The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Applicants: Nodia Ltd, Urumashvili and Partners
Subject: Extract from the register of entrepreneurial and non-entrepreneurial legal entities
Date: 22/June/2021
I have no idea what this is about but the application was accepted.
Website: https://enreg.reestri.gov.ge/main.php?value=Frontera&state=search_by_name
Interesting that finally a 'Shareholder' albeit ZM is suing FRC Directors on their breaches of their fiduciary duties to FRC
Part 3
SUMMARY OF THE ARGUMENT
(Several pages lot of "tosh or facts" plus legal justification in this section that I'm unable to copy and paste unfortunately)
CONCLUSION
Mr. Mamulaishvili’s shareholder derivative claims against the Directors are
based on their breaches of their fiduciary duties to FRC. Mr. Mamulaishvili is suing
in his capacity as a shareholder of FRC, not an employee. Resolving his derivative
claims will not require interpretation of the Employment Agreement or resolution of
any issues pertaining to Mr. Mamulaishvili’s employment with FRC. Therefore, Mr.
16
Mamulaishvili’s claims do not fall within the category of disputes subject to
arbitration under the plain language of the arbitration provision. In addition, the
Directors are not parties to the Employment Agreement and cannot enforce its arbitration provision against Mr. Mamulaishvili. Accordingly, this Court should
affirm the trial court’s decision.
Website links:
https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=4a5c4a1a-1754-4877-b88b-2e5dac7ff51c&coa=coa01&DT=Brief&MediaID=d512ba33-db04-4bb1-a628-e30f29eced66
https://search.txcourts.gov/Case.aspx?cn=01-21-00125-CV&coa=coa01
Case: 01-21-00125-CV
Part 2
Second, Mr. Nicandros fraudulently applied for a loan under the Paycheck
Protection Program (“PPP”), which was intended to help small businesses struggling
with the COVID-19 pandemic. See CR8. Mr. Nicandros misrepresented FRC’s
3
business activities. He also misrepresented FRC’s payroll costs and that the loan
would save twelve jobs—even though FRC only had two employees (Mr.
Mamulaishvili and his son), neither of whom were in danger of losing their jobs
because FRC could not pay them. See CR9. After surreptitiously applying for the
loan, Mr. Nicandros distributed some of the loan proceeds to himself using bank
accounts he set up in secret. See CR8-9.
Nowhere in his Original Petition does Mr. Mamulaishvili allege that FRC
breached the Employment Agreement. See CR4-13. Likewise, he does not assert
any claims against FRC or seek any relief from FRC. See id. As is common in
derivative suits, Mr. Mamulaishvili’ only personal claim is for the attorneys’ fees
and costs he will incur in pursuing the claims on FRC’s behalf. See id.
STANDARD OF REVIEW
A decision granting or denying a motion to compel arbitration is reviewed for
an abuse of discretion. See Steer Wealth Mgmt., LLC v. Denson, 537 S.W.3d 558,
565 (Tex. App.—Houston [1st Dist.] 2017, no pet.). When reviewing a decision on
a motion to compel arbitration, “[t]he record must be construed in a light favorable
to the trial court’s ruling.” Kehoe v. Pollack, 526 S.W.3d 781, 791 (Tex. App.—
Houston [14th Dist.] 2017, no pet.). When, as here, “the trial court did not state a
basis for its ruling in the order denying the motion to compel arbitration,” the
4
appellate court “must uphold the trial court’s ruling on any legal theory supported
by the evidence.” Id.
SUMMARY OF THE ARGUMENT
This is a shareholder derivative suit brought by Mr. Mamulaishvili against the
Directors on behalf of FRC. Mr. Mamulaishvili has not asserted any claims based
on his Employment Agreement with FRC or his termination from FRC. Instead,
Mr. Mamulaishvili only seeks redress for the Directors’ wrongdoing on behalf of
FRC in his capacity as a shareholder of FRC.
