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No. ______________ DAVID WAYNE § IN THE DISTRICT COURT Plaintiff § § V. § HARRIS COUNTY, TEXAS § JERRY M. RICKY § THE FAMILY LIMITED § PARTNERSHIP, §

CITIES AFTER HOURS CLINIC, P.A., § STAR EVALUATIONS, INC., §

and PAIN CARE & REHAB § CENTER, P.A., § Defendants § _____ JUDICIAL DISTRICT

Plaintiff’s Original Petition, Requests for Disclosure, Requests for

Admissions, Interrogatories and Requests for Production

TO THE HONORABLE JUDGE OF SAID COURT:

I. Nature of this Action

1. This is a shareholder oppression and breach of fiduciary duties action arising out

of the squeeze-out by the majority owners of a minority owner of a Texas corporation and a

Texas general partnership, both of which are involved in a Harris County medical practice.

Plaintiff seeks a writ of mandamus to enforce his statutory and common law inspection rights

and seeks equitable relief from the Court as a result of Defendants’ pattern of oppressive

conduct. Plaintiff further seeks damages from Defendants for various torts suffered at

Defendants’ hands in connection with his ownership interest in Cities After Hours Clinic,

P.A. and San Family Medicine Clinic, LLP and an accounting and other equitable

relief relating to the dissolution of those entities.

II. Discovery Control Plan

2. Plaintiff intends to conduct discovery under Level 3 of Texas Rules of Civil

Filed 11 January 31 P6:47Chris Daniel - District ClerkHarris CountyED101J016158617By: Furshilla McGee

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Procedure 190.

III. Parties

3. Plaintiff, David Wayne (hereinafter “Plaintiff”), is an individual who

resides in Pasadena, Harris County, Texas. All pleas, pleadings, motions, discovery, and other

matters related in whole or in part to this case should be served upon Plaintiff’s attorney, Mr.

Eric Fryar, with The Fryar Law Firm, P.C., 1001 Texas Avenue, Suite 1400, Houston, TX

77002, Office: 281-715-6396, Facsimile: 281-715-6397.

4. Defendant, Jerry M. is a natural person residing in Harris County,

Texas and may be served at his place of business, W. San Deer Park, Texas

77536, at his residence in Deer Park, Lane, Deer Park, Texas 77536, or where he

may be found.

5. Defendant, Ricky is a natural person residing in Harris County, Texas

and may be served at either of his places of business, W. San Deer Park, Texas

77536, or at Katy Freeway, Houston, Texas 77007, at his residence in Houston,

Street, Houston, Texas 77007, or where he may be found.

6. Defendant, Family Limited Partnership, and/or any predecessors or

successors in interest (hereinafter “ FLP”), is a limited Partnership organized under the

laws of the State of Texas whose principal place of business is in Harris County, Texas.

FLP can be served with citation and/or process on its registered agent for service of

process, which is Jerry M. Lane, Deer Park, Texas 77536.

7. Defendant, Star Evaluations, Inc., and/or any predecessors or successors in

interest (hereinafter “ Star”), is a corporation organized under the laws of the State of Texas

whose principal place of business is in Harris County, Texas. Star can be served with

citation and/or process on its registered agent for service of process, which is Jerry M.

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Lane, Deer Park, Texas 77536, or upon any corporate officer found at its

corporate offices at W. San Deer Park, Texas 77536.

8. Defendant, Pain Care & Rehab Center, P.A., and/or any predecessors or

successors in interest (hereinafter “ is a professional association organized under the

laws of the State of Texas whose principal place of business is in Harris County, Texas.

can be served with citation and/or process on its registered agent for service of process,

which is CT Corporation System, 350 N. St. Paul Street, Suite 2900, Dallas, Texas 77201-4234.

9. Defendant, Cities After Hours Clinic, P.A., and/or any predecessors or

successors in interest (hereinafter “ Cities”), is a professional association organized under the

laws of the State of Texas whose principal place of business is in Harris County, Texas.

Cities can be served with citation and/or process on its registered agent for service of process,

which is Jerry M. Lane, Deer Park, Texas 77536, or upon any

corporate officer found at that location, or upon any corporate officer found at Katy

Freeway, Houston, Texas 77007.

IV. Jurisdiction & Venue

10. Jurisdiction is proper pursuant to Article 5, § 8 of the Texas Constitution. The

amount in controversy exceeds the minimum jurisdictional limits of this Court.

11. Venue is proper in Harris County, Texas, as all or a substantial part of the events

or omissions giving rise to this claim occurred in Harris County, Texas. TEX. CIV. PRAC. & REM.

CODE §15.002(a)(1). In addition, defendants Family Limited Partnership, Cities

After Hours Clinic, P.A., Star Evaluations, Inc., Pain Care & Rehab Center,

P.A.’s principal places of business are all in Harris County, Texas. TEX. CIV. PRAC. & REM.

CODE §15.002(a)(3).

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V. Verified Petition for Writ of Mandamus

12. Plaintiff is a one-third partner in San Family Medicine Clinic, LLP.

(hereinafter the “Partnership”), which is governed by the Restated and Amended Agreement of

Partnership of San Family Medicine Clinic, L.L.P. (hereinafter the “Partnership

Agreement”), attached hereto as Exhibit A. Plaintiff is also a 50 percent shareholder in

Cities as evidenced by Form 1120 federal income tax return attached hereto as Exhibit B, and by

the affirmative representations of the other owners, Ricky and Jerry Legal

counsel for the has represented that no stock ledger for the professional association

exists nor is one maintained.

