MARVIN ISGUR, Bankruptcy Judge.
Edward Talone Trust No. 1's Claim #22 is disallowed in its entirety. Edward Talone's Claim #23 is disallowed in its entirety. As set forth in more detail below, the claims are disallowed because they seek compensation for engineering services performed by unlicensed persons in violation of the Texas Engineering Practices Act.
This Memorandum Opinion concerns a dispute between Anloc, LLC (the Debtor) and Edward R. Talone (individually, "Talone" and together with the Edward Talone Trust No. 1, for which he serves as Trustee, the "Talone Plaintiffs"). Anloc hired Talone to perform various services in connection with its drilling operations. This dispute arises out of Talone's efforts to obtain compensation.
The dispute predates Anloc's bankruptcy filing. After the filing, the Talone Plaintiffs have attempted to collect compensation in multiple ways: (i) filing an adversary proceeding seeking a declaratory judgment that an employment contract conveyed equitable title to a portion of Anloc's interest in certain oil and gas leases
This Memorandum Opinion resolves: (i) Anloc's Objections to Proof of Claim 22 (Edward Talone Trust No. 1) and Proof of Claim Number 23 (Edward R. Talone), (ECF No. 293); (ii) Anloc's Motion to Estimate Claims, (ECF No. 296); and, (iii) Talone's Motion to Estimate Claim Pursuant to § 502(c), (ECF No. 331). In resolving
Although the parties dispute many facts, few of the disputed facts are material to the outcome of these motions.
Anloc is a Texas Railroad Commission Operator which has been approved to operate crude oil and natural gas leases in Texas. (ECF No. 37 at 3).
In early 2009, Anloc entered into a Farmout Agreement with Direct Petroleum Exploration, Inc., the lessor of two oil and gas leases in Harris County, Texas (known individually as the "Warren" and "Colvin" leases, and together as the "Hockley Dome Leases"). (Case No. 12-3216, ECF No. 12 at 2, ECF No. 13 at 3). Pursuant to the Farmout Agreement, Anloc would earn interests in these oil and gas leases by meeting certain drilling requirements. (Case No. 12-3216, ECF No. 12 at 2, ECF No. 13 at 3).
In February 2009, Anloc entered into a "Participation Agreement" with Petrodome Energy, LLC. In return for helping finance Anloc's drilling operations, Petrodome had the right to share in Anloc's earned interests in the oil and gas leases.
Anloc hired Talone to perform services in connection with these operations. The initial employment agreement (entered into in either January or February 2009) was oral. (Case No. 12-3216, ECF No. 12 at 2, ECF No. 13 at 3). The exact terms of the contract, the exact services Talone was hired to perform, and whether Talone competently performed those services are disputed issues of fact.
Both parties acknowledge that (at some point) Talone was to receive as compensation a portion of the interests in oil and gas leases acquired by Anloc.
Anloc eventually obtained interests in several oil and gas leases as a result of its drilling operations. In September 2009, Petrodome (Anloc's financial partner) sued Anloc over these interests. In March 2010, Anloc was temporarily forced out as operator of these leases and its interests were temporarily terminated. In November 2010, after a settlement in the Petrodome lawsuit, Anloc regained most of its interests in the leases (subject to ownership claims of additional parties connected to Anloc).
In the meantime, Talone continued to work for Anloc. Eventually, Talone and Anloc executed a written employment contract
Not long after execution of the Sharing Agreement, Anloc temporarily lost control of its interests in the oil and gas leases. As a result, Talone's compensation as originally contemplated was not possible. Talone alleges that, to rectify the problem, Anloc offered alternate compensation at the rate of $20,000.00 per month.
On April 15, 2010, Talone filed an Affidavit of Mechanic's Lien Oil and Mineral Property (hereinafter, "M & M lien"). (Case No. 12-3216; ECF No. 12 at 29-30). The amount of the lien ($300,000.00) corresponds to approximately 15 months' work (mid-January 2009 to mid-April 2010) at the rate of $20,000.00 per month.