Accordingly, there is no basis for the Directors’ attempt to compel arbitration
of Mr. Mamulaishvili’s claims. First, the arbitration provision in the Employment
Agreement is not a broad form provision, but is expressly restricted to specific
categories of disputes concerning Mr. Mamulaishvili’s employment. Mr.
Mamulaishvili’s shareholder derivative claims involve only the Directors’
wrongdoing and do not require a determination of any factual or legal issues related
to the Employment Agreement.
Second, the Directors are not parties to the Employment Agreement and
cannot enforce it. Mr. Mamulaishvili has not asserted any claims against FRC and
is not seeking any relief from FRC, directly or indirectly. In fact, the judgment in
this case will benefit FRC, not result in it being vicariously liable for the Directors’
As Looed mentioned:
PART 1
BRIEF OF APPELLEE ZAZA MAMULAISHVILI
STATEMENT OF THE CASE
Appellee Zaza Mamulaishvili disagrees with Appellants’ statement of the case
in one material respect. Appellants state that “[t]he underlying litigation involves
an arbitration.” Appellants’ Br. at viii (emphasis added). The litigation underlying
this appeal is a shareholder derivative suit brought by Mr. Mamulaishvili on behalf
of Appellant Frontera Resources Corporation (“FRC”) against Appellants Steve
Nicandros, Luis Giusti, and Tyler Nelson (the “Directors”) based on the Directors’
breaches of their fiduciary duties to FRC. See CR4-5. There is also a separate
arbitration proceeding between FRC and Mr. Mamulaishvili in which FRC claims
that Mr. Mamulaishvili breached his fiduciary duties to FRC and Mr. Mamulaishvili
has asserted a counterclaim for unpaid salary. See CR114. The Directors are not
parties to the arbitration between FRC and Mr. Mamulaishvili. See id.
ISSUE PRESENTED
Whether an arbitration provision in an employment agreement that is limited
to certain categories of employment disputes covers shareholder derivative claims
brought against the company’s directors who are not signatories to the employment
agreement.
STATEMENT OF FACTS
Appellants’ lengthy recitation of Mr. Mamulaishvili’s supposed misdeeds is
completely untrue. Tellingly, the only thing Appellants cite in support of their
2
allegations is their motion to compel arbitration, which is not supported by any
evidence, and is only attorney argument. In any event, refuting Appellants’ baseless
allegations in detail is unnecessary because they have no bearing on whether Mr.
Mamulaishvili’s shareholder derivative claims are covered by the arbitration
provision in his Employment Agreement with FRC.
Mr. Mamulaishvili is a shareholder in FRC. See CR6. In 2019 and 2020, Mr.
Mamulaishvili discovered that the Directors had engaged in fraudulent and ultra
vires acts that have caused FRC monetary losses, hurt its reputation, and could
potentially result in criminal liability. See CR4-5.
First, Mr. Nicandros secretly entered into an agreement with Cornerstone
Government Affairs (“Cornerstone”) a Washington, D.C.-based lobbying firm in
which Mr. Nelson, another FRC Director, is a principal. See CR7. FRC ultimately
paid Cornerstone $440,000 at a time when FRC had limited funds. See id. Mr.
Nicandros was unable to explain his actions when Mr. Mamulaishvili confronted
him, and it appears that the he intentionally hid his activities from Mr. Mamulaishvili
because he knew Mr. Mamulaishvili would not permit him to denude the corporation
and effectively steal funds from FRC.
ZAZA MAMULAISHVILI’S ORIGINAL ANSWER TO FRONTERA RESOURCES
CORPORATION’S AND FRONTERA RESOUCES US, LLCS’S SECOND AMENDED
COUNTERCLAIM
Counter-Defendant Zaza Mamulaishvili files the following Original Answer to Frontera
Resources Corporation’s and Frontera Resources US, LLC’s (collectively “Frontera”) Second
Amended Counterclaim. In support thereof, Mr. Mamulaishvili respectfully shows as follows:
I. GENERAL DENIAL
1. Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Mr. Mamulaishvili
denies each and every allegation in Frontera’s Second Amended Counterclaim and demands strict
proof thereof.
