Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
What don't you understand about PRODUCING?
This is the part that ABSOLUTELY ASTOUNDS ME !!!
I am INSULTED that Ken thinks we are so stupid
that he can pretend he doesn't have results yet.
Notice how in the PR, they did not state the most important aspect of a purchase like this: The QUANTITY. ... Sure these wells are producers ...
So many investors got MAULED by this stock going from 25 cents last spring to the basement where it has been langishing the last 6 months.
Please share your HORROR stories.
Maybe this company needs a cartoon character mascot for COMIC RELIEF and to cheer things up on this gloomy board!
I can name probably 20 mining/exploration penny stocks that ran up on anticipation of spring/summer/fall drilling results and then sunk like KATX when the results did not hit the homeruns people had piled in for.
If Gump’s bizarre theory was correct, i.e. that the MM’s got caught selling on the way up in the runups from last year and then somehow did not cover/square their books since then and now need to do so, we would be seeing these large block trades going off all across penny land last week.
AND THAT SIMPLY JUST HAS NOT HAPPENED!
As I pointed out several times, it is ridiculous to think that any MM who was on the other side of the rules would square up, by making BIG, BODACIOUS, “HEY LOOK AT WHAT I’M DOING” trades that stick out and scream to be noticed. That explanation should be insulting to anyone with even the least ability to think critically and who also has any real experience in this area.
Like sort of clandestine, secretive, and devious. If it is based on inside information it is illegal. I think it's inter-market makers continuing to juggle and clean their books for the upcoming new rules starting Monday. I think that a lot of them had built a big short position by abusing their own rules on covering. Now who is on the sell side ?? Perhaps the Financiers. The trades are obviously pre-arranged. And who has large amounts of stock ?
6.After the pump and dump was over in June Ken stopped talking and emailing investors! What does this tell you kool-aid drinkers? It tells me everything I need to know.
shaddrack
Tuesday, February 01, 2011 11:13:18 AM
Re: scubastevemd post# 5071 Post # of 5129
I spoke to Stanley Wunderlich yesterday from I.R. We talked for ten minutes and I am very happy with our conversation. The non-believers will be silenced very soon. Anyone looking for cheap shares will have to be in soon or miss the boat. Call him yourself to verify. He is a nice guy with his ducks in a row. I am impressed with what they are doing in a short time. Gl
investorshub.advfn.com/boards/read_msg.aspx?message_id=59401414
shaddrack
Tuesday, February 01, 2011 11:35:12 AM
Re: Akec post# 5073 Post # of 5129
Everything promised to us will come to fruition very soon. Hang tight and buy if you can. I purchased 40k more yesterday and will be looking to add the rest of the week! Stanley is a respectable man and I am pleased with our conversation. Call him if you have any questions. He called me back within two hours. We about to be GOLDEN soon! Gl
investorshub.advfn.com/boards/read_msg.aspx?message_id=59403058
To me it is just patently absurd to claim that Ken Stead conspired in some elaborate lie about Handcamp when in the 8k it is exclaimed to the world in full detail that previous work was performed.
8k excerpt:
All of the drill holes successfully intersected alteration and mineralization associated with the Property. Estimated true widths of the mineralized zone intersected vary from 15 to 50m. The structure was tested to a vertical depth of 185m, or approximately 135m below intersections completed during previous drilling by US Borax and Falconbridge along the Property.Anomalous values of gold, silver, lead and zinc were intersected in all of the holes.
I glad you finally realize that you have only you to blame for your results. You decided who to listen to. If you listened to the pumpers, shame on you. You decided when to buy and sell.
I have not found one hard, real example where Ken Stead has intentionally, purposely lied to me.
If anything, I've seen how the "Ken lied" crowd always ranted how the PR's were not "pumpy" enough. How irrational is that?
THE ONE MILLION SHARE TRADES
My post from days ago:
The way the standing bid (0.24) and ask (.027) were split and the trade occurred at .0257 indicates to me that a marker maker jumped on this one and swallowed up the lot whole. Who else could "see" the order when it came in and then raise their bid up to .0257? Not Joe Retail!
I hope Ken Stead DOES NOT give one single solitary update during the next month or two so more investors who in my opinion need to go "BYE, BYE", do so.
As far as me responding to what I consider irrational noise, sorry, I can't be bothered.
Another really nice day of very steady accumulation in KATX. All the weak hands keep going bye, bye and shares are accumulating into the strong hands.
The third 1 million share buy lot in the last week just went off. Someone is very confidant that good things await.
Why too much of it is just baseless noise without any basis in fact whatsoever. If you are happy with that fine. Some of us are not.
680,000 magnets have quite a force of attraction. Putting a stop in this close is the equivalent to coating yourself with chum before swimming off the Great Barrier Reef.
Say "Bye, bye".
I'm at the ready to take advantage of this.
Thank you for Alan and usafa for exposing another attempt at spreading more flat out false statements. It is truly bizarre and puzzling why some seem to spend all their time trying to constantly spread them against this company and it's honest and truthful CEO.
The comparison against that other company Goldcliff Resources is shocking. I would not touch that stock with a 50 foot pole with the outrageous waste and abuse of investor's monies.
And as far as KAT reporting information, regulatory laws state that the disclosure of information is for INVESTORS. If you are not an INVESTOR or potential INVESTOR, then you are a NON-ENTITY as far as being owed any information. You have no right to complain or demand. ZIP, ZERO, NONE!
I'm somewhat confused by what you've posted. You said you'll be adding in the coming weeks but also expect more dilution.
So why would you not wait till the expected dilution lowers the share price before adding? What am I missing?
Funny how do you think BVIG got their money in the first place to drill? Off course we know about the $100,000 grant but the rest came from -wait for it- KATX.
THE ONE MILLION SHARE TRADE
yes, somebody no longer wanted their 1 million shares and another was only to happy to buy them.
Some of what you claim as facts are just baseless noise.
They drill 2 holes in RR. If they had more cash would they have drilled more?
How about HC phase 2. If they had more cash would they not have lent BVIG the cash to drill more?
AS a matter of fact everyone said the weather did not hamper work.
I hope this works out for everyone mostly the employees who did not get paid they have no say!!!in this economy no one needs that type of pressure...
Sell some antimony and pay the people!!!
However, I don't repeatedly post the same concerns daily, week after week. Say your piece and then leave it be.
Inspar's Response to Motion to Dismiss
This is an OCR recreation from the court filed pdf document, so there a few reconition typos scattered about.
Case 4:10-cv-05086 Document 10 Filed in TXSD on 02/10/11
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KENT WEISENBERG AND §
INSPAR FIELD SERVICES, LLC §
Plaintiffs §
vs., § CIVIL ACTION NO. 4:l0-cv-05086
PLANET RESOURCE RECOVERY, §
INC., KURT NEUBAUER §
Defendants
PLAINTIFFS' RESPONSE TO MOTION TO DISMISS
TO THE HONORABLE UNITED STATES DISTRICT COURT:
COMES NOW, Plaintiffs Kent Weisenberg and Inspar Field Services, LLC and file this
Response to the Motion to Dismiss (the "Motion") (Docket No. 6) filed by the Defendants,
Planet Resources Recovery, Inc. ("Planet") and Kurt Neubauer ("Neubauer") and would
respectfially show as follows:
At its heart, this case involves the Defendants' fraud in connection with a securities
transaction. By virtue of an Asset Purchase Agreement (Exhibit A to the Motion), the
Plaintiffs conveyed a number of patents and intellectual property in exchange for restricted
stock in Planet. The consideration was set out specifically in the Asset Purchase Agreement
as follows:
3. lbs Purchaser shall issue lie Seller 15,000,000 shares of restdcted comjaoa stock of the
Purchaser (the "Shares" or the "Common Stock") in consideratipii for the Assets and
the Weisenberg Assets. The Paities agree that "the Purchase Price for the Assets wil! he
allocated among the Assets as follows suhject to required adjustments that are nratually
agreed upon by the Partiies:
i. Business Equipment, Inventory and packaging, outstanding biisiness
cDntracts, BoolcSj records and files. Trade marks and trade names.
