no. 2011- › fryarlawfirmcom › ...2011/03/15 · plaintiff’s original petition, request for...

PLAINTIFF’S ORIGINAL PETITION, REQUEST FOR DISCLOSURES, REQUEST FOR PRODUCTION, INTERROGATORIES, NOTICE OF DEPOSITION, AND SUBPOENA FOR DEPOSITION

1 of 33

No. 2011-_____________

MARICHU P. § IN THE DISTRICT COURT PLAINTIFF, § v. § OF HARRIS COUNTY, TEXAS RAFAEL PATTY MAX

HOTEL & BUILDING SERVICES, INC., FAMILY OF SERVICES, INC., and CONSTRUCTION AND MANAGEMENT SERVICES, L.L.C.,

§ § § § § §

DEFENDANTS. § ________ JUDICIAL DISTRICT

PLAINTIFF’S ORIGINAL PETITION, REQUEST FOR DISCLOSURES, REQUESTS FOR PRODUCTION, REQUEST

FOR ADMISSIONS, INTERROGATORIES, NOTICE OF DEPOSITION, and SUBPOENA FOR DEPOSITION

TO THE HONORABLE DISTRICT COURT:

PLAINTIFF, MS. MARICHU P. files this PLAINTIFF’S ORIGINAL

PETITION, REQUEST FOR WRITTEN DISCOVERY, and NOTICE OF DEPOSITION, and in

support, would show the Court the following:

I. Nature of This Action

1. Plaintiff Marichu P. owns 33 1/3% of the outstanding shares of Hotel &

Building Services, Inc. Plaintiff seeks a declaratory judgment, and protection and relief from the

Court as a result of Defendants’ pattern of oppressive conduct. Plaintiff further seeks damages

for Defendants’ breach of fiduciary duties.

II. Discovery Control Plan

2. Plaintiff intends that discovery be conducted under Level 2.

III. Parties

3. PLAINTIFF, MARICHU P. (“Plaintiff”), is a natural person residing in Fort

Bend County, Texas. All pleas, pleadings, motions, discovery, and other matters related in whole

eric

Typewritten Text

16452

eric

Typewritten Text

113th

http://www.FryarLawFirm.com

http://www.ShareholderOppression.com


2 of 33

or in part to this case should be served upon Plaintiff’s attorney, Mr. Eric Fryar with the Fryar

Law Firm, P.C., 1001 Texas Avenue, Suite 1400, Houston, Texas, 77002.

4. DEFENDANT, RAFAEL (“Mr. or “Rafael”), is a natural person residing

in Harris County, Texas, and may be served with process at his place of employment, 3506

Dunvale Street, Houston, Texas 77063, his home, , Houston, Texas 77056-

7227, or wherever he may be found. Issuance of citation and service of process is hereby

requested.

5. DEFENDANT, PATTY (“Mrs. or “Patty”), is a natural person residing in

Harris County, Texas, and may be served with process at her place of employment, 3506

Dunvale Street, Houston, Texas 77063, her home, , Houston, Texas 77056-

7227, or wherever she may be found. Issuance of citation and service of process is hereby

requested.

6. DEFENDANT, MAX (“Mr. is a natural person residing in Harris

County, Texas, and may be served as his place of employment, 3506 Dunvale Street, Houston,

Texas 77063, or wherever he may be found. Issuance of citation and service of process is hereby

requested.

7. DEFENDANT, CONSTRUCTION & MANAGEMENT SERVICES, L.L.C., is

a Texas limited liability company with its principal place of business in Houston, Harris County,

Texas. The company may be served with process through its registered agent, Patricia at

3506 Dunvale St., Houston, Texas 77036.

8. DEFENDANT, FAMILY OF SERVICES, INC., is a Texas corporation with its

principal place of business in Houston, Harris County, Texas. The company may be served with

process through its registered agent, Alma at 3506 Dunvale St., Houston, Texas 77036.




3 of 33

9. NOMINAL DEFENDANT, HOTEL & BUILDING SERVICES, INC. (the

“Company”), is a Texas corporation with its principal place of business in Houston, Harris

County, Texas. The Company may be served with process through its registered agent, Mr.

Phillips, 3506 Dunvale, Houston, Texas, 77036, Mr. Phillip’s place of business, 1155 Dairy

Ashford, Suite 104, Houston, Texas 77079, or upon any officer at its principal office 3506

Dunvale Street, Houston, Texas 77063.

IV. Jurisdiction and Venue

10. This Court has jurisdiction of this cause because the matter in controversy is within this

Court’s general jurisdiction and the amount in controversy exceeds this Court’s minimum

jurisdictional limits.

11. Venue is proper in Harris County because a substantial part of the transactions, acts, and

omissions giving rise to the claims occurred in Harris County. Tex. Civ. Prac. Rem. Code

§ 15.002(a)(1). Venue is also proper in Harris County because Rafael and Patty reside in

Harris County and because the Company’s principal office is in Harris County. Tex. Civ. Prac.

Rem. Code § 15.002(a)(2)–(3).

VI. Petition for Damages and Equitable Relief

A. Facts

12. The Company is a corporation that provides temporary staffing and contract janitorial

services for hotels and other businesses throughout Texas. The Company is a closely-held

corporation in that it has only three shareholders, there is an absence of a market for the shares in

the corporation, and the shareholders substantially participate in the management of the

corporation.




4 of 33

13. At the age of 61, Plaintiff started the Company as a d/b/a in August 2001with her close

friend Patty then Patty The business operated from Plaintiff’s home. Plaintiff

was in charge of operations, sales, purchasing, and public relations for the new business.