13. In November 2009, Plaintiff demanded and received certain financial records

pertaining to the Partnership, including Quickbooks data files. On March 18, 2010, Plaintiff

through his counsel, made a written demand on Brian counsel for Ricky and Jerry

pointing out questionable self-dealing transactions and numerous problems with the

financial records maintained by the and making specific requests for Partnership

records relating to the deficiencies. In the same letter, Plaintiff requested to be provided access

to the stock ledger and all financial records for Cities. A true and correct copy is attached

hereto as Exhibit C.

14. Receiving no response, Plaintiff, through counsel, e-mailed Brian on April

30, 2010, and renewed Plaintiff’s inspection demand; a true and correct copy is attached hereto

as Exhibit D.

15. Defendant never made a formal response to the written demand for Cities

corporate records, but on May 28, 2010, Defendant Cities, through counsel Brian

sent a letter marked FOR SETTLEMENT PURPOSES ONLY – NOT ADMISSIBLE FOR ANY

REASON, which offered access to the Cities records if Plaintiff would “provide us with a

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written request detailing the specific documents you wish to review,” plainly ignoring that

Plaintiff had already made a valid inspection demand.

16. Plaintiff, through counsel, renewed his inspection demand in an e-mail to Brian

dated July 16, 2010; a true and correct copy is attached hereto as Exhibit E. Only then

was Plaintiff informed that a part of the accounting records for Cities were contained in a

password-protected computer file mislabeled as “ which had been provided to Plaintiff

with the original Partnership records. Defendant Cities supplied the password on July 21,

2010, and counsel Brian stated that the balance of the bookkeeping and accounting

records for Cities was in the possession of & Co., P.C., the corporation’s

accountant

17. On July 23, 2010, Plaintiff, through counsel, made simultaneous written

inspection demands upon the apparent custodians of the remaining Cities records,

CPA, P.C. and & Co., P.C. (“ it appearing that

& Co., P.C. had by that time become defunct or was no longer in use as an entity doing

business in Texas; a true and correct copy of each is attached hereto as Exhibit F and G,

respectively.

18. Defendant in an e-mail dated August 3, 2010, asserted to Plaintiff’s

counsel that Arjunani Hasan had exclusive possession and custody of the requested records.

Further inquiries to Arjunani Hasan resulted in a response from “Wayne Jr., CPA, Tax

Manager” who stated in an e-mail dated September 17, 2010, that “[w]e have requested an

authorization of release for tax workpapers many different times from Elaine We

have not been able to have a response either by e-mail or phone call messages.” A true and

correct copy of said e-mail is attached hereto as Exhibit H.

19. Thereafter, on October 13, 2010, counsel for Plaintiff contacted Mr. by

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phone in an effort to persuade him to reconsider. Mr. stated that if he received an e-mail or

other written authorization from the attorney for the then he would be happy to

provide any and all financial information in his possession, although he denied that

was now doing the accounting for Cites. Counsel for Plaintiff requested in an e-mail

to Brian that day that Mr. provide written authorization to Mr. for the

release of financial records and for further clarification on who was then doing the accounting

for Cities. On October 20, 2010, Mr. forwarded to Counsel for Plaintiff what he

represented as tax work papers for 2007 and 2008, but nothing more recent than that. Contrary

to the representations by Brian Mr. stated that the accountants had never been the

custodians of Cities financial records and only had their own workpapers from 2007 and

2008. An e-mail to Brian demanding an up to date accounting for Cities produced no

response whatsoever. A true and correct copy of said e-mail is attached hereto as Exhibit I. To

date, the have not produced an up to date accounting for Cities.

20. Based on the foregoing, Defendants have succeeded in stonewalling and delaying

Plaintiff’s access to and inspection of Partnership records and corporate records for almost a

year, resulting in substantial expense and attorneys’ time. To date, Defendants have failed to

permit access of Partnership records including the following: all books and records of account

and Quickbooks data for the period December 2009 to present; CMEDS billing software and

data. To date, Defendants have failed to permit access and inspection of Cities corporate

records including the following: all books and records of account and Quickbooks data for the

period December 2009 to present; CMEDS billing software and data; all bank account records

and statements; invoices, deposits, and billing records; by-laws of the association, minutes of

meetings, and any and all other corporate documents and records.

21. Pursuant to Texas common law, to §152.212 of the Texas Business Organizations

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Code (hereinafter “BOC”) and to §5.3 of the Partnership Agreement, Defendants have a duty to

disclose and Plaintiff has a right to inspect all the Partnership records he has demanded.

Defendants have violated Plaintiff’s common law, statutory, and contract rights. Therefore,

pursuant to BOC §152.211, Plaintiff is entitled to legal and equitable relief to enforce his

Partnership rights, including a writ of mandamus, or in the alternative a permanent injunction,

ordering Defendants to make the requested Partnership records available. Plaintiff is further

entitled to an award of attorneys’ fees and costs incurred to enforce his rights to inspect the

Partnership records pursuant to §12.11 of the Partnership Agreement and §38.001 of the Texas

Civil Practice and Remedies Code.

22. Pursuant to Texas common law and to §3.151, §3.152, §21.218(b) and §21.218(c)

of the Texas Business Organizations Code, Plaintiff has a right to access and inspection of the

Cities records that he has requested. Plaintiff owns more than 5% of the common stock of

Cities and has been a stockholder for more than six months. Plaintiff made written requests

and stated a proper purpose. Plaintiff has complied fully with the procedures specified in

§21.218(b). Therefore, Plaintiff is entitled to a writ of mandamus, or in the alternative a

permanent injunction, from this Court compelling Tri -Cities and its officers and directors to

permit Plaintiff’s inspection of corporate records immediately.

23. Furthermore, pursuant to §21.222, Plaintiff is entitled to recover any cost or

expense, including attorney’s fees, incurred in enforcing his rights. Plaintiff has been forced to

retain an attorney and has and will continue to incur substantial costs and attorneys’ fees in

enforcing his rights.