Goodwill and Patents.
The term "Assets" and "Weisenberg Assets" were specifically identified in the Asset Purchase
Agreement, but consist primarily of these patents and intellectual property.
2. Additionally, in connection with the Asset Purchase Agreement, the following people
received stock as a part of this transaction:
2.1. Dudley Primeaux - 1,500,00 shares
2.2. Emil Pena- 750,000 shares
2.3. John Nixon -- 750,000 shares
2.4. Barbara A. Hoekstra Revocable Trust - 642,857 shares
2.5. Mark Alan Ragen - 35, 714 shares
2.6. Sheila M. Wales - 35,714 shares
3. This is the only consideration supporting the Asset Purchase Agreement. After the purchase
of the Assets, Planet set up a subsidiary corporation, Inspar Robotic Technologies, Inc.
("IRT"), to hold the Assets and assume business using the Assets. Weisenberg was
appointed as the CEO of IRT and signed an employment agreement with IRT. In its brief
existence. Planet did infuse some money into IRT (although not near the amount needed or
promised). This is the money that the Defendants refer to as "working capital".' That money
1 This is a disputed issue in this case. While the Defendants claim (without evidence or support) that they infused
approximately $1,000,000 into IRT, the evidence will show, when Planet is forced to produce its books and records,
that this is a false statement. More than half of this is in arrears to employees and vendors. More than 10% of the
was used to pay certain bills of IRT and salaries of the employees of IRT. That money was
completely controlled by Planet and Neubauer, who never gave Weisenberg any independent
authority to make payments on IRT's behalf. But more importantly, the working capital had
NOTHING to do with the Asset Purchase Agreement or the consideration thereunder.
4. It was then learned that through a systematic scheme designed to artificially inflate the value
of Planet's stock, the Defendants disseminated a substantial amount of false information to
the Plaintiffs, as"wells as to the investing public. That information is detailed in the
Plaintiffs' Original Petition (Docket No. 1) as amended by the Plaintiffs' First Amended
Petition (Docket No. 9). The Plaintiffs identify the information, the speaker, the timing, and
how it ended up all being one big lie. There is no question that the Defendants are on notice
of the specific claims being made against them. There is no question that the Plaintiffs' live
petition meets the specificity requirements of the federal securities laws as well as Rule 9 of
the Federal Rules of Civil Procedure.
5. Yet, the Defendants filed the Motion arguing that: (1) there was a failure to name necessary
parties, namely the people listed in Paragraph 2 herein; (2) there was a failure to join required
parties in the form of undisclosed recipients of payments from IRT; (3) failure to name Tim
Williams; (4) failure to plead fraud with particularity; (5) failure to plead a proper claim
under the securities act; and (6) failure to attend mediation.
Failure to Join Necessary Parties - Stock Recipients or the "Additional Shares "
6. Defendants' first argument regarding the failure to join all people who received Planet stock
money they paid went to the salaries of Planet officers.
2 In fact, even as the CEO of IRT, Weisenberg was only given a company debit card with a $500 limit. Weisenberg
was permitted to make payments on his own credit cards; however, reimbursement required the approval of
Neubauer. Neubauer approved all reimbursements and controlled all "working capital". At no time did Weisenberg
or any IRT staff have control over or were a signatory to any IRT account. Despite the $500 debit card, many of
those expenditres were rejected due to lack of funds in the account.
under the Asset Purchase Agreement is now moot. Pursuant to Rule 15(a)(l)(B), the
Plaintiffs were allowed to amend the Complaint and add all of these parties. All of these
people are now parties to this case. (Docket No. 9).
Failure to Join Necessary Parties — Recipients of IRTpayments
7. Defendants' second argument regarding the failure to join the imdisclosed recipients of
payments from IRT is misplaced for several reasons. The Defendants' basic argument is that
if the Court rescinds the Asset Purchase Agreement, it is required to put the parties back in
the exact same place they were had there never been a contract. The Defendants then argue
that because of the Asset Purchase Agreement, they infused money into IRT, and that money
should be returned to them. The Defendants then go a step further and argue that all of the
many, many parties that received payments from IRT should be made party to this lawsuit as
necessary parties. However, because those parties cannot be identified, this case should be
dismissed in its entirety. This is an extraordinarily inequitable argument, and one that is not
based in law or fact.
8. First, any money the Defendants infused into IRT was not consideration supporting the Asset
Purchase Agreement. When rescinding an agreement, the Court's charge is to return the
consideration paid under the terms of the contract. See Ford Motor Co. v. Castillo, 279
S.W.3d 656, 66A-65 (Tex. 2009) {citing Tex. Employers Ins. Ass'n v. Kennedy, 135 Tex. 486,
143 S.W.2d 583, 585 (Tex. 1940) ("The general equitable rule is that a plaintiff in a suit for
the rescission or cancellation of a contract to which he is a party must return, or offer to
return, any consideration which he has received under the contract."); Gibson v. Lancaster,
90 Tex. 540, 39 S.W. 1078, 1079 (Tex. 1897) ("[I]f any part of the purchase price has been
paid, in order to [obtain] a rescission the money so paid must be tendered by the seller to the
purchaser."). Restoring consideration actually received by the party seeking rescission is the
goal. See Johnson v. Cherry, 726 S.W.2d 4, 9 (Tex. 1987).
9. To do equity, the party seeking rescission must generally offer and be prepared to return any
consideration already received under the contract, since one may not repudiate a contract and
still retain the benefits received under it. See Freyer v. Michaels, 360 S.W.2d 559, 562 (Tex.
App. — Dallas 1962, Avrit dism'd). Restitution of the consideration is the goal of rescission.
See id; see also Hunt County Oil Co. v. Scott, 61 S.W. 451, 452 (Tex. Civ. App. - 1902, writ
ref d). The party seeking rescission cannot retain any of the benefits of the contract. See
Texas Co. v. State, 281 S.W.2d 83 (Tex. 1955). "[T]he cases requiring a party to restore
the original status refer to returning money or property received pursuant to the
contract." Castillo, 279 S.W.3d at 664.
10. Because the "v^orking capital" was not consideration paid under the terms of the Asset
Purchase Agreement, it is not consideration to be returned if rescission is ordered. It is not
consideration that the Plaintiffs, or any other party received as a result of the Asset Purchase
Agreement. The Plaintiffs are ready, willing, and able to return all money and property that
they received pursuant to the terms of the Asset Purchase Agreement. The Plaintiffs have
offered repeatedly to return all such consideration.
11. Second, because those payments were to vendors and employees, they are not necessary
parties as this lawsuit does not effect their rights at all. More importantly, the Defendants
have not shown how or why these parties are "indispensable" as that term is defmed by the
Federal Rules of Civil Procedure.
12. The Fifth Circuit has a two part inquiry to determine if a case should be dismissed for failure
to join a party. It states:
Determining whether to dismiss a case for failure to join an indispensable party
requires a two-step inquiry. First the district court must determine whether the
party should be added under the requirements of Rule 19(a). Rule 19(a)(l)
requires that a person subject to process and whose joinder will not deprive the
court of subject-matter jurisdiction be joined if:
(A) in that person's^ absence, the court cannot accord complete
relief among existing parties; or (B) that person claims an interest
relating to the subject of the action and is so situated that disposing
of the action in the person's absence may: (i) as a practical matter
impair or impede the person's ability to protect the interest; or (ii)
leave an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because of
the interest.
