FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
7/1/2026
2026 Tex. Bus. 41
The Business Court of Texas,
1st Division
JEAN CHRISTINE THOMPSON §
and THOMPSON PETROLEUM §
CORPORATION, Plaintiffs § Cause No. 25-BC01B-0038
§
v. §
§
ANCHOR CAPITAL GP LLC and
MICHAEL MANN, Defendants
═══════════════════════════════════════
NUNC PRO TUNC
MEMORANDUM OPINION AND ORDER ON
DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
═══════════════════════════════════════
[¶ 1] This case is about whether defendants breached various duties
owed to plaintiffs under a promissory note (Note),1 security agreement, and
employment agreement. Before the court is Defendants’ Motion for Partial
1
The promissory note was later amended and reinstated following an additional loan. However, both the original and amended notes were cumulatively entered for the same general purpose. So, references to the Note included within this opinion encompass both notes.
Summary Judgment. The court considered the parties’ pleadings,
submissions and oral arguments.
[¶ 2] The pivotal issue is whether the Note is a “security” under the
Texas Securities Act (TSA). After applying the Supreme Court’s test in Reves
v. Ernst & Young, 494 U.S. 56, 63-64 (1990), the court concludes that the
Note is not a TSA security. Accordingly, the court grants defendants’ motion.
[¶ 3] The parties are familiar with the facts the court discussed in its
May 4, 2026, Memorandum Opinion and Order on Plaintiffs’ Motion for
Summary Judgment. So, the court focuses on only those facts relevant to this
opinion.
I. BACKGROUND
A. Factual Background2
1. The Parties
[¶ 4] Jean Thompson is an owner and President of Thompson
Petroleum Corporation (TPC).3
2
These facts came from evidence contained in the Appendix to Plaintiffs’ Traditional Motion for Partial Summary Judgment (Motion Appx.), which is included in the same document file as Plaintiffs’ Motion, unless otherwise stated.
3
Motion Appx. at 544.
MEMORANDUM OPINION AND ORDER, Page 2
[¶ 5] TPC is a family business that manages the Thompson family’s
assets and employs the J. Cleo Thompson Family Office’s personnel. 4
[¶ 6] Michael Mann is the founder and CEO of defendant Anchor
Capital GP LLC, a private equity investment brokerage comprised of Anchor
and various subsidiaries.5
2. Thompson and Mann form a business relationship.
[¶ 7] Thompson and Mann met in 2022, after which Mann began
offering her investment advice on alternative investments. 6 Using Christy
2017, a holding company for the Thompson family’s investments, Thompson
began investing millions into Anchor-managed funds.7
[¶ 8] In September 2024, Mann asked Thompson to loan Anchor
money so he could buy out one of Anchor’s partners. 8 She agreed contingent
upon Mann providing a personal financial statement and loan guarantee. 9
Mann signed a Secured Promissory Note, Security Agreement, and Mann’s
Personal Guaranty to memorialize this agreement.10
4
Motion Appx. at 544.
5
Motion Appx. at 545.
6
Motion Appx. at 545.
7
Motion Appx. at 545.
8
Motion Appx. at 67.
9
Motion Appx. at 546.
10
Motion Appx. at 69–89.
MEMORANDUM OPINION AND ORDER, Page 3
[¶ 9] The parties amended this agreement three months later after
Mann requested additional funds to buy out another Anchor partner.11
[¶ 10] On May 5, 2025, Thompson exercised her rights to inspect the
Collateral to verify that her loans to Anchor were adequately protected.12 To
that end, she asked Anchor for access to its “books and records.” 13
[¶ 11] Throughout that month, the parties communicated about the
books and records request.14 But by early June, Thompson claimed that
Anchor failed to produce the requested information.15 Approximately two
weeks later, her outside counsel sent a letter requesting additional documents
and answers to specific questions.16
[¶ 12] Mann sent multiple replies but refused to provide an audited
personal financial statement that Thompson requested. 17 So, in late June,
Thompson’s counsel sent another letter about these issues. 18 When Mann
11
Motion Appx. at 547.
12
Motion Appx. at 378–79.
13
Motion Appx. at 79.
14
See Motion Appx. at 381–86.
15
Motion Appx. at 62–63.
16
Motion Appx. at 395.
17
See Motion Appx. at 398, 400–01.
18
Motion Appx. at 404–05.
