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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
ProfHenryHiggins
Considering that only a tiny fraction of the total registered members have ever posted in one of the Holbrook threads, I wonder how they would rationalize that should one of the majority members take offense at such a revelation? Of course, the likelihood of this Sue person managing to figure out who even 10% of the members actually are without hacking is astronomical odds.
And as I've commented in the past, I'm not involved with the Heather vs. Holbrook matter, so if someone drags me into it, I won't be polite.
I think we can safely presume that it is all bluff and bluster, as always seems to be the case with anonymous posters griping about anonymous posters...!
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
ProfHenryHiggins
Considering that only a tiny fraction of the total registered members have ever posted in one of the Holbrook threads, I wonder how they would rationalize that should one of the majority members take offense at such a revelation? Of course, the likelihood of this Sue person managing to figure out who even 10% of the members actually are without hacking is astronomical odds.
And as I've commented in the past, I'm not involved with the Heather vs. Holbrook matter, so if someone drags me into it, I won't be polite.
Come on Prof. Everyone knows you're one of the biggest, baddest vigil antis on this forum. :RpS_lol: :RpS_lol: Uh, hold that thought. I just remembered that you are me and I am you because maniacalmoronbrain said so. Therefore it has to be true.
But wait, they are going to have fun determining just who is who after maniacalmoronbrain outed everyone as being everyone they aren't.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Isn't vigil antis that lost world all the researchers are looking for?
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
Whip
Isn't vigil antis that lost world all the researchers are looking for?
No, that's vigil lantis or was it vigil antlis? No matter, it wasn't vigil antis.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Don Allen Holbrook's fan club has truly gone over the edge yet again:
Quote:
ez123wealth --- 2 hours ago - quote -
hide comments I m happy to say I joined the suit. I received an email about joining a class action suit against Heather and members of her and her husband Paul's website real scam. There was over 100 signatures so far as they build the case. Will look to see and how much money we win and if Hearher and crew go to jail.
The poor brainless idiot thinks a civil suit could result in a prison sentence. I am sure the nice folks in the white suits can adjust those meds. Let's have the names of these 100 Plaintiffs, the case number and court where it is filed.
The creep that wrote this put this link on his page:
Empower Network: Commission Loophole
Google says:
If that is you on the Earthquest thread, Tony, I can assure you that is not a good way to advertise!
Soapboxmom
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
The scammers really need a new schtick.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Should I or shouldn't I? Oh, HELL YES! All members hiding will be exposed. They will be exposed just like you were Doc. Let me save them the trouble, SueHeatherPaulDobrott, it's about time I come out of the closet anyway........:mooning:
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
EagleOne
No, that's vigil lantis or was it vigil antlis? No matter, it wasn't vigil antis.
No, No, No! It's vigil ante like in a poker game, " I see your lookout and ante 1 vigil"...!
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
Soapboxmom
If that is you on the Earthquest thread, Tony, I can assure you that is not a good way to advertise!
Soapboxmom
After looking Tony up for a few minutes, I found myself praying that "Tony Barnes" was an unusually common name in his region, because of all the C-R-A-P that came up.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
Whip
The scammers really need a new schtick.
Anything to help out:
http://i218.photobucket.com/albums/c...ams/schick.jpg
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Have Don and Sue played their super-duper, double-secret trump card, Tony? Will everyone crumble under the immense pressure and fold?......the suspense is killing me
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
New Caney Dino Park Discussion & Rumors
http://www.houstondinopark.com/images/spacer.gif
COMMENTS
Quote:
Comment by: Would laugh if it wasn't so tragic.... on Jul. 27th, 2012 - 6:23am
How long is this guy going to string East Montgomery county around? If he put as much effort into the park as he did with his lawyers we would be enjoying a park right now. Just let it go. Quit getting peoples hopes up. Just go away.....
This is not unique, it seems there are a lot of parks looking for investors that only exist as pictures on the Internet. Just go play Roller Coaster Tycoon....it is a lot cheaper and would get more results. Want to see what real progress looks like? Go to Kemah or Galveston's Pleasure Pier.....
How many tens or hundreds of thousands is Holbrook going to spend chasing folks around in his frivolous lawsuit? Why hasn't he made a herculean effort to help line up funding for Earthquest as his reputation is on the line? He was hired in 2007 just for that purpose. He claims to have 9 or 10 investment groups following him around and yet Earthquest can't even secure the property to build on. Holbrook should have settled with Huber Heights and never started a public fight with numerous newspapers, journalists and taxpayers.
Holbrook either got very poor legal advice or his ego won't allow him to take a sensible course of action. Sue Seeberger has asked for more time to respond to my Motion to Dismiss. I suspect her parents medical problems are the not the only reason she is not prepared to respond. I don't think she will be able to challenge the numerous motions to dismiss which will be flooding in.
Did she really think bringing in a deluge of third-parties was going to help Holbrook with a suit focused on his report turned into the city of Huber Heights, Ohio? Has she discovered her fatal mistake of claiming no other jurisdictions or issues outside of Ohio are mentioned in her Third-party complaint, when in fact she asked for damages for Holbrook's dealings in Pahrump, Nevada?
I can't wait to see the witness list. What member of the IEDC will testify for Holbrook? Will Seeberger withdraw when Holbrook can no longer pay her? Will Holbrook scrounge around for another attorney to replace her as this mess explodes around him?
Soapboxmom
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
This Dont Holdback and Si Sueberger show is getting more preposterous by the minute...!
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
laidback
This Dont Holdback and Si Sueberger show is getting more preposterous by the minute...!
Clearly they think everyone is going to cave and this will never see a court room.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Quote:
Originally Posted by
whip
clearly they think everyone is going to cave and this will never see a court room.
EXACTLY !!!!
The whole point of bullying and terrorism is to instill fear in people of what MIGHT happen.
Despite the very rare stories picked up by the sensationalist media, the law is NOT there to be used as a weapon to stifle free speech, ESPECIALLY since the introduction of anti SLAPP legislation in most jurisdictions.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Didn't that locust, Sir Gas Bag not use HIS parents as a crutch, sometime before feeding on Huber Heights crop of taxdollars?:RpS_rolleyes:
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
http://ecx.images-amazon.com/images/...uL._AA160_.jpg
Paperback: $6.99
The Nine Steps to Satisfaction, Success, Happiness & Wealth: You Should Take Action Today Towards a Better Quality of Life (Volume 1) by Don Allen Holbrook and Sir Don Allen Holbrook KTJ (Jul 13, 2012)
Don Allen Holbrook's book is such a complete joke! He was in chapter 7 bankruptcy in 2007 and wrote off almost 2 million in debt. 1.29 million of that was for his legal adventures alone. He is now floundering in chapter 11 bankruptcy and his "actions are under scrutiny across the nation" as Huber Heights attorneys pointed out.
He has some nerve touting his Knighthood when he is suing everyone on the planet to silence them. He does not support freedom of speech or value the truth. Is his happiness found in being a threatening, litigious goon? What could this joker possibly know about wealth or true success???
Soapboxmom
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
The Nine Steps to Satisfaction, Success, Happiness & Wealth: You Should Take Action Today Towards a Better Quality of Life (Volume 1) by Don Allen Holbrook and SIR Don Allen Holbrook KTJ (Jul 13, 2012)
You have GOT to be joking.
The ultimate in pretentiousness.
A fake bloody knighthood.
Is there no end to this stupidity ???
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Can't wait for the next book, The Nine Steps to Dissatisfaction, Failure, Litigation, and Bancruptcy. I'll gladly pay $6.99 for that one, just to see who gets the blame. A #1 comedy best-seller for sure!
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
http://sphotos-a.xx.fbcdn.net/hphoto...96509244_n.jpg
http://profile.ak.fbcdn.net/hprofile...03083944_q.jpg
Don Allen Holbrook
SubscribeSubscribed · July 30 via My Unplug
What is your facebook profile value...? Find out now at MyUnplug.com - What's your facebook profile value?
LikeUnlike · Share
I guess he has nothing better to do with his time than to fantasize about what his name is worth.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
ELECTRONICALLY FILED
Redacted by Clerk of Court COURT OF COMMON PLEAS
Friday, August 03, 2012 2:55:58 PM
CASE NUMBER: 2012 CV 02947 Docket ID: 17404996
GREGORY A BRUSH
CLERK OF COURTS MONTGOMERY COUNTY OHIO
IN THE COMMON PLEAS COURT OF MONTGOMERY COUNTY, OHIO
GENERAL DIVSION
CITY OF HUBER HEIGHTS, OHIO
Plaintiff,
V.
DON ALLEN HOLBROOK, LLC
Defendant
Third-Party Plaintiff,
V.
HEATHER DOBROTT, et al.
Third-Party Defendants
CASE NO: 2012-CV-02947
JUDGE MICHAEL TUCKER
Third-Party Defendants Cynthia
Calvert's and Hartburg Publications,
LLC's Motion To Dismiss for Lack
of Personal Jurisdiction and Motion to
Quash Service of Process
Third-Party Defendants Cynthia Calvert and Hartburg Publications, LLC d/b/a The
Tribune respectfully request that this Court dismiss Third-Party Plaintiff Don Allen Holbrook,
LLC's claims against them for lack of personal jurisdiction under Ohio Rules of Civil Procedure
12(b)(2).' They also move to quash service of process pursuant to Civ.R. 4.3(A)(9).
Ms. Calvert is a Texas resident and has been sued in her individual capacity and as the
Editor, Publisher, and CEO of "The Triibune." Hartburg Publications, LLC is a Texas limited
liability corporation doing business as The Tribune, a local newspaper covering the northeast
suburbs of Houston, Texas.
IThis Motion is made in response to Defendant's Third-Party Complaint (filed 6.12.12), First
Amended Third-Party Complaint (filed 6.21.12), and Second Amended Third-Party Complaint
(filed 6.22.12), pursuant to Civ.R. 12(A)(2).
<<PAGE-DIVIDER>>
Neither Ms. Calvert nor The Tribune do business in Ohio. None of the allegations
against them anise out of any act or omission that was committed 'in the State of Ohio. Moreover,
even assuming-without conceding-that the allegations against them are true, a reasonable
person could not have expected that Ms. Calvert's or The Tribune's alleged acts or omissions
would cause an injury to a person in Ohio. Under the analysis adopted by the Supreme Court of
Ohio in Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St. 3d 81, 2010-Ohio-2551, 930
N.E.2d 784, neither Ms. Calvert nor The Tribune have purposefully availed themselves of the
benefits and protections of Ohio's law.
