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Full title: Response to Trustee's Objection to Claim 71-1 and Request for Estimation. Filed by Timothy Thompson (Castillo, Jesse) (Entered: 07/29/2021)
Document posted on Jul 28, 2021 in the bankruptcy, 6 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
As part of the Asset Purchase Agreement, TVET Management LLC signed a Promissory Note dated December 29, 2012 in favor of Dr. Thompson.On July 8, 2014, Veterinary Care, Inc. And Dr. Thompson entered into a Letter Agreement, whereby Veterinary Care Inc. modified the “earn-out’ provisions in the Convertible debenture.Dr. Thompson’s Partner Veterinarian Agreement was later “restated” and an Amended And Restated Employment Agreement (the “restated Agreement”) was executed by Dr. Thompson and TVET.In order to avoid paying Dr. Thompson the quarterly profit-sharing amounts, TVET contrived Dr. Thompson’s termination.VitalPet alleged Dr. Thompson was in breach because VitalPet understood Dr. Thompson owned a clinic by the name of San Gabriel Animal Hospital in Georgetown, Texas.
List of Tables
Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: § JOINTLY ADMINISTERED § VETERINARY CARE, INC. dba § CASE NO. 19-35736 VitalPet, et al., § Debtor § CAHPTER 11 ____________________________________________________________________________________ TIMOTHY J. THOMPSON,DVM’S RESPONSE TO TRUSTEE’S OBJECTION TO CLAIM 71-1 FILED BY TIMOTHY J. THOMPSON, AND REQUEST FOR ESTIMATION ____________________________________________________________________________________ TO THE HONORABLE JUDGE OF SAID COURT: NOW COMES Timothy J. Thompson DVM, by and through his undersigned counsel, and hereby responds to the Trustees’ Objection to Claim 71-1 filed by Timothy J. Thompson and Request for Estimation and would show the Court the following: In support of this Response, Timothy J. Thompson ( “Dr. Thompson” or “Claimant”) avers as follows: 1. On April 22, 2020, Claimant filed his Proof of Claim in the amount of $1,267,000.00 in Case No. 19-35736 (“Thompson’s Claim”). 2. In the Objection, the Trustee seeks to disallow Thompson’s Claim or following summary estimation procedures enter an Order allowing the claim in an appropriate amount that is supported by the evidence. 3. For the reasons set forth below, Claimant requests that the Court overrule the Objection and allow the claim in the amount set forth and supported by the evidence. 4. In late 2012, TVET Operating PLLC and Timothy J. Thomson entered into an Asset Purchase Agreement. In connection with the Asset Purchase Agreement, the parties entered into several agreements. TVET did not pay the full consideration price for the purchase of the assets. Instead, the transaction included several promises to pay.
15. As part of the Asset Purchase Agreement, TVET Management LLC signed a Promissory Note dated December 29, 2012 in favor of Dr. Thompson. The principal amount was $290,000.00 bearing interest at 6 percent payable quarterly with a maturity date of January 1, 2019. The Promissory Note also provided “earn-out” provisions based on net margin calculations of the “Hospital” as defined in the Asset Purchase Agreement. Page 2 of the Promissory Note described the earn out provisions and the method of calculating the earn out amounts. The calculated earn-out amounts would be added to the principal balance. 6. In addition to the Promissory Note, Veterinary Care Inc. also executed a Convertible Debenture in favor of Dr. Thompson as the registered holder of the Convertible Debenture. The principal amount of the Convertible Debenture was in the original principal amount of $290,000.00 subject to adjustments described in the Convertible Debenture. The Convertible Debenture provided for 3% interest and a maturity date of January 1, 2019. Like the Promissory Note, the Convertible Debenture had “earn-out” provisions. See paragraph 3, page 3 of the Convertible Debenture. 7. On July 8, 2014, Veterinary Care, Inc. And Dr. Thompson entered into a Letter Agreement, whereby Veterinary Care Inc. modified the “earn-out’ provisions in the Convertible debenture. 8. Also, in connection with the Asset Purchase Agreement, Veterinary Care Inc. entered into agreements with Dr. Thompson to employ him as the Director of Veterinary Recruiting and as a Partner Veterinarian with TVET Operating, PLLC. Under the Director Agreement, Dr. Thompson was to be paid $40,000.00 annually and under the Partner Veterinarian Agreement, Dr. Thompson was to be paid $45,000.00 per month assuming certain billable production. 9. On February 15, 2015, Benjamin Thomas on behalf of VitalPet informed Dr. Thompson that the principal balances of both the Promissory Note and the Convertible Debenture would be increased by an earn-out amount of $75,000.00 each. 10. Dr. Thompson’s Partner Veterinarian Agreement was later “restated” and an Amended And Restated Employment Agreement (the “restated Agreement”) was executed by Dr. Thompson and TVET. Under