II. DEFENSES
Mr. Mamulaishvili asserts the following defenses and affirmative defenses:
2. Frontera lacks standing to purse the claims asserted in its Second Amended
Counterclaim.
3. Frontera’s claims are barred under the doctrines of collateral estoppel, res judicata,
and comity by judgments and decisions from other tribunals, including the Permanent Court of
Arbitration, the Civil Cases Panel of Tbilisi City Court, and the Grand Court of the Cayman
Islands.
4. Frontera’s request for injunctive relief is barred by the doctrine of unclean hands.
5. Frontera’s request for injunctive relief is barred by laches.
6. On Frontera’s tort claims, Mr. Mamulaishvili is entitled to the application of the
provisions of Chapter 33 of the Texas Civil Practice & Remedies Code to reduce any judgment
against Mr. Mamulaishvili by the degree of negligence or fault attributable to any other person or
party. Mr. Mamulaishvili specifically invokes Chapter 33 and all of its subparts.
7. Frontera fails to state a claim or cause of action upon which relief can be granted.
8. Frontera failed to mitigate its damages.
9. Frontera has failed to join JSC Georgian Oil & Gas Company, Green Capital, LLC,
David Griffin, and Andrew Morrison, which are all necessary parties to Frontera’s claims.
10. Frontera’s claims are barred on grounds of justification.
11. Frontera’s claims should be dismissed under the doctrine of forum non conveniens.
III. PRAYER
WHEREFORE, Mr. Mamulaishvili prays that the Court render judgment that Frontera take
nothing and that Mr. Mamulaishvili recover his reasonable and necessary attorneys’ fees and costs
of court, and for all other relief to which Mr. Mamulaishvili may be justly entitled at law or in
equity.
Dated: June 11, 2021
Turning off the live-feed is only to the benefit of both SN and ZM (and their respective teams) - very convenient of them.
As Mole alludes to, both parties have kept schtum for the better part of almost 3 years - they don't want the Shareholders to know what they've been doing (and not doing).
I will not put it past them to have connived together to get the live-streaming switched off.
For all we know, they (or their representatives) could 'also' have 'deliberately' been messaging the Judge about the case on her 'official' social media accounts so as to get the Judge to act as she as...
AIMHO
Read the board quite often but never posted before despite my considerable exposure to the share.
I particularly like the last paragraph of your post Daceon.
God bless all and go out there an enjoy the beautiful weather out there. !
it could be worth giving this link a try now or later
https://www.youtube.com/results?search_query=Houston+Courts+of+Appeals
The Credit bit can be found in Exhibit 08 of the finding – quite a whole lot of the usual legal stuff.
Key bits for me as follows:
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of April 22, 2020, between Frontera Resources Corporation, a Cayman Islands corporation and Frontera Resources U.S. LLC (FRUS), a Texas, USA limited liability company ("Borrower"), and CSTN Ltd., a Texas, USA limited partnership, and BMCN Holdings LLC, a Texas, USA limited liability company (collectively, "Lender").
RECITALS A. .
Borrower has requested Lender to extend credit not to exceed $5,000,000.00 to Borrower in" the form of a revolving credit facility
Borrower
Frontera Resources Corporation
3040 Post Oak, Suite 1100 Houston, Texas 77056
Frontera Resources Corporation U.S. LLC
3040 Post Oak, Suite 1100 Houston, Texas 77056
Lender
CSTN LTD. 3040 Post Oak, Suite 1100 Houston, Texas 77056
BMCN HOLDINGS LLC 3040 Post Oak, Suite 1100 Houston, Texas 77056
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of April 22, 2020, between Frontera Resources Corporation, a Cayman Islands corporation and Frontera Resources U.S. LLC (FRUS), a Texas, USA limited liability company ("Borrower"), and Varang Exploration Ltd., a corporation organized and existing under the laws of the British Virgin Islands ("Lender").
RECITALS A. .
Borrower has requested Lender to extend credit not to exceed $5,000,000.00 to Borrower in" the form of a revolving credit facility
LENDER: Varang Exploration Ltd.
