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Out-sourced General Counsel for Small Business Owners

Several years ago a good friend came to me with a problem.  My friend is a small business owner and his problem is one all too common for growing businesses.  But, it is a good problem and, now, an easy one to solve.

My friend started a small business and poured out his heart, soul, sweat, tears, and money to grow the business.  As a result of his efforts, the business grew.  It grew fast and he was experiencing great success.  But, success and growth brought legal issues all growing companies face, and with legal issues come legal fees.

Suddenly, my friend’s company was big enough to need a lawyer on a regular basis, but still too small to afford its own in-house counsel.  Simply put, his business was in need of a lawyer without the usual large attorney fees.

Many small business owners will attempt to solve legal issues on their own when faced with the prospect of paying legal fees – which, unfortunately, usually leads to big legal problems and exorbitant fees.  Good, affordable legal counsel in the beginning can save lots of money and prevent big legal headaches later on.

Knowing that every penny counts when building a small business, we discussed his problem over a long lunch.  We put our heads together, reviewed his budget, and we solved his problem.  I became his “out-sourced general counsel.”  Based upon his budget, we agreed on a set, fixed monthly fee that allowed him to send documents for review and revision, ask for draft contracts and other documents, and to call at any time with a legal question.

Bailey & Galyen is the big firm for small business.  As your “outsourced general counsel,” we will be available to you, help you with all of your legal issues, and customize a fee structure that fits your budget.  We will take the time to understand your business and assist you with every aspect of starting, running, and growing a successful business – without busting your budget.

Legal formalities of Non-Profit Corporations in Texas

By Leslie J. Burgoyne

Many nonprofits do not consider themselves to be businesses. In Texas, a nonprofit is a corporation, similar to any other for-profit corporation registered in Texas. The main difference is that nonprofits do not make distributions or divided payments to shareholders, therefore shareholders are usually referred to as “members.” Just like with any other corporation, corporate formalities must be followed to maintain the legal entity.

Annual meetings

The Texas Business Organizations Code requires all corporations to have annual meetings of shareholders, or in the case of a nonprofit corporation, “members.” These meetings do not have to be formal, and they can be held remotely through video and teleconferencing. Advance notice must be provided in accordance with the bylaws of the corporation. Minutes of the meetings have to be taken by the corporate secretary and stored in the corporate records book.


Speaking of bylaws, does your organization have them? Bylaws are an important governing document for a nonprofit corporation. They dictate membership requirements, board member eligibility, positions, terms, and elections. In the absence of bylaws, the default provisions of the Texas Business Organizations Code prevail. Most business owners would rather customize their own infrastructure instead of relying on standard provisions in the law.

Corporate Records Book

The corporate records book should contain the documents that created the business entity with the secretary of state of the state of Texas as well as all minutes of meetings. The corporate records book has to be stored in the “principal office” of the business and must be made available to any member of the public who requests to view it.

Minutes of Meetings

The corporate secretary takes minutes of meetings. Minutes do not have to be long and detailed, they not notes of the discussion that occur in a meeting. They are simply a record of the important decisions that were made at any particular meeting. Minutes must be signed by the secretary and must contain a verification that the secretary gave proper advance notice of the meeting to the membership (if a member meeting) or the board members (if a board meeting). The notice requirement can be waived if all members are present at a particular meeting and consent, in writing to the waiver of notice.

There are several formalities that must be followed in order for your nonprofit to continue to exist in the state of Texas. Failure to follow these formalities could result in “piercing the corporate veil” – or having individual owners or members be held personally liable for debts of the business. If you need any help with the corporate formalities of your nonprofit, please contact Bailey & Galyen by phone at 800-208-3104 or email.

Foreclosure Defense

Texas foreclosure laws provide lenders with options for both judicial and non-judicial foreclosure proceedings in the event that a mortgage goes into default. In the event of a judicial foreclosure, the mortgage contract must not include a power of sale stipulation or clause.

To receive a judicial foreclosure, Texas foreclosure law requires the lender to sue the borrower in court to obtain a court order authorizing the foreclosure.

In a non-judicial foreclosure, the borrower has signed a power of sale clause, which allows the lender pre-authorization to foreclose in the event of a default. If the power of sale clause stipulates the time, place and terms of the sale, it must be followed exactly. If the clause does not state the terms then Texas foreclosure law outlines the procedure to be followed.

Before the official foreclosure process can begin, the lender is required to mail the borrower a letter of demand. This letter requires the lender to demand payment for all past due amounts from the borrower within 20 days.

