Hsin-Chi-Su AKA Nobu Su v. Vantage Drilling Company

Affirmed and Opinion filed July 14, 2015.

In The

Fourteenth Court of Appeals

NO. 14-14-00461-CV

HSIN-CHI-SU AKA NOBU SU, Appellant

V.

VANTAGE DRILLING COMPANY, Appellee

On Appeal from the 295th District Court

Harris County, Texas

Trial Court Cause No. 2012-47755

OPINION

Appellee, Vantage Drilling Company (“Vantage”), sued appellant, Hsin-

Chi-Su aka Nobu Su (“Su”), seeking, inter alia, to recover Vantage shares held by

Su’s wholly-owned affiliate, F3 Capital, on the ground the stock was acquired via

Su’s fraud and breach of fiduciary duties. The trial court signed a temporary

injunction precluding Su from disposing of, or otherwise encumbering, the shares

pending final judgment.

In five appellate issues, Su attacks the merits of the injunctive relief and the

amount of the temporary-injunction bond that Vantage was ordered to post. Su has

also filed in our court a “Motion to Void State Court Proceedings, Or Alternatively

Motion To Increase Temporary Injunction Bond Pending Interlocutory Appeal of

Injunction Order.” We ordered the motion taken with the case. We deny the

motion and affirm the temporary injunction.

I. BACKGROUND

A. Factual History1

Vantage was formed in 2006 as a special-purpose-acquisition entity to

acquire drilling assets for lease to oil-and-gas operators.2 Vantage sought to

acquire jack-up rigs and ultra-deepwater drillships because it discerned a need for

those assets in the industry. In 2007, Vantage officers were introduced to Su, a

shipping magnate. Su, through his affiliates, had deals in place to build the type of

assets that Vantage sought to acquire.

1. The Transactions

Vantage and Su or his affiliates entered into multiple transactions, including

the following:3

1

Consistent with our applicable standard of review, we set forth the factual history based

on viewing the evidence in the light most favorable to the trial court’s ruling. See LasikPlus of

Tex., P.C. v. Mattioli, 418 S.W.3d 210, 216 (Tex. App.—Houston [14th Dist.] 2013, no pet.).

2

The special-purpose-acquisition status permits a business to raise funds for an

acquisition through an initial public offering of shares. The funds are placed in trust pending

identification of an acquisition. Once shareholders approve the targeted acquisition, the money

is removed from the trust to fund the acquisition. Vantage’s founders invested millions of their

own funds and raised millions through an initial public offering in May 2007.

3

Many of the transactions or Su’s underlying deals were entered into by affiliates directly

or indirectly controlled by Su. For ease of discussion, we will refer to each such entity as Su’s

“affiliate,” except when necessary to specifically identify the affiliate, because, for the most part,

the affiliate’s identity is not material to our disposition of this appeal.

2

July 2007 Memorandum of Understanding

In July 2007, Vantage and Su executed a non-binding Memorandum of

Understanding expressing their intent that Su or his nominee would sell Vantage

two jack-up rigs and an option to acquire an ultra-deepwater drillship—the

Platinum Explorer. That document set forth the contemplated consideration for

the sale: (1) Vantage would pay $440 million for the jack-up rigs, including $145

million in Vantage shares and warrants payable to Su or his nominee; (2) Vantage

would pay $660 million for the drillship option, with 30% due upon exercise of the

option and 70% due upon delivery of the ship; and (3) Su and his representative

would receive seats on the Vantage board of directors.

According to Vantage, Su represented that this 30/70 payment structure for

the drillship option would correspond with the payment structure on his underlying

contract with Daewoo Shipbuilding & Marine Engineering (“Daewoo”) for

construction of the ship. For example, when Vantage paid 30% upon exercising its

option, Su would have paid 30% to Daewoo, thereby making Su effectively a “pass

through” for payments. These representations regarding the corresponding

payment structures were material to Vantage because they affected its ability to

obtain financing for the purchase. Specifically, the fact that payments would have

already been made to Daewoo when Vantage made its payments to Su would

guarantee Vantage a refund from Daewoo if it defaulted on delivery of the ship; in

contrast, financers would detect an unnecessary risk with respect to Vantage

receiving a refund in the event of a Daewoo default if payments had been made to

Su only. Vantage maintains that Su knew this aspect of corresponding payment

structures was material to Vantage because it is a common concept in the ship-

building industry.

3

Su then formed F3 Capital to receive the shares of Vantage stock to be

transferred in the transaction. Su is F3 Capital’s sole shareholder, sole director,

and president. F3 Capital’s sole assets are the Vantage shares and some funds

owed to it by the U.S. Government.

August 2007 Share Purchase Agreement

In August 2007, a Share Purchase Agreement was executed between

Vantage and a Su affiliate, which held the underlying contracts to build the jack-up

rigs. This agreement formalized and expanded the Memorandum of

Understanding. Under the agreement, Vantage would purchase the jack-up rigs

(now four rigs) by (1) transferring $275 million worth of Vantage stock and

warrants to F3 Capital upon closing of the purchase, (2) paying $56 million in

cash, and (3) assuming $517 million due on the underlying construction contracts

for the rigs. The parties also agreed that Vantage and another Su affiliate would

execute an option contract for the Platinum Explorer by the date for closing the

purchase of the jack-up rigs—with the option exercisable within six months after

the closing.

November 2007 Letter of Intent for Drillship Option

In November 2007, Vantage and another Su affiliate entered into a Letter of

Intent specifying further details for purchase of the Platinum Explorer. These

details again called for an initial down payment of 30% of the $660 million

purchase price upon exercise of the option and the remainder due on delivery of

the ship. According to Vantage, its representatives again relied on Su’s

representations that this payment structure corresponded with the payment

structure for the underlying contract with Daewoo.

4

March 2008 Drillship Purchase Agreement

Instead of an option contract, in March 2008, Vantage and a Su affiliate

entered into an agreement for Vantage to outright purchase the Platinum Explorer

from the affiliate for $676 million. The agreement required Vantage to make a

30% down payment on September 13, 2008 and remit the remaining 70% upon

delivery of the ship in November 2010. The agreement also provided that Su

retained control over the underlying Daewoo contract, including ensuring that it

would be paid timely. Additionally, Su’s affiliate agreed to perform all actions

necessary to consummate the transactions with Vantage, which would include

cooperating in Vantage’s financing efforts and disclosing the terms of the Daewoo

contract. That aspect was important to Vantage because it was relinquishing

control over the Daewoo contract, yet, as explained above, the fact that Vantage’s

payments to Su’s affiliate would correspond with his payments to Daewoo was

vital to obtaining financing. However, Su provided only a redacted version of the

Daewoo contract, which lacked details regarding when payments were due, while

he continued to represent the Daewoo contract’s payment structure was the same

as the 30/70 payment structure in the March 2008 Drillship Purchase Agreement

between Su’s affiliate and Vantage.

