10 May 7 P5:37 Gary Fitzsimmons District Clerk Dallas District

CAUSE NO. 10-0S417-H
















COMES NOW, Plaintiff Marguerite Hoffman and files this her First Amended

Petition and for grounds therefor would show unto the Court the following:

1. Discovery in this action is intended to be conducted under Level 2 of Rule

190.3 of the Texas Rules of Civil Procedure.

2. This is a lawsuit seeking relief for injuries suffered as a result of breach of

contract and torts committed by Defendants.


3. "It's all very hard-nosed," is how defendant Tobias Meyer likes to describe

the world of international auctions, in whose firmament he is a luminary -- the chief

auctioneer at the legendary Sotheby's Auction House. But to judge by the conduct of

Mr. Meyer and Sotheby's, hard-nosed is too polite a term to describe his ethical

standards and those of his employer.

4. On May 12, 2010, Sotheby's will auction a celebrated oil painting by Mark

Rothko, Untitled, dating from 1961 (the "Painting"). The Painting, gorgeous, vibrant and

red, is the centerpiece of Sotheby's spring sale, featured on the cover of the catalogue.

Sathe by's states that it expects it to sell at a price between $18 and $25 million, but in

fact expects it to bring in far more.

5. "You can see from the scale how wonderful it sits on the wall and really

envelopes you," Meyer gushes in his marketing blitz for the upcoming sale. 'The

experience that you are supposed to have in front of a Rothko is, of course, very

spiritual and transporting you into another realm, into the realm of this color."

6. But when not being transported to the realm of the spirit, Meyer's values

are more mundane and materialistic: To secure the Painting, and the huge commission

they expect to pocket from its sale, Meyer and Sotheby's committed a tort -- and in

furtherance of that tort deployed all their mighty resources of publicity and the art world

connections they boast.

7. The tort is interference with contract. For the auction to go forward, the

owner of the Painting, financier David Martinez, broke his contractual promise to make

"maximum effort" to keep confidential "all aspects" of the transaction through which he

acquired it. Martinez made that promise because Plaintiff, the Painting's previous

owner, was unwilling to sell it to him unless he did so.

8. When he bought the Painting in 2007, Martinez was still feeling financially

comfortable enough to promise to hold it in his private collection indefinitely. And for

nearly three years, Martinez appeared to honor this promise.

9. But times have changed. The Rothko market is hot. And Meyer, under

tremendous pressure to capture a major treasure for Sotheby's spring sale, set out to

"seduce" Martinez -- in the words of one of his co-defendants -- to sell the work at public

auction. So rather than honor the confidentiality he had promised to Plaintiff as part of


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the consideration for the sale, Martinez elected to sacrifice Plaintiffs privacy, embarking, through Sotheby's, on a high-profile marketing and publicity campaign that inevitably and swiftly exposed Plaintiff's sale.

10. In short, in response to Meyer's and Sotheby's blandishments, Martinez

traded his written promise for the promise of a cash bonanza.


11. Plaintiff Marguerite Hoffman is a businesswoman, philanthropist and

patron of the arts. She is past Chair and a present Trustee of the Dallas Museum of Art (the "Dallas Museum"). She lives in Dallas.

12. Defendant L&M Arts (,'L&M") is a Delaware limited liability company that

describes itself as "one of the most important galleries in the world." Its principals are Dominique Levy and Robert Mnuchin. L&M operates galleries at 45 East 78th Street in Manhattan and 660 Venice Boulevard in Venice, California. Pursuant to Chapter 17 of the Texas Civil Practice & Remedies Code, L&M, as a non-resident which has breached a contract in Texas, can be served by serving the Texas Secretary of State. The Texas Secretary of State should forward service to L&M at its registered office for service of process at 45 East 78th Street, New York, New York 10075.

13. Defendant Sotheby's, Inc. ("Sotheby's") is a New York corporation that

engages in art auction, private sales and art-related financing activities, with its principal place of business in Manhattan at 1334 York Avenue. Pursuant to Chapter 17 of the Texas Civil Practice & Remedies Code, Sotheby's, as a non-resident which has committed a tort in Texas, can be served by serving the Texas Secretary of State. The Texas Secretary of State should forward service to Sotheby's clo Corporation Service

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Company at its registered address for service of process at 80 State Street, Albany, New York 12207.

