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In just two days a major change in the case is guaranteed.
Older photos...big deal. How different is the property? Not like they're 10 years old.
This ruling on Friday will be huge. Surprised there's no trading.
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
Company, )
)
Plaintiffs/Counter-Defendants, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, a Delaware )
Corporation, and JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation, )
)
Defendants/Counter-Plaintiffs. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
JNS POWER & CONTROL SYSTEMS, INC.’S REPLY IN SUPPORT OF ITS MOTION
FOR PARTIAL SUMMARY JUDGMENT
JNS Power & Control Systems, Inc. (“JNS”), by and through its attorneys, and pursuant
to Rule 56 of the Federal Rules of Civil Procedure, respectfully submits this Reply in support of
its Motion for Partial Summary Judgment against 350 Green, LLC (“350 Green”) on Count I of
JNS’s Complaint in Case. No. 13 CV 4020 for specific performance of the April 17, 2013 Asset
Purchase Agreement entered into between JNS and 350 Green (the “APA”) for the transfer of
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 1 of 35 PageID #:557
2
certain assets, including 168 completed and installed electric car chargers (the “Completed
Chargers”) and 51 Coulumb or equivalent chargers (the “Coulumb Chargers”) to be used for
service at electric vehicle (“EV”) charging stations in the Chicago area (collectively referred to
as the “Chargers” or “Chicago Assets”). In its response, 350 Green raises four arguments –
none of which are supported by the law or undisputed facts in this case. As set forth below, 350
Green fails to raise any questions of material fact or law that prevent entry of partial summary
judgment in favor of JNS and against 350 Green for specific performance of the APA.
ARGUMENT
I. 350 Green’s Standing Argument Is Without Merit.
350 Green’s first argument – that JNS lacks the standing necessary to challenge the
enforceability and effect of the Equity Exchange Agreement (“Exchange Agreement”) – is
categorically wrong. 350 Green alleges that a non-party to a contract does not have standing to
bring a claim based on the contract. (Resp., pp. 7-9). However, in the instant case, JNS is not
seeking any relief under the Exchange Agreement. Rather, JNS’s arguments regarding the
Exchange Agreement are in response to claims raised by 350 Green in its affirmative defenses
and summary judgment pleadings that the Exchange Agreement purportedly voids the APA.1 It
would be illogical and fundamentally unfair for JNS not to be able to respond to 350 Green’s
affirmative defenses and summary judgment arguments regarding the Exchange Agreement
when 350 Green is at the same time arguing in the consolidated case that the Exchange
Agreement voids the APA. 350 Green’s reliance on inapplicable law governing a party’s
standing to bring a claim under a contract does not alter the fact that it has placed the
interpretation and effect of the Exchange Agreement in the center of both of these cases.
1 JNS has made these same arguments relating to the Exchange Agreement in opposition to CCGI’s motion for
partial summary judgment on CCGI’s claim for declaratory relief seeking to have the APA declared void based on
the terms of the Exchange Agreement. See 13cv3124, Dkt. 41
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 2 of 35 PageID #:558
3
Not surprisingly, none of the four cases cited by 350 Green support its bizarre notion that
a party is barred from responding to an argument based on interpretation of a contract because
that party was not a party to that contract. For instance, JNS is not a third-party seeking to
enforce a contract, i.e. the Exchange Agreement, for JNS’s benefit, as is the situation in Btesh v.
City of Maitland, Fla., 6:10-CV-71-ORL-19DAB, 2011 WL 3269647 (M.D. Fla. July 29, 2011)
(third-party shooting victim seeking to recover against municipality by enforcing an agreement
among cooperating municipalities). Similarly inapposite is Morgan Stanley v. Halliday, 873 So.
2d 400 (Fla. Dist. Ct. App. 2004), in which an arbitration clause in a customer account
agreement between a brokerage firm and the trustee was found unenforceable against the trust
beneficiary who was claiming mismanagement of the trust against the trustee. Unlike the
plaintiff in Morgan Stanley, JNS is not claiming to be an intended beneficiary of the Exchange
Agreement. The factual scenario presented in another one of 350 Green’s cases, Sun
Commodities, Inc. v. C.H. Robinson Worldwide, Inc., 11-62738-CIV, 2012 WL 602616 (S.D.
Fla. Feb. 23, 2012), is also distinguishable from and inapplicable to the instant situation between
JNS and 350 Green. In Sun Commodities, the plaintiff sought a declaratory judgment that a noncompete
contract between the defendant and defendant’s former employee was unenforceable.
Id. at * 1. In the instant case, JNS is not seeking any declaratory relief related to the Exchange
Agreement. Finally, 350 Green’s fourth case, Lujan v. Defenders of Wildlife, 504 U.S. 555
(1992), does not even involve claims requiring contract interpretation or enforcement.
By raising affirmative defenses based on the Exchange Agreement, 350 Green placed the
Exchange Agreement at issue in this case and invited arguments by JNS that 350 Green’s
affirmative defenses relying on the Exchange Agreement are meritless and do not prevent entry
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 3 of 35 PageID #:559
4
of summary judgment in favor of JNS. For these reasons, 350 Green’s standing argument should
be rejected out of hand.
II. The Exchange Agreement Did Not Bar 350 Green And JNS From Entering Into The
APA.
For the reasons stated in JNS’s Motion for Partial Summary Judgment (Case no.
13cv4020, Dkt. 33) and JNS’s Response to the CCGI Parties’ motion for partial summary
judgment (Case no. 13cv3124, Dkt.41), which are both adopted and incorporated as if fully set
forth herein, whether the Exchange Agreement was in effect at the time the APA was executed is
immaterial. 350 Green has not raised any new issues in response to the JNS motion for partial
summary judgment. (Resp., pp. 9-11). As should be clear from the JNS pleadings already filed,
the Exchange Agreement did not, and cannot, operate to prohibit or limit 350 Green’s ability or
capacity to enter into or perform under the APA. For this reason, there are no questions of
material fact or law that the APA is a valid and enforceable contract.
III. Knowledge Of The New York Litigation Does Not Bar JNS From Relying Upon 350
Green’s Representation And Warranties.
350 Green mistakenly argues that JNS’s knowledge of the lawsuit filed by CCGI against
350 Green and JNS Holdings Corporation (S.D.N.Y. case no. 13cv2389, “NY Lawsuit”)
somehow prevented JNS from relying on the representations and warranties of 350 Green stated
in the APA. (Resp., pp. 11-13). 350 Green’s failure to cite even one case in support of this
novel proposition serves to demonstrate the fallacy of the argument, since not surprisingly, in
Illinois, precisely the opposite is true. “A warranty is an assurance of one party to a contract of
the existence of a fact upon which the other party may rely. It is intended precisely to relieve the
promise of any duty to ascertain the fact for himself.” Vasco Trucking, Inc. v. Parkhill Truck
Co., 286 N.E.2d 383, 386 (Ill. App. Ct. 1972). Just because CCGI had sued 350 Green and JNS
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 4 of 35 PageID #:560
5
does not provide notice that any of the assets which are the subject of the APA were somehow
encumbered and could not be sold.
Indeed, in making this “notice and knowledge” argument, 350 Green ignores a key ruling
by the Judge in the NY Lawsuit. On April 15, 2013, the judge affirmatively advised all parties
that he was not enjoining JNS and 350 Green from negotiating any purchase of assets of 350
Green. Transcript of April 15, 2013 hearing in the NY Lawsuit, p. 34, a copy of which is
attached hereto as Exhibit A. Therefore, and in reliance on the judge’s ruling, JNS and 350
Green negotiated and entered into the APA on April 17, 2013. (SMF, ¶5).
In its motion for partial summary judgment in the 13cv3124 case, 350 Green makes the
same “notice and knowledge” argument, attempting to find support by analogy to purchases
made under the Uniform Commercial Code. As discussed, in detail in JNS’s response to CCGI’s
motion for partial summary judgment in the 13cv3124 case, this argument is also wholly without
legal precedent and, in fact, contradicted by the laws governing contractual representations and
warranties. See 13cv3124, Dkt. 47, pp. 12-14. Furthermore, in the NY Lawsuit case, 350 Green
took the position that after March 22, 2013, and at the time the APA was executed, 350 Green
had an unfettered right to sell its assets. (S.D.N.Y. Case no. 13cv2389, Dkt. 21, p. 11). This
position has never been held to be invalid or found improper by a court. 350 Green did not
concede that it could not sell these assets at the time it executed the April 22, 2013 Addendum,
which settled the NY Lawsuit, and did not expressly take any position regarding the APA.
(SMF, ¶39, Ex. 14 (Addendum pp. 1,3)). Obviously, 350 Green’s position in the NY Lawsuit
formed the basis for the representations and warranties made in the April 17, 2013 APA upon
which JNS reasonably relied. The argument that knowledge of the NY Lawsuit operates to
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 5 of 35 PageID #:561
6
invalidate the enforceability of the APA is meritless, and therefore, does not operate to prevent
entry of partial summary judgment against 350 Green.
IV. Ordering Specific Performance Of The APA, Against 350 Green, Is The
Appropriate Remedy.
350 Green’s additional arguments regarding the specific performance remedy are equally
unavailing. As demonstrated below, the Court should reject these arguments outright and find
that specific performance is the appropriate remedy for 350 Green’s breach of the APA.
A. The APA Closed And Is Enforceable.
350 Green argues that JNS has not produced any evidence that the parties executed
documents to extend the closing beyond April 11, 2013. In so arguing, 350 Green blithely
ignores the uncontested fact that both parties executed the APA on April 17, 2013. (SMF, ¶5). In
light of the date the agreement was actually signed, the date listed for closing in the APA, April
11, 2013, obviously was a scrivener’s error, uncorrected from what is clearly the April 4, 2013
draft of the APA. (Complaint, Ex. B). The underlying terms of the APA had not been agreed
upon until April 17, 2013, after the District Court in the NY Lawsuit advised all the parties that it
was not enjoining JNS or 350 Green from negotiating the purchase of 350 Green’s assets.
(Exhibit A, p. 34). Therefore, it would have been an impossibility for the APA to close on a date
prior to the parties’ execution of the contract.2
2 The contract law doctrine of “scrivener's error,” or mutual mistake, allows a court of equity to
reform a contract where a written agreement does not reflect the clear intent of the parties due to
a drafting error. Young v. Verizon's Bell Atl. Cash Balance Plan, 667 F. Supp. 2d 850, 894 (N.D.
Ill. 2009) aff'd, 615 F.3d 808 (7th Cir. 2010) (citing, 27 Richard A. Lord, Williston on Contracts
§ 70:93); “To reform a writing based on mutual mistake, the Court must find that some provision
agreed upon was omitted and reforming the agreement by inserting the provisions would change
the instrument to the contract agreed upon.” Pneumatic Trucking, Inc. v. Local 164 Int'l Bhd. of
Teamsters, 05-74875, 2007 WL 2178394 (E.D. Mich. July 27, 2007).
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 6 of 35 PageID #:562
7
Moreover, the APA called for the closing to occur “on or about April 11, 2013.”
(Complaint, Ex. B). According to Black’s Law Dictionary, the phrase “on or about” is defined
as: “Approximately; at or around the time specified.” Black's Law Dictionary, (9th ed. 2009).
Therefore, it is clear that the parties did not intend the APA to close by a specific date certain.
Accordingly, there was no need under the APA for the parties to execute documents to extend
the closing date. On April 30, 2013, JNS obtained the letter from the City approving the terms of
the APA (SMF, ¶20, Ex. 4), and clearly fulfilled its obligations and was ready willing and able to
close on the transaction “on or about April 11, 2013.” Nothing further was required.
B. JNS Fully Performed Its Obligations Under The APA.
350 Green suggests, without presenting any facts or argument in support, that a question
of fact exists, which would prevent entry of summary judgment in favor of JNS, regarding the
assignment of licenses referenced in §2.7 of the APA. 350 Green argues that JNS is not entitled
to specific performance because the consents for the assignments of licenses were not secured or
provided by the licensors. (Resp., p. 13). In arguing this point, however, 350 Green ignores that
350 Green was the party obligated to assign the licenses and secure any consents for those
assignments under the APA. (Complaint, Ex. B, ¶2.7). There is no question of material fact that
the obligation to secure and deliver consents from certain licensors was 350 Green’s alone.
Section 2.7 of the APA required 350 Green to perform as follows:
[350 Green] shall assign and [JNS] shall accept and acknowledge the assignment
of all Licenses for locations of the assets set forth in Exhibit 2.1. [350 Green]
shall provide any and all Licensor consents required pursuant to such Licenses. If
needed [350 Green] will assist in transfer of unsigned license agreements, provide
contact information and make email introductions to potential and existing hosts.
(Complaint, Ex. B, ¶2.7).
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 7 of 35 PageID #:563
8
Notably, 350 Green does not dispute that it failed to assign the Licenses to JNS, even after JNS
demanded that the transaction close on May 6, 2013. (SMF, ¶49; SAUF, ¶23).
In its response, 350 Green relies upon the affidavit of Mariana Gerzanych, the President
and member of 350 Green at the time the APA was executed (SAUF, Ex. M) wherein she
admits: “None of the hosts that needed to provide their consents for license agreements pursuant
to part (b) of the APA ever provided such consents.” (Response., p. 13; SAUF, Ex. M, ¶60). By
Gerzanych’s own statement, 350 Green admits that it did not perform its obligations under the
APA.3 That 350 Green did not perform as required does not create a question of fact that
precludes summary judgment on JNS’s specific performance claim.
“A party seeking specific performance of a contract must show he has himself always
been ready, willing and able to perform the contract on his part, and he is not entitled to a decree
for specific performance if the circumstances or a course of conduct clearly show an
abandonment of the contract by him.” Wolford v. James E. Kolls Inv. Co., Inc., 377 N.E.2d
1314, 1317 (Ill. App. Ct. 1978). The undisputed material facts before the Court demonstrate that
JNS performed its obligations as fully as possible under the APA, and stands ready willing and
able to complete this transaction upon 350 Green’s performance of its obligations. Obviously,
JNS could not accept the assignment of the licenses and licensor consents, as required by §2.7 of
the APA, until such time as 350 Green assigned the licenses and provided any licensor consents
required. JNS cannot accept that which 350 Green refused to provide.
350 Green’s argument regarding the grant is also misleading. The only condition that
JNS was required to fulfill under the APA was the agreement by the City to allow 350 Green to
3 In fact, in its response, 350 Green does not refute that it failed to transfer the Chicago Assets after the APA closed
April 30, 2013. Failing to transfer these assets was a breach of the APA that 350 Green has now conceded.
Marcavage v. City of Chicago, 659 F.3d 626, 638 (7th Cir. 2011) (holding, “Plaintiffs waived their challenge to the
permit policy by failing to respond on that point when the city defendants moved for summary judgment”).
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 8 of 35 PageID #:564
9
assign to JNS the remaining benefits and obligations associated with the grant – not the
assignment itself. This condition was achieved as evidenced by the April 30, 2013 letter from
the City to JNS accepting the terms of the APA and approving the assignment of the grant to
JNS. (SMF, ¶20).
