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Law360 (November 23, 2020, 6:29 PM EST ) A Mexican medical equipment supply company told a Texas federal judge on Monday that it had agreed to settle claims that a San Antonio-based law firm withheld over $3 million from a deal to sell millions of face masks to the state's emergency management agency.
Terms of the settlement between Serna & Associates PLLC, attorney Enrique Serna and the Mexican supplier, Happy Healthcare SA de CV, were not disclosed.
The suit was filed in September, when Happy Healthcare alleged that Serna scammed the company by lying about the price the Texas Department of Emergency Management paid for the masks, which were sold by a pair of third-party companies. The companies sold the masks at over twice the purchase price, and Serna failed to tell Happy Healthcare of the profits they made, the complaint said.
Serna allegedly paid Happy Healthcare 55 cents per mask and then sold them through Florida-based Online Transport International LLC and Texas-based Taylor Bio Armor to the Texas Department of Emergency Management for $1.25 each. The lawyer had promised to split profits from the sale fifty-fifty with Happy Healthcare, but despite selling more than $6 million worth of masks, the Mexican company hasn't seen any profits, according to the suit.
While the claims against Serna were settled, Happy Healthcare said claims against the third-party companies were still active.
Serna shifted the blame towards the third parties, filing counterclaims earlier this month that said Online Transport International LLC executive Joseph Lassen and Lassen's business partner Austin Taylor were responsible for lying about the price the Texas Department of Emergency Management was paying for masks.
He claimed he was told that the masks were being sold for 98 cents to the Texas Department of Emergency Management and that the companies pocketed the difference. Serna's counterclaims are also still active.
Soon after Serna's counterclaims were filed, he and Happy Healthcare asked for an injunction to freeze the assets of the third-party companies, claiming they were dissipating their assets in order to avoid having to pay the money. Serna also claimed that they were trying to rope him into the alleged fraud in order to cover up their involvement at his expense.
The companies argued that the injunction bid was filed at the last minute and that none of their actions violate Texas fraud law. They also said Serna had no right to seek relief because he and the firm had "unclean hands" from also being complicit in the alleged fraud.
A decision on the injunction request has yet to be announced.
Representatives for the parties didn't immediately respond to requests for comment Monday.
Happy Healthcare is represented by Jason M. Davis and Jay Hulings of Davis & Santos PC.
Online Transport, Taylor Bio Armor and Lassen are represented by Edward D. Burbach and Andres Medrano of Foley & Lardner LLP.
Serna and his firm are represented by Edward C. Snyder of Castillo Snyder PC.
Counsel information for Taylor and Taylor & Perry Investment Group was not immediately available on Monday.
The case is Happy Healthcare SA de CV v. Online Transport Intl LLC et al., case number 5:20-cv-01038, in the U.S. District Court for the Western District of Texas.
--Additional reporting by Adam Lidgett and Katie Buehler. Editing by Peter Rozovsky.
For a reprint of this article, please contact reprints@law360.com.
