EXHIBIT 99.1
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SUMMONS
(CITACION JUDICIAL) FOR COURT USE ONLY
(SOLO PARA USO DE LA CORTE)
NOTICE TO DEFENDANT:
(AVISO AL DEMANDADO):
PERSONAL COMPUTING ENVIRONMENTS, INC. a.k.a. PCE, INC.
a.k.a. P--CE COMPUTERS, INC.; BEN MOGLIN; ALLAN
QUATTRAIN and DOES 1 through 1000, inclusive,
YOU ARE BEING SUED BY PLAINTIFF:
(LO ESTA DEMANDANDO EL DEMANDANTE):
PERSONAL COMPUTING ENVIRONMENTS KOREA, INC. a.k.a. PCE
KOREA, INC.; A THOUSAND STEPS, INC., BEN HYNES, JIMMY
KIM
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You have 30 CALENDAR DAYS after this summons and legal papers are served on
you to file a written response at this court and have a copy served on the
plaintiff. A letter or phone call will not protect you. Your written response
must be in proper legal form if you want the court to hear your case. There may
be a court form that you can use for your response. You can find these court
forms and more information at the California Courts Online Self-Help Center
(www.courtinfo.ca.gov/selfhelp), your county law library, or the courthouse
nearest you. If you cannot pay the filing fee, ask the court clerk for a fee
waiver form. If you do not file your response on time, you may lose the case by
default, and your wages, money, and property may be taken without further
warning from the court.
There are other legal requirements. You may want to call an attorney right
away. If you do not know an attorney, you may want to call an attorney referral
service. If you cannot afford an attorney, you may be eligible for free legal
services from a nonprofit legal services program. You can locate these nonprofit
groups at the California Legal Services Web site (www.lawhelpcalifornia.org),
the California Courts Online Self-Help Center (www.courtinfo.ca.gov/selfhelp),
or by contacting your local court or county bar association.
Tiene 30 DIAS DE CALENDARIO despues de que le entreguen esta citacion y
papeles levies para presentar una respuesta por escrito en esta corte y hacer
que se entregue una copia al demandante. Una carta o una llamada telefanica no
lo protegen. Su respuesta por escrito tiene que estar en formato legal correcto
si desea que procesen su caso en la carte. Es posible que haya un formulario que
usted pueda usar para su respuesta. Puede encontrar estos formularios de la
corte y ma's informaciOn en el Centro de Ayuda de las Cartes de California
(wvvw.courtinfo.ca.gov/selfhelplespanol/), en la biblioteca de leyes de su
condado o en la corte que le quede mas cerca. Si no puede pagar la cuota de
presentacion, pida al secretario de la corte que le de un formulario de exencion
de pago de cuotas. Si no presenta su respuesta a tiempo, puede perder caso por
incumplimiento y la carte le podra guitar su sueldo, dinero y bienes sin mas
advertencia.
Hay otros requisites legales. Es recomendable que llame a un abogado
inmediatamente. Si no conoce a un abogado, puede Ilamar a un servicio de
remision a abogados. Si no puede pagar a un abogado, es posible que cumpla con
los requisitos para obtener servicios legales gratuitos de un programa de
servicios levies sin fines de lucro. Puede encontrar estos grupos sin fines de
lucro en el sitio web de California Legal Services, (www.lawhelpcalifornia.org),
en el Centro de Ayuda de las Cartes de California,
(www.courtinfo.ca.gov/selfhelp/espanol/) o poniendose en contacto con la torte o
el colegio de abogados locales.
The name and address of the court is:
(El nombre y direccion de la corte es): CASE NUMBER:
(Numero del Caso):
Orange County Superior Court, Central Justice 0003335
Center 700 Civic Center Drive West, Santa
Ana, California 92702
The name, address, and telephone number of plaintiff's attorney, or plaintiff
without an attorney, is:
(El nombre, la direccien y el nCimero de telefono del abogado del demandante, o
del demandante que no tiene abogado, es):
Reuben D. Nathan, Esq.
18500 Von Karman Ave., Suite 500, Irvine Calfornia 92612 Tel: (949) 486-1888;
DATE: MAR 0 9 2004 Clerk, by_______________________ , Deputy
(Fecha) (Secretario) (Adjunto)
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(For proof of service of this summons, use Proof of Service of Summons (form
POS-010).)
(Para prueba de entrega de esta citation use el formulario Proof of Service of
Summons, (POS-010)).
NOTICE TO THE PERSON SERVED: You are served
[SEAL] 1. [_] as an individual defendant.
2. [_] as the person sued under the fictitious
name of (specify):
3. [_] on behalf of (specify):
under:
[_] CCP 416.10 (corporation)
[_] CCP 416.20 (defunct corporation)
[_] CCP 416.40 (association or partnership)
[_] CCP 416.60 (minor)
[_] CCP 416.70 (conservatee)
[_] CCP 416.90 (authorized person)
[_] other (specify):
4. [_] by personal delivery on (date):
Page 1 of 1
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SUMMONS
CM-010
FOR COURT USE ONLY
FILED
SUPERIOR COURT OF CALIFORNIA
COUNTY OF ORANGE
CENTRAL JUSTICE CENTER
MAR 09 2004
ALAN SLATER, Clerk of the Court
BY: L. IBAREZ, DEPUTY
CASE NUMBER: 04CC03735
ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, number, and address):
Reuben D. Nathan, Esq. (SBN 2084
AZIMY & NATHAN, LLP
18500 Von Kaltman Ave., Suite 500, Irvine, California 92612
TELEPHONE NO.: (949) 486-1888 FAX NO.: (949) 486-1889
ATTORNEY FOR (Name):
Plaintiffs, PCE Korea, Inc.; Ben Hynes and Jimmy Kim
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SUPERIOR COURT OF CALIFORNIA, COUNTY OF Orange
STREET ADDRESS: 700 Civic Center Drive West
MAILING ADDRESS: 700 Civic Center Drive West
CITY AND ZIP CODE: Santa Ana, California 92702
BRANCH NAME: Central Justice Center
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CASE NAME:
PCE Korea, Inc.; Ben Hynes; Jimmy Kim v. PCE, Inc., et aL,
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CIVIL CASE COVER SHEEET Complex Case Designation
[X] Unlimited [_] Limited [_] Counter [_] Joinder
(Amount (Amount Filed with first appearance by
demanded demanded is defendant (Cal. Rules of Court,
exceeds $25,000) $25,000 or less) rule 1811)
All five (5) items below must be completed (see instructions on page 2).