Accordingly, and as further discussed in the attached Memorandum, this Court lacks
personal jurisdiction over Ms. Calvert and The Tribune. Nor can they be properly served with
legal process. Therefore, Third-Party Plaintiff Don Allen Holbrook, LLC's claims against them
must be dismissed.
MEMORANDUM 2.
1. STATEMENT OF THE CASE.
This case onigially arose out of a contract dispute between the City of Huber Heights,
Ohio ("the City") and Don Allen Holbrook, LLC ("Holbrook"). In sum, the City claimed that it
hired Holbrook to create an economic development plan, and that Holbrook failed to comply
with the terms of their agreement. See generally PI's Complaint, Apr. 24, 2012. In response,
Holbrook counter-sued the City. See generally Def's Answer & Counterclaim, May 29, 2012.
Holbrook also filed a Third-Party Complaint against numerous individuals, newspapers, and
websites, claiming that they conspired to defame Holbrook, which allegedly caused the City to
breach the contract at issue. See generally Def s 2d Am. Third-Party Complaint, June 22, 2012.
2This Memorandum closely parallels the content of Third-Party Defendant Heather Dobrott's Motion to Dismiss.
The facts arc very similar, and the legal arguments arc functionally identical.
2
<<PAGE-DIVIDER>>
Cynthia Calvert is one of the individuals whom Holbrook has named as a third-party defendant.
Def's 2d Am. Third-Party Complaint, ~2. According to Holbrook, Calvert is the publisher of a
community newspaper that "published articles and blogs including defamatory, derogatory, and
false statements" about Holbrook. Def s 2d Am. Third-Party Complaint, T7. Holbrook further
alleges that The Tribune permitted "unknown persons" to "post and re-post comments" on its
website that "included defamatory, derogatory, and false statements." Def s 2d Am. Third-Party
Complaint, T8. Holbrook claims that the statements and publications that caused his contract
with Huber Heights to fall through were made on or before February 29, 2012. Def s 2d Am.
Third-Party Complaint, T12.
In this motion, Calvert and The Tribune contend that Holbrook's claims must be
dismissed for lack of personal jurisdiction.
11. STATEMENT OF FACTS.
Cynthia Calvert resides in Kingwood, Texas, and she is the CEO of Hartburg
Publications, LLC d/b/a The Tribune. Calvert Aff., TTI-2.
2. Calvert has never been to, does not own property in, and does not maintain bank
accounts in Ohio. Calvert Aff., TT3-5.
3. The Tribune is a small community newspaper (circulation approx. 50,000)
covering the northeast suburbs of Houston, Texas. It does not maintain a place of
business in Ohio. It does not circulate outside of Texas. It does not solicit for
advertisers or readership in Ohio. It does not regularly report on events or
persons in Ohio unless those events or persons are of national concern or of a
special concern to our Texas readers. Calvert Aff., T7.
4. The Tribune does maintain a website, Ourtribune.com. The website is
maintained and operated from The Tribune's offices in Humble, Texas. Like the
print edition, the website is directed at a readership in Texas. Calvert Aff., TT7,
10.
5. Don Allen Holbrook, LLC states that it is a limited-liability company registered 'in
Arizona that "conducts business around the United States of America and
elsewhere." Def s 2d Am. Third-Party Complaint, June 22, 2012, T 1.
3
<<PAGE-DIVIDER>>
Holbrook avers that the City breached its contract with him on February 29, 2012.
He alleges that the City breached its contract because of Calvert's and The
Tribune's actions and inactions prior to Februafy 29, 2012. Def's 2d Am. Third-
Party Complaint, June 22, 2012, ~12.
All of the statements that Calvert or The Tribune published in its print edition
regarding Don Allen Holbrook, LLC prior to February 29, 2012 are attached to
this Brief as Exhibit A. Calvert Aff., ~8.
Although Holbrook avers that The Tribune permitted "unknown persons" to "post
and re-post comments" on its website that "included defamatory, derogatory, and
false statements," The Tribune does not permit readers or any member of the
public to post comments on its website, Ourtribune.com. Calvert Aff., T12.
All of the publications on the attached Exhibit A concern Holbrook's involvement
with the East Montgomery County Improvement District, EarthQuest, and a
project in Pahrump, Nevada. Calvert Aff., TI 1.
10. None of the publications on the attached Exhibit A reference Holbrook's activities
in Ohio, the names of any residents of Ohio, or even the state of Ohio. See
Exhibit A.
11. Calvert did not receive information regarding Holbrook's relationship with the
City of Huber Heights until after February 29, 2012, and she did not know, and
had no reason to suspect, that Holbrook was engaged in any business in the State
of Ohio. Calvert Aff.,TT13-14.
12. None of the Calvert's publications about Holbrook prior to February 29, 2012
were made with the purpose of inflicting an injury in Ohio, nor did she imagine
that anyone would ever allege that these publications would have ramifications in
Ohio. Calvert Aff., T 15.
111. ARGUMENT AND AUTHORITIES
The determination of whether an Ohio court has personal jurisdiction over a nonresident
is a two-step process. Fallang v. Hickey, 40 Ohio St.3d 106, 107, 532 N.E.2d 117 (1988). First,
the court must look to the words of the state's "long-arm statute" or applicable civil rule to
detertnine whether there is jurisdiction under the facts of the particular case. Id. If it does, the
court must decide whether the assertion of jurisdiction deprives the nonresident defendant of due
<<PAGE-DIVIDER>>
process of law. Id. (citing International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154
(1945)).
A. Holbrook cannot establish personal jurisdiction over Calvert or The Tribune
under the plain language of Ohio's Long Arm Statute and Rules for Service of
Process.
Ohio's long-arm statute, R.C. 2307.382, enumerates specific acts that give rise to personal
jurisdiction. The statute provides in pertinent part:
(A) A court may exercise personal jurisdiction over a person who acts directly or
by an agent, as to a cause of action arising from the person's:
(6) Causig tortious injury in this state to any person by an act outside this state
committed with the purpose of injuring persons, when he might reasonably have
expected that some person would be injured thereby in this state.
R.C. 2307.382(A)(6).
Similarly, Civ.R. 4.3 allows service of process on nonresidents in certain circumstances
mirroring the long-arm statute:
(A) Service of process may be made outside of this state, as provided in this rule,
in any action in this state, upon a person who, at the time of service of process, is
a nonresident of this state or is a resident of this state who is absent from this
state. 'Person' includes an individual * * * who, acting directly or by an agent,
has caused an event to occur out of which the claim that is the subject of the
complaint arose, from the person's:
(9) Causing tortious injury in this state to any person by an act outside this state
committed with the purpose of injuring persons, when the person to be served
might reasonably have expected that some person would be injured by the act in
this state.
Thus, reading these provisions together, Holbrook cannot satisfy the requirements of R.C.
2307.382(A)(6) or Civ.R. 4.3(A)(9) unless he can demonstrate that: (1) Calvert or The Tribune
published defamatory statements outside of Ohio; (2) with the purpose of causing injury to an
Ohio resident; and (3) Calvert or The Tribune had a reasonable expectation that they Miflicted an
5
<<PAGE-DIVIDER>>
injury that would occur in Ohio. See Kauffman Racing Equip., L.L. C. v. Roberts, 126 Ohio St. 3d
81, 87, 930N.E.2d 784,792, 2010-Ohio-2551; Clark v. Connor (1998),82 Ohio St.3d 309,313,
695 N.E.2d 75 1. Holbrook cannot prove the latter two elements.
All of the alleged pre-February 29, 2012 defamatory statements3 were published from
Calvert's and The Tribune's place of business in Humble, Texas. Def's 2d Am. Third-Party
Complaint, p. 2-3 ~ 1; Calvert Aff., TIO. All these alleged defamatory statements involved
Holbrook's activities in Nevada and Texas. Calvert Aff., Tll, Exhibit A. None of these
statements make any reference to any Ohio resident, project, contract, or other business
arrangement. See Exhibit A. Neither Calvert nor The Tribune is a resident of Ohio or maintains
a presence Ohio. Calvert Aff., TTI-7. Neither Calvert's nor The Tribune's statements were made
with the purpose of inflicting an injury in Ohio, nor could she have "reasonably suspected" that
her statements would have an allegedly tortious impact in Ohio. Calvert Aff., TT 14-15.
Accordingly, Holbrook cannot meet the requirements of the Ohio long-arrn statute to
establish personal jurisdiction over Calvert or The Tribune. Nor can service of process be legally
made on Ms. Calvert under Civ.R. 4.3.
B. Holbrook cannot establish personal jurisdiction over Calvert under the due
process standards mandated by the United States Constitution.
"Ohio's long-arm statute is not coterminous with due process." Kauffman Racing Equip.,
L.L.C. v. Roberts, 126 Ohio St. 3d 81, 2010-Ohio-2551, 930 N.E.2d 784, T45 (citing Goldstein v.
Christiansen, 70 Ohio St.3d 232, 237, 638 N.E.2d 541 (1994)). Therefore, even if Ohio's long-
arm statute confers personal jurisdiction over Calvert or The Tribune (which it does not), an
3 Holbrook avers that it was solely Calvert's pre-February 29, 2012 statements that caused the City to breach its
contract with him. Any alleged statements after that date cannot be considered for jurisdictional purposes. See 16
JAMES WILLIAM MOORE, MOORE'S FEDERAL PRACTICE 108.42[2][a], at 108-55 tolO8-56 (3d ed. 2010)
("The proper focus in the specific jurisdiction analysis is on those contacts leading up to and surrounding the accrual
of the cause of action. Later events arc not considered.").
6
<<PAGE-DIVIDER>>
Ohio court cannot exercise personal jurisdiction over either if doing so would violate their
constitutional night to due process. Due process is only satisfied if Calvert or The Tribune has
11 minimum contacts" with Ohio such that the maintenance of the suit does not offend "traditional
notions of fair play and substantial justice." Kauffman, at ~45 (citing International Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S.Ct. 154 (1945)). To establish such minimum contacts, a
Holbrook must show that Calvert or The Tribune, two nonresident third-party defendants,
11 purposefully [availed themselves] of the privilege of conducting activities within [Ohio]." Id.
(citing Hanson, 357 U.S. 235, 253, 78 S.Ct. 1228). The undisputed evidence plainly reflects that
Holbrook cannot meet this standard.