Finally, 350 Green’s argument regarding the purported discrepancy in the amount of the
liabilities that 350 Green owed to its creditors listed in the APA and the subsequent affidavit of
Amber Achilles Ritter (“Ritter “) does not preclude entry of summary judgment. The amount of
liabilities owed by 350 Green and to be satisfied by JNS pursuant to the APA is not material to
whether specific performance is an appropriate remedy. How much JNS may have to pay to
creditors under the Chicago Grant does not affect whether 350 Green should be ordered to
transfer all of the assets described in the APA. Moreover, even if a question of fact exists
regarding the actual amount to be paid as part of JNS’s performance, 350 Green has failed to
provide any basis upon which the Court could find that discrepancy material. Specific
performance by 350 Green under the APA – which does not in any way involve payments to
these creditors by 350 Green – is the appropriate remedy.
C. The Assets To Be Transferred Are Unique In Nature Such That Monetary
Damages Are An Inadequate Remedy At Law.
350 Green’s conclusory statements that the Chicago Assets are not unique and JNS has
an adequate remedy at law (Resp., p. 14) should be rejected outright by the Court as these bare
boned conclusions are devoid of any legal or factual support. The undisputed facts and
applicable law clearly demonstrate the fallacy of these arguments.
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 9 of 35 PageID #:565
10
1. It is Uncontradicted that the Chicago Assets are Unique and Therefore,
Specific Performance is Appropriate.
“A court may decree specific performance where the goods are unique… whether goods
are replaceable as a practical matter—for example, whether it would be difficult to obtain similar
goods on the open market.” Magellan Int'l Corp. v. Salzgitter Handel GmbH, 76 F. Supp. 2d
919, 926 (N.D. Ill. 1999) (denying motion to dismiss specific performance claims). “The test of
uniqueness under this section must be made in terms of the total situation which characterized
the contract.” In re Bullet Jet Charter, Inc., 177 B.R. 593, 599 (Bankr. N.D. Ill. 1995) (citing
Uniform Commercial Code Comment, 810 ILCS 5/2–716). In Bullet Jet, the court found that,
under the totality of the circumstances, the property at issue, an aircraft, was unique based on the
nature of the aircraft and the work done to the aircraft in connection with the contract for
purchase. In re Bullet Jet Charter, Inc., 177 B.R. 593, 599.
JNS has argued that the undisputed facts demonstrate that the Chicago assets were unique
and integral to the transaction. (JNS Memorandum, p. 14). In response, 350 Green merely
makes the conclusory statement that “[t]he Chicago Assets are not unique, nor were they created
specifically for the Chicago Project.” (Resp. p. 14). Neither in its Response or it Statement of
Additional Facts, however, does 350 Green offer any factual basis for this claim.
What is clear from the undisputed facts in this case is that the Chargers, which are among
the assets 350 Green agreed to sell, are unique. As noted in the APA, all 219 chargers sold under
the APA are necessary to and inextricably integrated with the work performed and remaining to
be performed under Grant. (Complaint, Ex. B). As contemplated in the APA, JNS was to
perform the remaining tasks required under the Grant and accept those additional obligations in
exchange for those monetary benefits 350 Green already had received under the Grant. This
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 10 of 35 PageID #:566
11
included ownership of all 219 chargers already purchased by 350 Green. The Chargers, thus, are
inextricably tied to the Grant and JNS’s completion of the Chicago Project.
In addition, 168 of the chargers already have been installed at various locations
throughout the Chicago area. (SMF, ¶5). As in Bullet Jet, the work done by 350 Green to the
installed chargers, prior to executing the APA, renders those charges particularly important to the
transaction. The 168 chargers that have been installed at specific locations simply cannot be
removed and replaced by other chargers, as evidenced by the requirement that 350 Green assign
the licenses for those locations to JNS. (Complaint, Ex. B, ¶2.7). Thus, contrary to 350 Green’s
claim, these chargers were “created specifically for the Chicago Project.” To not require the
assignment of these installed chargers would defeat one of the purposes of the transaction – to
obtain these chargers and the corresponding leases in exchange for JNS’s payment to the 350
Green creditors from the Chicago Project.
Here, the Court is being asked to order 350 Green to transfer the Chargers that were
obtained and installed pursuant to the Grant, which is also being assigned, to JNS. The Chargers
are the type and model specifically described in the Grant and are either already installed or are
ready-on-hand in Chicago and available for immediate installation, so that JNS can timely
complete the remaining installations before the Grant expires on December 31, 2013. Under
these circumstances, these Chargers are not fungible or replaceable; they are unique and warrant
specific performance as a remedy for 350 Green’s breach of the APA.
Since 350 Green has provided no facts to refute the uniqueness of the Chargers which
form a significant portion of the Chicago Assets to be transferred under the APA, this argument
that the chargers are not unique should be rejected. “Generalized allegations, without more, are
insufficient to defeat a motion for summary judgment.” Villafuerte v. Camberley Associates,
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 11 of 35 PageID #:567
12
Inc., 98 C 473, 1999 WL 66575, at *3 (N.D. Ill. Feb. 8, 1999). “Bare assertions in the pleadings
and arguments are not sufficient to raise a question of material fact.” Nat'l Sur. Co. v. Preferred
Piping, Inc., 88 C 8490, 1990 WL 16213, at *3 (N.D. Ill. Feb. 1, 1990).
2. Monetary Damages are Inadequate.
350 Green also contends that monetary damages are adequate since JNS’s losses arising
from 350 Green’s breach of the APA are somehow limited to the satisfaction of 350 Green’s
previous debt to JNS. (Resp., p. 15). JNS’s losses resulting from 350 Green’s breach of the
APA, however, include the irreplaceable Chargers, the assignments, and the leases 350 Green
agreed to assign and transfer to JNS. No adequate remedy at law exists for 350 Green’s failure
to transfer the assets described in the APA since they are so unique in nature that damages for
350 Green’s breach will be impossible to calculate. In such cases, specific performance is
proper, “where the measure of damages resulting from non-performance of the agreement is
uncertain or difficult to ascertain.” Greyhound Fin. Corp., 1993 WL 294023, at *3.
Accordingly, there are no questions of material fact or law that 350 Green breached the APA and
that specific performance is the just and equitable remedy.
V. Conclusion
“In contract law once a contract is established as valid, the rights of the parties become
absolute and in absence of a breach going to the essence of it, the contract will be enforced.”
Friedman v. 5424 Cornell Corp., 382 N.E.2d 296, 298 (Ill. App. Ct. 1978). As discussed in
Sections II, A and B, infra, there are no questions of material fact that the APA is a valid and
enforceable contract. There is also no question of material fact that JNS is not in breach of any
material terms of the APA or otherwise failed to satisfy any conditions precedent to be
performed by JNS. Infra, Section 10.B. Moreover, it is undisputed that the Chicago Assets are
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 12 of 35 PageID #:568
13
unique and appropriate for specific performance. Infra, Section IV.C. Accordingly, there is no
question of fact or law that would prohibit the Court from enforcing the APA and ordering 350
Green to specifically perform pursuant to the terms of the APA.
WHEREFORE, JNS Power & Control Systems, Inc., respectfully request that this Court
find there are no questions of fact or law regarding JNS’s Motion for Partial Summary Judgment
and enter an order: (1) Granting summary judgment on Count I of JNS’s Complaint; (2) Order
350 Green to immediately transfer the Chargers to JNS, deliver the assignments of 350 Green’s
rights in the grants, licenses, rental agreements or leases identified in the APA, and provide full
releases and indemnification as identified in the APA; and (3) grant such other relief as the court
deems just and appropriate.
Respectfully submitted,
JNS Power & Control Systems, Inc.,
By: s/ Evan J. Haim
One of Their Attorneys
KELLY MCCLOSKEY CHERF
PATRICK E. DEADY
EVAN J. HAIM
HOGAN MARREN, LTD.
321 N. Clark Street, Suite 1301
Chicago, Illinois 60654
(312) 946-1800
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 13 of 35 PageID #:569
EXHIBIT A
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 14 of 35 PageID #:570
d4f0cara
1
1 D4F0CARA Motion
2 UNITED STATES DISTRICT COURT
2 SOUTHERN DISTRICT OF NEW YORK
3 ------------------------------x
3
4 CAR CHARGING GROUP, INC 350
4 HOLDINGS, LLC,
5
5 Plaintiff,
6
6 v. 13 CV 2389
7
7 350 GREEN, LLC
8 MARIANA GERZANYCH
8 TIMOTHY MASON
9 JNS HOLDING CORPORATION,
9
10 Defendant.
10
11 ------------------------------x
11 New York, N.Y.
12 April 15, 2013
12 4:08 P.M.
13
13 Before:
14
14 HON. JESSE M. FURMAN,
15
15 District Judge
16
16 APPEARANCES
17
17 MICHAEL IRA BERNSTEIN
18 Attorney for Plaintiff
18
19 CARY BRIAN SAMOWITZ
19 FARAH LISA WHITLEY-SEBTI
20 Attorney for Defendant 350 Green,LLC
20 Marian Gerzanych, Timothy Mason
21
21 RANDALL SCOTT NEWMAN
22 Attorney for Defendant JNS Holding Corporation
22
23
24
25
SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
2
1 (In open court)
2 THE COURT: You may be seated.
3 In the matter of Car Charging Group, 13 CV 2389.
4 Counsel, state your names for the record.
5 MR. BERNSTEIN: Michael Bernstein, on behalf of
6 plaintiffs.
7 MR. SAMOWITZ: Carry Samowitz, for all defendants
8 other than JNS Holding Corporation. And I'm here with Farah
9 Lisa Whitley-Sebti.
10 MR. NEWMAN: Randall Newman, for defendant, JNS
11 Holdings Corporation.
12 THE COURT: All right. Good afternoon, all.
13 So, I called this conference to discuss the -- I
Page 1
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 15 of 35 PageID #:571
d4f0cara
14 received an application, new complaint and application for
15 preliminary injunction from plaintiff last week. And I wanted
16 to discuss how we were going to proceed, and what the status of
17 things is beyond what I know from reading the papers.
18 So to begin, with Mr. Bernstein, why don't you fill me
19 in, if there is anything beyond what I have read that I should
20 know about.
21 MR. BERNSTEIN: Thank you.
22 From the plaintiff's position, we are not aware, as of
23 right now, of any anything that's been going on in the pending
24 discussions that we understand have been ongoing between JNS
25 and 350 Green and its principle.
SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
3
1 The last we heard was what was put in our papers. And
2 the reason why we had asked for injunctive relief --
3 THE COURT: Explain to me, just flush out for me why,
4 what exactly the risk of irreparable harm is here, which is to
5 say, what the harm is to your reputation if the merger doesn't
6 go through, or doesn't go through in precisely the fashion that
7 you originally contemplated.
8 I understand that it may be a bummer from your
9 client's standpoint, but why would damages not be adequate to
10 remedy whatever harm occurred as a result?
11 MR. BERNSTEIN: Your Honor, the reason for that is
12 because this industry, the electric car industry, is a new
13 industry. My clients, Car Charging, and its affiliated entity
14 that we are entering into this contract, had done so, had
15 issued press releases precisely because this acquisition was
16 going to enable them to raise considerable capital, as well as
17 enable them to complete their application for being listed on
18 the, I believe it is in our papers, they were looking to go on
19 two stock exchanges, either Nasdaq or, I believe it was the New
20 York Stock Exchange. And precisely because of -- if this deal
21 does not go through, as it's been contemplated, and the fact
22 that investors have put in moneys precisely based on this, the
23 releases, that this transaction was going to occur, you have
24 the lawsuits from public investors that bought stock and trades
25 on the over-the-counter bulletin board. So people bought stock
SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
4
1 in anticipation of this transaction. The investors made
2 private investments into their company, based on the fact that
3 this deal was going to go through.
4 THE COURT: All of that goes to whether those parties
5 have been harmed by any actions of the defendants, to the
6 extent that's a question of your reputation. I mean, if this
7 deal falls through, through the acts or conduct of the
8 defendants, and perhaps even acts or conduct in violation of
9 whatever contract they had, how does it harm your reputation?
10 Certainly harms their reputation. But, you don't get the
11 benefit of the anticipated merger, but presumably you can
12 figure out, in some fashion, what -- how much that deprived you
13 in the form of, you know, anticipated earnings, or you know
14 economy scale, what have you. I'm trying to understand
15 precisely how it harms your reputation if, through misconduct
16 of theirs, the merger falls through.
17 MR. BERNSTEIN: Because if the investors invested,
18 based on this transaction, lose their confidence and pull out,
19 and/or we don't get listed because this transaction doesn't go
20 through, then the chances of us getting listed as anticipated
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21 will not happen. The company will, most likely, according to
22 the declaration of CEO Michael Farkas, will not survive the
23 whole debacle, and there will be no company.
24 So the fact that 350 Green, which says in our papers
25 has been under federal investigation, has no money, it's -- the
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1 City of Chicago has cancelled the contract. And this was an
2 asset purchase that was obtained for a certain price, based on
3 all of those criminal charges of other ongoings that were going
4 on, there wouldn't be any monetary equivalent. These people
5 have no money. So in the end, Car Charging will be potentially
6 out of business. That company will be out of business, or it
7 may or may not complete its merger with JNS. It may go to
8 someone else, or nothing may happen. We don't know exactly
9 where that stands.
10 But all we know is that if Car Charging goes out of
11 business, and 350 has no assets, then there is no adequate
12 remedy at law, because getting a judgment against a defunct
13 company that has basically lost its contracts due to its, you
14 know, alleged criminal behavior, is not going to put my client
15 in a position that an adequate remedy at law would by making it
16 whole on collecting on some potential judgment that would be
17 recovered after trial.
18 THE COURT: Okay. I'm not sure you made that argument
19 in your memorandum. You didn't --
20 MR. BERNSTEIN: I believe we did, your Honor. We said
21 the exact same thing. That if this goes out of business,
22 precisely because of the investor confidence, we won't get
23 listed and the transaction won't be able to proceed.
24 THE COURT: Well, if that was on service of the
25 argument that the irreparable harm was to your reputation, not
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1 the irreparable harm that would flow from the risk that the
2 they would be insolvent or not in existence, at the end of the
3 day and, therefore, couldn't pay whatever damages you sought.
4 MR. BERNSTEIN: Well, the harm to our reputation is
5 that no one is going to invest in the company. People are not
6 buying stock, if people are not investing, we're out of
7 business.
8 I can't sit here on the record and say the very fact
9 of this transaction not happening will put Car Charging out of
10 business, as your Honor brought out. But what will put it out
11 of business is if all of the investors sell out their stock
12 because of the loss of investor confidence, the private
13 investors pull out their money and, coupled with that, is the
14 inability to collect on a judgment. Because collecting on a
15 judgement after the fact may enable us, as your Honor pointed
16 out astutely, that if we get shareholder lawsuits, or
17 derivative lawsuits, that we have to pay out a recovery, if it
18 even existed, would be used to pay that. But for all practical
19 purposes, if the company goes out of business, that's not
20 really an adequate remedy of law. It's just being able to pay
21 off third party lawsuits against the company as a result of the
22 inability of this transaction to close in accordance with its
23 terms, based on the intentional breach of 350 Green.
