AW Harris Awh 2024 48085 Doc. 120966558

Hearing October 28, 2024

REPORTER'S RECORD VOLUME 1 OF 1 VOLUMES TRIAL COURT CAUSE NO. 2024-48085

ATLANTIC WAVE HOLDINGS, ) IN THE DISTRICT COURT

LLC AND SECURE COMMUNITY,

VS.

) ) HARRIS COUNTY, TEXAS

CYBERLUX CORPORATION AND )

MARK SCHMIDT, INDIVIDUALLY) ) 129TH JUDICIAL DISTRICT

On the 28th day October, 2024, the following proceedings came on to be held in the above-titled and numbered cause before the Honorable Michael Gomez, Judge Presiding, held in Houston, Harris County, Texas.

Proceedings reported by computerized stenotype

machine.

Inoficial Copy office of Marin Burgess District Clerk

) ) ) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Hearing October 28, 2024

APPEARANCES

Unofficial Copy Office of Marilyn Burgess District Clerk

Hearing October 28, 2024

THE COURT: Court is on the record, Cause

Will everyone, please, introduce

themselves for the record.

MR. GRADY: Shawn Grady for the Plaintiff. MR. PENNETI: Alex Penneti for the

THE COURT: One second. I'm trying to -- this is Defendant's Motion to Vacate and Motion to Stay the foreign judgment; is that right

MR. PENNETI: That's right.

THE COURT : You may proceed.

MR. PENNETI Judge, this action was brought following a settlement agreement entered by the parties that was entered last summer, so June of 2023, the settlement agreement was entered in Virginia. I 17 would like to touch on that before I get into some of the other issues here. The settlement agreement itself was entered in June. As a part of that, the parties included a venue and choice of law provision to dictate any disputes arising from the settlement agreement will be litigated in Virginia pursuant to Virginia law.

THE COURT: Can I -- so this is a little bit confusing but I want to make sure I kind of figure out where -- what we're talking about because --

Hearing October 28, 2024

MR. PENNETI: I think it makes more sense

THE COURT: -- because a judgment was

entered in Virginia; is that right?

MR. PENNETI: That's right, Judge I

think I should have started with this. As part of the

settlement agreement was a consent judgment And that was incorporated into the settlement agreement in part because there's another party who's not -- there is another entity that was part of that agreement that is not a party to this case. It's called Stripe Point

Consulting. So that consent judgment in part was to ensure that Strike Points claims were resolved. So that

THE COURT: Well, so, but -- so I don't really get to go underneath the merits of whatever judgment is entered, right. So there was a final judgment that was entered in Virginia that they're seeking to enforce here in Texas, right?

MR. PENNETI: Yes, that's correct, Judge. That's right. You can't undermine that Virginia

Hearing October 28, 2024

the time of the settlement agreement, so June 2023. It also, again, began making payments on the settlement.

because in some Virginia litigation - on a higher

ignoring the specifics of the alleged breach by

Plaintiffs, really what happened is Plaintiffs contend

ended up in federal court, as well. The first 21 California lawsuits is the same posture. There's a

Hearing October 28, 2024

Court dismissed that second California action so that we could go litigate this in Virginia where it belongs. So

So you have the collection action in Virginia, the two actions filed by my client in Virginia, this action, another action in Cada fornia, all about the same facts and circumstances. And so, that's kind of the high level.

THE COURT: So what does that matter? Like why do I -- why should that have any -- why is this any part of the discussion when I have a final judgment here out of Virginia that they have domesticated, as long as it's final, doesn't that end the conversation?

MR. PENNETI: No, it doesn't because it's a final judgment in title, sure, but the reality is

Hearing October 28, 2024

given the litigation in Virginia is over this settlement agreement, which that consent judgment arose from, that litigation in Virginia, whether it's through any of the four original actions, and really it would be through the latter three, so my clients' two actions or

THE COURT: But that's every case. Every case you may collect part of it. Part of collection efforts, you collect until you're satisfied. And this case hasn't been modified and hasn't been appealed and hasn't been superseded. Nothing has happened with this

order, right?

MR. PENNETI: Well, it hasn't been

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there because we have done that and because we granted the security interest at minimum, Judge, you have to stay the action. You have to either vacate it or stay

THE COURT: Has it been stayed? I mean has it been stayed in Virginia?

MR. PENNETI : Those Se Dall th those litigations, yes, the stay has occurred in Virginia. There's no -- the collection there's no activity in

the collection suit. 'ou've got the three other lawsuits.

THE COURT: So the enforcement of this judgment that they domesticated has been stayed in Virginia?