FED. R. CrV. P. 19(a)(l). While the party advocating joinder has the initial
burden of demonstrating that a missing party is necessary, after "an initial
appraisal of the facts indicates that a possibly necessary party is absent, the
burden of disputing this initial appraisal falls on the party who opposes joinder."
Pulitzer-Polster, 784 F.2d at 1309.
Hoodv. The City of Memphis. 570 F.3d 625, 628 (5* Cir. 2009).
13. The second part of the test relates to the addition of a party that will destroy subject matter
jurisdiction.
If the necessary party cannot be joined without destroying subject-matter
jurisdiction, the court must then determine whether that person is "indispensable,"
that is, whether litigation can be properly pursued without the absent party. HS
Res., 327 F.3d at 439. The factors that the district court is to consider in maldng
this determination are laid out in Rule 19(b):
(1) the extent to which a judgment rendered in the person's absence
might prejudice that person or the existing parties; (2) the extent to
which any prejudice could be lessened or avoided by; (A)
protective provisions in the judgment; (B) shaping the relief; or (C)
other measures; (3) whether a judgment rendered in the person's
absence would be adequate; and (4) whether the plaintiff would
have an adequate remedy if the action were dismissed for
nonjoinder.
Id. Diversity jurisdiction is not an issue in this case, so here, the Court only need determine
if these unJkaiown recipients of IRT payments are indispensable.
14. In this case, the initial burden falls on the Defendants to establish how these missing, and
unidentified parties are necessary to this lawsuit. The Defendants completely failed to meet
this burden. Nowhere in the four comers of the Asset Purchase Agreement are these
"unidentified" parties mentioned. In fact, nowhere in the four comers of the Asset Purchase
Agreement is IRT mentioned except to state that it will be formed. If Planet invested money
into IRT, and it wants to get that money back, it can go after IRT. Interestingly, and not
mentioned by the Defendants, IRT is a wholly owned subsidiary of Planet. If Planet thinks
that IRT owes it something, it can take care of that issue with its own subsidiary. This has
nothing to do with the issues in this case.
15. Nothing about IRT served as the consideration supporting the Asset Purchase Agreement.
While the concept of IRT (although not mentioned by name) is referenced in the Letter of
Intent, that document was merely the springboard for the Asset Purchase Agreement.
Neither IRT nor any obligations relating to IRT, found their way into the Asset Purchase
Agreement.
16. For example, the Plaintiffs believe strongly that the Defendants ignored their promises and
obligations to IRT. The Defendants made repeated promises to fund this company and
provide it with the resources it needed to build its business. This never happened. In fact,
the Defendants, not only failed to pay the ongoing bills of IRT, but also failed to pay IRT's
employees.^ The Defendants are currently under investigation of the Texas Workforce
3 The failure to pay wages is a violation of the Texas Labor Code §61.019 and carries with it criminal penalties.
Commission (Texas Workforce Commission/Attorney General's office - Case # 10 064146-
1} as well as the U.S. Department of Labor (US Department of Labor — Case # 1599036)
regarding their failure to pay these employees. Additionally, all employees of IRT filed
complaint form 3949-A with the Internal Revenue Service for nonpayment of withholding
taxes as they were ineligible for unemployment due to the non-reporting of income or
employment by Planet.
17. However, the failure to fimd ERT does not constitute a breach of the Asset Purchase
Agreement — because that promise is not found within that agreement. If the promise to fund
IRT is not a requirement of the Asset Purchase Agreement, then it is likewise not
consideration supporting the Agreement. If it is not consideration supporting the Asset
Purchase Agreement, then there is nothing for the Court to "return" if it determines that
rescission is the appropriate remedy in this case.
18. The Defendants make a number of unsubstantiated allegations against Weisenberg relating to
IRT's expenditure of money. The Plaintiffs strongly deny these allegations;^ however, they
are misplaced in this motion. If the Defendants have a claim against Weisenberg, they can
bring a claim against him (as they have in the filing of the Defendants' Counterclaim seeking
monetary damages). But, this does not demonstrate how the Plaintiffs failed to join
necessary parties in this suit thus justifying Rule 12 relief. These are bogus arguments
designed to sling mud against Weisenberg in an attempt to shift the focus from where it
belongs: on the wrongful conduct of Planet and Neubauer.
Failure to Join Necessary Parties — Tim Williams
4 These allegations are being made as a part of Planet's ongoing attempts to manipulate stock value through use of
postings on the internet. Planet fills its pleadings with false and bizarre accusations and then posts them on the
internet and issues ongoing press releases as though the accusations are facts.
5 Planet and Neubauer kept all the books on IRT.
19. Defendants' next argument is that a person named Tim Williams is the party that was
primarily responsible for negotiating the Asset Purchase Agreement by and between
Weisenberg, Inspar, and Planet, and should therefore be a party to this lawsuit. This
argument is not expressly stated within the arguments contained in the Motion; however, the
Defendants allude to this in their recitation of the facts. As such, and in an abundance of
caution, this idea is addressed in this Response. However, because the Defendants did not
properly present this issue to the Court, it should not be considered as a valid grounds for
dismissal.
20. Planet states that it was Tim Williams who was the person speaking on behalf of Planet in
this negotiation. Planet then alludes that Tim Williams should be a party to this lawsuit.
21. Planet can name Tim Williams if it so chooses. But, there is nothing about Tim Williams
that makes him a necessary party to this lawsuit. Complete relief can be afforded the parties
absent Tim Williams being named as a defendant. Tim Williams has no interest in the Assets
or the consideration supporting the Asset Purchase Agreement. Nor does Tim William's
absence leave any other party at risk of incurring double, multiple, or inconsistent
obligations. The Defendants did not even attempt to meet their initial burden on explaining
why Tim Williams is necessary to this lawsuit. As such, this should not be a groimd for
dismissal.
Failure to State a Claim — Pleading Fraud with Particularity
22. Defendants' fourth argument is that this case should be dismissed for failure to plead fraud
with particularity.
[FRCP 9(b)] requires the plaintiffs in secxirities fraud causes to plead with
particularity the circumstances constituting the alleged fraud. To satisfy
Rule 9(b)'s pleading requirements, the plaintiffs must 'specify the
statements contended to be fraudulent, identify the speaker, state when and
where the statements were made, and explain why the statements were
fraudulent.
Southland Sees. Corp. v. INSpire Ins. Soultions, Inc., 365 F.3d 353, 362 (5* Cir. 2004).
23. Case law continues:
[T]he normally rigorous particularity rule has been relaxed somewhat
where the factual information is peculiarly within the defendant's
knowledge or control. But even under a relaxed application of [FRCP]
9(b), boilerplate and conclusory allegations will not suffice. While state
of mind may be averred generally, plaintiffs must still allege facts that
show the court their basis for inferring that the defendants acted with
"scienter." '"•
In re Burlington Coat Factory Sec. Litg., 114 F.3d 1410, 1418 (3'''' Cir. 1997).
24. These are the standards under both Rule 9(b) and the federal securities laws. The Reform
Act amended the Securities Act of 1933 and the Exchange Act of 1934, in part by
heightening the pleading requirements in securities fraud lawsuits. See City of Philadelphia
V. Fleming Cos., Inc., 264 F.3d 1245, 1258-59 (10th Cir. 2001). In cases brought under
federal securities law, when a plaintiff alleges that the defendant made a false statement of a
material fact or omitted a material fact necessary to prevent the statements made from being
misleading, he or she must specify each allegedly false or misleading statement and explain
why it is false. 15 U.S.C. § 78u-4(b)(l). Additionally, a plaintiff must "state with
particularity facts giving rise to a strong inference that the defendant acted with the required
state of mind" for each alleged securities law violation. 15 U.S.C. § 78u-4(b)(2).