24 THE COURT: Okay. And are you aware of any cases -- I
25 think in your memorandum, you, to the extent that you have any
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7
1 support, legal support for the argument of irreparable harm, it
2 is for the proposition, the incontestable proposition, that the
3 loss of bid in a contract case is a form of irreparable harm.
4 Can you cite any cases, circumstances similar to this,
5 where investors have made investments based on some anticipated
6 merger, and/or, you know, there is some other collateral
7 benefit, like listing on an exchange, would flow from that and
8 that that constitutes irreparable harm?
9 MR. BERNSTEIN: Sitting here today, your Honor, I
10 don't have a case to that effect.
11 I cite it because this conduct is governed by Florida
12 law, even though the jurisdiction is here in New York.
13 We cited -- the cases we cited was the Florida standard for
14 irreparable harm. And it's our interpretation that that is
15 what, again, we are saying that that is a substantially
16 likelihood of events that will occur. As I said, I don't have
17 a case that says investors pulling out automatically makes it
18 irreparable harm. But irreparable harm is harm that a money
19 judgment at law won't provide us with sufficient benefit at the
20 end of the day. And in this case, we feel that based on these
21 circumstances that we cited, based on the Florida case law, as
22 it relates to the contract showing that there was no default
23 provision, there was no time of the essence clause. And the
24 cases that we cited were clearly on point, showing that there
25 was an intentional breach by the defendant, 350 Green, and its
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1 principles. The fact that, again, your Honor, some of it is
2 based on the declaration of the CEO. From a business
3 standpoint, they were in the process of being, completing their
4 application to be listed. This will affect their ability to
5 raise money. This will affect the stock price. But, again,
6 we're doing this preemptively because it has not happened yet.
7 And so the AK that will be issued, based on this lawsuit, may
8 or may not determine how the investors would ultimately react
9 as a result of this, the publishing of what's going on now with
10 the breach of contract.
11 THE COURT: Okay. And do you have any authority for,
12 in your memorandum, you also argue that the parties
13 contemplated the need for injunctive relief and essentially
14 agreed by contract, that any party would be entitled to
15 injunctive relief to prevent the breaching of the agreement.
16 But there is no case law to support the proposition that
17 parties can agree prior to contract, the injunctive relief of
18 the sort that you are seeking. Are you aware of any such
19 authority under --
20 MR. BERNSTEIN: Standing here, today, your Honor, I do
21 not. I'm happy to try to supplement it if your Honor would
22 request. I could take a look to see if such cases exist.
23 THE COURT: All right. Well, for now, let's leave it
24 there. But we'll proceed.
25 Anything else you want to add before I ask defense
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1 counsel?
2 MR. BERNSTEIN: Well, one of the things that I think
3 would be beneficial, I want to bring up, your Honor, from a
4 housekeeping standpoint, subsequent to the filing of our
5 papers, we had filed a motion to file sealed records.
6 Specifically because I think it would benefit your Honor to see
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7 the provisions of the July term sheet, the August term sheet,
8 and the exchange agreement that are the underlying documents in
9 this case which, generally, in the ordinary course are
10 requested. Surprisingly from Mr. Samowitz on behalf of the
11 defendants, objected to it being filed under seal. And as
12 such, to the extent that on the record Mr. Samowitz, since he
13 has objected on our filing it under seal, we have no objection
14 to uploading them as exhibits, that they are public records
15 that your Honor can see immediately. And it obviates the need
16 for the motion to file under seal. We just didn't want to open
17 up to a claim for breach of the terms of the agreements in the
18 confidentiality provisions.
19 And, as such, even though I picked up the sealed
20 envelope from Room 270 at 500 Pearl Street, I think from a
21 housekeeping standpoint, on that motion, I would be happy to
22 just upload those documents if Mr. Samowitz has no objection.
23 THE COURT: Well if they are going to be filed under
24 seal, you don't upload them anyway, because that would make
25 them readily available to the world. But, you know, I'll hear
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1 from Mr. Samowitz on that issue, as well.
2 So, Mr. Samowitz, number one, let's stick to the
3 substance and merits for the moment. And then this is largely
4 to figure out sort of the process that we are going to follow
5 to resolve the applications on the table. But why don't you
6 start with the housekeeping matter. The motion to seal, I
7 would have thought that that was something that both sides
8 would probably want to maintain under seal.
9 MR. SAMOWITZ: Your Honor, if I understood Mr.
10 Bernstein correctly, are you saying if I don't have an
11 objection, you wouldn't bring a claim for benefits, you
12 wouldn't file the public record. So maybe it would obviate --
13 THE COURT: There is a court reporter here, but I have
14 no idea what you just said.
15 MR. SAMOWITZ: Did I hear Mr. Bernstein correctly that
16 if I'm not objecting, and your Honor's not objecting, either,
17 that you can file them in public record?
18 MR. BERNSTEIN: Correct.
19 We were filing them under seal, as I said to the
20 judge, because of the fact that there are confidentiality
21 provisions in those documents. And, as such, it is our
22 understanding that the parties wanted them confidential and not
23 published to the world.
24 Since we asked you to file it under seal, and you
25 objected, we interpreted that as you had no objection to them
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1 being filed as public documents. As such, we'll just file
2 them, presuming on the record you say you have no objection.
3 MR. SAMOWITZ: We have no objection. Just to clarify,
4 the main document does not have a confidentiality provision.
5 That is one of the problems. If you'd show me the
6 confidentiality provision. But, otherwise, I don't see why.
7 These are just three contracts, your Honor. There is no reason
8 to burden the Court and the parties with the sealing of those
9 three contracts.
10 THE COURT: I am going to leave you guys to confer
11 about what can and can't be filed in public record with the
12 following guidance and caveat.
13 My view, I take the public right of access to judicial
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14 documents pretty seriously, which is to say, number 1, you
15 don't have authority to file anything under seal. You can only
16 ask me to file something under seal. And I, and I alone,
17 could, can, authorize things to be filed under seal.
18 Number 2, to the extent that documents, particularly,
19 well, judicial documents, that is documents relevant to the
20 judicial function, can be filed publically, even in redacted
21 form, I will mandate that that be that that happens. Now,
22 which is to say you should keep your redactions to a minimum.
23 An agreement between the parties that something be should
24 remain confidential, by itself, does not justify something
25 remaining under seal, if it would otherwise be subject to
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1 common law right of access or the First Amendment right of
2 access.
3 So with that guidance in mind, you can look at look
4 Lugosch. I can't remember the name of the defendant. But it's
5 a leading Second Circuit case on common law right of access and
6 First Amendment right of access. If you look at that case it
7 will give you some guidance on what can and can't remain under
8 seal. And if after looking at it and conferring, either side
9 has an application, or even better there is a joint
10 application, I will consider it. But, you know, it sounds like
11 you guys can do a little bit of the leg work in the first
12 instance.
13 Okay?
14 MR. BERNSTEIN: Thank you, your Honor.
15 MR. SAMOWITZ: Very well, your Honor.
16 THE COURT: So with that, for now, I'll leave the
17 motion to seal on the record -- on the docket. And depending
18 on what comes of your discussions, that may be mooted or it may
19 not be. Maybe narrowed, I don't know. But I'll leave it to
20 you to discuss first.
21 So, with that, Mr. Samowitz, talk to me about the
22 substance and merits. And I ask counsel only about the
23 irreparable harm component of this, but you should obviously
24 address the likelihood of success component as well.
25 MR. SAMOWITZ: Sure. If I may, just to start, just as
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1 a caveat for my point of view, I only found out about this case
2 maybe last Wednesday night, so please don't take whatever I'm
3 going to say as our final say on these issues, because we are
4 still coming up to speed on the facts.
5 On the merits, your Honor, just to back up for a
6 second, our client services these, manufacturing services these
7 electric vehicle charging stations.
8 And Mr. Bernstein's client is in the same business.
9 There is nothing unique about electric vehicle charging
10 stations. It's a very fungible product. There are many
11 players in the field. There is no reason why plaintiff can't
12 find another company that sells the same product, and services
13 the same product and, in fact, there was an SEC filing last
14 month that indicated that this plaintiff had done just that.
15 They bought a company called Beam, which I believe is in the
16 same field. That was disclosed in an 8K filing.
17 On the merits, your Honor, first of all, it's kind of
18 odd to hear all of this stuff about criminal activity,
19 investigations, and times that we went back on our deal.
20 Because all of that happened allegedly before the parties
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21 entered into the equity exchange agreement.
22 The two term sheets, your Honor, were not binding.
23 The parties had the right to back out of those term sheets if
24 they didn't reach a mutually agreeable deal. After everything
25 had happened that Mr. Bernstein talked about and set forth in
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1 the complaint for several pages after that happened, then the
2 parties entered into this final agreement. So, you know,
3 clearly, plaintiff's waived any issue about that.
4 THE COURT: I sort of -- I mean I don't disagree with
5 that. I sort of took all of that as kind of background for
6 explaining the revised or amended term sheet or agreement,
7 which is to say that I have discounted those allegations. But
8 that being said, it strikes me as reading, obviously, their
9 papers, that you know there was a fairly definitive agreement
10 here, after all that. And it would seem that if there were
11 negotiations with JNS, let alone an agreement, that that would
12 seem to be some tension with the terms of that agreement, no?
13 MR. SAMOWITZ: The negotiations and press release that
14 plaintiff cited was before the new agreement, before the
15 exchange agreement that is at the heart of the case.
16 And I should say, your Honor, just for the record, the
17 first two term sheets have arbitration provisions. I need to
18 sit down with my client. There is one cause of action that is
19 based only on the term sheet. I don't know if they're gonna
20 seek to use arbitration provision, we may not, just in the
21 interest of simplifying the case. But I just wanted to state
22 that on the record so there is no accusation of waiver from the
23 plaintiffs later on.
24 THE COURT: Okay.
25 MR. SAMOWITZ: Now, again, briefly on the merits, your
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1 Honor, the parties entered into this equity exchange agreement.
2 Both sides represented by counsel. The equity exchange
3 agreement has a very clear date for closing. It says there is
4 an effective date which is March 8. And then in clause 1.2 of
5 the agreement, the parties agreed, quote: Closing shall take
6 place no later than 10 business days after the effective date.
7 Shall take place no later than. So that's pretty
8 clear that that is the definitive closing date.
9 So what happens, is that the 23rd would be the closing
10 date under that language. On the 21st, everything that my
11 client has had to do, we had done. We sent over our signature
12 pages and said you send over your signature pages, plaintiffs,
13 and we are done.
14 On the 22nd, the in-house counsel for the plaintiffs
15 said that we acknowledge that -- I'm sorry, the 21st. In-house
16 counsel says we acknowledge that you sent over these signature
17 pages, but I'm not yet authorized to send over my signature
18 pages.
19 And we say, why, what's happening.
20 There is back and forth between counsel.
21 On the 22nd, in-house counsel for the other side sent
22 over a noncompete agreement, which was never part of the final
23 deal, totally knew element, onerous and burdensome for my
24 client. They are not allowed to compete anywhere in the United
25 States or Europe in any area of business that is subject to
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16
1 agreement. And it was always our client's intention to do just
2 that. They were not getting out of this business. They have
3 other interests. They are very involved in the business. They
4 have other assets that are subject to the deal, it is my
5 understanding. So they did not want to do a noncompete
6 agreement.
7 And, get this. On the day before the closing, it was
8 quite upsetting to my client, but, you know, plaintiffs say it
9 was just a request in their declaration or complaint. That is
10 not what their e-mail says. E-mail says we are in-house
11 counsel, we need both documents signed in the term before I
12 will circulate the signature pages. The other document being
13 extension of the closing date.
14 So the plaintiffs recognized on the 22nd that the
15 closing date is coming the next day, and that it is not closing
16 time because of their insistence on this new deal, so they want
17 us to extend the closing date. And on the 23rd, our counsel
18 talked to their counsel and said, no, we're not going to agree
19 on an entirely new element of this deal, it is onerous and
20 burdensome, that we are not getting anything for. This is the
21 last day of the period. You sign by the end of this period or
22 no deal.
23 Just like they said to us, you sign the noncompete or
24 no deal, we said, okay, no deal. And I think we had that right
25 to do that, after what they did, which was really acting in bad
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1 faith to bring in, at the 11th hour, an entirely new term.
2 So we told them no deal. There was some discussions
3 over the weekend. My clients were out of pocket for some
4 point. But eventually we said, look, we are just not doing
5 this with you guys anymore. You blew the closing date, acting
6 in bad faith introducing this new element, and we're not going
7 through with this. And that's really all there is.
8 That's the main point of the merits, your Honor.
9 THE COURT: Okay, two questions for you.
10 One, you made a representation that the press release
11 predated the revised or amended term sheet? Maybe this is
12 wrong, but looking at the plaintiff's memorandum, I felt that
13 the relevant term sheet was August 29th, 2012. And they
14 reference the press release issued by JNS Holdings Corporation,
15 as of February 11, 2013, which is to say after the relevant
16 term sheet. Am I missing something?
17 MR. SAMOWITZ: No, your Honor. I was talking about
18 another press release. The press release I believe was talking
19 about the press release issued by plaintiffs announcing one of
20 the term sheets.
21 THE COURT: I see. But my point was, if the August 29
22 term sheet, you know, basically gives plaintiff, you know, sole
23 exclusive, if you will, on the purchasing of the defendant and
24 the like, and while that agreement is still in effect the
25 defendant is negotiating with a third party, is that not a
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1 breach of the August 29 agreement?
2 MR. SAMOWITZ: Well, again, your Honor, I think -- I
3 don't really know, but I think that goes back to what we talked
4 about a few minutes ago, that the equity exchange agreement
5 that, obviously, that integration clause says it supercedes
6 every previous agreement that's entered into as of March 8, so
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7 that comes after the present release about the JNS dealings.
8 So clearly, by that point, the plaintiffs have waived anything
9 that came before then. They knew about that press release. If
10 they knew they had a claim there for breach, why didn't they
11 enter into the deal with us.
12 But in any event, I think, clearly, because the final
13 agreement subsumes all other agreements, they don't have a
14 claim there anymore.
15 THE COURT: Okay. And my second question is the
16 absence -- is counsel wrong that under Florida law, which I
17 take it governs here, in the absence of the time is of the
18 essence clause, then even an agreement to close on the
19 specified date is not failure to close on that date, does not
20 constitute a breach of the agreement?
21 MR. SAMOWITZ: Again, your Honor, we have not
22 completed our research, but our understanding is that principle
23 is most often applied to real estate cases.
24 Also, that there has to be good faith on the part of
25 the other side, which we contend was not here, that it was not
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D4fzcarm2 Motion
1 that the parties were just working out some kinks and needed a
2 little more time. That they came in the next to last day
3 before the closing and asked for an entire new element. Plus,
4 we said we are sticking to our right and insisting on closing
5 timely. All of that, the plaintiffs had to do. And they have
6 conceded in subsequent e-mails from in-house counsel that
7 in-house counsel had the signature pages in their possession on
8 the 21st, on the 22nd. All she had to do was press send on an
9 e-mail, and the deal is closed. So it's not like some cases
10 where the parties are still trying to work out the value of
11 property, and having some disputes about what goes with the
12 sale and what doesn't. This was a bad faith failure to close.
