Visionary Industrial Insultation, Inc. v. TTHREI, LLC and Timothy Holland ( 2024 )

ACCEPTED
05-23-00539-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
2/20/2024 12:09 PM
RUBEN MORIN
CLERK
No. 05-23-00539-CV
FILED IN
5th COURT OF APPEALS
IN THE COURT OF APPEALS DALLAS, TEXAS
FOR THE FIFTH DISTRICT 2/20/2024 12:09:24 PM
DALLAS TEXAS Ruben Morin
Clerk
VISIONARY INDUSTRIAL INSULTATION, INC.,
Appellant
v.
TTHREI, LLC AND TIMOTHY HOLLAND,
Appellees
On Appeal from County Court at Law No. 2, Grayson County, Texas,
Trial Court Cause No. 2021-2-130CV
APPELLANT’S BRIEF
Sul Lee Kyle Carney
State Bar No. 24078844 Texas Bar No. 24096789
Diren W. Singhe CARNEY LAW PLLC
State Bar No. 24044135 9800 Hillwood Pkwy., Ste. 140
J. Spencer Young Fort Worth, TX 76177
State Bar No. 24101268
SUL LEE LAW FIRM, PLLC
3030 Lyndon B Johnson Fwy, Ste. 220
Dallas, TX 75234
ATTORNEYS FOR APPELLANT
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Appellant: Counsel for Appellants:
Visionary Industrial Insultation, Sul Lee (Attorney in Charge)
Inc. Sul@SulLeeLaw.com
Diren W. Singhe
DSinghe@SulLeeLaw.com
J. Spencer Young
SYoung@SulLeeLaw.com
SUL LEE LAW FIRM, PLLC 3030
Lyndon B. Johnson Fwy, Suite
220 Dallas, Texas 75234
Telephone: 214-206-4064
Kyle Carney
Texas Bar No. 24096789 CARNEY
LAW PLLC
9800 Hillwood Pkwy., Ste. 140
Fort Worth, TX 76177
Phone: (817) 717-1195 Facsimile:
(817) 616-8751 Email:
kyle@carney.law
Counsel for Appellees:
Appellees:
J. Stephen Hunnicutt
TTHREI, LLC Steve@HunnicuttLaw.com
Timothy Holland Timothy A. Robinson
Tim@HunnicuttLaw.com
THE HUNNICUTT LAW GROUP
17330 Preston Rd.
STE. 275B
DALLAS, TX 75252
Telephone: (214) 361-6740
ii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL ..................................................... ii
TABLE OF CONTENTS.................................................................................. iii
TABLE OF AUTHORITIES ............................................................................ iv
STATEMENT OF THE CASE ........................................................................ vii
STATEMENT REGARDING ORAL ARGUMENT ........................................ ix
ISSUE PRESENTED ........................................................................................x
STATEMENT OF FACTS ................................................................................. 1
SUMMARY OF THE ARGUMENT ................................................................. 4
ARGUMENTS AND AUTHORITIES .............................................................. 6
A. Standard of Review. ............................................................................... 6
B. The Trial Court Erred in Granting Holland and TTHREI’s Traditional
Summary Judgment Motion. ................................................................ 6
C. The No-Evidence Summary Judgment Was Defective as a Matter of
Law. ....................................................................................................... 14
D. Appellees’ Claims are Time Barred. ..................................................... 17
PRAYER.......................................................................................................... 19
CERTIFICATE OF COMPLIANCE................................................................. 21
CERTIFICATE OF SERVICE ......................................................................... 21
APPENDIX .................................................................................................... 22
iii
TABLE OF AUTHORITIES
CASES
Am. Home Fence Co. v. Himes,
374 S.W.2d 777 (Tex. App.—Tyler 1964) ................................................. 8
Barker v. Eckman,
213 S.W. 3d 306 (Tex. 2006) .................................................................. 17
City of Dall. v. Homan,
2022 Tex. App. LEXIS 2148 (2022) ........................................................ 6
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) .....................................................................7
E.P. Towne Ctr. v. Chopsticks, Inc.,
242 S.W. 3d 117 ....................................................................................... 17
In re Estate of Poe,
648 S.W.3d 277 (Tex. 2022) ................................................................... 15
International Bankers Life Ins. v. Holloway,
368 S.W.2d 567 (Tex. 1963) ................................................................... 14
Jones v. Houston Materials Co.,
477 S.W.2d 694 (Tex. App.—Houston [14th Dist.] 1972, no writ) ......... 8
Jones v. Strauss,
745 S.W.2d 898 (Tex. 1988) .................................................................... 6
Jose Fuentes Co. v. Alfaro,
418 S.W.3d 280 (Tex. App.—Dallas 2013, pet. denied) ......................... 14
Kaldis v. Crest Fin.,
463 S.W.3d 588 (Tex. App.—Houston [1st Dist.] 2015, no pet.) .............7
Kaufman Cty. v. Combs,
393 S.W.3d 336 (Tex. App.—Dallas 2012, pet. denied) .......................... 6
iv
Lear Siegler, Inc. v. Perez,
819 S.W.2d 470 (Tex. 1991) ......................................................................7
Livingston Ford Mercury, Inc. v. Haley,
997 S.W.2d 425 (Tex. App.—Beaumont 1999, no pet.) ...................... 8, 9
Merriman v. XTO Energy, Inc.,
407 S.W.3d 244 (Tex. 2013) .................................................................... 6
Meyer v. Cathey,
167 S.W.3d 327 (Tex. 2005).................................................................... 15
Nall v. Plunkett,
404 S.W.3d 552 (Tex. 2013) .....................................................................7
Schlumberger Tech. v. Swanson,
959 S.W.2d 171 (Tex. 1997) ..................................................................... 15
Sharif v. Par Tech, Inc.,
135 S.W.3d 869 (Tex. App.—Houston 1st Dist. 2004)............................ 8
Stine v. Stewart,
80 S.W.3d 586 (Tex. 2002) .................................................................... 17
STATUTES
Business and Commerce Code § 26.01 .......................................................... 16
Civil Practice and Remedies Code § 16.051 ................................................... 17
RULES
Texas Rules of Civil Procedure Rule 93 .......................................................... 8
Texas Rules of Civil Procedure Rule 166a ................................................. 7, 13
Texas Rules of Civil Procedure Rule 185 ........................................................ 8
Texas Rules of Appellate Procedure Rule 6.3 ............................................... 21
v
Texas Rules of Appellate Procedure Rule 9.4(i)(1) ....................................... 21
vi
STATEMENT OF THE CASE
Nature of the Case: This is an appeal from a summary judgment order
on cross motions for summary judgment in a civil
dispute over invoices asserted by a consultant-
turned-company-officer who claimed he was owed
amounts for services allegedly rendered prior to his
employment, despite the applicable limitations
period and his self-directed compensation during
his employment as a company officer.
Course of Plaintiffs-Appellees TTHREI, LLC (“TTHREI”) and
Proceedings: Timothy Holland sued Defendant-Appellant
Visionary Industrial Insultation, Inc. (“VII”)
alleging (1) suit on sworn account in the amount of
$90,822.50, along with backup claims for (2)
quantum meruit, (3) unjust enrichment, and (4)
breach of contract. VII answered and asserted
counterclaims for breach of contract and breach of
fiduciary duty. Holland, before becoming employed
by VII as Chief Operating Officer (“COO”), had
served VII as an independent contractor as a
consultant, but eventually Holland opted to become
an employee and officer of VII. At the conclusion of
the employment relationship, Holland claimed he
was owed the $90,822.50 sum in dispute for
services allegedly performed before his employment
with VII. Holland and TTHREI moved for summary
judgment on the invoiced amounts and against VII’s
claims, asserting the invoices as evidence. VII
responded with evidence that the statute of
limitations ran on 30 of the invoices in dispute, that
the invoiced amounts were disputed, that Holland
had compensated himself for any alleged differences
while acting as COO, and that Holland had accepted
settlement money and then breached that contract.
VII also filed a cross-motion for summary judgment.