MEMORANDUM OPINION AND ORDER, Page 4
didn’t respond, counsel sent another letter a week later, detailing the precise
list of necessary, outstanding documents. 19 Counsel sent two more letters.20
[¶ 13] Plaintiffs claim that defendants have not cured any outstanding
deficiencies highlighted in their last letter, which they say are an Event of
Default under both the Note and Security Agreement.21 So, on July 22nd,
Thompson sent Anchor a default notice and accelerated the loan.22
B. Procedural Background
[¶ 14] Plaintiffs sued the next month, 23 and Defendants answered24.
Plaintiffs later filed their First Amended Petition. 25 Defendants then filed this
motion,26 which plaintiffs opposed.27
19
Motion Appx. at 411–20.
20
Motion Appx. at 421–49
21
Motion Appx. at 554–55.
22
Motion Appx. at 450–52.
23
See generally Plaintiffs’ Original Petition (POP).
24
See generally Defendants’ Original Answer, Affirmative and Other Defenses, and Request for Attorneys’ Fees (Orig. Answer). Defendants later filed counterclaims but none are at issue for purposes of this motion. See generally Defendants’ First Counterclaims Against Plaintiffs.
25
See generally First Amended Petition (FAP).
26
See generally Defendants’ Motion for Partial Summary Judgment (MPSJ).
27
See generally Plaintiffs’ Response to MPSJ (MPSJ Response).
MEMORANDUM OPINION AND ORDER, Page 5
II. APPLICABLE LAW
A. Summary Judgment Standards
[¶ 15] At any time, a party may move with or without supporting
evidence for a summary judgment as to all or any part of any causes of action
asserted against it. TEX. R. CIV. P. 166a(b). The motion must state its specific
grounds. Id. at 166a(c).
[¶ 16] Thereafter, the court shall render judgment if the pleadings,
summary judgment filings, and properly filed evidence show that, except as to
the amount of damages, there is no genuine issue as to any material fact and
the movant is entitled to judgment as a matter of law on the issues stated in
the motion or in an answer or any other response. Id.; JLB Builders, L.L.C. v.
Hernandez, 622 S.W.3d 860, 864 (Tex. 2021).
[¶ 17] A court can grant a movant’s traditional summary judgment only
if the movant’s evidence as a matter of law either proves all elements of its
defense or disproves at least one element of the nonmovant’s claim. See e.g.,
Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 511 (Tex. 1995) (causation
disproved as a matter of law).
[¶ 18] So a summary judgment motion
MEMORANDUM OPINION AND ORDER, Page 6
…is essentially a motion for a pretrial directed verdict. * * * Once
such a motion is filed, the burden shifts to the nonmoving party
to present evidence raising an issue of material fact as to the
elements specified in the motion. * * * [Courts] review the
evidence presented by the motion and response in the light most
favorable to the party against whom the summary judgment was
rendered, crediting evidence favorable to that party if reasonable
jurors could, and disregarding contrary evidence unless
reasonable jurors could not. * * *
Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581-82 (Tex. 2006) (citations
omitted).
[¶ 19] A genuine fact issue exists if more than a scintilla of evidence
supports the alleged fact. See Amazon.com Servs. LLC v. Grant, No. 05-23-01306, 2024 WL 5053063, at *2 (Tex. App.—5th Dist. Dec. 10, 2024, no
pet.). Evidence is more than a scintilla when it “rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions.” King
Ranch v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (quoting Merrell Dow
Pharms., Inc. v. Havner, 953 S.W.3d 706, 711 (Tex. 1997)). However, less
than a scintilla exists when the evidence is “so weak as to do no more than
create a mere surmise or suspicion” of a fact. Id. (quoting Kindred v.
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).
[¶ 20] When a contract’s terms are unambiguous and the material facts
are undisputed, compliance with those terms is a question of law. Hrdy v.
MEMORANDUM OPINION AND ORDER, Page 7
Second St. Props., 649 S.W.3d 522, 554 (Tex. App.—1st Dist. 2022, pet.
denied).
[¶ 21] Accordingly, to decide this motion, the court must apply
contractual construction principles to the Note and Security Agreement,
Guaranty, Employment Agreement, the parties’ submissions, and the
summary judgment evidence.
B. Contract Construction
[¶ 22] A court’s primary objective when construing contracts “is to
ascertain and give effect to the parties’ intent as expressed in the instrument.”
U.S. Polyco, Inc. v. Tex. Cent. Bus. Lines Corp., 681 S.W.3d 383, 387 (Tex.
2023) (quoting URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 763 (Tex. 2018)).