When considering a jurisdictional challenge, this Court must first determine whether
Holbrook is attempting to exercise "general" or "specific" Jurisdiction over Ms. Calvert or The
Tribune. Id. at ~46 (citing Conti v. Pneumatic Prods. Corp., 977 F.2d 978, 981 (6th Cir. 1992)).
"General jurisdiction is proper only where a defendant's contacts with the forum state are of such
a continuous and systematic nature that the state may exercise personal jurisdiction over the
defendant even if the action is unrelated to the defendant's contacts with the state." Id. (quoting
Bird v. Parsons, 289 F.3d 865, 873 (6th Cir. 2002)). Alternatively, specific jurisdiction applies
when the suit arises out of or related to a defendant's contacts with the forum state. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868 (1984). At the outset,
it is important to note that Holbrook's third-party complaint does not contami any allegations to
suggest that Calvert or The Tribune have "continuous and systematic contacts" with Ohio.
Moreover, the undisputed facts recited above plainly establish that Calvert is a Texas resident
with no connections to the State of Ohio and that The Tribune is a Texas limited liability
company that conducts no business 'in Ohio. Calvert Aff. ~Tl-7. Accordingly, 'in order to
7
<<PAGE-DIVIDER>>
exercise jurisdiction over Calvert or The Tribune, Holbrook's allegations must satisfy the
requirements for specific Jurisdiction.
In Kauffman Racing Equip., L.L.C. v. Roberts, the Ohio Supreme Court adopted a three-
part test to determine if exercise of specific jurisdiction is appropriate in a given case. Kauffman,
126 Ohio St. 3d 81, 2010-Ohio-2551, 930 N.E.2d 784, ~48 (adopting the Sixth Circuit's analysis
in Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374 (6th Cir. 1968) and Bird v.
Parsons, 289 F.3d 865 (6th Cir. 2002)). Specifically, 'in order to find jurisdiction that comports
with due process this Court must determine if-
I . Calvert or The Tribune purposefully availed themselves of the privilege of acting
in Ohio or causing a consequence in Ohio;
2. The cause of action arose from Calvert's or The Tribune's activities in Ohio; and
3. The acts of Calvert or The Tribune or consequences caused by them had a
substantial connection Ohio to make the exercise of jurisdiction over them
reasonable.
Kaufffinan, at ~49.
1 . Neither Calvert nor The Tribune "pMosefully availed" themself of the
benefits and protections of Ohio law.
Regarding the first factor, "purposeful availment" is present when the defendant's
contacts with the forum state "proximately result from actions by the defendant [herself] that
create a 'substantial connection' with the forum State." Kauffman, at T49-51. The defendant's
conduct and connection with the forum must be such that she "should reasonably anticipate
being hated into court there." Id. (internal citations omitted). This requirement ensures that a
defendant will not be haled into a jurisdiction solely as a result of "random," "fortuitous," or
"attenuated contacts," or of the "unilateral activity of another party or third person." Id. (citing
Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774, 104 S.Ct. 1473(1983) and Helicopteros, 466
U.S. at 417).
8
<<PAGE-DIVIDER>>
This is a defamation case, and Ohio courts have been especially reluctant to find personal
jurisdiction in cases involving statements made by non-Ohio residents about subjects and matters
that they could not reasonably expect to have an effect in Ohio.
In Reynolds v. Internad. Amateur Ath. Fedn., 23 F.3d 1110 (6th Cir. 1994), the Sixth
Circuit considered the case of an Ohio athlete, who brought a defamation claim against non-Ohio
residents who reported that that he tested positive for banned substances following an
international competition in Monaco. The Sixth Circuit held that Ohio courts could not exercise
personal jurisdiction on the grounds that: (1) the statements concerned activities in Monaco, not
Ohio; (2) the athlete was an international competitor whose professional reputation is not
centered in Ohio; (3) the statement was not published or circulated specifically for consumption
in Ohio; (4) Ohio was not the 'focal point' of the press release, and the fact that it might have
been foreseen that the report would be circulated and have an effect in Ohio was not, in itself,
enough to create personal jurisdiction; (5) although the athlete lost Ohio corporate-endorsement
contracts and appearance fees in Ohio, there was no evidence that the defendant knew of the
contracts or of their Ohio origin. Reynolds v. Internatt. Amateur Ath. Fedn., 23 F.3d 1110, 1116-
20 (6th Cir. 1994).
All of the above factors that the Sixth Circuit noted to find against jurisdiction are present
in this case: (1) Calvert's and The Tribune's statements concerned Holbrook's activities in
Nevada and Texas; (2) Holbrook states it "conducts business around the United States of
America and elsewhere"; (3) nether Calvert nor The Tribune made statements specifically for
consumption in Ohio; (4) Ohio was not the 'focal point' of the statements and had neither
Calvert nor The Tribune had reason to think that it would be circulated or have an effect in Ohio;
9
<<PAGE-DIVIDER>>
(5) although Holbrook allegedly lost a contract in Ohio, neither Calvert nor The Tribune
published anything about said contract until after it was allegedly breached.
The Sixth Circuit has also extended Reynolds to internet communications. In Cadle Co.
v. Schlichtmann, a Massachusetts resident created a website to expose what he believed to be the
unlawful activities of an Ohio based-debt collector who was operating in Massachusetts. Cadle
Co. v. Schlichtmann, 6th Cir. No. 04-3145, 123 Fed. Appx. 675 (Feb. 8, 2005). The Sixth Circuit
held that Ohio courts had no Jurisdiction over the Massachusetts defendant. Id. As in Reynolds,
no personal jurisdiction existed because the alleged defamatory statements were not topical to
any activities in Ohio. Id. at 680. Importantly, the Sixth Circuit held that the fact that the
statements were published on the intemet-which is obviously accessible in Ohio-did not mean
that jurisdiction was automatically appropriate. Id. at 679 ("The law does not require that people
avoid using the internet altogether in order to avoid availing themselves of the laws of every
state. ")(citing Revell v. Lidov, 317 F.3d 467, 473 (5th Cir. 2002)).
Similarly, in Oasis Corp. v. Judd, Oklahoma residents made a website to complain about
the products of an Ohio corporation. Oasis Corp. v. Judd, 132 F.Supp.2d 612, 614 (S.D. Ohio
2001). The Oklahoma residents had not purchased any items from the Ohio corporation, but
were upset that a product made by the company had caused a fire in a building the defendants
were renting. Id. The Oasis court held that personal jurisdiction was inappropriate because: (1)
the subject of the defamatory statement was topical to Oklahoma, not Ohio; (2) the plaintiff was
an international company whose reputation is not centered in Ohio; (3) the website did not
specifically target an Ohio audience; and (4) there was no evidence to suggest that the website
was viewed by anyone in Ohio other than the plaintiff. Id. at 621. Importantly, the court
concluded, "[flhe fact that [Defendants] could foresee that [their proclamations would be
10
<<PAGE-DIVIDER>>
viewed] and have an effect in Ohio is not, in itself, enough to create personal jurisdiction." Id. at
624 (quoting Reynolds, at 1120).
The same result should follow here. All of Calvert's and The Tribune's statements
regarding Holbrook concerned its activities in Nevada and Texas, not in Ohio. The statements
were published from an office in Texas to a website that is based in Texas. Neither the State of
Ohio, nor its residents, nor any transactions that took place in Ohio were even mentioned prior to
February 29, 2012. Finally, Holbrook cannot offer any evidence to suggest that Calvert or any
other agent of The Tribune knew of Holbrook's contracts with the City of Huber Heights at the
time the alleged injuries occurred. Therefore, neither Calvert nor The Tribune could have
reasonably anticipated that they would be haled into court in Ohio.
2. Holbrook's claims do not arise from Calvert's or The Tribune's contacts
with Ohio.
The second prong of the Supreme Court's test involves an analysis of whether the
plaintiff's claims arise from those contacts. "If a defendant's contacts with the forum state are
related to the operative facts of the controversy, then an action will be deemed to have arisen
from those contacts." CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267 (6th Cir. 1996). This
"does not require that the cause of action formally 'arise from' defendant's contacts with the
forum; rather, this criterion requires only 'that the cause of action, of whatever type, have a
substantial connection with the defendant's in-state activities."' Third Nat'l Bank v. Wedge
Group, 882 F.2d 1087, 1091 (6th Cir. 1989)(quoting S. Machine Co., 401 F.2d at 384). As
discussed above, Calvert's and The Tribune's publications have no relationship to the operative
facts of the contract dispute between Holbrook and the City.
I I
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
3. Ohio has no interest in the dispute between Holbrook and Calvert and The
Tribune.
Under the third and final prong, the acts of the nonresident defendant or consequences
caused by the defendant must have a substantial connection with the forum state to make
exercise of jurisdiction over the defendant reasonable. Kauffinan, 2010-Ohio-2551 at ~71-72. To
make such a determination, a court first must consider Ohio's interest in the controversy and the
reasonableness of resolving the matter in Ohio. In-Flight Devices Corp. v. Van Dusen Air, Inc.,
466 F.2d 220, 232 (6th Cir. 1972).
As discussed above, Calvert's and The Tribune's allegedly tortious acts or omissions
have no connection to Ohio; they are solely related to Holbrook's activities in Texas and Nevada.
Accordingly, even assuming-without conceding-that Calvert's publications about Holbrook's
activities in Texas and Nevada were defamatory (which they plaffily are not), such matters would
be properly litigated in Texas or Nevada-not Ohio, which has no interest in such a controversy.
Moreover, given that neither Calvert nor The Tribune have any connection-physical, personal,
financial, or otherwise-to the State of Ohio, it would be entirely unreasonable and offensive to
notions of fair play and justice to subject her to the jurisdiction of Ohio's courts.
IV. CONCLUSION.
This Court should dismiss Holbrook's claims against Calvert and The Tribune for lack of
personal jurisdiction. Ohio's Long Arm Statute and Civil Rules do not allow for jurisdiction
over Ms. Calvert or The Tribune or for legal service of process upon them. Moreover,
Holbrook's attempt to assert jurisdiction over Ms. Calvert and The Tribune offends the Due
Process Clause of the United States Constitution. Third-Party Defendants Cynthia Calvert and
Hartburg Publications, LLC d/b/a The Tribune respectfully request that all claims against them
be dismissed pursuant to Civ.R. 12(b)(2).
12
<<PAGE-DIVIDER>>
Respectfully Submitted,
/s/ Adam R. Webber
ADAM R. WEBBER, Esq.
Bar No. 0080900
FALKE & DUNPHY, LLC
30 Wyoming Street
Dayton, Ohio 45409
Phone: 937.222.3000
Fax: 937.222.1414
Email: webbergohiolawyers.ce
KEVIN W. KITA, Esq.