14. Sotheby's describes itself as "one of the world's two largest auctioneers of

authenticated fine and decorative art, jewelry and collectibles. . .. In 2009, Sotheby's accounted for $2.3 billion, or 44%, of the total aggregate auction sales of the two major auction houses within the global auction market." According to its 2009 Form 10-K, Sotheby's total revenues for 2009 were approximately $485 million.

15. Defendant Tobias Meyer has been Sotheby's Worldwide Head of

Contemporary Art since 1997. He is the Principal Auctioneer for Sotheby's sales of contemporary art. According to Sotheby's website, Meyer "is deeply connected to the world's most powerful and active post-war art collectors in the United States and Europe. As one of the most recognized figures in the Contemporary Art world, Meyer has been closely involved with the sales of many of the most iconic 20th-century works. Under the direction of the dashing Mr. Meyer, Sotheby's has produced three of the four highest auction prices ever paid for post-war art, including Mark Rothko's White Center (Yellow, Pink and Lavender on Rose) for $72.8 million in May 2007." Pursuant to Chapter 17 of the Texas Civil Practice & Remedies Code, Meyer, as a non-resident individual who has committed a tort in Texas, may be served by serving the Texas Secretary of State. The Texas Secretary of State should forward service to Meyer at his office address of 1334 York Avenue, New York, New York 10021 or his home address of 25 Columbus Circle #ST66A, New York, New York 10019.

16. Defendant David Martinez is an art collector, as well as the founder and a

managing partner of Fintech Advisory, a firm that specializes in corporate and country

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debt. Martinez maintains a permanent office at Fintech Advisory in Manhattan at 375 Park Avenue. Martinez maintains a "pied a terre" on the 76th floor of the Time Warner Center, for which he reputedly paid $54 million. Pursuant to Chapter 17 of the Texas Civil Practice & Remedies Code, Martinez, as a non-resident individual who has breached a contract and/or committed a tort in Texas, may be served by serving the Texas Secretary of State. The Texas Secretary of State should forward service to Martinez at his office address of 375 Park Avenue, New York, New York 10152 or his home address of 25 Columbus Circle, 76th Floor, New York, New York 10019.

17. Defendant Studio Capital, Inc. ("Studio Capital") is a company organized

and existing under the laws of Belize, with its registered office at 35A Regent Street, Jasmine Court, Suite 101, P.O. Box 1777, Belize City, Belize. Studio Capital is a shell company dominated and controlled by its alter ego, defendant Martinez, for the purposes of maintaining the secrecy of his purchases and sales of art. Pursuant to Chapter 17 of the Texas Civil Practice & Remedies Code, Studio Capital, as a nonresident entity which has breached a contract and/or committed a tort in Texas, can be served by serving the Texas Secretary of State. The Secretary of State should forward service to Studio Capital at its registered office for service of process at 35A Regent Street, Jasmine Court, Suite 101, P.O. Box 1777, Belize City Belize.

18. This Court has personal jurisdiction over the Defendants in that they have

maintained continuous and systematic contacts with Texas, have employed agents in Texas and have entered into contracts with Texas citizens. Moreover, this action arises from a contract entered into between Plaintiff and Defendants through intermediaries which contract was entered into in the State of Texas.

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19. Pursuant to Section 15.002 of the Texas Civil Practice and Remedies

Code, venue lies in Dallas County because no Defendant resided in or has its principal office in Texas, and Dallas County is the county in which Plaintiff resided at the time of accrual of the cause of action and in which all or a substantial portion of the events giving rise to the claims herein occurred.


20. In the course of their marriage, Plaintiff and her late husband amassed a

world-renowned collection of modern art that included the Painting.

21. In 2007, Plaintiff's ownership of the Painting was well known. It was

exhibited as part of "Fast Forward: Contemporary Collections for the Dallas Museum of Art," a special two-part exhibition of works from Plaintiff's collection. The catalogue and online description of the exhibition highlighted five "iconic and rarely displayed works," including the Painting, "a stunning masterpiece in orange and red." Press coverage of the exhibition likewise focused on the Painting.