The Drillship Purchase Agreement also gave Vantage the option to purchase

a second ultra-deepwater drillship, the Titanium Explorer, under construction by

Daewoo.

The Share Purchase Agreement and the Drillship Purchase Agreement

closed on June 12, 2008. Upon closing, F3 Capital received $275 million in

Vantage stock and warrants, thereby owning 40% of its shares, plus $56 million in

cash. Su joined the Vantage board of directors and gained the right to nominate

two additional members of the nine-member board.

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2. Post-closing Events

After the closing, Vantage began preparing a road show to obtain financing

for its obligation to make a 30% down payment toward purchase of the Platinum

Explorer. However, Su, who was now a fiduciary, took actions which Vantage

characterized as detrimental to its financing efforts and its interests in general.4

In particular, despite repeated requests, Su still refused for several months to

provide a complete copy of the Daewoo contract and provided only a redacted

copy which lacked payment terms. Su claimed he had a special arrangement with

Daewoo to keep the terms secret. Vantage informed Su that such refusal would

harm Vantage’s ability to obtain financing. According to Vantage, Su also tied his

willingness to provide the complete Daewoo contract and otherwise comply with

his affiliates’ contractual obligations to attempts to re-trade the parties’

agreements.

For instance, Su repeatedly demanded early remittance of some or all of the

down payment, although it was not due until September 13, 2008. The first

demand was actually made shortly before the closing when Su demanded the entire

down payment ($200 million) immediately after the closing—when the special-

purpose-acquisition funds were to be released. Vantage responded that early

payment was impossible because (1) financers would require the funds be paid

directly to Daewoo and view payment under Su’s proposal as preferential and not

arm’s length, and (2) the SEC would frown on a substantial advance payment to a

party who controlled 40% of Vantage’s shares and would likely remove the board.

During July and August 2008 (after the closing), Su requested respectively

(as each request was refused by Vantage) that it pay $46 million, then $30 million,

4

Su acknowledges he was a Vantage fiduciary once he became a board member.

6

and then “3 weeks funding” in exchange for Su pledging some Vantage shares held

by F3 Capital. When refusing, Vantage replied that prepayment was impossible

because existing funds were earmarked for purchase of the jack-up rigs but it was

working on obtaining the funds for the Platinum Explorer down payment. Then,

Su threatened that unless he received an advanced payment, he would not transfer

to Vantage the right to decide specifications for the drillship, to which Vantage

was entitled under the Drillship Purchase Agreement. Vantage responded that

such a position would be a breach of Su’s fiduciary duties to Vantage and the

agreement.

In late August 2008, several days before Vantage was scheduled to begin its

financing roadshow, Su proposed changing the parties’ agreement regarding the

option for the second drillship—the Titanium Explorer. Instead of an option to

purchase, Su proposed a a 50% joint-venture. Vantage replied that it would further

discuss the proposal regarding the second drillship but it was concentrating on

obtaining financing for the Platinum Explorer. Su then refused to provide the

Daewoo contract unless Vantage agreed to the proposal regarding the Titanium

Explorer. Vantage rejected the proposal and replied that Su’s position would

clearly frustrate financing for the Platinum Explorer.

One day before the scheduled roadshow, Su provided a complete copy of the

Daewoo contract. Vantage learned that the payment structure under the Daewoo

contract did not comport with the structure for Vantage’s payments. Rather, the

Daewoo contract called for four installments of 5% (approximately $32 million

each) and a final 80% payment on delivery—not the 30/70 arrangement as

represented. Vantage also learned that Su had paid only one of the $32 million

installments with the next due in September 2008. These revelations were

detrimental to Vantage’s ability to obtain financing because (1) as explained

7

above, the disparity between payment structures would preclude the shipyard

guarantee, and (2) when Vantage paid Su its $200 million down payment due on

September 13, 2008, Su would have paid only $64 million to Daewoo, thus

effectively providing Su with a $136 million interest-free loan. Despite what it

viewed as misrepresentations by Su, Vantage proposed alternatives to salvage the

financing effort because acquiring the Platinum Explorer was critical to its

operations. However, Su rejected the proposals, Vantage’s efforts to obtain

financing were “dead,” and its reputation in the financing community was

damaged.

Consequently, Vantage was unable to make its down payment on September

13, 2008. According to Vantage, it could have made the payment and

consummated the transaction if Su’s representations about the Daewoo contract

had been correct. Su was also unable to make his $32 million payment due to

Daewoo at the same time. Su demanded that Vantage advance the $32 million and

insisted Daewoo would not defer the due date. Because salvaging the purchase

was vital to Vantage’s ability to enter the drillship business, it provided the $32

million from funds earmarked for purchase of the jack-up rigs, thereby harming its

relationship with the lenders for those rigs. At Su’s insistence, Vantage paid the

$32 million directly to Su rather than to Daewoo. Vantage eventually discovered

that Su had actually obtained a deferral from Daewoo until late October 2008.

Consequently, Su obtained an interest-free loan for $32 million from Vantage.

In mid-November 2008, Vantage agreed to modify the Drillship Purchase

Agreement at Su’s demand. According to Vantage, modification would have been

unnecessary and undesirable if Su had not harmed the financing efforts for the

original agreement. Under the modified agreement, instead of Vantage owning

100% of the ship (per the original agreement), it would be owned by a joint

8

venture with Vantage controlling 45% and a Su affiliate controlling 55%. As

consideration, a Su affiliate received an additional $149.75 million, F3 Capital

exercised warrants to acquire an additional 25 million Vantage shares, and F3

Capital received an additional 1.9 million warrants to acquire more shares. In

exchange, Su agreed to pay all remaining progress installments on the Daewoo

contract plus 55% of remaining costs associated with the ship.

Subsequently, Su was unable to make those payments but attempted to

obtain more shares and loans from Vantage to meet his obligations. Vantage

bought Su’s 55% interest to avoid defaulting on the Daewoo contract and risking

“catastrophic” consequences if Vantage were unable to deliver on its contracts with

drillers. The consideration included a $60 million promissory note to Su, which

was still outstanding at the time of the temporary-injunction hearing. Vantage

eventually owned 100% of the Platinum Explorer when all was completed. In

April 2011, Su resigned from Vantage’s board.