2the Restated Agreement, Dr. Thompson was to be paid additional compensation, for so long as he was employed, a quarterly amount equal to twenty percent of the net income of the clinic. 11. In order to avoid paying Dr. Thompson the quarterly profit-sharing amounts, TVET contrived Dr. Thompson’s termination. This was a practice utilized by Benjamin Thomas to avoid TVET’s obligation to its Partner Veterinarian. Dr. Thompson was aware of such practice. As an example, Benjamin Thomas contrived Dr. May’s termination in Frisco Texas in order to avoid paying the notes and convertible debenture and prohibit him from practicing in his own territory. See W. Scott Mays, Individually and W. Scott Mays, D.V.M. P.A., A Texas Professional Association v. TVET Management. LLC, TVET Operating, PLLC and Benjamin Thomas, Cause No. 429-02337-2014 In the 429th Judicial District, Collin County, Texas. 12. Similar claims were made by other Partner Veterinarians. 13. On April 13, 2018, TVET, through Warren Resell, sent a letter to Dr Thompson alleging that Dr. Thompson was in breach of the Restated Agreement. Dr. Thompson was not in breach of the Restated Agreement and notified Dr. Resell. VitalPet alleged Dr. Thompson was in breach because VitalPet understood Dr. Thompson owned a clinic by the name of San Gabriel Animal Hospital in Georgetown, Texas. Dr. Thompson had a veterinarian that worked at San Gabriel. Nowhere in the Restated Agreement was Dr. Thompson prohibited from having an ownership interest in San Gabriel Animal Hospital, a location wholly outside of the “restricted” area defined in the Restated Agreement. 14. On July 30, 2018, VitalPet terminated Dr. Thompson and “calculated” the buy-out purportedly under section 4.2 of the Agreement. The termination resulted in Dr. Thompson no longer receiving the quarterly profit-sharing payments, and Dr. Thompson lost the salary benefits of the Restated Agreement. 15. VitalPet “calculated” a buy-out in the amount of $203,635.68, however such amount is not consistent with the formula contained in the Restated Agreement of six times the aggregate for the four quarterly profit-sharing payments.
316. VitalPet did pay Dr. Thompson an amount due on the Note and the Convertible Debenture; however, it improperly deducted an amount attributed to a bar-b-que trailer. VitalPet did not own the trailer. Dr. Thompson bought it, improved it, expended funds to register it, maintain it, insure it and store it. The trailer belonged to Dr. Thompson. Benjamin Thomas accused Dr. Thompson of being a “trailer thief” and threatened to report him to the Marble Falls law authorities for “grand felony theft.” VitalPet never owned the trailer. VitalPet did not buy it from Dr. Thompson. The “deduction” from amounts due was improper and resulted in Dr. Thompson receiving less than what he was owed on the Note and Convertible Debenture. RESPONSE TO OBJECTIONS 17. The objection is grounded on section 502(b)(1) of the Bankruptcy Code. Section 502(b)(1) does not provide a basis to disallow the claim to zero. 18. Under section 502(b)(1), a claim may be disallowed to the extent that it is unenforceable against the debtor. See 11 USC section 502(b)(1). 19. The Claim submitted three components to the claim. One was under the Promissory Note and the Convertible Debenture, both of which were attached to the Claim. The Claim also submitted the claim that the amounts of the note and the convertible debenture were increased due to the calculation dated December 18, 2018 by Robert Cossick, VP of Finance. Dr. Thompson acknowledges that an amount of $706,500.00 was wired on or about January 2, 2019 but this payment did not fully satisfy the outstanding balance due on the Note and the Convertible Debenture Dr. Thompson is owed $22,500.00 on this element of the claim. 20. The second part of the claim is for the wrongful termination of Dr. Thompson in July 2018. As set forth above, VitalPet terminated Dr. Thompson for allegedly breaching the Restated Agreement. The Objection goes further and states that Dr. Thompson was in violation of the “non-compete” part of the Restated Agreement. See paragraph 13, of the Objection. Dr. Thompson disputes he was ever in violation of the Restated Agreement and the contrived termination was used to eliminate Dr. Thompson’s receipt of the quarterly net profit sharing payments and his salary.
421. Dr. Thompson is in agreement with the Trustee, to the extent that a proceeding should be established either through an adversary proceeding or an estimation proceeding allowing for discovery and a summary trial. VitalPet had a history of contriving reasons for terminating its partner Veterinarians to avoid paying them amounts due under the notes, convertible debentures, and their salary and then attempting to enforce the non-compete provisions of the agreements. 22. Dr. Thompson accordingly requests that the Court deny the Objection and following a separate adversary proceeding or summary proceeding enter an order allowing the Claim in an appropriate amount that is supported by the evidence. WHEREFORE, PREMISES CONSIDERED, Respondent respectfully requests that this Court deny the Objection and allow the Claim in an appropriate amount and grant Dr. Thompson such other and further relief the Court deems appropriate. Respectfully submitted, CASTILLO SNYDER, P.C. 700 N. St Mary’s Suite 1560 San Antonio, TX 78205 Telephone: (210) 630-4200 Facsimile: (210) 630-4210 /s/ Jesse R. Castillo JESSE R. CASTILLO State Bar No. 03986600 ATTORNEYS FOR RESPONDENT TIMOTHY J. THOMPSON, DVM
5CERTIFICATE OF SERVICE I certify that a copy of the above document was sent by electronic means to all parties on file on this 29th day of July, 2021 by electronically filing it with the Court using the Court’s CM/ECF system, which sent notification to all parties of interest receiving notice in this case through the CM/ECF system.: /s/ Jesse R. Castillo Jesse R. Castillo