24. All conditions precedent necessary for Plaintiff to obtain the requested relief have

been performed or have occurred. Plaintiff is without adequate remedy at law.

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VI. Petition for Damages and Equitable Relief

A. Facts

1. Formation of the Partnership and Cities

25. On September 8, 1989, Plaintiff and Dr. Jerry M. entered into a

partnership agreement for the purpose of practicing medicine for profit. That partnership

agreement was later amended on January 1, 1995, in a Restated and Amended Agreement of

Partnership of San Family Medicine Clinic, L.L.P. (hereinafter the “Partnership

Agreement”), attached hereto as Exhibit A and incorporated herein by reference, and a filing of a

limited liability partnership was made with the Texas Secretary of State around the same time

frame. The practice was originally located in Deer Park, Texas and satellite offices were later

opened in Baytown, Texas and Katy Freeway in Houston. From the beginning, both

Plaintiff and Dr. Jerry practiced occupational medicine, and the Partnership offered

pre-employment and annual physical exams, evaluation and care of work-related injuries, drug

screens, PFTs, audiometry, respiratory fit testing, and company doctor services as well as family

practice medicine. At some point the practice adopted the trade name “ and began to

use it in conjunction with the practice, although it is not a registered assumed name of the

Partnership. Elaine wife of Dr. Jerry has, almost from the beginning,

served as the bookkeeper and business manager for the Partnership and continues to do so at

present.

26. Throughout the history of the Partnership, Dr. Jerry has acted as the

managing partner. Dr. Jerry and his wife Elaine have exercised complete control over

the Partnership’s finances and record-keeping.

27. The Partnership later purchased trucks, trailers and medical equipment as a way to

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provide on-site occupational medical care to corporate clients locally and in other states. When

performing these services, the Partnership did business under the name “ Mobile.” In

addition, the Partnership was able to secure contracts to provide medical services to companies

that had won bids to provide contractor services to the U.S. military overseas, including KBR,

LSI-EG&G and others. Partnership employees screened, examined, tested, immunized and

cleared individuals working for these companies to travel and work abroad in areas with limited

access to medical care, such as Iraq and Afghanistan. When performing these services, the

Partnership did business under the name “ International.”

28. Cities was formed on June 24, 1998. Plaintiff and Dr. Jerry were

the initial shareholders. The Plaintiff and Dr. Jerry also practiced medicine for this

entity under the name “ Industrial Clinic” or “ Industrial Clinic of Houston.”

2. Star Evaluations

29. Separate from the Partnership, and as another facet of their respective medical

practices, Plaintiff and Dr. Jerry performed workmen’s compensation impairment

ratings for the Texas Department of Insurance – Workers’ Compensation Division through

Churchill Evaluation Centers. This specific type of work was done individually, outside the

Partnership, by mutual agreement of the partners. Over time, Dr. Jerry expressed

dissatisfaction regarding his rate of compensation for this service and proposed starting a

competing business. At some point in 2004, Dr. Jerry decided to form Star

Evaluations, Inc. (registered with the Texas Secretary of State on August 30, 2004) solely in

order to do impairment ratings in competition with Churchill Evaluation Centers and realize

additional profit rather than continuing to do impairment ratings through Churchill Evaluation

Centers. Dr. Jerry offered to allow Plaintiff to become a part owner in the corporation,

but Plaintiff declined because he was happy with Churchill Evaluation Centers. However, at no

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time did Plaintiff authorize or acquiesce in any decision to allow Star to compete with the

Partnership or Cities, neither of which was involved in conducting impairment ratings at that

time or presently. In fact, Dr. Jerry expressly represented that the purpose of Star

was solely to do impairment ratings and that its business would remain limited to impairment

ratings. Given the prior mutual agreement of the partners, Star would not have competed

in the Partnership’s line of business or competed with the Partnership, if its business activities

had been restricted to the express representations made by Dr. Jerry

3. Admission of Ricky

30. At some point in 2007, Dr. Ricky Dr. Jerry son, became a

partner of the Partnership and a shareholder in Cities. Dr. Ricky did not make a

capital contribution to the Partnership or pay the other two partners for his one-third interest in

the Partnership, nor was the Partnership agreement amended to reflect his admission. On

information and belief, Dr. Ricky also did not pay for or provide any monetary

consideration for his one-third ownership interest in Cities. At no time did Plaintiff agree

that Dr. Ricky would be transferred any capital or existing equity already owned by

Plaintiff, and none of the Defendants ever disclosed to Plaintiff any intention to effect such a

transfer.

31. Subsequently, Plaintiff and Dr. Jerry acquired real property in Deer

Park under the name of the Partnership, which is the current location of “San Family

Medicine Clinic” and “ Industrial.” In 2009, another location in Groves, Texas was

purchased, upon information and belief, in the name of Cities. This location operates under

the trade name “ – Groves.”

4. Compete with the Partnership and Cities

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32. Over the years, the have focused more and more of their time and

attention on the business of Star. This shift significantly harmed the Partnership, as Dr.

Jerry in particular deprived the Partnership of his services and income. Simultaneously,

the Defendants utilized Partnership assets and personnel for the benefit of Star. The

Defendants greatly expanded the scope of Star’s line of business beyond merely

impairment ratings so that Star actually began to compete with the occupational medicine

practice of the Partnership and Cities and to take clients and business opportunities away

from the Partnership and Cities.

