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10/17/2887 15:52 281976. .04 LAW OFFICES PAGE 09/13
5
Cause No. 2004-59790
MICROCHECK. SYSTEMS, INC. IN THE DISTRICT COUR’
AND MICROCHECK SOLUTIONS, INC. TOF
Vs.
(1) ZIGROSSI & MURPHY, L.L.C.,
individ and d/b/a EDUCATED
SCOTT
IONS;
8 SRB cH
HARRIS COUNTY, TEXAS
(4) MIKE SMIN, tnd idually and d/b/a CMS
TECHNO! Ya |
TECHNOLOGIES;
6) MacHOice Co Lor
SYSTEMS, INC;
125™ JUDICIAL DISTRICT
——— = —
DEFENDANT, MIKE SMITH?S
THIRD A AMENDED ORIGINAL ANSWER
—: =a
TO THE HONORABLE JUDGE OF SAID COURT:
NOW COMES MIKE SMITH, Defendant, in the above styled and numbered cause, and
respectfiilly files herein, his Third Amended Original Answer, and will further show unto this
Honorable Court the following:
L
GENERAL DENIAL
Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendant, Mike Smith, enters
this his General Denial, and Defendant denies generally, each and every, all and singular, the
allegations contained in Plaintiffs’ Third Amended Original Petition and Application for Injunctive
Relief and demands strict proof thereof.
Defendant, Mike Smith, admits he was the president and CEO of Microcheck for a very
long time, approximately 20 years, and for some portion of that time, Scott Murphy acted as
Mictocheck’s computer programmer.10/17/2087 15:52 281978. .o4 LAW OFFICES PAGE 10/13
i
Mike Smith specifically denies he ever violated his fiduciary duty to Microcheck or that he
ever conspired to destroy Microcheck. Mike Smith would specifically deny that for months as
alleged in Plaintiff's Third Amended Petition, he had siphoned off thousands of dollars or any sum.
of money for his own personal use and benefit. Mike Smith would specifically deny as alleged in
Plaintiffs’ petition that he made expenditures that were not approved by Microcheck’s Board of
Directors. In that regard, Mike Smith would state there never was a meeting of the Board of
Directors in the 20 years he was president and CEO of Microcheck. These allegations of Board of
Directors meetings are nothing but a fabrication by John Manning.
™m.
Mike Smith would specifically deny that I have conunitted any theft of property pursuant to
§134.002(2) of the Texas Civil Practices and Remodies Code, specifically the Defendants denied
violating §31.003(a) of the Texas Penal Code.
Iv.
Defendant, Mike Smith, would allege that John Manning, the claimed owner of Microcheck
Systems, Inc. and Microcheck Solutions, Inc. was an absentes owner, that very rarely, if ever,
participated in the day in and day out functions of Microcheck Systems, Inc. and only showed up on
rare occasions to withdraw large sums of money to pay outstanding debt; oftentimes, to the peril of
Microcheck, which created a cash flow crises on many occasions. In that regard, Mike Smith
would plead that the actions he took which are complained of as, “conspiracies to destroy the
company” were, in fact, efforts to protect the clients of Microcheck and to keep Microcheck on an
even keel so they could comply with the agreements made with their customers.
Vv.
It is alleged in the Plaintiffs’ petition that Mike Smith, Defendant has converted the source
code and/or trade secrets for his own use which the Defendant specifically denies. Alternatively,
however, Mike Smith would aflegs that he was end is a partner and part owner of Microcheck“sy
10/17/2087 15:52 281976. 04 LAW OFFICES PAGE 11/13
Systems, Inc., and as such was a patt owner of al] the inventory, assets, and/or source codes for
trade secrets, if any existed, which is not admitted but expressly denied and, therefore, could not
have possibly converted these assets to his own use as he was already a part owner,
VI.
Mike Smith would specifically state that he was the president and CEO and had absolute
authority to perform all business functions on behalf of Microcheck Systems, Inc. and had done so
for 20 years, and as such had the absolute authority to enter into the PSA Agreement with Educated
Solutions on October 4, 2004, and into any other agreement that was necessary and proper. As
such, this constitutes legal justification for the acts complained of by the Plaintiffs against Mike
Smith as president and CEO of Microcheck Systems, Inc.
Vil.
In further answer, Defendant, Mike Smith, wil) show that Plaintiffs’ damages, if any, were
caused by the negligence of John Manning. Therefore, pursuant to Chapter 33 of the Texas Civil
Practices and Remedies Code (“TCPRC”), Defendant requests this juty to make a determination as
to the proportionate responsibility of the damages, if any, asscrted by Plaintiffs in this lawsuit.
vii.
Defendant, Mike Smith, affirmatively pleads §18.092 of the TCPRC, requesting Plaintiff be
tequired to present evidence of its economic loss damages in “Net” value, as required by the
TCPRC, (§18.091).
x.