[¶ 23] Usually, courts deem the contract alone to express the parties’
intent because it is objective, not subjective, intent that controls. Id.
[¶ 24] With unambiguous contracts, courts “can determine the parties’
rights and obligations under the agreement as a matter of law.” Inwood Nat’l
Bank v. Fagin, No. 24-0055, 2025 WL 349890, at *4 (Tex. 2025) (per curiam)
(quoting ACS Invs., Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997)).
MEMORANDUM OPINION AND ORDER, Page 8
C. Statutory Construction
[¶ 25] A court’s primary purpose in statutory construction is to
implement the Legislature’s intent by giving effect to every word, clause, and
sentence. Sunstate Equip. Co. v. Hegar, 601 S.W.3d 685, 689-90 (Tex. 2020)
(citation omitted). Indeed, statutory text is the “first and foremost” indication
of legislative intent. Greater Hous. P’ship v. Paxton, 468 S.W.3d 51, 58 (Tex.
2015). Thus, courts apply the words’ common, ordinary meaning unless
(i) the text supplies a different meaning or (ii) the common meaning produces
absurd results. Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 838
(Tex. 2018).
[¶ 26] Further, courts derive statutory meaning from the entire statute.
TEX. GOV’T CODE § 311.021(2); Janvey v. Gold Channel, Inc., 487 S.W.3d 560,
572 (Tex. 2016). So, courts “presume the Legislature chose statutory
language deliberately and purposefully,” Crosstex Energy Servs. L.P., v. Pro
Plus, Inc., 439 S.W.3d 384, 390 (Tex. 2014), and that it likewise excluded
language deliberately and purposefully, Cameron v. Terrell & Garrett, Inc.,
618 S.W.2d 535, 540 (Tex. 1981).
MEMORANDUM OPINION AND ORDER, Page 9
III. ANALYSIS
A. Introduction
[¶ 27] Defendants sought the following summary judgment rulings:
(i) Thompson’s Texas Securities Act claim (Count 3) fails because the Note is
not a security, and (ii) Thompson’s Breach of Guaranty claim (Count 2) fails
because the Guaranty did not require Mann to audit his personal financial
statement.28
[¶ 28] Plaintiffs responded that the court should deny the motion
because (i) the Note is presumed a security, and defendants failed to rebut that
presumption; and (ii) fact issues preclude summary judgment on a guaranty
claim.29
[¶ 29] In a separate, June 18, 2026, order the court concluded that the
Guaranty did not require Mann to provide an audited personal financial
statement.30 Thus, the only remaining issue is whether the Note is a security.
28
See generally MPSJ.
29
See generally MPSJ Response.
30
See generally June 18, 2026, Order on Defendants’ Motion for Reconsideration.
MEMORANDUM OPINION AND ORDER, Page 10
B. Securities Act Claim
1. Introduction
[¶ 30] The TSA 31 creates civil liability for a person who offers or sells a
security by means of an untrue statement of material fact or by means of a
material misleading, omission of fact. TEX. GOV’T CODE § 4008.052(a).
[¶ 31] The TSA broadly defines “securities.” See TEX. GOV’T CODE
§ 4001.068(a).
[¶ 32] Determining whether documents are TSA securities is a matter
of law. Grotjohn Precise Connexiones Intern., S.A. v. JEM Fin., Inc., 12 S.W.3d
859, 868 (Tex. App.—6th Dist. 2000, no pet.). Because the TSA closely
mirrors the Federal Securities Act of 1933, Texas courts look to federal
decisions to aid Texas’s interpretation of the TSA. See Searsy v. Com. Trading
Corp., 560 S.W.2d 637, 639 (Tex. 1977).
2. Parties’ Arguments
[¶ 33] Defendants argue that the Note is merely a “commercial loan
transaction” as opposed to a “security” and thus falls outside the TSA’s
31
The Texas Securities Act was recodified in 2022 under Texas Government Code §§ 4000.001 et seq. However, the recodification merely restates former Texas Civil Statutes article 581, so all cases analyzing the prior statute still hold full force and effect.
MEMORANDUM OPINION AND ORDER, Page 11
purview. 32 Plaintiffs respond that the Note is presumed a security under the
Supreme Court’s adopted “family resemblance” test.33 Defendants’ reply
asserts that the “commercial versus investment” test is the proper test, but
applying the “family resemblance” test produces the same result34
[¶ 34] Accordingly, the court must determine the proper test before
addressing the issue’s merits.