25. Under the Exchange Act, the primary private cause of action arises under SEC Rule lOb-5,
17 C.F.R. § 240.10b-5, promulgated under 10-b of the Exchange Act, 15 U.S.C. § 78j. Both §
78j and Rule lOb-5 prohibit the use of manipulative and deceptive devices in the sale of
securities. Rule lOb-5 also explicitly forbids "making any untrue statement of a material fact
or . . . omitting to state a material fact" in connection with the purchase or sale of a security if
the fact is necessary to prevent the statement from being misleading. 17 C.F.R. § 240.10b-
5(b).
26. The Plaintiffs stand on their extremely detailed pleading showing the fraudulent scheme
initiated by the Defendants to artificially inflate the value of Planet's stock so that they could
sell off their stock at a high price and leave the Plaintiffs with worthless stock. A classic
"pump and dump" scheme.
27. By way of example, prior to execution of the Asset Purchase Agreement, Planet issued press
releases that spoke of the strength of Planet's relationship with a subsidiary called Rada
Technologies Inc. It was later discovered that the former owners of Rada initiated a number
of lawsuits against Planet and Neubauer alleging similar facts to the "pump and dump"
alleged in this lawsuit. Planet failed to disclose the existence of these lawsuits in their SEC
filings. The Plaintiffs explain that this was done knowingly by the Defendants and how they
intentionally misrepresented this relationship. The Plaintiffs go on that had they known of
the truth in this regard, they never would have sold their valuable patents and assets to such
schemesters.
28. The Petition goes on to identify 8 specific press releases issued by Planet discussing the
value and functionality of the PetroLexus technology. These releases also discussed the
value of the technology and the revenues generated from the technology. None of it was
true, rather Neubauer was simply copying information firom another product called Diamond
6 In a recent dissent, Justice Bryer describes the classic "pump and dump" where the defendants, "deliberately and
repeatedly make egregiously fraudulent misrepresentations to inflate the price of securities that, unbeknovmst to
investors, they own. After the stock price rises, the defendants sell at an artificial profit. When the fraud is revealed,
the price crashes, to the investors' detriment." Hemi Group, LLC v. City of New York, U.S. , 130 S.Ct. 983,
963 (2010).
Flo. Neubauer knew of the functionality of Diamond Flo because he formerly worked for the
owner of Diamond Flo, Sequioia Interests, Inc. Neubauer even copied the artwork to market
the products. The Petition describes how this was a part of the Defendants' scheme to
artificially inflate the value of Planet's stock.
29. Neubauer went on in another specific press release to discuss how Planet was patenting
PetroLexus. This was false and the technology was incapable of obtaining a patent.
30. Paragraph 16 details three specific press releases in which Planet makes false statements.
The best example surrounds the San Antonio de Turiri Antimony mine in Bolivia. Planet
totally made this up as neither the Bolivia Ministry of Mines or the USGS can identify this
mine in Bolivia. Yet, Planet issued a press release that it was entering into a joint venture to
develop this mine. Such a joint venture, if it truly existed, would increase the value of
Planet's stock. This statement among others, was relied upon in convincing the Plaintiffs that
Planet was a valuable company with many, many ongoing business opportunities. That is.
Planet artificially inflated the value of its stock. Then, when the stock reached a certain
price, the Defendants sold off their stock reaping significant gain. This was all done to the
detriment of the other investors, such as the Plaintiffs. These very specific examples of fi:aud
also demonstrate the scheme and course of conduct of the Defendants. This scheme forms
the basis for inferring that the Defendants acted with the requisite scienter.
31. The Petition goes on and on with example after example of how the Defendants released
false information to the public, including the Plaintiffs, through these press releases. The
Petition clearly states that the Defendants knew what they were doing. The Petition clearly
states how this caused harm to the Plaintiffs. There is nothing in the Petition that can be
called "boilerplate". As such, these allegations of fraud are plead with sufficient
particularity.
32. The Plaintiffs also describe how Neubauer represented the natiire of the restricted stock that
Weisenberg received under the terms of the Asset Purchase Agreement. Neubauer
misrepresented the filing of the company's Form S-10, which would "lift" the restrictions on
Weisenberg's stock. Not only have the Defendants failed to file this form, but research
revealed that the Defendants have been wrongfully asserting that this process was "nearly
completed" sine 2007, clearly establishing the Defendants' scienter regarding the falsity of
this information. Weisenberg explains how this was material to him (as it would be to any
investor) when he chose to enter the Asset Purchase Agreement.
33. The Plaintiffs go on with great detail to explain the false statements contained in the
unaudited financial statements that Planet posted on the Pinlc Sheets prior to April 10. 2010.
These statements misrepresented facts and failed to disclose serious material information on
a number of issues. See % 22(a)-(d). The Plaintiffs go on to explain many of the various and
sundry SEC violations that the Defendants are engaged in.
34. The reliance, scienter, and causation elements are all further explained in %% 21-33. fp4-35
further explain the benefit the Defendants recognized from the "pump and dump" scheme.
And then the Petition goes on to explain how all of this appears to be a pattern of conduct for
Neubauer who is involved in various other companies and investigations for similar conduct.
The allegations regarding this similar conduct with other business entities undeniably forms
the basis for inferring that these Defendants acted intentionally, deliberately, and with
scienter.
35. There is no mystery in this case as to the allegations against the Defendants. For purposes of
this review, the Court is to consider that all of the allegations are true. The inquiry is simple,
"if the allegations are trae, do they establish a claim for fraud?" Here, that inquiry is simple.
If allegations are true, the Plaintiffs meet every element of fraud (both common law and
statutory). See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). The
pleadings go way beyond recitals of elements and conclusory statements. The Petition
describes this fraudulent scheme with specific facts showing specifically how the Defendants
benefited from their actions to the detriment of the Plaintiffs. As such, this Motion should be
denied.
Failure to State a Claim - The Securities Exchange Act §10b-5.
36. Defendants' fifth argument relates to an alleged failure to state a claim under the Securities
Exchange Act. While the Plaintiffs disagree with the Defendants' rendition of the law, the
Complaint was amended to address this concern pursuant to Rule 15(a)(B)(l), and thus this
point is now moot.
37. Additionally, and damages sought under the Texas statutory laws are sought in the
alternative.
Mediation
38. Defendants' final argument is that this case should be dismissed because the Asset Purchase
Agreement requires mediation. While there is a section of the Asset Purchase Agreement
that references mediation (specifically ^ 45-48), this is not a valid ground under Rule 12 to
dismiss a case.
39. The Plaintiffs did malce a good faith effort to resolve this case before suit was filed; however,
that effort was only met with absurd demands and closed doors. Mediation would be
fruitless and it is believed that the Defendants are only raising this issue in an attempt to
delay.
40. More importantly, this lawsuit seeks to rescind the Asset Purchase Agreement. The
Plaintiffs' argument is that the Asset Purchase Agreement is unenforceable because it was
procured through fraud. Interestingly, that is also the Defendants' arguments through their
counterclaims. If the Asset Purchase Agreement was the product of fraud, then the mediation
provisions of that same agreement are likewise unenforceable. Fraud vitiates everything it
touches. See Cox v. The Upjohn Company, 913 S.W.2d 225 (Tex. Civ. App. - Dallas 1995,
no writ).
WHEREFORE, Plaintiffs request that the Court deny the Motion to Dismiss and grant the
Plaintiffs any and all further relief to which they may justly be entitled.