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1. Check one box below for the case type that best describes this case:
Auto Tort Contract Provisionally Complex Civil Litigation
[_] Auto (22) [X] Breach of contract/warranty (06) (Cal. Rules of Court, rules 1800-1812)
[_] Uninsured motorist (46) [_] Collections (09) [_] Antitrust/Trade regulation (03)
Other PI/PD/WD (Personal Injury/Property [_] Insurance coverage (18) [_] Construction defect (10)
Damage/Wrongful Death) Tort [_] Other contract (37) [_] Mass tort (40)
[_] Asbestos (04) Real Property [_] Securities litigation (28)
[_] Product liability (24) [_] Eminent domain/Inverse [_] Environmental /Toxic tort (30)
[_] Medical malpractice (45) condemnation (14) [_] Insurance coverage claims arising from the
above listed provisionally complex case
[_] Other PI/PD/WD (23) [_] Wrongful eviction (33) types (41)
Non-PI/PDIWD (Other) Tort [_] Other real property (26) Enforcement of Judgment
Unlawful Detainer [_] Enforcement of judgment (20)
[_] Business tort/unfair business
practice (07)
[_] Civil rights (08) [_] Commercial (31) Miscellaneous Civil Complaint
[_] Defamation (13) [_] Residential (32) [_] RICO (27)
[_] Fraud (16) [_] Drugs (38) [_] Other complaint (not specified above) (42)
[_] Intellectual property (19) Judicial Review Miscellaneous Civil Petition
[_] Professional negligence (25) [_] Asset forfeiture (05) [_] Partnership and corporate governance (21)
[_] Other non-PI/PD/WD tort (35) [_] Petition re: arbitration award(11)[_] Other petition (not specified above)(43)
Employment [_] Writ of mandate (02)
[_] Wrongful termination (36) [_] Other judicial review (39)
[_] Other employment (15)
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2. This case [_] is [X] is not complex under rule 1800 of the California
Rules of Court. if the case is complex, mark the factors requiring
exceptional judicial management:
a. [_] Large number of separately represented parties
b. [_] Extensive motion practice raising difficult or issues that will be
time-consuming to resolve
c. [_] Substantial amount of documentary evidence
d. [_] Large number of witnesses
e. [_] Coordination with related actions pending in one or more novel courts
in other counties, states or countries, or in a federal court
f. [_] Substantial post-judgment judicial supervision
3. Type of remedies sought (check all that apply):
a. [X] monetary b. [X] nonmonetary; declaratory or injunctive relief
c. [X] punitive
4. Number of causes of action (specify): Six (6)
5. This case [_] is [X] is not a class action suit.
Date: March 8, 2004
Reuben D. Nathan, Esq. /s/
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(TYPE OR PRINT NAME) (SIGNATURE OF PARTY OR ATTORNEY FOR PARTY)
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NOTICE
o Plaintiff must file this cover sheet with the first paper filed in the
action or proceeding (except small claims cases or cases filed under the
Probate, Family, or Welfare and Institutions Code). (Cal. Rules of Court,
rule 201.8.) Failure to file may result in sanctions.
o File this cover sheet in addition to any cover sheet required by local
court rule.
o If this case is complex under rule 1800 et seq. of the California Rules
of Court, you must serve a copy of this cover sheet on all other parties
to the action or proceeding.
o Unless this is a complex case, this cover sheet will be used for
statistical purposes only. Page 1 of 2
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CIVIL CASE COVER SHEET
FILED
SUPERIOR COURT OF CALIFORNIA
COUNTRY OF ORANGE
CENTRAL JUSTICE CENTER
MAR 09 2004
ALAN SLATER, Clerk of the Court
BY: L. IBAREZ, DEPUTY
Attorneys of Record for Plaintiffs
PERSONAL COMPUTING ENVIRONMENTS KOREA, INC. a.k.a. PCE KOREA, Inc., A
THOUSAND STEPS, INC., BENJAMIN HYNES, and JIMMY KIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF ORANGE, CENTRAL JUSTICE CENTER
Case No: 04CC03735
Judge: Honorable
Dept.
PERSONAL COMPUTING
ENVIRONMENTS KOREA, INC. a.k.a.