By: David Keselman Title: Director
Exhibit D —Additional Funding Plans
Now that the arbitration proceeding is finished, Frontera's traditional U.S. investment banking, equity and lending financial markets are open to our company. It is therefore planned to utilize the long-standing financial market and banking relationships of the Frontera group of companies that have historically organized approximately $500 million of capital for investment in Block 12.
This will be done in accordance with Article 3.4 of the PSC which states: "...Contractor may borrow capital from Third Parties and/or from Affiliated Companies for the financing required for the investments necessary for Petroleum Operations...." . EXHIBIT 1 Exhibit D – Additional Funding Plans Now that the arbitration proceeding is finished, Frontera’s traditional U.S. investment banking, equity and lending financial markets are open to our company. It is therefore planned to utilize the long-standing financial market and banking relationships of the Frontera group of companies that have historically organized approximately $500 million of capital for investment in Block 12.
This will be done in accordance with Article 3.4 of the PSC which states: “…Contractor may borrow capital from Third Parties and/or from Affiliated Companies for the financing required for the investments necessary for Petroleum Operations
VI. ZM’S BREACH OF COVENANT NOT TO COMPETE IN HIS
EMPLOYMENT AGREEMENT WITH FRONTERA
20. Since his termination on January 15, 2020,30 ZM has continued to try and
unlawfully compete with Frontera in violation of his Employment Agreement with Frontera.31
Specifically, ZM has wrongfully “compete[d] with and usurped business opportunities of FRC
[Frontera] regarding oil and gas exploration, development, drilling, production, geophysical or
geotechnical work, seismic exploration, geophysical consulting, prospect development, prospect
promotion, or design, sale, fabrication, assembly, or operation of pipelines or refineries or the
marketing or distribution of liquid or gaseous hydrocarbons or hydrocarbon products (the
‘Company Opportunities’),” as prohibited by Paragraph 22(a)(iii) of his Employment
Agreement. Ex. 10.32
21. Under paragraph 22 of the Employment Agreement, ZM is also prohibited from
competing with Frontera, and in particular cannot “compete with Frontera during the Term of
Employment; or for three years after the Term of Employment.” See para. 22(a)(i)(ii), and iii.33
ZM’s employment ended on January 15, 2021 when he was terminated for cause,34 and he
cannot compete with Frontera before January 15, 2024.
22. Frontera is also entitled to injunctive relief. Paragraph 22(e) contains ZM’s
agreement that a breach or violation of the covenant not to compete by him:
“shall entitle the Company as a matter of right, to an injunction
issued by any court of competent jurisdiction, restraining any
further or continued breach or violation of his covenant. Such right
to an injunction shall be cumulative and in addition to, and not in
lieu of, any other remedies to which the Company may show itself
justly entitled.”35
Thus, Frontera, who owns the subject oil and gas interests, is entitled to a temporary injunction
preventing ZM from competing with these interests whether they are operated by FRGC or
FRUS, which are both wholly owned subsidiaries of Frontera, and the smoke screen thrown up
by ZM’s Motion to Dismiss should be disregarded by the Court.
23. ZM’s attack on the Employment Agreement he signed is unavailing. First, the
covenant not to compete is not overly broad as it is limited to specific exploration and production
activities spelled out in paragraph 22(a), it is also limited to Eastern Georgia where Frontera’s
interests are located, and three years is reasonable given that he was there operating for Frontera
for twenty years. ZM also argues that Frontera “should not be able to prevent ZM from
continuing to earn a living in a position he has held for over 20 years,” but it is undisputed he has
been terminated for cause from that position back on January 15, 2020.36 It is further unclear
what company he could be running at this point other than one of Frontera’s wholly-owned
subsidiaries or a fake Frontera company he has set up.