Anloc regained most of its lost interests by November 2010. Although this made possible the original compensation agreement, the Talone plaintiffs never received an assignment of any interest in the oil and gas leases. In late 2010, Talone became aware that Anloc would not honor the terms of Sharing Agreement.
On December 22, 2010, Talone filed a copy of the Sharing Agreement in the real property records. Talone acknowledges altering the Sharing Agreement prior to filing it by writing the phrase "This instrument acknowledged before me" beside the notary's stamp. (ECF No. 381 at 54).
Anloc was involved in litigation with various other parties around the same time period. On January 11, 2011, the Talone Plaintiffs intervened in a state court lawsuit involving Anloc's interests in the oil and gas leases. The Talone Plaintiffs asserted a breach of contract claim against Anloc (for refusing to assign the lease interests and for failure to pay the $300,000.00 secured by the M & M lien) as well as a claim for quantum meruit. (Case No. 12-3216, ECF No. 1-1).
Anloc and the Talone Plaintiffs engaged in settlement negotiations after the intervention. Talone alleges that a settlement agreement was reached in principle and that, as a result, the parties executed a document known as the Assignment of Carried Working Interest. The Assignment of Carried Working Interest purports to assign Talone Trust a 6% carried working interest in certain oil and gas leases. (Case No. 12-3216, ECF No. 12 at 35). This document was only part of the alleged settlement agreement. The parties were to execute mutual releases and Talone was to be reimbursed for his legal fees incurred. (Case No. 12-3216, ECF No. 16-4 at 46) ("This was a settlement agreement we made — a verbal settlement agreement. This was — and to me [Talone], the fact that [Coolures] made the assignment meant that [Coolures] was going through with the verbal agreement, which was also pay me the money he owed me on past oil, my legal fees, future oil payments coming in, et cetera.").
There are validity issues with the Assignment of Carried Working Interest. Instead of a normal signature, the phrase "Assignor, Anloc, llc/Michael Coolures" appears in block print at the bottom of the first page. Although he later changed his testimony, Michael Coolures (Anloc's president) acknowledged in an affidavit that he wrote this phrase but argued that it was not intended to constitute his signature. (Talone Ex. 15 at 2) ("When I wrote the words `Assignor, Anloc, llc/Michael Coolures,' I was noting on the document that a signature block needed to be added if I was ever going to sign the document; I was not signing it, which is why I did not use my signature.").
On January 24, 2011, Talone filed the Assignment of Carried Working Interest with the Official Real Property Records of Harris County, Texas. (Case No. 12-3216, ECF No. 12 at 36). As with the Sharing Agreement, Talone acknowledges that he unilaterally altered the document prior to filing it. (ECF No. 381 at 61). Talone wrote the phrase "President Michael Coolures" just to the right of "Assignor, Anloc, llc/Michael Coolures." (ECF No. 381 at 61).
Anloc's disputes with several parties continued over the course of the next year. Eventually, on February 16, 2012, an involuntary bankruptcy was filed against Anloc. (ECF No. 1). Neither Talone nor Talone Trust joined in filing the involuntary bankruptcy proceeding against Anloc. (ECF No. 1).
On April 20, 2012, the involuntary case was converted to a chapter 11. (ECF No. 41).
On April 27, 2012, Anloc removed the Talone Plaintiffs' state court lawsuit. (Case No. 12-3216, ECF No. 1).
On July 25, 2012, the Court granted a Motion to Approve Compromise under Rule 9019 in the main bankruptcy case. (ECF No. 234). This resolved many of the disputes over the oil and gas leases, but specifically left unimpaired the rights of the Talone Plaintiffs to claim either an ownership interest or a right to payment (and Anloc's ability to contest those claims). (ECF No. 234 at 3). In addition, the Court withheld from disbursement proceeds corresponding to the 10% disputed interest in case the Talone Plaintiffs' arguments succeeded.
On September 4, 2012, Talone Trust filed Claim # 22, which is an unsecured claim in the amount of $6,156,205.00. (Claim's Register No. 22 at 1).