B. Procedural History

In August 2012, Vantage sued Su in state court for fraud, breach of fiduciary

duty, and unjust enrichment. Vantage claims that Su wrongfully induced Vantage

to issue approximately 100 million shares of its stock to Su through F3 Capital.

Vantage seeks damages, plus a constructive trust over, and disgorgement of, all

profits realized by Su from the transactions, including the Vantage shares.

Su invoked diversity of citizenship to remove the case to federal court, but

the case ultimately was remanded to the state court. Vantage then filed an

application for temporary injunction seeking to enjoin Su from disposing of the

shares pending final judgment. The application was prompted by Su’s actions

during the removal period of pledging numerous shares for debts of other entities

that he controlled.

9

The trial court conducted a hearing on the application. On June 11, 2014,

the trial court signed a temporary injunction, ruling as follows with respect to

72,238,972 shares of Vantage stock “[Su] holds through F3 Capital”:

The Court ORDERS [Su], individually or by / through his officers,

agents, servants, employees, attorneys, and those persons in active

concert or participation, enjoined from taking any action to sell,

transfer, pledge, hypothecate, or otherwise encumber any of the

Shares pending final judgment of in [sic] this case.

The Court ORDERS [Su] acting by or through F3 Capital’s officers,

agents, servants, employees, attorneys, and those persons in active

concert or participation, enjoined from taking any action to sell,

transfer, pledge, hypothecate, or otherwise encumber any of the

Shares pending final judgment of in [sic] this case.

In the order, the trial court recited findings of fact, which we will discuss in more

detail when addressing the issues on which the various findings are relevant. The

trial court also ordered Vantage to post a bond in the amount of $125,695.81. Su

filed this interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. §

51.014(a)(4) (West, Westlaw through 2015 R.S.).

II. JURISDICTION

We will first address the portion of Su’s appellate motion contending the

trial court lacked subject matter jurisdiction to issue the temporary injunction

because, at that time, the federal court had not yet remanded the case.

In October 2012, Su removed the case to federal court. In April 2013, the

federal district court denied Vantage’s motion to remand. On January 7, 2014, the

Fifth Circuit issued an opinion reversing the district court’s order denying remand.

On January 21, 2014, the district court signed a remand order. On January 23,

2014, the district court vacated that remand order. The Fifth Circuit issued the

mandate on January 29, 2014. The district court did not sign another remand order

at that time. Thereafter, the proceedings continued in the state court with both

10

parties filing various pleadings. When the trial court signed the temporary

injunction on June 11, 2014, the federal district court had not yet signed another

remand order.

Su argues that the temporary injunction is void because the federal district

court had not yet remanded the case when the trial court signed the temporary

injunction. Su characterizes his complaint as a challenge to the trial court’s subject

matter jurisdiction, which may be raised for the first time on appeal. As Su

acknowledges, on September 4, 2014 (a few days after he filed his appellate

motion), the federal district court signed a remand order. Nonetheless, Su

continues to argue the trial court lacked jurisdiction to take any actions, including

signing the temporary injunction, between the removal and the September 4th

remand order.5 We disagree.

Federal law provides as follows regarding remand procedures:

If at any time before final judgment it appears that the district court

lacks subject matter jurisdiction, the case shall be remanded. . . . A

certified copy of the order of remand shall be mailed by the clerk to

the clerk of the State court. The State court may thereupon proceed

with such case.

28 U.S.C. 1447(c).

Su correctly asserts that, when the trial court signed its temporary injunction,

the federal district court had not signed a remand order to be mailed to the state

5

Not all of the pertinent documents in the federal court proceeding are part of the clerk’s

record in this appeal. However, certified or sworn copies of the documents are attached to Su’s

appellate motion and Vantage’s response. Both parties rely on these attachments and do not

dispute they are accurate copies. Accordingly, we grant Vantage’s request that we take judicial

notice of the documents in order to decide whether the trial court had jurisdiction. See Freedom

Commc’ns, Inc. v. Coronado, 372 S.W.3d 621, 623–24 (Tex. 2012) (per curiam) (stating, “a

court will take judicial notice of another court’s records if a party provides proof of the

records”); see also Tex. R. Evid. 201(b) (providing appellate court may take judicial notice of a

relevant fact that “can be accurately and readily determined from sources whose accuracy cannot

reasonably be questioned”).

11

clerk because the court had vacated the one order it did sign. However, we agree

with Vantage that (1) the case was effectively remanded despite the lack of

compliance with section 1447(c), and (2) because that provision is procedural

rather than jurisdictional, Su waived his complaint by failing to object and by

continuing to participate in the state-court proceedings.

Vantage cites Gonzalez v. Guilbot, 315 S.W.3d 533, 536 (Tex. 2010), in

which the defendants argued that a state court’s judgment and sanctions order were

void because jurisdiction had not re-vested in state court following remand from a

federal court. Instead of mailing the remand order to the state clerk as required

under section 1447(c), the federal clerk gave the order to plaintiff’s counsel who

delivered it to the state court. Id. at 535, 536–37. The supreme court held that

hand-delivery of the remand order successfully transferred jurisdiction back to the

state court because the federal court expressed its “unmistakable intention to divest

itself of jurisdiction and return jurisdiction to the state court.” Id. at 538.

Unlike in Gonzalez, there was no remand order signed in the present case

until after the trial court signed its temporary injunction. Regardless, the federal

court had clearly intended to divest itself of jurisdiction. There was nothing left to

be resolved in the federal courts on the remand issue because the Fifth Circuit had

issued its opinion requiring remand and its mandate. The only remaining action

that could properly occur in the federal proceeding was the federal district court

signing a remand order as a ministerial act and the clerk mailing that order to the

state court clerk. The district court vacated its original remand order only because

the mandate had not issued—not because the court intended to retain jurisdiction

and make further rulings despite the Fifth Circuit’s decision. See Direct Mortg.

Corp. v. Keirtec, Inc., 478 F. Supp. 2d 1339, 1341 (D. Utah 2007) (stating

procedural devices of removal and remand are designed to ensure only one court

12

exercises jurisdiction over case at any given time, which prevents inconsistent

rulings and duplicitous work and preserves judicial and party resources). And,

although the effective remand order was ultimately signed after the trial court

signed the temporary injunction, that remand order confirms the federal court

intended to divest itself of jurisdiction. Accordingly, it is “unmistakable” that

when the trial court signed the temporary injunction, the federal court had intended

to remand. See Gonzalez, 315 S.W.3d at 538.

