Eyes on the Go, Inc. (AXCG)

[skietz]

Looks like Counter suit by Auctus dismissed???

https://www.pacermonitor.com/public/case/19436584/Eyes_on_the_Go_NY,_INC_v_Auctus_Private_Equity_Fund,_LLC_et_al#

Wednesday, May 03, 2017
48 order Order on Motion to Dismiss Wed 2:33 PM
Judge Richard G. Stearns: ELECTRONIC ORDER entered granting34 Motion to Dismiss WITHOUT PREJUDICE. The counterclaims of Auctus Private Equity Fund arise out of a penny-stock investment gone bad. Counterdefendant Eyes On the Go NY, Inc. developed a business model offering consumers online streaming of live and recorded video and audio from social venues such as bars, restaurants, performance spaces, and clubs. In July of 2014, Auctus, for approximately $56,000, purchased from Eyes a promissory note convertible into 8% of Eyes common stock. See Counterclaims Exs. A (Purchase Agreement) & B (Note). Under the Note, Auctus could elect to be repaid the principal with interest, or to convert the note or a portion thereof, for shares in Eyes. In September of 2014, Auctus purchased a second convertible note from Eyes on the same terms as before. See Counterclaims Ex. C (Purchase Agreement) & D (Note). In January of 2015, Auctus converted approximately $6,500 of unpaid principal and interest from the July note into Eyes shares. See Counterclaims Ex. E. Auctus alleges that Eyes has failed to make repayments under the terms of the notes. Auctus also alleges that Eyes, to induce Auctus to make the investments, materially misrepresented its operation, finances, and future prospects. Auctus asserts, against Eyes and several other entities and individuals it alleges as "control persons" of Eyes, claims for securities fraud under federal (Count I) and state (Count II) law; breach of contract (Count III) and the implied covenant of good faith and fair dealing (Count IV); unjust enrichment (Count V); breach of fiduciary duty (Count VI); fraud (Count VII); negligent misrepresentation (Count VIII); fraudulent conveyance (Count IX); violations of the Massachusetts Unfair Business Practices Act (Count X); civil conspiracy (Count XI); and accounting (Count XII). For purposes of its motion to dismiss, Eyes does not challenge the breach of contract claim. Eyes contend, and the court agrees, that Auctus has not adequately pled the core of its remaining claims, that is, Eyes' alleged misrepresentation(s). Under Fed. R. Civ. P. 9(b), "n alleging fraud..., a party must state with particularity the circumstances constituting fraud." Likewise, under the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4(b), "the complaint shall specify each statement alleged to have been misleading, [and] the reason or reasons why the statement is misleading." Although Auctus identifies certain statements made by Eyes about the health of its business over the course of the parties' dealings, Auctus does not identify what, if any, aspect of these statements was false, or explain "the reason or reasons why the statement [was] misleading." Because the Counterclaims contain no factual allegations as to the actual state of Eyes' business affairs or the alleged speakers' knowledge, the court cannot infer that any untrue statements were made with the requisite scienter. See In re Genzyme Corp. Sec. Litig. , 754 F.3d 31, 40 (1st Cir. 2014) ("To state a claim for securities fraud under Section 10(b), a plaintiff must allege: (1) a material misrepresentation or omission; (2) scienter, or a wrongful state of mind; (3) in connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation."). Auctus's claims for negligent misrepresentation and under the Securities Act § 12(2), 15 U.S.C. §77l(a)(2), to the extent that they do not sound in fraud, but see N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale , 567 F.3d 8, 15 (1st Cir. 2009) ("[T]he case law here and in other circuits reads Rule 9(b) expansively to cover associated claims where the core allegations effectively charge fraud."), also falter because the Counterclaims do not specifically identify the materially misleading statements or omissions upon which Auctus purportedly relied. Because misrepresentation is also the only basis for the claims of breach of fiduciary duty, civil conspiracy, and violations of the Unfair Business Practices Act, these too will be dismissed as inadequately pled. Finally, the court will also dismiss Auctus's claims for unjust enrichment and an accounting. Auctus's breach of contract claim provides an adequate legal remedy for the sole damages alleged in the Counterclaims - those incurred through Eyes' alleged default on the two notes. See Santagate v. Tower , 64 Mass. App. Ct. 324, 329 (2005) ("An equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law."). (RGS, int2)