33. In addition, Plaintiff has recently discovered that Dr. Jerry and Dr.

Ricky have registered the assumed name “ International” for Star in

Harris County and are billing clients that properly belong to the Partnership through Star

for both occupational medicine services and overseas medical screening. This usurpation of

Partnership and corporate opportunities is a breach of Dr. Ricky and Dr. Jerry

fiduciary duties to the Partnership and to Cities. In addition, the

operate their other business ventures out of the Partnership building and by using Partnership

materials and resources without reimbursing the Partnership.

5. Squeeze-Out of Plaintiff

34. Over time, Dr. Ricky and Dr. Jerry began to restrict Plaintiff’s

practice until his only work for the Partnership or Cities was working in the family practice

clinic in Deer Park. As part of that process, Dr. Jerry and Dr. Ricky

purported to create an artificial partition or “Chinese Wall” of the Partnership into “

Industrial,” which handled only occupational medicine patients, and “San Family

Medicine Clinic,” which handled only family medicine patients. However, in reality, there is no

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formal separation of the Partnership into separate divisions. There is no segregation of funds,

records or accounts. Plaintiff was restricted to the family medicine side, which was the less

lucrative side. This despite the fact that Plaintiff has practiced occupational medicine his entire

career and is well qualified to practice in this field.

35. In 2004, 2006 and again in 2008, Defendants filed tax returns for the Partnership

and issued a K-1 to Plaintiff showing taxable income roughly twice the amount of distributions

to Plaintiff. Defendants have never accounted for the “phantom” income. As a result,

Defendants saddled Plaintiff with a tax liability that he could not afford to pay.

36. During the spring of 2009, Defendants abruptly stopped paying Plaintiff. Dr.

Jerry and Dr. Ricky represented to Plaintiff that because of the weakening

economy, business had slowed and the Partnership could no longer afford to pay Plaintiff his

monthly draws. This caused a significant hardship to Plaintiff who was forced to tap into his

retirement savings (causing another significant tax liability) to make ends meet and pay the

mortgage for his personal residence. While the also purported to cease to taking

draws, they were being paid by Star based on its business in competition with the

Partnership and Cities.

37. Simultaneously, Dr. Jerry proposed that the Partnership be split up so

that the doctors could go their separate ways. Plaintiff asked to review the books and records of

the Partnership in order to determine what his Partnership interest was worth and in order to

enter into negotiations armed with information. Several proposals have been made to Plaintiff—

none of them fair or in good faith.

38. On July 19, 2010, Dr. Jerry called a meeting of the partners of the

Partnership and a meeting of the members of Cities, to be held consecutively on July 19,

2010, for the purpose of considering and voting on a resolution to dissolve and wind up the

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Partnership and Cities. At the meetings, which, as it happened, were held simultaneously,

despite several material financial issues that were raised by the Plaintiff and Plaintiff’s expressed

willingness to continue to attempt to resolve the issues and work toward an amicable resolution,

Dr. Jerry and Dr. Ricky voted for, and Plaintiff voted against, motions to

dissolve the Partnership and Cities, respectively. The resolution also appointed Dr. Jerry

as the liquidating partner who would formulate and circulate a written, formal plan of

dissolution. Two days later, July 21, 2010, while Plaintiff was undergoing surgery and thus

unable to intervene, the closed the family medicine portion of the clinic and fired all

of the employees of the family medicine portion. In contrast, the industrial medicine portion of

the clinic, where Dr. Jerry and Dr. Ricky practice, remained open to treat

patients and remained fully staffed. Plaintiff maintains that Dr. Jerry and Dr. Ricky

voted to dissolve the Partnership in bad faith in an effort to wrongfully squeeze out

Plaintiff and ratify their misappropriations and malfeasance regarding Partnership property,

clients and funds.

6. Financial Misconduct and Need for Accounting

39. Even a cursory review of the accounting records of the Partnership thus far

available to the Plaintiff reveals that the bookkeeping and accounting for the Partnership is

confused, disorganized, fails to account for significant amounts of missing funds and reveals that

significant amounts of Partnership funds have been comingled with the funds of other entities or

misappropriated by the or their affiliated entities. As the managing partner of the

Partnership, Dr. Jerry bears responsibility for maintaining accurate books and records

for the Partnership, particularly because he insisted on retaining sole responsibility for this task

and delegated its execution to Elaine In failing to properly perform the task, he bears

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full responsibility to account for any and all funds of the Partnership and to make up for any

short falls or misappropriated or missing funds.

40. Dr. Jerry has a duty both as the managing partner and as the partner in

charge of winding up to render an accurate accounting of the partnership assets. Plaintiff

concedes that there are personal expenses and payments made by the Partnership to all three of

the partners which must be accounted for. However, the conduct of the Defendants to date

constitutes little more than wholesale theft.

41. A review of the limited accounting records for the Partnership that Plaintiff was

able to obtain revealed that Elaine Dr. Jerry and Dr. Ricky in both

their individual capacities and in their capacities as officers and/or directors of the various

entities they own, had misappropriated large sums of Partnership property and funds, used

Partnership credit cards to purchase items for their personal benefit or to benefit entities in which

the Plaintiff had no ownership interest.

42. Elaine caused “loans” to be made from the Partnership to the

FLP in the amount of $274,337.00. Upon information and belief, this amount has never been

repaid to the Partnership. Another loan was made from the Partnership to “ in the

amount of $423,914.00, however, it is not clear which entity actually received this loan nor

whether it was ever repaid.