Also on September 4, 2012, Talone filed Claim # 23, which is a secured claim in the amount of $300,000.00. (Claim's Register No. 23 at 1).
On September 18, 2012, Anloc timely filed objections to these claims. (ECF No. 293). Shortly thereafter, Anloc filed a chapter 11 plan, a disclosure statement, and a motion to estimate the Talone Plaintiffs' claims (at a value of $0). (ECF Nos. 294-96).
On October 2, 2012, the Talone Plaintiffs filed a first amended petition in the removed adversary proceeding. (Case No. 12-3216, ECF No. 12). The amended petition seeks a declaratory judgment that the Sharing Agreement conveyed to Talone Trust equitable title to a 10% carried working interest in the Hockley Dome Leases and the High Island Lease. (Case No. 12-3216, ECF No. 12 at 7). The Talone Plaintiffs also brought numerous other causes of action, including breach of contract, quantum meruit, and fraud. (Case No. 12-3216, ECF No. 12 at 7-20). All of these additional causes of action revolve around the same dispute — Anloc's failure to compensate Talone for services performed. Anloc brought counterclaims against the Talone Plaintiffs for breach of contract, negligence, breach of fiduciary duty, trespass to try title, and declaratory judgment. (Case No. 12-3216, ECF No. 13).
On October 16, 2012, Anloc filed a Motion for Summary Judgment in the adversary proceeding. (Case No. 12-3216, ECF No. 16). Shortly thereafter, the parties agreed to abate the adversary proceeding pending resolution of the Talone Plaintiffs' claims in the main bankruptcy case. (Case No. 12-3216, ECF No. 19).
On November 13 and 14, 2012, an evidentiary hearing was held on the motions to estimate and the objections to the Talone Plaintiffs' claims. After the hearing,
This Memorandum Opinion describes in greater detail the basis of the ruling.
The first issue that must be addressed is whether the Sharing Agreement and the Assignment of Carried Working Interest conveyed interests in the oil and gas leases to the Talone Plaintiffs. The outcome may affect the Talone Plaintiffs' claims against the estate.
The Sharing Agreement did not convey any interest to the Talone Plaintiffs. The Sharing Agreement is an agreement to assign rights in the future in exchange for services to be rendered in the future. (ECF No. 296 at 34) ("For [Talone Trust's] efforts, [Anloc] agrees to assign to [Talone Trust] on all leases taken by [Anloc] in the aforementioned Exhibits a Carried Working Interest (CWI) as described in those same Exhibits.") ("Such CWI will be assigned, recorded in the respective counties of production, and transferred to [Talone Trust] within thirty (30) days of initial sale of production."). There is no indication in the Sharing Agreement of a present intent to pass title as required for a conveyance. See Young v. Rudd, 226 S.W.2d 469 (Tex.Civ.App. — Texarkana 1950) ("Whatever may be the inaccuracy of expression or the inaptness of the words used in an instrument, in a legal view, if the intention to pass the title can be discovered, the courts will give effect to it....") (quoting Harlowe v. Hudgins, 84 Tex. 107, 111, 19 S.W. 364 (1892)); see also TEX. PROP.CODE § 5.022 (providing rubric for valid conveyance using the phrase "grant, sold, and conveyed").
Talone portrays the Sharing Agreement as a contract for the sale of real property. (Case No. 12-3216, ECF No. 12 at 7) ("The Sharing Agreement is a contract for the sale of real property and Talone Trust became the owner of the equitable title to the ten percent (10%) carried working interest in the Hockley Dome Leases and the High Island Lease when the Sharing Agreement was executed."). The Sharing Agreement is not a contract for the sale of real property. It is an employment contract pursuant to which, as compensation for services to be rendered in the future, Anloc agreed to assign interests in oil and gas leases to Talone Trust in the future. Talone Trust may have a claim against the estate for the value of these interests. Talone Trust does not, however, have equitable title to a 10% carried working interest in these leases by virtue of the Sharing Agreement.