14. Plaintiff did all the legwork for the fledgling company. She bought and distributed

supplies to employees working at locations all over the Houston area, from the Woodlands to

Sugarland. She supervised and inspected employees’ work from 11:00 p.m. to 5:00 a.m. seven

days a week to maintain a good working relationship with her clients. Plaintiff often transported

workers from one job site to another and lending a hand if a job site was short-handed. Plaintiff

ran the business single-handedly for the most part while maintaining a full-time day job for

approximately three years. During this time, Patty did payroll and created bids for Plaintiff’s new

clients.

15. During that first year, Rafael was brought in to the Company. Rafael’s initial contribution

to the Company was a large account with monthly gross sales of $15,000, but he soon lost that

account. Rafael was also to help grow the business and prepare marketing materials. Rafael and

Patty were married sometime in 2002. Plaintiff and Defendants set up a small office in a

warehouse at 6400 Westpark.

16. The Company was incorporated by Plaintiff on August 19, 2002, and had two

shareholders. Rafael held two thousand shares, and Plaintiff held one thousand shares. Patty and

Rafael held their shares as community property, and all three served on the board of directors.

Plaintiff served as the Company’s president until 2008, when she was removed without notice

and without a board meeting. Additionally, all three shareholders agreed that they would be

employed by the Company and that all three would be paid the same salary.




5 of 33

17. In July 2006, without consulting the Company’s president and without a board of

directors meeting, Patty and Rafael unilaterally decided to use Company assets to build new

headquarters. Patty took out a loan in her own name to purchase a building and land located at

3506 Dunvale, Houston, Texas, for the Company. This decision was presented to Plaintiff as a

fait accompli.

18. When Plaintiff later discovered that the property was in Patty’s name rather than the

Company’s, Patty told Plaintiff that the purchase had been made for the benefit of the Company

and that the loan and the building had been obtained in Patty’s name because Patty claimed that

she had better credit than the Company. Defendants said that this transaction was done solely for

the benefit of the Company. Defendants represented that Patty would hold the property for the

benefit of the Company, and the property would be transferred to the Company as soon as the

Company could afford it. Without consulting with Plaintiff and without board resolution,

Defendants caused the Company to spend tens of thousands of dollars on numerous expensive

improvements and upgrades to the building.

19. The Company paid all taxes, insurance, and debt servicing on the building, although the

expenses were characterized as “rent” to Patty. Because Patty was a fiduciary of the Company

and held the property in trust for the Company, she should only have been reimbursed for any

loan payments, taxes, or other direct expenses incurred as a result of holding title to the property

for the Company. However, Defendants caused the Company to pay rent in the amount of $2500

to Patty each month. This amount was later increased to $3000 per month, again without a board

meeting and without consulting Plaintiff. On information and belief, these amounts exceeded the

actual costs of holding title for the Company and resulted in the Defendants profiting at the

Company’s expense. The Company moved to the new location around September of 2006.




6 of 33

20. Thereafter, despite the fact that Plaintiff was nominally the “president” of the Company,

Patty and Rafael exercised essentially complete dominance and control over the operations and

management of the Company, to the effective exclusion of Plaintiff. After moving to the

Company’s new opulent headquarters, Rafael and Patty became even more reckless in the way

they managed the Company’s assets. Plaintiff was consistently kept in the dark about

Defendants’ business decisions. Board meetings were never held to address either the

expenditures or the decisions, both of which wasted the Company’s assets. Defendants

consistently denied Plaintiff access to the Company’s records. Plaintiff repeatedly requested to

see the Company’s financial records and to have access to the information regarding the

Company’s income, expenditures, and financial condition. Defendants always refused those

requests.

21. In late 2006 and early 2007, Defendants persuaded Plaintiff to sign a series of promissory

notes on behalf of the Company to Patty for loans Patty obtained on behalf of the Company and

for money that Patty had supposedly contributed several years before. Defendants never

disclosed the reasons why the loans were necessary or even how the funds were used; however,

Plaintiff relied on Defendants’ representations that the loans were necessary and that the money

had been used for the Company’s benefit.

22. April 6, 2007, a Trusteed Buy-Sell Agreement was executed by Plaintiff and Defendants.

As of the time of that agreement, Plaintiff, Patty, and Raphael each owned 33 1/3% of the

Company’s outstanding shares. Per the terms of that Agreement, each shareholder’s interest was

valued at $1 million, and life insurance was to be obtained by the Company for each shareholder

for the purpose of paying that shareholder’s estate the value of his or her shares in the event of




7 of 33

death or disability. Under the terms of this Agreement, a Trustee retained possession of all the

shares.

23. Plaintiff constantly cautioned Defendants against expanding the Company too quickly

and “biting off more than they could chew.” In November 2007, Plaintiff went on vacation to the

Philippines and returned in February 2008. In her absence, and without a board meeting or board

resolution, Defendants removed Plaintiff as president and put Mr. Karl in that office.

Mr. employment package included a $90,000 a year salary and 10% ownership in the

Company. This action apparently diluted Plaintiff’s stock ownership without her consent,

violating her preemptive rights.

24. While Plaintiff was away, Patty also secretly registered Construction and

Management Services, L.L.C. Plaintiff was not made a member of this L.L.C. or given any

ownership interest in that company. Defendants subsequently bid on and were awarded

demolition projects in Port Arthur through the L.L.C. Plaintiff had some awareness that

Defendants were attempting to expand the Company’s business beyond contract janitorial

services; however, Plaintiff was completely unaware that Defendants were usurping corporate

opportunities and operating another business with the Company’s name. Plaintiff discovered, not

through a board meeting, but by accident, that the Company paid rent on office space in Port

Arthur for this construction venture.

