Texas Attorney General Warren Kenneth Paxton must be made part of a civil securities lawsuit, the 5th Court of Appeals in Dallas has ruled.
The opinion was issued by the court en banc, meaning the full court heard arguments.
Parties to a lawsuit over a company that Paxton was a part of have been trying to make him a responsible third party. The request was initially denied by Collin County District Court Judge Cynthia Wheless who sealed the case, keeping details from the public.
“We conclude the trial court abused its discretion in denying relators’ motion to designate a responsible third party and there is no adequate remedy at law.” the court said in its opinion. “Accordingly, we conditionally grant relators’ petition for a writ of mandamus and direct the trial court to enter an order granting relators’ motion to designate Ken Paxton as a responsible third party. We are confident the trial court will comply with this order; a writ will issue only if it does not.”
The ruling comes in the midst of a suit filed in Collin County District Court, Calco Land Development, L.L.C. Plaintiff, v. Unity Resources et al. Paxton was a manager in Unity Resources.
The Plaintiffs alleged securities fraud and related claims in relation to a mineral acreage purchase transaction facilitated by Unity Resources. The plaintiffs said their transaction met the Texas Security Act’s definition of securities, making heightened disclosure duties and other obligations not otherwise applicable.
“Relators filed a motion for leave to designate Ken Paxton (“the non-party”) as a responsible third party, alleging that the non-party knew about, reviewed, and approved the conduct complained of in plaintiff’s petition. See id. Relators alleged that the non-party “served as counsel to and a manager and member” of Unity from 2008 through 2014 and ‘exercised control over the operations of Unity in general.’” the opinion said.
One justice went a step further, chastising the court for keeping the case sealed from the public.
“I fully embrace the importance of protecting certain confidential information. However, failure to follow rule 76a (Texas rules of civil procedure) jeopardizes the concepts of open courts and public access, wastes valuable judicial resources, and lets parties hide information that should not be protected.” Wrote Justice Craig Smith in a concurring opinion.
It’s the latest legal setback for the top law enforcement officer in Texas. Paxton faces trial over a 2015 criminal securities fraud indictment out of Collin County. The case has bounced from jurisdiction to jurisdiction for years and has been on appeal.
Late last year the Associated Press reported Paxton was being investigated by the FBI after eight top aides said Paxton illegally used the poser of his office to benefit a political donor.
Paxton has also been in a fight over records related to an appearance at a pro-Donald Trump rally held just before the deadly U.S. Capitol riot Jan. 6. The attorney general gave a speech touting his failed effort to overturn Joe Biden’s victory in the presidential election.
Attempts to contact Paxton’s attorneys have not resulted in a call.