The Assignment of Carried Working Interest does contain conveyance language. (ECF No. 293 at 25) ("ANLOC, L.L.C.,... for good and valuable consideration... does hereby sell, transfer and assign unto EDWARD TALONE TRUST NO. 1... a six percent (6%) CARRIED WORKING INTERSET (defined below) in and to the following oil and gas leases....").
The Assignment of Carried Working Interest is of questionable validity. Instead of a normal signature, "Assignor, Anloc, llc/Michael Coolures" is written in block print at the bottom of the first page. In addition, Talone acknowledges unilaterally altering the document by writing "President Michael Coolures" on the bottom of the first page next to where "Assignor, Anloc, llc/Michael Coolures" appears. (ECF No. 381 at 61).
The first issue is whether the document was signed. If the document was
Coolures signed the Assignment of Carried Working Interest by writing "Assignor, Anloc, llc/Michael Coolures" because he intended this mark to represent to Talone his approval and acceptance of the document. See Betts v. Betts, 2012 WL 2803750, 2012 Tex.App. LEXIS 5395 (Tex. Ct.App. — Houston July 10, 2012) (citing Bustillos v. State, 152 Tex.Crim. 275, 282, 213 S.W.2d 837, 841 (1948) ("To sign an instrument or document is to make any mark upon it in token of knowledge, approval, acceptance, or obligation.")). Coolures's testimony that he wrote "Assignor, Anloc, llc/Michael Coolures" only to indicate the future placement of a signature block is simply not credible.
Although signed by Coolures, the document was not properly acknowledged as being signed by Coolures on behalf of Anloc LLC. The certificate of acknowledgement states only that it was acknowledged by Michael Coolures, not Michael Coolures on behalf of Anloc LLC. (Claim's Register # 22 at 11). Acknowledgments by corporate officers must note that the document is being executed on behalf of that corporation. TEX. CIV. PRACTICE & REMEDIES CODE § 121.008(b)(4).
If "subscribed" is not defined as "signed and acknowledged," there is an argument that Texas Property Code § 5.021 does not require an acknowledgement for a proper conveyance. Even if this were true, it would not help Talone because this conveyance could not be properly recorded without the proper acknowledgment. TEX. PROP.CODE § 12.001(b).
Instruments unlawfully recorded do not create constructive notice. Hayden v. Moffat, 74 Tex. 647, 650, 12 S.W. 820 (1889) ("If the certificate of acknowledgement does not state the facts essential to the conveyance, the registration of the instrument is illegal, and does not constitute notice."); see also Tandy v. Dickinson, 371 S.W.2d 81 (Tex.Civ.App. — Amarillo 1963) ("If [an instrument lacking the proper acknowledgment or proof] is recorded, it is not constructive notice.").
Once Anloc filed bankruptcy, this interest is subject to the strong-arm powers, particularly § 544(a)(3)
11 U.S.C. § 544(a)(3).
Although federal law (via the Bankruptcy Code) provides the debtor-in-possession the powers of a hypothetical bona fide purchaser, it is state law that defines the status of a hypothetical bona fide purchaser. Hamilton, 125 F.3d at 298. "Under Texas law, a `bona fide purchaser is one who acquires (apparent) legal title to property in good faith for a valuable consideration without ... notice of an infirmity in the tile.'" Hamilton, 125 F.3d at 298 (quoting Williams v. Jennings, 755 S.W.2d 874, 881 (Tex.App. — Houston 1988)).
Under Texas law, "[a] conveyance of real property or an interest in real property or a mortgage or deed of trust is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged, sworn to, or proved and filed for record as required by law." TEX. PROP.CODE § 13.001(a). The actual knowledge of the trustee (or the debtor-in-possession) is not relevant. 11 U.S.C. § 544 ("without regard to the knowledge of the trustee or of any creditor"). As a result, "the issue is therefore whether a hypothetical purchaser would be charged with implied knowledge of the [assignment], by constructive or inquiry notice." Hamilton, 125 F.3d at 299. Otherwise Anloc, with the powers of a bona fide purchaser under Texas Property Code § 13.001(a), may avoid Talone's interest.