Trial Court: County Court at Law No. 2, Grayson County, Texas,
Trial Court Cause No. 2021-2-130CV
vii
Trial Court The trial court denied Appellant’s summary
Disposition: judgment and granted summary judgment in favor
of Appellees.
viii
STATEMENT REGARDING ORAL ARGUMENT
Oral argument would be helpful to the Court’s decisional process
because this case involves multiple counterclaims regarding overlapping fact
issues in dispute. Although the judgment of the trial court includes certain
errors that could be reversed through a summary order and memorandum
opinion, there are 31 invoices in dispute regarding Appellee Holland’s
involvement with Appellant VII over the course of several years in multiple
roles. Oral argument would assist the Court in sorting through these issues
and in making the narrowest ruling necessary to deal with the errors in the
summary judgment order. Thus, Appellant submits that oral argument
would aid the Court in its decisional process in this case and requests that it
be granted.
ix
ISSUE PRESENTED
Appellee Holland worked for Appellant Visionary Industrial
Insultation, Inc. as a consultant and independent contractor under his
entity, TTHREI, LLC, until November of 2016 when Holland accepted a
position as Chief Operating Officer of Appellant. Holland worked for
Appellant as a full-time salaried officer until December 31, 2019, when he
resigned and alleged that he was still owed amounts for work done as a
consultant. Appellant provided evidence that the statute of limitations had
run for claims on all but one of those invoices and that Holland had enriched
himself through his employment with Appellant, including by taking leave
and adjusting his own compensation based on his view of what he was owed
for his alleged consulting work. Appellant offered to resolve the dispute by
offering to pay Holland a settlement sum, which was accepted. Nevertheless,
Holland and his company sued Appellant in 2022, claiming that purported
invoices dated from before his employment in 2016 were still owed.
The issues presented are:
1. Did the trial court err in granting summary judgment in
favor of Appellees?
2. Did the trial court err in granting a no-evidence summary
judgment in favor of Appellees?
3. Did the trial court err in denying Appellant’s cross-motion
for summary judgment?
x
STATEMENT OF FACTS
Holland started working for VII as a consultant in January of 2016
under his company, TTHREI. CR 280. This relationship was governed by an
“Executive Advisory Services Agreement” (i.e., a consulting agreement) that
was drafted by Holland. CR 280-282. The consulting agreement provided,
“upon mutual agreement Consultant will consider converting from ‘1099’ to
‘employee’ status at a later date.” CR 281.
In November of 2016, Appellant offered Appellee Holland to begin a
full-time salaried position as Chief Operating Officer (“COO”). CR 325.
Holland, after expressly accepting Appellant’s offer, operated as a full-time,
salaried employee in all aspects after this time. CR 325-331. When Appellee
Holland was offered the position, he was made aware that he would no longer
be a consultant for Appellant. CR 325-26. During these discussions and
negotiations between Appellee and Holland, Holland made no mention of
continued consultancy through TTHREI or other fees outside of his mutually
agreed-upon salary and benefits package to be paid for services as full-time
COO. Id.
Appellant understood that Appellees had been paid and fees fully
remitted for invoices for consulting work prior to Holland’s transition to a
full-time salaried position. CR 149. Specifically, Appellee, via email,
1
expressly acknowledges this, confirming “TTHREI consulting fees were
incurred before I became an employee and we had a signed consulting
agreement.” CR 329 (emphasis added). When Holland became an employee
of VII, VII’s relationship with TTHREI ceased. CR 27, 144-45.
It was not until much later when Holland began to demand payment
for amounts, he unilaterally claimed were “deferred” that Appellant realized
Holland claimed he was owed for purported amounts incurred prior to the
start of his employment with Appellant. Id.; see also CR 329. Once Holland
began to demand these amounts, Appellant learned that Holland had
submitted additional invoices from his company for purported consulting
services while serving as an employee and officer of VII. CR 146-47, 149.
Apparently, during his tenure as a full-time, salaried COO, Appellee Holland
entered into an agreement with himself and his own company to continue
operating as a consultant or self-approved continuation of his previous
consultancy. CR 149; see also CR 332. As COO, Holland controlled the
operations of the company, including its accounting and the distribution of
payments. CR 144. Holland had control of the books and distributed
payments to himself unilaterally without approval. CR 146-47. For example,
in June of 2019, Holland distributed to himself a $6,000 “Vacation
Supplement” that was not approved by another officer of VII. CR 14, 106; CR
2
146-47, 149. Similarly, VII did not approve Holland’s unilateral submission
of his consulting company’s invoices into the accounts receivable. CR 149.
Once VII’s CEO discovered these accounting and payment practices, the
relationship understandably soured, and VII began the process of
transitioning Holland out of his role. CR 164 (email from VII CEO to Holland
requesting his resignation by November 10, 2019).
On December 31, 2019, Holland resigned from his officer position at
VII, and made an offer to VII to settle the allegedly unpaid TTHREI invoices
$60,000.00. CR 349-50. On January 31, 2020, VII made a counteroffer to
Holland of $20,000.00 to be paid out in increments of $1,500 bi-weekly
from January 2020 to May 2020 to satisfy any and all outstanding disputes
between the parties. CR 351-52. This counteroffer was verbally accepted by
Holland, and the amount was paid to Holland as salary as agreed. CR 353.
VII tendered performance in accordance with that agreement and Appellant
Holland accepted the payments made. Id.
At the center of Appellees’ claims are 31 consulting invoices from
Appellee TTHREI to Appellant dated February 16, 2016 to July 23, 2017 for
consulting services allegedly rendered to Appellant. CR 282-313. Each
invoice indicates payment terms of “net 10,” meaning that payment for each
invoice was due ten-days after the date of the invoice. Id.
3
On June 22, 2021, more than four years after becoming an
employee and officer of VII and after transitioning from a part-time
consulting role, Holland, and his company TTHREI, sued VII. CR 5-10.
The parties filed competing summary judgment motions. CR 92-180;
191-253. The trial court denied Appellant’s motion but granted Appellees’
motion resulting in this Appeal. CR Supp. 20-22.
SUMMARY OF THE ARGUMENT
The trial court’s judgment must be fully reversed because, (1) the
Appellees failed to carry their burden to establish entitlement to summary
judgment, (2) a no-evidence summary judgment was improper and
inappropriate, and (3) the trial court should have granted Appellant’s cross-
motion for summary judgment.
First, the trial court erred in granting Appellees’ plaintiff’s summary
judgment on its affirmative claims for relief and on their no-evidence claims
for relief. Appellees moved for summary judgment only on their suit on a
sworn account claim, but controverting affidavit and attached evidence
precluded summary judgment by creating multiple fact issues, including:
• Whether Appellee Holland was acting as an independent
contractor pursuant to the independent contractor agreement
between him and Appellant while simultaneously acting as the
COO for Appellant;
• Whether the independent contractor agreement between
4
Appellee Holland and Appellant concluded in 2017 or continued
through 2019;
• Whether the 31 invoices consulting invoices from Appellee
TTHREI to Appellant dated February 16, 2016, to July 23, 2017,
for consulting services allegedly rendered to Appellant constitute
payments due under a continued contract;
• Whether Holland was approved to issue these invoices while he
was employed as a full-time COO of Appellant;
• Whether Holland compensated himself by taking time off and
making unapproved unilateral distributions to himself as COO;
• Whether Holland created false invoices while he was employed
with VII;
• Even if some amount were hypothetically owed to Holland, what
the appropriate amount would have been given the multiple
issues in dispute regarding Holland’s compensation during his
employment as an officer of VII; and
• Whether Holland released the claims in a settlement agreement.
CR 95-97; CR 144-49; see also CR 269-354.
Second, Appellant’s no-evidence summary judgment was insufficient
as a matter of law because it failed to challenge a specific element of any one
of Appellant’s claims. See CR 92-180. Moreover, Appellant presented more
than a scintilla of evidence in support of its claims. CR 269-354.
Third, the trial court should have granted summary judgment in favor
of Appellant in whole or in part. Specifically, Appellees’ claims were barred
by the statute of limitations, as this suit was filed more than four years after
5
the disputed invoices were allegedly due to be paid.
Consequently, the judgment below must be reversed.
ARGUMENTS AND AUTHORITIES
A. Standard of Review
Appellate courts “review the granting of a motion for summary
judgment de novo.” City of Dall. v. Homan, No. 05-20-01111-CV, 2022 Tex.
App. LEXIS 2148, at *10 (Tex. App.—Dallas Mar. 31, 2022, no pet. h.) (citing
Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013)). “Where,
as here, the parties file cross-motions for summary judgment, and the trial
court grants one and denies the other,” the court “review[s] the summary
judgment evidence supporting the motions and determine[s] all questions
presented and preserved.” Id. (citing Kaufman Cty. v. Combs, 393 S.W.3d
336, 341 (Tex. App.—Dallas 2012, pet. denied); (Jones v. Strauss, 745 S.W.2d
898, 900 (Tex. 1988)).
B. The Trial Court Erred in Granting Holland and TTHREI’s
Traditional Summary Judgment Motion.