Bar No. 0088029
SUTTER O'CONNELL
3600 Erieview Tower
1301 East Ninth Street
Cleveland, Ohio 44114
Phone: (216) 928-2200
Fax: (216) 928-4400
Email: kkitagsutter-law.com
MATTHEW J. KITA, Esq.
Admitted Pro Hac Vice
Ohio Bar No. PHV - 2978-2012
Texas Bar No. 2405o883
P.O. Box 5119
Dallas, Texas 75208
Phone: (214) 699-1863
Fax: (214) 347-7221
Email: mattgmattkita.com
Attorneysjor Third-Party Defendants
HeatherDobrott, Cynthia Calvert, and
Hartburg Publications, LLC
13
<<PAGE-DIVIDER>>
CERTIFICATE OF SERVICE
A copy of the forgoing was served upon the following via this Court's electronic filing
system.
L. Michael Bly
Joshua M. Kin
Pickrel Schaeffer & Ebeling Co.
2700 Kettering Tower
Dayton, Ohio 45423
937-223-1130
Fax: 937-223-0339
mblygpselaw.c
jkingpselaw.com
Attorney for City of Huber Heights Ohio
Andrew J. Reitz
Robert P. Bartlett, Jr.
Faruki Ireland & Cox P.L.L.
500 Courthouse Plaza, S.W.
10 North Ludlow Street
Dayton, Ohio 45402
937-227-3707
Fax: 937-227-3717
rbartlettgficlaw.com
Attorneys for Craig Maliso
Houston Press
Sue Seeberger
5975 Kentshire Drive, Suite D
Dayton, Ohio 45440
937-291-8646
Fax: 937-291-8650
sueseebergergbiegeltye.com
Attorney for Don Allen Holbrook, LLC
Dba Houston Press, LP
Dba Village Voice Media Holdings, LLC
Dba Backpage.com, LLC
Pahrump Valley Times
Dba Stephens Media Group
Dba Stephens Media, LLC
A copy of the foregoing has been sent by regular U.S. mail on this 3rd day of August,
2012, to the following:
Frank Maurizio
581 China Street
Pahrump, Nevada 89048
/s/ Adam R. Webber
Adam R. Webber (0080900)
14
<<PAGE-DIVIDER>>
IN THE MONTGOMERY COUNTY COURT OF COMM6N PLEAS
GENERAL DIVISION
CITY OF HUBER HEIGHTS
Plaintiff,
V.
DON ALLEN HOLBROOK, LLC
CASE NO. 2012 CV 02947
JUDGE MICHAE L TUCKER
Defendant/Third Party Plaintiff,
V. AFFIDAVIT OF CYNTHIA
CALVERT
HEATHER DOBROTT, et al.
Third Party Defendants.
<<PAGE-DIVIDER>>
STATE OF TEXAS
SS-
COUNTY OF HARRIS
Now comes Cynthia Calvert, and being first duly cautioned and sworn deposes and says
that: I
1. 1 am an adult, competent individual, and I reside, in Kingwood, Texas,
2. 1 am a member of Hartburg Publications, LLC, a Texas limited liability corporation
"/a:'The Tribune. At all times relevant, I served as its Chief Executive Officer.
3. 1 have never been to Ohio, The Tribune does not operate in, circulate in, or market to
Ohio readers.
4. 1 do not own property in Ohio. The Tribune does not own property in Ohio.
5. 1 do not maintain bank accounts in Ohio. The Tribune does not maintain bank
accounts in Ohio.
6. 1 do not maintain a place of business in Ohio.
7. The Tribune is a small community newspaper (circulation approx. 50,000) covering
the northeast suburbs of Houston, Texas. It does not circulate outside of Texas. The
Tribune maintains no physical place of business in Ohio. It does not solicit for
advertisers or readership in Ohio, It does not regularly report on events or persons in
Ohio unless those events or persons are of national concern or of a special concern to
our Texas readers.
2
<<PAGE-DIVIDER>>
8. All of the articles that The Tribune published on the internet regarding Don Allen
Holbrook, LLC prior to February 29, 2012 are attached hereto as Exhibit A.
9. The statements on the attached Exhibit A were published in print for circulation in the
Northeast suburbs of Houston, Texas on our newspaper's website,
wwwourtribune.com.
10, The published statements on the attached Exhibit A were published from the
Tribune's office in Humble, Texas, and the website is maintained in Humble, Texas.
11. All of the publications on the attached Exhibit A concern Holbrook's involvement
with a project in a small municipality in Texas and a similar project in Pahrump,
Nevada.
12, Although Holbrook avers that The Tribune permitted "unknown persons" to "post and
re-post comments" on its website that "included defamatory, derogatory, and false
statements," The Tribune does not permit readers or any member of the public to post
comments on its website, wwwourtrib-one.com.
13. 1 did not receive information regarding Holbrook's relationship with the City of
Huber Heights until after February 29, 2012.
14. 1 did not know, and had no reason to suspect, that Holbrook was engaged in any
business in the State of Ohio.
is, None of the publications about Holbrook prior to February 29, 2012 were made with
the purpose of inflicting an injury in Ohio, nor did I ever imagine t1lat anyone would
ever allege that these publications would have ramifications in Ohio.
FURTHER AFFIANT SAYETH NAUGHT.
Cynthia Calvert, Affiant
<<PAGE-DIVIDER>>
Swom to before me and subscribed in my presence by the said Cynthia Calvert this
day of August, 2012.
STEPHANIE TODD
Notary Niblic, State of Texas
my commisoon Expites
March 14, 2016
Notary Public
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
EarthQuest land in bankruptcy
Tuesday, January 10, 2012
Cynthia Calvert
Whitestone Houston Land Ltd. ("Whitestone"), an entity that owns approximately 1,564 acres
near New Caney, a portion of which includes the planned EarthQuest theme park and museum,
has filed for bankruptcy.
The EarthQuest theme park and museum has been promoted for years as a soon-to-come
entertainment center with retail shopping, a water park, hotels, an eco-tourism area, and a
residential development, along with a dinosaur area. The project grew from $50 to $500 million+
with numerous delays in breaking ground. To date, no construction has occurred.
According to trollerbk.com, Whitestone filed a Chapter 11 petition (re- organization) for
bankruptcy protection more than five months ago on August 1, 2011. The filing was made at the
United States Bankruptcy Court, Eastern District of Texas (Sherman). The bankruptcy petition
number is 11 - 42400.
According to Schedule B of the petition, Whitestone has $0.00 in its business checking account.
Schedule D shows a total indebtedness to secured creditors of $20,167,465.94.
Schedule F of the petition indicates that Whitestone owes another $808,179.28 to various
unsecured creditors. Notably, those unpaid amounts include $123,845.13 to local taxing agencies
for unpaid property taxes for the 2008 to 2010 tax years. The status of payment for the property
taxes due January 31, 2012, for the 2011 tax year is unknown.
Also included in Schedule F is an unsecured $225,000 note payable to the East Montgomery
County Improvement District ("EMCID"). However, more significant amounts have been funded
by EMCID to Whitestone in the form of expense reimbursements.
Whitestone is a limited partnership whose general partner is Whitestone Houston Holdings LLC.
The manager of the general partner is John D. Marlin. Marlin is also manager of EQ Ventures
GP LLC, the general partner of Global Earthquest Ventures LP ("Global"). Global is one of the
parties to the contracts executed with EMCID.
According to EarthQuest Institute, Marlin is also a director of the EarthQuest Institute
("Institute"), a nonprofit organization established to apparently manage the EarthQuest Museum
and Institute. Marlin is shown on their website as a director of the Institute. The Institute is
another of the parties to the contracts executed with EMCID.
According to Eco-Resort, Hotel, Conference Center and Theme Park | Earth Quest Resort, Marlin's real estate and development company,
Marlin-Atlantis, of which he is the chief executive officer, is the general partner and developer of
the planned project through an entity called EarthQuest Resort. This company does not appear to
be a party to the contracts executed with EMCID. Marlin-Atlantis is based in Dallas.
<<PAGE-DIVIDER>>
Marlin did not respond to a request for comment.
Frank McCrady, President and CEO of EMCID, stands behind the development. "We have a
new developer who is working with the bank to take over the property and the project.
"It is not a matter of if, but when [it will be built]," he said.
According to a w6site at www.landadvisors.com/whitcstone, Wbitestonc originally acquired the
New Caney land for a residential development to be called Whitestone. As described in a special
warranty deed dated June 14, 2004, the same being recorded in the public records of
Montgomery County under Clerk's File Number 2004-06651 and film code number
~, the property was purchased from HS Tej as Ltd. The purchase price of the land, as stated in
the first paragraph of the deed, was in the amount of $4,150,000 plus "$ 10 and other good and
valuable consideration."
Over time, the idea of a dinosaur-themcd park and resort was developed through the principals
and affiliates of Whitestone. This new concept was then planned on about 500 acres of the land
that was originally intended for residential development. Due to the projected economic impact
on the surrounding region, discussions were initiated with EMCID.
Those discussions ultimately resulted in a series of complex agreements between Global,
EMCID and the Earthquest Institute. Briefly stated, for the perceived future benefits of having a
major theme park and other related developments, EMCID agreed to sell millions of dollars in
bonds in order to provide funds to Whitestone for "pre-development" and "pre- construction"
expenses.
Pursuant to a Houston Chronicle-This Week article dated August 26, 2009, the aggregate funds
[then] paid by EMCID to Whitestone for the foregoing expenses totaled $7,800,000. The same
article referenced a second request by Marlin for EMCID to provide another $2,800,000 to
Global to pay for a "site locater fee," the recipient of which was unnamed in the article.
McCrady said that EMCID subsequently did not advance the additional funds to pay the site
locater fee.
"We do not want people alarmed and think that the project will not be built. We have Contour
Entertainment from Los Angeles. They are going to take over," he said.
McCrady said he was aware Whitestone had filed for bankruptcy some months ago.
"They have a restructuring plan - a hearing on this will be held Jan. 23 in Dallas," he said.
The property is currently in bankruptcy but McCrady says Contour is currently working with the
bank and hopes to purchase the property eventually.
"Contour is an entertainment company with experience developing theme parks all over the
world. Our board thinks that is very good," McCrady said. Contour, McCrady said, was a
<<PAGE-DIVIDER>>
subcontractor of Whitestone's and performed all the design work on the EarthQuest project, he
said. "Chris Brown, CEO of Contour, has been prepared to step in from the inception," McCrady
said. Owning the site would be a first for the Los Angeles-based design firm.