43. Furthermore, Plaintiff has learned that Elaine took out an American

Express credit card in the name of the Partnership and on the Partnership credit. Elaine

Dr. Jerry Dr. Ricky and about a dozen Partnership employees are

all authorized users on the account. Plaintiff is not an authorized user on the account. Plaintiff

has learned that the have charged tens of thousands of dollars to the Partnership

American Express account for purely personal expenses, including, for example, to repair

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damage to the automobile owned by the daughter which was damaged in a traffic

accident she allegedly caused. In addition, tens of thousands of dollars of charges are for non-

Partnership expenses or for supplies for Star, FLP or Upon

information and belief, all of these expenses have been paid for with Partnership funds. Also,

Plaintiff has not benefitted from any reward points or airline miles accumulated as a result of

these purchases, unlike the

44. Plaintiff has also discovered that Elaine or one of her authorized agents

has been collecting cash payments that patients of the Partnership pay for services (for example,

office visit co-pays or cash paying patients) and depositing them in unknown bank accounts

rather than depositing them in the Partnership bank account. This misappropriation amounts to

over three hundred thousand dollars during the short time frame for which Plaintiff has been able

to examine the records, and, upon information and belief, more likely amounts to more than five

hundred thousand dollars.

45. Upon information and belief, some of the trucks, trailers, and mobile medical

equipment with which the Partnership practiced, under the trade name “ Mobile,” were

sold on or about September 15, 2009, and the proceeds have been misappropriated by Dr. Jerry

Dr. Ricky and Elaine for their own personal benefit and/or have

been misappropriated by one of the other entities they own or control.

46. Throughout the time period preceding this suit in which the Plaintiff and the

were attempting to negotiate regarding a split up of the Partnership, the

repeatedly represented that they had made cash infusions into the Partnership in order to make

payroll. Upon information and belief, these cash infusions came not from the

personal funds but rather from accounts under the name of Star and were paid out of funds

that had been accumulated from business that properly belonged to the Partnership. Therefore,

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the should not be able to claim a credit for any of these alleged cash infusions unless

and until they prove the source of said funds.

7. Misconduct During Winding Up

47. Defendants’ misconduct has continued unabated during the winding up of the

Partnership and the liquidation of Cities. Plaintiff has learned that the after

expelling Dr. immediately re-opened the family clinic, which belonged to the

Partnership, and it is now operating under the name “San Family Medicine Clinic”

and is seeing patients that were previously treated exclusively by Dr. Furthermore, the

occupational practices of the Partnership and Cities have continued without interruption as

well. This is a breach of fiduciary duty and a blatant misappropriation of the business goodwill

Dr. established with his patients and a tortious interference with his business relationship

with those patients. More than 90 days has passed since the majority of the partners voted to

dissolve the Partnership, however, despite that vote, the Partnership is still operating as “San

Family Medicine Clinic” and no steps whatsoever have been taken to dissolve the

Partnership. Under Section 152.709 of the Texas Business Organizations Code, a Partnership

that is continuing in business 90 days after the vote to dissolve is prima facie evidence of an

agreement by the partners to continue in business. Because Plaintiff is being excluded from the

Partnership building and premises and prevented from seeing his patients, the have

effected a de facto expulsion of the Plaintiff from the Partnership, have misappropriated

Plaintiff’s business goodwill and Partnership assets.

48. In an effort to make sure that the cash receipts of the Partnership actually made it

to the bank, Plaintiff had instructed an employee of the Partnership to collect all cash payments

and checks obtained during the day and from incoming mail and deposit such funds in the

Partnership account personally. On July 22, 2010, Amanda Plaintiff’s assistant, was in

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her private vehicle in the process of taking the checks and cash to the bank to be deposited in the

Partnership account when she was called on her cell phone from the clinic by Becky

an employee of the Partnership, informing her that Dr. Jerry was threatening to call the

police unless Ms. returned to the clinic with the cash and checks. When Ms.

refused, Dr. Jerry held Becky at the clinic against her will, and stated in her

presence that Ms. Morse “is going down!” Ms. Morse perceived this as a threat.

49. In addition, since the July 19th meeting, during which time Dr. had been

unable to be at the clinic because he was recuperating from major surgery (a fact of which

defendants were quite well aware), representatives of the have been informing

patients of the San Family Medicine Clinic that: “Dr. went on vacation and

while there he called and said to shut down the clinic and he won’t be back” or “We don’t know

what happened to Dr. he just walked out one day and he hasn’t come back” or “Dr.

died” or “Dr. had a nervous breakdown one Friday afternoon and he just

abandoned all of his patients.” In addition, one or more representatives of the

informed patients that: “we will not be practicing medicine the way Dr. did.”

Furthermore, these representatives have been giving out other physicians’ business cards to

patients of the family medicine clinic when asked by patients for information on how to contact

Dr. This is an obvious attempt to take advantage of Dr. unavoidable absence to

blacken Dr. professional reputation, tortiously interfere with Dr. doctor-patient

relationship and misappropriate the goodwill that he has been able to cultivate with his patients.

50. Plans of Liquidation for the Partnership and for Cities were sent to Plaintiff on

September 3, 2010 along with a schedule of assets and liabilities and Notices of Meeting setting

a follow-up special meeting of the partners and shareholders for September 13, 2010. On

September 13th, Revised Plans of Liquidation were circulated and, at the special meeting, Drs.

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Jerry and Ricky voted to adopt, and Dr. voted not to adopt, the Revised Plans of

Liquidation. At the special meeting, Drs. Jerry and Ricky promised to change the

phone message for the family medicine clinic to inform individuals calling the clinic that Dr.

had now established a new practice at a new location along with contact information for

Dr. Despite this promise, the phone message was never changed.

51. A review of the Revised Plans of Liquidation reveals that the schedule of assets

and liabilities fails to list as assets of the Partnership the clinic building, owned by the

Partnership and currently with over $500,000 in equity, accounts receivable and cash on hand,

and the purchase price of the Partnership’s ownership interest in Renaissance Physician’s

Organization which, upon information and belief, was repurchased from the Partnership in

October 2010. It appears that these omissions were intentionally made in an effort to undervalue

the Partnership and deny Dr. his pro rata share of the ownership of the Partnership.