Defendant Mike Smith, affirmatively pleads that the damages, if any, asserted by Plaintiff in
this lawsuit were caused in whole or in part by the Plaintiffs failure to mitigate its own damages.
x.
Defendant, Mike Smith, affirmatively pleads accord and satisfaction. Defendant has
complied with the orders of this Court which were entered at the conclusion of evidence of the
previous TRO hearings. Therefore, Defendant requests that the jury be instructed to not include any
310/17/2087 15:52 281978. 04 LAW OFFICES PAGE 12/13
damages, if any, in which Plaintiffs have received accord and satisfaction as of the date the
Defendant complied with this Court’s order.
Xi
Defendant, Mike Smith, affirmatively pleads the defenses of duress, estoppel, and failure of
XI.
Defendant, Mike Smith, affirmatively pleads by reason of a defense, that the damages
alleged by Plaintiff in this lawsult, if any, were caused by and were the result of its own financial
instability, and were not caused in any way by the actions of the Defendant in this lawsuit.
/ xu.
Defendant, Mike Smith, requests that the jury be instructed to segregate any damages,
between (compensatory / non-compensatory), found in favor of the Plaintiffs, if any.
XIV.
Defendant, Mike Smith prays for the recovery of all necessary and reasonable attomey’s
fees incurred by Defendant in defending Plaintiffs’ claims arising under the Texas Liability Act as
well as all other claims, whether in tort or in contract, which provide for Defendant’s recovery of
attorney’s fees incurred by the defense herein.
WHEREFORE, PREMISES CONSIDERED, Defendant, Mike Smith prays that upon
final trial herein, (1) Plaintiffs shall take nothing from Defendant; (2) that Defendant shall have and
recover from Plaintiffs, Microcheck Systems, Inc. and Microcheck Solutions, Inc. and John
Manning, jointly and severally, all reasonable and necessary attorney fees as plead for herein, as
well as cost of court and post-judgment interest; and for such other relief as this Honorable Court
may find this Defendant justly entitled.
Respectfully submitted,
ROY MURPHY & ASSOCIATES18/17/2887 15:52 281976 .04 LAW OFFICES PAGE 13/13
CERTIFICATE OF SERVICE
Thereby certify that a trus and correct copy of Defendant, Mike Smith's, Third Amended
Original Answer, has been fory
Copy to:
Ghristepher D, DeMeo
$ > SERPE & WARE, P.C,
2500 Two Houston Center
909 Fannin Street
Houston, Tx 77010
713.951.1000 Ph.
713.951.1199 Fax.
J. Reid Perry, at Law
12850 Jones Road #201
TX 77
281.970.4175 Ph.
281.970.1664 Fax
Preview
~ 10/17/2887 15:52 281976. .04 LAW OFFICES PAGE 09/13 5 Cause No. 2004-59790 MICROCHECK. SYSTEMS, INC. IN THE DISTRICT COUR’ AND MICROCHECK SOLUTIONS, INC. TOF Vs. (1) ZIGROSSI & MURPHY, L.L.C., individ and d/b/a EDUCATED SCOTT IONS; 8 SRB cH HARRIS COUNTY, TEXAS (4) MIKE SMIN, tnd idually and d/b/a CMS TECHNO! Ya | TECHNOLOGIES; 6) MacHOice Co Lor SYSTEMS, INC; 125™ JUDICIAL DISTRICT ——— = — DEFENDANT, MIKE SMITH?S THIRD A AMENDED ORIGINAL ANSWER —: =a TO THE HONORABLE JUDGE OF SAID COURT: NOW COMES MIKE SMITH, Defendant, in the above styled and numbered cause, and respectfiilly files herein, his Third Amended Original Answer, and will further show unto this Honorable Court the following: L GENERAL DENIAL Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendant, Mike Smith, enters this his General Denial, and Defendant denies generally, each and every, all and singular, the allegations contained in Plaintiffs’ Third Amended Original Petition and Application for Injunctive Relief and demands strict proof thereof. Defendant, Mike Smith, admits he was the president and CEO of Microcheck for a very long time, approximately 20 years, and for some portion of that time, Scott Murphy acted as Mictocheck’s computer programmer.10/17/2087 15:52 281978. .o4 LAW OFFICES PAGE 10/13 i Mike Smith specifically denies he ever violated his fiduciary duty to Microcheck or that he ever conspired to destroy Microcheck. Mike Smith would specifically deny that for months as alleged in Plaintiff's Third Amended Petition, he had siphoned off thousands of dollars or any sum. of money for his own personal use and benefit. Mike Smith would specifically deny as alleged in Plaintiffs’ petition that he made expenditures that were not approved by Microcheck’s Board of Directors. In that regard, Mike Smith would state there never was a meeting of the Board of Directors in the 20 years he was president and CEO of Microcheck. These allegations of Board of Directors meetings are nothing but a fabrication by John Manning. ™m. Mike Smith would specifically deny that I have conunitted any theft of property pursuant to §134.002(2) of the Texas Civil Practices and Remodies Code, specifically the Defendants denied violating §31.003(a) of the Texas Penal Code. Iv. Defendant, Mike Smith, would allege that John Manning, the claimed owner of Microcheck Systems, Inc. and Microcheck