United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED June 30, 2022 No. 21-50912 Lyle W. Cayce Clerk

Carnegie Technologies, L.L.C.,

Plaintiff—Appellee,

versus

Triller, Incorporated,

Defendant—Appellant.

Appeal from the United States District Court for the Western District of Texas USDC No. 5:20-CV-271

Before Higginbotham, Haynes, and Wilson, Circuit Judges. Cory T. Wilson, Circuit Judge: What began as a relatively straightforward sale of one company, Triller, Inc. (Triller), by a group of owners that included another company, Carnegie Technologies, L.L.C. (Carnegie), has ended as a tangled dispute between Carnegie and Triller over a promissory note Triller executed in favor of Carnegie and then immediately assigned to a group of “legacy” owners—including Carnegie—as part of the deal’s closing. After the note was defaulted, Carnegie sued Triller to collect the amounts due. Triller countered that because its obligations under the note had been assigned, resulting in a novation, Triller was excused from further liability. The district Case: 21-50912 Document: 00516377341 Page: 2 Date Filed: 06/30/2022

No. 21-50912

court disagreed, finding that Carnegie had demonstrated the validity of the note and that the note was in default, and rejected Triller’s novation defense. We agree based on the record before us that Triller remained liable under the note to Carnegie, so we affirm. I. A. In 2019, Triller, a social media company that owns the Triller internet application, was owned by an investment group that included Carnegie. In addition to being an owner of Triller, Carnegie also provided human resources, accounting, and tax services to Triller under an Administrative Services Agreement (the ASA). Triller rarely paid for those services, instead recording them as liabilities in its internal recordkeeping. On October 8, 2019, Triller was sold by Carnegie’s investment group to Triller HoldCo, LLC (HoldCo). HoldCo’s ownership was divided between the majority stakeholder, an investment group headed by Proxima Media, LLC (Proxima), and the minority-shareholder Triller Legacy, LLC (Legacy). Legacy was owned by Carnegie and the original investment group. The day the transaction closed, Triller executed a Promissory Note in favor of Carnegie (the Note). The Note memorialized the debts that Triller had incurred under the ASA. The Note provided that Triller would repay a principal amount of $4,280,109, as well as interest accruing at ten percent per annum. It carried a due date of October 8, 2021. It also provided that if Triller failed “to make any required payment of principal, accrued interest or any other amount under this Note when due and payable,” or if Triller materially failed to comply “with any of its obligations, agreements and covenants” contained in the ASA, then Triller would be deemed to have defaulted on the Note. In the event of default, Carnegie was permitted to accelerate payment of the unpaid p