25. In April 2008, Defendants informed Plaintiff that she was legally required to transfer

some of her shares to Patty to secure the outstanding notes to Patty from the Company. Rafael

also transferred shares to secure these loans. Because Plaintiff was never allowed access to the

financial records, it is impossible to know whether Patty was repaid, or whether those transferred

shares should have been returned to her when those debt were paid. The transaction itself was




8 of 33

without adequate consideration, based on misrepresentation and failure to make full disclosure,

and is void as a breach of fiduciary duties. Also in April 2008, the shareholders executed an

amendment to the Trusteed Buy-Sell Agreement that recited that Plaintiff now owned 24.3% of

the Company’s shares at a value of $218,700.00.

26. Patty and Rafael further committed self-dealing with Company assets by hiring their

relatives. Patty’s brother, nephews, and son work for the Company. Rafael’s mother and father

work for the Company as well. Defendants never consulted Plaintiff before putting nearly their

entire extended family on the Company’s payroll, again denying Plaintiff’s reasonable

expectation to have a voice in the company she founded. Plaintiff requested that her daughter be

hired to help in the office, but Patty refused. Again, decisions made without consulting Plaintiff

and decisions that denied Plaintiff of any meaningful participation in management.

27. Patty and Rafael consistently used the Company’s assets for their own benefit, spending

recklessly on themselves with no benefit to the Company or Plaintiff. The Company pays

Rafael’s child support payments. The Company also pays car insurance on vehicles that do not

belong to the Company, while Plaintiff always paid her own car insurance. Patty and Rafael have

a Company credit card that Plaintiff suspects is used to pay personal expenses and the balance

paid with Company funds. Patty and Rafael use their American Express card to pay Company

operational expenses to accrue frequent flier miles and other perks. These activities denied

Plaintiff an economic return on her investment and harmed the Company by diminishing its

assets.

28. In 2008, the Company had a period of reduced capital, caused at least in part by

Defendants’ looting and reckless business decisions. Karl suspended Rafael’s, Patty’s

and Plaintiff’s salaries for approximately six to seven months. Rafael, Patty, and Plaintiff




9 of 33

received staggered payments of these withheld wages. Plaintiff still has about $5800 of this

withheld amount due her. Despite repeated requests, Plaintiff has yet to be paid these back

wages.

29. In July 2008, Defendants persuaded Plaintiff to sign a Shareholders’ Agreement that

provided for future transfers of shares in the event that a shareholder was unable to make a future

capital contribution. This agreement provided Rafael and Patty an additional positive benefit

from their profligate spending and financial mismanagement. Because they knew that they would

always be in a position to put money back into the Company, and that Plaintiff would not, the

new Shareholders’ Agreement provided a ready-made squeeze-out mechanism whereby

Plaintiff’s interests could be continually diminished so long as Rafael and Patty kept the

Company short of cash.

30. During 2008 and 2009, Plaintiff repeatedly requested access to the Company’s financial

records to determine the extent of the Defendants’ use of company funds, but Patty vehemently

refused to allow it. As director and shareholder, Plaintiff had the absolute right to view the

company’s business and financial records, but the majority shareholders maintained total control

over the Company’s finances and records and consistently denied this right.

31. In 2009, Defendants reduced Plaintiff’s salary, a violation of her employment agreement.

Eventually, it was agreed that Plaintiff would be paid $51,000 per year, while Patty and Rafael’s

salaries were reduced only minimally, an inequitable distribution of corporate assets. Lowering

her salary denied Plaintiff’s expectation of economic return. In fact, Defendants even tried to

terminate Plaintiff’s employment at that time, but Plaintiff refused to sign the agreement.

32. In October 2009, Patty informed Plaintiff that the Company needed a loan for a capital

infusion. The details of the loan were concealed from Plaintiff. Plaintiff found a share transfer




10 of 33

document on her desk that transferred her remaining shares to Patty. Rafael explained that the

document was solely to allow the Company to obtain the loan. The loan might be denied if

Plaintiff signed the loan application as one of the Company’s owners, due to some potentially

poor credit history. Patty assured Plaintiff that the document was only for this purpose, that the

transfer would never be entered in the corporate records, and that the agreement would be

rescinded once the loan was approved. In fact, Plaintiff was told that she could throw away her

copy of the transfer document, as it meant nothing.

33. Throughout 2009 and 2010, Plaintiff continued to seek current information about the

Company’s financial condition. Patty and Rafael continued to hide this information from

Plaintiff and went so far as to have the locks changed to the Company’s books and records room

without informing Plaintiff. Patty thereafter refused to allow Plaintiff access to the room.

34. Events came to a head October 26, 2010. At a company meeting held that day, Plaintiff

again demanded that her salary be raised to earn the same amount of money as Patty and Rafael

and again demanded access to the company’s books and records, which as a shareholder and

director, she had every right to do. Defendants refused these demands. When Plaintiff protested

that, as a shareholder she had the right to inspect corporate records, Defendants responded that

Plaintiff was not a shareholder and had not been a shareholder since October 2009, when she

signed over her shares to Patty in connection with the Wells Fargo loan.

35. Plaintiff could only have been considered to be “not a shareholder” if the 2009 “transfer”

had been a real transfer, rather than an agreement to hold Plaintiff’s shares in name only to

obtain a bank loan, as had been represented not only by the Defendants but by Chris

Pursuant to Texas law, a person holding a beneficial interest in shares has the same right to

inspect records as a record shareholder, but Plaintiff was denied this right. Furthermore, even if




11 of 33

Plaintiff was not a shareholder, as a director, she had an absolute right to the information she

requested. Plaintiff was denied this right.