Respectfully Submitted,
By: /s/ Tanya N. Garrison
ANDREW M. CAPLAN
State Bar No. 03776700
TANYA N. GARRISON
State Bar No. 24027180
Weycer, Kaplan, Pulasld & Zuber, P.C.
11 Greenway Plaza, Suite 1400
Houston, Texas 77046
Telephone: (713) 961-9045
Facsimile: (7,132.961-5341
ATTORNEYS FOR PLAINTIFFS
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing instrument
has been served through electronic transmission through the USDC ECP, on February 10, 2011.
A copy of this pleading was also forwarded to the following via certified mail:
Mr. Michael Minns
The Minns Law Firm
9119 S. Gessner Suite One
Houston, Texas 1101A
s/Tanya N. Garrison
Tanya N. Garrison
Inspar's Answer to Planet's counterclaims.
Note: The court documents are scanned PDF files and so this is the text from an OCR recreation. I noted that process created a few typos that are not in the original doc.
Case 4:10-cv-05086 Document 12 Filed in TXSD on 02/10/11
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OE TEXAS
HOUSTON DIVISION
KENT WEISENBERG AND
INSPAR EIELD SERVICES, LLC
Plaintiffs
vs.
PLANET RESOURCE RECOVERY,
INC., KURT NEUBAUER
Defendants
CIVIL ACTION NO. 4:l0-cv-05086
PLAINTIFFS' ANSWER TO COUNTERCLAIMS
Conditional Upon Plaintiffs' Motion to Dismiss Counterclaims
TO THE HONORABLE UNITED STATES DISTRICT COURT:
COMES NOW, Plaintiffs Kent Weisenberg and Inspar Field Services, LLC and file this
Answer to the Counterclaims filed by the Defendants, Planet Resources Recovery, Inc. ("Planet")
and Kurt Neubauer ("Neubauer") and would respectfully show as follows:
1. Plaintiffs deny that they engaged in any fraud against the Defendants or that Defendants
suffered any injury as alleged in Paragraph 53 (a) - (f) of the Original Counterclaim.
1.1. Specifically, as pertains to Exhibit "A" to Defendant's Counterclaim, the document
attached as an Exhibit is not a complete document and is specifically designed to mislead.
Projections, by definition, axe hypothetical scenarios or an estimate of future possibilities
based upon current trends. Plaintiff contends that the projections that were made in Exhibit
"A" were in no way false. In fact, many of the projects outlined within the Exhibit did not
come to fruition as a result of Planet's fraud and breaches. For example, with regard to the
Dynergy and Xcel Energy transactions (projects) IRT could not complete this project
because Planet never had, nor ever procured, the proper liability insurance and/or worker's
compensation insurance which is required by companies in order to do work at their
facilities. Yet another example, with regard to technology and licensing fees. Planet would
not fund the building of the robotic equipment to facilitate sales and, the entities would not
sign licensing agreements without the ability to obtain equipment to facilitate the completion
of these projects. In essence, it was the fraudulent representations and breaches by Planet
that negatively impacted the business of IRT and impacted the "projections". To argue that
IRT was unable to meet projections after Planet breached its obligations; failed to pay
employees salaries and failed to act in accordance with industry standards is a disingenuous
position that lacks any legal merit.
2. Plaintiffs deny that they engaged in any fraud in the inducement or that Defendants suffered
any injury as alleged by the- Defendants in Paragraph 54 (a) — (d) of the Original
Counterclaim.
3. Plaintiffs deny that they owed any frduciaxy duty to the Defendants as alleged in Paragraph
55 (a) - (c) of the Original Complaint. Plaintiffs deny that the breached any duty owed to the
Defendants, or that Defendants suffered any injury as alleged in Paragraph 55 of the Original
Complaint.
3.1.Specifically, it is imperative to note that the Defendants are the ones that authorized and
approved every transaction and expenditure of IRT. It is the Defendants that controlled and
maintained the books of IRT (and still do) and at no time was Plaintiff permitted to keep the
accounting. Everything was submitted to Planet for their review and approval.
3.2.With regard to the truck allegations. Plaintiff vehemently denies these charges. The
transactions with Carl Frisch were negotiated by the Defendant Neubauer along with Bill
Young and Tim Williams. Weisenberg introduced them to Mr. Frisch at which point the
foregoing persons inspected the truck and gave IRT the authorization to have Planet pay for
the truck. Planet's office sent the check for $5,500, as negotiated, to Mr. Frisch and title was
provided to Weisenberg and forwarded to Planet's office.
3.3. Planet also fails to paint the complete picture v^th regard to transactions involving Karl
Frisch. Planet authorized the rental of a building where Mr. Frisch was the landlord. Planet,
consistent with their failure to meet their financial obligations, became more than three
months in arrears on the lease. Additionally, Planet failed to properly register IRT in Florida
as required under Florida law. Consequently, a lawsuit was filed against Weisenberg,
individually as a result of Planet's default and Planet's failure to register IRT to do business
in the state of Florida as legally required. Since Weisenberg signed the lease for IRT, and
since Planet wrongfiiUy failed to register IRT in the State of Florida, Weisenberg was sued in
his individual capacity for a Planet debt. This has culminated in litigation against Weisenberg
in the state of Florida (since Weisenberg signed the Lease on behalf of IRT). Weisenberg
has been forced to expend resources and faces individual exposxH'e as a result of Planet's
failures and breaches.
3.4. By way of affirmative defense, the Plaintiffs allege ratification and waiver.
3.5. By way of affirmative defense, the Plaintiffs allege justification and privilege.
3.6. By way of affirmative defense, the Plaintiffs allege fi:aud by Defendants.
4. Plaintiffs deny that they published any disparaging words to third parties as alleged in
Paragraph 56 (a) - (g) of the Original Counterclaim. Plaintiffs deny that the Defendants
suffered any injury as alleged.
4.1. Plaintiffs, by way of affirmative defense, plead that the damages of which the
Defendants-claim were caused in whole or part by the actions of the Defendants.
4.2. Plaintiffs, by way of affirmative defense, plead justification, truth, and privilege.
4.3. Plaintiffs, by way of affirmative defense, plead that the Defendants are "libel-proof in
that they have no reputation to lose.
5. Plaintiffs deny that the Defendants are entitled to any of the relief that they seek tlirough their
counterclaims, as identified in Paragraphs 58 and 59 (a) — (f) of the Original Counterclaim.
6. Plaintiffs deny that the Defendants have the right to amend their pleading (unless allowed by
rule, agreement, or court order) as alleged in Paragraph 60 of the Original Counterclaim.
7. In conjunction with Plaintiffs denials under Paragraph 56 of the Defendant's Counterclaim,
Plaintiff further asserts the affirmative defense of unclean hands. Specifically, many of the
bogus allegations contained in this Counterclaim were purposefully alleged so that Planet
could post these public documents on the internet and in the public domain. Plaintiffs
contend that Planet posted these pleadings on the internet, sent them in email blasts to
shareholders, and into the public record so they can be used like press releases in a manner
consistent with their past practices of posting information in order to manipulate their stock
value. Plaintiffs contend that the Defendants have purposefully authored these documents
with false, misleading and inaccurate information solely to discredit the Plaintiffs in the
public domain through the internet. In essence. Defendants use self serving publicly filed
pleadings as a form of a press release. Plaintiff contends that this tact is undertaken solely in
an attempt to discredit the Plaintiff and somehow provide false confidences to shareholders.
8. Wherefore, the Plaintiffs pray that upon final hearing of these matters, the Court dismiss the
counterclaims and enter a take nothing judgment against the Defendants for any relief sought
through these counterclaims.
Respectfully Submitted,
By: /s/Tanya N. Garrison
ANDREW M. CAPLAN
State Bar No. 03776700
TANYA N. GARRISON
State Bar No. 24027180
Weycer, Kaplan, Pulaski & Zuber, P.C.