V. FRGC HAD NO OPERATING INTEREST TO PASS ON TO GREEN CAPITAL
17. After Frontera terminated ZM for cause on January 15, 2021, Frontera discovered
ZM had been forming companies to carry on the business of Frontera run by his family
members, and tried to transfer the PSC to Green Capital, a company associated with other ZM
family companies, all in violation of his Employment Agreement. Specifically, companies
similar to Frontera’s name were opened by ZM through his son, Nikoloz Mamulaishvili,
including Frontera U.S. LLC formed on January 15, 2021,27 and Frontera Trading LLC. on
January 16, 2020.28
18. Green Capital was formed on September 6, 2017, with a schoolmate of ZM’s son
in charge, and on July 5, 2018 the ownership was changed to Otar Urushidze.29 Mr. Urushidze is
the Head of the Radiology Department at Tbilisi State Medical Institute and has been in that
position since 2016. He has no oil and gas experience whatsoever other than the fact that he also
formed Stream Georgia Ltd. on January 14, 2016. He then transferred ownership to ZM’s
daughter, Manana Mamulaishvili, on October 27, 2017 with Otar Urushidze remaining as a
director. So ZM and Mr. Urushidze are connected at least through ZM’s daughter. Mr.
Urushidze’s grandfather is ZM’s grandmother’s brother, which makes ZM and Mr. Urushidze
cousins.
19. ZM also laid down on Green Capital’s claim against FRGC in a Georgia
proceeding where the Judge had never before ruled on any matter, let alone one this complex,
and entered a judgment in less than 30 days giving Green Capital the rights of FRGC to operate
under the PSC. The only problem is that FRGC had no such rights, so this judgment has been
suspended at the request of the Government of Georgia
Accordingly, FRGC has 0% interest in the area known as Block 12 in Georgia and the associated
production sharing contract and license.
14. ZM is also estopped from arguing that FRGC has the operating interest rather
than FRUS. ZM signed two letters acknowledging that FRUS now has all of the interest of
FRGC, and ZM has so notified the government of Georgia. The First Notice dated April 15,
2019 to Georgia Oil and Gas Corporation and signed by ZM refers to the Production Sharing
Contract and Refinery Study, or PSC, and states:
Please take this letter as notice pursuant to Article 27 of the PSC
that on April 15, 2019, Contractor [FRGC] assigned 100% of its
interest in the PSC and corresponding ownership interest in the
Operating Company to Frontera Resources US, LLC, a Texas
118225056\V-6 8
Limited Liability Company, an Affiliate of Contractor and a
wholly owned subsidiary of Frontera Resources Corporation.23
ZM resubmitted this notice of assignment of this operating interest to FRUS by letter dated April
24, 2020, and further addressed the allegation that FRUS did not have the technical and financial
ability to perform as follows:
Therefore, pursuant to Article 27 of the PSC, Frontera Resources
US, LLC hereby declares and guarantees that:
(a) It has the technical and financial ability to perform the
obligations to be assumed by it under the PSC and provides the
following assurances:
(i) Exhibit A - Technical Credentials
(ii) Exhibit B - $5 million Revolving Credit Agreement with
CSTN Ltd. and BMCN Holdings LLC
(iii) Exhibit C - $5 million Revolving Credit Agreement with
Varang Exploration Ltd.
(iv) Exhibit D - Additional Funding Plans
(b) As to the interest assigned to it accepts and assumes all of this
Thus, ZM in signed writings has agreed with and confirmed the assertions in Frontera’s
Counterclaim that its wholly owned subsidiary, FRUS, has the right to operate by assignment
from FRGC and that FRGC has zero operating interests at this point. ZM is estopped from
arguing otherwise. See, In re D.R.R., 322 S.W.3d 771, 774 (2010) (“A party who accepts benefits
under a contract is estopped from questioning the contract’s existence, validity, or effect.”); ZM
cannot ratify and disavow the same contract.
15. Finally, ZM is also estopped because he signed corporate Resolutions that
approved of the transfer and assignment of any operating interest from FRGC to FRUS, thereby
leaving FRGC with zero operating interest in connection with the oil and gas interests of
Frontera in Block 12 under the PSC.25
11. Frontera has also given operating responsibilities to its subsidiaries under its
direction and control, including initially FRGC and then FRUS. Indeed, ZM signed the
Resolutions of the Board of Directors for FRGC,15 and the Resolutions of the Board of Managers
for FRUS,16 approving the Assignment from FRGC dated April 13, 2019,17 (the “Resolutions”).
