Nov 2, 2012
, 5:00am CDT
Vitamin maker sues ex-parent company for contract breach
Staff Writer- Austin Business Journal
Natural Dynamics LLC, the Austin-based maker of Natural Vitality vitamins, has filed two lawsuits against its former parent company and the company’s founder, alleging that he has violated the noncompete clause signed when Natural Dynamics bought the parent company’s signature line of vitamins for more than $3.8 million.
Meanwhile, that founder, Peter Gillham, is suing the lawyers, accountants and others who he alleges cost him $8 million by failing to properly represent him during the sale of Conquest International Inc.’s assets.
Natural Dynamics alleges that Gillham created and marketed a new line of vitamins with a name and bottle similar to that of the Natural Vitality product line, which it had just bought from Conquest International.
Natural Dynamics, whose vitamins are sold online and at retailers such as Whole Foods Market Inc., employs about 45 workers, with 20 in Austin. The company has seen double-digit growth for the past several years, said Ken Whitman, an executive at Natural Dynamics.
Natural Dynamics has also accused Gillham of abusing a line of credit to buy Natural Vitality vitamins without paying for them and selling them in his own stores.
Natural Dynamics is seeking to enjoin Conquest and Gillham “from using certain trademarks Natural Dynamics purchased many years ago and that are being used in violation of a contract in an attempt to create confusion in the marketplace,” said Scott Field of The Field Law Firm LLC, who is representing Natural Dynamics in its contract violation and infringement suits.
Gillham and the lawyer representing him in the case against Natural Dynamics could not be reached for comment.
Lloyd Pantell, who is representing Gillham in his suit against Rosser Cole, declined to comment.
Gillham founded Nevada-based Conquest International Inc. in 1994 and launched the Natural Vitality line of vitamins. His company grew until 2008, when an 80-year-old Gillham agreed to sell Conquest International’s assets to board members Justin Farmer, Ken Whitman and Susan Whitman, court documents show.
Disagreements over the deal began almost immediately, court documents show.
California law firm R. Rosser Cole represented both sides throughout the sale, and accounting firm Hinton Kreditor & Gronroos LLP valued the company at $4.1 million, according to court documents. Gillham subsequently agreed to sell Conquest’s assets for $3.8 million plus the cost of inventory, according to the deal filed with Gillham’s suit.
Natural Dynamics’ lawsuit states that Gillham would receive $380,000 per year as long as he abided by a noncompete clause and marketing agreement that accompanied the sale. Nevertheless, Gillham alleges the defendants in his suit incorrectly valued his company and mismanaged the deal, costing him more than $8 million.