Judge Smith expressed skepticism. “Your client knew that many of these employees had been terminated, but you continued to pay for about 35 months?” he asked.
Disputes Over Leadership and Control
Highland’s attorney, John Morris of Pachulski Stang Ziehl & Jones LLP, countered that NexPoint’s leadership was complicit in approving payments despite the staff reductions. He pointed to Frank Waterhouse, Highland’s CFO and NexPoint’s treasurer, who signed and authorized all disputed payments under flat-fee agreements.
“Mr. Waterhouse was in complete control,” Morris argued. “He had all of the information. He is their agent … approving every one of these payments until Highland gives notice of termination.”
Morris emphasized that NexPoint received the services outlined in the agreements, making the $2.6 million judgment equitable. “To suggest it would be inequitable for Highland to get paid … is kind of perverse,” he said.
Background of the Dispute
The case is part of broader litigation between NexPoint and Highland, which filed for Chapter 11 bankruptcy in 2019. The bankruptcy followed a multiyear legal battle, including a $189 million arbitration award against Highland in Delaware. NexPoint, led by Highland co-founder James Dondero, has also challenged Highland’s reorganization plan.