Multiple fact issues precluded a summary judgment for Appellees on
their suit on a sworn account claim, which was the sole basis of their motion.
Because the trial court misapplied the legal standard to the evidence, the
summary judgment must be reversed.
6
When reviewing a summary judgment, this Court must examine the
entire record in the light most favorable to the nonmovant, indulging every
reasonable inference and resolving any doubts against the motion. City of
Keller v. Wilson, 168 S.W.3d 802, 824-25 (Tex. 2005). It was Appellees’
burden, as the moving party, to establish that no genuine issues of material
fact existed, and that Appellees were entitled to judgment as a matter of law.
Tex. R. Civ. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.
1991).
“A trial court cannot grant summary judgment on grounds that were
not presented.” Nall v. Plunkett, 404 S.W.3d 552, 555 (Tex. 2013).
Here, the only claim for affirmative relief presented by Appellees’
summary judgment motion was Appellees’ suit on a sworn account claim. CR
95-97. However, multiple fact issues precluded summary judgment on this
claim. See CR 269-354. Therefore, summary judgment was improper.
The elements for a claim for suit on an open account are (1)
transactions between parties, (2) creating a creditor-debtor relationship
through the general course of dealing, (3) with the account still being open,
and (4) with the expectation of further dealings. Kaldis v. Crest Fin., 463
S.W.3d 588, 592 (Tex. App.—Houston [1st Dist.] 2015, no pet.).
7
Appellant filed a verified denial of Appellees’ account, so any automatic
presumption created by the mere filing of a suit on a sworn account under
Rule 185 was rebutted by Appellant’s verified denial. CR 18, 26-29, 182, 238,
246-49, 264-67, 314, 324-27. See TEX. R. CIV. P. 93, 185.
In the context of a summary judgment for a suit on a sworn account,
several cases illustrate that a defendant’s testimony disputing the plaintiff’s
account can create a fact issue, which prevents a summary judgment. E.g.,
Sharif v. Par Tech, Inc., 135 S.W.3d 869, 873 (Tex. App.—Houston 1st Dist.
2004); Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425, 431 (Tex.
App.—Beaumont 1999, no pet.); Jones v. Houston Materials Co., 477 S.W.2d
694, 696 (Tex. App.—Houston [14th Dist.] 1972, no writ); Am. Home Fence
Co. v. Himes, 374 S.W.2d 777, 779 (Tex. App.—Tyler 1964).
For example, in Sharif, the plaintiff did not file any special exceptions
against the denial of the account or the attached affidavit. Sharif, 135 S.W.3d
at 873. There, the court held that in absence of a challenge to the denial, the
sworn denial was sufficient “to destroy the evidentiary effect” of the
plaintiff’s “verified sworn account pleadings,” and it “force[d] the plaintiff to
put on proof of its claim.” Id. Thus, the summary judgment was reversed. Id.And in Haley, as here, the defendant presented a controverting
affidavit as “summary judgment proof of the incorrectness of the account.”
8
Haley, 997 S.W.2d at 431. The defendant company’s representative provided
in the affidavit that the account was “made up of entries not based upon
supporting records, but which was instead made up after approximately
three (3) years of no billing being sent and no billing entries.” Id. The court
held that the denial and this affidavit was sufficient to defeat summary
judgment, as it created a fact issue. Id. at 432.
In the matter at bar, the very same material fact issues were created by
the unchallenged verified denial and controverting affidavit, as in Sharif and
Haley. Appellant filed its verified denial, and in response to summary
judgment provided an affidavit by its CEO disputing the accuracy of the
alleged account along with corroborating emails as evidence. E.g., CR 252,
324-27, 330. Just like the company representative in Haley, the CEO of VII
testified that Holland created unapproved charges in the company
accounting records. CR 146-47, 149, 324-27.
Furthermore, Appellant produced evidence that the second and third
elements of a an open account were not met because the parties altered the
course of dealing when Holland became employed as a full-time, salaried
officer of VII. CR 203-04, 329. For example, the summary judgment record
shows:
9
CR 329. Further, during Holland’s April 27, 2022 deposition, Holland
provided he was an official officer of Visionary. CR 275-76. Any payments
made to TTHREI by VII after the year 2016 were for services rendered in
2016. TTHREI and VII no longer had any sort of contractual work
relationship once Holland became an employee of VII. CR 144-47 (Chang,
CEO of VII, explaining that VII terminated TTHREI’s contract as a vendor
and employed Holland as a full-time COO of VII in November of 2016).
Appellee Holland was a fulltime salaried employee as COO of VII
beginning on November 13, 2016, and he controlled operations of the
company, including its accounting from that time through the termination
of his employment. CR 144. Holland had control of the books and distributed
payments to himself unilaterally without approval. CR 146-47. For example,
in June of 2019, Holland distributed to himself a $6,000 “Vacation
Supplement” that was not approved by another officer of VII. CR 14, 106; CR
10
146-47, 149. As VII’s CEO testified regarding his review of Holland’s
accounting:
I was in shock and -- and surprised because all the consultation
fee has been fully rendered and why there’s – there’s a dispute
fees there. The first time ever because of that, I looked at review
thoroughly of the accounting of the company. I know that his fees
been all rendered during the consultation period. However after
the full-time basis, he was submitting consultation invoices,
that’s – that’s what I found out.· Because after conversion to full-
time basis all the other invoice that he submitted, I did not know
because he submitted himself -- all by himself. All the -- all the
submitted invoices was not approved by me or being shown --
shown to me, this was submitted by himself when he was COO
and that’s when it was discovered, when that -- when the USDA
loan application was submitted. That’s how I found it out.
CR 149. Thus, the record makes plain that Appellees’ invoices and accounting
were contested by disputed evidence and testimony. CR 146 (VII’s CEO
providing: “we are indicating this as a false record”; “This is something that
I did not agree – I did not agree to. This is a false record that was created –
created by – record by his [Holland’s] CPA and himself”).
In defending the fees that he had placed on VII’s accounts receivable,
Holland claimed that these claimed amounts were not attempts at self-
dealing or evidence of double billing, but rather, Holland claimed, these
funds were supposedly incurred before the parties had entered any
agreement or before he had become an employee (i.e., not a vendor or
creditor). Id. This statement also demonstrates that Holland claimed that
11
this account was closed because he was now being paid a salary. Id. So,
Appellees failed to conclusively establish the second and third elements of
their claim, and summary judgment was improper.
Moreover, multiple fact issues were presented by Appellant that call
into question the amount claimed by Appellees. The summary judgment
record included deposition testimony and email statements indicating that
VII did not authorize Holland to continue billing consulting services from
TTHREI apart from the salary that Holland was to be paid. CR 149, 330, 332.
Appellees took for granted that Holland was paid on an hourly basis both
during his work for VII as an independent contractor and as an employee.
CR 93 at ¶ 2. But the summary judgment evidence demonstrates that VII
paid Holland on a salary basis that was not tied with hourly work. CR 325.
Plus, the record shows that Holland unilaterally took leave and paid himself
at will. CR 332 (showing email from Holland stating that he “reduced” the
time he worked to “match the income” he received, and that he was the
person who “deferred” his income and instructed Appellant’s employees to
pay him defined amounts at certain times). Given that Holland was supposed
to be paid on a salary, this evidence calls into question the veracity of this
account—a portion of which Holland argues was accruing during his salaried
employment as an officer of the company.
12
The trial court further erred in denying Appellant’s summary judgment
motion as there are remaining issues of material fact, including those set out
above, and specifically relating to the alleged breach of fiduciary duty by
Appellee Holland. That is, by erring in its ruling as to when Appellee Holland
was acting as a 1099 independent contractor and when he became a salaried
employee, Appellant’s were precluded from arguing its affirmative claim of
breach of fiduciary duty relating to the unauthorized misappropriation made
at the direction and benefit of Appellee Holland. CR 276-77.
Disputed fact issues remain, including (1) whether Holland could
continue to operate as both an independent contractor and a salaried
employee serving as an officer of Appellant’s organization; (2) whether
Appellant authorized Holland to approve additional payments to his
consulting firm; (3) whether the amount claimed was correct; (4) whether
Holland was double dipping in directing payments for these invoices or
double billing in generating these invoices; (5) whether any amount that
might have been owed was correct based on these discrepancies; and (6)
whether amounts paid to Holland during his employment actually satisfied
any outstanding balance. Because more than a scintilla of evidence calls each
of these material fact issues into dispute, Appellees failed to carry their
summary judgment burden. See Tex. R. Civ. P. 166a(b).