ZM also sent notices to the Georgian government notifying it of this Assignment not once, but
twice, on April 15, 2019 (“First Notice”),18 and April 24, 2019 (“Second Notice”).
Assignment between wholly owned subsidiaries could be entered “without the prior consent of
the State or Georgia Oil.”20
12. In his Motion to Dismiss, ZM argues that an international arbitration tribunal
found on April 17, 2020, that Frontera failed to comply with article 27.3 of the PSC in
transferring the operating rights from one of its subsidiaries to another, but that was the purpose
of ZM’s Second Notice of such transfer dated April 24, 2020, which cured that alleged lack of
compliance.21 What ZM also neglects to tell the Court is that the government of Georgia has
suspended this purported decision to allow Frontera to continue to operate through its wholly
owned subsidiaries:
“SUBJECT: SUSPENSION OF TERMINATION NOTICE”
“We refer to the Production Sharing Contract and Refinery Study
dated 25 June 1997 (as amended, the “Contract”) among LEPL the
State Agency of Oil and Gas (“SAOG”), JSC Georiga Oil and Gas
Corporation (“GOGC”) and Frontera Resources Georgia
Corporation (“Frontera”). Capitalized terms wherever made in this
letter, which are not otherwise defined herein, have the meaning
ascribed to them in the Contract.
With this letter we would like to inform you that the notice of
termination, dated 27 April 2020 (SAOG letters #04-130 and #05-
131), with regard to Petroleum Operations issued based on the
provisions of Article 30.2 and 30.4 of the Contract due to a
material breach of the Contract committed by Frontera, is
temporarily suspended.”
Thus, any termination of the PSC based on any purported ruling by an arbitration panel has been
suspended by the Georgian government.22 13. Moreover, ZM signed the Resolutions for the Assignment that assigned FRGC’s
operating interest to FRUS under Article 3 of the Assignment:
Article 3
3.0 Agreement to Assign
3.1 Subject to the conditions of this Agreement and in exchange for the consideration set
forth in Article 6 below, FRGC hereby assigns to FRUS an undivided 100% Participating
Interest in the PSC with respect to the Farmout Area and its entire Operating Company
Interest. FRUS agrees to accept such assignment.
3.2 The assignment pursuant to Article 3.1 above shall become effective on the Effective
Date April 13, 2019.
3.3 As of the Effective Date, the respective Participating Interests of the Parties with respect
to the Farmout area and the Corresponding Operating Company Interest shall be as
follows:
FRGC 0%
FRUS 100%
8. Frontera is the parent of a group of companies operating in the oil and gas and
exploration and production industry, including FRGC and FRUS. Frontera was founded in 1996
by Steve Nicandros and others, not ZM, and ZM was later hired by Mr. Nicandros as a salaried
employee. The Company is headquartered in Houston, Texas. Since 2002, Frontera has focused
substantially all of its efforts on the exploration and development of oilfields in the Black Sea
area, namely Georgia, Moldova, and Ukraine.10 Frontera has invested more than $550,000,000 in
the Country of Georgia alone, and owns all of the assets and proceeds from its exploration and
production activity there, which are consolidated up into Frontera as the parent holding company
as explained by its auditor, Price Waterhouse.11 Thus, contrary to the assertion of ZM, Frontera
has standing to bring this action as the beneficial owner of all of the assets and income being
operated in the Country of Georgia.
9. In June 1997, Frontera “entered into a 25 year production sharing agreement [the
Production Sharing Contract or “PSC”] with the Ministry of Fuel and Energy of Georgia and the
State Company Georgia Oil (“Georgia Oil”), which gives the Company exclusive right to
explore, develop, and produce crude oil and natural gas (“Petroleum”) in a 5,500 square
kilometer area in eastern Georgia known as Block 12 (“Block 12”).12 Frontera’s interests in
9 See, Employment Agreement attached as Exhibit 9.
10 See, Frontera Resources Notes to Condensed Consolidated Financial Statements dated June 30, 2017 (“Price
Waterhouse Notes”) and attached as Exhibit 10.
