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Texas Law Firm May Upend Investor Case

CARSON CITY, Nev. (CN) - A Texas law firm deserves another shot at dismissing claims from an investor in a $250 million real estate development, the Nevada Supreme Court ruled.

The decision Thursday revives the bid to dismiss by Texas law firm Fulbright & Jaworski, and attorney Jane Macon, in Clark County District Court.

Though the court reversed rejection of the initial motion, it did not go so far as to order that the lower court dismiss the complaint based on jurisdiction.

Evidence might arise during the discovery phase that would establish Nevada as a proper jurisdiction, Chief Justice James Hardesty wrote for the unanimous court.

The dispute stems from parcels of land near San Antonio that Nevada-based Triple L Management began buying in 2006 in anticipation of Texas A&M University building a branch campus nearby, according to the ruling.

Triple L raised more than $20 million from mostly Nevada residents, bought properties and named the Verano Land Group as owner on the titles. Triple L maintained managerial control of the properties, Hardesty wrote.

Verano was registered as a Texas partnership and retained defendants Fulbright & Jaworski as its legal representative. It allegedly hired the law in part because of the connections Macon, one of its partners, has in San Antonio as its former city attorney.

Macon worked with Triple L, Texas A&M and San Antonio officials to secure an agreement in which Verano would donate to the university some of the property it bought in exchange for $250 million in public funding from San Antonio to develop the property, according to the ruling

Investors took issue, however, with Triple L's creation of another entity, VTLM Texas, to deal with the university and city officials. VTLM, rather than Triple L or Verano, became the entity to which the $250 million in development funds would go.

Macon allegedly claims VTLM was created to limit the Nevada investors' potential income tax liabilities.

The Nevada investors meanwhile questioned whether Triple L acted in Verano's best interests and voted to replace Triple L as Verano's general manager in 2010. A year later they removed Macon as its legal representative, the ruling notes.

The investors registered Verano as a Nevada partnership in November 2011 and filed the lawsuit in Clark County District Court in 2012.

Verano named the law firm and Macon as defendants and accuse them of breach of fiduciary duty and engaging in "self-dealing" by donating more land than Verano originally intended to Texas A&M and helping Triple L to create VTLM Texas, according to Hardesty.

Verano says Triple L created VTLM to "usurp the city of San Antonio's funds," Hardesty wrote.

The law firm and Macon's motion to dismiss rested on Nevada's purported lack of jurisdiction.

Verano counters that the law firm's contacts with Nevada in other matters, and the fact it agreed to represent Nevada-based Verano, give Clark County District Court proper jurisdiction in the matter.

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