13 And given that bad faith failure to close, we had the right to
14 not close ourselves.
15 (Continued on next page)
16 MR. SAMOWITZ: Talking 50 seconds, your Honor, about
17 irreparable harm.
18 First of all, I believe -- and again we still only
19 believe that the plaintiffs indirectly assumed that Florida
20 injunctive relief standard is going to apply. I'm fairly sure
21 that in a federal court in New York your Honor would apply the
22 standard for injunctive relief by federal cases Second Circuit,
23 not Florida. So that issue aside, I think the standards are
24 not too dissimilar.
25 THE COURT: I certainly think federal standard
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D4fzcarm2 Motion
1 applies, not a Florida state standard. I don't -- I confess I
2 don't know offhand if the Eleventh circuit case law governs or
3 Second Circuit. But looking at what counsel represented to be
4 Eleventh Circuit standard, it wasn't immediately obvious to me
5 that it should matter, but --
6 MR. SAMOWITZ: You're probably right, your Honor. I
7 just wanted to put that out there.
8 THE COURT: Okay.
9 MR. SAMOWITZ: But the cases that he cited, and that's
10 all I got to go by so far, did talk about loss of good will
11 could cause irreparable harm. But that's not the loss of
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12 goodwill he's talking about here. The loss of goodwill, a
13 party who has customers that they're trying to service and
14 someone's trying to take those customers away, that's loss of
15 good will. This is just, well, we might be a little
16 embarrassed in the market. That's just not the same thing.
17 You know, plus when they issued the press release about this
18 deal they said, look, this is subject to further negotiations,
19 regulatory approval. They say this is just going forward, you
20 can't necessarily rely on this. And for them to come back
21 later and say well we have egg on our face I don't think is
22 proper. But in any event, they haven't cited any case that
23 shows that this kind of harm, alleged harm is irreparable. And
24 in fact it sounds to me like pure money damages. If they get
25 lawsuits by shareholders and they can come after us for that, I
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D4fzcarm2 Motion
1 don't think they can, but that's money. If they think that the
2 purchase price of our assets was a good deal and they can't get
3 that deal again, well, that's money. You know, the thought
4 that -- the fact that someone, some investors might not be
5 happy -- and plus I got to -- because this is an injunction,
6 that assertion, you know, is wholly unsupported by the record.
7 They have incredibly conclusory allegations from Mr. Farkas I
8 think is the CEO of the company, and all he says is some
9 unspecified investors purchased their interests in the lion of
10 this deal. And he doesn't say who the investors or they know
11 any of those investors. He hasn't submitted anything from
12 anybody saying, hey, we're pulling out of this deal because
13 we're going to sue you because this deal is gone now, or you
14 know explain to us why this deal's gone. It's just totally
15 conclusory, your Honor, which is not enough for an injunction.
16 THE COURT: And what about the question I asked about
17 the language in the contract that seems to suggest the parties
18 would agree injunctive relief was appropriate?
19 MR. SAMOWITZ: Your Honor, we're researching that as
20 well. I mean, I know that he hasn't cited any cases. I think
21 logically that language would not be sufficient to make every
22 part of the contract subject to injunction, regardless of
23 whether there is irreparable harm. I think that can't --
24 parties can't contract away the law on irreparable harm, but we
25 do need to research that further, your Honor.
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D4fzcarm2 Motion
1 THE COURT: Okay.
2 MR. SAMOWITZ: I want to be candid about that. I
3 think just logically it doesn't make any sense, I have to say,
4 that would be the law. I'd also like to talk a minute about
5 the balance of harm who would be harmed by an injunction. They
6 really haven't identified much harm. You know, this vague
7 accusation that shareholders might be unhappy. For the first
8 time Mr. Bernstein today says he his company might go out of
9 business. That's nowhere in these papers, that I recall. You
10 know, that's got to be supported and it's not. You know, if
11 anything, they get to keep a lot of their shares, they would
12 have given to us as part of the deal. So they haven't
13 established any significant harm to them, as opposed to us,
14 what they're requesting is that our company basically be
15 frozen, that until this case is over we can't sell if we think
16 it's in your best interest to sell, we can't sell part of our
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17 company or all of our company, or merge. We're just stuck
18 frozen in time until this case is over, and that could destroy
19 our company, which is, you know, much more tangible harm than
20 anything they've alleged.
21 Your Honor, that's the over view. Obviously, if we
22 get to the point, we want a bond. But I guess I'd rather, if
23 it's appropriate, you know, we'd of course want discovery. We
24 think there's some dispute and factual issues here presented on
25 their papers, going to the merits and to the irreparable harm
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D4fzcarm2 Motion
1 and other elements. So we would request discovery on those
2 elements. And, you know, if your Honor agrees we can discuss a
3 schedule with the three of us -- four of us, sorry -- but we'd
4 like a chance to have discovery and then brief the issues.
5 THE COURT: Okay, well, I'm certainly prepared to do
6 that, but let me hear first from Mr. Newman before we get down
7 to discussing schedules.
8 MR. NEWMAN: Well, as far as my client's concerned, I
9 don't think an injunction even is against us. It's only
10 against 350 Green. So it's our understanding -- I just got
11 involved Friday afternoon, so I'm new as to the lawyers in this
12 case -- but it's my understanding that their agreement, which
13 we haven't seen, is for the sale of the membership interest,
14 and we were negotiation -- JNS was negotiating for just one
15 asset, which is the Chicago contract. So for them to get
16 injunction preventing them from selling the -- we really don't
17 care who owns the company, because we're just buying assets.
18 So injunction preventing them from selling any assets doesn't
19 really make much sense when they're selling the shares, the
20 agreements for the shares, it's not for the assets.
21 Secondly, there is no allegations in the complaint
22 that support first of all jurisdiction against JNS. We don't
23 do business in New York. There is no allegation that any of
24 this conduct took place in New York, no allegations whatsoever
25 that the Court has personal jurisdiction over JNS.
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1 Also, with the tortious interference, there is no
2 allegations that we had knowledge of this contract. Obviously,
3 if 350 Green is saying there is no contract, it's hard to have
4 tortious interference with a contract that they say doesn't
5 exist. How could we have knowledge of a contract if they're
6 saying that there is no contract? And there is conclusory
7 allegations about tortious interference. Florida law doesn't
8 apply to us. It would be New York law, not Florida law. So as
9 far as we're concerned, we are going to make a motion to
10 dismiss for personal jurisdiction and 12(b)(6) failure to
11 plead.
12 THE COURT: Okay, am I correct in hearing you,
13 basically, you're saying you don't have a dog in the fight with
14 respect to the injunctive relief?
15 MR. NEWMAN: We would like to purchase the Chicago
16 asset from them, my clients. So as far as that goes, yes, we
17 don't think injunction -- there is no contract right now
18 between 350 and JNS.
19 THE COURT: Okay. And what is the current status of
20 any negotiations, if any, with respect to those parties?
21 MR. NEWMAN: I think they're circulated a draft
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22 agreement, but nobody's signed.
23 THE COURT: Okay, so I guess one question I have is,
24 you know, I'm happy to try to schedule that resolves the
25 preliminary injunction question swiftly. But if we're talking
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1 about allowing for time for discovery, which I'm prepared to do
2 followed by the preliminary injunction hearing, you know, and
3 my hope is I would be able to render a decision pretty quickly,
4 if not at the end of the hearing, but no guarantees there. You
5 know, in the meantime I would be concerned that the issue
6 wouldn't be mooted by virtue of any agreement. I didn't see
7 anything in the papers that plaintiff was asking for a TRO
8 pending the preliminary injunction, but maybe I am wrong or
9 missed that.
10 MR. NEWMAN: In the Order to Show Cause, page 5, first
11 paragraph says that ordered that until hearing on the
12 plaintiff's motion for -- it's confusing because there is no
13 such thing as a temporary -- there is either temporary
14 restraining order.
15 THE COURT: That's precisely what was causing me
16 confusion.
17 MR. NEWMAN: Right.
18 THE COURT: In some papers it was called temporary
19 injunction, which sounds like a TRO, but then in some of the
20 papers temporary injunction was described as what preliminary
21 injunction is called under Florida law. So I took that to mean
22 there was an application for preliminary injunction, rather
23 than TRO pending the preliminary injunction.
24 MR. NEWMAN: It seems that the language of paragraph
25 five, first paragraph is a TRO language.
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1 THE COURT: Okay. Well, Mr. Bernstein can perhaps
2 clarify that.
3 Anything further from your end?
4 MR. NEWMAN: No, your Honor.
5 THE COURT: Sorry?
6 MR. NEWMAN: No.
7 THE COURT: And I guess my one question for you, to
8 the extent you think there is no personal jurisdiction, I
9 confess I haven't encountered this situation before, I'm not
10 quite sure -- I presume there must be a way for you to litigate
11 the preliminary injunction issue without necessarily waiving
12 the argument that there is no personal jurisdiction, is that,
13 do you know what the --
14 MR. NEWMAN: Well --
15 THE COURT: -- story, which is that?
16 MR. NEWMAN: -- technically, the preliminary -- TRO is
17 not really against us. It says, prohibits 350 Green from
18 selling any portion of 350 Green to defendant JNS. But it's
19 really against 350 Green.
20 THE COURT: Agreed.
21 MR. NEWMAN: I know that putting an appearance I don't
22 think waives personal jurisdiction, but I don't know at what
23 point it's waived. I have to do some research.
24 THE COURT: Okay, all right.
25 Mr. Bernstein, you want to clarify the temporary
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1 versus permanent preliminary question?
2 MR. BERNSTEIN: Your Honor, I apologize if it wasn't
3 articulated well, but it's -- essentially, we are seeking to
4 have 350 Green estopped from selling any portion of the
5 company, until your Honor decides the issue of the injunction.
6 And I think that by -- contrary to what counsel is saying, we
7 think we cited the cases from the Eleventh Circuit which would
8 be applicable here as part of federal law that says irreparable
9 harm is any harm that would not be satisfied by monetary
10 remedies. Failing to list on an exchange if he has personal
11 knowledge of going through the application, that's not monetary
12 damages that we could even -- if we get a lawsuit, that's not
13 going to help us get listed on another public exchange. I
14 would agree that having a restraint against 350 Green, pending
15 this hearing, regardless of jurisdictional issue of JNS, the
16 difficulty would apply, would be subject to jurisdiction
17 here --
18 THE COURT: You're trailing off, I didn't hear.
19 MR. BERNSTEIN: I'm sorry. I would agree that pending
20 the decision of this Court on the injunction, stopping 350
21 Green from selling its assets, to keep the status quo would, in
22 that short duration, allow the Court to decide how to proceed
23 forward on that without necessarily having a restraint against
24 JNS. And I strongly disagree that -- we knew there were talks
25 of the Chicago contract and that's how the equity exchange
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1 agreement got negotiated based on the prior breach. I know Mr.
2 Samowitz says it wasn't binding. It wasn't entirely binding.
3 But when we upload these documents, you'll see there are
4 several provisions that are binding. One of those was the no
5 shop agreement. And we're not just buying membership interest
6 in a dead company. The point of being a company is you get the
7 assets along with the company, so that it's little disingenuous
8 to say they're only buying membership interest, but it doesn't
9 include any assets of the company. Those are separate, but
10 buying worthless membership interests, it's specifically for
11 the assets in the charging stations and the contracts that they
12 have, which is why we're purchasing this company for the
13 valuation that it brings. And we believe that, again, I know
14 Mr. Samowitz said a lot about the e-mails back and forth. That
15 will ultimately go to the merits because we -- and the facts
16 which will show that contrary to Mr. Samowitz's claims, his
17 client did not emphatically say X, Y and Z. As a matter of
18 fact, they claimed they are in China, they didn't respond. And
19 if you read the e-mails, your Honor will read them, you'll see
20 that it wasn't said, hey, sign this non-compete or we're not
21 doing the deal. It was requested. They said no. We said fine
22 and sent them the signature pages. So I think he's misstating
23 the facts.
24 But, again, as he said, he just got into this so he's
25 climbing out of a prism. But at the end of the day what he did
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1 not do is come here with any cases that said Florida law,
2 without a time of the essence clause, and contrary to his
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3 statements again, you'll read the contract, it doesn't say that
4 the closing will be on March 22nd at 10:00 a.m. in the offices
5 of DLAPiper. It says on or before ten days from the signing of
6 this agreement, which is exactly what Florida law says. There
7 is no specific date. They can close the second day from
8 signing or the 10th day from signing, which is precisely why a
9 time of the essence letter must be sent to the breaching party
10 saying closing is whatever reasonable time would be
11 interpreted; 24 hours, 48 hours, 52 hours and saying if you
12 don't show up then, we're deeming the contract breached and
13 terminated. That never happens. As far as we're concerned, we
14 have a valid binding contract to buy the membership and assets
15 of 350 Green that they're refusing to comply with and we want
16 to close this transaction, which is part of the specific
17 performance relief which won't be available to us if they start
18 selling off their assets to JNS and other people.
19 THE COURT: Okay. Let me talk to you about how I
20 envision this going, and then we can talk about the schedule
21 and the question of temporary relief.
22 Basically, it does sound like there is some fact
23 issues to explore here, so some limited discovery would be
24 appropriate.
25 My inclination is to let you talk in the first
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1 instance about what the scope and timing of that discovery is,
2 but here is how I intend to proceed on the preliminary
3 injunction front. You can use that as a basis to figure out --
4 well, you can discuss the timing. So, number one, there should
5 be some discovery. Number two, obviously defendants need an
6 opportunity to file their opposition to the motion for
7 preliminary injunction, and the plaintiff obviously will be
8 given an opportunity to reply.
9 The way I proceed with a preliminary injunction
10 hearing is I take the any witnesses' direct testimony by
11 affidavit, and basically we'll give you a date by which to file
12 a joint prehearing order that is akin to a joint pretrial order
13 and sort of modeled on what I look for in a joint pretrial
14 order. On the same date, direct testimony of any witness
15 witnesses should be submitted but not filed, along with
16 proposed findings of fact and conclusion of law. Three days
17 after that, the other side can indicate which, if any of the
18 witnesses for whom direct has been filed they intend to
19 cross-examine at the hearing, and only those witnesses need to
20 appear at the hearing.
21 I should back up and say, this is assuming that we
22 have time to do this. If the nature of the circumstances
23 doesn't give us the time, then we're going to proceed in a more
24 expedited fashion than I'm now outlining. But this is
25 certainly my preferred method. Then we would basically conduct
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1 a hearing a couple weeks after that, and with -- and hear from
2 the witnesses that, again, the other side has designated that
3 they intend to cross, at the end of which I might render an
4 opinion at the end of the hearing itself, but certainly will
5 endeavor to do so as quickly thereafter as possible. And given
6 the possibility that I would rule immediately, you should not
7 necessarily assume that you'll be given an opportunity to
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8 submit anything, any post hearing briefing. So any legal
9 authority you want me to consider, you need to submit to me in
10 connection with the prehearing filings that I described before,
11 and not assume that you'll have an opportunity to add anything
12 after the hearing. So that's my preferred method. But some of
13 the -- as I've just indicated, whether we can proceed in that
14 fashion, turns a little bit on the question of whether the
15 whole thing might be mooted in the interim.