3. Securities Tests
[¶ 35] Since the Securities Act of 1933’s passage, courts have devised
multiple approaches to determine whether promissory notes are “securities.”
Reves, 494 U.S. at 63-64. Specifically, Reves discussed three such approaches
various federal circuits had adopted: (i) the “investment versus commercial”
test, (ii) the “family resemblance” test, and (iii) the Court’s Howey test.
a. “Investment versus Commercial” Test
[¶ 36] Under the “investment versus commercial approach” courts
distinguish, upon the totality of the circumstances, notes issued in investment
contexts (securities) versus notes issued in commercial or consumer contexts
32
MPSJ at 6–7.
33
MPSJ Response at 17–18.
34
Reply in Support of Defendants’ Traditional Motion for Partial Summary Judgment (MPSJ Reply) at 4–6.
MEMORANDUM OPINION AND ORDER, Page 12
(non-securities). Id. This test focuses on the degree to which the plaintiff
depends on the expertise and efforts of others rather than the instruments’
nature. See Futura Development Corp. v. Centex Corp., 761 F.2d 33, 40-41 (1st
Cir. 1985) (adopts investment/commercial test because it focuses on
disclosures and that securities laws were designed to offer protections through
disclosures).
b. “Family Resemblance” Test
[¶ 37] The “family resemblance test” presumes that any note with a
term of more than nine months is a security. Reves, 494 U.S. at 63 (citing
Exchange Nat. Bank of Chi. v. Touche Ross & Co., 544 F.2d 1126, 1137 (2nd
Cir. 1976)). However, that test judicially excepts certain notes that are
obviously not securities, such as (i) notes delivered in consumer financing,
(ii) notes secured by home mortgages, (iii) short-term notes secured by liens
on a small business or some of its assets, (iv) notes evidencing a “character”
loan to bank customers, and (v) notes formalizing open-account debts incurred
in the ordinary course of business. Exchange Nat. Bank, 544 F.2d at 1138.
[¶ 38] Further, that test allows parties to rebut the presumption if they
can show the note either (i) “bears a strong family resemblance” to an item on
MEMORANDUM OPINION AND ORDER, Page 13
the list of exceptions or (ii) convinces the court to add a new instrument to the
list. Reves, 494 U.S. at 64.
c. Howey Test
[¶ 39] The United States Supreme Court developed the Howey Test to
determine if an instrument was an “investment contract,” but some courts
later expanded its application to determine whether an instrument is a “note.”
Id. Under this test, a note is effectively presumed to not be a security unless it
evidences “(1) an investment, (2) in a common enterprise, (3) with a
reasonable expectation of profits, (4) to be derived from the entrepreneurial or
managerial efforts of others.” Id.
d. Adopted Test
[¶ 40] After analyzing all three tests, and noting that the “family
resemblance” and “investment versus commercial” tests formulate the same
general approach, the Reves Court rejected the Howey test and adopted the
“family resemblance” test. Id. at 64-65.
[¶ 41] Texas courts followed and also adopted the “family
resemblance” test as the controlling test on this issue.35 Campbell v. C.D.
Reves and its progeny are narrowly tailored to determining whether notes are securities. 35
The court’s analysis is thus limited to this issue and does not express any views on cases
MEMORANDUM OPINION AND ORDER, Page 14
Payne & Geldermann Sec., Inc., 894 S.W.2d 411, 418 (Tex. App.—7th Dist.
1995, writ denied); Grotjohn, 12 S.W.3d at 868.
[¶ 42] Accordingly, this court applies the “family resemblance” test.
4. “Family Resemblance” Test
a. Applicable Law
[¶ 43] To prevail under the “family resemblance” test, the movant
must rebut the note’s presumed security status by showing the note (i) is an
enumerated judicial exception or (ii) bears a strong family resemblance to one
of the exceptions. Reves, 494 U.S. at 64.
[¶ 44] Courts apply four factors when analyzing whether the note bears
a family resemblance to one of the enumerated exceptions. First, courts
consider the parties’ motivations for entering into the transaction. Id. at 66.
Evidence that the note is for an investment purpose as opposed to a
commercial or consumer purpose suggests that the note is a security. Id.
Second, courts examine the “plan of distribution” to determine whether it is
applying or analyzing tests on instruments aside from notes. See e.g., SEC v. Barton, 135 F.4th 206, 215-17 (5th Cir. 2025) (applying Howey test after concluding loan agreements were investment contracts); Life Partners, Inc. v. Arnold, 464 S.W.3d 660, 684 (Tex. 2015) (applying Howey test after determining life settlement agreements are investment contracts); Christie v. Hahn, No. 05-20-01045-CV, 2022 WL 3572690, at *4 (Tex. App.— 5th Dist. Aug. 19, 2022, no pet.) (mem. op.) (declining to apply Reves after concluding note was an investment contract).