11 Greenway Plaza, Suite 1400
Houston, Texas 77046
Telephone: (713) 961-9045
Facsimile: (713) 961-5341
ATTORNEYS FOR PLAINTIFFS
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing instrument
has been served through electronic transmission through the USDC ECP, on February 10, 2011.
A copy of this pleading was also forwarded to the following via certified mail:
Mr. Michael Minns
The Minns Law Firm
9119 S. Gessner Suite One
Houston, Texas IIQIA
Inspar's Motion To Dismiss Planet's counterclaims.
The saga continues...
Case 4:10-cv-05086 Document 11 Filed in TXSD on 02/10/11
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KENT WEISENBERG AND
INSPAR FIELD SERVICES, LLC
Plaintiffs
vs.
PLANET RESOURCE RECOVERY,
INC., KURT NEUBAUER
Defendants
CIVIL ACTION NO. 4:10-cv-05086
PLAINTIFFS/COUNTER DEFENDANTS' MOTION TO DISMISS
TO THE HONORABLE UNITED STATES DISTRICT COURT:
COMES NOW Plaintiffs/Counter-Defendants Kent Weisenberg and Inspar Field
Services, LLC ("Plaintiffs") and, pursuant to Federal Rules of Civil Procedure 8, 9(b) and
12(b)(6), file this Motion to Dismiss one or more of the counterclaims alleged by Defendants
Planet Resources Recovery, Inc. ("Planet") and Kurt Neubauer ("Neubauer") in their Original
Answer and Counterclaims (Docket No. 7). Plaintiffs would respectfully show as follows:
SUMMARY OF MOTION
This case centers on the Defendants' fraud in connection with a securities transaction.
Through their pleadings. Plaintiffs lay out the nature of Defendants' wrongful conduct in
painstaking detail and precision. In response. Defendants allege barebones, one-liner
counterclaims for fraud, fraud in the inducement, breach of fiduciary duty, and business
disparagement. Defendants' pleadings are conclusory and insufficient, with the alleged claims
being supported, if at all, by threadbare recitals of the elements of each claim. Such ineffective
pleading requires that the counterclaims be dismissed, in whole or in part.
PROCEDURAL HISTORY
1. On December 20, 2010, Plaintiffs'Tiled their Plaintiffs' Original Complaint,
which, in general, sets forth Defendants' fraud in connection with a securities transaction.
Plaintiffs amended their complaint on about February 9, 2011, and for the sake of Judicial
Economy, Plaintiffs incorporate herein the Statement of Facts set forth in Plaintiffs' live pleading
(Docket No. 9).
2. On January 21, 2011, Defendants filed their Defendants' Original Answer and
Counterclaims. (Docket No. 7).
3. Plaintiffs acknowledge that this Court should assume Defendants' alleged
material facts as true. Therefore, and for the sake of Judicial Economy, Plaintiffs incorporate
Paragraphs 53, 54, 55, and 56 of Defendants' Original Answer and Counterclaims (Docket No.
7) for the sole and single purpose of identifying the allegations (but not legal conclusions) of
Defendants in support of their various counterclaims against Plaintiffs. See Blackburn v. City of
Marshall, 42 F.3d 925, 931 (5* Cir. 1995) (stating that "conclusory allegations or legal
conclusions masquerading as factual conclusions Avill not suffice to prevent a motion to
dismiss."). By this incorporation. Plaintiffs do not admit to the allegations of Defendants, and
Plaintiffs reserve the right to contest same herein and at trial in accordance with the Federal
Rules of Civil Procedure.
4. Defendants' barebones and conclusory counterclaims for fraud, fraud in the
inducement, breach of fiduciary duty, and/or business disparagement/defamation should be
dismissed pursuant to Rule 12(b)(6).
STANDARD OF REVIEW ON RULE 12(b)(6) MOTION TO DISMISS
5. Federal Rule of Civil Procedure 12(b)(6) permits Plaintiffs as Counter-Defendants
to move to dismiss a counterclaim on the basis that the Defendants' failed to state a cognizable
claim upon which relief can be granted. Rule 12(b)(6) tests the legal sufficiency of the claims
advanced in the complaint. Grisham v. United States, 103 F.3d 24, 25-26 (5* Cir. 1997).
6. Under the 12(b)(6) standard, well-pleaded facts are viewed in the light most
favorable to the pleading party, but the pleader must allege facts that support the elements of the
cause of action in order to malce out a valid claim. City of Clinton v. Pilgrim's Pride Corp., No.
10-10039, 2010 U.S. App. LEXIS 25917, *7 (5th Cir. Tex. Dec. 21, 2010). Federal Rule of Civil
Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the
pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is
and the grounds upon which it rests." However, "[f]actual allegations must be enough to raise a
right of relief above the speculative level." Bell Atlantic Corp. v. Twombty, 550 U.S. 544, 127
S.Ct 1955,1965,167 L. Ed. 2d 929 (2007).
7. Courts cannot "accept as true ' [tjhreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements.'" Pilgrim's Pride Corp., 2010 U.S. App.
LEXIS 25917, *7 (quoting ^;y/zcrq^ v. Iqbal, 129 S.Ct. 1937, 1949,173 L. Ed. 2d 868 (2009)).
Defendants' Fraud and Fraud in the Inducement Counterclaims Should be Dismissed
8. Under Texas law, the elements of fraud are: (1) that a material representation was
made; (2) the representation was false; (3) when the representation was made, the person knew it
was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4)
the person made the representation with the intent that the other party should act upon it; (5) the
party acted in reliance on the representation; and (6) the party thereby suffered injury. Aquaplex,
Inc. V. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam).
9. Defendants must allege "a plausible entitlement to relief on the fraud claims in
order to withstand this Rule 12(b)(6) motion. See Twombty, 111 S.Ct. at 1967-69. In addition,
fraud claims and fraud in the inducement claims must also meet the heightened pleading standard
of Rule 9(b), imder which 'a party must state with particularity the circumstances constituting
fraud.'" Pilgrim's Pride Corp., 2010 U.S. App. LEXIS 25917, *8 (quoting FED. R. CIV. P. 9(b)).
For these fraud claims, Rule 9(b) requires '"the who, what, when, where, and how' to be laid
out." Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029, 1032 (5th Cir.
Tex. 2010) (quoting Benchmark Electronics, Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th
Cir. 2003).
10. Defendants allege the following conclusory, threadbare allegations of fraud:
a. Plaintiffs Inspar and Weisenberg made material misrepresentations including,
but not limited to, the following:
1. Projected Revenues Second Quarter (Attached as Exhibit "A")
2. Weisenberg assured Defendants that Inspar Field Technologies was
ready to "go to market".
b. Such representations were false when made, and Plaintiffs knew such
statements were false or made them recldessly without any knowledge of the
truth and as positive assertions.
c. The representations were made with the intention that they should be acted on
by Defendants.
d. Defendants were ignorant of their falsity.
e. Defendants had a right to rely on the representations.
f. The material misrepresentations made by the Plaintiff were reasonably relied
upon by Defendants to their detriment. Defendants are entitled to damages. 1
1 Through Defendants' Original Answer and Counterclaims (Docket No. 7 f 40), Defendants also allege a
practically identical fraud allegation in the form of an "Affirmative Defense". For the sake of Judicial Economy
(and to avoid any additional confusion caused by Defendants' pleading construction), Plaintiffs move to dismiss the
fraud claim set forth in Paragraph 40 on the same grounds as Plaintiff moves to dismiss the fraud claim set forth in
Paragraph 53.
(Docket No. 7 f^ 53-53.f.).