PCE KOREA, INC.; A THOUSAND
STEPS, INC., BEN HUNES, JIMMY KIM
vs. COMPLAINT FOR DAMAGES,
INCLUDING PUNITIVE DAMAGES,
INJUNCTIVE RELIEF,
DECLARATORY RELIEF, AND
OTHER EQUITABLE RELIEF
PERSONAL COMPUTING 1. FRAUD & CONCEALMENT
ENVIRONMENTS, INC. a.k.a. PCE, INC. 2. NEGLIGENT MISREPRESENTATION
a.k.a. P---CE COMPPUTERS, INC.; BEN 3. BREACH OF CONTRACT
MOGLIN; ALLAN QUATTRAIN and 4. BREACH OF CONTRACT [UCC ss. 2306]
dOES 1 THROUGH 1000, INCLUSIVE, 5. UNLAWFUL BUSINESS PRACTICES
6. FALSE ADVERTISING
Defendants
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PLAINTIFFS COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
INTRODUCTION
------------
This is a Complaint seeking damages, injunctive relief, equitable relief,
and punitive damages by Plaintiffs against PCE, INC., a Nevada Corporation doing
business in Palm Springs, California, and its principals, Defendants BEN MOGLIN
and ALLAN QUATTRAIN (collectively hereinafter "Defendants").
PARTIES
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1. The within action is brought by PERSONAL COMPUTING ENVIRONMENTS KOREA,
INC. a.k.a. PCE KOREA (hereinafter "PCE KOREA"), a Korean company, A THOUSAND
STEPS. INC. (hereinafter "A THOUSAND STEPS"), a Nevada Corporation, both
registered and qualified to transact business as foreign corporations in
California and its principals BENJAMIN HYNES and JIMMY KIM, residents of the
State of California (hereinafter "Plaintiffs")
2. Defendant, PERSONAL COMPUTING ENVIRONMENTS, INC. a.k.a. PCE, INC.
a.k.a. P--CE COMPUTERS, INC. (hereinafter referred to as "PCE") is being sued as
a business, and is and at all times herein mentioned was a corporation organized
and existing under the laws of the State of Nevada, with its principal place of
business in Palm Springs. California.
3. Defendant, BEN MOGLIN (hereinafter "MOGLIN"), is being sued in his
individual capacity. Plaintiff is informed and believes and thereon alleges that
MOGLIN is and at all times mentioned herein was the agent, employee, and
shareholder of Defendant PCE and in doing the things herein alleged was acting
within the course and scope of such agency, employment, and authority and with
the permission and consent of PCE.
4. Defendant, ALLAN QUATTRAIN (hereinafter "QUATTRAIN"), is being sued in
his individual capacity and as a principal and agent of Defendant PCE. Plaintiff
is informed and believes and thereon alleges that QUATTRAIN is and at all times
mentioned herein was the President of PCE, INC., and was therefore an agent,
employee, and shareholder of Defendant PCE and in doing the things herein
alleged was acting within the course and scope of such agency, employment, and
authority and with the permission and consent of PCE.
2
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
5. Defendants, DOES 1 through 1000, are, and at all times herein
mentioned have been, each considered a "person" pursuant to the Business and
Professions Code Secsions 17201 & 17506. Plaintiff is ignorant of the true names
and capacities of defendants sued herein as Defendant DOES 1 through 1000,
inclusive. Upon ascertaining their true names and capacities, Plaintiff shall
amend this Complaint and state them herein. Plaintiff is informed and believes
and thereon alleges that each of the fictitiously named defendants is
responsible in some manner for the occurrences herein alleged, and that
Plaintiff's damages as herein alleged were proximately caused by their conduct.
STATEMENT OF FACTS
------------------
6. Plaintiffs, BEN HYNES and JIMMY KIM have substantial experience in
marketing and distributing various technologies on the international market,
including the Asian Market and Korea, and have reputable business contacts
sufficient to effectively market and sell computer technologies throughout Asia.
7. Throughout the second quarter of the calendar year 2003, Defendant
PCE, by and through its employees, agents and representatives Defendants MOGLIN
and QUATTRAIN engaged in an ongoing negotiation with Plaintiffs HYNES and KIM
regarding an invention purportedly owned by PCE, which was a 'personal computing
environment' that integrated a balanced ergonomic simulator with a series of
computer monitors and hand-operated controls (the "PRODUCT").
8. Throughout the course of these negotiations, Defendants represented to
Plaintiffs that Defendants had obtained U.S. and international patents for the
PRODUCT and had secured a manufacturing facility in China that would produce the
PRODUCT in mass. Defendants sought an overseas distributor, and began
negotiations with Plaintiffs for that purpose.
9. Discussions between the parties, MOGLIN, QUATTRAIN, HYNES, and KIM
lead to an oral agreement that was reached between Plaintiffs and Defendants in
July 2003 in Newport Beach, California. The terms of the oral agreement were
certain: PCE would supply PCE KOREA and A THOUSAND STEPS, by and through HYNES
and KIM, 500 units of the PRODUCT, sales ready, in or about October 2003. PCE
3
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
KOREA, by and through HYNES and KIM, would have an exclusive distributorship of
the PRODUCT in Asia for twelve months after having received the first PRODUCT
contained within the 500 units from Defendants, and if Plaintiffs could sell
four thousand (4,000) units within the 12 months of receipt of the sales-ready
units, by October 2004, Plaintiffs would then be entitled to an exclusive
distributorship of the PRODUCT in Asia for an indefinite period.
10. In or about July 2003, and concurrently with the oral agreement
referenced above, the parties executed a written licensing agreement,
memorializing the exclusive distributorship undertaken by Plaintiffs and
summarizing briefly some of the terms orally agreed.
11. The written licensing agreement did not contain an integration or
merger clause and was not intended to be the complete agreement or to supersede
the parties' oral agreements.