13
The trial court erred in failing to construe the evidence in the light most
favorable to Appellant VII as the nonmovant and in resolving disputed fact
issues in favor of Appellees. These material fact issues are reserved only for
the fact finder after a full trial on the merits. Accordingly, the summary
judgment must be reversed.
C. The No-Evidence Summary Judgment Was Defective as a
Matter of Law.
Appellees’ no-evidence motion was fundamentally defective, as it failed
to specify the elements Appellees contended lacked evidentiary support. Jose
Fuentes Co. v. Alfaro, 418 S.W.3d 280, 283 (Tex. App.—Dallas 2013, pet.
denied) (“A no-evidence motion that only generally challenges the
sufficiency of the non-movant’s case and fails to state the specific elements
that the movant contends lack supporting evidence is fundamentally
defective and cannot support summary judgment as a matter of law.”). Thus,
the summary judgment order could not have been supported by the no-
evidence motion as a matter of law.
Appellees asserted a general argument against Appellant’s breach of
fiduciary duty claim, asserting that the mere fact that Holland was acting as
a COO both when he was a consultant and as an employee somehow
undermines the fiduciary duty claim. CR 97. But corporate officers and
directors owe a fiduciary duty to the corporations they serve. International
14
Bankers Life Ins. v. Holloway, 368 S.W.2d 567, 576 (Tex. 1963); see In re
Estate of Poe, 648 S.W.3d 277, 286–87 (Tex. 2022). Additionally, purely
personal relationship of trust and confidence can create a fiduciary duty. In
re Estate of Poe, 648 S.W.3d at 287; see also Meyer v. Cathey, 167 S.W.3d
327, 330–31 (Tex.2005); Schlumberger Tech. v. Swanson, 959 S.W.2d 171,
176 (Tex.1997). And here, the summary judgment evidence demonstrated
that Holland was entrusted with company operations as a COO, and the
deposition testimony attached to Appellees’ motion provided evidence that
Holland engaged in unauthorized self-dealing by unilaterally approving
TTHREI invoices. CR 149. Appellant attached evidence to the same effect in
its response. CR 330. Indeed, not only did the record demonstrate evidence
that Holland submitted unauthorized invoices, but it also showed that
Holland controlled when and how he was paid by VII. CR 332.
The record demonstrates, with testimony excerpts, that Appellant
disputed Appellees’ accounting and claimed that Holland submitted
unauthorized payments to himself, engaged in double dipping, and created
false accounting records. CR 146-47. Thus, the summary judgment evidence
provided more than a scintilla of evidence to support Appellant’s breach of
fiduciary duty claim.
15
Similarly, Appellees failed to specify any particular element of
Appellant’s breach of contract claim that supposedly lacked support, and,
thus, Appellees’ no-evidence motion failed on that claim too. CR 97-98.
Appellees again asserted a general argument against the merits of
Appellant’s breach of contract claim by suggesting that the severance
agreement was somehow improper or not binding because it was not in
writing. Id. But this was not an agreement required to be in writing by the
statute of frauds, and the summary judgment evidence provided evidence of
the agreement—specifically that VII performed under a verbal agreement by
making payments and that Holland accepted those payments. CR 351-53; see
Tex. Bus. & Com. Code. § 26.01. Not only did Appellees fail to properly
challenge any element of Appellant’s claim, but also Appellant produced
evidence of its breach of contract claim.
Because Appellees failed to properly challenge a specific element of
Appellant’s claims, the no-evidence motion was deficient as a matter of law.
And in any event, Appellant produced more than a scintilla of evidence of its
claims. As a result, the trial court erred in granting a no-evidence summary
judgment on both Appellant’s fiduciary duty and breach of contract claims.
16
D. Appellees’ Claims are Time Barred.
Appellees’ own summary judgment motion established as a matter of
law that their breach of contract claims are time barred. CR 191-253. As a
result, the trial court erred in failing to grant Appellant’s summary judgment
claim against Appellees’ assertion that Appellant breached an agreement to
pay.
The statute of limitations for a breach of contract action is four years
from the date of accrual. Tex. Civ. Prac. & Rem. Code § 16.051; Stine v.
Stewart, 80 S.W.3d 586, 592 (Tex. 2002). An action for breach of contract
accrues immediately upon breach. Barker v. Eckman, 213 S.W. 3d 306, 311
(Tex. 2006). “A party breaches a contract by failing to perform when that
party’s performance is due.” E.P. Towne Ctr. v. Chopsticks, Inc., 242 S.W. 3d
117, 123 (Tex. App—El Paso 2007, no pet).
Here, Holland himself provided that, “TTHREI consulting fees were
incurred before [he] became an employee.” CR 329. And Appellees’ own
motion asserted as an “undisputed fact” that “VII fell behind in its payments
starting in October of 2016 and by November of 2016 owed a running balance
of $32,532.50.” CR 93. And again, each invoice provides that payment was
due within 10 days (“net 10”). CR 282-313.
17
The invoices at issue here indicate that TTHREI allegedly provided
consulting services to VII from January 23, 2016, to July 22, 2017. CR 103-
37; 205-34. Specifically, here, of the 31 allegedly unpaid invoices, only one of
them was still within the statute of limitation for breach of contract when
Plaintiffs filed this suit. CR 32, 205-235. Invoice number 2017_0723001
dated July 23, 2017, with a payment due date of August 2, 2017, for the
amount of -$875.00 (negative eight hundred and seventy-five dollars), is
the only invoice that was within the statute of limitations when
Plaintiffs filed this suit. CR 235. TTHREI billed $2,125.00 for alleged
consulting services rendered to VII, and then subtracted Holland’s COO
salary of $3,000.00 from the billed amount; this resulted in a negative
balance (i.e., -$875.00), and thus, VII owes no amounts to Plaintiffs for
this invoice. CR 235.
Again, it is worth noting that Appellee Holland was a fulltime salaried
employee as COO of VII beginning on November 13, 2016, and he controlled
operations of the company, including its accounting from that time through
the termination of his employment. CR 144. Holland had control of the books
and distributed payments to himself unilaterally without approval. CR 146-
47. For example, in June of 2019, Holland distributed to himself a $6,000
“Vacation Supplement” that was not approved by another officer of VII. CR
18
14, 106; CR 146-47, 149. Holland changed from being an independent
contractor to a full-time officer, a COO, with fiduciary obligations to VII, and
these disputed invoices were all submitted without approval from VII. But
even if Holland’s allegations were taken as true, the claimed invoices
contained due dates more than four years before Holland and his company
filed a lawsuit.
The record shows that Appellees did not file a lawsuit until June 22,
2021, CR 2, 5-15. Thus, because Appellees filed their lawsuit more than four
years after the payments were due and had not been paid in breach of the
terms set by the invoices, Appellees’ claims for invoiced amount older than
four years are time barred by the statute of limitations.
The trial court erred in denying Appellant’s motion for summary
judgment on the limitations ground. Thus, the order must be reversed and
rendered on those claims.
PRAYER
For these reasons, Appellant Visionary Industrial Insultation, Inc.
respectfully requests that this Court reverse the judgment of the trial court,
render judgment on Appellees’ claims that are barred by limitations, and
remand this case for further proceedings. Appellant requests all further relief
in law and in equity to which it may be entitled.
19
Respectfully submitted,
/s/ J. Spencer Young
Sul Lee
State Bar No. 24078844
sul@sulleelaw.com
Diren W. Singhe
State Bar No. 24044135
dsinghe@sulleelaw.com
J. Spencer Young
State Bar No. 24101268
syoung@sulleelaw.com
3030 Lyndon B Johnson Fwy, Suite 220
Dallas, TX 75234
Tel) 214-206-4064
Fax) 214-206-4068
- And -
Kyle Carney
State Bar No. 24096789
kyle@carney.law
Carney Law PLLC
9800 Hillwood Parkway, Ste. 140
Fort Worth, Texas 76177
Tel) 817-717-1195
Fax) 214-206-
ATTORNEYS FOR APPELLANT
20
CERTIFICATE OF COMPLIANCE
I certify that this brief contains 4,067 words according to Microsoft
Word’s Word Count function, excluding the portions of the brief exempted
by Rule 9.4(i)(1).
/s/ J. Spencer Young
J. Spencer Young
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the foregoing instrument has
been served to all counsel listed below in accordance with Texas Rules of
Appellate Procedure 6.3 and 9.5 on Tuesday, February 20, 2024, via
electronic service.
