In a suit involving the bankruptcy of a Missouri meat processing plant the Fort Worth (Eighth Division) Business Court has denied Defendant’s plea to the jurisdiction, maintaining jurisdiction under Section 25A.004(b), Government Code, because the amount (of damages) in controversy exceeded $5 million.
M&M Livestock, LLC, and John Malouff, individually, and derivatively on behalf of ZMDR, LLC d/b/a Republic Foods, v. Jeremy Robinson, individually, ZMDR, LLC d/b/a Republic Foods, David DeVito, and NMD Enterprises, LLC (No. 24-BC08B-0003; 2025 Tex. Bus. Ct. 29; August 4, 2025) arose from a dispute between owners of a limited liability company (ZMDR) formed for the purposes of operating a meat processing plant in Missouri. When the plant failed, Malouff filed suit against Defendants ZMDR, DeVito, and NMD for fraud, breach of contract, and breach of fiduciary duty (among other things), alleging they “ran [ZMDR] into the ground” and refused to pay Plaintiffs for the livestock sales it made to ZMDR. Plaintiffs’ petition sought damages exceeding $5 million, though it identified specific damages for its breach of contract and suit on a sworn account ($1.7 million). Plaintiffs asserted that the court had jurisdiction by virtue of § 25A.004(b)(1), (2), (4), and (5), Government Code, which require a minimum amount in controversy of more than $5 million.
The facts are as follows. Malouff acquired a 33% stake in ZMDR for $882,000, whereas Defendants contributed only $10 for their respective 33% interests as members and managers of ZMDR. At the end of 2022, the value of ZMDR’s assets (real estate, fixtures, cattle equipment, and livestock) totaled $21,426,488. However, by 2024 the value had plummeted by more than $25 million, sinking into the red by nearly $4 million. Plaintiffs blamed Defendants’ “serial fraud, waste and abuse of corporate assets and other malfeasance” for the catastrophe. They also alleged that under Defendants’ management, ZMDR violated numerous health and safety regulations, which prevented it from selling beef, and had its meat-processing plant scheduled for a foreclosure sale in 2025. Plaintiffs asserted that these managerial failures exposed him to nearly $11.7 million in personal liability, citing a letter from the processing plant’s lender seeking to enforce Malouff’s personal guaranty to secure the loan. Defendants filed a plea to the jurisdiction on the basis that Plaintiff did not plead sufficient jurisdictional facts to meet the $5 million statutory threshold.
In an opinion by Judge Stagner, the court denied Defendants’ plea. The court determined that Plaintiffs’ amended petition successfully linked its first three causes of actions with their factual allegations and requested relief to satisfy the amount-in-controversy requirement. Section 25A.004(b) grants the Court jurisdiction over certain actions in which the amount in controversy exceeds $5 million, including derivative proceedings; actions regarding the governance […] or internal affairs of an organization; actions by an organization, or an owner of an organization, if the action (A) is brought against an owner, controlling person or managerial official of the organization[,] and (B) alleges an act or omission by the person in the person’s capacity as an owner, controlling person, or managerial official of the organization; and [actions] alleging that an owner, controlling person, or managerial official breached a duty owed to an organization” (See § 25A.004(b)(1), (2), (4), and (5)).
The court found that Plaintiffs’ breach of fiduciary duty claim met the $5 million jurisdictional threshold for each of its proposed damage calculations under subsections (b)(1), (2), (4), and (5). Plaintiffs’ derivative claim on behalf of ZMDR measured “damages in the form of asset diminution of not less than $19 [million].” It further calculated Malouff’s individual damages based on his 33% pro rata share of the diminished assets, as well as to his exposure to personal liability for ZMDR’s debts amounting to almost $11.7 million. The court then turned to Plaintiffs’ breach of contract claim that Defendants violated ZMDR’s company agreement by failing to pay its obligations, maintaining its assets, and complying with health and safety laws. The court reasoned that “the loss of Malouff’s pro rata value of his 33% ownership interest … based on ZMDR’s 2022 corporate asset valuations of $21,426,487.79” was more than enough to satisfy the jurisdictional threshold under subsection (b)(2). Applying this same method of calculation to the benefit-of-the-bargain damages Malouff demanded for his fraudulent inducement claim, the court concluded that the amount in controversy exceeded $5 million. Although Defendants challenged the plausibility of these measures of recovery, the court reiterated that since pleadings are liberally construed in favor of jurisdiction, (C Ten 31 LLC ex rel. SummerMoon Holdings LLC v. Tarbox, 2025 Tex. Bus. 1, 708 S.W.3d at 238), it only mattered whether the pleaded damages met the jurisdictional limit.
Consequently, the court denied Defendants’ plea. It also found that § 25.004(f) conferred supplemental jurisdiction over claims pertaining to the cattle sale, that is, Plaintiffs’ fraud, breach of contract, suit on sworn account, unjust enrichment claims.
TCJL Intern Shaan Rao Singh researched and prepared the first draft of this article.
