Loveland dermatologist files counterclaim against Mott, Skin PC

BOULDER and LOVELAND — A Loveland dermatologist embroiled in a bankruptcy and lawsuit with a former colleague has denied allegations of fraud, breach of fiduciary duty and unjust enrichment, and has filed counterclaims against the former colleague.

Patrick Lillis, former owner of Lake Loveland Dermatology PC, and his wife, Tracy Amick, on May 24 filed a response to allegations made in an adversary complaint by Lake Loveland Dermatology, Skin PC and Kevin Mott. Mott owns the Boulder-based Skin PC dermatology clinic, which operates as Ideal Dermatology and which purchased Lake Loveland Dermatology from Lillis in October 2016.

Through Skin PC, Mott had acquired Lake Loveland Dermatology, which operates at 776 W. Eisenhower Blvd.,  for $8.76 million through a promissory note.

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Mott and the clinics filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Denver, March 8, reporting assets of $1 million to $10 million, and liabilities of between $10 million and $50 million.

The parties on May 2 filed an adversary complaint against Lillis and Amick, alleging that financials for Lake Loveland Dermatology were falsified prior to sale of the practice, and that Lillis wrongfully paid himself from Lake Loveland Dermatology’s revenues, aided by Amick, who served as office manager for the practice.

Lillis resigned as Lake Loveland Dermatology’s chief operating officer, and Amick resigned as bookkeeper, in early 2018.

Mott and the clinics asked the bankruptcy court to reduce the amount of the promissory note to an original principal balance of $1.17 million, with credit given for all payments made.

In the response and counterclaim filed May 24, attorneys for Lillis and Amick said the claims are “frivolous, substantially groundless, or substantially vexatious.” They seek attorneys’ fees and costs incurred in defending the action.

Lillis and Amick are represented by Senn Visciano Canges PC and Markus Williams Young & Hunsicker LLC, both Denver law firms. A call to Matthew Faga, an attorney with Markus Williams Young & Hunsicker, was not immediately returned.

The attorneys said in the court filing that claims by the plaintiffs are barred because Lake Loveland Dermatology “was solvent and was not rendered insolvent or left with unreasonably small capital as a result of any transactions with the Defendants.”

Lillis and Amick filed counterclaims against Skin PC and Mott. Lillis said Skin was required to make 120 equal monthly payments of principal and interest in the amount of $89,977.40. But Lillis informed Skin and Mott in May 2018 that Skin was in default in its obligations to provide monthly financial reporting, and in June 2018 informed Skin of its failure to pay the May 2018 note installment in full, with subsequent correspondence alleging that Skin had failed to pay in full monthly installments for April, May and June.

The counterclaim alleges that Skin had paid only six total payments under the note as of June 20, 2018, totaling $465,205. By that time, “a total of fourteen Note installments had become due and payable in the aggregate amount of $1,259,683.60,” according to the counterclaim, leaving a deficiency of $794,478.52.

Lillis filed a lawsuit in Denver District Court in July 2018 asserting a claim against Skin for breach of note, and against Mott for breach of his guaranty of the note.

The parties remained in dispute in succeeding months, with Mott claiming that financial performance of Lake Loveland Dermatology allowed him to reduce the monthly payments, and Lillis countering that Skin remained in breach of its financial-reporting obligations.

“Skin’s failure to timely deliver financial statements for the proper period … impeded Lillis’ ability to account for the payment received and determine whether Skin had additional payment obligations …,” according to the counterclaim.

The Denver district court action proceeded until Mott, Skin and Lake Loveland Dermatology filed for bankruptcy protection.

“On the virtual eve of the scheduled taking of depositions in the State Court Action of persons then involved in the operation of LLD and its medical practice, Mott caused to be filed, on March 8, 2019, separate bankruptcy petitions for himself and for Skin and LLD, in an effort to prevent Lillis from enforcing, or to attempt to renegotiate, the valid and enforceable contractual obligations that had been negotiated by the parties …,” the counterclaim states, adding that the bankruptcy filing itself constituted a default under the note.

Lillis claims that he was owed $8,293,794 as of June 27, 2018, with interest continuing to accrue.

Lillis seeks all amounts owed under the promissory note and guaranty, in amounts to be proved at trial, plus additional interest, default interest, attorneys’ fees and costs.

Attorneys for Lake Loveland Dermatology did not immediately return a call seeking comment.