J. Stephen Hunnicutt
Steve@HunnicuttLaw.com
Timothy A. Robinson
Tim@HunnicuttLaw.com
THE HUNNICUTT LAW GROUP
17330 Preston Rd.
STE. 275B
DALLAS, TX 75252
Telephone: (214) 361-6740
/s/ J. Spencer Young
J. Spencer Young
21
No. 05-23-00539-CV
IN THE COURT OF APPEALS
FOR THE FIFTH DISTRICT
DALLAS TEXAS
VISIONARY INDUSTRIAL INSULTATION, INC.,
Appellant
v.
TTHREI, LLC AND TIMOTHY HOLLAND,
Appellees
On Appeal from County Court at Law No. 2, Grayson County, Texas,
Trial Court Cause No. 2021-2-130CV
APPENDIX
Tab A Trial Court Judgment
Tab B Rule 166a
Tab C Record Excerpt – Verified Denial
Tab D Record Excerpt – Affidavit
Tab E Record Excerpt – Email Evidence
Tab F Record Excerpt – Deposition
Testimony
Appendix
Tab A
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Appendix
Tab B
Tex. R. Civ. P. 166a, Part 1 of 2
The State and Federal rules are current through January 25, 2024. Local District rules are updated
periodically throughout the year.
TX - Texas Local, State & Federal Court Rules > TEXAS RULES OF CIVIL PROCEDURE > PART II.
RULES OF PRACTICE IN DISTRICT AND COUNTY COURTS > SECTION 8. Pre-Trial Procedure
Rule 166a. Summary Judgment.
(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to
obtain a declaratory judgment may, at any time after the adverse party has appeared or answered,
move with or without supporting affidavits for a summary judgment in his favor upon all or any
part thereof. A summary judgment, interlocutory in character, may be rendered on the issue of
liability alone although there is a genuine issue as to amount of damages.
(b) For Defending Party. A party against whom a claim, counterclaim, or cross-claim is asserted
or a declaratory judgment is sought may, at any time, move with or without supporting affidavits
for a summary judgment in his favor as to all or any part thereof.
(c) Motion and Proceedings Thereon. The motion for summary judgment shall state the
specific grounds therefor. Except on leave of court, with notice to opposing counsel, the motion
and any supporting affidavits shall be filed and served at least twenty-one days before the time
specified for hearing. Except on leave of court, the adverse party, not later than seven days prior to
the day of hearing may file and serve opposing affidavits or other written response. No oral
testimony shall be received at the hearing. The judgment sought shall be rendered forthwith if (i)
the deposition transcripts, interrogatory answers, and other discovery responses referenced or set
forth in the motion or response, and (ii) the pleadings, admissions, affidavits, stipulations of the
parties, and authenticated or certified public records, if any, on file at the time of the hearing, or
filed thereafter and before judgment with permission of the court, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law on the issues expressly set out in the motion or in an answer
or any other response. Issues not expressly presented to the trial court by written motion, answer or
other response shall not be considered on appeal as grounds for reversal. A summary judgment
may be based on uncontroverted testimonial evidence of an interested witness, or of an expert
witness as to subject matter concerning which the trier of fact must be guided solely by the opinion
testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from
contradictions and inconsistencies, and could have been readily controverted.
(d) Appendices, References and Other Use of Discovery Not Otherwise on File. Discovery
products not on file with the clerk may be used as summary judgment evidence if copies of the
material, appendices containing the evidence, or a notice containing specific references to the
discovery or specific references to other instruments, are filed and served on all parties together
Page 2 of 2
Tex. R. Civ. P. 166a, Part 1 of 2
with a statement of intent to use the specified discovery as summary judgment proofs: (i) at least
twenty-one days before the hearing if such proofs are to be used to support the summary judgment;
or (ii) at least seven days before the hearing if such proofs are to be used to oppose the summary
judgment.
(e) Case Not Fully Adjudicated on Motion. If summary judgment is not rendered upon the
whole case or for all the relief asked and a trial is necessary, the judge may at the hearing examine
the pleadings and the evidence on file, interrogate counsel, ascertain what material fact issues exist
and make an order specifying the facts that are established as a matter of law, and directing such
further proceedings in the action as are just.
(f) Form of Affidavits; Further Testimony. Supporting and opposing affidavits shall be made
on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall
show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or
certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or
served therewith. The court may permit affidavits to be supplemented or opposed by depositions
or by further affidavits. Defects in the form of affidavits or attachments will not be grounds for
reversal unless specifically pointed out by objection by an opposing party with opportunity, but
refusal, to amend.
(g) When Affidavits are Unavailable. Should it appear from the affidavits of a party opposing
the motion that he cannot for reasons stated present by affidavit facts essential to justify his
opposition, the court may refuse the application for judgment or may order a continuance to permit
affidavits to be obtained or depositions to be taken or discovery to be had or may make such other
order as is just.
(h) Affidavits Made in Bad Faith. Should it appear to the satisfaction of the court at any time
that any of the affidavits presented pursuant to this rule are presented in bad faith or solely for the
purpose of delay, the court shall forthwith order the party employing them to pay to the other party
the amount of the reasonable expenses which the filing of the affidavits caused him to incur,
including reasonable attorney’s fees, and any offending party or attorney may be adjudged guilty
of contempt.
(i) No-Evidence Motion. After adequate time for discovery, a party without presenting summary
judgment evidence may move for summary judgment on the ground that there is no evidence of
one or more essential elements of a claim or defense on which an adverse party would have the
burden of proof at trial. The motion must state the elements as to which there is no evidence. The
court must grant the motion unless the respondent produces summary judgment evidence raising a
genuine issue of material fact.
Texas Local, State & Federal Court Rules
Copyright © 2024 All rights reserved.
End of Document
Appendix
Tab C
5. Under Tex. R. Civ. P. 92, Defendant generally deny each and every allegation made
against them in Plaintiff's Petition and demands strict proof thereof.
VERIFIED DENIAL
6. Defendant specially denies any liability under Plaintiffs’ suit on sworn account claim
as Tim Holland was not operating in his capacity as consultant during the vast majority of
the billing. Instead, as COO, Tim Holland was an employee of Defendant and had specific
and special obligations more thoroughly described below in Defendant’s counterclaim. See
Affidavit of Chang Hwan Jang attached as Exhibit A.
AFFIRMATIVE DEFENSES
7. Subject to and without waiving any of the foregoing, under Tex. R. Civ. P. 94,
Defendants asserts that Plaintiffs suit is barred in whole or part by the following affirmative
defenses:
a. Defendant is not liable as alleged under the affirmative defense of accord
and satisfaction. Plaintiffs accepted a payment post-employment with VII
as satisfaction for any outstanding amount claimed to be owing by
Plaintiffs.
b. Defendant is not liable as alleged because of a failure of consideration.
Plaintiffs purportedly continued to consult despite Mr. Holland being a
full-time, salaried, officer of Defendant.
c. Defendant is not liable as alleged under the doctrine of laches. Despite
an amount being allegedly owed since 2016, Plaintiffs have only now
filed a lawsuit seeking to recover such monies alleged to be due. Mr.
Defendant/Counter-Plaintiff’s General & Verified Denial, Affirmative Defenses, And Counterclaims 3
316
Appendix
Tab D
EXHIBIT
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327
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VISI0001
329
Appendix
Tab F
CHANG JANG April 14, 2022
TTHREI V. VISIONARY INDUSTRIAL 13–16
Page 13 Page 15
·1· full-time and he worked for three years. ·1· provision exercised whereby you gave Mr. Holland notice
·2· · · ·Q.· Were those tasks that were performed the same ·2· of termination of this agreement?
·3· tasks from the entire time?· Or did he change -- did he ·3· · · ·A.· When it was converted, it was -- a 1099 was
·4· change what he was doing? ·4· given as employee, that's what the notice was -- what
·5· · · · · · · · MS. SMITH:· Objection; form. ·5· went out.
·6· · · ·Q.· (BY MR. ROBINSON)· Did Mr. Holland perform the ·6· · · ·Q.· Okay.· So your -- so your contention is that
·7· same tasks from 2015 through whenever he left the ·7· when Mr. Holland was -- went from being paid as a 1099
·8· company, did he perform the same tasks the entire time? ·8· to being paid as an employee that that was the
·9· · · ·A.· Yeah.· So on the consultation agreement, it was ·9· termination of this contract?
10· 2015 through January 2016 and converted to full-time 10· · · ·A.· If you look at it carefully from the 1099 to
11· status and when he left end of 2019, he was working the 11· conversion to full-time employee, there is notices
12· same work. 12· there.