Vantage further cites authority recognizing a contention that remand was not

effected in compliance with the federal requirements is a procedural complaint

which may be waived. When the Gonzalez court held jurisdiction had re-vested in

the state court, it also relied on the fact that the defendants resumed litigation in the

state court with full knowledge of the remand, although the Gonzalez court did not

expressly use the term “waiver.” See id. at 538–39; see also Tex. R. App. P.

33.1(a) (providing, to preserve error, party must present the complaint to the trial

court via timely objection or request and obtain a ruling); Tellez v. City of Socorro,

226 S.W.3d 413, 414 (Tex. 2007) (per curiam) (recognizing, although lack of

subject matter jurisdiction may not be waived and may be raised at any time, a

party waives a procedural complaint by failing to object in the trial court).

As another example, in Keirtec, the defendant removed the case to federal

court. 478 F. Supp. 2d at 1340. However, the defendant then “stood silent” while

other parties filed pleadings in the state court and that court issued orders. Id. at

1340–41. The federal court held that it must remand because the defendant had

impliedly consented to jurisdiction in state court. See id. at 1341–42. Unlike in

Keirtec, the parties in the present case did not continue to litigate in state court

while the case was removed to federal court. Nonetheless, Keirtec supports a

13

conclusion that Su consented to the state court’s jurisdiction once the Fifth Circuit

issued its mandate requiring remand by resuming litigation in the state court.

Since that mandate, Su has affirmatively litigated the matter in state court

via the following actions: (1) filing a counterclaim which asserts the trial court has

jurisdiction and requests damages; (2) filing an answer and requests for disclosure;

(3) subpoenaing witnesses for a hearing scheduled on the application for temporary

injunction; and (4) filing a response to the application. Moreover, the record does

not reflect that Su ever complained in the trial court that no remand order had been

signed. Su first raises the issue in his appellate motion. Thus, Su waived his

complaint that the case was not remanded in compliance with federal procedures.

Accordingly, because the case was remanded, the trial court had jurisdiction

to sign the temporary injunction. We overrule the portion of Su’s appellate motion

contending the trial court lacked jurisdiction and turn to his challenges to the

merits of the temporary injunction.

III. TEMPORARY INJUNCTION

The purpose of a temporary injunction is to preserve the status quo of the

subject matter of the litigation pending a trial on the merits. Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). A temporary injunction is an

extraordinary remedy and does not issue as a matter of right. Id. To obtain a

temporary injunction, the applicant must plead and prove (1) a cause of action

against the defendant, (2) a probable right to the relief sought, and (3) a probable,

imminent, and irreparable injury in the interim. Id.

The applicant is not required to establish that it will prevail at a trial on the

merits. Sharma v. Vinmar Int’l, Ltd., 231 S.W.3d 405, 419 (Tex. App.—Houston

[14th Dist.] 2007, no pet.) (citing Walling v. Metcalfe, 863 S.W.2d 56, 58

14

(Tex.1993)). The merits of the applicant’s suit are not presented for review. Id.

Instead, we strictly limit our review to whether the trial court clearly abused its

discretion in granting the temporary injunction. See Butnaru, 84 S.W.3d at 204;

Sharma, 231 S.W.3d at 419. We may not reverse a temporary injunction unless

the trial court’s decision was so arbitrary that it exceeded the bounds of reasonable

discretion. Butnaru, 84 S.W.3d at 204; Sharma, 231 S.W.3d at 419. If some

evidence reasonably supports the trial court’s decision, there is no abuse of

discretion. Butnaru, 84 S.W.3d at 211. We view the evidence in the light most

favorable to the trial court’s order, indulging every reasonable inference in favor of

the ruling. LasikPlus of Tex., P.C. v. Mattioli, 418 S.W.3d 210, 216 (Tex. App.—

Houston [14th Dist.] 2013, no pet.).

The trial court recited in its order that Vantage satisfied the above-cited

elements. Su challenges the injunction on four grounds: (1) the order enjoined F3

Capital, a non-party; (2) Vantage failed to prove a probable right to the relief

sought; (3) Vantage failed to establish a probable, imminent, and irreparable injury

in the interim; and (4) collateral estoppel barred the relief.

A. Injunction implicating F3 Capital

The trial court enjoined actions undertaken by Su individually and “by or

through” F3 Capital to dispose of the Vantage shares. In his first issue, Su

contends the trial court abused its discretion by enjoining F3 Capital because it is

not a named party to this suit. However, as Vantage asserts, the trial court did not

directly enjoin F3 Capital as the order applied directly to Su. Yet, Su suggests the

trial court improperly issued an injunction affecting the property of a non-party

because the shares are held by F3 Capital.

Su cites Texas Rule of Civil Procedure 124, which provides: “In no case

shall judgment be rendered against any defendant unless upon service, or

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acceptance or waiver of process, or upon an appearance by the defendant, as

prescribed in these rules, except where otherwise expressly provided by law or

these rules.” Tex. R. Civ. P. 124. But the trial court did not render “judgment”

against Su or F3 Capital, but rather a temporary injunction. The rules governing

injunctive relief provide that an injunction “is binding only upon the parties to the

action, their officers, agents, servants, employees, and attorneys, and upon those

persons in active concert or participation with them who receive actual notice

of the order by personal service or otherwise.” Tex. R. Civ. P. 683 (emphasis

added).

The trial court’s findings indicate, and the evidence supports, that F3 Capital

was “in active concert or participation with Su” relative to acquisition of, and

attempts to dispose of, the Vantage shares. It is undisputed Su is the sole director,

shareholder, and officer of F3 Capital, and thus all actions of F3 Capital are

controlled wholly by Su. As further discussed below, Vantage presented evidence

that Su obtained the shares held by F3 Capital through fraud or breach of fiduciary

duties. Additionally, Su’s own actions reflect that he has treated the F3 Capital

shares as subject to his ownership and control and disposed of, or attempted to

dispose of, some shares for his own purposes: (1) he has personally filed a

counterclaim against Vantage and its representatives, alleging their actions caused

a significant decrease in the value of the shares; (2) shortly after closing the

transactions, Su promised to pledge shares in return for Vantage advancing the

early payments demanded by Su; and (3) Su pledged shares for obligations and

debts of his various affiliates that were unrelated to the transactions at issue.

Finally, F3 Capital “otherwise” received actual notice of the temporary injunction

by virtue of Su (F3 Capital’s sole director, shareholder, and officer) having

16

received notice. Accordingly, the injunction is permissibly binding on assets held

by F3 Capital. See id. We overrule Su’s first issue.