11. Defendants' also allege fraud in the inducement, which essentially mirrors
Defendants' fraud claim, although the inducement claim is even more bareboned than the fraud
claim (if that is possible). {See Docket No. 7 fi 54.a.-d.).
12. Plaintiffs refer to these two separate claims collectively as "fraud", and both
alleged fraud causes of action are wholly insufficient to state a claim.
13. First, Defendants fail to allege any material fact to support element 1 of a fraud
claim. A false statement is, by definition, material only '"if a reasonable person would attach
importance to and be induced to act on the information,"' and "statements that are so
inherently vague and ambiguous cannot be material." Pilgrim's Pride Corp., 2010 U.S. App.
LEXIS 25917, *8 (quoting Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d
1029, 1033 (5th Cir. 2010)) (emphasis added).
14. Here, Defendants allege that Plaintiffs misrepresented two facts: (1) "Projected
Revenues Second Quarter" written in a one-line email, and (2) that "the Inspar Field
Technologies were ready to 'go to market"'. (Docket No. 7 ^flf 53.a., 54.a.). "Projected"
generally means to estimate. Defendants completely fail to allege how a reasonable person
would attach importance to and be induced to act on the estimated information contained in such
a one-sentence email or by an alleged verbal statement that certain technologies are ready to "go
to market". Allegations of fact such as this axe inherently vague and wholly insufficient under
Rule 9(b) because they admit of a variety of interpretations. See Pilgrim's Pride Corp., 2010
U.S. App. LEXIS 25917, *9-10 (dismissing fraud under Rules 9(b) and 12(b)(6), and noting that
the statement that the defendant '"will not go off and leave you holding the bag,'" was
inherently vague).
15. As to the third element of a fraud cause of action. Defendants plead that "These
[two] representations were false." {See Docket No. 7 fl 53.b., 53.c, 54.c.). Such allegations are
meaningless absent any factual allegations concerning any then-existing intent to defraud
Defendants. Such pleadings are nothing more than conclusory statements of the elements of the
fraud causes of action. See Pilgrim's Pride Corp., 2010 U.S. App. LEXIS 25917, at *12; Dorsey
V. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008) (stating that "simple allegations that
defendants possess fraudulent intent will not satisfy Rule 9(b)").
16. Indeed, Defendants' conclusory, threadbare pleadings and elements contained in
Paragraphs 53.a.-f. and 54.a.-d. of Docket No. 7 absolutely do not lay out the required "who,
what, when, where, and how" of the required fraud elements and are without question
insufficient to survive this motion to dismiss under the standards of Rules 12(b)(6) and 9(b).
Breach of Fiduciary Duty Claims Should be Dismissed
17. The elements of a claim for breach of fiduciary duty are as follows: (1) a fiduciary
relationship between the plaintiff and defendant; (2) the defendant must have breached its
fiduciary duty to the plaintiff; and (3) the defendant's breach must result in injury to the plaintiff
or benefit to the defendant. See Punts v. Wilson, 137 S.W.3d 889, 891 (Tex. App.—^Texarkana
2004, no pet); City of Driscoll v. Saenz, Civil Action No. C-06-543, 2007 U.S. Dist. LEXIS
3690, * 11-12 (S.D. Tex. Jan. 17, 2007).
18. Generally, a claim for breach of fiduciary duty is covered by the notice pleading
standard in Rule 8(a), not the heightened pleading standard for fraud claims set forth in Rule
9(b). See City of Driscoll, Texas v. Saenz, No. C-06-543, 2007 U.S. Dist. LEXIS 3690, *5 (S.D.
Tex. Jan. 17, 2007). However, courts apply the particularity requirement of Rule 9(b) to breach
of fiduciary duty claims predicated on fraud. Brown v. Bilek, No. 09-20654, 2010 U.S. App.
LEXIS 23477, *9-10 (5th Cir. Tex. Nov. 12, 2010). Where a plaintiff contends that the
defendants breached their fiduciary duties by defrauding the plaintiff of money or business
opportunities, the heightened standard of Rule 9(b) applies. Ingalls v. Edgewater Private Equity
Fund III L.P., Ciyil Action No. H-05-1392, 2005 U.S. Dist. LEXIS 45592, *15 (S.D. Tex. Oct.
17, 2005).
19. In Docket No. 7, Paragraph 55, Defendants allege a counterclaim of breach of
fiduciary duty against both Plaintiffs. Defendants allege that Plaintiff Kent Weisenberg (1)
defrauded Defendants of money by failing to disclose a business owned by Plaintiff Weisenberg,
(2) defrauded Defendants of money by failing to disclose alleged facts of a sale of a truck, and
(3) allegedly defrauded Defendants of money by the alleged unauthorized use of a debit card.
(DocketNo. 7t1f55.a.-a.3.).
20. First, and foremost, the Defendants fail to identify the nature of the duty alleged
between the Plaintiffs and Defendants. To prove an action for breach of fiduciary duty, the
plaintiff must establish the defendant was the plaintiffs fiduciary. See Priddy v. Rawson, 282
S.W.3d 588, 599 (Tex. App. - Houston [14* Dist.] 2009, pet. denied). Only certain relationships
give rise to a formal fiduciary duty. See Environmental Procedures, Inc. v. Guidiy, 282 S.W.3d
602, 627 (Tex. App. - Houston [14* Dist.] 2009, pet. denied). And while informal fiduciary
duties can exist, those relationships must be based on past dealings and close relationships of
trust. See Crim Truck & Tractor Co. v. Navistar Int'l Transp., 823 S.W.2d 591, 594 (Tex. 1992).
The Defendants wholly fail to identify any viable source a formal or informal fiduciary
relationship. As such, the Defendants failed to state a valid claim upon which relief can be
granted.
21. Paragraphs 55.a.l. and 55.a.2. likely meet the pleading requirements of Rule 9(b)
with regard to the circumstances alleged. However, the alleged claim set forth in paragraph
55.a.3. fails to contain the pleadings necessary under any standard, much less the pleadings
necessary to show the "who, what, when, where, and how" with regard to the alleged "numerous
[debit card] charges" made allegedly without authorization.
22. Also, Defendants allege that "Plaintiffs" alleged conduct proximately caused
Defendants actual damages. (Docket No. 7 f 55.c). Yet, Defendants' allegations contain
absolutely no factual basis to support a claim that Plaintiff Inspar Field Services, LLC is
somehow liable for breach of fiduciary duty to Defendants.
23. Defendants' counterclaims for breach of fiduciary duty against Plaintiff
Weisenberg and/or Plaintiff Inspar Field Services, LLC should be dismissed, in whole or in part,
for failure to state a claim.
Business Disparagement/Defamation Claims Should be Dismissed
24. To state a claim for defamation under Texas law, a plaintiff must show that the
defendant (1) published a statement; (2) that was defamatory concerning the plaintiff; (3) while
acting with negligence, if the plaintiff was a private individual, regarding the truth of the
statement. WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998), cert, denied, 526
U.S. 1051, 119 S.Ct. 1358, 143 L. Ed. 2d 519 (1999). The pleader must identify the alleged
defamatory statement and the speaker. Ameen v. Merck & Co., 226 F. App'x 363, 370 (5* Cir.
2007); Redden v. Smith & Nephew, Inc., 2010 U.S. Dist. LEXIS 4078 (N.D. Tex. Jan. 19, 2010);
LED Sign Co., LLC v. Hwee, H-08-1463, 2008 U.S. Dist. LEXIS 97851, *24-25 (S.D. Tex. Dec.
3, 2008).