22. Early in 2007, Plaintiff decided to sell the Painting. The decision to sell

was a reluctant one made in difficult personal circumstances, Plaintiff's financial condition remaining unsettled after her husband's untimely death in August of 2006.

23. Plaintiff was determined to avoid the embarrassment that she believed

would ensue if the fact of the sale became public. She therefore elected to go the route of a private -- and confidential -- sale.

24. The decision to limit herself to a private sale was not without cost to

Plaintiff, because of the premium a well-publicized auction can produce for such an iconic work as the Painting. Defendants Sotheby's and Meyer, for example, enjoyed

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vaunted reputations for obtaining dramatic premiums from the public sale of major Rothko paintings. According to Meyer, the Painting would have sold at public auction for $30 to $40 million in April of 2007, which is exactly when Plaintiff sold it privately for millions of dollars less. NY auctions to signal return of good times: art dealers, Agence France-Presse (English), May 2, 2010.

25. For Plaintiff, therefore, securing the benefit of a private sale meant

sacrificing the substantial premium Plaintiff could have realized from the public sale of such a famous work.

26. The restriction Plaintiff placed on herself equally diminished the price

Martinez had to pay to acquire the Painting. Martinez thereby obtained a corresponding financial benefit by purchasing privately, rather than at a public auction.

27. But to obtain that benefit, Martinez agreed to incur a cost: In the purchase

contract, he explicitly promised to maximize the confidentiality of al/ aspects of the transaction indefinitely. This meant he could not turn around, sell the Painting at public auction, then pocket the premium that Plaintiff had forgone to protect her family's privacy.

28. To further ensure the privacy of the sale, Plaintiff relied on intermediaries

whose reputations for rectitude and discretion she believed were impeccable. One of these was defendant L&M and, in particular, its principal Robert Mnuchin. L&M acted as agent for Martinez as buyer, although at the time of the sale Martinez's identity was not disclosed.

29. Plaintiff trusted L&M's principal Robert Mnuchin in particular, from whom

she, with her husband, had bought the Painting in the first instance. Over the years,

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Plaintiff had acquired many major contemporary art works through and from L&M,

including works by Franz Kline, Philip Guston, Willem de Kooning, and Joseph Cornell.

30. Plaintiff made clear to L&M that preservation of confidentiality had to be a

critical component of any sale. Acting as Martinez's agent, L&M assured Plaintiff that

her privacy would be protected, and professed to appreciate her reasons. Martinez, to

give the appearance that he valued discretion, traveled in secret to Texas with Levy to

view the Painting where it then hung in the Dallas Museum.

31. To further ensure confidentiality, the first agreement of sale (later

superseded), dated February 27, 2007, expressly made confidentiality a key term:

It is the specified wish of the seller that the sale and terms of the sale remain confidential. Any breach in confidentiality prior to payment in full will be considered by the seller grounds for terminating this agreement. It is requested that confidentiality be maintained indefinitely.

32. In case these commitments were not clear enough, the parties made them

unequivocally clear through events that transpired in the following weeks.

33. Before the sale was consummated, Plaintiff was contacted by an art-world

professional who had heard she was selling the Painting. Because the fact that she

was selling the Painting was exactly what she did not want publicly disclosed, Plaintiff

reached out to Mnuchin to determine what had gone wrong. Mnuchin acknowledged

that his undisclosed buyer had contacted a third party -- another professional in the art

world -- about the Painting, and that his undisclosed buyer was very "embarrassed" that

this breach of the agreement had been discovered by Plaintiff.

34. This indiscretion alarmed Plaintiff, and she decided not to go forward with

the sale.

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35. But defendants Martinez and Studio Capital, acting through L&M, were

determined to persuade Plaintiff to change her mind.

36. So L&M, through Mnuchin, expressly promised that the Painting would

"disappear" into his undisclosed buyer's "very private" collection.