12. Under the terms of the oral agreement and the written licensing
agreement, and based on the oral representations made by PCE, QUATTRAIN and
MOGLIN that PCE owned the U.S. and International Patents to the PRODUCT, HYNES
and KIM were to pay a $30,000 (thirty thousand dollars) distributor licensing
fee to PCE, QUATTRAIN and MOGLIN to consummate the deal.
13. PCE KOREA, A THOUSAND STEPS, HYNES and KIM thereafter researched the
sales environment and potential marketability of the PRODUCT, making use of
their Asian and other international business contacts to investigate possible
sales channels, gathering resources, establishing and developing contacts and
potential purchasers.
14. During this time period, PCE KOREA, A THOUSAND STEPS, HYNES and KIM
learned that the COMDEX Korea show, an international technology tradeshow, was
to be held in August 2003 in Korea. Based on the oral agreement and on the
ongoing representations made by Defendants about the sales-readiness of the
PRODUCT, and based on the wide scale marketing opportunity it was for Plaintiffs
to market the PRODUCT on the Asian market. Plaintiffs secured a place in the
COMDEX show and undertook over $200,000 in expenses preparing for and staffing
the COMDEX show.
4
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
15. At that time, Plaintiffs paid Defendants the agreed-upon sum of
$30,000 for the distributor licensing fee, thereby purportedly securing
protection against infringement from third parties claiming any right or
ownership to the PRODUCT, and paid Defendants an additional $60,000 for twelve
working units of the PRODUCT for use at the COMDEX Korea tradeshow, and to date
has incurred approximately $50,000 in additional expenses as a result of PCE,
MOGLIN, and QUATTRAIN's inability to perform under their oral agreement.
16. The units of the PRODUCT received by Plaintiffs from Defendants for
the COMDEX Korea tradeshow were not in sales-ready condition. Six of the twelve
did not work at all, for various design and manufacture reasons, and the other
six worked only after significant on-site engineering and technical
troubleshooting.
17. After the completion of the COMDEX Korea tradeshow, Defendants made
continued and ongoing representations that the manufacture of the PRODUCT was in
place, that the problems with the units at the COMDEX show was being resolved at
the manufacture level, and that the U.S. and international patents were secure.
18. Immediately after the COMDEX show, in September 2003 at Huntington
Beach, California, Defendants PCE, QUATTRAIN and MOGLIN presented Plaintiffs,
PCE KOREA, HYNES, and KIM with two pre-drafted documents in the form of a
Memorandum of Understanding (the "MOU") and a Distributor Agreement (the
"Agreement"). True and correct copies of these two documents are attached hereto
and have been filed and served concurrently herewith as Exhibits 1 and 2.
19. At that time, Plaintiffs and Defendants executed the two written
instruments, intended to reflect many of the remaining aspects of their oral
agreement: (1) the MOU, setting forth the basic terms of the prior oral
agreement reached in July, 2003, and (2) the Agreement, memorializing the oral
agreement regarding the exclusivity of Plaintiffs Asian market distributorship.
20. Neither the written MOU nor the distributor agreement contained an
integration or merger clause and neither was intended to be the complete
agreement or to supersede the parties' oral agreements.
5
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
21. PCE, QUATTRAIN and MOGLIN have at all times thereafter failed and/or
refused to deliver the PRODUCT to Plaintiffs. Despite the parties agreement that
500 units would be supplied in October, 2003, no such units were supplied.
Plaintiffs have attempted to have meaningful dialogue with Defendants herein
regarding the necessity of timely delivery of the PRODUCT but, after numerous
conversations in which Defendants herein make additional promises and stall for
more time to complete manufacture of the PRODUCT, no such delivery has been made
to Plaintiffs, despite numerous demands by Plaintiffs. Plaintiffs have never
received any units of the PRODUCT since the COMDEX Korea show, where they had
received 12 non-sales ready units.
22. Plaintiffs have since learned, and are informed and believe and
thereon allege that neither PCE, INC. nor MOGLIN, the purported patent holder,
actually hold any patents to the PRODUCT at all. Rather, Defendants herein have
merely filed patent applications and have intentionally and negligently
misrepresented those patent applications as defensible patents and failed to
disclose the status of the patent applications, instead continuously
representing that U.S. and international patents existed that were sufficient to
form the basis of a licensing agreement.
23. Plaintiff have also since learned, and are informed and believe and
thereon allege, that despite oral and written representations to the contrary,
Defendants have and remain at all times herein unable to manufacture the PRODUCT
to meet Plaintiffs' sales requirements due to the lack of any viable
manufacturing center having been established and/or due to the lack of funds to
establish such a manufacturing facility. Defendants' representations regarding
their ability to provide 500 units of the PRODUCT by October 2003 and to fill
4000 orders in year one under the MOU and Agreement was, were and are a sham
intended to defraud Plaintiffs.
24. Furthermore, Plaintiffs herein allege that PCE, INC. is a defunct
shell company without funds to manufacture, advertise or promote the PRODUCT or
to enter into legitimate contracts with third parties, and without a
patent-protected PRODUCT.
25. Furthermore, Plaintiffs herein allege that PCE is a Nevada corporation
with its principal place of business in Palm Springs, California, but has failed
or refused to register with the California Secretary of State as a foreign
corporation doing business in California.
6
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
26. Furthermore, Plaintiffs herein allege that the advertising materials
produced and circulated by Defendants and received by Plaintiffs contain
demonstrably false information and are and have at all times mentioned herein
have been intended to misrepresent the status of the PRODUCT, of the Defendants'
purported patents and Defendants' prospective earnings for the purpose of
defrauding members of the general public and other potential sources of
investment and distributorship.