36. On November 1, 2010, Marichu received notice that Defendants had terminated her

employment with the Company, depriving Plaintiff of her right to participate in her company,

denying her of any expectation of economic return, and denying her reasonable expectation of

continued employment. Plaintiff’s notice of termination included a offer to pay her a sum of cash

to “release any claim”—i.e., to give up her claim to any ownership in the Company she founded.

After depriving Plaintiff of her livelihood and her dignity, Defendants offered to pay Plaintiff far

less than the value of Plaintiff’s interest in the Company, a classic squeeze-out scheme.

37. As a result, Plaintiff retained counsel. Demand was again made to inspect the Company’s

books and records. Plaintiff’s counsel pointed out that, regardless of whether Plaintiff was a

shareholder, she had the right to inspect records as a director. Defendants’ immediate response

was to remove Marichu as director of the Company at a secret shareholders’ meeting about

which Plaintiff received no notice, completing their oppression over Plaintiff and stealing her

company from her.

38. Since her termination, Plaintiff discovered through an HCAD record search that Patty

transferred the Company’s building and property to her son, Max Arias, a breach of Patty’s

fiduciary duties as Patty holds this property in trust for the Company.

39. On November 24, 2010, Rafael demanded return of Plaintiff’s company vehicle, right

before the Thanksgiving holiday. The Company purchased three company cars in 2007, and

Rafael told Plaintiff that the vehicle was “hers to do with as she pleased” and she could even

“sell it if she wanted.” In reliance, while executive salaries were suspended in 2008, Plaintiff

sold her personal vehicle. Rafael had reiterated this representation as late as the Fall of 2010.




12 of 33

Rafael knew the Company car was Plaintiff’s only vehicle, but he had no problem attempting to

deprive a 70-year-old woman of transportation during the holidays.

40. Also since Plaintiff’s termination, Patty incorporated another business, Family of

Services, Inc., in December 2010.

41. As a final act of oppression, Defendants even contested Plaintiff’s right to receive

unemployment compensation. Defendants filed a false claim that Plaintiff had been terminated

for cause—notwithstanding that her termination notice made no mention of a “for cause”

termination, that Plaintiff had done nothing that would qualify as “for cause” under the terms of

her employment agreement, and that Defendants were required under the terms of the

employment agreement to provide written notice of any “for cause” termination. In March 2011,

the Texas Workforce Commission ruled that the Defendants’ claims were bogus and awarded

Plaintiff unemployment compensation.

42. Defendants defeated Plaintiff’s reasonable expectations as a founder, shareholder, officer,

and director of the Company. Defendants refused to consult with Plaintiff before making major

business decisions, violating her rights as a director to participate in management. Defendants

denied Plaintiff the economic value of her shares by misappropriating Company funds. Their

burdensome, harsh, and wrongful conduct and extreme bad faith escalated during Plaintiff’s ten

years with her company, ending when Rafael terminated Plaintiff.

43. As a result of Defendants Patty and Rafael pattern of oppressive and abusive

conduct, Plaintiff is forced to bring this action.

V. Causes of Action

A. Violation of the Right of Inspection

44. Plaintiff is a shareholder and director in the Company.




13 of 33

45. On November 2, 2010, Plaintiff, through counsel, made a written demand on the

Company, addressed to Mr. Chris for inspection of corporate books and records via

facsimile and email. The written demand stated a proper purpose.

46. On November 3, 2010, the Company, through counsel Phillips, contacted Plaintiff’s

counsel. Mr. Phillips represented that Plaintiff was no longer a shareholder because of an

October 2009 share transfer. Mr. Phillips also stated that Plaintiff was no longer a director, as

Patty and Rafael removed Plaintiff from the Board of Directors that morning.

47. Pursuant to Texas common law and to Tex. Bus. Org. Code §§ 3.152, 3.153 and 21.218,

Plaintiff was entitled to inspect the corporate records. Plaintiff made repeated oral requests and

one explicit written request stating a proper purpose.

48. Under Tex. Bus. Org. Code §§ 3.152 and 21.222, Plaintiff is entitled to recover any cost

or expense, including attorney’s fees, incurred in enforcing her rights. Plaintiff was forced to

retain an attorney and has and will continue to incur substantial costs and attorneys’ fees in

enforcing her rights.

49. All conditions precedent necessary for Plaintiff to obtain the requested relief have been

performed or have occurred. Plaintiff is without adequate remedy at law.

B. Declaratory Judgment

50. Plaintiff is entitled to a declaratory judgment pursuant to Tex. Civ. Prac. Rem. Code

§ 37.001, et seq. to determine the rights and status of the parties. A ripe controversy exists.

Specifically, Plaintiff is entitled to the following declarations:

a. Plaintiff is a shareholder of the Company, and her interest equals 33 1/3% of the

common stock currently outstanding.




14 of 33

b. The purported transfer of Plaintiff’s shares in October 2009 has no legal effect on

Plaintiff’s share ownership or on any of her claims because: 1) it was induced by

fraud or constructive fraud; 2) it is void or voidable as a breach of fiduciary

duties; 3) it was not supported by consideration.

51. Pursuant to Tex. Civ. Prac. Rem. Code § 37.009, Plaintiff is entitled to costs and

reasonable and necessary attorney’s fees as are equitable and just, and to such other and further

supplemental relief as is necessary and proper to terminate the uncertainty, resolve the

controversy, do equity, and effectuate the declarations of the Court.