Under Texas foreclosure law, if the borrower is unable to correct the default within the 20 days the lender is required to file a notice of sale with the county clerk in the county where the property is located. In addition, a copy must be posted on the courthouse door and an addition copy must be mailed to the borrower at their last known address. This must be done at least 21 days in advance of the sale date for the property.

The sale itself is to be held on the first Tuesday of the month. This applies even if the first Tuesday is a legal holiday. The sale is a public auction that allows anyone to bid, including the lender by canceling all or a portion of the outstanding mortgage balance. In the event that there are no other bidders, the lender will take title of the property.

Lenders under Texas foreclosure law are allowed to sue for a deficiency judgment; however, this amount is limited to the difference between the sale amount, or fair market value and the amount that is due on the mortgage loan.

Whatever your foreclosure situation is time is against you. The sooner you discover your options, the easier it may be to stop your foreclosure. The lawyers at Bailey & Galyen are experienced and successful in foreclosure laws. Contact us today for an evaluation of your case.

When is a person entitled to an expunction of his or her record

An expunction of a person’s criminal records and files means that all of the records relating to an arrest cannot be released, maintained, disseminated or used for any purpose; that a person may deny the arrest and the existence of the expunction order; and that if questioned under oath in a criminal proceeding, the person may state only that the matter in question has been expunged. Generally, a person who has been arrested for either a felony or a class A or class B misdemeanor is entitled to have all records and files relating to the arrest expunged if:

  1. The person is tried for the offense and is
    1. Found not guilty or
    2. Found guilty and subsequently pardoned; or
  1. The person has been released and the charge has not resulted in a final conviction, and the charge is no longer pending and there was no court-ordered community supervision.

If either of the above conditions is met, the following must also be satisfied

  1. A person charged with a class A or class B misdemeanor must wait one year from the date of the arrest to request an expunction;
  1. A person charged with a felony must wait three years from the date of the arrest to request an expunction; and
  1. Prosecution of the offense is no longer possible because the statute of limitations has run out for that offense.

Generally, a person arrested for a class C misdemeanor is entitled to have all records and files relating to the arrest expunged if:

  1. The person is tried for the offense and is
      1. Found not guilty or
      2. Found guilty and subsequently pardoned; or
    1. The person has been released and the charge has not resulted in a final conviction (meaning the person received deferred adjudication), and the charge is no longer pending.

    If either of the above conditions is met, the following must also be satisfied:

    1. A person charged with a class C misdemeanor must wait 180 days after the date of the arrest to request an expunction.

    If you believe that you may be entitled to an expunction of your criminal records, please do not hesitate to call Bailey and Galyen to assist you.

“Judgment Collection”

When you or your company is owed money, it is often necessary to turn to the legal system to collect the debt.  The attorneys at Bailey & Galyen have the experience necessary to maximize your recovery and minimize your cost while collecting the money your or your business is owed.

If you are owed a debt, Texas law allows a number of pre- and post-judgment collection methods, including:

  • Pre- and post-judgment garnishment proceedings;
  • Filing lis pendens;
  • Abstracting judgments; and
  • Obtaining turnover orders.

Under the right circumstances, these collection methods may provide a quick and cost-effective mechanism for collecting a debt.  The attorneys at Bailey & Galyen can assist our clients in using these methods to collect the debts they are owed.  The attorneys at Bailey & Galyen are also experienced in aggressively pursuing post-judgment discovery to uncover a debtor’s assets that may be subject to seizure to satisfy a debt.

Josh Borsellino has years of experience helping individuals and business collect the debts they are owed.  With offices in Dallas, Arlington, Fort Worth, Houston, and McAllen, to name a few, Bailey & Galyen has the resources to assist you with in collecting the debts your are owed throughout Texas.


When you need experienced legal counsel to aggressively pursue those that owe you money, call our law firm at (866) 378-4705, or contact us online, to arrange a consultation. Our business attorneys stand ready to enforce your rights and collect the money that you are owed.

Writ of Garnishment

Originally printed in the Dallas Bar Association Headnotes publication by author Peter Chen

Does your company hold a judgment against one of its ex-customers?

If so, Bailey & Galyen can help you collect the judgment in a number of different ways.  One way is through a writ of garnishment.

Pursuant to CPRC §63.001(3), a post-judgment writ of garnishment is available if ”a plaintiff has a valid, subsisting judgment and makes an affidavit stating that, within the plaintiff’s knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the judgment.” In light of what appear to be relatively simple requirements, Texas courts have long held that garnishment is a summary and harsh remedy, requiring strict compliance with the statutory provisions and related rules.