27. As a result of the intentional and negligent misrepresentations of
Defendants herein, and as a result of the unfair and unlawful business practices
and breaches of contract as alleged herein, Plaintiffs PCE KOREA, A THOUSAND
STEPS, HYNES and KIM have suffered pecuniary losses, injury to business
contacts, loss of reputation, loss of income, and have been defrauded out of
cash tendered to and received by Defendants herein.
28. Furthermore, Plaintiffs herein seek actual and punitive damages,
declaratory relief and an injunctive order of the Court refraining Defendants,
and each of them, from continuing to engage in the unlawful practices alleged
herein.
JURISDICTION AND VENUE
----------------------
29. This Court has jurisdiction over this action pursuant to California
Code of Civil Procedure Section 410.10 and California Business and Professions
Code Sections 17203, and 17204, which allows enforcement in any court of
competent jurisdiction. The California Supreme Court has jurisdiction over this
action pursuant to California Constitution Article VI Section 10, which grants
the Superior Court "original jurisdiction" in all cases except those given to
other trial courts."
30. This Court has jurisdiction over the Defendants, and each of them,
based on information and belief each is an natural person or a business entity
that has sufficient minimum contacts in California, or is otherwise
intentionally availing him/her/itself of the benefits of California, or is
otherwise a citizen of the State of California.
31. Venue is proper in the Orange County Superior Court, Central Justice
Center pursuant to California Civil Code of Procedure Sections 395. 395(b), and
395.5. because one of the defendants has contracted to perform an obligation
wherein the contract was 'in fact' entered into in the County of Orange, or one
7
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
or more of the defendants are registered to do business in the State of
California, one or more of the defendants principal place of business is located
in the County of Orange, one or more of the defendants are doing business is the
County of Orange, and/or one or more of the violations alleged in this complaint
arise in the County of Orange.
FIRST CAUSE OF ACTION
---------------------
FRAUD and CONCEALMENT
(By ALL PLAINTIFFS against ALL DEFENDANTS)
32. Plaintiffs hereby incorporate by reference, the allegations set forth
in paragraphs 1 through 31 of this Complaint, as if fully set forth herein.
33. Throughout the second quarter of the calendar year 2003 until the
present, Defendant PCE, by and through its duly authorized agents, employees,
principals and/or shareholders MOGLIN and QUATTRAIN falsely and fraudulently
represented to Plaintiffs that PCE owned U.S. and international patents to the
PRODUCT sufficient for Plaintiffs to pay Defendants $30,000 as consideration for
a licensing agreement.
34. Throughout the second quarter of the calendar year 2003 until the
present, Defendant PCE, by and through its duly authorized agents, employees,
principals and/or shareholders MOGLIN and QUATTRAIN falsely and fraudulently
represented to Plaintiffs that PCE had established a manufacturing base
sufficient to supply at least 4000 units of the PRODUCT for sale within 12
calendar months and that Plaintiffs could rely on PCE's ability to manufacture
sufficient units of the PRODUCT to warrant the expenditure by Plaintiffs of over
$300,000 marketing the PRODUCT at the COMDEX Korea 2003 tradeshow and
establishing sales channels in Asia for the PRODUCT.
35. These representations made by Defendants as set forth above were
false. The true facts at all relevant times herein are that Defendants, and each
of them, had never secured patents to the PRODUCT and had only submitted patent
applications, and had never established a manufacturing base, in China or
otherwise, sufficient to meet Defendants obligations under the oral agreement
and the various written agreements between Plaintiffs and Defendants.
36. Defendants herein, and each of them, at all times herein concealed and
intentionally failed to disclose that the patent applications for the PRODUCT
had not yet been perfected, and instead continued to represent that the PRODUCT
had U.S. and international patents and continued to allow Plaintiffs to rely on
8
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
such representations, even while Defendants knew and intentionally concealed the
falsity thereof for the purpose of inducing Plaintiffs' reliance thereon.
37. Defendants, and each of them, at all times herein concealed and
intentionally failed to disclose that no manufacturing base for the PRODUCT had
been established, and instead continued to represent that the PRODUCT was being
manufactured and would be supplied to Plaintiffs as required for the purpose of
inducing Plaintiffs' reliance thereon.
38. When Defendants, and each of them, made these representations,
Defendants knew them to be false and made these representations with the
intention to deceive and induce Plaintiff to act in reliance on these
representations in the manner hereafter alleged, or with the expectation that
plaintiff would so act.
39. Further, Defendants suppression of the fact that Defendants had not
yet obtained patents for the PRODUCT and had not yet established a manufacturing
center for the PRODUCT was likely to mislead Plaintiffs and did in fact mislead
Plaintiffs, who acted in reliance on these representations in paying over
$90,000 in licensing and product fees and expended over $250,000 additional
dollars marketing the PRODUCT at the COMDEX show.
40. The representations and failure to disclose information and
suppression of information herein alleged to have been made by Defendants
concerned material facts and were made with the intent to induce the Plaintiffs
to act in a manner herein alleged in reliance thereon.
41. Plaintiffs were, at the time these representations were made by
Defendants, and each of them, and at the time Plaintiffs took the actions herein
alleged, ignorant of the falsity of Defendant's representations and existence of
the suppression of information by Defendants and Plaintiffs believed them to be
true. Should Plaintiffs have known of the actual facts, and the existence of the
facts suppressed by the Defendants, then Plaintiffs would not have taken such
actions.