B. Shareholder Oppression

52. Defendants Patty and Rafael are majority shareholders of the Company, and as

such, exercise dominance and control. Defendants committed a continuing pattern of oppressive

acts that have the purpose and effect of substantially defeating Plaintiff’s objectively reasonable

expectation of share ownership, of systematically violating her rights and interests as a

shareholder, and of denying her economic value of her share ownership and/or return on her

investment. Examples of but a few of these oppressive acts include, but are not limited to

refusing to allow Plaintiff access to financial records, fraudulently depriving her of her stock,

diverting corporate opportunities by transferring the Company’s property to Patty’s son, denying

Plaintiff participation in management decisions, terminating Plaintiff’s employment, locking her

out of her own company, and attempting to squeeze her out through an extortionate buy-out

offer. The net result of Defendants’ conduct is to render Plaintiff’s share ownership essentially

worthless, meaningless, and financially punitive. See Pinnacle Data Srvcs., Inc. v. Gillen, 104

S.W.2d 188, 197 (Tex. App.—Texarkana 2003, no pet.) citing Davis v. Sheerin, 754 S.W.2d 375,

381 (Tex. App.—Houston [1st Dist.] 1988, writ denied).




15 of 33

53. Defendants Rafael and Patty have repeatedly violated Plaintiff’s legal rights as a

shareholder. Defendants’ burdensome, harsh, and wrongful conduct visibly departs from

standards of fair dealing that constitute shareholder oppression. See Willis v. Bydalek, 997

S.W.2d 798, 802–03 (Tex. App.—Houston [1st Dist.] 1999, pet. denied)

54. Plaintiff is entitled to equitable relief to remedy the oppressive conduct, including but not

limited to, having the Court order a fair buy-out at a fair price, together with actual and

exemplary damages, disgorgement, restitution, and other equitable relief. Furthermore,

Defendants’ conduct was committed willfully and maliciously and Plaintiff is entitled to punitive

damages.

D. Breach of Fiduciary Duty to Plaintiff

55. By the acts alleged herein, Defendants breached their fiduciary duties owed to Plaintiff as

controlling shareholders of the Company. Plaintiff is entitled to recover her actual damages for

the breach of these duties and further equitable relief including disgorgement and constructive

trust. Because Defendants acted knowingly, intentionally, maliciously, and with reckless

disregard of Plaintiff’s rights, Plaintiff is entitled to exemplary damages.

E. Breach of Fiduciary Duty to the Company

56. Patty and Rafael also breached fiduciary duties owned to the Company as officers,

directors, and controlling shareholders by misappropriating assets, excessive compensation, and

other misconduct alleged herein. The Company has suffered actual damages as a result of the

breach of fiduciary duties.

57. The Company is entitled to recover actual damages for said breach of fiduciary duties and

further equitable relief including disgorgement, constructive trust, and injunction. Because the




16 of 33

Defendants acted knowingly, intentionally, and maliciously, Plaintiff is entitled to exemplary

damages. Plaintiff is further entitled to her reasonable and necessary attorney’s fees.

58. Plaintiff has standing to bring a derivative action on behalf of the Company. All

conditions precedent have been satisfied. Plaintiff is entitled to recover her expenses and

reasonable and necessary attorney’s fees pursuant to Tex. Bus. Org. Code § 21.561. The

Company is a “closely-held” corporation, with less than 35 shareholders, and no shares listed on

a national securities exchange or regularly quoted in an over the counter market by one or more

members of a national securities association.

59. Pursuant to Tex. Bus. Org. Code § 21.563(a), Plaintiff requests that, in the interest of

justice, this action be treated by the Court as a direct action brought by the Plaintiff for her own

benefit and that the recovery be paid directly to Plaintiff.

F. Knowing Participation/Civil Conspiracy

60. As alleged herein, all Defendants conspired to commit fraud and breach of fiduciary

duties and are thus jointly and severally liable for all actual damages and equitable relief.

Moreover, Patty Rafael Max Arias, Construction & Management Services,

L.L.C., and Family of Services, Inc. knowingly participated and materially benefited

from the breaches of fiduciary duties committed by Patty and Rafael and are jointly and severally

liable for all damages. Furthermore, all Defendants acted knowingly, intentionally, maliciously,

and with reckless disregard of Plaintiff’s rights and the Company’s rights, and Plaintiff is entitled

to exemplary damages.

G. Breach of Contract

61. Plaintiff had a valid and binding contract of employment with the Company, by the acts

alleged herein, Defendants breached the contract. Defendants further breached the contact by




17 of 33

failing to pay back wages owed to Plaintiff that she earned under the employment contract.

Therefore, Plaintiff is entitled to actual damages from the Company and to an award of

reasonable and necessary attorneys fees. Presentment has been made. All conditions precedent

have been satisfied.

H. Money Had and Received

62. Patty and Rafael and the Company hold back wages that, in equity and good

conscience, belong to Plaintiff. Plaintiff seeks liquidated damages in an amount in excess of the

jurisdictional limits of the court, exemplary damages, and further equitable relief including an

accounting, disgorgement, constructive trust, and injunction.

I. Fraud

63. Patty and Rafael committed fraud by representing that Plaintiff’s share

transfer was merely to obtain a capital infusion and that the transfer would not be recorded.

Plaintiff relied on these representations to her detriment by agreeing to the transaction and by

continuing to provide valuable services to the company as an employee and director and

continuing to contribute time, money and effort to the success of the corporation. Defendants

knew their representations were false or made them recklessly and had no intention of

performing their promises.

64. Plaintiff suffered damages in the form of lost profits, lost opportunities to participate in

other ventures, and ultimately the loss of her company. Plaintiff is entitled to recover actual

damages, exemplary damages, restitution, and disgorgement.

VII. Jury Trial

65. Plaintiff demands her right to trial by jury.




18 of 33

VIII. Prayer

66. THEREFORE, Plaintiff respectfully prays for the following:

a. The Defendants be cited and served;

b. Upon trial of this cause, judgment may be entered in favor of Plaintiff for actual

damages; exemplary damages; equitable relief including disgorgement,

constructive trust, and forced buy-out;

c. Pre-judgment and post-judgment interest;

d. Reasonable and necessary attorney’s fees;

e. Costs of suit; and

f. Such other and further legal and equitable relief to which Plaintiff may be justly

entitled.