Unlike a writ of execution, a post – judgment writ of garnishment may be applied for and issued immediately after entry of a final judgment. TRCP 657. Thus, post – judgment garnishment actions are often quick-strike opportunities, as a debtor will likely withdraw assets from any suspected target of collection actions. Accordingly, it is vitally important that a post-judgment garnishor gets it right the first time around. The following are five common, though not exclusive, errors to be avoided:

  1. Affidavits that merely regurgitate the statutory language are insufficient. The rules require that the affidavit be either based on personal knowledge, “set[ting] forth such facts as would be admissible in evidence,” or based on information and belief, provided “the grounds of such belief are specifically stated.”
  2. In cases where the underlying judgment is against multiple defendants, an affidavit that addresses only one defendant is insufficient.
  3. A writ of garnishment that does not issue from the court that issued the underlying judgment is defective.  Note that when instituting garnishment proceedings that arise from a judgment rendered in another state, this requirement necessitates domestication of the foreign judgment under the Uniform Enforcement of Foreign Judgments Act, CPRC chapter 35.
  4. A writ served on the garnishee by a private process server cannot be sustained. TRCP 663 makes explicitly clear that only a sheriff or constable may serve the writ of garnishment on the garnishee.
  5. Without service on the debtor, a garnishment cannot be sustained. The rules require that a copy of the writ be served on the judgment debtor ”as soon as practicable following the service of the writ.” Although this rule does not provide an explicit deadline, a 15-day delay before serving the debtor has been held to be too long, according to Texas courts.  In contrast to the requirements for service on the garnishee, the rules allow for service on the debtor as provided in TRCP 21a. And, it is worth noting that ”[a]ctual knowledge or a voluntary appearance by the debtor is insufficient and does not waive rule 663’s requirement of service.”

If you or your company has any “bad debts,” feel free to contact the attorneys at Bailey & Galyen to see if we can help turn those bad debts into good money.

Clearing Your Record

By John Robinson

Anytime a person is arrested and booked into jail, a record is created.  This record quickly proliferates through many databases and is easily accessible to the public. In fact, many counties in the Dallas-Fort Worth area have booking photos of each person arrested available online at no cost.  Even if the case is ultimately dismissed, there is a not guilty finding or community supervision is successfully completed, the stigma of arrest remains for all the public to see.  Further, the reality is that the arrest record alone is effectively as harmful as being found guilty is to most prospective employers.

In Texas there are two main avenues used to limit an arrest and case record from public view: expunction and nondisclosure.  An expunction is the complete erasure of the arrest and case record from government databases and down-line reporting companies. This expunction does not include stories that end up on sites like Yahoo! or Google. For example, even though O.J. Simpson would be eligible for an expunction had his case tried been in Texas, expunction would have been pointless because all the news stories about his case, both online and in print, do not fall under the Texas statute requiring removal of the record.  An expunction is only available if a person is acquitted of the charge, the charge is dismissed (but not dismissed through a deferred adjudication) and the statute of limitations has run out, or the charge was pardoned by the governor’s office.  There are also other factors, such as other felonies, that limit a person’s eligibility for an expunction.

Nondisclosure is a partial erasure of the record.  It prohibits arrest and case information from being made available to the public but allows law enforcement and most state agencies to access it.  Nondisclosure is only applicable to offenses where deferred adjudication community supervision (probation) was granted and the case was dismissed after its successful completion.  After the case is dismissed, there is a five year wait for all felonies and a two-year wait for some misdemeanors, during which time the accused must not have any new convictions or probations, before a nondisclosure can be filed.  Further, certain offenses, for example cases involving family violence, kidnapping or stalking, or cases that require sex offender registration, are not eligible for nondisclosure.  Finally, nondisclosure is discretionary to the court where the original case was filed.  Unlike with expunction where you either qualify or you don’t, there is no right to a nondisclosure.  If the district attorney agrees, most judges will grant the nondisclosure.  If the district attorney doesn’t agree, however, then it is up to the petitioner to prove that it is in the best interests of justice to grant the nondisclosure.

A person’s background check can be the difference between getting a job and not getting a job.  It can affect many other things in one’s daily life.  If you have been arrested for an offense and fall into one of the above categories, you should definitely take action to clear your record.

Fuddruckers Filed For Bankruptcy? Can I Still Get My Hamburger?

