Ruff v. Ruff

1

MICHAEL A. RUFF, Appellant v. SUZANN RUFF, Appellee

No. 11-23-00019-CV

Court of Appeals of Texas, Eleventh District

October 31, 2024

On Appeal from the 29th District Court Palo Pinto County, Texas Trial Court Cause No. C46164

Panel consists of: Bailey, C.J., Trotter, J., and Williams, J.

MEMORANDUM OPINION

JOHN M. BAILEY, CHIEF JUSTICE

This appeal is the latest development in a series of lawsuits in which Appellee Suzann Ruff seeks to recover millions of dollars that, according to an arbitration award, were taken from her by Appellant Michael A. Ruff, who is her son.

In this appeal, Michael,^[1] appearing pro se both at trial and on appeal, complains that the trial court erred when it denied his most recent motion to dismiss under the Texas Citizens Participation Act (TCPA). Tex. Civ. Prac. & Rem. Code Ann. § 27.001-.011 (West 2020 & Supp. 2024). He also complains that the trial court erred when rendered an award of sanctions against him under the TCPA. We affirm.

Background Facts

In 2011, Suzann filed suit against Michael in a Dallas County probate court. Ruff v. Ruff, No. 05-18-00326-CV 2020 WL 4592794, at *2 (Tex. App.-Dallas Aug. 11, 2020, pet denied) (mem. op.) (Ruff II). Michael moved to arbitrate the case, and his motion was granted. Id. In the probate court, as well as the arbitration, Suzann maintained that Michael had acted improperly while acting as her fiduciary, resulting in the loss of millions of dollars. Id.

In the meantime, on October 21, 2014, Suzann filed another lawsuit in Palo Pinto County relating to a 4,083-acre property that is situated therein. Suzann named five business entities as defendants in her initial pleading. Suzann alleged that the entities had engaged in a series of transactions in connection with the property that constituted a breach of fiduciary duty and conversion. Shortly thereafter, the defendants filed a motion to stay the proceeding, arguing that similar claims involving the same property were the subject of the Dallas County arbitration.

While the arbitration was pending, the arbitration panel issued sanctions against Michael. Among other things, the panel found that Michael had failed to comply with its instructions to produce documents, and that both Michael and his counsel had violated the panel's direct orders to answer questions in connection with Michael's oral deposition about various entities allegedly under his control. It also found that Michael admitted that he had drafted letters and submissions expressing "defiance and hostility against the rulings of the Panel," even though the submissions were signed by his counsel. As a result of these and other findings, the panel struck Michael's claims and defenses therein.

On December 7, 2017, the arbitration panel awarded Suzann over fifty-million dollars against Michael. Among other things the panel found that Michael defrauded Suzann, and breached fiduciary duties that he owed Suzann in managing numerous assets on her behalf. The arbitration award also imposed a constructive trust in favor of Suzann for "any entity which [Michael] formed or invested, in whole or in part with monies or property misappropriated from, and originating with Suzann." Attached to the award was a nonexclusive list of entities against which a constructive trust was imposed. Three out of five of the entities named in the Palo Pinto County lawsuit were also listed in the arbitration award.

After the arbitration award was issued, the probate court ordered Michael not to move any assets under his control. See Borderline Mgmt., LLC v. Ruff, No. 11-19-00152-CV, 2020 WL 1061485, at *2 (Tex. App.-Eastland Mar. 5, 2020, pet denied) (mem. op.) (Ruff I). This order included a prohibition against the movement of assets by any entities which he controlled. See id. Within days, Michael's attorneys formed Borderline Management, LLC (Borderline). Id. Michael then resigned from several entities involved in the development of property in Palo Pinto County, and Borderline was substituted in his place. Id. However, even after the transfer, Michael remained in effective control of those entities. Id.

During the same timeframe, Michael asked the probate court to vacate the award. Ruff II, 2020 WL 4592794, at *3. The probate court conducted an extensive evidentiary hearing, after which it confirmed the award. Id. at *4. Michael appealed to the Dallas Court of Appeals, which affirmed the confirmation of the award. Id. at *15.