Solutions, Inc. was an absentes owner, that very rarely, if ever, participated in the day in and day out functions of Microcheck Systems, Inc. and only showed up on rare occasions to withdraw large sums of money to pay outstanding debt; oftentimes, to the peril of Microcheck, which created a cash flow crises on many occasions. In that regard, Mike Smith would plead that the actions he took which are complained of as, “conspiracies to destroy the company” were, in fact, efforts to protect the clients of Microcheck and to keep Microcheck on an even keel so they could comply with the agreements made with their customers. Vv. It is alleged in the Plaintiffs’ petition that Mike Smith, Defendant has converted the source code and/or trade secrets for his own use which the Defendant specifically denies. Alternatively, however, Mike Smith would aflegs that he was end is a partner and part owner of Microcheck“sy 10/17/2087 15:52 281976. 04 LAW OFFICES PAGE 11/13 Systems, Inc., and as such was a patt owner of al] the inventory, assets, and/or source codes for trade secrets, if any existed, which is not admitted but expressly denied and, therefore, could not have possibly converted these assets to his own use as he was already a part owner, VI. Mike Smith would specifically state that he was the president and CEO and had absolute authority to perform all business functions on behalf of Microcheck Systems, Inc. and had done so for 20 years, and as such had the absolute authority to enter into the PSA Agreement with Educated Solutions on October 4, 2004, and into any other agreement that was necessary and proper. As such, this constitutes legal justification for the acts complained of by the Plaintiffs against Mike Smith as president and CEO of Microcheck Systems, Inc. Vil. In further answer, Defendant, Mike Smith, wil) show that Plaintiffs’ damages, if any, were caused by the negligence of John Manning. Therefore, pursuant to Chapter 33 of the Texas Civil Practices and Remedies Code (“TCPRC”), Defendant requests this juty to make a determination as to the proportionate responsibility of the damages, if any, asscrted by Plaintiffs in this lawsuit. vii. Defendant, Mike Smith, affirmatively pleads §18.092 of the TCPRC, requesting Plaintiff be tequired to present evidence of its economic loss damages in “Net” value, as required by the TCPRC, (§18.091). x. Defendant Mike Smith, affirmatively pleads that the damages, if any, asserted by Plaintiff in this lawsuit were caused in whole or in part by the Plaintiffs failure to mitigate its own damages. x. Defendant, Mike Smith, affirmatively pleads accord and satisfaction. Defendant has complied with the orders of this Court which were entered at the conclusion of evidence of the previous TRO hearings. Therefore, Defendant requests that the jury be instructed to not include any 310/17/2087 15:52 281978. 04 LAW OFFICES PAGE 12/13 damages, if any, in which Plaintiffs have received accord and satisfaction as of the date the Defendant complied with this Court’s order. Xi Defendant, Mike Smith, affirmatively pleads the defenses of duress, estoppel, and failure of XI. Defendant, Mike Smith, affirmatively pleads by reason of a defense, that the damages alleged by Plaintiff in this lawsult, if any, were caused by and were the result of its own financial instability, and were not caused in any way by the actions of the Defendant in this lawsuit. / xu. Defendant, Mike Smith, requests that the jury be instructed to segregate any damages, between (compensatory / non-compensatory), found in favor of the Plaintiffs, if any. XIV. Defendant, Mike Smith prays for the recovery of all necessary and reasonable attomey’s fees incurred by Defendant in defending Plaintiffs’ claims arising under the Texas Liability Act as well as all other claims, whether in tort or in contract, which provide for Defendant’s recovery of attorney’s fees incurred by the defense herein. WHEREFORE, PREMISES CONSIDERED, Defendant, Mike Smith prays that upon final trial herein, (1) Plaintiffs shall take nothing from Defendant; (2) that Defendant shall have and recover from Plaintiffs, Microcheck Systems, Inc. and Microcheck Solutions, Inc. and John Manning, jointly and severally, all reasonable and necessary attorney fees as plead for herein, as well as cost of court and post-judgment interest; and for such other relief as this Honorable Court may find this Defendant justly entitled. Respectfully submitted, ROY MURPHY & ASSOCIATES18/17/2887 15:52 281976 .04 LAW OFFICES PAGE 13/13 CERTIFICATE OF SERVICE Thereby certify that a trus and correct copy of Defendant, Mike Smith's, Third Amended Original Answer, has been fory Copy to: Ghristepher D, DeMeo $ > SERPE & WARE, P.C, 2500 Two Houston Center 909 Fannin Street Houston, Tx 77010 713.951.1000 Ph. 713.951.1199 Fax. J. Reid Perry, at Law 12850 Jones Road #201 TX 77 281.970.4175 Ph. 281.970.1664 Fax