According to Contour Entertainment's website, Contour Entertainment,
the company performs many functions related to theme park management but they do not own
theme parks. Contour's website states that they perforrn concept development and show design,
project management, operational planning, market research and architectural design. EarthQuest
is already listed as one of the six projects Contour is working on.
The site states that, "Contour Entertainment is the Resort Masterplanner and lead designer for all
aspects of this $530 million, 500-acre (Phase 1) entertainment resort as well as providing the
initial design for the conceptual direction and facility design for the $20 million, 40,000-sqare
foot, not-for-profit EarthQuest Institute."
It appears that the general plan of repayment to EMCID was to receive about one-half of the
proceeds at the beginning of construction of the theme park, with the second half being repaid
after construction of the park was completed. However, there have been numerous changes and
amendments to the original contracts and the current status of the repayment terms is uncertain.
The filing of the bankruptcy petition has created concerns about any projected construction date
and whether or not the bankruptcy filing has jeopardized the repayment of the monies funded by
EMCID to Global.
"Whitestone was just a landholding company," McCrady said. "The bond paid for
predevelopment expenses, engineers, drainage, things like that all related to EarthQuest."
McCrady said that repayments are certain, based on future sales tax recapture as well as future
taxes attached to the development zone and future hotel taxes.
"We would not have issued bonds if there was any chance of the funds not being recovered," he
said.
The contracts further provide that, should the project not be constructed, then EMCID would
have the right to purchase certain properties owned by the Institute. That purchase option is for
the 50 acres upon which the Dino Institute and Museum would be built. The option price for that
tract is $1,250,000. This amount would be in addition to the original $7,800,000 already known
to be approved by the bond to Global.
McCrady said that EMCID and the bond has put up about $9 million. He said "you can add
another million to the bond money" for expenses to date.
Marlin Atlantis also received approval from taxing authorities for property tax abatements to
enhance the profitability of the project via Montgomery County Commissioners Court and from
the passage of House Bill 4015. At the same time, the contracts between Global and EMCID
would have set in motion a set of new taxes and user fees in connection with the development
<<PAGE-DIVIDER>>
and operation of the theme park and museum, including Improvement Zone sales taxes and hotel
occupancy taxes, along with event admission taxes and parking fees and taxes.
In fact, McCrady said,"Without a doubt, this will happen. If Contour fails, others are willing to
step up. We are not putting all our faith in one developer. That is not the way we do business.
We have backup plans A, B, C and D."
"From our perspective, the board thinks the future sales tax will pay back the money. The
property is well suited to retail development.
"Contour is hoping to pick up the project after the bankruptcy is complete," McCrady said.
"Houston is poised for theme park projects. We have three different economic reports that say
that. I I
List of creditors and amounts owed listed in the bankruptcy filing:
Creditors holding secured claims, according to Schedule D:
J.R. Moore, Jr. Tax Assessor, $15,970.81; County of Montgomery Tax Office, $61,943.94;
Hillcrest Bank, $20,043,611.21; J. R. Moore, Jr. Tax Assessor, $45,939.98.
Creditors Holding Unsecured Claims, according to Schedule F:
Anco-McDonald Waterworks, $5,385; Bracewell & Guiliani LLP, $952.50; Cindy A Schmidt,
$2,521.57; Coasts, Rose, Yale Ryman & Lee, $3858.83; East Montgomery County Improvement
District, $225,000; Hayne and Associates PC, $155; Hesse & Hesse LLP, $225; Ryan &
Company PC, $1025; Sammons Realty Corp., $275,683.88; Texas Commission-Environmental
Quality, $2,565.38; Thompson & Knight LLP, $11,978.74, and WMA Whitestone Land LP,
$278,828.38.
EMCID may lose millions unless dino-project built.
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re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Tuesday, January 24, 2012
Cynthia Calvert
Marlin-Atlantis ousted as developer of EarthQuest
Marlin-Atlantis, the Dallas-based real estate developer of Whitestone and the related EarthQuest
theme park, is no longer associated with the project.
Frank McCrady, president and CEO of the East Montgomery County Improvement District,
("EMCID"), said Marlin-Atlantis is not associated with the dinosaur theme park any longer and,
<<PAGE-DIVIDER>>
in fact, said that Marlin-Atlantis has no legal liability to repay the millions of dollars EMCID has
given them until and unless the park project is opened.
The Marlin-Atlantis company which purchased the land several years ago, Whitestone Houston
Land Ltd., filed for bankruptcy last summer.
McCrady said that a new developer, Contour Entertainment of Los Angeles, has assumed the
financial responsibilities for the bankrupt project.
"Marlin-Atlantis is no longer capable of delivering the theme park project. They have an
obligation for repayment once the project occurs. That obligation has been assumed by our
existing developer, Contour Entertainment. Our approach has been for the bond repayment to be
project specific and not developer specific. Developers come and go, however the project
remains viable and is moving forward as we speak."
Chris Brown, president of Contour Entertainment offered a somewhat different answer as to his
firm's involvement.
"That is not how I would characterize it," Brown said. "Actually, we have an agreement in place
with an option on the intellectual property licensing agreements with EMCID. We are working to
raise the money, $500 million. That is a lot of money. However, we have not raised it yet. That is
something we are working on."
Brown said Contour was not looking to EMCID for money. "We have not received any funds
from EMCID. They have already written a lot of checks [to the previous developers]." Brown
said Contour expected to get financial assistance from EMCID once the park is built.
"EMCID has a partnership role with us and through their backing and support, we have achieved
legislative changes that will support the project once it is built, once it is operating. But not in the
current development phase. Raising this kind of money in this economy is entirely different for
us and a big challenge."
Brown said the impending bankruptcy and possible foreclosure on the original property was not
a concern to Contour as they had built land costs into their business plan. If the original site
becomes unavailable, Contour has chosen several other nearby alternative sites.
"We are interested in that property, but we have also looked at other sites. Our preference is that
particular piece of land but it doesn't have to be. The project is not dependent exclusively on
that," Brown said.
McCrady remains emphatic that the project will be built and that EMCID will recoup the $9-$13
million already invested with the previous developer. The project must be built for EMCID to
recapture the money, unless another form of retail development occurs.
"Our incentives are what makes the project viable. Any developer wanting access to these
incentives would have to come to EMCID and negotiate to receive these and in that negotiation,
<<PAGE-DIVIDER>>
we would require them to repay the outstanding bonds in order to receive our incentives,"
McCrady said.
Notwithstanding McCrady's confidence, the threat of the park not getting built was voiced
almost two-and-one-half years ago by John Howell, bond counsel to EMCID. In a board meeting
on August 24, 2009, Howell expressed his concern to the EMCID board about the possibility of
the theme park not being constructed. Howell advised the board that they should make efforts "to
protect the [Improvement] District in the event no park is developed."
He advised the EMCID board that the [Improvement] District "should request an interest in the
land with a preferred return on land sales." McCrady answered that the developer (Martin-
Atlantis) would not agree to that option. The board then directed McCrady to discuss other
possible options with the developer to protect the interests of the Improvement Zone in the event
no park is ever built. What, if any, actions were taken by McCrady to protect the interests of the
Improvement Zone are not mentioned in the board minutes.
As if the possibility of the park not getting built isn't serious enough by itself, the bank holding
the lien on the property has filed a motion with the bankruptcy court to allow it to foreclose its
lien.
On January 16, 2012, according to Research Bankruptcy Records Online | TrollerBk.com, Bank Midwest, N.A., successor in
interest to Hillcrest Bank, N.A. (Whitestone's tender), filed a motion of objection with the
bankruptcy court 'in response to Whitestone's plan of reorganization. The objection motion is
quite lengthy and can be read in its entirety at the end of this article.
The purpose of the motion is for Whitestone's lender to be granted permission by the bankruptcy
court to proceed with a foreclosure on all of the properties that Whitestone owns, including the
Dino-Park land.
This motion paints a far different picture of the status of the EarthQuest project than what has
been commonly portrayed by various interested parties and some publications. Excerpts from the
lender's motion include the following quotations which are in response to Whitestone's plan of
reorganization (the "Plan"):
"On or about July 31, 2007, Hillcrest Bank, N.A., loaned Whitestone up to $19.6 million for the
acquisition of real property in New Caney, Texas. The initial maturity date of the note was
January 1, 2009 ... but was extended to November 1, 2010 ... at which time Whitestone
defaulted in its obligations ... and was subsequently declared in default on November 19, 2010.
. . The indebtedness remains unpaid ... in the [current] amount of $21,377,520.24."
"The Plan 'envisions a new third-party debt facility' and [that] the Plan will be implemented
through 'the revenue from Whitestone's future business operations and an equity investment put
in by the 'New Capital Partner.' The alleged New Capital Partner is not identified, disclosed or
supported. Whitestone's future business operations and 'development' are not explained or
supported. In addition, there is no support for the Plan's feasibility because ... the Plan is not
feasible.
<<PAGE-DIVIDER>>
"Whitestone has no equity in the property ... Whitestone has no history ... [and] is a start-up
venture ... Considering Whitestone's prior inadequate performance in regards to developing the
property ... the current state of the new home market ... and the speculative nature of an
amusement park ... the Plan is not feasible."
The objection motion goes on to state that, although Whitestone contends that the property is
worth $27.4 million, the lender has certified appraisals stating that the property's current value is
only $9.88 million.
The bankruptcy court has not yet ruled on the lender's motion of objection. If the court does rule
in Hillcrest's favor, then it is expected the lender will foreclose its lien on the property, take
ownership of the land and subsequently place the land on the market for re-sale. The act of
foreclosure will terminate the interests of all prior owner(s) and any other interested parties.
If the property is foreclosed, the feasibility of the EarthQuest project going forward is, at best,
questionable. More importantly, once the foreclosure occurs, it is doubtful Whitestone's lender
will have an interest in reinvesting in another speculative venture. The most likely scenario is
that the lender's focus will be to sell the property in order to recover its loan proceeds.
Although many have been surprised at the seemingly current problems of the EarthQuest project,
it appears the EMCID board has been in damage control mode for almost a year. Based on
comments recorded in the EMCID board minutes, warning signs about the project apparently
surfaced as early as mid-2009.