B. Whether Vantage proved a probable right to the relief sought

In his second issue, Su argues Vantage failed to prove a probable right to the

relief sought in this suit because (1) Vantage cannot prevail at trial on the equitable

theory relied on by the trial court when issuing the injunction, and (2) Vantage may

not recover shares from F3 Capital for its claims against Su.

1. Whether Vantage established a theory for recovery of the shares

In its pleading, Vantage requested disgorgement of, or a constructive trust

over, the shares based on Su’s fraud and breach of fiduciary duties. The trial court

found that Vantage proved a probable right to recover the shares via one of these

equitable remedies. The following findings are relevant to this issue:

3. Mr. Su, acting individually and/or by or through F3 Capital and

several affiliates, entered into a series of transactions with Vantage,

including [listing the four pre-closing transactions outlined above].

4. Mr. Su’s representations regarding the payment terms of the

agreement with [Daewoo] were material to Vantage’s decision to

enter into the Transactions.

5. Vantage relied on Mr. Su’s representations when it entered into the

Transactions.

6. On June 12, 2008, in reliance on Mr. Su’s representations, Vantage

closed the Transactions and, at Mr. Su’s direction, paid consideration

including warrants to Vantage common stock to Mr. Su’s wholly-

owned, solely controlled affiliate F3 Capital.

7. On June 12, 2008, Mr. Su became a Director on the Board of

Directors of [Vantage] and in that capacity, obtained rights to

nominate two other board members.

8. Vantage has made a prima facie case that following his appointment

to the Vantage Board[,] Mr. Su breached his fiduciary duty to Vantage

by not complying with his obligations under the Transactions.

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9. Vantage has made a prima facie case that, in communications made in

August 2008, Mr. Su, as a Vantage Director, breached his fiduciary

duty, frustrating Vantage’s ability to obtain financing for existing

transactions that were essential to the viability of the company.

10. Vantage has made a prima facie case that Mr. Su’s actions were

designed to retain his Vantage stock holdings and obtain additional

cash and other benefits.

11. Vantage has made a prima facie case that Mr. Su’s breach of fiduciary

duty benefited him directly and is traceable to the Stocks.

12. If Vantage obtains a final judgment against Mr. Su, it may be entitled

to recover the Shares awarded in consideration for the Transactions

through the imposition of an order of disgorgement or comparable

equitable relief either in this action or in a subsequent enforcement

action against F3 Capital or other transferees of the Shares.

Su emphasizes the trial court’s determination that Vantage made a prima

facie case that it may recover the shares based on Su’s breach of fiduciary duties.

As we construe Su’s appellate contention, he challenges the trial court’s reasoning

because (1) F3 Capital acquired the majority of the shares before Su became a

fiduciary, and (2) Vantage may not recover the shares acquired after Su became a

fiduciary, even under a breach-of-fiduciary-duty theory. We will discuss

separately the shares acquired before and after Su became a fiduciary because our

analysis is somewhat different for each category.

Shares acquired before Su became a fiduciary

We acknowledge F3 Capital did not acquire all of the 72,238,972 shares

governed by the temporary injunction through Su’s alleged breach of fiduciary

duties or while Su was a Vantage fiduciary. Rather, F3 Capital acquired some

shares simultaneously with Su becoming a fiduciary; i.e. when the transactions

closed, Su became a director of Vantage, and F3 Capital received 33,333,333

Vantage shares and the right to acquire an additional 25 million shares.

18

Nonetheless, we conclude Vantage proved a probable right to recover the 33

million and 25 million shares via equitable remedies.6

We recognize the trial court expressly recited that Vantage proved a

probable right to recover the shares via “disgorgement” based on Su’s breach of

fiduciary duties. Disgorgement of profits is an equitable remedy appropriate when

a party has breached his fiduciary duty; its purpose is to protect relationships of

trust by discouraging disloyalty. See, e.g., ERI Consulting Eng’rs, Inc. v. Swinnea,

318 S.W.3d 867, 873 (Tex. 2010); Burrow v. Arce, 997 S.W.2d 229, 238 (Tex.

1999). However, disgorgement is not the only equitable remedy requested by

Vantage because it also requests a constructive trust based on fraud. Vantage

urges that we may uphold the temporary injunction on that theory.7

When reviewing a temporary injunction, we are not limited to the reasons

stated by the trial court or its findings of fact and conclusions of law. Erickson v.

Rocco, 433 S.W.2d 746, 750 (Tex. Civ. App.—Houston [14th Dist.] 1968, writ

ref’d n.r.e.). We should review all the evidence and indulge in all legitimate

inferences from the evidence in a light most favorable to the temporary injunction,

even if we may disapprove of the reasons given by the trial court. See Hartwell’s

Office World, Inc. v. Systex Corp., 598 S.W.2d 636, 638 (Tex. Civ. App.—Houston

6

F3 Capital did not exercise the right to acquire the 25 million shares until the parties

later modified the Drillship Purchase Agreement—after Su became a fiduciary. Su suggests

those shares should be treated as acquired before he became a fiduciary, when F3 Capital

obtained the right to acquire them. We need not decide at what point F3 Capital may be

considered as having acquired those shares because even if that occurred before Su became a

fiduciary, Vantage proved a probable right to recover those shares. Thus, solely for purposes of

discussion, we will treat those shares as acquired before Su became a fiduciary.

7

The trial court recited some elements of fraud but did not expressly find all of the

elements or use the term “constructive trust.” Arguably, the trial court found “constructive trust”

may be an appropriate remedy by reciting Vantage proved a probable right to recover the shares

through disgorgement or “comparable equitable relief.” Regardless of whether the trial court

meant for that “comparable equitable relief” to include a constructive trust, we may uphold its

conclusion on this element because Vantage presented evidence supporting a constructive trust.

19

[14th Dist.] 1980, writ ref’d n.r.e.); Erickson, 433 S.W.2d at 750. “If such a

review of the evidence will support any findings of fact that would, in turn, support

the trial court’s judgment, those findings are implied in the judgment, itself.”

Erickson, 433 S.W.2d at 750; see Waddell v. Lee, 562 S.W.2d 32, 33 (Tex. Civ.

App.—Houston [14th Dist.] 1978, no writ) (quoting Erickson). Because a trial

court cannot abuse its discretion in reaching a correct result for the wrong reasons,

we will uphold a trial court’s order reviewed under the abuse-of-discretion

standard on any ground supported by the record. See In re ExxonMobil Corp., 97

S.W.3d 353, 358 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding);

Luxenberg v. Marshall, 835 S.W.2d 136, 141–42 (Tex. App.—Dallas 1992, orig.

proceeding).