11 Id.
12 Price Waterhouse Notes, Exhibit 10.
118225056\V-6 5
Block 12 and the related Production Sharing Contract or PSC, can be extended if commercial
production remains viable upon its expiration in June 2022.13
10. As explained by Price Waterhouse, Frontera shares the income from its oil and
gas activities with the Georgian government. Specifically, Frontera is entitled to the following:
Under the terms of the Block 12 PSC, the Company [defined as
Frontera and its subsidiaries] is entitled to conduct exploration and
production activities and is entitled to recover its cumulative costs
and expenses from the Petroleum produced from Block 12.
Following recovery of cumulative costs and expenses from Block
12 production, the remaining Petroleum sales, referred to as ‘Profit
Oil’ or ‘Profit Natural Gas,’ are allocated between Georgia Oil and
Frontera in the proportion of 51% and 49% respectively.14
Thus Frontera is the beneficial owner of all of the income to Frontera from all of the assets in
Georgia.
2
The TRO was granted by Judge McFarland on May 4, 2021, and is attached as Exhibit 2.
3 See, Verification of Steve Nicandros verifying the facts in this Motion, and the Frontera Organizational Chart
attached as Exhibit 3 to this Motion.
4 See, Assignment attached as Exhibit 4.
5 See, PSC attached as Exhibit 5.
118225056\V-6 3
3. Third, ZM’s allegations that the Assignment of the PSC to FRUS has been
nullified by language in an arbitration award is untrue, as the government of Georgia has
suspended any termination of the PSC (the “Suspension of Termination”).6
4. Fourth, ZM’s allegation that FRGC still had the right to operate under the PSC
even after ZM approved the Assignment assigning such right to FRUS on April 13, 2019, is
absurd, and contradicts ZM’s own approval of the Assignment, twice, on April 15, 2019 (the
“First Notice”)7
and April 24, 2020 (the “Second Notice”).8
5. Fifth, ZM’s allegation that FRGC still had the right to operate under the PSC even
though he approved the Assignment of that right to FRUS is again completely false. After this
Assignment, there was also nothing for Outrider Master Fund, LP (“Outrider”) or any other
company to foreclose upon with respect to FRGC’s operating interest under the PSC in any
liquidation process in the Cayman Islands.
6. Sixth, ZM’s allegation that a company called Green Capital Ltd. (“Green
Capital”) owns a 50% operating interest in the PSC through FRGC is false, because FRGC no
longer has any interest under the PSC to takeover. This argument also makes no sense as Green
Capital has no track record, experience or expertise in the oil and gas industry and is operated by
a radiologist with ties to ZM’s family. This argument has been rejected by the Court in Georgia
and should be rejected by this Court.
7. Finally, ZM misses the point of Frontera’s TRO, which was granted, and of the
request for a Temporary Injunction. Frontera seeks to enjoin ZM from violating the Employment
Agreement he signed with Frontera by continuing to compete with Frontera, and the
6 See, Country of Georgia Suspension of Termination attached as Exhibit 6.
7 See, First Notice dated April 15, 2019 and attached as Exhibit 7.
8 See, Second Notice dated April 24, 2019 and attached as Exhibit 8.
118225056\V-6 4
Employment Agreement expressly provides for such injunctive relief.9
If the Court does not
issue the injunction, ZM will simply complete the process of stealing Frontera’s assets before a
trial can be conducted, and Frontera will have no legal remedy.
III. FRONTERA IS THE BENEFICIAL OWNER OF THE ASSETS
MADE THE SUBJECT OF THE TRO
Quite a load of docs to go through.