13· · · ·Q.· I'm going to show -- I'm going to show you 13· · · ·Q.· Okay.· So was a notice given -- did you -- let
14· what's been marked as Exhibit 1. 14· me rephrase.
15· · · · · · · · (Exhibit Number 1 was marked.) 15· · · · · · · · Did you send Mr. Holland an email or any --
16· · · ·Q.· (BY MR. ROBINSON)· All right.· Can you see 16· or any other written communication that said that this
17· that? 17· contract was going to be terminated?
18· · · ·A.· Yes, sir. 18· · · ·A.· No.· There is -- is not.· However, if you look
19· · · ·Q.· Okay.· And what is this? 19· at it --
20· · · ·A.· This is agreement that -- that was under -- end 20· · · · · · · · THE INTERPRETER:· Where did he read this?
21· of 2015 that he came and -- and it was an agreement with 21· · · · · · · · THE WITNESS:· Go up.· A little bit.· Yeah.
22· the TTHREI, I believe, working as COO. 22· · · · · · · · THE INTERPRETER:· Okay.
23· · · · · · · · THE INTERPRETER:· I'm sorry.· Let me 23· · · · · · · · MR. ROBINSON:· Mr. Jang, are you done
24· correct -- correct that, TTHREI. 24· with -- with the answer to that question?
25· · · ·Q.· (BY MR. ROBINSON)· Okay.· And under this 25· · · · · · · · THE INTERPRETER:· Do you want me to repeat
Page 14 Page 16
·1· agreement that you had, was -- was Mr. Holland and his ·1· what Mr. Jang said about the termination in English?
·2· company to act as -- as COO of the company? ·2· · · · · · · · MR. ROBINSON:· Yes.· Yes, please.
·3· · · ·A.· With this company, it's a -- it's a one-man -- ·3· · · · · · · · THE INTERPRETER:· Okay.· I'm trying to find
·4· one-man company and it was signed as -- yes, signed as a ·4· the place.· I -- I don't remember everything what he
·5· COO, yes, sir. ·5· said.· I'm asking where that would -- you -- you asked
·6· · · ·Q.· And right here where you're looking where it's ·6· earlier whether there's any documentation where the
·7· under -- where it says proposal here, it has a list of ·7· termination notice was sent, there is none.· However it
·8· examples of tasks to perform.· Do you see that? ·8· is clearly stated --
·9· · · · · · · · MS. SMITH:· Can you make it bigger, please? ·9· · · ·A.· There's -- there's another condition of when
10· · · ·A.· Yes, sir. 10· there's -- when there's conversion here.
11· · · ·Q.· (BY MR. ROBINSON)· Okay.· And were these the 11· · · ·Q.· (BY MR. ROBINSON)· Okay.
12· tasks to be -- that were performed -- I know you said 12· · · ·A.· Right there.
13· that he was under a contract and then went full time, 13· · · ·Q.· Okay.· So let's -- let's discuss that.· Where
14· but are these the tasks that he performed from 2016 14· it says standard services, that's upon mutual agreement,
15· until the time he left in 2019? 15· the consultant will consider converting from 1099 to
16· · · ·A.· Yes, sir. 16· employee status at a later date.· Is this what you're
17· · · ·Q.· Okay.· All right.· I pulled it down here where 17· referring to?
18· it says, terms and conditions.· Do you -- do you see 18· · · ·A.· Yes, sir.· That's correct.
19· that? 19· · · ·Q.· Okay.
20· · · ·A.· Yes, sir. 20· · · ·A.· Yeah.· Right there.
21· · · ·Q.· All right.· And do you see the part where it -- 21· · · ·Q.· Okay.· So on what date did you exercise this
22· it states that either party may terminate the agreement 22· provision or the parties exercise this provision of the
23· with 7 days' notice.· Do you see that? 23· contract?
24· · · ·A.· Yes, sir. 24· · · ·A.· In my -- in my recollection, this was around
25· · · ·Q.· Okay.· And when was this -- when was this 25· November 2016, when the -- the payment, the check -- the
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TTHREI V. VISIONARY INDUSTRIAL 17–20
Page 17 Page 19
·1· first time check came and went out on that date. ·1· see this?
·2· · · ·Q.· So, is that November of 2016? ·2· · · ·A.· Yes, sir.
·3· · · ·A.· Yes.· In my recollection, it's correct, yes, ·3· · · ·Q.· I'm going to blow it up a little bit bigger.
·4· and also the record shows that it is. ·4· All right.· And this is what was submitted by Visionary
·5· · · ·Q.· And who drafted this contract? ·5· in response to -- this is the response to discovery
·6· · · ·A.· Tim Holland made it. ·6· request, so this is a Visionary document.· What -- what
·7· · · ·Q.· This is -- this is a -- the TTHREI, this is ·7· document is this?
·8· the -- this is that company's document -- Mr. Holland's ·8· · · ·A.· This is a record that was downloaded from the
·9· document, right? ·9· accounting record from the company.
10· · · ·A.· Yes, sir.· This is a proposal that -- a 10· · · ·Q.· Okay.· So you testified earlier that the --
11· consulting agreement that he drafted. 11· that the financial records that were provided were true
12· · · ·Q.· All right.· All right.· So after -- after that 12· and accurate to the best of your knowledge, so we're --
13· provision in the contract was exercised in November of 13· I'm going to assume that these are accurate numbers that
14· 2016, did -- did Mr. Holland continue to send invoices 14· we're talking about here.· I pulled this down here to
15· to -- to the company for payment? 15· the bottom to the -- to the accounts payable.
16· · · ·A.· Yes.· He did send a -- a couple of invoices 16· Highlighted, we have accrued professional fees.· Do you
17· that was before the conversion -- conversion which we 17· see that?
18· did not make -- make good on the invoice. 18· · · ·A.· Yes, sir, I see it.
19· · · ·Q.· Okay.· So the -- my -- my question was, after 19· · · ·Q.· Okay.· And at the top here where I've got it
20· that conversion.· After the conversion to being paid as 20· highlighted December 31st, 2017, just for clarity's sake
21· a -- as a W-2 employee, did Visionary continue to 21· and how this is on all of these entries, the first
22· receive invoices from Mr. Holland and TTHREI? 22· column would be the balance of -- of that particular
23· · · ·A.· No, I did not receive any. 23· account on December 31st, 2017, and then the second
24· · · ·Q.· The -- during the pendency of this lawsuit, you 24· column being the balance of a particular account on
25· have provided -- or Visionary has provided books and 25· December 31st, 2018.· Is that your understanding of how
Page 18 Page 20
·1· records such as balance sheets and the like.· Of those ·1· to read this balance sheet?
·2· balance sheets and financial documents that were ·2· · · ·A.· Yes, sir, that's correct.· They have -- if you
·3· provided in discovery, are those true and accurate ·3· have a QuickBooks, this is from QuickBooks.· If you
·4· reflections of the -- of the company's books? ·4· downloaded this balance sheet, this is how it comes out.
·5· · · ·A.· Yes.· Far as I'm concerned their records are ·5· · · ·Q.· So going down then and -- and looking at the
·6· correct, however, I need to tell you that invoice that ·6· first column of the -- the accrued professional fees by
·7· Tim, TTHREI, some of the invoice are slid in when those ·7· TTHREI, are we -- I guess it -- it's cut off a little
·8· are -- some of the invoice are not approved by me or was ·8· bit because it's not -- it's not continued, but -- but
·9· notified by me of those invoices. ·9· can we assume that -- that this particular account that
10· · · ·Q.· So where did -- where did Mr. Holland submit 10· I have highlighted here is the account for TTHREI, LLC,
11· his invoices to?· Was there an accounting department for 11· and Mr. Holland?
12· him to submit those invoices to? 12· · · ·A.· This is not what I did.· This is the account
13· · · ·A.· When he was consulting he gave me -- the 13· that was done by the CPA by Mr. Holland.
14· invoice directly to me and I approved those invoice and 14· · · ·Q.· Okay.· So -- but do you still maintain that
15· I signed those invoices. 15· this -- that this is an accurate reflection of the books
16· · · ·Q.· Does Visionary have a separate accounting 16· of -- of Visionary?
17· department for accounts payable? 17· · · ·A.· That's what it says on the record, but right
18· · · ·A.· Yes, sir. 18· now we are -- we are indicating this as a false record.
19· · · ·Q.· And is that where a -- a vendor would send 19· · · ·Q.· So -- so this is -- so as of December 31st,
20· invoices to to be paid? 20· 2017, you're saying these numbers are incorrect?