IX. Written Discovery

67. Pursuant to the Texas Rules of Civil Procedure, each of the Defendants must respond to

the following requests for discovery within 50 days after service of this Petition.

A. Request for Disclosure

68. Pursuant to Tex. R. Civ. Proc. 194, each Defendant is requested to disclose the

information or material described in Rule 194.2(a)–(i) within 50 days of service of this request.

B. Request for Production

69. Pursuant to Tex. R. Civ. Proc. 196, you are required to respond in writing to the requests

for production stated below no later than 50 days after service of this pleading. Please produce

the following documents on the date that your response is due at the offices of the undersigned or

at such other place that may be mutually agreed. You are requested to produce responsive

documents that are maintained in electronic or magnetic form as well as all responsive paper




19 of 33

records. Accounting records should be produced in native format data files that can be utilized in

the accounting software, and you are to disclose the accounting software used. All other

electronic documents shall be produced either as .tiff or searchable .pdf files along with all meta

data associated with those files. These requests include all drafts of responsive documents.

Produce the following documents:

a. The complete corporate book, including the share transfer ledger, articles, bylaws,

minutes, resolutions, etc.

b. All Shareholder Agreements, Buy-Sell Agreements, Purchase and Sale

Agreements, Employment Agreements, or any other agreement relating to the

Company or its shares that is signed by one or more of the Company’s

shareholders.

c. All agreements relating to the conveyance, transfer, pledging, or disposal of any

shares in the Company.

d. All documents relating to any life insurance policies held by the Company or for

which the Company has paid or for which the Company is a beneficiary.

e. All documents, emails or written communications to, from or relating to Plaintiff.

f. All documents, emails or written communications relating to or mentioning shares

in the Company, transfer of shares, loans to or from the Company, promissory

notes, access to financial information, or Plaintiff’s ownership interest, job

performance, employment, or termination.

g. All documents relating to Plaintiff’s unemployment claim.

h. All documents relating to any loans to or from the Company.




20 of 33

i. All minutes or notes taken for all Company meetings, and all written resolutions

or consents in lieu of meetings.

j. All notices of annual meetings, special meetings, or any other meetings of the

Company.

k. All books and records of account or financial records, including but not limited to,

financial statements, annual and monthly income or profit and loss statements,

annual and monthly balance sheets, all cashflow statements, all bank statements,

all check registers, all payroll records, and the complete general ledger, and all

records of all disbursements made by the Company.

l. All tax returns, W-2s and 1099s of the Company.

m. Any and all documents pertaining to any payments made by the Company to or on

behalf of Rafael

n. Any and all documents pertaining to any payments made by the Company to or on

behalf of Patty

o. Any and all audio recordings made of any conversations with Plaintiff.

p. Any and all documents pertaining to the transfers of Plaintiff’s shares in the

Company.

q. Any and all communications between Mr. Chris and Patty for the

years 2001 to November 3, 2010.

r. Any and all communications between Mr. Chris and Rafael for the

years 2001 to November 3, 2010.

s. The bylaws of the Company and any amendments hereto.

t. Patty & Rafael income tax returns for the last ten years.




21 of 33

u. All share certificates issued by the Company.

v. All documents relating to Patty’s purchase of the property and building located at

3506 Dunvale Street, Houston, Texas 77063.

w. All documents relating to improvements made to the property and building

located at 3506 Dunvale Street, Houston, Texas 77063.

x. All documents relating to any rent or other payments made by the Company with

regard to the property and building located at 3506 Dunvale Street, Houston,

Texas 77063, including any 1099s relating to such payments and all tax returns or

other documents filed by Patty with the IRS characterizing such income.

y. All documents relating to conveyance or transfer of title of the property and

building located at 3506 Dunvale Street, Houston, Texas 77063, including all

documents relating to any consideration paid.

z. Former the Company president Karl employment contract.

aa. All promissory notes issued to Patty from the Company.

bb. All documents relating to or evidencing the payment and use of fund provided to

the Company relating to the promissory notes.

cc. All communications with the I.R.S. by the Company

dd. All documents related to the 2009 Wells Fargo loan.

ee. All documents related to the purchase of the 2007 Saturn purchased in the

Company’s and Plaintiff’s names.

ff. All documents relating to I.P.A.

gg. All documents relating to the I.R.S. audit.




22 of 33

hh. All documents reflecting or relating to any transaction between or involving the

Company and Family of Services, Inc.

ii. All documents relating to all business operations, contracts, revenue,

expenditures, assets and liabilities of Hotel & Building Services, Inc.

jj. All documents relating to the ownership, creation or organization of Hotel

& Building Services, Inc.

kk. All documents reflecting or relating to any transaction between or involving the

Company and Construction & Management Services, L.L.C.

ll. All documents relating to all business operations, contracts, revenue,

expenditures, assets and liabilities of Construction & Management

Services, L.L.C.

mm. All documents relating to the ownership, creation or organization of

Construction & Management Services, L.L.C.

nn. All documents relating to the ownership, creation or organization of

Family of Services, Inc.

oo. Documents transferring the property at 3506 Dunvale, Houston, Texas 77056-

7227 to Max Arias.

pp. Rafael cell phone records from October 29, 2010.

qq. Company surveillance tapes from October 22, 26, and 29, 2010.

rr. Any invoices and billing records of any attorney representing any Defendant in

this case.