52. As a result of the foregoing, Plaintiff has been forced to bring this action and to

retain attorneys for that purpose. All conditions precedent to the relief sought herein have

occurred or have been otherwise satisfied.

B. Causes of Action

1. Breach of Partnership Duties

53. By the acts alleged herein, Dr. Jerry and Dr. Ricky have

breached fiduciary duties of loyalty, care and good faith owed directly to Plaintiff as partners of

the Partnership by acting in bad faith and for the purpose of benefiting themselves and harming

Plaintiff by misappropriating Partnership property, clients and funds, by usurping Partnership

opportunities, by failing to keep and maintain accurate and reliable books and accounting

records, and by wrongfully and in bad faith pretending to “dissolve” the Partnership in order to

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effect a de facto expulsion of Plaintiff from the Partnership, and by interfering with Plaintiff’s

rights to Partnership information and records. These actions violate duties imposed by statute

and common law and constitute a breach of the implied or express terms of the Partnership

Agreement. Plaintiff is entitled to recover his actual damages for this breach of fiduciary duties

and further equitable relief including an accounting, disgorgement, constructive trust, and

injunction. Because Dr. Jerry and Dr. Ricky acted knowingly, intentionally,

maliciously and with reckless disregard of Plaintiff’s rights, Plaintiff is further entitled to

exemplary damages. Plaintiff is further entitled to recovery of reasonable and necessary

attorneys fees pursuant to TCPRC §38.001. Presentment has been made. All conditions

precedent have been satisfied or have occurred.

2. Equitable Accounting/Declaratory Judgment

54. Plaintiff is entitled to an order requiring Defendants to render an accurate

accounting of the Partnership and to disgorge any profits. Plaintiff further requests that the Court

appoint a special master to supervise and certify the accuracy of the accounting.

55. As shown herein, justiciable issues exist regarding the rights and status of the

Plaintiff in relation to his Partnership interest and interest in Cities. Pursuant to Chapter 37 of

the Texas Civil Practice & Remedies Code, Plaintiff seeks a declaratory judgment determining:

a. the status of each partner’s capital account as of the date Dr. Ricky was

admitted as a partner;

b. the rights of each partner upon wind up of the Partnership;

c. the final accounting of the Partnership.

56. Pursuant to §37.009 of the Texas Civil Practices & Remedies Code, Plaintiff is

entitled to an award of attorney’s fees and costs.

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3. Breach of Fiduciary Duties in Cities

57. In addition, Dr. Jerry and Dr. Ricky as controlling

shareholders of Cities, have breached fiduciary duties owed as controlling shareholders

directly to Plaintiff and/or caused Cities to breach fiduciary duties owed by it to Plaintiff by

virtue of his share ownership and/or arising from the personal confidential relationship. Dr. Jerry

and Dr. Ricky acted in bad faith and for the purpose of benefiting themselves

and harming Plaintiff by diminishing the value of Plaintiff’s investment in Cities, interfering

with his legal rights and reasonable expectations as a shareholder of Cities, and denying

Plaintiff the payment of constructive dividends from Cities that Dr. Jerry and Dr.

Ricky paid to themselves. Plaintiff is entitled to recover his actual damages for this

breach of fiduciary duties and further equitable relief including an accounting, disgorgement,

constructive trust, and injunction. Furthermore, Plaintiff is entitled, under sections 152.608 and

11.054 of the Texas Business Organizations Code to have the court supervise the winding up of

the Partnership and Cities or to have the court appoint a person to carry out the winding up of

the Partnership and Cities. Because Dr. Jerry and Dr. Ricky acted

knowingly, intentionally, maliciously and with reckless disregard of Plaintiff’s rights, Plaintiff is

further entitled to exemplary damages.

4. Derivative Claim

58. Dr. Jerry and Dr. Ricky have breached fiduciary duties to

Cities that they owe as officers, directors, and controlling shareholders by misappropriating

assets, excessive compensation, and the other misconduct alleged herein. Cities has suffered

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actual damages as a result of the breach of fiduciary duties. Cities is entitled to recover actual

damages for this breach of fiduciary duties and further equitable relief including disgorgement,

constructive trust, and injunction. Because Dr. Jerry and Dr. Ricky acted

knowingly, intentionally, maliciously and with reckless disregard of Plaintiff’s rights, Plaintiff is

further entitled to exemplary damages. Plaintiff is further entitled to his reasonable attorneys

fees.

59. Plaintiff has standing to bring a derivative action on behalf of Cities. All

conditions precedent have been satisfied. Plaintiff is entitled to recover his expenses and

reasonable and necessary attorney’s fees pursuant to section 21.561 of the Texas Business

Organizations Code. Cities is a “closely-held” corporation with less than 35 shareholders,

and no shares listed on a national securities exchange or regularly quoted in an over the counter

market by one or more members of a national securities association. Pursuant to section

21.563(a) of the Texas Business Organizations Code, Plaintiff requests that, in the interests of

justice, this action be treated by the Court as a direct action brought by the plaintiff for his own

benefit and that the recovery be paid directly to plaintiff. Furthermore, Plaintiff is entitled to

recover his reasonable and necessary attorneys’ fees and expenses pursuant to BOC §21.561.

