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Saturday, April 10, 2021

Another hearing in Billy Bob’s Texas dispute

The owners of Billy Bob’s Texas were back in court on Friday, Oct. 27 for a hearing on the heart of the matter that has left them divided and deadlocked.

The owners had not been in State District Judge Mike Wallach’s courtroom since he ruled in August against granting the minority group of owners an injunction that would have maintained the status quo and kept Concho Minick in place as president throughout the legal proceedings.

A three-day hearing in the case in July resulted in Wallach’s ruling against relief for minority owners. Nevertheless, Minick continues to run day-to-day operations at Billy Bob’s.

This dispute among owners of the world’s largest honky-tonk has turned friends and relatives against one another. The protracted battle prompted a lawsuit by Minick and his allies, who represent the minority group of owners.

Wallach’s ruling left the central issue of the dispute hanging. That issue is the company’s operating agreement and its requirement for unanimous consent on major decisions such as firing Minick, which the majority group of owners led by Brad Hickman and his family have been angling to do.

During Friday’s hearing, Wallach heard arguments from attorneys for both sides about how the company agreement and its companion document, Billy Bob’s certificate of formation should be interpreted.

Marshall Searcy of Kelly, Hart & Hallman, attorney for the majority group of owners who control 65 percent of Billy Bob’s, argued that the certificate of formation super-cedes that company agreement by setting up a governing board of six managers.

Both sides argued that state law could be interpreted in their favor.

“Nothing makes one into six,” Searcy argued. “This company is not run by one person.”

The company agreement, he argued, was set up by “well-intentioned lay people who weren’t quite sure what they were doing.”

The company agreement was created and signed before the certificate of formation. The certificate of formation is a legal requirement for a limited liability company, both sides agreed.

Andy Sims of Harris, Finley & Bogle, now representing the minority group of owners led by the family of former Fort Worth City Councilman Steve Murrin, argued that the documents are meant to work hand-in-hand and there is no competition between the two.

Minority owners, which also included Dallas Mavericks General Manager Donnie Nelson, sought the opinion of James Spindler, professor of the University of Texas School or Law and UT’s McCombs School of Business. In court documents, Spindler

He stated that “both the certificate and the company agreement are fairly typical of customary practice, and the relevant provisions under the company agreement are similar to default provisions under the TBOC (Texas Business Organizations Code).” Further, “I find that the certificate of formation and the company agreement are not in conflict.”

“We’ve got an expert witness who expressed there is no conflict,” Sims told Wallach. “They don’t have an expert because no one is buying what they are selling.”

Wallach said the several times that the dispute is so entangled that a jury trial may be necessary to reach a resolution.

Tense relations among the roiled owners reached a breaking point last spring when Hickman tried to have Minick demoted and re-assigned as a result of a series of grievances of his work performance. Those grievances included poor communication with owners and mishandling money decisions to pad his performance bonus, according to testimony during a three-day hearing in July.

The bad blood among the embittered owners led to meddling and underhanded tactics, including changing locks to keep Minick out of the club and installing spyware on company computers, according to court testimony last summer.

Philip Murrin said the lawsuit was an attempt to resolve the dispute after owners were unable to reach agreement amongst themselves.

Searcy has said that the certificate of formation as the company’s top document would establish majority-rule among the owners.

Minority owners claim in court documents and during testimony that a majority-rule scenario deprives them of their ownership rights in important decisions. They claimed the unanimous-consent rule in the company agreement was the only way to ensure fairness for all owners.

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