37. While this assurance was welcome, standing alone it was not enough to

persuade Plaintiff. She only agreed to sell the Painting when the undisclosed buyer made an unequivocal written and binding commitment in the purchase agreement (the "Contract") to "make maximum effort to keep all aspects of this transaction confidential .... "

38. The duration of Martinez's promise to maintain confidentiality was

negotiated by his agents and expressly stated: His obligation to maintain confidentiality was to continue "indefinitely." The confidentiality provision was a material part of the agreement going to the essence of the Contract.

39. With that promise in hand, Plaintiff was prepared to go forward, subject to

the proviso that an additional $500,000 be paid directly to the Dallas Museum, not to her, and anonymously. Defendant Martinez, and/or his shell company, agreed.

40. For the next 35 months, the transaction apparently remained secret.

41. All that changed when Martinez consigned the Painting to public auction at Sotheby's. On March 19, 2010, Bloomberg News announced that Sotheby's had "landed a splashy 1961 red Mark Rothko painting, estimated to fetch $18 million to $25 million. The nearly 8-foot tall painting with two reddish rectangles, is likely to be the May 12 sale's projected top lot." Other media sources ran with the news, including

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Lindsay Pollock's "Art Market Views" that very day, and the Pittsburgh Tribune Review

on March 20th.

42. On April 2, 2010, numerous media sources, including National Public

Radio and ABC News, published stories about the auction, which were accompanied by

a large color photograph of the Painting.

43. To promote the auction, the Sotheby's website posted a large color photo

of the Painting and stated that it was exhibited in "Fast Forward: Contemporary

Collections for the Dallas Museum of Fine Arts" in 2007. In a similar vein, the Sotheby's

catalogue states that the painting was exhibited "Dallas, Dallas Museum of Art, Fast

Forward: Contemporary Collections for the Dallas Museum of Art, February - April


44. Within the art community whose opinion was paramount to Plaintiff, these

announcements precipitated precisely the disclosure and embarrassment she had been

determined to avoid. Avoiding that embarrassment had been a material and negotiated

-- indeed renegotiated -- component of the 2007 sale.

45. But the Sotheby's publicity machine was so effective that before long the

wider world knew as well. Internet art blogger Lindsay Pollock reported on April 19th:

Three market sources have told me that the Rothko consigned for sale at Sotheby's comes from Mexican financier David Martinez.

* * *

If Martinez, or a related holding company, is the owner, it has been a hasty marriage.

In 2007 the painting was exhibited at the Dallas Museum of Art in a Fast Forward: Contemporary Collections for the Dallas Museum of Art. The show included works owned by three major area collectors who have promised works to the museum: the Hoffman, Rose and Rachofsky collections.

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Lindsay Pollock, Art Market Views, (April 19, 2010).

46. Plaintiff, in short, had been outed. Recognizing that the Contract was

being dishonored by its client Martinez, L&M contacted Plaintiff. Mnuchin (again)

professed embarrassment and concern, just as he had done when Martinez breached

his confidentiality obligation under the predecessor contract.

47. "I feel simply terrible about the way events have evolved," Mnuchin stated,

admitting that the transaction "required a special degree of confidentiality." "I regret the

work is now publicly displayed to the world," Mnuchin said.

48. But Mnuchin claimed it was not his fault: "Unfortunately, even in

retrospect, I see no way I could have changed the course of events when informed that

he was selling at Sotheby's." That statement was untrue, since L&M had itself

committed to use maximum effort to maintain confidentiality.

49. L&M claimed it would have preferred the Painting to be sold privately, but

in Mnuchin's words, "the world has changed since September 2008" -- a reference to

the economic crisis that, among its many repercussions, had adversely impacted the art


50. In other words, Martinez was feeling less flush. That, Mnuchin stated in a

subsequent conversation, explained why defendant Meyer had been able to "seduce" --

in Mnuchin's words -- Martinez into selling the Painting at public auction. Mnuchin said

that Meyer had told Martinez that Sotheby's would price the Painting at a low estimate

($18 million to $25 million) with the expectation that it would sell for much more.

51. That was right out of Meyer's standard playbook: "When you have

something great, then the challenge is to convince the consigner to put an estimate that

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is 10 to 15 percent below the retail price," Meyer has said. "It's all about playing the game of low estimates, and getting people who trust us to play too." Carol Vogel, The Blue-Chip Period, N.Y. Times, Apr. 26, 2010, at Section AR p.21.