23 of 33

ss. All documents relating to the Company that have been sent to or received from or

are in the possession of any accountant, bookkeeper, CPA, financial advisor, or

business consultant of the Company.

tt. All communications with any lender of the Company.

uu. All personal financial statements of Patty and/or Rafael

vv. All written communications and email to or from any lawyer representing the

Company during the period from incorporation of the Company up to the moment

that Plaintiff was removed as a director.

ww. All written communications and email to or from any lawyer representing

any defendant relating to the October 2009 transfer of Plaintiff’s shares or to

Defendants’ position that Plaintiff is no longer a shareholder.

xx. All written communications and email to or from any lawyer representing the

Company regarding the response to Plaintiffs’ demand for inspection of

documents or Plaintiffs’ removal from the Board of Directors.

yy. Any and all statements made by any witnesses to the occurrences made the basis

of this lawsuit, identifying the name and address of such person giving the

statement.

zz. All documents or tangible things you will or may seek to introduce into evidence

at trial.

aaa. Any and all documents, records, memoranda, notes or tangible things

made, generated, or maintained by the Company which may in any way record,

evidence, recount, discuss or comment on the facts forming the basis of this

lawsuit.




24 of 33

bbb. Any and all documents or tangible things evidencing statements made by

persons with relevant knowledge of the events made the basis of this lawsuit.

C. Interrogatories to Defendant Rafael

70. Pursuant to Tex. R. Civ. Proc. 197, Defendant Rafael must respond to each of the

following written interrogatories under oath:

1) If you denied any of the Requests for Admissions, state in detail to reasons

why and what you contend the true facts are with regard to the matter about

which the admission was requested.

2) State the fair value of the Company and the basis for your calculation, the

method of valuation, and describe all documents or financial information used

to answer.

3) State how many shares were offered to Karl to become president of

the Company.

4) Identify the current, and all prior, accountants or bookkeepers for the

Company and all other persons who have knowledge of the financial

performance of the corporation.

5) Identify all persons or entities with whom any of the Defendants has discussed

or submitted information relating to the value of the Company, including

banks and other lenders, brokers, prospective investors or shareholders,

potential buyers, and creditors.

6) State the date, amount, reason, and nature of the transaction for each and

every cash disbursement or other benefit or transfer from the Company to

each officer, director, or shareholder from inception to present, including




25 of 33

salary, commissions, bonuses, loans, gifts, and any other transfer or

transaction whatsoever, including personal salary, commissions, bonuses,

loans, gifts, and any other transfer or transaction whatsoever, including

personal use of corporate assets.

7) State whether the Company has agreed to advance attorney’s fees or other

expenses related to this action to Patty or Rafael and if so, state

the complete terms and conditions under which such advancement is made,

and identify the persons who made the decision on behalf of the corporation to

make such advancement.

8) Do you deny that Plaintiff was told in October 2009 that the transfer of her

shares was to be in name only, that the transfer would never be recorded on

the corporation’s books, and that the agreement would be rescinded as soon as

the loan was obtained? If so, state in detail what promises, representations,

and agreements were made to or with Plaintiff in connection with the October

2009 transfer and by whom, and state the consideration paid for Plaintiffs

shares.

D. Interrogatories to Defendant Patty

71. Pursuant to Tex. R. Civ. Proc. 197, Defendant Patty must respond to each of the

following written interrogatories under oath:

1) If you denied any of the Requests for Admissions, state in detail to reasons

why and what you contend the true facts are with regard to the matter about

which the admission was requested.




26 of 33

2) State the fair value of the Company and the basis for your calculation, the

method of valuation, and describe all documents or financial information used

to answer.

3) State how many shares were offered to Karl to become president of

the Company.

4) Identify the current, and all prior, accountants or bookkeepers for the

Company and all other persons who have knowledge of the financial

performance of the corporation.

5) Identify all persons or entities with whom any of the Defendants have

discussed or submitted information relating to the value of the Company,

including banks and other lenders, brokers, prospective investors or

shareholders, potential buyers, and creditors.

6) State the date, amount, reason, and nature of the transaction for each and

every cash disbursement or other benefit or transfer from the Company to

each officer, director, or shareholder from inception to present, including

salary, commissions, bonuses, loans, gifts, and any other transfer or

transaction whatsoever, including personal salary, commissions, bonuses,

loans, gifts, and any other transfer or transaction whatsoever, including

personal use of corporate assets.

7) State whether the Company has agreed to advance attorney’s fees or other

expenses related to this action to Patty or Rafael and if so, state

the complete terms and conditions under which such advancement is made,




27 of 33

and identify the persons who made the decision on behalf of the corporation to

make such advancement.

8) Do you deny that Plaintiff was told in October 2009 that the transfer of her

shares was to be in name only, that the transfer would never be recorded on

the corporation’s books, and that the agreement would be rescinded as soon as

the loan was obtained? If so, state in detail what promises, representations,

and agreements were made to or with Plaintiff in connection with the October

2009 transfer and by whom, and state the consideration paid for Plaintiffs

shares.

E. Request for Admissions

72. Pursuant to Tex. R. Civ. Proc. 198, each Defendant must admit or deny the following:

a. Marichu is a shareholder of Hotel & Building Services, Inc.

b. Plaintiff made a written demand for inspection of the Company’s corporate books

and records.

c. The Company refused to permit Plaintiff’s inspection of the Company’s corporate

books and records.

d. Rafael has used the assets of Hotel & Building Services, Inc. for

personal expenses.

e. Patty has used the assets of Hotel & Building Services, Inc. for

personal expenses.

f. Chris told Marichu that transfer of her shares in the Company

would not be recorded.