16 So turning to that question, I guess, Mr. Samowitz,
17 you know, one option is I have a temporary restraining order,
18 and in which case, among other things, you're entitled to have
19 a hearing within I think 14 days. The other is, you know, you
20 represent that the issue won't be mooted while this issue runs
21 its course.
22 I guess the third is that we do this more quickly in
23 the absence of temporary relief of one sort or another.
24 MR. SAMOWITZ: Thank you, your Honor. I cannot
25 represent that my clients won't try to sell, which we believe
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1 they have a right to do some or all their business. That's one
2 reason why we're so vociferously fighting a TRO, because that
3 could kill our company.
4 As you indicated, the factual disputes, I can only go
5 by the case already cited. He cited a case that says time is
6 not of the essence in contracts for the sale and purchase of
7 real estate, unless the contract so provides. That's the Henry
8 case. The Henry case also says that the Court was assuming
9 that both parties were trying to close in good faith, which we
10 think we can establish the plaintiffs weren't.
11 And as I said before, your Honor, they've not
12 established factually that there is any irreparable harm.
13 Mostly irreparable harm they discussed today is not even
14 mentioned in their brief.
15 So, you know, we certainly think there is no record
16 here sufficient to show the requirements for a temporary
17 restraining order.
18 If your Honor is concerned about the issue being
19 mooted, I think that's why -- that's the, you know, maybe it is
20 mooted, but it's not mooted all the way because they still have
21 their request for money damages. Maybe they could try to
22 unwind the transaction. But in any event until they show that
23 they can establish the standards for getting a TRO, I don't
24 think it matters to get mooted. But if your Honor's correct
25 the standard would be, we have to do this very quickly then we
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1 have to do this quickly.
2 THE COURT: And what discovery would you propose to
3 take before a preliminary injunction hearing?
4 MR. SAMOWITZ: Well, again I'd like to sit and think
5 about it a little more. But we would want to depose the CEO
6 Mr. Farkas, there is an in-house counsel named Kiley Wagonett.
7 There might be another in-house counsel. There is an
8 investment banker named I believe Ian Gardener that we want to
9 talk to. Those are the depositions, and there may be a couple
10 of others. I believe the issue would be relatively narrow
11 because I think the injunction's going to go to, you know, what
12 happened in that week before the closing date, the week after,
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13 and then the irreparable harm. So I don't think we're talking
14 about extensive depositions. We'd obviously also want document
15 discovery.
16 THE COURT: Okay. But you just described four or five
17 depositions if I got you correctly. So they may not be
18 extensive, but we're not talking about discovery that could be
19 taken this week.
20 MR. SAMOWITZ: No, no, your Honor. I appreciate that.
21 It may be more a 30 day period might make sense.
22 THE COURT: Okay. Mr. Bernstein.
23 MR. BERNSTEIN: Yes, your Honor. I mean, I think that
24 if counsel for 350 wants to conduct discovery over a 30 day
25 period, certainly we would want similar type discovery on the
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1 principals of 350 Green and anyone they cited in their papers
2 as having knowledge as to the occurrences that week on their
3 side of the transaction, including JNS.
4 THE COURT: All right, let me bring a little order to
5 this by saying that based on your submission and the discussion
6 we've had today, I don't think you have met the standard for
7 temporary restraining order. I'm, you know, I'm not sure that
8 there is a -- well, putting aside the likelihood of success on
9 the merits, I'm skeptical for the reasons that I've started
10 this proceeding with, that you've demonstrated risk of
11 irreparable harm. I think most of the harms that you've
12 articulated could be remedied in the form of money damages.
13 And if there is authority for the proposition that types of
14 harms here; namely, you know, investors losing confidence and
15 not getting listed on an exchange constitute irreparable harm
16 in the form of reputational damages or damage, or parties can
17 agree by contract that, you know, essentially bargained for
18 injunctive relief, you haven't brought it to my attention. So
19 it may be that you're entitled to it and that you would be able
20 between now and preliminary injunction hearing to support the
21 request for injunctive relief.
22 But if the, to the extent that the question on the
23 table right now is whether to temporarily restrain the
24 defendants or defendant 350 Green from doing anything, I'm not
25 prepared to do that at the time, at the moment. So given that,
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1 how would you like to proceed? I'm prepared to give you a
2 hearing next week and have limited discovery this week, but
3 it's not going to be of the scope that either of you is looking
4 for. We're talking about a preliminary proceeding here, and I
5 think you are entitled to try and get whatever preliminary
6 relief you want, especially in light of the fact that I'm not
7 granting you a TRO in a relatively quick fashion.
8 MR. BERNSTEIN: In light of that, your Honor, I would
9 want to have a hearing as quickly as possible. I would not
10 want it to be a 30 day period and -- I mean, if Mr. Samowitz
11 wants to conduct some discovery next week and have a hearing
12 immediately thereafter, I think it should be in the shortest
13 time the Court will allow.
14 THE COURT: Okay. Today is Monday, the 15th. I'm
15 prepared to have a hearing in this case next week, unless
16 there's some agreement in the absence of a TRO to keep things,
17 maintain the status quo for some short period between now and
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18 when the hearing is, and to give you guys limited discovery in
19 the form of maybe one or two depositions aside between now and
20 the hearing. But otherwise I think Mr. Bernstein is entitled
21 to, you know, relatively quick process in the absence of some
22 assurance or guarantee that this entire issue won't be mooted.
23 Mr. Samowitz.
24 MR. SAMOWITZ: Your Honor, if it could be another two
25 weeks instead of next week. I'm just concerned about even if
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1 it's just limited to two depositions, you know, scheduling it
2 and getting documents and that in that time, I don't know what
3 the state is of plaintiff's document collection. The company
4 hearing like this, I would really ask that we have, you know, a
5 two or three week period. I understand 30 days is too much,
6 but two or three week period rather than next week.
7 THE COURT: Do you understand my concern and what I
8 think is a veiled concern of Mr. Bernstein's, which is I'm fine
9 giving more time, but I think it's unfair to grant you more
10 time if there is no assurance given to Mr. Bernstein and the
11 plaintiff that this entire issue won't be mooted and that, you
12 know, a week and a half you're not going to turn around and
13 execute the sale to JNS.
14 MR. SAMOWITZ: Very well, your Honor. May I just make
15 one other request then. I think a lot of this is going to rise
16 and fall on whether Mr. Bernstein can find those cases that are
17 not in his main brief. Could Mr. Bernstein, plaintiffs be
18 directed to let the parties and your Honor know by, you know,
19 midweek whether he's found those cases or not? Because if he
20 hasn't found those cases, I think it's really unfair to my
21 client to go through all this for something where he can't show
22 irreparable harm. I know it's a little unorthodox, but I think
23 right now we have a brief that I think we all agree just
24 doesn't cite cases he needs to cite, and it's not fair to my
25 client to have to do the hunting for him.
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1 THE COURT: Mr. Bernstein.
2 MR. BERNSTEIN: I mean, if your Honor wants to give us
3 a few days to do an amended brief, which to the extent we find
4 cases that support this position for the Court's consideration.
5 The only question I have is to what Mr. Samowitz didn't say is
6 assuming for a moment that those cases are found and submitted
7 along with an extra affidavit or whatever case would go along
8 with those cases that were cited, does that mean that Mr.
9 Samowitz would then agree for status quo pending the hearing
10 with that additional time to conduct this discovery? I'm not
11 sure I'm hearing from him, if I do find those cases and submit
12 amended documents, how that ultimately affects his position on
13 this issue and the extent of time that this Court will grant
14 for discovery.
15 MR. SAMOWITZ: Obviously, I'd like to read the cases
16 first and, you know, we think we solve the argument by the
17 merits on irreparable harm. My point is that if he hasn't
18 supported his harm with case law, then he should be required to
19 do that before we're put through this whole process, either he
20 finds a case or doesn't.
21 THE COURT: He's entitled to make his case at a
22 preliminary injunction hearing.
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23 MR. SAMOWITZ: But I respect that. I think if he
24 comes back to you and says I haven't found those cases, then I
25 think I'd be entitled to say well, you know, he hasn't --
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1 almost all but admitted he can't show irreparable harm so at
2 the very least you shouldn't put my client through, you know,
3 the expense of a hurry up preliminary injunction hearing.
4 MR. BERNSTEIN: Your Honor, may I respond?
5 THE COURT: Yeah.
6 MR. BERNSTEIN: I don't think it is fair for Mr.
7 Samowitz saying that in case, unless I find a case that's
8 exactly on point with this factual scenario, I haven't proven
9 irreparable harm. I don't think that that's standard in any
10 case in any federal court in this country. I don't think --
11 it's very rare that you find an exact factual scenario that
12 fits the factual pattern that's before the Court. I have no
13 problem if the Court wants some amended documents submitted for
14 the purpose of the hearing, but I would object to finding a
15 case Mr. Samowitz wants exactly on point on the exact same fact
16 pattern to be dispositive as to whether or not my client would
17 be entitled to injunctive relief.
18 MR. SAMOWITZ: I guess my point, your Honor, would
19 just be if he, you know, makes whatever submission he can make
20 by Wednesday, say, we can come back before your Honor on
21 Thursday, then talk about, you know, where we go next.
22 THE COURT: I'm not inclined to drag it out. So I
23 think what I'm going to do is -- how long do you anticipate a
24 hearing would take, Mr. Bernstein?
25 MR. BERNSTEIN: I would probably have at least two
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1 witnesses, your Honor. Using your Honor's standard, is that --
2 would be the same standard as we would submit these affidavits,
3 and depending if Mr. Samowitz wants to cross them, they would
4 need to be here in person or not? That's what I'm trying to
5 establish.
6 THE COURT: I'm not sure we have time to do that,
7 given that I think we need to proceed more quickly than that
8 way would normally allow. So, no I think we're going to have a
9 full blown hearing with direct and cross, you know, in one shot
10 so.
11 MR. BERNSTEIN: For my purposes, your Honor, I would
12 probable say at least two to three hours, depending on the
13 testimony of the two or three witnesses, depending on who comes
14 to the hearing.
15 THE COURT: Mr. Samowitz.
16 MR. SAMOWITZ: I'm sorry, I didn't hear the end.
17 MR. BERNSTEIN: I said it would be two to three hours
18 depending on if I brought two or three witnesses, Mr. Farkas
19 the attorney, and obviously depending if I was calling any of
20 your witnesses that you were bringing in for cross.
21 MR. SAMOWITZ: I would say, your Honor, probably a day
22 would do it. If he's two or three hours, and that usually
23 means it's four or five hours and we'll try to do the same. So
24 I think a day.
25 THE COURT: Okay. So I'm going to schedule a hearing
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1 for Monday, April 29th. And if we need to continue into the
2 30th, then so be it. We'll start at 9:00 a.m., or as close to
3 that as we can, and continue until shortly before three, each
4 of those days. In the meantime, I'm going to direct that the
5 defendants file any opposition to the motion for preliminary
6 injunction by next Monday, the 22nd, and that any reply is
7 filed by Thursday, the 25th at noon. And I would certainly
8 encourage you to include any authority that would, you know,
9 bolster your case on irreparable harm in that filing, although
10 you've made your arguments in your opening brief.
11 In the meantime, I'm prepared to allow for limited
12 discovery. If you want up to two depositions a side, and I'm
13 inclined to leave you to negotiate the timing and circumstances
14 of that to make sure that it gets done in time for you to do
15 this hearing on the 29th. So why don't you guys confer about
16 that.
17 You also have to confer about the sealing issue and
18 why don't you submit a letter to me by the close of business
19 tomorrow, indicating whether you have agreed on those issues or
20 if there is any disagreement that you need me to resolve.
21 Yes.
22 MR. SAMOWITZ: Thank you, your Honor. Document
23 requests, limited number?
24 THE COURT: Same thing. I'm prepared to do limited
25 document requests, but you guys try and resolve and reach
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1 agreement on them, and the timing and scope of them. If you
2 can't, again submit a letter to me indicating what your
3 disagreement is and I will decide right away which way we're
4 going to go.
5 Is there anything else we need to do?
6 MR. BERNSTEIN: No, your Honor.
7 MR. SAMOWITZ: No. Thank you, your Honor.
8 THE COURT: Anything from you?
9 MR. NEWMAN: In the opposition to the preliminary
10 injunction, can we also do a motion to dismiss the same time?
11 Because we have to really talk about the same issues anyhow.
12 THE COURT: I mean to the extent that -- it's not
13 clear to me that if a motion were to -- sorry -- a motion to
14 dismiss were granted as to you, that that would resolve the
15 injunction issue. Because to the extent that the injunction is
16 being sought against 350 Green, I don't know what -- in other
17 words, you could have been excluded from this case altogether,
18 and may well be excluded from this case altogether if your
19 motion is granted. But how does that go to whether the
20 injunction should be entered? That was I guess my question
21 before about whether you have a dog in the fight. I understand
22 that it has implications for you.
23 MR. NEWMAN: Right. So either we shouldn't have to
24 respond at all as opposition to the preliminary injunction
25 because it doesn't affect us or if we have to respond, then
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1 respond with motion to dismiss?
2 THE COURT: I'm not inclined to bring up the motion to
3 dismiss now. So if that means that you don't want to be heard
Page 19
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 33 of 35 PageID #:589
d4f0cara
4 on the question of the preliminary injunction, I'm fine. If
5 you please just leave it to be litigated by 350 Green and go
6 from that, I understand. Again, it has implications for you,
7 but to the extent that the injunctive relief isn't sought
8 against you, I don't know if you need to be heard on it.
9 MR. NEWMAN: Okay.
10 THE COURT: Or I guess is there a reason that the
11 defendants can't submit a single brief in connection with this
12 issue rather than having to file two?
13 MR. SAMOWITZ: In connection with the jurisdictional
14 issue?
15 THE COURT: No, in connection with the preliminary
16 injunction issue.
17 MR. SAMOWITZ: Certainly they can join whatever we
18 file. I don't want to submit a joint brief, but if they want
19 to join us, they certainly can.
20 MR. NEWMAN: Okay, we'll discuss and --
21 THE COURT: I would say if you can, I mean either of
22 you or both of you is entitled to file a brief on the schedule
23 that I set before. If you can see your way toward filing a
24 single brief on behalf of all defendants, that would certainly
25 be welcome from my perspective and I think probably makes sense
SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
43
D4fzcarm2 Motion
1 given the circumstances.
2 Anything else?
3 MR. BERNSTEIN: No, your Honor.
4 MR. SAMOWITZ: No. Thank you, your Honor.
5 THE COURT: All right, then the matter is adjourned.
6 Thank you very much.
7 MR. SAMOWITZ: Thank you.
8 (Adjourned to April 29, 2013 at 9:00 a.m.)
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
Page 20
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 34 of 35 PageID #:590
CERTIFICATE OF SERVICE
I, Evan J. Haim, hereby certify that on this 6th day of September, 2013, and in
accordance with the General Order on Electronic Case Filing (ECF), I served the foregoing JNS
Power & Control Systems, Inc.’s Reply in support of its Motion for Partial Summary
Judgment against 350 Green, LLC, upon the below-named individuals by electronic transmittal
through the CM-ECF electronic filing system.