52. And in the case of Martinez and the Painting, Meyer was desperate to

convince the consignor because, by his own admission, Meyer was under extreme pressure to obtain "brand-name masterpieces" for the May auction. Every spring, Sotheby's and Christie's -- the "two big rival auction houses" -- conduct contemporary art sales. "With Wall Street profits roaring back from the 2007-2008 financial crisis ... Christie's and Sotheby's battled for four months" to win the collection of Frances Lasker Brody, which included Picasso's "Nude, Green Leaves, and Bust," estimated to sell for between $70 and $90 million. NY auctions to signal return of good times: art dealers, Agence France-Presse (English), May 2, 2010. But Christie's, not Sotheby's, won that trophy.

53. The right to auction the collection of Michael Crichton was another prize

Meyer lost to Christie's. Meyer, having suffered humiliating defeats in both battles with Christie's, needed to save face.

54. Sotheby's likes to boast that Meyer "has ways of precipitating an

acquisition when the phone hasn't rung." John Colapinto, The Alchemist, The New Yorker, Mar. 20, 2006, at 88. The New Yorker, in a profile on which Meyer himself collaborated, describes him thus: "He prefers trickier acquisitions, since those typically reap the greatest financial rewards, and also because he relishes the complex blend of diplomacy, detective work, and seduction required." Id.

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55. Meyer makes no bones about the fact that he has few scruples. As the

New Yorker has written: "Auction professionals will go to almost any length to snag art from a rival house; Meyer is no exception. [Meyer] once intercepted a truck filled with crates of [artwork by Francis Bacon] bound for Christie's, he told me. 'They didn't get there.'"

56. Meyer had long coveted the opportunity to auction the Painting in

particular, admitting last month that "I've known this painting for 15 years and followed it over those years .... " Mark Brown, Ghost of Warhol: Sotheby's to auction late selfportrait, The Guardian (London), Apr. 16,2010, at 14.

57. The stakes were high, and Sotheby's decided, and remains determined, to

procure the breach of L&M's, Martinez's and Studio Capital's obligations under the Contract.

58. The goal and purpose of the imminent auction is to procure for Martinez

and Sotheby's the premium from a public sale that Plaintiff decided to forgo when she contractually elected to engage in what she believed was, and would remain, a private and confidential sale. Plaintiff sacrificed that premium as consideration for preserving her family's privacy. Defendants, with the Painting now in hand, have decided not to honor their end of the bargain, and are cashing in at Plaintiff's expense.

59. Martinez, it bears emphasis, respects privacy, so long as it is his own.

Indeed, he is willing to dissemble to preserve it. In recent weeks, he has attempted to mislead the public into believing he is not the seller of the Painting. See Lindsay Pollock, Art Market Views, (April 19, 2010).

60. Such denials are Martinez's modus operandi. Martinez is so determined --

press reports use the word "obsessed" -- to conceal his art-buying activities from the public that he formed Studio Capital in order to disguise his role and ensure his anonymity. As one French court recently found in a case involving Martinez's art-buying activities with L&M, "1/ Y a lieu par ailleurs de constater que l'ideniiie de l'ecquereur de la sculpture est apparemment disslmulee par !'interposition de la societe STUDIO CAPITAL, societe dont Ie siege est a Belize, paradis fiscal garantissant J'anonymaf des essocies." Tribunal de grande instance [T.G.I.] [ordinary court of original jurisdiction] Paris, req. ch., Nov. 6, 2007, 07/12847, obs. F. Picard (Fr.). Translation: "It should also be noted that the identity of the buyer of the sculpture is apparently disguised by the interposition of STUDIO CAPITAL, a company headquartered in Belize, a tax haven guaranteeing the anonymity of shareholders."

61. Defendants' material breach of the Contract has deprived Plaintiff of the

benefit of the bargain she entered into in April 2007. If the sale is cancelled, Plaintiff has elected to rescind the Contract and return the money she received from Martinez in 2007. Once Martinez returns the Painting, Plaintiff intends to commit it to the Dallas Museum.