A constructive trust is an equitable remedy created by the courts to prevent

unjust enrichment. Hubbard v. Shankle, 138 S.W.3d 474, 485 (Tex. App.—Fort

Worth 2004, pet. denied).

It is a well settled general rule that if one person obtains the legal title

to property, not only by fraud, or by violation of confidence of

fiduciary relations, but in any other unconscientious manner, so that

he cannot equitably retain the property which really belongs to

another, equity carries out its theory of a double ownership, equitable

and legal, by impressing a constructive trust upon the property in

favor of the one who is in good conscience entitled to it, and who is

considered in equity as the beneficial owner.

Binford v. Snyder, 189 S.W.2d 471, 472–73 (Tex. 1945); see Meadows v.

Bierschwale, 516 S.W.2d 125, 128 (Tex. 1974). A constructive trust subjects the

person holding title to property to an equitable duty to convey it to another on the

ground the person’s acquisition or retention of the property is wrongful and he

would be unjustly enriched if permitted to retain it. Baker Botts, L.L.P. v.

Cailloux, 224 S.W.3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied) (citing

Talley v. Howsley, 176 S.W.2d 158, 160 (Tex. 1943)); Miller v. Huebner, 474

20

S.W.2d 587, 590–91 (Tex. Civ. App.—Houston [14th Dist.] 1971, writ ref’d

n.r.e.).

To establish that a constructive trust exists, the proponent must prove (1)

breach of a special trust, fiduciary relationship, or actual fraud, (2) unjust

enrichment of the wrongdoer, and (3) tracing to an identifiable res. Hubbard, 138

S.W.3d at 485. “A constructive trust is justified when one party commits fraud or .

. . breaches a fiduciary relationship.” Baker Botts, 224 S.W.3d at 736 (emphasis

added) (citing Meadows, 516 S.W.2d at 128; In re Marriage of Nolder, 48 S.W.3d

432, 434 (Tex. App.—Texarkana 2001, pet. denied)). Therefore, imposition of a

constructive trust may be based on fraud and does not require a breach of fiduciary

duty. See Baker Botts, 224 S.W.3d at 736; Hubbard, 138 S.W.3d at 485; Nolder,

48 S.W.3d at 434; see also Burkhart Grob Luft und Raumfahrt GmbH & Co. KG v.

E–Sys., Inc., 257 F.3d 461, 469 (5th Cir. 2001) (quoting Meadows, 516 S.W.2d at

128, when stating, “Under Texas law, a constructive trust is an equitable remedy

available to a party that has been defrauded.”).

The elements of fraud are (1) the speaker made a material representation, (2)

it was false, (3) the speaker knew the representation was false when made or made

it recklessly without any knowledge of its truth and as a positive assertion, (4) the

speaker made the representation with intent that the other party act upon it, (5) the

other party acted in reliance on the misrepresentation, and (6) that party suffered

injury thereby. Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341

S.W.3d 323, 337 (Tex. 2011). For fraudulent inducement, the elements of fraud

must be established as they relate to an inducement to enter into a contract between

the parties. See Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001).

The following evidence and reasonable inferences supported the fraudulent-

inducement claim relative to the shares acquired before Su was a fiduciary: (1) Su

21

misrepresented that the payment schedule from Vantage to Su’s affiliate for the

Platinum Explorer would correspond with the payment schedule on the Daewoo

contract; (2) Su knew these representations were false because it was his affiliate

who had contracted with Daewoo; (3) Su intended Vantage to act on the

misrepresentations because the transactions with Vantage were extremely lucrative

to Su; and (4) the misrepresentations were material to, and relied on by, Vantage

when deciding to enter into the transactions because the aspect of the

corresponding payment schedules was vital to its ability to obtain financing.

Likewise, Vantage presented evidence on the elements necessary to impose

a constructive trust: (1) the above-described fraud; (2) resulting unjust enrichment

of Su via the transfer of Vantage shares to Su’s wholly-owned subsidiary, F3

Capital, upon closing of the transactions; and (3) tracing to an identifiable res—

those shares. See Hubbard, 138 S.W.3d at 485. Accordingly, Vantage established

a probable right to recover the shares transferred upon closing of the transactions.

Shares acquired after Su became a fiduciary

With respect to the shares acquired after Su became a fiduciary, he suggests

(1) he did not breach fiduciary duties in the manner outlined by the trial court, or

(2) disgorgement is inappropriate because any breach did not amount to fraudulent

inducement.

To support his first contention, Su focuses on the trial court’s finding that

Vantage made a prima facie case that Su breached fiduciary duties by failing to

comply “with his obligations under the Transactions.” Su suggests such actions

could not constitute a breach of fiduciary duties because he was a party only to the

Memorandum of Understanding, which was non-binding. However, it is

undisputed the parties to the binding contracts were Su affiliates. It is a reasonable

conclusion that Su breached his fiduciary duties to Vantage if he caused his

22

affiliates to breach their contracts with Vantage, including the obligation to

cooperate in Vantage’s financing efforts for purchase of the Platinum Explorer.

Moreover, apart from the breach-of-contract finding, the trial court generally found

Vantage made a prima facie case that Su “breached his fiduciary duty, frustrating

Vantage’s ability to obtain financing for existing transactions that were essential to

the viability of the company.” Su does not contest that, regardless of any

contractual obligations of his affiliates, Su was bound as a fiduciary to refrain from

taking affirmative actions that would harm Vantage’s financing efforts.

Vantage presented evidence that Su not only failed to cooperate but took

affirmative actions to harm the financing efforts, while intending to benefit

himself: (1) Su demanded (albeit unsuccessfully) early remittance of some or all of

Vantage’s down payment on the Platinum Explorer, although that arrangement

would be viewed negatively by potential financers; (2) Su perpetuated his pre-

closing misrepresentations that Vantage’s payment schedule for the Platinum

Explorer corresponded with the payment schedule to Daewoo—despite knowing

that aspect was vital to Vantage obtaining financing; (3) Su conditioned his

willingness to provide the complete Daewoo contract on Vantage modifying the

option for the Titanium Explorer to a joint venture whereby Su would own 50%;

and (4) Su failed to provide a complete Daewoo contract until the eve of the

financing roadshow—when it was too late for Vantage to adjust its financing

efforts to compensate for the now-revealed discrepancy in payment schedules.