5. Shareholder Oppression

60. Dr. Jerry and Dr. Ricky exercise dominance and control over

Cities through their powers as the majority shareholders and officers and directors of

Cities. The acts alleged herein constitute a continuing pattern of shareholder oppression in that

Dr. Jerry and Dr. Ricky have repeatedly violated Plaintiff’s rights as a

shareholder, substantially defeated Plaintiff’s objectively reasonable expectations as a

shareholder that were central to his decision to join the venture, and acted in a manner

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constituting burdensome, harsh and wrongful conduct, a lack of probity and fair dealing in the

affairs of the company to the prejudice of Plaintiff, and/or a visible departure from the standards

of fair dealing and a violation of fair play on which every shareholder who entrusts his money to

a company is entitled to rely. As a result, Plaintiff seeks his actual damages, exemplary damages,

reasonable and necessary attorney’s fees, pre and post judgment interest, court costs, injunctive

relief, and requests that a compulsory buy-out be ordered at a fair price determined by this Court

and/or other relief necessary to do equity. Because Dr. Jerry and Dr. Ricky

acted knowingly, intentionally, maliciously and with reckless disregard of Plaintiff’s rights,

Plaintiff is further entitled to exemplary damages. Plaintiff is without adequate remedy at law.

6. Knowing Participation/Joint and Several Liability

61. Upon information and belief, FLP, Star and/or had

actual knowledge, by virtue of the fact that Dr. Jerry Dr. Ricky and/or

Elaine were officers, directors, partners, controlling shareholders and/or owners of

these entities, that they were receiving funds, and performing work for and billing clients that

rightfully belonged to the Partnership or to Cities, and had been misappropriated or diverted

by the Under established principles of Texas law, FLP, Star and/or

knowingly participated in and aided and abetted Dr. Jerry and Dr. Ricky

breach of their fiduciary duties to Plaintiff and are jointly and severally liable to

Plaintiff for any and all misappropriated Partnership funds or property which was transferred to

them.

7. Tortious Interference

62. After Defendants wrongfully forced Plaintiff out of the Partnership, they

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maliciously interfered with his ability to continue practicing medicine by preventing his patients

from finding him. Plaintiff had an on-going or potential contractual relationship to provide

medical care with his patients at San Family Medicine Clinic, L.L.P. Many of these

patients would want to, and did want to, continue that relationship with Plaintiff even after he

could no long practice medicine at the Partnership. Defendants had reason to know of Plaintiff’s

contractual relationships with his patients. Defendants willfully and intentionally interfered with

Plaintiff’s contractual relationship with his patients. Defendants interference proximately caused

injury to Plaintiff, which resulted in the following actual loss or damage: lost revenues from the

practice of medicine from patients who sought medical care elsewhere or who have transferred

their care to other physicians permanently. Plaintiff seeks unliquidated damages within the

jurisdictional limits of this court. Plaintiff’s injury resulted from Defendants’ actual malice or

actual fraud, which entitles Plaintiff to exemplary damages under Texas Civil Practice &

Remedies Code section 41.003(a).

8. Defamation

63. Defendants, or their authorized agents, published statements by oral

communication asserting as a fact that Dr. had died, had a nervous breakdown and

abandoned his patients or abandoned his practice at the clinic for no apparent reason. The

statements involved a private matter. The statements referred to Plaintiff by name. The

statements were defamatory because they unambiguously asserted that Dr. was mentally

unstable, erratic, irresponsible, undependable and that he had breached his professional

responsibilities to his patients and abandoned his medical practice for frivolous or irrational

reasons. The statement was false because Dr. did not abandon, and had no intention of

abandoning, his practice and he had not died. Defendants’ false statement caused injury to

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Plaintiff, which resulted in the following damages: injury to reputation, lost revenues from the

practice of medicine from patients who sought medical care elsewhere or who have transferred

their care to other physicians permanently (i.e. loss of past and future income), loss of personal

standing in the community, personal humiliation, and mental anguish and suffering. Plaintiff

seeks damages within the jurisdictional limits of this court. Plaintiff’s injury resulted from

Defendants’ malice, which entitles plaintiff to exemplary damages under Texas Civil Practice &

Remedies Code section 41.003.

VII. Prayer

64. For these reasons, Plaintiff asks that the defendants be cited to appear and answer

and that Plaintiff have judgment against the Defendants for the following:

a. A writ of mandamus or permanent injunction ordering defendants to make the

Partnership records and the corporate books and records of Cities available for

inspection;

b. Actual, and exemplary damages as allowed by law;

c. An order requiring an accounting, together with

d. Equitable relief including disgorgement, injunction, constructive trust, forced buy-out,

accounting, declaratory relief, and court supervision or appointment of a receiver and/or a

special master to supervise the winding up and final accounting of the Partnership and

Cities;

e. Reasonable and necessary attorneys’ fees and expenses;

f. Prejudgment and post-judgment interest as allowed by law;

g. Costs of suit; and

h. All other relief, general and special, legal and equitable, to which Plaintiff may be

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entitled.

65. Plaintiff demands his right to trial by jury.

IX. Written Discovery

66. Pursuant to the Texas Rules of Civil Procedure, each of the Defendants must respond

to the following requests for written discovery within 50 days after service of this Petition:

a. Pursuant to Rule 194, each Defendant is requested to disclose the information or material

described in Rule 194.2(a)-(i), inclusive.

b. Pursuant to Rule 198, each Defendant must admit or deny the following:

1. Plaintiff owns 50% of the shares of Cities.

2. Exhibit A is genuine.

3. Exhibit B is genuine.

4. Exhibit C is genuine.

5. Exhibit D is genuine.

6. Exhibit E is genuine.

7. Exhibit F is genuine.

8. Exhibit G is genuine.

9. Exhibit H is genuine.

10. Exhibit I is genuine.

11. Plaintiff has made a written demand for inspection of corporate books and records

of Cities, stating a proper purpose.