62. Plaintiff has searched for ways to remedy the breach, but her efforts have

been met with contempt on the part of the Defendants. Defendants have threatened Plaintiff with public embarrassment unless she agrees to be silent, suggesting that Plaintiff's sale of the Painting in 2007 was itself a breach of her bequest to the Dallas Museum, which of course, it was not. And, while refusing Plaintiff's request to permit her to proceed anonymously in this litigation, they have persistently hid behind

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Martinez's various corporate disguises. Giving new meaning to the phrase "shell

game," they insist that it is not Martinez himself who is the owner of the Painting, while

refusing to divulge which of his corporate shells he is using this time.


63. Plaintiff incorporates herein by reference all preceding paragraphs of this

Complaint as if fully set forth hereinafter.

64. Defendants L&M, Martinez and Studio Capital have breached and

continue to breach material express provisions of the Contract as well as the covenant

of good faith and fair dealing implied in the Contract.

65. Plaintiff has fully performed all conditions, covenants, and promises

required to be performed on her part pursuant to the terms and conditions of the


66. As a direct and proximate result of their breach, Plaintiff has been made to

suffer and continues to suffer damages in an amount in excess of the jurisdictional

minimum of this Court.



67. Plaintiff incorporates by reference all preceding paragraphs of this

Complaint as if fully set forth hereinafter.

68. With knowledge of the Contract, Defendants Sotheby's and Meyer

intentionally and willfully interfered, and continue to interfere, with the Contract without

justification, and their interference induced and continues to induce Defendant

Martinez's breach of the Contract.

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69. By reason of that interference, Plaintiff has been made to suffer and

continues to suffer damages in an amount in excess of the jurisdictional minimum of this



70. Plaintiff incorporates herein by reference all preceding paragraphs of this

Complaint as if fully set forth hereinafter.

71. Defendant Sotheby's will be unjustly enriched by the auction of the


72. Once in receipt of these proceeds, Defendant Sotheby's will be subject to

an equitable duty to convey these proceeds to Plaintiff because it would be unjustly

enriched if it were permitted to retain them.

73. Plaintiff seeks damages and/or equitable remedies, including but not

limited to an accounting of all consideration received by Defendant Sotheby's in

connection with the auction of the Painting, and that a constructive trust be placed on

the proceeds derived therefrom requiring Defendant Sotheby's to release or convey

such proceeds to Plaintiff upon her request.


74. Plaintiff incorporates herein by reference all preceding paragraphs of this

Complaint as if fully set forth hereinafter.

75. Plaintiff has no adequate remedy at law ..

76. Plaintiff will be irreparably harmed if defendants Martinez, Studio Capital

or L&M publicly discuss, comment on, or refer to the 2007 sale.

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77. A balance of the equities weighs in Plaintiff's favor.

78. Plaintiff respectfully requests that this Court enter a permanent injunction enjoining Defendants Martinez, Studio Capital and L&M, and all those acting with them in concert or under their direction or authority, from publicly discussing, commenting on, or referring to the 2007 sale.


WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that Defendants be cited to appear and answer herein, and that upon final hearing hereof Plaintiff be awarded judgment for the damages she has suffered. Plaintiff additionally prays for equitable relief in the nature deemed appropriate by the Court, including rescission of the Contract. Plaintiff additionally prays that the Court enjoin Defendants Martinez, Studio Capital and L&M and all those acting with them in concert or under their direction or authority, from publicly discussing, commenting on, or referring to the 2007 sale. Plaintiff additionally prays for attorney's fees, costs of court, prejudgment and postjudgment interest, all actual out of pocket damages, as well as all other and further relief, whether general, or special, at law, or in equity, to which Plaintiff may show herself to be entitled.

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Respectfully submitted,

Bart Wulff

State Bar No. 22086100

Shackelford, Melton & McKinley LLP 3333 Lee Parkway, Tenth Floor Dallas, TX 75219

Telephone: (214) 780-1400 Telecopy: (214) 889-9715




787 Seventh Avenue New York, NY 10019 (212) 728-8000

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