By Jim Ince

On April 22, 2010, the parent company of Fuddruckers declared bankruptcy. The interesting fact here is that very few people are aware that Fuddruckers even filed for bankruptcy.  Many of you might be saying to yourselves that you ate a Fuddruckers burger recently and everything seemed normal.  It is shocking to find out that a well-respected company can file for bankruptcy and largely keep that a secret. Planning to enjoy a day at Six Flags anytime soon?  Well, they too are in bankruptcy.

Probably the largest misconception about bankruptcy is that it completely disrupts or destroys your life.  In reality, unless a company reaches the point where it simply chooses not to continue doing business, it continues to operate with little or no interruption in service.  So, why did Fuddruckers file?  It seems the company has a small handful of stores that have not been operating profitably, and that handful of stores is having a negative impact on the rest of the operation.  The company found that by continually trying to prop up the individually failing stores, it was risking collapse of the whole operation.

Individuals often find themselves in a similar situation.  They are able to continue existing day to day.  However, so much of their financial focus is on the part of their life that is not functioning well, and they are devoting more and more of their disposable income to paying credit card debt.  Much as Fuddruckers discovered, there may be aspects of the financial picture that are working extremely well.  The problem is that a substantial part of their income is tied up with purchases made long ago and ever-increasing late fees and interest.  Unlike with companies, creditors owed money by individuals do not really “negotiate” and make a plan for you to pay back your debts.

If you are struggling, it is time to sit down with an experienced bankruptcy attorney.  There are two major kinds of bankruptcy for consumers.  Chapter 7 is the traditional bankruptcy and deals primarily with credit card and medical debt.  Chapter 13 helps you if you have also gotten behind on your house and/or car, as well as with your credit card debt.  The type of bankruptcy best for a particular individual depends on a variety of factors including the type of debt that person is carrying and their amount of income.

Don’t let the situation deteriorate until there is no choice but to dig into your 401(k) or your home equity.  In Texas, these are protected assets and you need to keep them protected.  A bankruptcy will let you keep your home, cars, 401(k) and, in most cases, cash!  You won’t know until you explore.

Unlike for a Fuddruckers, personal bankruptcy is not just a business decision.  It is also an emotional situation, which a bankruptcy attorney is trained to handle.  You do not have to apologize for the situation you find yourself in.  The appointment is free.  Call now to see one of our attorneys.  Let us put you back on your feet so that you, like Fuddruckers, can manage your finances and be profitable and successful.  People do not think less of Fuddruckers or Six Flags because those companies filed bankruptcy.  I think I know where I may go for lunch today!

Deceptive Trade Practices Prohibited in Texas

by Michael Cramer

Texas law protects consumers from “false, misleading or deceptive acts or practices.”

The term “false, misleading or deceptive acts or practices” includes, but is not limited to, the following acts:

  1. passing off goods and services as those of another;
  2. causing confusion or misunderstanding as to the source, sponsorship, approval or certification of goods or services;
  3. causing confusion or misunderstanding as to affiliation, connection, association with or certification by another;
  4. using deceptive representations or designatins of geographic origin in connection with goods or services;
  5. representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have, or that a person has a sponsorship, approval, status, affiliation or connection that he does not;
  6. representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used or secondhand;
  7. representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another;
  8. disparaging the goods, services or business of another by false or misleading representation of facts;
  9. advertising goods or services with intent not to sell them as advertised;
  10. advertising goods or services with intent not to supply a reasonable expectable public demand, unless the advertisements disclosed a limitation of quantity;
  11. making false or misleading statements of fact concerning the reasons for, existence of or amount of price reductions;
  12. representing that an agreement confers or involves rights, remedies or obligations that it does not have or involve, or that are prohibited by law;
  13. knowingly making false or misleading statements of fact concerning the need for parts, replacement or repair service;
  14. misrepresenting the authority of a salesman, representative or agent to negotiate the final terms of a consumer transaction;
  15. basing a charge for the repair of any item in whole or in part on a guaranty or warranty instead of on the value of the actual repairs made or work performed on the item without stating separately the charges for the work and the charge for the warranty or guaranty, if any;
  16. disconnecting, turning back or resetting the odometer of any motor vehicle so as to reduce the number of miles indicated on the odometer gauge;
  17. advertising of any sale by fraudulently representing that a person is going out of business;
  18. advertising, selling or distributing a card that purports to be a prescription drug identification card issued under Section 4151.152, Insurance Code, in accordance with rules adopted by the commissioner of insurance, which offers a discount on the purchase of health care goods or services from a third-party provider, and which is not evidence of insurance coverage, unless:
    1. the discount is authorized under an agreement between the seller of the card and the provider of those goods and services, or the discount or card is offered to members of the seller;
    2. the seller does not represent that the card provides insurance coverage of any kind; and
    3. the discount is not false, misleading or deceptive;
  19. using or employing a chain referral sales plan in connection with the sale of or offer to sell goods, merchandise or anything of value, which uses a sales technique, plan, arrangement or agreement in which the buyer or prospective buyer is offered the opportunity to purchase merchandise or goods and in connection with the purchase receives the seller’s promise or representation that the buyer shall have the right to receive compensation or consideration in any form for furnishing to the seller the names of other prospective buyers if receipt of the compensation or consideration is contingent upon the occurrence of an event subsequent to the time the buyer purchases the merchandise or goods;
  20. representing that a guarantee or warranty confers or involves rights or remedies that it does not have or involve, provided, however, that nothing in this subchapter shall be construed to expand the implied warranty of merchantability as defined in Sections 2.314 through 2.318 and Sections 2A.212 through 2A.216 to involve obligations in excess of those which are appropriate to the goods;
  21. promoting a pyramid promotional scheme, as defined by Section 17.461;
  22. representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts not replaced;
  23. filing suit founded upon a written contractual obligation of and signed by the defendant to pay money arising out of or based on a consumer transaction for goods, services, loans or extensions of credit intended primarily for personal, family, household or agricultural use in any county other than in the county in which the defendant resides at the time of the commencement of the action or in the county in which the defendant in fact signed the contract; provided, however, that a violation of this subsection shall not occur where it is shown by the person filing such suit he neither knew or had reason to know that the county in which such suit was filed was neither the county in which the defendant resides at the commencement of the suit nor the county in which the defendant in fact signed the contract;
  24. failing to disclose information concerning goods or services that was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed;
  25. using the term “corporation” or “incorporated,” or an abbreviation of either of those terms, in the name of a business entity that is not incorporated under the laws of this state or another jurisdiction;
  26. selling, offering to sell or illegally promoting an annuity contract under Chapter 22, Acts of the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon’s Texas Civil Statutes), with the intent that the annuity contract will be the subject of a salary reduction agreement, as defined by that Act, if the annuity contract is not an eligible qualified investment under that Act or is not registered with the Teacher Retirement System of Texas as required by Section 8A of that Act; or
  27. taking advantage of a disaster declared by the governor under Chapter 418, Government Code, by:
    1. selling or leasing fuel, food, medicine or another necessity at an exorbitant or excessive price; or
    2. demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity.

If you have been a victim of any of the above types of transactions, you may be able to recover up to three times the amount of damages that the fraudulent transaction cost you. Specifically, you may sue for the following:

  1. The consumer may sue for the amount of economic damages.
  2. If the conduct of the defendant was committed knowingly, the consumer may also recover damages for mental anguish and not more than three times the amount of economic damages.
  3. If the conduct was committed intentionally, the consumer may recover damages for mental anguish, and not more than three times the amount of damages for mental anguish and economic damages.
  4. Each consumer who prevails shall be awarded court costs and reasonable and necessary attorney fees.

If you feel that you have been the victim of any false, misleading or deceptive practice, please call the attorneys at Bailey & Galyen.

Arcadia Petroleum Futures Trading Investigation

by John Fabry

Bailey & Galyen is investigating potential claims on behalf of investors in light sweet crude oil futures or options contracts in early 2008. According to a complaint filed by the Commodity Futures Trading Commission (CFTC), traders at Arcadia Petroleum Ltd., a Swiss commodity-trading firm, manipulated the price of oil at America’s central oil hub in Cushing, Oklahoma, in January and February of 2008. The oil traders, Nicholas Wildgoose and James Dyer, are alleged to have entered into forward contracts to buy 4.6 million barrels of oil for physical delivery in February, an amount that represented 66 percent of their beginning-of-month estimate of the total physical Cushing market. Between January 3 and January 16, the pair is alleged to have also bought approximately 13,600 February futures contracts (equivalent to 13.6 million barrels of oil) and sold the same number of March futures contracts. They allegedly did so to manipulate the price of derivatives tied to the value of oil prices at that hub. More specifically, it is alleged that by creating the appearance of temporarily tighter conditions in the physical market, the February futures price would rise relative to the March and the traders would profit as they closed out their futures positions between January 16 and January 22.

If you would like to discuss your rights and interests as an investor, or have information relating to this investigation, please contact John Fabry at Bailey & Galyen’s Houston office at 381-335-7744 or by e-mail at Legal Website Services  ATTORNEY ADVERTISING

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