In Texas, "constructive notice is notice given by properly recorded instruments and charged to a person as a matter of law, regardless of the person's actual knowledge." Hamilton, 125 F.3d at 299 (citing Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex.1981); TEX. PROP.CODE § 13.002). As discussed above, even assuming the instrument were a valid conveyance, it was recorded only because Talone altered the document to make it appear to be in recordable
Inquiry notice is "triggered by notice of facts that would put a reasonably prudent person on a duty of inquiry." Hamilton, 125 F.3d at 299 (citing Woodward v. Ortiz, 150 Tex. 75, 237 S.W.2d 286, 289 (1951)). Unlike in Hamilton, there is no properly recorded deed of trust creating constructive notice, thereby putting a hypothetical purchaser on inquiry notice. 125 F.3d at 299-300.
Talone may not argue that this document, illegally recorded and incapable of constituting constructive notice, nevertheless creates a duty of inquiry for the hypothetical purchaser. This would allow Talone to profit from his wrong (the unilateral material alteration of the document). Talone testified that he added the phrase "President Michael Coolures" in order to get the County clerk to agree to file the document in the real property records.
Talone has not produced any other documents, of which a hypothetical purchaser would have constructive notice under Texas law, that trigger a duty to inquire. There are no documents of which a hypothetical purchaser has constructive notice, or which would create a duty to inquire, such that it would prevent the hypothetical purchaser as qualifying as a bona fide purchaser under Texas law.
The assignment to Talone is voidable as an unperfected interest in real property pursuant to § 544(a)(3) and § 13.001(a) of the Texas Property Code. As Anloc may avoid the Assignment of Carried Working Interest via its § 544(a)(3) strong-arm powers, the Assignment: (i) does not serve to reduce the value of the Talone Plaintiffs' claims against the estate; and (ii) is avoided.
The Bankruptcy Code states that courts shall allow a claim "except to the extent that — such a claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent and or unmatured...." 11 U.S.C. § 502(b)(1).
If applicable law prevents the Talone Plaintiffs from recovering compensation for the services performed, Anloc may use these laws to disallow the claims.
The Statement in Support of Proof of Claim accompanying Claim # 22 states clearly that the debt is owed "by virtue of the Sharing Agreement." (Claim's Register # 22, at 4).
The Texas Occupations Code regulates engineering and related practices. See TEX. OCC.CODE §§ 1001.001 et seq. (hereinafter, "Texas Engineering Practice Act" or "TEPA"). The TEPA "shall be liberally construed to carry out the intent of the legislature." TEX.OCC.CODE § 1001.004(d). In addition, the TEPA shall "be strictly complied with and enforced." TEX. OCC. CODE § 1001.004(c)(3).
Under TEPA, only a licensed person may: (i) engage in the practice of engineering; (ii) be represented in any way as any kind of "engineer"; or, (iii) make any professional use of the term "engineer". TEX.OCC.CODE § 1001.004(c)(2)(A)-(2)(C).
Talone admits that he is not now, and has never been, a licensed engineer. (ECF No. 381 at 50).
The TEPA prevents an unlicensed person from receiving compensation for the practice of engineering. TEX. OCC.CODE § 1001.301(d) ("A person may not receive any fee or compensation or the promise of any fee or compensation for engaging in the practice of engineering unless the person holds a license issued under this chapter.").
The parties dispute whether Talone engaged in the "practice of engineering" as that phrase is defined by the TEPA.
Talone drafted the Sharing Agreement. (ECF No. 381 at 49). The Sharing Agreement begins: "WHEREAS [Talone Trust] is in the business of petroleum engineering, developing oil and gas properties, and other interests related thereto...." (ECF No. 296 at 34) (emphasis added).
The TEPA forbids unlicensed people from using the designation "engineer" or variants thereof:
TEX. OCC.CODE § 1001.301(b). Talone's use of the phrase "in the business of petroleum engineering" in the Sharing Agreement (a violation of § 1001.301(b)) results in a conclusive
Even without the conclusive presumption, the Court would find that Talone engaged in the practice of engineering. The TEPA broadly defines the "practice of engineering", which includes:
TEX. OCC.CODE § 1001.003(c).