42. As a proximate result of the fraudulent conduct of Defendants as
herein alleged, Plaintiffs suffered damages, including pecuniary losses,
expectation losses, losses of profits, loss of reputation, injury to Plaintiffs'
contacts, and other and additional damages as may be proved at the trial of this
matter.
43. The aforementioned conduct of Defendants was an intentional
misrepresentation, deceit, and suppression and/or concealment of a material fact
known to the Defendants with the intention on the part of the Defendants of
thereby depriving Plaintiff of property or legal rights or otherwise causing
9
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
injury and was despicable conduct that subjected Plaintiff to a cruel and unjust
hardship in conscious disregard of Plaintiff's rights, so as to justify an award
actual damages in excess of $400,000.00 and exemplary and punitive damages.
SECOND CAUSE OF ACTION
----------------------
NEGLIGENT MISREPRESENTATION
(By ALL PLAINTIFFS against ALL DEFENDANTS)
44. Plaintiff hereby incorporates by reference, the allegations set forth
in paragraphs 1 through 43 of this Complaint, as if fully set forth herein.
45. Throughout the second quarter of the calendar year 2003 until the
present, Defendant PCE, by and through its duly authorized agents, employees,
principals and/or shareholders MOGLIN and QUATTRAIN falsely and fraudulently
represented to Plaintiffs that PCE owned U.S. and international patents to the
PRODUCT sufficient for Plaintiffs to pay Defendants $30,000 as consideration for
a licensing agreement.
46. Throughout the second quarter of the calendar year 2003 until the
present, Defendant PCE, by and through its duly authorized agents, employees,
principals and/or shareholders MOGLIN and QUATTRAIN falsely and fraudulently
represented to Plaintiffs that PCE had established a manufacturing base
sufficient to supply at least 4000 units of the PRODUCT for sale within 12
calendar months and that Plaintiffs could rely on PCE's ability to manufacture
sufficient units of the PRODUCT to warrant the expenditure by Plaintiffs of over
$300,000 marketing the PRODUCT at the COMDEX Korea 2003 tradeshow and
establishing sales channels in Asia for the PRODUCT.
47. These representations made by Defendants as set forth above were
false. The true facts at all relevant times herein are that Defendants, and each
of them, had never secured patents to the PRODUCT and had only submitted patent
applications, and had never established a manufacturing base, in China or
otherwise, sufficient to meet Defendants obligations under the oral agreement
and the various written agreements between Plaintiffs and Defendants.
48. Defendants herein, and each of them, at all times herein knew or
should have, in the exercise of reasonable care and/or due diligence, known of
the falsity of the statements made, i.e. that the patent applications for the
PRODUCT had not yet been perfected and applications had merely been filed, no
patents having issued, no manufacturing base having been established. Instead,
Defendants continued to represent that the PRODUCT had U.S. and international
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
patents and continued to allow Plaintiffs to rely on such representations, while
Defendants knew or should have known of the falsity thereof.
49. Defendants, and each of them, at all times herein knew or should have
known that no manufacturing base for the PRODUCT had been established, and
instead continued to represent that the PRODUCT was being manufactured and would
be supplied to Plaintiffs as required, as a material inducement intended to
bring about reliance on the part of the Plaintiffs and resulting in such
reliance by Plaintiffs on these specific statements by Defendants.
50. When Defendants, and each of them, made these representations,
Defendants knew or should have, in the exercise of ordinary care, known them to
be false and made these representations with the intention to deceive and induce
Plaintiff to act in reliance on these representations in the manner hereafter
alleged, or with the expectation that plaintiff would so act.
51. Further, Defendants suppression of the fact that Defendants had not
yet obtained patents for the PRODUCT and had not yet established a manufacturing
center for the PRODUCT was likely to mislead Plaintiffs and did in fact mislead
Plaintiffs, who acted in reliance on these representations in paying over
$90,000 in licensing and product fees and expended over $250,000 additional
dollars marketing the PRODUCT at the COMDEX show.
52. The representations and failure to disclose information and
suppression of information herein alleged to have been made by Defendants
concerned material facts and were made negligently with the intent to induce the
Plaintiffs to act in a manner herein alleged in reliance thereon.
53. Plaintiffs were, at the time these representations were made by
Defendants, and each of them, and at the time Plaintiffs took the actions herein
alleged, ignorant of the falsity of Defendant's representations and existence of
the suppression of information by Defendants and Plaintiffs believed them to be
true. Should Plaintiffs have known of the actual facts, and the existence of the
facts suppressed by the Defendants, then Plaintiffs would not have taken such
actions.
54. As a proximate result of the negligent misrepresentations of
Defendants as herein alleged, Plaintiffs suffered damages, including pecuniary
losses, expectation losses, losses of profits, loss of reputation, injury to
Plaintiffs' contacts, and other and additional damages as may be proved at the
trial of this matter.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
55. The aforementioned conduct of Defendants was a misrepresentation,
deceit, and suppression and/or concealment of a material fact known, or which
should have been known in the exercise of ordinary care, to the Defendants with
the intention on the part of the Defendants of thereby depriving Plaintiff of
property or legal rights or otherwise causing injury and was despicable conduct
that subjected Plaintiff to a cruel and unjust hardship in conscious disregard
of Plaintiff's rights, so as to justify an award actual damages in excess of
$400,000.00 and exemplary and punitive damages.
THIRD CAUSE OF ACTION
---------------------
BREACH OF CONTRACT
(By ALL PLAINTIFFS against ALL DEFENDANTS)
56. Plaintiff hereby incorporates by reference, the allegations set forth
in paragraphs 1 through 55 of this Complaint, as if fully set forth herein.
