Why that decision was taken is still unknown, but court records suggest that throwing money away on a case that couldn’t be won might be one of the possibilities. The downside is that the plaintiffs went completely unchallenged, including when they requested and received a damages award in excess of $100 million last June.
Cash Disappeared, House Remained
After receiving the green light, DISH began searching for the defendants’ assets, including more than $10 million generated by the Nitro TV service.
Four banks that had received deposits of more than $9 million complied with disclosure requests; two reported no active accounts, one confirmed a $49.00 balance, and the final account was in the red.
Finding the cupboard bare, DISH moved in on the defendants’ house in Friendswood, Texas.
Since the property might qualify for homestead protection, DISH presented evidence to the court to show that Nitro TV subscription revenue was used to pay for the house. With the defendants entirely absent from the legal process, the court ordered the United States Marshal Service to levy and sell the property.
Out of nowhere, the defendants suddenly decided that wasn’t going to happen.
The House is Off Limits
In a motion to alter or amend the judgment “to prevent a clear error or manifest injustice,” counsel for Alex Galindo explained that his client bought the house in Friendswood in March 2020 and declared it his home.
“The Texas Constitution provides special protections for the homestead separate and distinct from protections afforded other types of property,” the motion reads.
“Because constitutional homestead rights protect citizens from losing their homes, statutes relating to homestead rights are liberally construed to protect the homestead.”
DISH evidence linked 99% of the house purchase price to sales of illegal IPTV subscriptions. The company argued that homestead protection is not available when a property is purchased with wrongfully acquired funds.
To support that claim, DISH cited another case – Deluxe Barber School, LLC and Bonifice I. Mbaka – but according to counsel for Galindo, an important detail means that his house still enjoys protection.
No Money Was Stolen
In a nutshell, Deluxe Barber involved a foreclosure on a property that was purchased with stolen cash. The strong suggestion here is that since the cash at issue in the Nitro case wasn’t stolen and wasn’t earned by DISH, Deluxe Barber is unhelpful to the broadcaster.
“[T]hese funds were never possessed, or even earned, by the Plaintiffs. There is no evidence that such funds belonged to the Plaintiffs or that Defendants stole or wrongfully acquired funds directly from Plaintiffs,” the motion reads.
The 99% figure is also important, the motion adds. It argues that since the account used to buy the property contained personal funds and money “potentially earned” from legitimate transactions, just one percent of legitimate funding would mean homestead rights under the Texas Constitution, especially since Texas courts “liberally construe statutes” relating to homestead rights.
Predictably, DISH sees things quite differently.
DISH: Don’t Undo The Correct Decision
In calling for the motion to be dismissed, DISH cites the history of the lawsuit, using the Court’s own words to state its position. The defendants operated an “illegal streaming service called Nitro TV, through which the defendants pirated the plaintiffs’ television programming and sold that content to Nitro TV’s subscribers,” the court’s judgment reads.
The Court also handed down a statutory damages award of $100,363,000 – the defendants didn’t challenge the award in June 2022, and they aren’t challenging it now, DISH adds. Furthermore, the defendants were served with a motion relating to the house in October 2022, and a month later after receiving no response, the Court found that the property does not warrant homestead protection.
“Defendants moved the Fifth Circuit to stay the sale of the Friendswood Property – making essentially the same arguments raised here – and that motion was denied,” DISH notes.
“Defendants’ motion for reconsideration should likewise be denied as there are no grounds warranting the extraordinary remedy of reconsideration and, even if reconsidered, the Court’s Order allowing the sale of the Friendswood Property is supported by the undisputed facts and well-established Texas law.”
The Money Wasn’t Stolen But Fraud Works Too
Addressing Galindo’s assertion that stolen money wasn’t used to buy the house, DISH draws attention to “analogous Florida laws” where homestead protection did not apply because funds were “fraudulently obtained.” Furthermore, if the house was indeed a homestead, it wasn’t designated as such for tax purposes.
“Defendants fail to show entitlement to the extraordinary remedy of reconsideration. Defendants’ motion to alter or amend the Court’s Order authorizing the U.S. Marshal to levy and sell the Friendswood Property and apply the proceeds towards the satisfaction of Plaintiffs’ judgment should be denied in all respects,” DISH concludes.