Examples of these concerns, listed by board meeting dates, are as follows:
August 24, 2009
The first of two major restructures of the contractual arrangement between the developer
(Marlin-Atlantis) and EMCID is proposed. The developer requested: (i) forgiveness of its
obligation to repay several million dollars of bond proceeds previously given to the developer by
EMCID; (ii) forgiveness of its obligation to repay $1.5 million in bond proceeds utilized for the
benefit of ESD # 7; (iii) a request for EMCID, rather than the developer, to pay a 'site locater'
fee of @ $3 million; along with other concessions.
According to the minutes, the EMCID counter-proposed that a $1 parking tax would be levied on
all future park visitors to: (i) repay the millions of dollars of bond indebtedness owed by the
developer (as requested); (ii) utilize the same parking levy to payoff the $1.5 million bond
indebtedness related to ESD #7 (as requested) (iii) ask the developer to donate to EMCID the
planned site of the future EarthQuest Institute; and other considerations.
The Tribune does not have a copy of the final restructured agreement therefore, the final terms
are unknown. Furthermore, what, if any, additional assurances McCrady was able to achieve
with the developer is unknown.
November 9, 20 10
<<PAGE-DIVIDER>>
The EMCID board learns that the project is not going to happen as planned. A second major
restructure of the project is proposed. John Marlin, president of Marlin-Atlantis, informed the
EMCID board that a $500 million "greenfield" project like EarthQuest was not feasible in the
current market. Consequently, the project would have to be "phased" to reduce development and
construction costs. The phasing of the project proposed that the theme park would be constructed
first, followed by subsequent phases for related amenities.
February 1, 2011
In the meeting, McCrady states that the [Improvement] District is "a little behind on revenue
projects . . ." The board then discussed areas where the budget could be reduced if the revenues
did not match the budget. Director Linda Floyd "recommended that the travel by the EarthQuest
consultants "be restricted or elimmiated."
There is no mention of why Floyd was so concerned about the traveling expenses of the
EarthQuest consultants. But from financial records obtained by The Tribune it is obvious that
EMCID has paid for extensive travel and other accommodations for the EarthQuest consultants.
March 10, 2011
EMCID director Floyd again appears concerned about money. She questioned a wire transfer of
funds to EarthQuest Institute. Floyd is on the record as saying, "It was her understanding that
such funding had ended." She further asked the board "to recall the EarthQuest Institute wire."
The amount of this wire transfer was not referenced in the minutes and is unknown. What is clear
is that Floyd's concern about the wire transfer to EarthQuest reflected a growing concern on the
part of some of the EMCID board members.
June 16, 2011
Chris Brown, president of Contour Entertainment, informed the EMCID board that his company
was "assuming" the position of Marlin-Atlantis as developer for the EarthQuest project. In light
of the complex contractual agreements that exist between EMCID and various Marlin-Atlantis
entities, it is unknown if this is a formal assumption of the developer's role or a temporary
measure until a more permanent solution is determined.
November 10, 2011
The EMCID board approved an assignment and release with "Dino" Don Lessem. Reportedly
renowned worldwide for his expertise in paleontology, Lessem was the brainchild, founder and
director of the EarthQuest Institute. Lessem received thousands of dollars consulting on the
project for several years and his extensive travel and entertainment expenses were paid by
EMCID. The circumstances of Lessem's departure were not disclosed in the minutes. What
effect his leaving will have on the project is unknown. The EarthQuest Institute was a tax-
exempt entity which held several fund raisers to raise money for the museum facilities. The
status of those funds is unknown.
<<PAGE-DIVIDER>>
December 8, 2011
The EMCID board approved the expenditure of $25,000 to renew the Wbitestone [sanitary
sewer] waste discharge permit to Caney Creek. Reportedly, the permit will be assigned to
EMCID. It appears that EMCID is trying to preserve the early (and limited) development work
that Marlin- Atlantis performed on the Whitestone property when it was originally planned as
only a residential community. This specific permit most likely was the Caney Creek Plant Permit
No. WQ0014559001, which was originally issued in April of 2005. There is a companion waste
permit that will also soon need to be renewed, if that has not already been done. That will be for
the Peach Creek Plant Permit No. WQ0014559001, which was also first issued in April of 2005.
With Marlin-Atlantis having left the project, these type of real estate expenses will be regular
occurrences as EMCID tries to preserve whatever interests it can in the EarthQuest property.
Chris Brown of Contour emphasized this. "EMCID is trying to do what it can to protect the
investment it has made in the project," he said.
Questions Remain
This complex and convoluted situation, the seriousness of which has been further magnified by
the potential foreclosure of the EarthQuest property, has prompted valid inquiries by this
newspaper and the public to the EMCII) board.
How much money has EMCID funded to the various entities involved in the proposed
EarthQuest / Dino-Park venture?
The Tribune previously asked both EMCID attorney David Marks and McCrady this specific
question. Marks said he did not know but "Frank should." McCrady responded that EMCID has
funded "about" $9 million "for expenses to date." (Note: The original Tribune article reported an
amount of $7.8 million). However, in a Houston Chronicle-This Week article dated August 26,
2009, Connie Bloodworth, a board member of EMCID, then stated that EMCID had a potential
exposure to the project of $13 million. "Director Connie Bloodworth said the requested changes
will add up to a net initial incentive cost to the district of some $13 million. 'Right now we're
putting ourselves and the community on the line," said Bloodworth. "He's (Marlin) got his neck
on the line, but we do too."'
Why did the EMCID board not inform the public that the entity owning the land for the proposed
EarthQuest property filed for bankruptcy protection more than five months ago on August 1,
2011?
Why did the EMCID board not inform the public about Marlin-Atlantis leaving the project?
Why did the EMCID board ignore the advice of its own bond counsel to seek additional security
in order to protect its multi-million dollar investment in Marlin-Atlantis and the EarthQuest
project.
<<PAGE-DIVIDER>>
How much money has EMCID expended for travel, accommodations, food, gifts, etc. for the
various EarthQuest personnel and consultants?
Based on financial records in the possession of The Tribune it appears to be extensive. A review
of those expenses is underway and will be reported on in a future article.
Samuel M. Stricklin (State Bar No. 19397050)
Michael L. Dinnin (State Bar No. 05888100)
Brian C. Mitchell (State Bar No. 24046452)
Bracewell and Giuliani LLP
1445 Ross Avenue, Suite 3800
Dallas, Texas 75202-2711
Telephone: (214) 468-3800
Facsimile: (214) 468-3888
Email: sam.stricklin@bgllp.com
Email: michael.dinnin@bgllp.com
Email: brian.mitchell@bgllp.com
Attorneys for Hillcrest Bank, N.A.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
IN RE:
CHAPTER I I
WHITESTONE HOUSTON LAND, LTD., CASE NO. 11-42400
<<PAGE-DIVIDER>>
Debtor.
HILLCREST BANK, N.A.'S OBJECTION TO CONFIRMATION OF
DEBTOR'S FIRST PLAN OF REORGANIZATION DATED OCTOBER 28,2011
Hillcrest, N.A. ("Hillcrest"),
1
secured creditor and party in interest herein, files this
Objection to Confirmation of Debtor's First Plan of Reorganization Dated October 28, 2011
("Objection"), and in support thereof would show the Court the following:
JURISDICTION AND VENUE
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and
1334. This Objection is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper in
this district pursuant to 28 U.S.C. 1409.
1
On November 7, 2011, Hillcrest Bank, N.A. merged with Bank Midwest, N.A., and now
operates under the name
Bankr Midwest, N.A.OBJECTION OF HILLCREST BANK, N.A. TO CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 2
RELEVANT BACKGROUND
A. Debtor's Bankruptcy Filing
1. On August 1, 2011 (the "Petition Date"), Whitestone Houston Land, Ltd.
("Whitestone" or "Debtor") filed a voluntary petition for relief under chapter I I of title I I of the
United States Code (the "Bankruptcy Code") in the Eastern District of Texas, Plano Division (the
"Bankruptcy Court"), Cause No. 11-42400. This is a Single Asset Real Estate case.
<<PAGE-DIVIDER>>
2. On October 28, 2011, the Debtor filed its First Disclosure Statement Dated
October 28, 2011 [Dkt. No. 15 ] ("Disclosure Statement") and its Chapter I I Plan of
Reorganization Dated October 28, 2011 [Dkt. No. 14] ("Plan"). The Debtor filed its First
Modification to Disclosure Statement on December 11, 2011 ("Disclosure Statement
Modification"). [Dkt. No. 24]. On December 20, 2011, the Court entered an Order Approving
First Disclosure Statement Dated October 28, 2011 as Modified. [Dkt. No. 27].
B. Hillcrest Bank's Secured Claim
3. On or about July 31, 2007, Hillcrest and Whitestone entered into a secured loan
agreement (the "Loan Agreement") whereby Hillcrest agreed to loan Whitestone up to
$19,600,000.00 in connection with the acquisition of real property located in New Caney,
Montgomery County, Texas (the "Property"). Pursuant to the terms of the Loan Agreement, and
contemporaneously therewith, Whitestone executed a Promissory Note (the "Note") for the
principal sum of $19,600,000.00 in favor of Hillcrest. The Note was secured by a Deed of Trust
granted by Whitestone in favor of Hillcrest, which provided Hillcrest a security interest in the
Property (the "Deed of Trust"). OBJECTION OF HILLCREST BANK, N.A. TO
CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 3
4. The initial maturity date of the Note, for full repayment of the entire principal
balance and unpaid interest to Hillcrest by Whitestone, was January 1, 2009. The maturity date
was subsequently modified twice via agreement, so that the maturity date under the Note was
November 1, 2010. However, Whitestone defaulted under the Loan Agreement and Note, and
Hillcrest notified Whitestone of the events of default on November 1, 20 10. Whitestone failed to
cure the default, and on November 19, 2010, Hillcrest accelerated the outstanding indebtedness
(the "Indebtedness") under the Note and Loan Agreement. The Indebtedness remains unpaid,
<<PAGE-DIVIDER>>
and as of August 1, 2011, the approximate amount due and owing by Whitestone under the Note
and Loan Agreement, including principal and accrued interest, was $21,377,520.24. Interest and
fees continue to accrue on this amount.