MEMORANDUM OPINION AND ORDER, Page 15
an instrument where there is common trading for speculation or investment.
Id. Third, courts look to the investing public’s reasonable expectations. Id.
Finally, courts examine whether there are risk-reducing measures in place
thereby mitigating the need for statutory protections. Id. at 67.
b. “Short-Term” Note Analysis
[¶ 45] Preliminarily, defendants assert that the Note is “a short-term
note secured by a lien on a small business or some of its assets” thereby
avoiding the need to analyze the “family resemblance” test’s factors.36
Because the parties agree that the Note is secured by Anchor’s assets as
Collateral, the only relevant question is whether the Note is “short-term.”37
[¶ 46] Neither the TSA nor its federal analogues expressly define the
phrase “short-term” regarding securities or other instruments. However, the
statutes suggest that short-term notes are nine months or less. See TEX. GOV’T
CODE § 4005.055(1)(B) (exempting commercial paper with repayment
obligation of less than nine months); 15 U.S.C. § 78c(a)(10) (“[t]he term
ʻsecurity’…shall not include currency of any note…which has a maturity at
36
MPSJ at 7.
37
See MPSJ at 6; MPSJ Response ¶4.
MEMORANDUM OPINION AND ORDER, Page 16
the time of issuance not exceeding nine months[.]”). This approach tracks the
common industry short-term paper definition.38
[¶ 47] Here, the Note has a four-year maturity. 39 So, it is not a “shortterm” note nor excepted from the “family resemblance” test. Accordingly, the
court applies the “family resemblance” test.
c. Reves Factors Analysis
[¶ 48] Because Plaintiffs’ response conceded that the “plan of
distribution” factor (Factor 2) supports Defendants, 40 the court need consider
factors pertaining to only (i) the parties’ motives (Factor 1), (ii) the investing
public’s reasonable expectations (Factor 3), and (iii) the presence of riskreducing measures (Factor 4).
1) Party Motives
[¶ 49] The first factor considers both parties’ purpose for entering into
the Note transaction. Grotjohn, 12 S.W.3d at 868. If the note’s purpose is to
raise money for the business enterprise’s use and the lender seeks to profit off
the note, it is likely a security. Id. However, if the note’s purpose is to
38
See James Chen, Short-Term Paper, https://www.investopedia.com/terms/s/shortterm-note.asp# (last visited June 24, 2026).
39
Appendix to MPSJ (MPSJ App.) at 38-39.
40
MPSJ Response at 20.
MEMORANDUM OPINION AND ORDER, Page 17
generally advance some commercial or consumer purpose, the note is likely
not a security. Id.
[¶ 50] Here, Thompson is entitled to accruing interest on the Note,
which the Reves court held is included in the definition of “profit.” Reves, 494
U.S. at 68 n.4. But Thompson admitted that she agreed to the Note at a belowmarket rate and under a borrower-friendly payment schedule.41
[¶ 51] Thus, while she is entitled to interest, that the Note was
favorable to the borrower as to both payment terms and interest rate suggests
profit was not her primary motive. Cf. Grotjohn, 12 S.W.3d at 869 (favorable
interest rate indicated profit was lender’s primary motivation); SEC v.
Thompson, 732 F.3d 1151, 1162-63 (10th Cir. 2013) (attractive interest rate
suggests profit was primary motive). These facts slightly suggests the Note is
not a TSA security.
[¶ 52] However, Mann admits that he used the Note to raise capital to
avoid diluting Anchor’s existing equity investor. 42 More specifically, Mann
said that the Note’s funds were used to help grow the business by paying
41
Appendix to Plaintiffs’ Motion for Summary Judgment (MSJ App.) at 546. 42
Appendix to MPSJ Response (MPSJ Response App.) at 61-63.
MEMORANDUM OPINION AND ORDER, Page 18
salaries and other standard business expenses.43 Together, these facts suggest
the Note is a security. See Aubrey v. Barlin, 159 F.Supp.3d 752, 755 (W.D.
Tex. 2016) (notes likely security because funds used for general business
purposes).