25. A business disparagement claim is similar to a defamation action. Forbes Inc. v.
Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003). The two claims differ in that
defamation actions serve to protect the personal reputation of an injured party, while a business
disparagement claim protects economic interests. Id. To establish a business disparagement
claim, a plaintiff must show that (1) the defendant published false and disparaging information
about the plaintiff, (2) with malice, (3) without privilege, (4) that resulted in special damages to
the plaintiff. Id.
26. In Docket No. 7, Paragraph 56, Defendants allege a conclusory counterclaim of
"business disparagement/defamation". Defendants fail to specifically identify any alleged
statement that forms the basis of these claims, and no speaker of any, if any, alleged actionable
statement is identified. {See Docket No. 7 ^ 56.a. - pleading that "The plaintiffs published
disparaging words to third parties."). Courts cannot "accept as true ' [tjhreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements.'" Pilgrim's Pride
Corp., 2010 U.S. App. LEXIS 25917, at *7. Defendants allege that Plaintiff Weisenberg "falsely
represented that the Bolivia Mine projects for antimony are fictitious" (Docket No. 7 ^ 56.f), but
Defendants fail to allege where, when and to whom such statements were made to effectively
remove any privilege assigned to such statements to the extent this claim is based on Plaintiffs'
pleadings on file in this cause. Such conclusory allegation cannot withstand a Rule 12(b)(6)
challenge.
27. Additionally, the Defendants must show that any such statements were made
without privilege as a fundamental element of their claim. If the source of these statements was
in the Plaintiffs' Original Petition, it cannot be the subject of a slander, defamation, or liable
lawsuit. An absolute privilege applies to communications published during the course of a
judicial or quasi-judicial proceeding. See James v. Brown, 637 S.W.2d 914, 916-17 (Tex. 1982);
see also Perdue, Brackett, Flores, Utt & Burns v. Linebarger, Goggan, Blair, Sampson & Meeks,
L.L.P., 291 S.W.3d 448,451 (Tex. App. - San Antonio 1996, wit denied).
28. Moreover, Defendants wholly fail to plead any fact to implicate Plaintiff Inspar
Field Services, LLC for a business disparagement or defamation claim. Absolutely no proper
pleading exists to support this alleged claim.
29. Defendants' counterclaims for business disparagement/defamation against
Plaintijff Weisenberg and/or Plaintiff Inspar Field Services, LLC should be dismissed, in whole
or in part, for failing to state a claim.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Plaintiffs/Counter-Defendants Kent
Weisenberg and Inspar Field Services, LLC request that the Court grant this Motion to Dismiss
in whole, or alternatively in part; that the Court dismiss Defendants' counterclaims as requested
herein; and that the Court grant Plaintiffs/Counter-Defendants such further relief to which they
are justly entitled.
Respectfully Submitted,
By:^^^^/ Tanya N. Garrison
ANDREW M. CAPLAN
State Bar No. 03776700
TANYA N. GARRISON
State Bar No. 24027180
Weycer, Kaplan, Pulaski & Zuber, P.C.
11 Greenway Plaza, Suite 1400
Houston, Texas 77046
Telephone: (713) 961-9045
Facsimile: (713) 961-5341
ATTORNEYS FOR PLAINTIFFS
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing instrument
has been served through electronic transmission through the USDC ECP, on February 10, 2011.
A copy of this pleading was also forwarded to the following via certified mail:
Mr. Michael Minns
The Minns Law Firm
9119 S. Gessner Suite One
Houston, Texas 77074
s/Tanya N. Garrison
Tanya N. Garrison
I'm expecting to read even more BIZARRE statements against or about KATX, the more frustrated some get that their concerted attacks are NOT WORKING ANYMORE. I'm fading the nay sayers too.
Pharmer at least I consider you honest. You behavior matches exactly what you claim. Most who have lost money in an investment sell and move on. They don't stick around and endlessly post and chatter and chatter and chatter about the stock or the company. They move on and focus on what they ARE investing in.
So let me ask you, how many of the KATX properties were thoroughly explored while you were a shareholder? The answer is none of them. You held for 2 years. You jumped the gun. Mark this post and check back in the fall. You laugh at two or three cents. I'm betting (with real money) that we are 500-1000% higher by then. Not a bad percentage at all.
However, FYI there has not be 1 restricted share cleared or sold regardless of rumors. And as you know by now if our stock were to get to $100/share and then dropped down to $90/share there would be those unreasonable humans claiming that Management is scamming it's shareholders. There are those who can never be satisfied because of their mistrusting attitude.
Ken Stead
Maybe KATX will turn the company around,but thats only another possibility,and if risking ones investment,just to wait and see if they do,would be a mistake.
I remain for 3 reasons....1-KATX potential...2-my share distribution...3- family member owns share.
My experience has shown that when someone truly believes the management of a company is incompetent and or flat out liars and scammers, they sell any shares they owned in that company and then run for their lives, far, far away. They simply do not hang around waiting to buy at a better price.
In the investment world, you need to go by hard facts, not vague feelings or made up fiction that you read on the internet. All the absurd rumors and innuendo about how Ken Stead lied or misled about the BVIG distribution have been exposed as totally, utterly false. All the proper SEC filings are there in hard black and white. They filed all the proper paperwork and then some clueless SEC bureaucrat got confused. After the KATX lawyers showed him the law and regulations, he agreed with them. He was wrong.
The meaning of these statements are crystal clear. They have been posted over and over again.
FROM THE PR: "In speaking with Actlabs who are doing the analysis of these samples it may still be a couple more weeks before results are received."
FROM THE PR: "Once the analytical results are received and the data reviewed by our team, a news release documenting the results will be issued."
Note what the company said will happen AFTER all the results are received. They did not use the language "upon receiving".
Good comments but I just want to be clear that I was referring to when the BVIG/KATG shares becomes tradeable. If they are sold into a hole during the first few days, I will absolutely take advantage of that.
Getting out BVIG shares before that would be a shame as the sell off would be bad for the PPS. Unless of course we receive them along with good news.
This is the very same fight balihi had convincing the the board that this was a distro not a divy
No it is not. You are confused again. An offering is not either A) a distribution or B) a dividend.
"could constitute an offer of a right to participate in the spin-off of Kat Gold"
I nominate that post for POST OF THE MONTH!
The inspector was speechless, yet still insisted he was STILL correct.
And just like that inspector, some will still DISHONESTLY try to keep telling the tale the KAT didn't file anything about the distribution with the SEC until after October 6th.
We humbly ask the Faithful and loyal followers to ignore the facts that the SEC was not aware of the Distribution as of Oct 6th 2010,
You simply do not have any understanding of what was required and what occurred.
The filings for the creation, change of ownership, and issue of the distribution shares were all filed with the SEC before Oct 6th. The filings are all there in hard black and white with dates. To claim KAT didn't notify the SEC is absurd.
Just because some SEC bureaucrat mistakenly thought it was an offering and not a distribution, DOES NOT MEAN KAT MANAGEMENT SHOULD HAVE FILED MORE THAN WHAT WAS REQUIRED.
You are playing silly word games.
Once the SEC questioned the shares, KAT management "froze", took no further action on issuing them.
The BVIG distribution shares were RESTRICTED! Since restricted can not be bought and sold, they do not need registration. KATX management made the required filings to create, issue, and transfer ownership of the restricted distribution shares. The PR they put out in September said they were ready to issue the shares.
The SEC "saw" the distribution on the web site about that time. They claimed that the shares should be registered. That started the back and forth with the SEC. So I can only surmise that the SEC prevailed in that postion since now KATG (Jan 7th PR) is filing the 15c2-11 so the shares can be "registered".
So let's stop all the hyperventilating and completely false nonsense how Ken lied.
http://taft.law.uc.edu/CCL/34Act/sec12.html#g
Securities Lawyer's Deskbook
Section 12 -- Registration Requirements for Securities