BASIS FOR OBJECTIONS
C. The Debtor Bears the Burden of Proof for Confirmation
2. A debtor in bankruptcy bears the burden of proving each and every element of
1129(a) by a preponderance of the evidence in order to attain confirmation of its plan. In re
Cajun Electric Power Cooperative, Inc., 230 B.R. 715, 728 (Bankr. M.D. La. 1999); In re
Barnes, 309 B.R. 888, 895 (Bankr. N.D. Tex. 2004) (citing In re T-H New Orleans Ltd. P'ship,
116 F.3d 790, 801 (5th Cir. 1997)); In re 8315 Fourth Avenue Corp., 172 B.R. 725, 735 (Bankr.
E.D.N.Y. 1994). Furthermore, the court has a mandatory duty to determine whether the plan has
met all of the requirements for confirmation, whether specifically raised by dissenting creditors
or not. Williams v. Hibernia National Bank, 850 F.2d 250, 253 (5th Cir. 1988). The Debtor in
this case is unable to meet its burden for confirmation.OBJECTION OF HILLCREST BANK,
N.A. TO CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 4
B. The Plan Violates 1123(a)(5) Because it Does Not Provide Adequate Means For Its
Implementation
3. The Court cannot confirm a plan unless it complies with the applicable provisions
of title 11. See 11 U.S.C. 1129(a)(1). A debtor's plan must provide adequate means for the
plan's implementation. See I I U.S.C. 1123(a)(5). Whitestone's Plan does not provide
adequate means for the Plan's implementation; therefore, the Plan cannot be confirmed.
4. The only information in the Plan regarding its implementation is in Article 11,
Concept of the Plan, Generally, and Article VI, Means for Implementation of Plan. The Concept
<<PAGE-DIVIDER>>
of the Plan is merely a "plan of reorganization." See Plan, 2.0 1. The Plan "envisions a new third
party debt facility," and the Plan will be implemented through "the revenue from the Debtor's
future business operations and an equity investment put in by the New Capital Partner." Id. The
alleged New Capital Partner is not identified, disclosed, or defined. Id. The Debtor's future
business operations and "development" are not explained or supported. Id. In addition, there is
no support for the Plan's feasibility, likely because, as discussed infra, the Plan is not feasible.
The Means for Implementation of Plan simply states that the "Plan will be implemented pursuant
to 1123(a)(5) of the Code, by the commencement of payments as called for above." See Plan,
6. 0 1. Further, the Plan "relies on the revenues generated from the Debtor's property and the
Equity Investment." Id. Similar to New Capital Partner, the Equity Investment is not defined,
explained, or identified. Therefore, the Plan does not provide any means for implementation
other than the baseless and conclusory statements that it will be implemented. The Plan does not
comply with the provisions in section 1123(a)(5) and, as a result, should not be confirmed.
C. The Plan Violates I I U.S.C. I 129(a)(7) Because Hillcrest Receives Less Under the
Plan Than it Would in a Chapter 7 Liquidation
5. Pursuant to 11 U.S.C. 1 129(a)(7), impaired classes of claims under the Plan
must receive property on account of their claim that is not less than the amount they would
OBJECTION OF HILLCREST BANK, N.A. TO CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 5
receive in a case under chapter 7. The Plan is not confirmable because the Debtor has failed to
meet its burden under 1129(a)(7). The Debtor bears the burden of proving 1129(a)(7) by a
preponderance of the evidence. Heartland Fed. Sav. & Loan Ass'n v. Briscoe Enters. (In re
Briscoe Enters.), 994 F.2d 1060 (5th Cir. 1993).
6. There is nothing in the Plan regarding liquidation, and in its Disclosure Statement
<<PAGE-DIVIDER>>
-
re: Don Allen Holbrook IEDC Rogue Former Member / Jeff Finkle Orchestrates Cover-up
Modification, the Debtor merely states that "in a liquidation the property would sell for less than
the secured debts given today's market conditions and the costs of sale." Disclosure Statement
Modification, 16. The Debtor states the Whitestone Houston Property Value is $25,000,000.00
(reduced by $2,000,000.00 for a liquidation) and its secured debt is listed as $21,377,520.24. Id.
Therefore, the Debtor's statement that the property would sell for less than the secured debts is
incorrect, even with a $2,000,000.00 reduction in property value. There is no evidence that the
impaired classes will not receive less through the Plan than they would in a liquidation. The
Debtor has not met its burden to prove the requirements under 1129(a)(7).
7. Further, Hillcrest will receive less under the Plan that it would under a chapter 7
liquidation. Under a liquidation, Hillcrest will receive the value of its secured claim
immediately.
2
However, under the Plan, Hillcrest must wait 120 days after confirmation before
it will receive payment of its secured claim, and will not be paid a market or otherwise
appropriate rate of interest. Further, it is unclear how Debtor intends to pay Hillcrest's
$19,389,607.91 claim (plus continued accrued fees and interest) when there is no indication of
who the New Equity Investor is or how the Debtor will implement the Plan. Accordingly,
2
Debtor contends the Property is worth 27,400,00.00, which would allow Hillcrest to receive the
full amount of its
secured claim through liquidation. However. even if the Property value is $9,880,000.00, as
Hillcrest contends
based on its certified appraisal, Hillcrest will still receive more through a liquidation that it
would under the Debtor's
Plan. OBJECTION OF HILLCREST BANK, N.A. TO CONFIRMATION
<<PAGE-DIVIDER>>
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 6
Hillcrest will receive less than it would under a chapter 7 liquidation and confirmation of the
plan should be denied under 1129(a)(7).
D. The Plan Violates 1 129(a)(1 1) Because it is Not Feasible
8. Whitestone's Plan is not feasible and cannot be confirmed under section
1129(a)(11). Courts must scrutinize the plan carefully to determine whether it offers a
reasonably prospect of success and is workable. In re Beyond.com Corp., 289 B.R. 138, 145
(Bankr. N.D. Cal. 2003). Whitestone has failed to offer anything other than hope and
speculation regarding its ability to satisfy the obligations of creditors. See, e.g., In re M&S
Assocs., Ltd., 138 B.R. 845, 852 (Bankr. W.D. Tex. 1992) ("Confirmation of the Plan would
merely allow the Debtor to postpone the inevitable, and to gamble, with the [secured creditor's]
money, on the long shot possibility of a drastic improvement in the real estate market"); In re
Pelham St. Assocs., 134 B.R. 700, 701 (Bankr. D.R.I. 1991) (denying confirmation of plan
predicated on a 5-year balloon payment to the secured creditor, concluding that the plan was
11 pure pie in the sky, and no secured creditor should be required to depend on such illusory pie.").
Whitestone has no equity in the Property, and this is a Single Asset Real Estate bankruptcy.
9. The proposed Plan does not have a reasonable probability of success because it
requires Whitestone to enter into a new third party debt facility and receive an equity investment
from a New Capital Partner in order to fund the reorganization. See Plan, 2,01. Simultaneously
with the refinancing, Whitestone will also place the Property for sale on the market. Id.
However, Whitestone does not explain how it will obtain a New Equity Partner and a new debt
financing facility when it intends to sell the Property, and Whitestone has no equity in the
Property. OBJECTION OF HILLCREST BANK, N.A. TO CONFIRMATION
<<PAGE-DIVIDER>>
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 7
10. Neither the Disclosure Statement nor the Plan provides any concrete explanation
for how creditors in this case will receive the value of their claims. Whitestone has no equity in
the Property, and this is a Single Asset Real Estate bankruptcy. More specifically, this case
involves more than 1,564.55 acres of raw/undeveloped land located in New Caney, Texas that
the Debtor purchased in 2005 and plans (at least in 2005) to develop into a mixed-use
multifamily, commercial, and retail development, a segment of the economy that is notoriously
struggling. See Disclosure Statement, Exhibit B, Development Overview. However, upon
information and belief, the Debtor actually intends to develop the majority of the Property into
an amusement park.
11. The only support for the Plan's success is contained in the Metrostudy Market
Overview and Development Feasibility Performa sections of Exhibit B of the Disclosure
Statement. However, the Market Overview is merely a conclusory summary of a pie in the sky
hope for what may happen to the real estate market, and there is no support for the Development
Feasibility of the Debtor's Plan. Speculative and unrealistic projections are not sufficient to
prove the feasibility of a plan of reorganization. In re Canal Place Ltd. P'ship, 921 F.2d 569,
579 (5th Cir. 1991). Moreover, it is unclear when the Development Feasibility Proforma was
prepared (although it appears to be years ago), who prepared it, how the figures contained in the
Proforma were determined, what assumptions were made, etc. Notably, the proposed Plan relies
on revenues generated from the Property (which, to date, amount to zero) and additional
financing. "Section I 129(a)(1 1) requires the plan proponent to show concrete evidence of a
sufficient cash flow to fund and maintain both its operations and obligations under the plan." See
In re 8315 Fourth Ave. Corp., 172 B.R. 725, 735 (Bankr. E.D.N.Y. 1994); In re SM 104 Ltd.,
<<PAGE-DIVIDER>>
160 B.R. 202, 234 (Bankr. S.D. Fla. 1993). Plans often fail on feasibility grounds where the
OBJECTION OF HILLCREST BANK, N.A. TO CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 8
assets needed to fund the Plan are speculative. See In re 8315 Fourth Ave. Corp., 172 B.R. at
735; In re Lakeside Global 11, Ltd., 116 B.R. 499, 506-09 (Bankr. S.D. Tex. 1989).
12. Further, where a plan relies on operating revenues, "a debtor's past and present
financial history are probative of the plan's feasibility." Id. The Debtor effectively has no
history - this is a start-up venture in bankruptcy. Considering the Debtor's prior inadequate
performance in regards to developing the property (Whitestone has owned the Property since
2005, yet no development has taken place), the current state of the new home market (and the
speculative nature of an amusement park) and the conjectural and speculative projections in
support of the Debtor's proposed Plan, the Plan is not feasible and cannot be confirmed as a
matter of law.
PRAYER
For the foregoing reasons, Hillcrest respectfully requests that the Court deny
confirmation of the Plan and grant Hillcrest such other and further relief as is just and proper.
Dated: January 13, 2012
Respectfully submitted,
BRACEWELL & GIULIANI LLP
By: /s/ Brian C. Mitchell
Samuel M. Stricklin
State Bar No. 19397050
Michael L. Dinnin
State Bar No. 05888100
<<PAGE-DIVIDER>>
Brian C. Mitchell
State Bar No. 24046452
1445 Ross Avenue Suite 3800
Dallas, TX 75202-2711
Telephone: (214) 468-3800
Facsimile: (214) 468-3888
ATTORNEYS FOR HILLCREST BANK, N.A.OBJECTION OF HILLCREST BANK, N.A.