MR. PENNETI: That's correct. And it's

also --

THE COURT: Hold on. Mr. Grady?

MR. GRADY: Yes, Your Honor. THE COURT : Is that right?

Unofficial Copy Office of Marilyn Burgess District. Clerk

MR. GRADY : -- that shows the Virginia judgment has been stayed. I know they filed a complaint for an injunction seeking a stay. According to my

Hearing October 28, 2024

THE COURT: Do you have a copy of the

MR. PENNETI: I don't have a copy of it, Judge, my firm is not handling that.

I

parcel of what you're asking. I mean, if your argument has been stayed then, yeah, of course, I won't enforce it. But if it's -- I don't really see -- Mr. Penneti, it's a final judgment. unless you say it was

fraudulently -- unless there's some fraud associated with it, it's enforceable. And there's not much else I can do about it. If you have a stay, an order to stay out of -- I can't go behind and undermine or figure out what's going Jon and whatever pieces of litigation may be associated with you folks and perhaps this judgment.

But if you have -- if this has been superseded, if it's been enjoined in some way out of Virginia, then, yes, I

stay. If you file a copy of the stay or the enjoining

Hearing October 28, 2024

Maissit ssoing uluiEN Jo ja Non HAyoun

MR. PENNETI: Judge, there is a basis. As long as we requested the stay under 35.006, the particular language is that a stay of execution has been granted, has been requested, or will be requested. So 7 we don't even have to request it at this point because 8 we have posted the bond. As long as we have requested 9 it, which we have, or we would request it and have posted bond, which we have and we have also granted a security interest, you still have to stay the action.

So -- THE COURT: You're saying under Virginia law it's stayed?

MR. PENNETI: No, Judge, what I'm saying is that under Texas law you're required to stay the action because we have requested the stay. That's what 35.006 says I can share my screen with you if you would like !!

THE COURT: Sure. MR. PENNETI: Okay. The language I'm referring to is right here.

THE COURT: Right. I mean, so we're talking about a situation where, you know, you superseded a judgment and you're putting up the

Hearing October 28, 2024

security, right? And so, if you're in the process of doing that -- and so you're saying you have put up security for that, you have bond?

MR. PENNETI: We don't have a bond, no, but under 52.006 we have granted a security interest and all of Cyberlux's property at the time --

THE COURT: Mr. Grady, your response?

MR. GRADY: Your Honor, that's not the same as a bond. That doesn't offer any security. It's just a UCC lien. And the security{is defined by 52.006. It doesn't say that you -- just grant UCC lien or that's not the same as putting up a supersedeas bond by any means.

THE COURT. This is --

MR. GRADY : I would note, Your Honor, in that statute, they do need to show a ground for stay of enforcement. They are not allowed to appeal. They have already waived their right to appeal. And so, I don't

think 35, 006 (a) which Mr. Penneti was directing the Court to applies. I think it's (b) and that they do have a burden to show ground for a stay. Which then

also does -- and if they do show that ground, then they need to post the bond as they would be required to under 52.006 for appellate bonds. So he's trying to sidestep

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I cited a case in our response in which the Austin Court of Appeals determined that to show -- to show grounds for stay you have to show irreparable harm and no legal adequate remedy.

THE COURT: So, hold on. Under 35.006 if the judgment debtor shows the Court that an appeal from the foreign judgment is pending or will be taken that the time for taking an appeal is not -- the stay of

execution has been granted -- has been requested or will be requested and proves that the judgment debtor has furnished or will furnish the security for satisfaction

of the judgment required by

rendered. The Court shall stay enforcement of the foreign judgment until the appeal is concluded, the time for appeal expires of the stay of execution expires or is vacated. So I don't -- this is in contemplation of an appeal, Mr. Penneti, it's not you filing -- it's not just going in and filing a motion for stay. This is shall stayenforcement of the foreign judgment until the appealis concluded, the time for appeal expired, or the stay of execution expires or is vacated. I don't -- I

don't think this is in contemplation of, hey, I made a motion for stay or will make a motion for stay and I get to stay your judgment.

MR. PENNETI: You are permitted to do that

Hearing October 28, 2024

THE COURT: So here's -- so what exactly do you have the Virginia court vis-a-vis the stay?

MR. PENNETI: I think we have got four active lawsuits. I think our requests are pending and that's in terms of Your Honor's request for an order. We do not have an order.

THE COURT: When you say it's pending, what does that mean?