Steven L. Baron Michael I. Bernstein
Natalie A. Harris The Bernstein Law Firm
Mandell Menkes LLC 1688 Meridian Avenue, Suite 418
One North Franklin Street, Suite #3600 Miami Beach, Florida 33139
Chicago, Illinois 60606 Telephone: (305) 672-9544
Telephone: (312) 251-1000 Facsimile: (305) 672-4572
Facsimile: (312) 251-1010 e-mail: michael@bernstein-lawfirm.com
e-mail: sbaron@madellmenkes.com
e-mail: nharris@mandellmenkes.com
/s/ Evan J. Haim
Case: 1:13-cv-04020 Document #: 42 Filed: 09/06/13 Page 35 of 35 PageID #:591
This was filed today under the 4020 case. Always seems slam dunk when JNS responds!
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
company, )
)
Plaintiffs, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, )
a Delaware Corporation, and )
JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation )
)
Defendants. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
JNS POWER & CONTROL SYSTEMS, INC.’S RESPONSE TO
350 GREEN, LLC’S STATEMENT OF ADDITIONAL UNDISPUTED FACTS
Pursuant to Local Rule 56.1(b)(3) of the Local Rules of the United States District Court for the Northern District of Illinois, JNS Power & Control Systems, Inc. (“JNS”), Plaintiff in Case No. 13 CV 04020, by and through its undersigned counsel, hereby submits its Responses to 350 Green, LLC’s (“350 Green”) Statement of Additional Undisputed Facts (“SAUF”), stating as follows: Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 1 of 12 PageID #:592
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1. On or about July 5, 2012, CCGI and 350 Green executed a binding term sheet agreement (the “July Term Sheet”). The July Term Sheet allowed for CCGI to conduct due diligence on 350 Green. The July Term Sheet set forth the terms and conditions upon which CCGI would purportedly purchase all of the issued and outstanding membership interests of 350 Green (the “Transaction”), as long as a due diligence investigation was completed in a manner satisfactory to CCGI. A copy of the July Term Sheet is attached hereto as Exhibit A.
RESPONSE: Disputed. JNS disputes that the terms of the July 5, 2012 Membership Interest Purchase Term Sheet between Car Charging, Inc. and 350 Green (“July Term Sheet”) are facts material to the Court’s determination of JNS’s motion for partial summary judgment. The July Term Sheet was superseded by the August 29, 2012 Membership Interest Purchase Term Sheet between Car Charging, Inc. and 350 Green (the “Aug. Term Sheet”), which was superseded by the March 8, 2013 Equity Exchange Agreement by and among Car Charging Group, Inc. (“CCGI”), 350 Holdings, LLC (“350 Holdings”), 350 Green, Mariana Gerzanych (“Gerzanych”) and Timothy Mason (“Mason”) (“Exchange Agreement”) (collectively, Gerzanych and Mason referred to as the “350 Members”). Further, to the extent the July Term Sheet is material to the instant dispute, JNS disputes 350 Green’s characterization of the July Term Sheet and relies on the specific terms of the July Term Sheet. See SAUF, Ex. A.
2. 350 Green retained Oracle Capital Securities (“Oracle”) to assist in the sale. [See, Exhibit B, P004638-P004648, P004636-P004637].
RESPONSE: Undisputed.
3. Based on the results of the initial due diligence performed by CCGI, CCGI requested that 350 Green enter into a new binding Term Sheet which was executed on August 29, 2012 (the “August Term Sheet”). The August Term Sheet contained, amongst other provisions, the Parties agreement to extend the due diligence period and time for the negotiation and execution of a final binding agreement for CCGI to acquire 350 Green. Paragraph Seven (7) of the August Term Sheet contained an exclusivity provision that had not been present in the July Term Sheet which prohibited 350 Green from taking, directly or indirectly, any action to initiate, solicit, negotiate or accept any offer from any person to sell 350 Green. A copy of the August Term Sheet is attached hereto as Exhibit C.
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 2 of 12 PageID #:593
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RESPONSE: Disputed. JNS disputes that the terms of the August Term Sheet are facts material to the Court’s determination of JNS’s motion for partial summary judgment. The August Term Sheet was superseded by the Exchange Agreement. Further, to the extent the August Term Sheet is material to the instant dispute, JNS disputes 350 Green’s characterization of the Aug. Term Sheet and specifically disputes that CCGI and 350 Green were negotiating for CCGI to acquire assets of 350 Green. As stated in the Aug. Term Sheet, CCGI and 350 Green were negotiating the purchase of “all issued and outstanding membership interests of 350 Green, LLC, a Virginia limited liability company.” (350 Green’s Statement of Additional Undisputed Facts (“SAUF”), Ex. C (P000710 – P000713).
4. In order to be able to close the Transaction, CCGI needed to obtain permission from the City of Chicago to assign the grant from 350 Green to CCGI. On March 1, 2013, the City of Chicago sent a letter to 350 Green’s attorney informing him that the City approved 350 Green’s intent to transfer the ownership of 350 Green to CCGI. A copy of the March 1st letter is
attached hereto as Exhibit D.
RESPONSE: Undisputed.
5. On March 8, 2013, Mariana Gerzanych (“Gerzanych”), and Timothy Mason (“Mason”) (hereinafter the “350 Members”), the principals of 350 Green, 350 Green, CCGI and 350 Holdings executed the Equity Exchange Agreement (hereinafter, the “Exchange Agreement”), which called for the transfer of one hundred percent (100%) the membership interests of 350 Green (in exchange for 1,111,111 shares of CCGI common stock to be paid to the 350 Members. See, JNS Power’s Statement of Material Facts, D.E. #35, Exhibit 1.
RESPONSE: Undisputed.
6. The Exchange Agreement specifically included the assets related to the Chicago Project, and such assets were a material part of the price that 350 Holdings had negotiated to pay for the 350 Members’ Interests of 350 Green. D.E. #35, Exhibit 1.
RESPONSE: Disputed. JNS disputes that the Exchange Agreement “specifically included the assets related to the Chicago Project, and such assets were a material part of the price that 350 Holdings had negotiated to pay for the 350 Members’ Interests of 350 Green.” The Exchange Agreement was an agreement for the purchase of “the membership interests of Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 3 of 12 PageID #:594
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350 [Green]” and did not include the purchase of the assets related to the Chicago Project. There is no language in the Exchange Agreement addressing CCGI’s supposed purchase of any 350 Green Assets. (Dkt. 35, Ex. 1). JNS further disputes that the assets related to the Chicago Project were specifically included or referenced in the Exchange Agreement.
7. The Exchange Agreement did not contain a “time of the essence” clause. D.E. #35, Exhibit 1.
RESPONSE: Disputed. The Exchange Agreement included a fixed time for the closing period. The closing date under the Exchange Agreement was to be “no later than ten (10) business days after the Effective Date,” or March 22, 2013. (Dkt. 35, Ex. 1).
8. The Exchange Agreement does not contain a specific closing date or time. D.E. #35, Exhibit 1.
RESPONSE: Disputed. The Exchange Agreement included a fixed time for the closing period. The closing date under the Exchange Agreement was to be “no later than ten (10) business days after the Effective Date.” Ten (10) business days after the March 8, 2013 Effective Date was March 22, 2013. (Dkt. 35, Ex. 1).
9. The Exchange Agreement does not contain a default provision. D.E. #35, Exhibit
1.
RESPONSE: Disputed. JNS asserts that this statement is not a fact material to the Court’s determination of the JNS’s motion for partial summary judgment. The Exchange Agreement’s lack of a default provision did not affect 350 Green’s ability to terminate the Exchange Agreement based on CCGI’s refusal to close on the closing date specifically set forth in the Exchange Agreement, March 22, 2013. (Dkt. 35, Ex. 1).
10. On or about March 21, 2013, then again on March 22, 2013, CCGI and 350 Holdings circulated an amendment to the Exchange Agreement (the “Amendment”) requesting a right of first refusal on any of the 350 Members’ future business opportunities for one year, and a non-compete agreement between the 350 Members and CCGI. A copy of the email from Wagenet designated as P007641 dated March 21, 2013 attached hereto as Exhibit E. Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 4 of 12 PageID #:595
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RESPONSE: JNS does not dispute that on March 21, 2013, Kylie Wagenet, in-house counsel for CCGI (“Wagenet”), sent correspondence to 350 Green acknowledging CCGI’s failure to close under the terms of the Exchange Agreement and seeking to extend the closing date. SAUF, Ex. E (P007641). JNS disputes that the Amendment attached to Wagenet’s March 21, 2013 email included any terms or proposed agreement for a right of first refusal or a non-compete agreement. The Amendment attached to Wagenet’s March 21, 2013 email (P007642, a copy of which is attached hereto as Exhibit A) only proposed to extend the date for closing, and was never executed by either 350 Green or CCGI or 350 Holdings. JNS further states that John Pierce, counsel for 350 Green (“Pierce”), indicated to CCGI that 350 Green considered CCGI’s demand to be an anticipatory breach and/or counter-offer. See 13cv3124 Dkt. 48, Ex. 9 (DLA_JP-001790 – DLA_JP-001793).
11. CCGI and 350 Holdings performed all of the conditions of the Exchange Agreement that were required, and were ready and willing to accept the 350 Defendants’ acknowledgment of the closing of the Transaction. See, declaration of Michael D. Farkas, ¶32 filed in the New York Action, attached hereto as Exhibit F.
RESPONSE: Disputed. Pursuant to the Exchange Agreement, CCGI was required to deliver to 350 Green duly executed signature pages of the Exchange Agreement on or before March 22, 2013. (Dkt. 35, Ex. 1). CCGI failed and refused to provide the executed signature pages, and therefore, failed to close under the Exchange Agreement on the closing date, March 22, 2013. See 13cv3124 Dkt. 48, Ex. 9 (DLA_JP-001791).
12. On March 26, 2013, having received no written communications of any kind directly from the 350 Members either demanding a time of the essence closing or otherwise asserting a default by Plaintiffs under the Exchange Agreement, CCGI and 350 Holdings withdrew their request for any Amendment to be executed and provided their executed signature pages to 350 Green and the 350 Members. A copy of the email from Kylie Wagenet dated March 26, 2013 at 10:54 a.m. designated as P004552 is attached hereto as Exhibit G.
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 5 of 12 PageID #:596
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RESPONSE: Disputed. On March 21, 2013, Pierce told Wagenet that 350 Green would consider the transaction to be expired if it was not closed by the close of business on March 22, 2013. See 13cv3124 Dkt. 48, ¶22.
13. The CCGI Entities were informed indirectly through the 350 Members’ agents, that 350 Green and the 350 Members purportedly: (i) considered the Transaction to be terminated; (ii) they would refuse to sign the Amendment; and (iii) that they would “entertain options with other companies” for the sale of 350 Green [A copy of the email between Craig Sultan and Kylie Wagenet dated March 26, 2013, attached hereto as Exhibit H, P008357-P008358].
RESPONSE: Disputed. On March 26, 2013, Craig Sultan, managing director at Oracle Capital Securities (“Sultan”), forwarded Gerzanych’s March 25, 2013 email to Wagenet in which Gerzanych stated that: (1) “CCG’s actions cancelled the Equity Exchange Agreement;” (2) “Neither Tim nor I believe there was good faith on CCG’s part to close the transaction;” and (3) [350 Green does] not intend to extend [the Exchange Agreement] or sign additional agreement as they were presented.” SAUF, Ex. H (P008358).
14. No written demand to close the Transaction or notice of default was provided by 350 Green or the 350 Members to CCGI or 350 Holdings.
RESPONSE: Disputed. On March 21, 2013, Pierce told Wagenet that 350 Green would consider the transaction to be expired if not closed by the close of business on March 22, 2013. See 13cv3124 Dkt. 48, ¶22.
15. After the CCGI Entities were indirectly informed of the 350 Members alleged refusal to close the Transaction, the Parties continued to negotiate closing the transaction and specific amendments thereto. [See, emails dated March 27, 2013, between Michael Farkas, Ian Gardner and Craig Sultan, P007920 – P007924, attached hereto as Exhibit I. See also, (i) email between Kylie Wagenet, Esq. and Ian Gardner dated March 28, 2013 P004535 attached hereto as
Exhibit J, and (ii) Email from Ian Gardner to Michael Farkas dated April 5, 2013, P006018, attached hereto as Exhibit K].
RESPONSE: Disputed. On March 26, 2013, Sultan forwarded Gerzanych’s March 25, 2013 email to Wagenet in which Gerzanych stated that: Gerzanych stated that: (1) “CCG’s
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 6 of 12 PageID #:597
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actions cancelled the Equity Exchange Agreement;” (2) “Neither Tim nor I believe there was good faith on CCG’s part to close the transaction;” and (3) [350 Green does] not intend to extend [the Exchange Agreement] or sign additional agreement as they were presented.” SAUF, Ex. H (P008358). JNS further states that on April 8, 2013, Pierce advised Wagenet that the Exchange Agreement was had been rendered null and void by CCGI’s conduct. See 13cv3124 Dkt. 48, Ex. 9 (DLA_JP-001791).
16. On April 9, 2013, CCGI and 350 Holdings filed a lawsuit against 350 Green, the 350 Members, and JNS Holdings Corp. in the Southern District of New York in the case entitled Car Charging Group, Inc., et al. v. 350 Green, LLC and JNS Holdings Corporation, under Case No.: 13-cv-2389 (the “New York Action”). See, D.E. # 35, ¶38.
RESPONSE: Undisputed.
17. JNS Power is a subsidiary of JNS Holdings. [See, JNS Power Press release, DLA_JP-000720, Exhibit L].
RESPONSE: Undisputed.
18. JNS Power had actual knowledge of the dispute between CCGI, 350 Holdings and the 350 Members at the time it executed the APA. [JNS Complaint, Ex. B, ¶1.3, 3.3].
RESPONSE: Disputed. JNS does not refute it had knowledge of a dispute between CCGI and 350 Holdings and the 350 Members regarding whether the Exchange Agreement had closed or was still in effect, at the time the APA was executed on April 17, 2013. Based on the representations and warranties made by 350 Green in the APA, JNS had no knowledge there was any dispute as to whether 350 Green could transfer the Chicago Assets. Section 1.2 of the APA states: “[350 Green has] terminated all other prospective term sheets or proposals with any other entity, specifically CAR CHARGING GROUP, INC., for the purchase of the assets that are defined herein and that are being sold herein.” Dkt. 1, Ex. B, ¶1.2.
19. The APA was executed on April 17, 2013, during the pendency of the New York Action. See, D.E. # 35, ¶38. Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 7 of 12 PageID #:598
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RESPONSE: Undisputed.
20. The APA called for the parties to close on April 11, 2013. JNS Complaint, Ex. B, §2.12.
RESPONSE: Disputed. The Asset Purchase Agreement (“APA”) was not executed by 350 Green and JNS until April 17, 2013. Dkt. 1, Ex. B. To require a closing date of April 11, 2013 would have been an impossibility. The closing date of April 11, 2013 was a scrivener’s error or mutual mistake inadvertently overlooked by both 350 Green and JNS as well as their respective attorneys.
21. As a condition precedent of closing under the APA, 350 Green was to provide consent for license assignments from the host partners. JNS Complaint, Ex. B, §2.12.