57. On or about July, 2003, Plaintiffs and Defendants entered into an oral
agreement according to the terms set forth in paragraphs 6 through 12 of this
Complaint.
58. On or about July, 2003, Plaintiffs and Defendants entered into a
written licensing agreement under the terms discussed and referenced in
paragraph 12 of this Complaint, memorializing some of the terms orally agreed.
59. On or about September 2003, Plaintiffs and Defendants entered into a
written Memorandum of Understanding and Distributor Agreement, under the terms
discussed and referenced in paragraphs 9 and 18 of this Complaint.
60. None of the written instruments at issue herein were intended to
supersede the oral agreements reached between the parties, and were instead
intended to memorialize some of the terms reached throughout the Parties'
negotiation and oral agreement.
61. Defendants received over $90,000 in consideration from Plaintiffs in
consummation of the agreements.
62. Defendants were obligated, under the various agreements, to supply 500
sales ready units of the PRODUCT to Plaintiffs not later than October 2003.
63. Defendants failed or refused to supply any of the units required under
the agreement and have failed or refused to so perform to this day, thereby
breaching their agreement.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
64. Defendants entered into a written licensing agreement with Plaintiffs
but failed or refused to secure the patents required to license their PRODUCT,
and thereby Defendants breached the licensing agreement.
65. The various breaches of Defendants have resulted in pecuniary losses,
losses of opportunity, loss of business reputation, injury to contacts, loss of
profits and Plaintiffs have been so damaged in an amount in excess of
S400,000.00 as a result of Defendants' breaches.
FOURTH CAUSE OF ACTION
----------------------
Breach of Contract UCC Section 2306
(By ALL PLAINTIFFS against ALL DEFENDANTS)
66. Plaintiff hereby reasserts and incorporates by reference the
allegations set forth in paragraphs 1 through 65 of this Complaint, as if fully
set forth herein.
67. The transactions and agreements at issue in this complaint all
concerned transactions in goods as defined by the UCC.
68. Under the terms of the agreements between the parties, Defendants were
obligated to manufacture and deliver 500 sales-ready units of the PRODUCT to
Plaintiffs not later than October 2003.
69. This figure of 500 sales-ready units was a minimum that was agreed to
by the parties as an appropriate starting figure for Plaintiffs to reach the
target of 4,000 unit sales by October, 2004.
70. Defendants failed to deliver any of the PRODUCT to Plaintiffs as
required under the agreement to be delivered in October and have continued to
fail or refuse since that time up until the present.
71. Defendants' failure or refusal to perform their obligations under the
agreements, has caused Plaintiffs to suffer pecuniary losses, lost profits in an
amount exceeding S400,000.00, not including loss of reputation, and injury to
business contacts in an amount to be determined at the trial of this matter.
FIFTH CAUSE OF ACTION
---------------------
UNLAWFUL BUSINESS PRACTICES
(By ALL PLAINTIFFS against ALL DEFENDANTS)
72. Plaintiff hereby reasserts and incorporates by reference the
allegations set forth in paragraphs 1 through 71 of this Complaint, as if fully
set forth herein.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
73. Plaintiffs bring this action pursuant to California Business and
Professions Code Section 17204, and California Code of Civil Procedure Sections
1021 and 1021.5 as private attorneys general on behalf of themselves, and for
the benefit of the general public.
74. Plaintiffs are citizens of the State of California. Plaintiffs, are
individuals and business entities duly organized under the laws of the State of
California, and are "persons" pursuant to the Business and Professions Code
Sections 17204.
75. Plaintiff is informed and believes that Defendant, PCE, INC. is, and
at all times herein mentioned has been, a "person" pursuant to the Business and
Professions Code Sections 17201 & 17506. PCE is, and at all times mentioned was,
a corporation, incorporated and organized under existing laws of the State of
Nevada with its principal place of business in Palm Springs, California.
76. Plaintiff is informed and believes that Defendant QUATTRAIN is, and at
all times herein mentioned has been, a "person" pursuant to the Business and
Professions Code Sections 17201 & 17506. Plaintiff, is informed and believes and
thereon alleges that defendant QUATTRAIN was the agent, employee, and President
of defendant, PCE. INC., and in doing the things herein alleged was acting
within the course and scope of such agency, employment, and authority and with
the permission and consent of his co-Defendant(s). QUATTRAIN is subject to
personal liability for the practices at issue herein pursuant to Business and
Professions Code Section 17095.
77. Plaintiff is informed and believes that Defendant MOGLIN is, and at
all times herein mentioned has been, a "person" pursuant to the Business and
Professions Code Sections 17201 & 17506. Plaintiff, is informed and believes and
thereon alleges that defendant QUATTRAIN was the agent, employee, and President
of defendant, PCE, INC., and in doing the things herein alleged was acting
within the course and scope of such agency, employment, and authority and with
the permission and consent of his co-Defendant(s). QUATTRAIN is subject to
personal liability for the practices at issue herein pursuant to Business and
Professions Code Section 17095.
78. At all times herein mentioned and continuing to the present time,
Defendants have violated California Business and Professions Code Section 17200
et seq. by engaging in unlawful activities in violation of California statutory
law in conjunction with and/or as a part of their business activities, as set
forth below.
79. Defendant PCE, INC. is a Nevada Corporation doing business in
California, with its principal place of business in Palm Springs, California.
However, PCE, INC. has, at all times mentioned herein, failed and/or refused to
comply with Corporation Code Section 2105 in failing to secure or obtain a
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
certificate of qualification to conduct business in the State of California.
PCE, INC. is, therefore, not qualified to do business in the State of
California.