Some of the standouts:
Prove of FRGC transfer to FRUS
Credit Loan Facilities
Prove of link between ZZ and GC
Here goes the summary - apologies for formatting:
118225056\V-6
CAUSE NO. 2021-03816
ZAZA MAMULAISHVILI, individually § IN THE DISTRICT COURT OF
And derivatively on behalf of Frontera §
Resources Corporation §
§
Plaintiff, §
§
v. §
§
STEVE NICANDROS, LUIS GIUSTI and § HARRIS COUNTY, TEXAS
TYLER NELSON §
§
Defendants, §
§
And §
§
FRONTERA RESOURCES CORPORATION §
§
Nominal Defendant § 281st JUDICIAL DISTRICT
COUNTER-PLAINTIFF FRONTERA RESOURCE CORPORATION’S RESPONSE TO
COUNTER-DEFENDANT ZAZA MAMULAISHVILI’S MOTION TO DISMISS FIRST
AMENDED COUNTERCLAIMS FOR LACK OF SUBJECT MATTER JURISDICTION
TO THE HONORABLE JUDGE CHRISTINE WEEMS:
Counter-Plaintiff Frontera Resource Corporation (“Frontera’) files this Response (the
“Response”) to Counter-Defendant Zaza Mamulaishvili’s (“ZM”) Motion to Dismiss the First
Amended Counterclaim of Frontera for lack of subject matter jurisdiction (the “Motion to
Dismiss”), and as grounds for denying this motion would show the following:
I. SUMMARY OF ARGUMENT
Frontera clearly has standing to pursue injunctive relief against the plaintiff, ZM,1
including the TRO that necessarily found both personal and subject matter jurisdiction over ZM
1
Plaintiff ZM has appeared both individually and derivatively and thus has waived any special appearance as stated
by Judge Roth on April 30, 2021. See, Hearing Transcript attached as Exhibit 1, at p. 8 (“He has submitted himself
to the jurisdiction of this Court. That is without doubt.”).
5/14/2021 10:36 AM
Marilyn Burgess - District Clerk Harris County
Envelope No. 53446551
By: Bonnie Lugo
Filed: 5/14/2021 10:36 AM
118225056\V-6 2
before it was granted,2
and the Application for Temporary Injunction to prevent this terminated
employee from competing in violation of the Employment Agreement he signed with Frontera.
The Motion to Dismiss should be denied on this basis alone since ZM signed the Employment
Agreement submitting himself to this Court’s jurisdiction, paid himself under this Agreement at
his discretion, and agreed in this document to the injunctive relief issued by the Court. Frontera
also has standing as it has spent more than $550,000,000 acquiring assets that ZM is in the
process of stealing, all of which are owned by Frontera.
II. FACTS SUPPORTING DENIAL OF MOTION TO DISMISS
1. ZM’s Motion to Dismiss is preposterous as it is based on numerous false premises
and must be denied. The first premise that Frontera is not the owner of its assets is entirely false
as all such assets and money consolidate up into the parent company, Frontera, as the beneficial
owner. Frontera’s wholly owned subsidiaries have had only operating responsibilities over time,
and are not the ultimate owners of any of the assets of Frontera.3
While waiting, you might want to have a look at the Texas website where a load of documents have been uploaded by SN + team rebutting ZZ with docs including the Temporary termination of the PSA by GOGC etc.
https://www.hcdistrictclerk.com/Edocs/Public/search.aspx
Perhaps TSB1, that's the reason why SN + team preferred arbitrating (privately) with ZZ rather than having a trial which has necessitated bringing out all these info to the public domain....
Time will tell
Green Capital (402052372)
Effected: Extract from the Register of Entrepreneurial and Non-Entrepreneurial Legal Entities
On: 29 April 2021 18:06
Unfortunately unable to get a proper translation for the Prepared Documents uploaded however certain keywords are there:
a) Seizure / ban
b) forbidden to alienate and encumber
c) Frontera Eastern Georgia
Hopefully, someone else interested my get a proper translation done and share same.
Website: https://enreg.reestri.gov.ge/main.php?value=Frontera&state=search_by_name
Search by ID: 402052372