21· · · ·A.· Yes, sir.· Yes. 21· · · ·A.· This is something that I did not agree -- I did
22· · · ·Q.· Okay.· All right.· I'm going to show you what 22· not agree to.· This is a false record that was
23· we have marked and submitted as Exhibit 4. 23· created -- created by -- recorded by his CPA and
24· · · · · · · · (Exhibit Number 4 was marked.) 24· himself.
25· · · ·Q.· (BY MR. ROBINSON)· Okay.· All right.· Can you 25· · · ·Q.· So -- so to clarify, you believe this is a
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TTHREI V. VISIONARY INDUSTRIAL 21–24
Page 21 Page 23
·1· false record, you believe your CPA falsified these ·1· · · ·A.· That number is incorrect, sir.
·2· records? ·2· · · ·Q.· Okay.· If that number is incorrect, how much
·3· · · ·A.· I don't -- I don't think it's a CPA that did ·3· money did Visionary owe TTHREI on December 31st, 2017?
·4· anything wrong, it's that Tim, TTHREI, who submitted ·4· · · ·A.· Hold on, please.· $9,500.
·5· this invoice to -- to get -- put these numbers in there. ·5· · · ·Q.· So on December 31st, 2017, you're saying that
·6· · · ·Q.· Okay.· So -- so that we're -- so that we're ·6· you owed -- or Visionary owed TTHREI $9,500?
·7· clear, the -- the number is correct, you just don't ·7· · · ·A.· Yes, sir.
·8· agree with the invoice being charged? ·8· · · ·Q.· And how do you -- upon what do you base that
·9· · · · · · · · THE INTERPRETER:· I'm sorry.· I don't ·9· number?
10· follow you when you say invoice are charged. 10· · · ·A.· For accounting purposes, that -- that is the
11· · · · · · · · MR. ROBINSON:· Okay.· Let -- then let me -- 11· one invoice that was not count for for doing the
12· let me rephrase. 12· consultation.
13· · · ·Q.· (BY MR. ROBINSON)· Let me think of a better way 13· · · ·Q.· Okay.· And what -- what invoice would that be?
14· to -- to ask that question. 14· Do you have a -- that invoice number or a date of that
15· · · · · · · · Your contention is that Visionary does not 15· invoice?
16· owe this amount.· Your contention is not that there's a 16· · · ·A.· I do not know the number of -- number of
17· mathematical error with the invoice that was provided, 17· invoice number, however, it's -- it's been part of the
18· but that the invoice itself was for services you did not 18· accumulation of our invoices, the balance -- balance of
19· agree to? 19· that invoice of accumulation invoices.
20· · · · · · · · MS. SMITH:· Objection; form. 20· · · ·Q.· And what document are you relying upon to
21· · · ·A.· I think there's a -- can I -- I need to consult 21· determine what the accumulation of invoices were at that
22· with my attorney.· Something's not -- the words is not 22· time?
23· right here. 23· · · ·A.· It is invoices I have approved, I have signed.
24· · · · · · · · MS. SMITH:· He -- he doesn't understand 24· Those -- those invoices.
25· the -- the question. 25· · · ·Q.· Okay.· What invoices -- the invoices that you
Page 22 Page 24
·1· · · · · · · · MR. ROBINSON:· Okay. ·1· have signed, what particular invoices are those, meaning
·2· · · ·Q.· (BY MR. ROBINSON)· So you don't agree this ·2· what date -- either an invoice number or a date to
·3· one -- as of December 31st, 2017, you -- it's your ·3· identify those invoices?
·4· position that you -- that Visionary does not owe ·4· · · ·A.· It's -- it's been so -- so long ago, a while
·5· $100,000 to TTHREI? ·5· ago, in my records, I don't know where that -- where
·6· · · · · · · · MS. SMITH:· Objection; form. ·6· that is.
·7· · · ·Q.· (BY MR. ROBINSON)· You -- you don't owe the ·7· · · ·Q.· Okay.· All right.· Well, if -- if you said it
·8· money?· The $100,000 is incorrect; is that correct, on ·8· was $9,500, how are you able to give me that number?
·9· December 31st, 2017? ·9· · · ·A.· There's a invoice of that -- I do not even know
10· · · ·A.· What I'm saying -- what I'm saying is that the 10· that there - there is -- there is -- they existed and
11· 90,000, the next to it, is wrong. 11· those are the differences -- invoices.
12· · · ·Q.· Well, I'm asking that on December 31st, 2017, 12· · · ·Q.· So if those were just the invoices, you know --
13· this $100,000 number that is in the first column, is it 13· you -- you just gave me that number $9,500, where did
14· Visionary's position that it -- as -- that on 14· you see that number to give me that answer?
15· December 31st, 2017, it did not owe TTHREI that 15· · · · · · · · THE INTERPRETER:· Okay.· Okay.· I lost -- I
16· $100,322.50? 16· lost everything what he -- what he said.
17· · · ·A.· Okay.· What I'm saying is that the next to it, 17· · · ·A.· This -- this fee of 2017, there over $100,000,
18· the 90,000 is wrong. 18· there's a difference of $9,500.
19· · · ·Q.· Okay.· All right. 19· · · ·Q.· (BY MR. ROBINSON)· A -- a difference of $9,500
20· · · · · · · · MR. ROBINSON:· I'm going to object to 20· from -- from what?
21· nonresponsive. 21· · · ·A.· Are we not looking at the -- at 2017 and 2018
22· · · ·Q.· (BY MR. ROBINSON)· I'm not asking about the 22· together?
23· second column.· I'm asking about the first column.· That 23· · · ·Q.· Yes.· We're -- we're looking at those together.
24· on December 31st of 2017, did Visionary owe TTHREI 24· Did you get the -- did you -- did you testify $9,500 was
25· $100,322.50? 25· what was owed on December 31st, 2017, because that just
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·1· happens to be the difference between column -- the first ·1· the QuickBooks program, it's a document from
·2· column and the second column? ·2· accounting -- an accounting document.
·3· · · ·A.· Yes, that's correct.· I am talking about ·3· · · ·Q.· Okay.· And is this the same balance sheet as
·4· difference between the first column, second column ·4· before, except for this is from -- balance sheet from
·5· that's the 9,500.· I do not know this very well because ·5· December 31st, 2019, to December 31st, 2020?
·6· I did not really thoroughly look through this; I didn't ·6· · · ·A.· Yes, sir.
·7· know this was in there. ·7· · · ·Q.· Okay.· And there was some question that you had
·8· · · ·Q.· Okay.· So you're not looking at any particular ·8· about the previous balance sheet in Exhibit Number 4
·9· invoice that you're adding up or payments, you're just ·9· that we took a look at regarding the accuracy of the
10· merely subtracting the first column from the second 10· numbers that were on the -- on the balance sheet.· Have
11· column? 11· you seen this balance sheet that we're looking at,
12· · · ·A.· Yes.· If -- if -- yes, that is the difference. 12· Exhibit Number 5, have you seen this before?
13· However, if I approved the differences, then I'm sure I 13· · · ·A.· Yes, sir.· I -- I saw it when I was reviewing
14· did. 14· it.
15· · · ·Q.· Okay.· So if you approved the differences in 15· · · ·Q.· Okay.· And are the numbers on this balance
16· these two numbers between December 31st, 2017, and 16· sheet on Exhibit Number 5, are they accurate?
17· December 31st, 2018, you must have reviewed those 17· · · ·A.· It is -- it's -- it's in the accounting system,
18· numbers at that time; is that correct? 18· company accounting system, is -- is as good as it gets.
19· · · ·A.· Yes.· It was -- this was done by COO and CPA. 19· · · ·Q.· Okay.· I'm going to come down here to where we
20· The only thing I -- I never really had this store 20· were looking at before with the TTHREI accrued fees.· Do
21· information.· The only thing I believe I had -- I had 21· you see that where I'm pointing now, the highlighted
22· was the invoices that was approved. 22· line item?
23· · · ·Q.· So is it your testimony that this balance 23· · · ·A.· Yes.· Yes, sir, I see it.
24· sheet, you've never -- you did not review this balance 24· · · ·Q.· Okay.· And right now it says as of
25· sheet in -- during this fiscal year? 25· December 31st, 2019, that the -- is now blank, it is now
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·1· · · ·A.· During the 2017, no, I did -- I did not.· It ·1· 0 from -- from the balance sheet two years before that,
·2· was -- the company was in -- in red, that a lot of ·2· it stated that it was 90,000-some-odd dollars, now it's
·3· negative balances there and that's why when the CPA and ·3· 0.· Why is it now 0?