28 of 33

g. Chris told Marichu that her shares in the Company would be

transferred back to her once the loan occurred.

h. Patty told Marichu that transfer of her shares in the Company

would not be recorded.

i. Patty told Marichu that her shares in the Company would be

transferred back to her once the loan occurred.

j. Prior to October 26, 2010, the transfer of Marichu shares of

Hotel & Building Services, Inc. was never recorded in the corporate books of

Hotel & Building Services, Inc.

k. The Company owes Marichu $5800 in unpaid wages.

l. Rafael told Plaintiff that the 2007 Saturn belonged to Plaintiff.

m. The Company paid a portion of the money used to purchase the Dunvale property.

XI. Plaintiff’s Notice of Deposition of Chris

To: Mr. Chris A. who may be located at 3100 Richmond Avenue, Suite 204,

Houston, Texas, 77098.

Please take notice that, pursuant to Tex. R. Civ. Proc. 176, 199.2 and 205, Plaintiff will

take the oral deposition of Mr. Chris (“Mr. Said deposition will commence at

10:00 a.m. on April 18, 2011, at the offices of the Fryar Law Firm located at 1001 Texas

Avenue, Suite 1400, Houston, Texas 77002 and will continue from day to day until complete.

All parties are invited to attend the deposition and question the witness as proscribed by the

Texas Rules of Civil Procedure.

The witness is instructed to bring to the following documents to his deposition:

1. The entire file relating to




29 of 33

2. All agreements signed by any of the shareholders of

3. All time entries and invoices covering services provided between

September 1, 2009 and November 30, 2009, and between October 1,

2010 and November 3, 2010.

4. All email, notes of conversations, documents and other written

communications relating to or to Plaintiff from the date of

incorporation through November 3, 2010.

Said deposition will be recorded stenographically and by video. Southwest Reporting will

conduct the stenographic recording.

Plaintiff requests that the court reporter issue and serve on Mr. Chris a subpoena

directing him to appear and give testimony.

Mr. will be served separately with a notice at least 10 days prior to service of the

subpoena. The form of subpoena to be served is attached.




30 of 33

Respectfully Submitted, FRYAR LAW FIRM, P.C.

______________________________ F. Eric Fryar Texas Bar No. 07495770 Email: [email protected] Christina D. Richardson Texas Bar No. 24070495 Email: [email protected] 1001 Texas Ave., Suite 1400 Houston, Texas 77001-3194 Tel. (281) 715-6396 Fax (281) 715-6397 Attorney in charge for Plaintiff, Ms. Marichu

mailto:[email protected]

mailto:[email protected]




31 of 33

THE STATE OF TEXAS

No. _____________

MARICHU P. § IN THE DISTRICT COURT PLAINTIFF, § v. § OF HARRIS COUNTY, TEXAS RAFAEL PATTY MAX

HOTEL & BUILDING SERVICES, INC., FAMILY OF SERVICES, INC., and CONSTRUCTION AND MANAGEMENT SERVICES, L.L.C.,

§ § § § § §

DEFENDANTS. § ________ JUDICIAL DISTRICT

SUBPOENA FOR DEPOSITION

To: Any sheriff or constable of the State of Texas or other person authorized to serve and execute subpoenas as provided in Texas Rule of Civil Procedure 176.5.

You are commanded to summon Mr. Chris located at The Enterprise Bank

Building, 3100 Richmond Ave., Suite 204, Houston, Texas 77098, 713-961-1900, to appear at the Fryar Law Firm, 1001 Texas Ave., Suite 1400, Houston, Harris County, Texas 77002, on April 18, 2011, at 10 a.m.,

Before Southwest Reporting, to attend and give testimony in this case at a deposition on behalf of the plaintiff, and to remain in attendance from day to day until lawfully discharged. The deposition will be videotaped.

The witness is commanded to bring to the following documents to his deposition:

1. The entire file relating to

2. All agreements signed by any of the shareholders of

3. All time entries and invoices covering services provided between

September 1, 2009 and November 30, 2009, and between October 1,

2010 and November 3, 2010.




32 of 33

4. All email, notes of conversations, documents and other written

communications relating to or to Plaintiff from the date of

incorporation through November 3, 2010.

Contempt. Failure by any person without adequate excuse to obey a subpoena served on

that person may be deemed in contempt of the court from which the subpoena is issued or a district court in the county in which the subpoena is served, and may be punished by fine or confinement or both. Tex. R. Civ. Proc. 176.8(a).

DO NOT FAIL to return this writ to _________ District Court with either the attached

officer’s return showing the manner of execution or the witness’s signed memorandum showing that the witness accepted the subpoena.

ISSUED on __________________________________________, 2011.

______________________________

F. Eric Fryar Texas Bar No. 07495770 1001 Texas Ave., Suite 1400 Houston, Texas 77002-3194

This subpoena was issued at the request of Plaintiff, whose attorney of record is Eric

Fryar, Fryar Law Firm, P.C., 1001 Texas Ave., Suite 1400, Houston, Texas 77002, 281-715-6396.




33 of 33

RETURN OF SERVICE OF SUBPOENA

I, _________________________________, delivered a copy of this subpoena to Mr. Chris in person at ______________________________________, in _________________, County, Texas, on _______________, 2011, at _______ o’clock ___m., and tendered to the witness a fee of $_______ in cash.

I, _________________________________, was unable to deliver a copy of this

subpoena to Mr. Chris for the following reasons:_______________________________ _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

By Deputy: ________________________ Sheriff/Constable____________________ Harris County, Texas By: _______________________________ Person authorized by law or written order of Trial court who has no interest in the lawsuit And is at least 18 years old.

ACCEPTANCE OF SERVICE OF SUBPOENA BY WITNESS UNDER TEXAS RULE OF CIVIL PROCEDURE 176

I accept service of this subpoena.

_____________________________________ Witness _____________________________________ Date

FEE FOR SERVICE OF SUBPOENA: $_____________