RESPONSE: Disputed. JNS disputes the characterization of the APA and specifically disputes the characterization of 350 Green’s obligation to provide consents for license assignments from host partners as a “condition precedent.” JNS contends pursuant to Section 2.7 of the APA, 350 Green was to assign all of the licenses and provide any required consents from the host partners for those assignments at closing and that this was an obligation under the APA that 350 Green did not perform. JNS is seeking specific performance by 350 Green under the APA as a result of 350 Green’s breach of the APA.
22. The parties to the APA never executed any documents extending the closing past April 11, 2013. See, declaration of Mariana Gerzanych, ¶5, attached hereto as Exhibit M.
RESPONSE: Disputed. On April 17, 2013, JNS and the 350 Members executed the APA. See Dkt. 1, Ex. B. Moreover, the terms of the APA do not require the execution of any document extending the April 11, 2013 date, since the closing was to be completed, “on or about April 11, 2013.” Dkt. 1, §2.12.
23. None of the hosts that needed to provide their consent for license agreements pursuant to part (b) of the APA ever provided such consents. See, Exhibit M, ¶6. Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 8 of 12 PageID #:599
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RESPONSE: JNS does not dispute that 350 Green failed to assign to JNS the Licenses subject to the APA and failed to provide JNS with all licensor consents required pursuant to those licenses, as required in Section 2.7 of the APA. JNS disputes that it was under any obligation under the APA to obtain these licensor consents. JNS also disputes that there is a “part (b) of the APA.”
24. CCGI, 350 Holdings, 350 Green and the 350 Members entered into subsequent settlement negotiations and came to a resolution of the dispute. On April 22, 2013, the parties executed an Amendment to the Equity Exchange Agreement, and closed the transaction for all
assets originally contemplated under the Exchange Agreement, including, specifically, the Chicago Project. There was no admission or acknowledgement by any party that the Exchange Agreement had been terminated [A copy of the Amendment to the Exchange Agreement is attached hereto as Exhibit N].
RESPONSE: Disputed. JNS disputes that the assets related to the Chicago Project were “contemplated” or otherwise included under the Exchange Agreement, as the Exchange Agreement was an agreement for the transfer of the membership interests in 350 Green and was not a sale of assets. There is nothing in the Exchange Agreement that provides for a sale of assets or that identified any assets to be included in the transfer of membership interests. (Dkt. 35, Ex. 1). JNS does not dispute that CCGI, 350 Holdings, 350 Green, and the 350 Members executed an Amendment to the Exchange Agreement on April 22, 2013, but disputes that the April 22, 2013 Amendment specifically referred to the Chicago Asserts or that the April 22, 2013 Amendment closed any transaction involving the Chicago Assets.
25. The Amendment to the Equity Exchange Agreement specifically contemplates and references the assets related to the Chicago Project as part of the consideration that 350 Holdings paid for the membership interests of the 350 Members. [See, Exhibit N].
RESPONSE: Disputed. JNS disputes that the assets related to the Chicago Project were part of, as consideration or otherwise, the Exchange Agreement or the April 22, 2013 Addendum to the Exchange Agreement, both of which were agreements for the transfer of the membership
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 9 of 12 PageID #:600
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interests in 350 Green to CCGI and neither specifically referenced that the assets related to the Chicago Project were part of the consideration for the transfer of the membership interests in 350 Green. SAUF, Ex. N.
26. As of the closing under the Exchange Agreement, 350 Holdings owned and continues to own both one hundred percent (100%) of the member equity interests and all assets of 350 Green, which specifically includes the Chicago Assets. [See, Exhibit N].
RESPONSE: Disputed. JNS disputes that the assets related to the Chicago Project were included under the Exchange Agreement, as the Exchange Agreement was an agreement for the transfer of the membership interests in 350 Green as of the date the membership interest were transferred. There is nothing in the Exchange Agreement that provides for a sale of assets or that identified any assets to be included in the transfer of membership interests. In addition, the assets related to the Chicago Project are subject to the APA, which is an enforceable contract. SAUF, Ex. N; Dkt. 1, Ex. B. Moreover, as of April 22, 2013, 350 Green was bound to the APA for the transfer of the assets related to the Chicago Project.
27. The City of Chicago has not awarded JNS Power the Grant Agreement. See, Affidavit of Amber Rittter, Esq., Senior Counsel with the City of Chicago Law, Aviation, Environmental, Regulatory and Contracts Division (“Ritter”) filed in case no. 1:13-cv-04020, D.E. #16-1 on June 14, 2013, attached hereto as Exhibit O, ¶6.
RESPONSE: Undisputed.
28. The initial amount of the Chicago Grant was $1,911,000. Of those funds, $163,928.60 remains available [Ritter affidavit, Exhibit O, ¶3].
RESPONSE: Undisputed.
29. The party that is awarded the remaining grant money will have to spend but will have to spend $798,497.92 to satisfy all outstanding liabilities [Ritter affidavit, Exhibit O, ¶4].
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 10 of 12 PageID #:601
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RESPONSE: JNS does not dispute that the City of Chicago is requiring the party that is awarded the Grant Agreement to satisfy all outstanding liabilities to creditors, and does not dispute that as of June 14, 2013, the City of Chicago believes those amounts are $798,497.92. JNS disputes that it will have to spend that amount in order to satisfy the outstanding liabilities.
Dated: September 6, 2013 Respectfully submitted,
JNS Power & Control Systems, Inc.,
By: s/ Evan J. Haim
One of Its Attorneys
KELLY MCCLOSKEY CHERF
PATRICK E. DEADY
EVAN J. HAIM
HOGAN MARREN, LTD.
321 N. Clark Street, Suite 1301
Chicago, Illinois 60654
(312) 946-1800 Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 11 of 12 PageID #:602
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CERTIFICATE OF SERVICE
I, Evan J. Haim, hereby certify that on this 6th day of September, 2013, and in accordance with the General Order on Electronic Case Filing (ECF), I served the foregoing JNS Power & Control Systems, Inc.’s Response to 350 Green, LLC’s Statement of Additional Undisputed Facts, upon the below-named individuals by electronic transmittal through the CM-ECF electronic filing system.
Steven L. Baron Michael I. Bernstein
Natalie A. Harris The Bernstein Law Firm
Mandell Menkes LLC 1688 Meridian Avenue, Suite 418
One North Franklin Street, Suite #3600 Miami Beach, Florida 33139
Chicago, Illinois 60606 Telephone: (305) 672-9544
Telephone: (312) 251-1000 Facsimile: (305) 672-4572
Facsimile: (312) 251-1010 e-mail: michael@bernstein-lawfirm.com
e-mail: sbaron@madellmenkes.com
e-mail: nharris@mandellmenkes.com
/s/ Evan J. Haim
Case: 1:13-cv-04020 Document #: 43 Filed: 09/06/13 Page 12 of 12 PageID #:603
I guess I can see their argument. I'm not sure on the laws on which agreement counts or what. Wanted a decision a month ago, could go til the end of the year.
There's another entry...I'll email it to stockbarber and see if he can post it. If others want it on .pdf post an email and I'll send them. Somewhat easier to read.
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC., a
Nevada corporation, 350 HOLDINGS,
LLC, a Florida limited liability company
and 350 GREEN, LLC, a Virginia
limited liability company,
v. Plaintiffs,
JNS HOLDING CORPORATION,
a Delaware corporation, and
JNS POWER & CONTROL
SYSTEMS, INC., an Illinois
Corporation,
Defendants.
(Consolidated With)
JNS POWER & CONTROL SYSTEMS,
INC., an Illinois Corporation,
Plaintiffs,
v.
350 Green, LLC, a Virginia limited
liability company
Defendant.
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Case No.: 13-cv-03124
(Consolidated with)
Case No.: 13-cv-04020
Hon. Elaine Bucklo
PLAINTIFFS’ RESPONSE IN OPPOSITION TO
DEFENDANTS’ MOTION TO STRIKE
Plaintiffs Car Charging Group, Inc. (“CCGI”), 350 Holdings, LLC (“350 Holdings”) and
350 Green, LLC (“350 Green”) (hereinafter, collectively “Plaintiffs”) submit the following
Response in Opposition to Defendants JNS Holdings Corporation (“JNS Holdings”) and JNS
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 1 of 13 PageID #:937
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Power & Control Systems, Inc.’s (“JNS Power”) (hereinafter collectively, “Defendants”)’s
Motion to Strike [D.E. #43] (“Defendants’ Motion”):
I. Introduction
On August 5, 2013, Plaintiffs filed a Motion for Partial Summary Judgment, seeking this
Court to declare that the Asset Purchase Agreement executed between 350 Green and JNS Power
is void as a matter of law. As this Court is well aware, it is Plaintiffs’ position that the Equity
Exchange Agreement (the “Exchange Agreement”) executed between CCGI, 350 Holdings and
350 Green and its members, members, Mariana Gerzanych (“Gerzanych”), and Timothy Mason
(“Mason”) (hereinafter collectively, the “350 Members”), which governed 350 Holdings’
purchase of all of the stock (and via such acquisition, the de facto purchase of all of 350 Green’s
assets) of 350 Green was binding on 350 Green at the time the APA was executed. In their
Statement of Material Facts in Support of Plaintiffs’ Motion for Partial Summary Judgment
pursuant to L.R. 56.1(a)(3) [D.E. #41-1], Plaintiffs submitted several business records, including
copies of certain agreements that were referenced therein, emails between the parties, and
documents created in prior litigation, all of which were created in the normal course of business.
In addition to the aforementioned business records, Plaintiffs submitted the declaration of
Michael D. Farkas, who is CEO of CCGI and CEO, Treasurer, and Secretary of 350 Holdings
(the “Farkas Declaration”). Defendants have moved to strike certain portions of the Farkas
Declaration, and the corresponding portions of Plaintiffs’ Memorandum in Support of their
Motion for Partial Summary Judgment [D.E. #41], arguing that said portions are inadmissible
because they are hearsay and violate the parole evidence rule. However, as set forth herein,
Defendants are incorrect on both points. As a result, Defendants’ Motion should be denied in its
entirety.
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 2 of 13 PageID #:938
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II. Argument
a. Farkas Declaration, Paragraphs 4, 5, 6, and 9
Defendants allege that Paragraphs 4, 5, 6, and 9 of Mr. Farkas’ declaration should be
stricken because they violate the parole evidence rule. Defendants cite Duval Motors Co. v.
Rogers, 73 So. 3d 261, 265 (Fla. 1st DCA, 2011) and First Union Discount Brokerage Servs. v.
Milos, 744 F. Supp. 1145, 1153 (S.D. Fla. 1990) for the propositions that (i) when a contract is fully
integrated, representations, negotiations, and conversations that precede, or are contemporaneous
with the making of, a contract are presumed to have merged in the written agreement, and (ii) that the
parole evidence rule prohibits the introduction of evidence of a prior or contemporaneous oral
agreement to vary or contradict the unambiguous language of a valid contract.
Plaintiffs do not dispute that the aforementioned cases stand for the proposition that the
parole evidence rule excludes all evidence that is extrinsic to a fully integrated document.
Further, Plaintiffs do not dispute that the Exchange Agreement is an integrated document.
However, the aforementioned cases involved a dispute as to the meaning of certain contracts.
Specifically, Duval Motors involved a dispute regarding an arbitration clause in a contract that
was subsequently integrated into a sales contract did not contain same. First Union involved a
claim, which was rejected by the trial court, by a defendant that the parties had an oral agreement
that contradicted a written agreement, as such a claim failed on the grounds of merger and parole
evidence.
It is well settled that under the parole evidence rule, evidence of a prior or
contemporaneous oral agreement is inadmissible to vary or contradict the unambiguous language
of a valid contract. First Union, at 1153. The portions of the Farkas Declaration that Defendants
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 3 of 13 PageID #:939
4
would have this Court strike are not “parole evidence” because they are not evidence of an oral
agreement that contradicts the language of the Equity Exchange Agreement.
Specifically, Defendants represent that the following paragraphs are in some way an
attempt by Plaintiffs to admit evidence that would vary the terms of the Exchange Agreement:
4. In July, 2012, CCGI and 350 Green began negotiation for a possible
purchase of all the stock (and via such acquisition, the de facto purchase of
all assets) of 350 Green (the “Transaction”) by CCGI or one of its
subsidiary entities.
5. 350 Green informed CCGI that it was having trouble with meeting its
financial obligations, and as a result, was interested in being purchased by
CCGI.
Next, Defendants would have this Court strike the following:
6. On or about July 5, 2012, CCGI and 350 Green executed a binding
term sheet agreement (the “July Term Sheet”). The July Term Sheet
allowed for CCGI to conduct due diligence on 350 Green. The July Term
Sheet set forth the terms and conditions upon which CCGI would
purportedly purchase all of the issued and outstanding membership
interests of 350 Green (the “Transaction”), as long as a due diligence
investigation was completed in a manner satisfactory to CCGI. A copy of
the July Term Sheet is attached hereto as Exhibit A.
and
9. Based on the results of the initial due diligence performed by CCGI,
CCGI requested that 350 Green enter into a new binding Term Sheet
which was executed on August 29, 2012 (the “August Term Sheet”). The
August Term Sheet contained, amongst other provisions, the parties’
agreement to extend the due diligence period and time for the negotiation
and execution of a final binding agreement for CCGI to acquire 350
Green. Paragraph Seven (7) of the August Term Sheet contained an
exclusivity provision that had not been present in the July Term Sheet
which prohibited 350 Green from taking, directly or indirectly, any action
to initiate, solicit, negotiate or accept any offer from any person to sell 350
Green. A copy of the August Term Sheet is attached hereto as Exhibit C.
These statements are made, as Mr. Farkas affirms, based on his “personal knowledge of CCGI
and 350 Holdings’ dealings with Plaintiff 350 Green, LLC…with regard to the negotiations for
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 4 of 13 PageID #:940
5
CCGI’s purchase of all the equity interests (and via such acquisition, the de facto purchase of all
assets) of 350 Green” (Farkas declaration ¶2). The aforementioned averments of Mr. Farkas’
beliefs and knowledge are not parole evidenced and do not in any way contradict the terms of the
July Term Sheet or the August Term Sheet. There are no other agreements that are referenced in
the Farkas Declaration that would contradict the terms of the July Term Sheet or August Term
Sheet that are at issue before this Court.
Consequently, Defendants’ attempt to invoke the parole evidence rule to exclude the
aforementioned paragraphs, and by extension the corresponding portions that references the
aforementioned portions of the Farkas Declaration is misplaced and should be disregarded by
this Court.
b. Farkas Declaration, Paragraphs 16 and 17
Next, Defendants would have this Court strike the following portion of the Farkas
Declaration as inadmissible hearsay:
16. On March 8, 2013, after the aforesaid extensive period of due
diligence and negotiation, the 350 Members, 350 Green, CCGI and 350
Holdings executed the Equity Exchange Agreement (hereinafter, the
“Exchange Agreement”), which called for the transfer of the membership
interests of 350 Green in exchange for 1,111,111 shares of CCGI common
stock to be paid to the 350 Members. The Exchange Agreement
specifically contemplated the assets related to the Chicago Project as part
of the price that 350 Holdings would pay for the membership interests of
the 350 Members. A copy of the Exchange Agreement is attached hereto
as Exhibit F.