Next, citing ERI Consulting Engineers, 318 S.W.3d at 881–82, Su

apparently maintains that Vantage cannot obtain disgorgement of the shares

because any breach of fiduciary duties did not amount to fraudulent inducement.

We do not necessarily agree with Su’s interpretation of that case. Nonetheless, we

need not consider its scope because Vantage presented evidence that Su’s breach

23

of fiduciary duties, as outlined above, did amount to fraudulent inducement. In

fact, although the trial court did not use the term “fraud,” it found, and the

evidence supports, that (1) Su’s actions in frustrating the financing efforts were

designed to obtain additional cash and other benefits, and (2) this breach benefited

Su directly and is traceable to the shares at issue. Thus, Vantage presented

evidence of a right to recover those shares by disgorgement (due to breach of

fiduciary duties amounting to fraud) or a constructive trust (based on fraud alone).

Specifically, again, Su’s continued misrepresentations about the

corresponding payment schedules were material to Vantage and it relied on them

by proceeding with efforts to obtain financing and consummate the transaction.

Then, revelation of the actual payment structure for the Daewoo contract on the

eve of the scheduled roadshow “killed” the financing efforts. Because acquisition

of the Platinum Explorer was integral to Vantage’s continued viability, it was

forced to re-trade the deal and reach the new agreement whereby F3 Capital

received further Vantage shares and other benefits.

Further, it is a rational inference that Su perpetuated the misrepresentations

regarding the Daewoo contract in order to force the new agreement because it

resulted in further lucrative benefits paid to Su. Other adverse actions by Su after

he became a fiduciary support this inference: (1) his repeatedly demanding

premature remittance of the down payment on the Platinum Explorer and

threatening to withhold Vantage’s right to control specifications if it failed to

comply; and (2) his forcing Vantage to redirect millions earmarked for the

purchase of the jack-up rigs to meet Su’s initial payment on the Daewoo contract—

when Su had obtained a deferral and thus retained those funds interest-free for a

period. We recognize these actions would result in Su receiving benefits other

than the shares governed by the temporary injunction. But, these actions support

24

Vantage’s position that Su engaged in a pattern of taking actions detrimental to

Vantage in order to extract more benefits. Thus, these actions are relevant to show

Su’s intent with respect to the misrepresentations that did result in his receiving

more shares. Accordingly, Vantage demonstrated a probable right to recover the

shares received by Su while he was a fiduciary.

2. Whether Vantage may recover shares held by F3 Capital

Su further maintains that, irrespective of his own actions, Vantage did not

prove a probable right to recover the shares from F3 Capital because it was never a

Vantage fiduciary. The trial court found that, if Vantage obtains judgment against

Su, it may be entitled to recover the shares via equitable relief in this action or in a

subsequent enforcement action against F3 Capital or other transferees of the

shares. We agree with the trial court’s conclusion.

Vantage cites authority recognizing that when property subject to a

constructive trust is transferred, the recipient of the property takes title to the

property subject to the trust if (1) the recipient does not give consideration for the

property, or (2) the recipient has notice of the existence of the trust at the time of

the transfer. Cote v. Texcan Ventures II, 271 S.W.3d 450, 453 (Tex. App.—Dallas

2008, no pet.) (citing Binford, 189 S.W.2d at 473). A court of equity can impose a

constructive trust on property “in the hands of the original wrongdoer or . . . any

subsequent holder, until a purchaser of it in good faith and without notice acquires

a higher right, and takes the property relieved from the trust.” Fitz–Gerald v.

Hull, 237 S.W.2d 256, 263 (Tex. 1951); see Teve Holdings Ltd. v. Jackson, 763

S.W.2d 905, 908 (Tex. App.—Houston [1st Dist.] 1988, no writ).

Vantage’s evidence indicates F3 Capital was aware of the alleged fraud and

breach of fiduciary duties resulting in its acquisition of the shares considering that

Su is F3 Capital’s sole owner, director, and officer. F3 Capital cannot claim the

25

status of an unsuspecting, innocent transferee of property subject to a constructive

trust. And, as the trial court found, Su has not shown Vantage would be foreclosed

from recovering shares held by F3 Capital in constructive trust by adding F3

Capital to this suit or bringing a subsequent enforcement action against it.

Further, as Vantage argues, an order for a constructive trust over, or

disgorgement of, the shares held by F3 Capital would work “hand-in-glove” with

the Texas Turnover Statute. Under that statute, to aid in enforcement of a

judgment, a court may “order the judgment debtor to turn over nonexempt property

that is in the debtor’s possession or is subject to the debtor’s control . . . .” Tex.

Civ. Prac. & Rem. Code Ann. § 31.002(b)(1) (West, Westlaw through 2015 R.S.).

Again, the shares are subject to Su’s control because he is F3 Capital’s sole owner,

director, and officer, and has consistently treated the shares as subject to his

control.8

In summary, because Vantage proved a probable right to recover the

Vantage shares held by F3 Capital, we overrule Su’s second issue.

C. Whether Vantage proved a probable, imminent, and irreparable injury

in the interim

According to the following findings, the trial court determined that Vantage

satisfied this element because Su had encumbered Vantage shares held by F3

Capital by pledging them to creditors of other Su-controlled entities:

13. Mr. Su acting through F3 Capital, has caused F3 Capital to encumber

approximately 55 million of the Shares as security for third-party

creditors of other entities under Mr. Su’s common ownership and

control.

8

Vantage also posits it may recover the shares from F3 Capital under alter ego and

privity theories. Because we agree Vantage made a prima facie case for recovery of the shares

under some theories, we need not address the viability of every theory proffered by Vantage.

26

14. Mr. Su, acting through F3 Capital, personally pledged 12.1 million

Shares to the Royal Bank of Scotland, 9 million Shares to Sinopec,

and 3 million Shares to NewLead Holdings.

15. Mr. Su’s actions taken individually, or by or through F3 Capital,

threaten to dispose of the Shares that are the subject of this pending

litigation.

16. Allowing Mr. Su to dispose of these Shares would infringe upon

Vantage’s equitable interest in the Shares.

17. To allow Mr. Su to dispose of these Shares would permit him to

interfere with this Court’ s exercise of its jurisdiction over the subject

matter of this suit by rendering any judgment regarding the Shares at

issue ineffectual.

18. Unless Mr. Su and all persons acting in concert with or under Mr.

Su’s control are restrained from further efforts to sell, transfer, pledge

or otherwise encumber or dissipate the shares, Vantage’s ability to

obtain meaningful relief in this action or any later enforcement action

will be rendered moot.