[¶ 53] Thus, the borrower’s and seller’s motives are mixed. But
because Mann’s motives are clearly for investment purposes, this factor favors
the Note being a security. See Pollack v. Laidlaw Holdings, Inc., 27 F.3d 808,
812-13 (2d Cir. 1994) (buyer’s clearer motives suggest note is a security).
2) Investing Public’s Reasonable Expectations
[¶ 54] The third factor considers how the investing public would
reasonably view a note. Reves, 494 U.S at 58-59. Courts analyzing this factor
consider the (i) note’s express language, (ii) notes’ advertisement, and
(iii) parties’ sophistication. See Kirschner v. JP Morgan Chase Bank, N.A., 79
F.4th 290, 308 (2d. Cir. 2023). Here, these considerations suggests that the
Note is not a security.
[¶ 55] For starters, the Note is entitled a “Secured Promissory Note,”
which without more does not give rise to public expectations that the Note is
43
MPSJ Response App. at 63.
MEMORANDUM OPINION AND ORDER, Page 19
a security.44 Cf. Grotjohn, 12 S.W.3d at 669-70 (convertible debenture altered
investing public’s expectations surrounding instrument). There are also no
references to “investors” or “investments” in the Note to suggest that the
Note is a security. See Kirschner, 79 F.4th at 308 (isolated references to
“investors” insufficient to create reasonable expectation instruments were
securities). Instead, the instruments at issue frequently refer to the funds
associated with the Note as a loan.45
[¶ 56] Second, there is no evidence suggesting that the Note was ever
advertised as an investment. When a note is advertised as an investment, “in
the absence of contrary indications it is reasonable for prospective purchasers
to take the offeror at its word.” Stoiber v. S.E.C., 161 F.3d 745, 751 (D.C. Cir.
1998) (quoting Reves, 494 U.S. at 69) (internal citations omitted).
Conversely, when express disclaimers are made indicating the note is not an
investment, the investing public can reasonably conclude that the note is not
a security. Id. Because there is no evidence suggesting the Note was ever
44
See MPSJ App. at 38.
45
See MPSJ App. at 17–22, 29–30, 38–39. Additionally, the Note includes an ambiguous disclaimer (in bold at the top of the instrument) stating that “this note has not been registered under [any securities laws] and may not be sold without registration.”
MEMORANDUM OPINION AND ORDER, Page 20
advertised as an investment, the investing public lacks a reasonable basis to
conclude the Note is a security.
[¶ 57] Finally, there is no dispute whether these are sophisticated
businesspersons as they are actively involved in handling finances and
represented by sophisticated counsel. So, the court can reasonably conclude
the parties had a solid understanding that the Note was a loan and not a
business enterprise investment. See Banco Espanol de Credito v. Sec. Pac. Nat.
Bank., 973 F.2d 51, 55 (2d Cir. 1995) (parties’ sophistication ensured ample
notice given to instruments’ purpose).
[¶ 58] Based on the forgoing, the investing public would not reasonably
view the Note as an investment. Accordingly, this factor weighs against the
Note being a security.
3) Risk-Reducing Measures
[¶ 59] The final factor considers whether there are schemes in place
that reduce the instrument’s risk and thereby moot the need for securities
protections. Reves, 494 U.S. at 67.
MEMORANDUM OPINION AND ORDER, Page 21
[¶ 60] Here, the Note is both collateralized and personally guaranteed
by Mann. 46 Further, the Note contains extensive representations, warranties,
and covenants which provide additional protections. 47 And the agreements
gave Thompson rights to inspect the collateral and require Mann to provide
her with financial information in a form and substance reasonably acceptable
to her.48
[¶ 61] Having multiple risk-reducing measures in place strongly
suggests the Note is not a TSA security. Accordingly, this factor also weighs
against the Note being a security.
4) Conclusion
[¶ 62] Based on the above Reves analysis, the court concludes as a
matter of law that the Note is not a security While the first factor leans toward
the Note being a security, the other three factors support that the instrument
in question is not a security.
46
MPSJ App. at 17, 29.
47
See MPSJ App. at 8–9.
48
MPSJ App. at 31–32.
MEMORANDUM OPINION AND ORDER, Page 22
IV. CONCLUSION
[¶ 63] Consistent with this opinion and its prior June 18 order,
Defendants’ Traditional Motion for Partial Summary Judgment is GRANTED.
So ORDERED.
BILL WHITEHILL
Judge of the Texas Business Court,
First Division
SIGNED: July 1, 2026
MEMORANDUM OPINION AND ORDER, Page 23
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