The services Talone performed for Anloc constitute the "practice of engineering" as defined by the Texas legislature.
The Sharing Agreement describes the services to be provided as follows:
(Claim's Register No. 22 at 5).
The Statement in Support of Proof of Claim filed with Claim # 22 describes the services Talone provided for Anloc as follows:
(Claim's Register No. 22 at 4).
It is clear that these services fall within the broad statutory definition as the practice of engineering.
Various services fall within the specifically defined categories of (1) through (11). Working on completion strategies, preparing reserve decline graphics, developing a new well program, and preparing cost estimates all fit under category 3 (development or optimization of plans and specifications for engineering works or systems) as well as category 2 (design, conceptual design, or conceptual design coordination of engineering works or systems). According to Talone's own testimony, all services related to drilling the wells (such as well completion and installing production equipment) would fall under category 4 (planning the use or alteration of land or water or the design or analysis of works or systems for the use or alteration of land or water). (ECF No. 381 at 16-17).
In addition, each service satisfies the "catch-all" category 12 as professional services necessary for the planning, progress, or completion of an engineering service. At the November 2012 evidentiary hearing, Talone testified that the services he provided were necessary for the petroleum engineers to properly complete their tasks. (ECF No. 381 at 28-31).
Although not relevant for TEPA purposes, Talone himself defined the work he performed for Anloc as engineering. The following exchange occurred during Talone's June 2012 deposition:
(Case No. 12-3216, ECF No. 16-4 at 18). Included amongst the list of services provided for Anloc are: (i) technical assistance; (ii) assisting with reservoir reports; (iii) preparing production reports; (iv) preparing cost estimates; and, (v) preparing reserve decline graphics. (Claim's Register No. 22 at 4).
The TEPA prevents Talone from collecting compensation under the Sharing Agreement, as unlicensed individuals may not receive compensation for the practice of engineering. TEX. OCC.CODE § 1001.301(d).
Talone argues for various TEPA exemptions, which would entitle him to receive compensation under the Sharing Agreement despite being an unlicensed engineer.
TEPA exemptions apply "only to a person who does not offer to the public to perform engineering services." TEX. OCC. CODE § 1001.051.
Talone authored the Sharing Agreement, specifically choosing language describing himself as a petroleum engineer. Coolures testified that Talone repeatedly represented to Anloc and potential financial
(ECF No. 381 at 51).
Even setting aside Talone's representations through the Sharing Agreement itself (a document filed in the public records), the evidence indicates that Talone (on behalf of Anloc) sought out financial investors. In order to encourage investment, Talone represented to the potential investors that an experienced and qualified petroleum engineer (himself) was involved with the drilling operations. Given the codified legislative intent that TEPA be liberally construed, the Court finds that Talone informed the public that he was to perform engineering services (and is therefore prohibited from using any TEPA exemptions). Talone used the promise of performance of his engineering services to induce financial investments from the public.
Even if the TEPA did not categorically preclude Talone from using the exemptions, the exemptions selected by Talone (§§ 1001.052, 1001.057, and 1001.059) are not applicable.
Section 1001.052 states: "A person who is an employee or subordinate of an engineer is exempt from the licensing requirements of this chapter if the person's practice does not include responsible charge of design or supervision." TEX. OCC. CODE § 1001.052. Talone argues that he is entitled to this exemption as a subordinate of the drilling engineers, who were themselves responsible for drilling the wells. (ECF No. 395 at 16).
Section 1001.052 is inapplicable for two reasons.
First, the TEPA defines "engineer" as "a person licensed to engage in the practice of engineering in this state." TEX. OCC.CODE § 1001.002(2). For § 1001.052 to be applicable, the person must be the employee or subordinate of a licensed engineer. Talone put forth no evidence that he was the employee or subordinate of a licensed engineer.