12. Cities refused to permit Plaintiff to inspect all the corporate books and records

requested by Plaintiff.

c. Pursuant to Rule 197, respond to each of the following written interrogatories under oath:

1. If you have denied any of the requests for admissions, state in detail the reasons

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why and what you contend the true facts are with regard to the matter about which

the admission was requested.

2. State the fair value of Cities and the basis for your calculation, the method of

valuation, and describe all documents or financial information used to answer.

3. Identify the current, and all prior, accountant or bookkeeper of Cities and all

other persons who have knowledge of the financial performance of the

corporation.

4. Identify all persons or entities with whom any of the Defendants has discussed or

submitted information relating to the value of Cities, including banks and

other lenders, brokers, prospective investors or shareholders, potential buyers and

creditors.

5. State the date, amount, reason and nature of the transaction for each and every

cash disbursement or other benefit or transfer from Cities to each officer,

director or shareholder from inception to present, including salary, commissions,

bonuses, loans, gifts and any other transfer or transaction whatsoever, including

personal use of corporate assets.

6. State whether Cities or the Partnership has agreed to advance attorney’s fees

or other expenses related to this action to Dr. Jerry Dr. Ricky

and/or Elaine and if so, state the complete terms and conditions under

which such advancement is made, and identify the persons who made the decision

on behalf of the corporation to make such advancement.

d. Pursuant to Rule 196, produce the following documents on the date that your response is

due at the offices of the undersigned or at such other place that may be mutually agreed.

These requests include electronic data and records. Please produce financial and

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accounting data in native format and textual records as searchable PDFs.

1. The complete corporate book for Cities, including but not limited to the

certificate of formation, all organizational documents, the by-laws, all minutes of

meetings or consents in lieu of meeting, all resolutions, all shareholder

agreements, all stock certificates and the complete shareholder ledger or other

records showing the shareholder names and all issuances and transfers of shares.

2. All financial records of Cities, including the general ledger, all schedules,

balance sheets, income statements, profit and loss statements, reports from

accountants, accountant’s work papers, interim and draft statements, or otherwise,

including for the “ Groves” location.

3. All financial records of the Partnership, including the general ledger, all

schedules, balance sheets, income statements, profit and loss statements, reports

from accountants, accountant’s work papers, interim and draft statements, or

otherwise.

4. Any and all business records of the Partnership, including but not limited to,

records of all cash payments made by patients, co-pays, cash receipts, insurance

reimbursements, the daily ledger of all cash payments collected from patients, and

invoices.

5. Any and all credit card statements, American Express statements, invoices, and

any other documents evidencing expenses, disbursements, debits or outlays of the

Partnership.

6. All bank accounts statements since 2000 for any and all bank accounts on which

Dr. Jerry Dr. Ricky Elaine or Dr. David Wayne

are signatories, and the operating, checking, business and/or savings

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accounts for the Partnership, Cities, FLP, Star and

7. All financial records of Star, including the general ledger, all schedules,

balance sheets, income statements, profit and loss statements, reports from

accountants, accountant’s work papers, interim and draft statements, or otherwise.

8. All financial records of including the general ledger, all schedules,

balance sheets, income statements, profit and loss statements, reports from

accountants, accountant’s work papers, interim and draft statements, or otherwise.

9. All data from the medical billing software for the Partnership in its original

electronic format, whether designated as “ Industrial” or “San

Family Medicine Clinic” and regardless of where it is stored or maintained.

10. All data from the medical billing software for Cities in its original electronic

format, whether designated as “ Industrial” “ Mobile,”

“ “ International,” or “ Groves” and regardless of

where it is stored or maintained.

11. All state and federal tax returns or reports of Cities and the Partnership.

12. All payroll records of Cities, the Partnership, Star and

13. All documents showing or relating to any transaction, transfer or disbursement

involving Cities, the Partnership and the

14. All bank or brokerage account records, statements, and check or account registers

for Cities, the Partnership, Star, the FLP and

15. All documents stating, reflecting or relating to the value of the Partnership and

Cities or of its shares, including but not limited to, internal memoranda, offers

to buy or offers to sell, appraisals, financial statements of any defendant, loan

applications, credit applications, or any other document relating to value.

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16. Invoices and billing records of any attorney representing Cities or the

Partnership for any services in any way relating to Plaintiff.

17. Invoices and billing records of any accountant, bookkeeper, or tax preparer who

has provided services to the Partnership or Cities.

18. Any written commitment, promise, or stated obligation made by the to

the Partnership or Cities.

19. Personal financial statements and tax returns for the

20. All records, including, but not limited to, invoices, check stubs, records of

payment, contracts or any other documents related to Dr. Jerry and/or

Dr. Ricky relationship with Minu Rx.

21. All records evidencing or recording use of mobile medical units (whether trucks,

trailers or semi tractor-trailers), regardless of which defendant or entity was using

such mobile medical unit at the time, including, but not limited to, any and all

logs, invoices, payments, mileage reports, gas receipts, or any other item or

document evidencing use of such mobile medical units.

22. All records or documents related to any retirement, profit-sharing or other

employee benefit plan for which the Partnership or Cities were or are

administrators or other fiduciaries, including, but not limited to, the PayChex

401(k) Plan for Drs. and Jerry

23. All records or documents related to the purchase of stock or ownership interests in

Renaissance Physicians Organization and/or Pasadena I.P.A. from the

Partnership, whether the sale was merely contemplated or, in fact, consummated.

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Respectfully Submitted, FRYAR LAW FIRM, P.C. __________________________ Eric Fryar SBN 07495770 1001 Texas Ave. Ste 1400 Houston, Texas 77002-3194 Tel. 888-481-9995 281-715-6396 Main Fax: 281-715-6397 Direct Fax: 281-605-1888 Email: efryar@fryarlawfirm.com ATTORNEYS FOR PLAINTIFF