On appeal, Su does not challenge the above-cited findings regarding his

encumbering shares for the benefit of his other affiliates. Nevertheless, it is

undisputed that, in a bankruptcy proceeding, Su pledged to creditors millions of the

Vantage shares held by F3 Capital. See In the Matter of TMT Procurement Corp.,

764 F.3d 512, 515–19 (5th Cir. 2014); see also In re TMT Procurement Corp., No.

13-33763, 2014 WL 1577475 (Bankr. S.D. Tex. Apr. 16, 2014), vacated and

remanded, TMT Procurement Corp., 764 F.3d 512. The bankruptcy proceeding

was filed on behalf of more than twenty companies controlled by Su, which are not

parties to the present suit. See TMT Procurement, 764 F.3d at 516. Certain

creditors moved to dismiss the proceeding. See id. With respect to most of the

debtors, in lieu of dismissal, the bankruptcy court permitted Su (over Vantage’s

objection) to deposit millions of the Vantage shares held by F3 Capital as collateral

for the creditors. See id. at 515–19; TMT Procurement, 2014 WL 1577475, at *1–

6. When the trial court issued the temporary injunction in the present case, the

27

orders of the bankruptcy court were still in place. Subsequently, the Fifth Circuit

vacated the orders, holding the bankruptcy court could not order such use of the

Vantage shares in the bankruptcy proceeding. See TMT Procurement, 764 F.3d at

519–28. However, Su at least attempted to encumber (and successfully so, before

the Fifth Circuit decision) the Vantage shares in that proceeding.

Moreover, at the temporary-injunction hearing, Su acknowledged he

previously pledged (outside the above-mentioned bankruptcy proceeding) Vantage

shares held by F3 Capital for other obligations of his affiliates—including pledges

to the Royal Bank of Scotland, Sinopec, and NewLead Holdings, the entities

mentioned by the trial court in its findings.

In summary, Vantage presented evidence it would suffer a probable,

imminent, and irreparable injury before trial if a temporary injunction did not issue

because of Su’s previous actions in placing, or attempting to place, the shares out

Vantage’s reach. We overrule Su’s third issue.

D. Collateral-estoppel contention

In his final attack on the merits of the injunction, Su asserts such relief was

barred by collateral estoppel. That doctrine prevents a party from re-litigating an

issue that it previously litigated and lost. Calabrian Corp. v. Alliance Specialty

Chems., Inc., 418 S.W.3d 154, 158 (Tex. App.—Houston [14th Dist.] 2013, no

pet.). The party relying on the doctrine must establish (1) the facts sought to be

litigated in the second action were fully and fairly litigated in the first action, (2)

the facts were essential to the judgment in the first action, and (3) the parties were

cast as adversaries in the first action. See id.

Su suggests the doctrine applies here because the bankruptcy court ruled

Vantage is not entitled to a constructive trust over the shares, when rejecting its

28

challenge to Su depositing the shares as collateral in that proceeding. However, we

conclude that at least the first element of collateral estoppel is not satisfied in this

case. Whether Vantage is entitled to a constructive trust over the shares was not

“fully . . . litigated” in the bankruptcy court because there was not a final

determination that Vantage has no such right. See id. As noted above, the Fifth

Circuit vacated the bankruptcy court’s orders. See TMT Procurement Corp., 764

F.3d at 528. We recognize the Fifth Circuit had not issued its opinion when the

trial court signed the temporary injunction. See id. But, Vantage had filed an

appeal of the bankruptcy court’s ruling, and the Fifth Circuit had heard oral

arguments. Thus, the issue had not been finally litigated, and collateral estoppel

did not bar the temporary injunction. We overrule Su’s fourth issue.

IV. AMOUNT OF THE BOND

Finally, we address Su’s fifth issue and the corresponding portion of his

appellate motion challenging the amount of the temporary-injunction bond. Before

granting a temporary injunction, the trial court must require the applicant to post a

bond in the sum fixed by the trial court payable to the adverse party. Tex. R. Civ.

P. 684. The purpose of the bond is to secure payment to the party against whom

the injunction is granted in the amount of damages he would suffer if the

injunction is subsequently dissolved. Biodynamics, Inc. v. Guest, 817 S.W.2d 128,

130 (Tex. App.—Houston [14th Dist.] 1991, writ dism’d by agr.). The trial court

has considerable discretion in setting the amount of the bond. Id. at 131; see IAC,

Ltd. v. Bell Helicopter Textron, Inc., 160 S.W.3d 191, 203 (Tex. App.—Fort Worth

2005, no pet.). We review case-by-case the adequacy of a bond set by the trial

court based on the record before us. IAC, Ltd., 160 S.W.3d at 203.

Here, the trial court set the bond at $125,695.81. Su argues that amount is

insufficient because it represents a percentage of the value of the shares subject to

29

the injunction rather than the damages he would sustain as a result of the

injunction. In support, Su cites only his following testimony at the hearing:

Q. If the court were to enjoin F3 from selling its shares of Vantage,

how would that affect its business and the business of related

companies, if at all?

A. Huge. These shares has values, but actually there is a reason. So

the -- another issue, the shares restricted by the Vantage --

Q. Mr. Su, listen to my question. My question is how would it affect

your businesses if the Court were to prevent F3 Capital from

disposing or using its shares as it sees fit?

A. It will affect my Chapter 11 and it will affect my business to

survive.

Q. Can you put a figure on it for us?

A. $1.5 billion.

Q. That’s what you stand to lose?

A. Yes, sir.

This testimony is too general and conclusory to establish Su would suffer

$1.5 billion in damages from the injunction. Su did not explain how he calculated

this amount or the nature of such potential loss. Therefore, on this record, the trial

court did not abuse its discretion by setting the bond at $125,695.81. See id.

(holding trial court did not abuse its discretion in setting amount of bond where

nothing in record demonstrated defendants’ potential lost profits from temporary

injunction precluding their use of applicant’s trade secrets; testimony that “income

[defendants] expected to derive” from selling products made from the information

“would be lost” was insufficient); Biodynamics, Inc., 817 S.W.2d at 131 (rejecting

defendant’s challenge to temporary-injunction bond where there was nothing in the

record to show amount was insufficient). Accordingly, we overrule Su’s fifth issue

and the portion of his appellate motion challenging the amount of the bond.

30

Having overruled all of Su’s issues in his appellate motion and brief, we

deny the motion and affirm the temporary injunction.

/s/ John Donovan

Justice

Panel consists of Justices Boyce, Jamison, and Donovan.

31