·4· COO worked out, and -- and I only -- I only received a ·4· · · ·A.· Because 90,000 I found out it was false --
·5· report of -- of there's how much negative balance -- ·5· false invoice been submitted and it was made up -- made
·6· balances on that year.· This is -- this is from the COO ·6· up, so that's when I found out it's 2019.· That is why.
·7· and CPA. ·7· · · ·Q.· So since you believed you did not owe or
·8· · · · · · · · MS. SMITH:· Okay, Tim.· It's been over an ·8· Visionary did not owe that money, you just took it off
·9· hour.· Can we get a 15-minute break here? ·9· the books; is that right?
10· · · · · · · · MR. ROBINSON:· Sure. 10· · · ·A.· Yes, because Visionary has no liability with
11· · · · · · · · (Recess taken 11:15 a.m. to 11:36 a.m.) 11· them -- with them.· That's why we took it out.
12· · · ·Q.· (BY MR. ROBINSON)· So, Mr. Jang, when we left 12· · · ·Q.· Okay.· Did you write this account off with a --
13· off before break, we were going over and we were 13· another account in QuickBooks, or did you just delete it
14· discussing balance sheets, specifically a balance sheet 14· out?
15· from December 31st, 2017, to December 31st, 2018.· I'm 15· · · ·A.· I don't really exactly remember, but I believe
16· going to show you what's been marked as Exhibit 16· it was deleted out and made a memo or made a note as it
17· Number 5. 17· was incorrect or false.
18· · · · · · · · (Exhibit Number 5 was marked.) 18· · · ·Q.· When was that deleted out, approximately?
19· · · ·Q.· (BY MR. ROBINSON)· All right.· Can you see 19· · · ·A.· I believe sometime late 2019 or -- or 2020.
20· this? 20· · · ·Q.· So on -- so on -- so was it in -- what's the
21· · · ·A.· Yes, sir, I see it. 21· best way to ask this?· Was it deleted prior to
22· · · ·Q.· All right.· I'm going to blow it up just a 22· December 31st, 2019?
23· little bit.· All right.· Okay.· And what is -- what's -- 23· · · ·A.· That's the way it is in the QuickBooks, but I
24· what is this document? 24· do not know exact date.
25· · · ·A.· As I -- as I said before, it's the same -- from 25· · · ·Q.· When did you find out, in your opinion, that
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·1· you did not owe TTHREI any money? ·1· the loan was approved.
·2· · · ·A.· It's going to be a long story.· It's going to ·2· · · ·Q.· So is it your testimony here today that when
·3· be a long story.· I could dissect it in section by ·3· you initially applied for the -- or Visionary initially
·4· section. ·4· applied for the USDA loan, that you did not review,
·5· · · ·Q.· Okay.· Then when was the first time -- let's ·5· approve, or sign any documents on the original
·6· just start with a -- with an approximate date, you don't ·6· application to USDA?
·7· have to give me the exact date, but an approximate date, ·7· · · ·A.· No, initially I did not -- I did not sign.
·8· of when you first realized that -- that you were -- or ·8· However, once we found the information is incorrect and
·9· Visionary was being invoiced for services that you do ·9· made a correction, then -- then after that, then I
10· not believe were rendered or owed? 10· signed it and submitted.
11· · · ·A.· Approximately late 2019. 11· · · ·Q.· So is it your testimony here today that you
12· · · ·Q.· Okay.· How did you find that out?· How did 12· have -- you never reviewed the balance sheet for
13· you -- how did you come to understand or know that? 13· Visionary at any time from 2016 until you -- until the
14· · · ·A.· At the time this company was processing a USDA 14· loan application process in 2019?
15· loan.· All that was processed by Tim and everything was 15· · · ·A.· I am not expert in accounting, that is why I
16· prepared by Tim, and Tim show me the documents that he 16· hired a CPA and COO to look through it.· During that
17· prepared for USDA.· From the loan -- yeah, the loan came 17· time period, we were in red, we were not making money --
18· out approved, and the distribution of the loan was 18· money and I was in a situation to have to bring money to
19· TTHREI of $90,000 that he approved.· I'm sorry.· I'm 19· put -- to put the funds into the company.· That's why I
20· sorry.· It was not -- during the -- it was not approved 20· did not thoroughly, specifically, detail-wise look
21· yet, but it was during the process and that -- that 21· through the accounting and I -- I -- generally I looked
22· list -- itemized list was given to me. 22· at it and that -- that is all.
23· · · · · · · · Yes.· He had -- he had about $90,000 to 23· · · ·Q.· So the five-page balance sheet that we're
24· allocate to TTHREI that was -- itemized list was given 24· looking at here, that same balance sheet for fiscal year
25· to me.· Because I -- I was in shock and -- and surprised 25· 2017, you -- it's your testimony that you never looked
Page 30 Page 32
·1· because all the consultation fee has been fully rendered ·1· at this five-page balance sheet for fiscal year 2017?
·2· and why there's -- there's a dispute fees there.· The ·2· · · ·A.· I cannot say I never looked at it.· I did look
·3· first time ever because of that, I looked at review ·3· at it.· Because I -- I trusted a -- a CPA who is a
·4· thoroughly of the accounting of the company.· I know ·4· FDIC-certified CPA and COO.· I trust them to do the
·5· that his fees been all rendered during the consultation ·5· work, so I did not question their detail -- detail --
·6· period.· However after the full-time basis, he was ·6· itemized to -- itemized and item to item -- I did -- I
·7· submitting consultation invoices, that's -- that's what ·7· did looked at it.
·8· I found out.· Because after conversion to full-time ·8· · · ·Q.· How about fiscal year of 2018, did you look at
·9· basis all the other invoice that he submitted, I did not ·9· the balance sheet for fiscal year of 2018?
10· know because he submitted himself -- all by himself. 10· · · ·A.· As I just stated earlier, it's the same.
11· All the -- all the submitted invoices was not approved 11· · · ·Q.· Do you believe that it's common as a CEO of a
12· by me or being shown -- shown to me, this was submitted 12· company not to review the balance sheet with your CPA
13· by himself when he was COO and that's when it was 13· each year?
14· discovered, when that -- when the USDA loan application 14· · · ·A.· I do not know accounting very well; however, I
15· was submitted.· That's how I found it out. 15· needed a -- a specialized skill person who's a CPA who
16· · · ·Q.· Was the loan ultimately approved? 16· could -- who could do the job and who I could trust.
17· · · ·A.· Yes, we did, sir. 17· And -- however, at the time the company's in red and
18· · · ·Q.· When you -- when you discovered the 18· there's a -- there are people who invested it --
19· inconsistencies that you testified to regarding these 19· invested in and they're individually invested in a
20· accounts payable to TTHREI, did you notify the lender 20· lot -- a lot of money who -- and a lot of those people
21· with respect to those inconsistencies? 21· who have specialized skills, but during that time, I was
22· · · ·A.· No -- no, sir.· Because this was discovered 22· very busy as -- as well; that's why I did not thoroughly
23· before all this was submitted to the -- to the USDA 23· review -- review the documents.
24· loan.· And then we -- we -- after discovering this, 24· · · ·Q.· All right.· I'm going to show you what -- let's
25· revised it and sent it -- sent it to the USDA and then 25· see here -- what I've got marked as Exhibit Number 3.
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Envelope ID: 84687204
Filing Code Description: Brief Requesting Oral Argument
Filing Description: Appellant's Brief Requesting Oral Argument
Status as of 2/20/2024 12:16 PM CST
Associated Case Party: VISIONARY INDUSTRIAL INSULATION, INC.
Name BarNumber Email TimestampSubmitted Status
Kyle Carney 24096789 kyle@carney.law 2/20/2024 12:09:24 PM SENT
Sul Lee filing@sulleelaw.com 2/20/2024 12:09:24 PM SENT
Sul Lee sul@sulleelaw.com 2/20/2024 12:09:24 PM SENT
Diren Singhe dsinghe@sulleelaw.com 2/20/2024 12:09:24 PM SENT
Spencer Young syoung@sulleelaw.com 2/20/2024 12:09:24 PM SENT
Sally Jun sjun@sulleelaw.com 2/20/2024 12:09:24 PM SENT
Associated Case Party: TIMOTHY HOLLAND
Name BarNumber Email TimestampSubmitted Status
J. StephenHunnicutt steve@hunnicuttlaw.com 2/20/2024 12:09:24 PM SENT
Tim Robinson tim@hunnicuttlaw.com 2/20/2024 12:09:24 PM SENT