Darocy v. Abildtrup
345 S.W.3d 129
| Tex. App. | 2011Background
- OGMP formed to promote oil and gas ventures; Darocy served as secretary/treasurer and board member amid an all-male board with Dannelly as CEO; OGMP offered unregistered securities for four joint ventures (A-1 to A-4) in Taylor County, TX.
- Prospectuses touted high returns (cash-on-cash 4:1) and substantial reserves; funds raised totaled about $8.33 million from investors.
- Funds were deposited into venture banks and then swept into three OGMP-controlled accounts, with funds commingled across ventures.
- Lindeberger, an investor, testified Darocy claimed to oversee OGMP’s operations and sought better information, but investors received poor or missing documentation and K-1 forms.
- Investors sued OGMP, Golden Triangle Energy, Dannelly, Darocy, and Pearce in 2007 for TSA violations and fiduciary breaches; a receiver was appointed in May 2007; OGMP and Dannelly settled prior to trial; Darocy went to trial in August 2009 with judgment against him.
- The trial court found OGMP violated the TSA and Darocy liable as a control person and as an aider/abettor; this appeal followed led by Darocy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Darocy was a TSA control person. | Darocy argues insufficient evidence of control. | OGMP’s structure and Darocy’s roles show control over operations. | Evidence supports control person finding. |
| Whether Darocy aided and abetted a breach of fiduciary duty. | Darocy knowingly participated in OGMP’s breaches. | Darocy denied involvement beyond nominal roles. | Sufficient evidence of knowing participation. |
| Whether Darocy aided and abetted a TSA violation. | Aiding found through access, awareness, and actions to further sales. | No intent or substantial assistance shown. | Evidence supports aider-and-abettor liability. |
Key Cases Cited
- Sterling Trust Co. v. Adderley, 168 S.W.3d 835 (Tex. 2005) (defines secondary liability under TSA art. 581-33(F))
- Frank v. Bear, Stearns & Co., 11 S.W.3d 380 (Tex.App.-Houston [14th Dist.] 2000) (control-person standard under TSA; two-prong test)
- Barnes v. SWS Fin. Servs., 97 S.W.3d 759 (Tex.App.-Dallas, 2003) (applies control test to TSA liability)
- Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) (legal sufficiency standards for evidentiary review)