80. Defendant PCE, INC. has also therefore violated Corporations Code
Section 2258 by engaging in the unauthorized transaction of intrastate business
within the State of California without being a duly registered foreign
corporation in good standing.
81. Defendant PCE, INC. has also failed or refused to comply with the
requirements of Corporation Code Section 1505 by designating a corporate agent
for service of process that has not filed a statement required under Section
1505.
82. These unlawful business practices are illustrative of the kind of
fraudulent, deceitful and illegal conduct and business activities engaged in by
Defendants herein, which conduct will likely continue unless otherwise
restrained by an injunctive order of this Court.
83. Unless restrained by a preliminary and permanent injunction of this
Court, Plaintiffs' injury will continue to be immediate and irreparable.
Plaintiffs have no other plain, speedy, and adequate remedy at law, and it will
be impossible to determine the precise amount of damage that Plaintiffs will
continue to suffer if Defendants' conduct is not restrained.
84. If Plaintiff, succeeds in enforcing the rights affecting the Plaintiff
and public interest under California Civil Code of Procedure Section 1021.5,
then attorneys' fees and costs may be awarded because:
(a). A significant benefit has been conferred on a large class of persons
within the general public;
(b). The action has resulted in the enforcement and vindication of an
important right affecting the public interest;
(c). The necessity and financial burden of private enforcement are such as
to make the award appropriate; and
(d). The fees should not be paid out of any recovery.
SIXTH CAUSE OF ACTION
---------------------
FALSE ADVERTISING
[Business and Professions Code Section 17500, et seq.]
(By ALL PLAINTIFFS against ALL DEFENDANTS)
85. Plaintiff hereby reasserts and incorporates by reference the
allegations set forth in paragraphs 1 through 84 of this Complaint, as if fully
set forth herein.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
86. Beginning at an exact date unknown to Plaintiff but least since July,
2003, Defendants PCE, QUATTRAIN and MOGLIN have committed acts of untrue and
misleading advertising, as defined by Business and Professions Code Section
17500, by engaging in the following acts or practices with the intent to induce
potential investors/distributors to enter into contractual business relations
with said Defendants, in furtherance of Defendants' business.
87. Publicly disseminating printed advertising and marketing materials
that include false and unsubstantiated statements regarding projected earnings
of the Defendants' business for the purpose of artificially inflating the value
of the Defendants' business to mislead potential investors and strategic
partners.
88. The acts of untrue and misleading advertising described herein present
a continuing threat to members of the general public who have no other remedy at
law or in equity. If this Court does not issue an injunctive order restraining
Defendants from making such unlawful false and misleading advertising,
irreparable harm will occur to members of the general public.
89. Plaintiff is informed and believes, based on information and belief,
that the defendants, and each of them, engaged in issuing publicly disseminated
material alleged herein with the intent to directly or indirectly dispose of the
property and/or perform the services described herein and/or induce the general
public to enter into an obligation relating to the property and/or the services
described herein.
90. Defendants, and each of them, knew, or by exercise of reasonable care
should have known, that failing to provide accurate and meaningful disclosures
concerning specific financial statements regarding profits herein alleged were
untrue or misleading, and in turn violated California Business and Professions
Code Sections 17500 et seq..
91. Defendants, and each of them, will continue to engage in untrue and
misleading advertising, as alleged above, in violation of Sections 17500 et seq.
of the Business and Professions Code, thus producing a multiplicity of judicial
proceedings, unless this Court restrains defendants from continuing to harm the
general public.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
92. Injunctive relief, restitution, and disgorgement of profits, is
specifically authorized for violations of California Business and Professions
Code Sections 17500 & 17535.
93. According to California Code of Civil Procedure Section 1021.5,
attorney's fees may be awarded to Plaintiff, as the action will result in the
enforcement of important rights affecting the public interest, because:
(a) A significant benefit will be conferred on the general public or a
large class of persons;
(b) The necessity and financial burden of private enforcement are such as
to make an award of attorneys' fees appropriate; and,
(c) The attorneys' fees will not in the interest of justice be paid out of
the recovery, if any.
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF
PRAYER FOR RELIEF
-----------------
WHEREFORE, Plaintiffs PCE KOREA, A THOUSAND STEPS, BENJAMIN HYNES and JIMMY
KIM pray for relief as follows:
1. For actual damages;
2. For punitive damages;
3. For exemplary damages;
4. That this Court issue an affirmative injunctive orders as follows:
a. Restraining Defendants, and each of them, from making false statements
regarding, Defendants' purported ownership of U.S. and International
patents to the PRODUCT to third parties:
b. Restraining Defendants, and each of them, from making false statements
regarding Defendants' purported ability to manufacture sales-ready
units of the PRODUCT to third parties;
c. Restraining Defendants from publicly disseminating advertising
materials making false and misleading statements regarding
unsubstantiated prospective earnings of Defendants:
5. For attorney's fees and costs of suit incurred by Plaintiffs herein;
6. For any such other and/or further relief the Court deems proper.
Respectfully Submitted,
Dated: March 8, 2004 AZIMY & NATHAN, LLP
By: /s/ Reuben D. Nathan
--------------------------------
Reuben D. Nathan, Esq.,
Attorneys for Plaintiffs,
PERSONAL COMPUTING
ENVIRONMENTS, INC. a.k.a. PCE
KOREA, INC., A THOUSAND STEPS,
BENJAMIN HYNES and JIMMY KIM
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PLAINTIFF'S COMPLAINT FOR DAMAGES, INJUNCTIVE AND EQUITABLE RELIEF