Second, there is evidence that Talone's duties included work as a supervisor. In fact, Talone submitted an affidavit attesting to such in connection with the M & M lien he filed (that forms the basis of Claim # 23). (Anloc Ex. 15 at 1).
Section 1001.057 states:
TEX. OCC.CODE § 1001.057(a). Talone misconstrues the extent of this exemption, arguing that it exempts all activities of full-time employees or other personnel under the direct supervision and control of the business entity. (ECF No. 395 at 17) ("The Engineering Act specifically exempts the activities of a private corporation or business entity [ANLOC]; or, full-time employees or `other personnel' [Talone] who are under the direct supervision and control of the business entity. This exemption applies to Talone."). Section 1001.057 applies to certain activities of full-time employees or other personnel under the direct supervision and control of the business entity, hence the phrase "on or in connection with."
Even if the exemption were as Talone argues, it is still inapplicable. Talone represented to Anloc that he was legally qualified to engage in the practice of engineering, and as a result is currently prevented from using this exemption. TEX. OCC.CODE § 1001.057(b) ("A person who claims an exemption under this section and who is determined to have directly or indirectly represented the person as legally qualified to engage in the practice of engineering or who is determined to have violated Section 1001.301 may not claim an exemption until the 10th anniversary of the date the person made that representation.").
Section 1001.059 states: "A qualified scientist engaged in scientific research and investigation of the physical or natural sciences is exempt from the licensing requirements of this chapter. This exemption includes the usual work and activities of a meteorologist, seismologist, geologist, chemist, geochemist, physicist, or geophysicist." TEX. OCC.CODE § 1001.059.
Talone's argument that this exemption applies is simply another way of arguing that Talone did not engage in the practice of engineering. First, because of Talone's use of a variant of the word "engineer", there is a conclusive presumption that he engaged in the practice of engineering (and is therefore not protected by § 1001.059). Second, irrespective of the conclusive presumption, this Court found that Talone engaged in the practice of engineering. Therefore, although Talone might have performed some activities that would qualify as the normal work of a physicist, his services under the Sharing Agreement were not limited to such activities. As a result, § 1001.059 does not provide an exemption.
The TEPA prevents the Talone Plaintiffs from collecting compensation under the Sharing Agreement. As the Talone Plaintiffs' claim is unenforceable under applicable Texas law, it is disallowed pursuant to § 502(b)(1).
Claim #23 relates to the M & M lien filed by Talone on April 15, 2010. Claim # 23 purports to be a secured claim in the amount of $300,000.00. (Claim's Register No. 23 at 1).
The Bankruptcy Code states that courts shall allow a claim "except to the extent that — such a claim is unenforceable against the debtor and property of the
If applicable law prevents Talone from collecting compensation for services rendered, Claim #23 will be disallowed under § 502(b)(1). If the underlying claim is disallowed, the lien securing Claim # 23 will be void. 11 U.S.C. § 506(d) ("To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void....").
As he is not a licensed engineer, the TEPA prevents Talone from receiving compensation for the practice of engineering. TEX. OCC.CODE § 1001.003(d).
The affidavit filed in support of the M & M lien states that "Edward R. Talone[] claims a lien for labor performed and services rendered under an express contract with, Anloc, LLC...." (Claim's Register No. 23 at 4).
Similarly, the following statement (included with the Statement in Support of Proof of Claim for Claim # 22) would accurately describe the services provided to Anloc under the verbal employment agreement as well as the services provided pursuant to the Sharing Agreement:
(Claim's Register No. 22 at 4).
For the reasons described above, the TEPA prevents Talone as an unlicensed person from receiving compensation under either employment agreement (as the services constitute the "practice of engineering."). Similarly, Talone is not entitled to any TEPA exemptions because: (i) the exemptions he argues for are not applicable; and, (ii) even if they were applicable, Talone is prevented from using the exemptions because of his public offer to perform engineering services.
The TEPA therefore prevents Talone from receiving compensation for these services.
As the M & M lien secures a claim which is not an allowed secured claim, the M & M lien is void pursuant to § 506(d).
The Court will issue a separate order in accordance with this Memorandum Opinion.