On December 27, 2017, the trial court entered an order lifting the stay of the Palo Pinto County litigation. At that point, Michael was also a defendant in the litigation, and-on January 12, 2018-the trial court ordered expedited discovery, which included a timeline for the production of documents, followed by the deposition of Michael. Michael and the other defendants failed to comply with the order. Thereafter, a new order was entered, requiring Michael to appear for additional deposition testimony. During the following six months, Suzann conducted additional discovery, and filed two more motions to compel discovery, seeking to have the trial court order Michael to answer multiple questions that he had refused to answer concerning the ownership, control, and transfer of assets between the various named entities. Suzann also filed an amended petition adding Borderline as a defendant, along with other entities purportedly concealing assets that were subject to the constructive trust in the arbitration award.

On August 14, 2018, the trial court announced its intention to grant Suzann's motion to compel, which included a request for sanctions. The following day, one of the named entities-CM Resort LLC-filed a suggestion of bankruptcy, which automatically stayed the proceedings pending the resolution of the bankruptcy. See 11 U.S.C. § 362(a)(1).

On September 26, 2018, the bankruptcy court severed the claims against the defendants who had not filed bankruptcy and remanded them to the trial court, noting that it saw the bankruptcy cases "as being merely the most recent installment of [Michael's] efforts to hinder and delay [Suzann]." The next day, Michael moved to disqualify the presiding trial court judge, Judge Michael Moore, once again pausing proceedings pending resolution of the motion.

Judge David Evans, the presiding judge for the Eighth Administrative Judicial Region, held a hearing on the motion to disqualify Judge Moore on October 23, 2018. Judge Evans issued an order denying the motion on December 19, 2018. Michael then filed a second motion to disqualify Judge Moore on January 2, 2019, after which Judge Moore voluntarily recused himself. Judge Robert Brotherton was assigned in his place.

Suzann filed a sixth amended petition on February 14, 2019. Shortly thereafter, Borderline filed a motion to dismiss under the TCPA. The trial court denied the motion to dismiss and severed the claims against Borderline from the rest of the case.

On April 22, 2019, Judge Brotherton issued an order granting Suzann's motion to compel, which had been pending for well over a year by that time. Judge Brotherton also struck the affirmative defenses of Michael and Clayton Mountain Development, LLC (CMD), one of the entity defendants, finding that they had repeatedly violated discovery orders.

Suzann filed her seventh amended petition on October 17, 2019. In the petition, Suzann sought to impose a constructive trust against CMD and other entities, including several that were listed in the arbitration award. Additionally, she alleged that any entities that qualified as Michael's alter ego were in breach of a fiduciary duty, and that such entities conspired with Michael in connection with his own breaches of fiduciary duty. Suzann also sought an accounting from Michael and any entities found to be his alter ego.

After Suzann filed her seventh amended petition, Michael sought to dismiss the claims therein under the TCPA. The trial court denied the motions and awarded attorneys' fees to Suzann. Michael appealed the trial court's order to this court.^[2]We affirmed the trial court's determination that the TCPA did not apply to Suzann's claims, but reversed the award of attorneys' fees. Clayton Mountain, LLC v. Ruff, No. 11-20-00034-CV, 2021 WL 3414754, at *9-10 (Tex. App.-Eastland Aug. 5, 2021, no pet.) (mem. op.) (Ruff III).

On February 12, 2020, Michael filed yet another TCPA motion to dismiss. Ruff v. Ruff, No. 11-20-00122-CV, 2021 WL 388707, at *2 (Tex. App.-Eastland Feb. 4, 2021, pet. denied) (mem. op.) (Ruff IV). This time, the motion was not based on Suzann's pleadings, but on her motion to compel. Id. The trial court again denied the motion and ordered sanctions against Michael under the TCPA. Id. at *3. We affirmed. Id. at *10.

Shortly after Michael filed his TCPA motion to dismiss based on Suzann's motion to compel, Suzann filed an eighth amended petition, which added Jennifer Ruff in her individual capacity^[3] to the lawsuit. The eighth amended petition also added two entities as defendants: JAAR Capital LLC and JAAR Irrevocable Trust. Otherwise, there are no material differences between the seventh and eighth amended petitions.

On September 30, 2022, the Texas Supreme Court dismissed a motion for rehearing in Ruff IV. One week later, Michael filed another motion to recuse, this time directed at Judge Brotherton. As a result, proceedings were yet again halted pending a ruling on the motion. On November 10, 2022, Judge R.H. Wallace, Jr., sitting by assignment, denied the motion.

In the meantime, while the motion to recuse Judge Brotherton was pending, Michael filed a motion to dismiss under the TCPA based on Suzann's eighth amended petition. On January 20 2023, the trial court denied the motion, finding that it was...