MR. PENNETIA Our actions' been filed. Frankly, we filed request for injunctive relief and declaratory relief

Unoficial Copy Office of Marilyn Burgess District, Mark

THE COURT: So here's -- so let's assume for a moment that I'm willing to go on this -- follow this line of logic. I don't believe that this is, in essence,' a'self executing stay where you can file something and say, hey, it's pending and I'm not going to anything with it. If you, in fact, have something that you are actually prosecuting, that you have pending before a Judge, that's been heard, that you filed the -- furnished the security to satisfy the judgment required in the state. You have done all of those things, then,

Hearing October 28, 2024

the Court or maybe you have an oral hearing set for next week or something of that nature. I would be willing to

judgment simply because something has been filed somewhere that says Chey, please don't enforce the

judgment. I just kind of need to know where we're at and really if this is a good faith prosecution of something or is this something you have on file somewhere

MR. PENNETI: Understood, Judge.

THE COURT: So I need to know which one it is and it doesn't sound like you're clear on that.

MR. PENNETI: The firm in Virginia is handling this matter. So I have somewhat of an idea of

Hearing October 28, 2024

THE COURT: So Mr. Grady -- here's -- are you doing anything in terms of collection right now?

MR. GRADY: Your Honor, the only thing we're seeking to do is take the deposition of a couple of witnesses. We noticed them. They were quashed) and nothing else. That's it.

THE COURT: But you haven't sought to execute on it? I don't know if they have anything. Or you may not know.

MR. GRADY: We haven't requested any writs or taken an actual enforcement action. Just discovery.

THE COURT: So Mr. Penneti, is there something you're concerned about besides some

MR. PENNETI: Judge, other than the depositions and discovery, all we have here is we have a lease here with some property on it. Again, that goes back to the notion that all this needs to be litigated in Virginia where all the parties and concerns are and

reall but, no, other than that I don't have concerns other than the fact that -- I'm concerned with

inconsistent outcome with three different ongoing

litigations. Irrespective of my clients litigation, the litigation brought by Defendants, if that were the

Hearing October 28, 2024

settlement agreement, again, allowing collection at this stage would be inconsistent and that's why this is not at final judgment but interlocutory.

THE COURT: Okay. So -- if all they're doing right now is just discovery then I don't think there's any real -- I'm not going to stay the discovery. If they were doing some enforcement I would be -- and you were trying to prosecute this other stuff in Virginia, I could say, hey, let's holdon a minute before you, you know, sell something or garnish

something or sequester something That might have a more -- there might be more urgency there. So this is -- so why don't we do this. Mr. Grady, is the fact that you're not enforcing because you're not aware of any assets?

MR(GRADY: Well, they have a warehouse which they're deasing. They may have drones stored there. They manufacture drones. And so, there might be assets i'n Texas but we don't know for sure. And so, or contracts and receivables, things like that that could be recovered but we're not aware. That's why we're doing the discovery, of course.

THE COURT: Tell you what. If you want, you can -- I will go ahead and stay enforcement for two weeks but not any discovery. I'm not going to stay any

Hearing October 28, 2024

discovery in this case. I will stay enforcement two

MR. PENNETI: Can we have 30 daysA Judge,

THE COURT: I know we're getting into Thanksgiving. So let me -- I will -- is it okay if I stay enforcement for 30 days?

MR. GRADY: 30 days isfine, Your Honor. THE COURT: I will stay enforcement for 30 days.

MR. GRADY: That doesn't include

discovery, right?

Unofficial Copy Office of Marilyn Burgess District Clerk

THE COURT: Correct. I'm not going to stop you from doing discovery. I can understand if -- but I will let you supplement in the meantime with anything that) seems to fit within 35.006 and then you can -- after 30 days the stay will expire. So between now and then you will need to update and then re-notice for hearing or set for submission anything the Court should consider continuing the stay of enforcement. Is

MR. PENNETI: I think that's all, Judge. THE COURT: Thank you. Have a good day.

Hearing October 28, 2024

STATE OF TEXAS

COUNTY OF HARRIS

I, Jennifer Gajevsky, Official Court Reporter in and for the 129th District Court of Harris, State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription

requested in writing by counsel for the parties to be included in this volume of

in the above-styled and numbered cause, all of which occurred in open court in chambers and were reported by me.

I further certify that this Reporter's Record of the proceedings truly, and correctly reflects the exhibits, if any, offered by the respective parties.

Unofficial Copy Office & Martyn Burgess District Clerk

/s/ Jennifer Gajevsky

Jennifer Gajevsky, CSR Texas CSR 9250

Official Court Reporter

129th District Court Harris County, Texas 201 Caroline Houston, Texas 77002 Expiration: 2/2026