TO CONFIRMATION
OF DEBTOR'S FIRST PLAN OF REORGANIZATION - PACE 9
CERTIFICATE 0
Court gives EarthQuest developer time to raise money, save project
Tuesday, February 07, 2012
Cynthia Calvert
-Questions arise over EMCID,consultant contracts-
The Eastern District Court of Texas, which is administering the bankruptcy proceedings of
Whitestone Houston Land, Ltd. (the legal owning entity of the EarthQuest / Dino-Park land), has
established a multi-step plan to allow
for the sale and disposition of the Dino - Park property.
On Jan. 23, 2012, the court decreed that the owners of Whitestone have until March 5, 2012, to
raise $ 10 million in capital in order to move forward with a plan to reorganize. N"itestone must
also file a Motion to Establish Bid procedures. If they achieve this, they then have until April 6,
2012, to obtain court approval of the bid
procedures for a sale of the property and they must conduct an auction to sell the property by
April 30 and close on the sale by June 4, 2012.
Failure to meet with any of these steps means that the court will allow foreclosure on the land.
<<PAGE-DIVIDER>>
Frank McCrady, president and CEO of the East Montgomery County Improvement District
(EMCID), said in January that Chris Brown, CEO of Contour Entertainment, is now the
EarthQuest developer and is actively seeking to raise capital in order to save the project. Brown
said, " We are working to raise the money. However, we have not raised it yet. That is something
we are working on. There is a list of bills to be paid first before we can complete the project. A
project like this comes in steps. It is a $500 million project and the reality is, that is a lot of
money.
"This is distinctively different for us - we have partnered financially on a much smaller scale but
this is our first time, basically, to be owners on this scale. The money side is definitely a
challenge. Outside of the cash issue, everything else is normal for us. We know we can do the
project, but raising the money is the big challenge," Brown added.
Brown is also working on another project, in Pahrump, Nevada. The town, an hour's drive from
Las Vegas, recently gave Brown, and Donald Allen Holbrook, a consultant paid also by EMCID,
thousands of dollars to conduct a study as to the feasibility of building a theme park in that rural
area. Brown and Holbrook struck a deal with the town board for a study, which Holbrook said
they should consider either an alien-themed park or a park he called Think Tank!, an
entertainment project where patrons could drive military tanks through explosive elements. In
later meetings, this idea was expanded to become "Adventure Springs," described in remarkably
similar language as the dinosaur-park-turned-EarthQuest-Global-Adventures.
Pahrunip paid $150,000 to Holbrook and his subcontractor, Contour Entertainment, and signed a
contract obligating them to give them thousands more if the study showed the area could support
a park, even if the park is never built.
Holbrook is a familiar face to many closely associated with EarthQuest.
In the October, 2007, the EMCID board agreed to hire the Vercitas Group, which is controlled
Holbrook, as a consultant "for services in connection with the Earth-Quest project." The minutes
authorized the contract "at a cost not to exceed $25,000 for hourly fees and expenses."
Holbrook presented to EMCID, and to projects before and since, a dazzling resume of scholarly
degrees and accomplishments. It's easy to see why Frank McCrady characterized Holbrook as
11 an expert in the theme park entertainment venue industry and ... is recognized across the
country as a premier economic development professional. We looked at his credentials and
discussed his interaction with other cities and counties in which they all had numerous positive
comments on their projects."
But the road that Holbrook has traveled, both to New Caney, Texas, and numerous other towns
across the U.S.A., is a long and winding journey, littered with disappointment and controversy.
Furthermore, a diligent search by The Tribune of documents, newspaper articles, public filings,
websites, etc., paints a vastly different portrait of this supposed 'entrepreneur extraordinaire'.
And it seems that trouble follows Holbrook to almost very town that invites him into their
community, and their coffers. For example:
<<PAGE-DIVIDER>>
Proposed Project - EarthQuest, New Caney, Texas (2007)
One of Holbrook's first interactions with EMCID was to prepare a site selection report which he
claimed verified that New Caney had been chosen as a prime spot to develop a theme park.
Recently, The Tribune asked EMCID for a copy of the 2007 site study. This report purportedly
selected the New Caney, Texas area over several dozens of other communities throughout
America as the preferred location for the EarthQuest project. It was presumed that such a study
would have been prepared by an independent, third-party firm, not affiliated with any of the
interested parties in order to preclude any conflicts of interest.
What was delivered to The Tribune was a 177-page report prepared by Baker Leisure Group,
LLC and being paid for by EMCID at a cost of $125,000. This report makes no mention
whatsoever of any 'national search' and focuses solely on the Houston area. It includes no
recommendations as to whether or not EarthQuest should be built, although it does list potential
strengths and weaknesses in the market. It appears to be a detailed demographic review of the
Houston region with various pro-forma's based on the early plans for EarthQuest. By any
account, it is a preliminary report based on preliminary assumptions.
At this point, the story gets more complicated. The report The Tribune received was not prepared
on behalf of EMCID, but for Dino Don, Inc. Dino Don, Inc. is a company affiliated with Don
Lessem, once a consultant on the move "Jurassic Park" and the (now former) Director of the
EarthQuest Institute. On the cover of the report, Dino Don, Inc. is shown as being represented by
Don Holbrook of Holbrook Development Company. Nowhere does EMCID appear in the report,
even though EMCID is the only party risking millions of dollars of taxpayer funds to build the
project.
About the same time, Lessem is quoted on the EarthQuest website as stating that "we,"
presumably the EarthQuest Institute (and EMCID?), engaged Holbrook to conduct a national
search for a site. However, no national search report has yet been given to The Tribune, as
requested.
The foregoing facts present a confused situation that is difficult to grasp. Were there two studies
conducted? One by Baker Leisure and one by Holbrook? If so, where is the Holbrook national
search report? If Holbrook did conduct the national study, why would EMCID allow its own
consultant to prepare the report when the same consultant clearly has a vested financial interest
in seeing that the project goes forth? The conflict of interests appear obvious.
So who does Holbrook represent? EMCID, Dino Don, Inc. or himself? Why did he conduct the
national search report? Why was a third-party not engaged for the study? What parties divvied
up the $125,000 fee? And last, but not least, where is the national search report that selected New
Caney, Texas, over all other potential locations in the United States?
Continuing the Holbrook saga, it seems that Holbrook doesn't travel alone. He clearly has a
business relationship with Lessem, as mentioned above. He also has strong ties to Contour
Entertainment, the new developer, according to McCrady [Tribune, Jan. 11] of the EarthQuest
<<PAGE-DIVIDER>>
project, replacing Marlin - Atlantis. Holbrook and Contour have teamed up on other proposed
theme parks in several cities across the country. However, it may prove telling for New Caney
residents that when officials in Pahrump, Nevada, questioned Holbrook in the fall of 2011 about
prior theme parks he had completed, Holbrook could not recall a single one.
Another disturbing fact is that The Tribune has not been able to get answers as to how much
Holbrook or Lessem were paid by EMCID for his EarthQuest-related efforts. A brief analyis of
EMCID payments in 2008 and 2009 reveal thousands of dollars spent on airfare, hotels and
meals for Holbrook to travel to New Caney as well as for EMCID staff and board members to
travel to Nevada to see Holbrook. Notwithstanding, The Tribune has learned from similar
contracts made available by other cities in which Holbrook and/or Contour are involved, that
their contracts are not simple documents for a single stated amount. In fact, quite the opposite is
true.
For example, the contract executed with Pahrump, Nevada, to determine if it was a good
candidate for a major theme park, was initially presented to the public as a $154,000 agreement.
The primary thrust of the initial contract was for Holbrook and Contour to conduct a survey and
see if Pahrump was a suitable site. Not surprisingly, the search (conducted by Contour &
Holbrook) did conclude that Pahrump was a viable venue.
In later town hall meetings it was disclosed to the general public that the contract was not a
single-purpose document, but an on-going, multi-phase commitment, with those future phases
triggered by specific events. Those future phases will commit the city to almost $900,000 in total
fees as additional phases are completed. Furthermore, the contract provides for "Success Fees"
should the project be constructed. Contour and Holbrook will receive I percent of all investor
money raised, and 3 percent of all public funding committed to the project. On a $500 million
project, the approximate cost of the EarthQuest park, that stipulation could generate a fee as high
as $10 million+ to the developers.
Since the Tribune has not received a copy of the contract executed with Holbrook, or the new
development agreement executed with Contour, it cannot comment on what terms those
contracts may include. Consequently, it is unknown if similar conditions in the Pahrump contract
are contained in the Holbrook and Contour contracts with EMCID. The Tribune will continue its
efforts to obtain copies of the contract.
But Holbrook's difficulties and inconsistencies don't end with his work.
Resume Problems
In the mid- and late 1990's, Holbrook's resume included a master's and a doctoral degree from
LaSalle University (Mandeville). But LaSalle was raided and closed by the F.B.I. in 1996. In
2004, the U.S. General Accounting Office determined that LaSalle was a "joke" where
11 students" simply paid a fee for their "degrees." Holbrook has since removed the degrees from
his resume.
<<PAGE-DIVIDER>>
Subsequently, Holbrook started listing on his resume three new degrees. These included a
Bachelor of Science in Environmental Studies and a Bachelor of Arts in Urban Economic
Planning Geography from Wright State University. The third (new) degree is a Masters of
Business Administration in Technology Management from the University of Phoenix. Holbrook
further claims, in another resume, to be a doctoral candidate at Walden University. According to
the National Student Clearinghouse website at National Student Clearinghouse, Holbrook
did get the geography degree and the MBA but never obtained the bachelor's degree in
environmental studies or the doctorate.
The Tribune has inquired of each university to determine if all of the forgoing degrees were
conferred unto Holbrook. The results of those inquiries will be published upon receipt.
Holbrook's employment history over recent years is also troubling. He was hired and
subsequently fired in several locations, mired in controversy. In 1996, Holbrook hired by the
Port Authority in Red Wing, Minnesota, and terminated in 1998 for questionable spending
practices, falsifying his resume, etc. In 2001, he was hired by the Lake Havasu Partnership for
Economic Development but less than two years later, his employment contract not renewed. In
2004, Holbrook was hired by the Richmond, Indiana Economic Development Corporation but 16
months later, left in an acrimonious departure after excessive spending, unauthorized
expenditures and other questonable practices came to light in the local newspaper. In 2007,
Holbrook hired by EMCID as a consultant to the EarthQuest project.
Holbrook is clearly a prominent participant in the EarthQuest story, but he is only one of several.
Future articles will explore the roles of other individuals. There will also be detailed analyses of
the financial implications that have occurred, and will continue to occur, as the full story of the
EarthQuest venture unfolds.