Further, Defendants request that this Court strike only the first sentence of Paragraph 17,
which states (in full):
17. The Exchange Agreement did not contain a “time of the essence”
clause, did not indicate a specific date or time to close the Transaction,
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 5 of 13 PageID #:941
6
and did not contain a default provision. The Exchange Agreement is
governed by the State of Florida. See, Exhibit F.
Again, Defendants’ representation that these paragraphs somehow violate the parole evidence
rule is misplaced. There is nothing in these averments that varies with the plain language of the
Exchange Agreement. The Exchange Agreement does not contain ambiguous terms. There is no
attempt by Plaintiffs to contradict any of the terms of the Exchange Agreement. The terms are
unambiguous, and Mr. Farkas is not attesting to his interpretation of the terms of the Exchange
Agreement, but he is merely bringing to this Court’s attention certain terms of the Exchange
Agreement pursuant to his personal knowledge and understanding. This is fully admissible
testimony. Defendants have no objection to Mr. Farkas stating that the Exchange Agreement is
governed by the State of Florida, but have an objection to him stating that the Exchange
Agreement called for the transfer of the membership interests of 350 Green in exchange for
1,111,111 shares of CCGI common stock to be paid to the 350 Members. Defendants’
inconsistency in this regard makes no sense. The Defendants’ Motion is nothing more than
litigation strategy to preclude Plaintiffs representative from pointing out to this Court that the
Exchange Agreement does not contain a time is of the essence clause or a default provision,
which is indisputable from the very content of the document itself.
As set forth in Plaintiffs’ Motion for Partial Summary Judgment, Defendants are well
aware that the fact that there is no time is of the essence clause, coupled with the fact that CCGI
and 350 Green were not given an opportunity to cure any purported default precluded 350 Green
from unilaterally terminating the Exchange Agreement.1 Consequently, Defendants’ request that
1 See, Inspiration Yacht Charters, Inc. v. Inspiration Yacht Charters II, Inc., 488 Fed. Appx. 408;
2012 U.S. App. LEXIS 18831 (11th Cir. 2012), McNeal v. Marco Bay Associates, 492 So. 2d 778
(Fla. 2nd DCA 1986)
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 6 of 13 PageID #:942
7
this Court strike Paragraph 16 and the first sentence of Paragraph 17 of the Farkas Declaration,
and any corresponding references in Plaintiff’s Memorandum in Support should be denied.
c. Farkas Declaration, Paragraph 27
Defendants next request this Court strike the Third, Fourth, and Fifth sentences of
Paragraph 27 of the Farkas Declaration. Paragraph 27 states:
27. CCGI, 350 Holdings, 350 Green and the 350 Members entered into
subsequent settlement negotiations and came to a resolution of the dispute.
As a result, on April 22, 2013, the parties executed an Amendment to the
Equity Exchange Agreement, and closed the transaction as contemplated
under the Exchange Agreement, a copy of which is attached hereto as
Exhibit M. As part of the resolution of the New York Action, there was no
admission or acknowledgement by any party that the Exchange Agreement
had been terminated. Further, as with the Exchange Agreement, the
Amendment to the Equity Exchange Agreement specifically contemplates
and references the assets related to the Chicago Project as part of the
consideration that 350 Holdings paid for the membership interests of the
350 Members. Consequently, as of the closing under the Exchange
Agreement, 350 Holdings owned and continues to own both one hundred
percent (100%) of the member equity interests and all assets of 350
Green, which specifically includes the Chicago Assets.
There is no “interpretation” of the Addendum by Mr. Farkas in the third and fourth sentences in
paragraph 27. The Addendum specifically includes the assets related to the Chicago Project.
Further, to the extent that Mr. Farkas’ statement that “[c]onsequently, as of the closing under the
Exchange Agreement, 350 Holdings owned and continues to own both one hundred percent
(100%) of the member equity interests and all assets of 350 Green, which specifically includes
the Chicago Assets” is somehow inadmissible, the entire reason that the parties are before this
Court is to determine who owns the Chicago Assets, thereby making Defendants’ request to
strike this sentence completely superfluous.
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 7 of 13 PageID #:943
8
d. Farkas Declaration Paragraph 18
Defendants assert that Paragraph 18 of the Farkas Declaration should be stricken because
it refers to certain emails from John Pierce, Esq., the 350 Members’ attorney to Kylie Wagenet,
General Counsel of CCGI, which transmitted the 350 Members signature pages. There is no
dispute that the email at issue is clearly a record that was prepared for and kept during the
ordinary course of business and is admissible pursuant to Federal Rule of Evidence 803(6). The
phrase “which evinced their intention to enter into the terms of the agreement with CCGI and
350 Holdings, as was the parties’ understanding” reflects Mr. Farkas’ impression as to what this
particular business record meant in the scope of the transaction contemplated under the
Exchange Agreement, and would testify as such before this Court should same be necessary. At
this point, Defendants are merely splitting hairs as to the admissibility of certain sentences.
Defendants fail to articulate how Paragraph 18 of the Declaration falls under the parole evidence
rule or is in any way an attempt to construe any language under the Exchange Agreement,
especially when it does not reference any specific section of the Exchange Agreement. Plaintiffs
will defer to this Court for a final determination as to the admissibility of the second part of the
first sentence of Paragraph 18 of the Farkas Declaration.
e. Farkas Declaration, Paragraph 8
Defendants allege that the second sentence of Paragraph 8, which states, “Based on
conversations with Amber Ritter, Senior Counsel with the City of Chicago Department of Law,
Aviation, Environmental, Regulatory and Contracts Division, whose affidavit was previously
submitted in this case, there is only $163,928.60 remaining under the Grant, however there are
outstanding liabilities of $798,497.92 that must be paid in order to receive the funds remaining
under the Grant” is hearsay. First, Defendants’ argument must be disregarded because Mr.
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 8 of 13 PageID #:944
9
Farkas is testifying about his own conversations with Ms. Ritter. Second, to the extent that Mr.
Farkas may have reviewed Ms. Ritter’s affidavit, Ms. Ritter’s supplemental affidavit that was
attached as an exhibit to 350 Green’s Response in Opposition to Plaintiff JNS Power’s Motion
for Expedited Proceedings and Discovery [D.E. #16-1] that was filed on June 14, 2013 in
consolidated case number 13-cv-04020, and, further, was utilized as Exhibit O to 350 Green’s
Statement of Additional Undisputed Facts Requiring the Denial of JNS Power’s Motion for
Partial Summary Judgment [D.E. #37] filed on August 21, 2013 in consolidated case number
13-cv-04020.
Therefore, this Court should overrule Defendants’ Motion, and leave the second sentence
of paragraph 8 of the Declaration, as well as the second sentence of paragraph 4 of the Statement
of Material Facts and paragraph 2 of the Uncontested Facts of Plaintiffs’ Memorandum intact.
f. Paragraphs 4, 10, and 11 of the Uncontested Facts
Defendants argue that Paragraphs 4, 10, and 11 of the section regarding the “Uncontested
Facts” of Plaintiff’s Memorandum should be disregarded as they fail to provide any basis for
same. Paragraph 4 of the Memorandum’s Statement of Uncontested Facts states that:
Notwithstanding the August Term Sheet’s express prohibition against 350
Green or its members from taking any action to sell the assets or
membership equity interests of 350 Green to any other party, on February
11, 2013, a press release was issued by Defendant JNS Holdings
Corporation (“JNS”) announcing that JNS had entered into a Formal
Letter of Intent with 350 Green to acquire “certain assets which consists of
the Chicago area Grant Agreement, only.” The 350 Members never
advised CCGI that they had entered into negotiations with any other
bidders for any part of 350 Green in violation of the August Term Sheet.
These facts, and the press release cited therein, are set forth in Paragraph 22 of the Declaration of
Michael Farkas that was filed in support of CCGI and 350 Holdings’ Motion for Injunctive
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 9 of 13 PageID #:945
10
Relief that was filed in the New York Action. The aforementioned declaration was attached as
Exhibit F to the Farkas Declaration that was filed in support of Plaintiff’s Motion for Partial
Summary Judgment [D.E. # 41-2]. Consequently, there was a basis for said statement, and, as a
result, Defendants’ motion that same be stricken should be denied.
Defendants then request this Court strike the following paragraph from the Statement of
Uncontested Facts section of Plaintiffs’ Memorandum:
As a result of the 350 Members’ continuing refusal to close the
Transaction as required under the Exchange Agreement and Florida law,
on April 9, 2013, Plaintiffs filed the New York Action against 350 Green,
the 350 Members, and JNS in the United States District Court for the
Southern District of New York in the case entitled Car Charging Group,
Inc., et al. v. 350 Green, LLC and JNS Holdings Corporation, under Case
No.: 13-cv-2389.
First, the foregoing was cited in Paragraph 25 of the Farkas Declaration. It is also set forth in
Paragraph 34 of Plaintiffs’ Amended Complaint. Second, the existence of the New York Action
is public record. Defendants are well aware of the allegations that CCGI and 350 Holdings made
against 350 Green and JNS Holdings in the New York Action, and the attempt to have this Court
strike the paragraph due to a “failure to cite” in the record is one more attempt by Defendants to
divert this Court’s attention from the substantive issues at bar.
Finally, Defendants request this Court strike the following paragraph from the Statement
of Uncontested Facts section of Plaintiffs’ Memorandum:
On April 17, 2013 after JNS Holdings’ counsel of record was served with
the New York Action, thereby placing JNS on actual notice of the
existence of a binding Exchange Agreement between CCGI, 350
Holdings, 350 Green and the 350 Members, 350 Green and JNS Power
entered into an Asset Purchase Agreement (the “APA”) wherein JNS
Power agreed to purchase the one hundred sixty-eight (168) installed
electric car chargers and fifty-one (51) chargers that were to be installed
for the Chicago Project (the “Chicago Assets”).
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 10 of 13 PageID #:946
11
This section sets for the date the APA was executed. Again, the APA was attached to the
Complaint filed by JNS Power in the consolidated action. There is no dispute as to when the
APA was executed. Further, there is no dispute that JNS Holdings, JNS Power’s parent
company, was a party to, was served, and entered an appearance in the New York Action. The
foregoing is all public record. In fact, Defendants’ attempt to have this sentence struck becomes
even more ridiculous considering that Defendants’ initially filed a Motion to Dismiss Plaintiffs’
Complaint [D. E#. 14] and Supporting Memorandum [D.E. #12] wherein Defendants attempted
to have this Court dismiss Plaintiffs’ Complaint, in part, under the doctrine of res judicata,
alleging that Plaintiffs’ claims against Defendants were barred because they were allegedly
dismissed previously in the New York Action. This Court entered an Order denying Defendants’
Motion in its entirety on August 5, 2013 [D.E. #40]. Defendants’ request that this Court strike
certain facts upon which Defendants have already used as the basis of one frivolous motion is
completely disingenuous, and should be denied by this Court.
III. Conclusion
Defendants’ Motion to Strike is completely frivolous, designed for no other purpose to
distract from the pertinent issues of law that are currently before this Court. The disputed
portions of the Farkas Declaration, and the supporting cites in Plaintiffs’ Memorandum in
Support of its Motion for Partial Summary Judgment [D.E. #41], are not hearsay designed to
dispute the terms of the Exchange Agreement. The disputed portions of the Farkas Declaration
are either Mr. Farkas’ impressions of the events surrounding the execution of said documents or
citing to the Court relevant portions of said documents. There is, however, no testimony
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 11 of 13 PageID #:947
12
designed to dispute the terms of said documents. Based on the foregoing reasons, Defendants’
Motion should be denied in its entirety.
Dated: September 6, 2013 Respectfully submitted,
Car Charging Group, Inc.,
350 Holdings, LLC, and 350 Green, LLC
By: s/Michael I. Bernstein
One of their attorneys
Steven L. Baron (ARDC No. 6200868)
Natalie A. Harris (ARDC No. 6272361)
Mandell Menkes LLC – Firm No. 38081
One North Franklin Street, Suite #3600
Chicago, Illinois 60606
Telephone: (312) 251-1000
Facsimile: (312) 251-1010
e-mail: sbaron@mandellmenkes.com
e-mail: nharris@mandellmenkes.com
Michael I. Bernstein, admitted pro hac vice
The Bernstein Law Firm
1688 Meridian Avenue, Suite 418
Miami Beach, Florida 33139
Telephone: (305) 672-9544
Facsimile: (305) 672-4572
e-mail: michael@bernstein-lawfirm.com
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 12 of 13 PageID #:948
13
CERTIFICATE OF SERVICE
The undersigned, an attorney, hereby certifies that Plaintiffs’ Response in Opposition to
Defendants’ Motion to Strike served upon counsel herein named by via ECF on September 6,
2013:
Patrick E. Deady
Kelly McCloskey Cherf
Evan J. Haim
Hogan Marren, Ltd.
321 N. Clark Street, Suite 1301
Chicago, IL 60654
312-946-1800
s/ Michael I. Bernstein
Case: 1:13-cv-03124 Document #: 52 Filed: 09/06/13 Page 13 of 13 PageID #:949
Ruling on motion next Friday.
http://www.ilnd.uscourts.gov/DailyCal/7.htm
Must have been a misprint in the PR....they meant selling 20 million.
UNITED STATES DISTRICT COURT
FOR THE Northern District of Illinois - CM/ECF LIVE, Ver 5.1.1
Eastern Division
Car Charging Group, Inc, et al.
Plaintiff,
v. Case No.: 1:13-cv-03124
Honorable Elaine E. Bucklo
JNS Holding Corporation, et al.
Defendant.
NOTIFICATION OF DOCKET ENTRY
This docket entry was made by the Clerk on Wednesday, August 28, 2013:
MINUTE entry before Honorable Elaine E. Bucklo: Status hearing held on
8/28/2013. Any additional briefs as to the motion to strike [43] due by 9/6/2013. Answer
to counterclaim to be filed by 9/16/2013. Mailed notice (jdh)
ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of
Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was
generated by CM/ECF, the automated docketing system used to maintain the civil and
criminal dockets of this District. If a minute order or other document is enclosed, please
refer to it for additional information.
For scheduled events, motion practices, recent opinions and other information, visit our
web site at www.ilnd.uscourts.gov.
Case: 1:13-cv-03124 Document #: 51 Filed: 08/28/13 Page 1 of 1 PageID #:936
How is 350 owners not in jail? They took 1.75 million of the grant(of 1.9)and would still owe companies for services that JNSH will pay 1.6 million.
Nothing new on pacer. Every other time they had a scheduled court date, something was sent to pacer. I think a deal was agreed upon. Even if they said they would try to work a deal out, a future court date would have been set.
The case with jnsh vs 350 green(4020) does have an end of September date but I think that's based on the CCGI case. I thought they were combined.
I do agree, announcement is soon.
I'm shocked that nothing is on pacer...maybe a deal in the works. This needs to end soon.
Surprised there isn't some chatter or opinions on scheduled meeting or those emails. Maybe jnsh has only us 8-9 shareholders;)
This is by far the best...even the 350 people realize all CCGI does is sell shares!
Tomorrow at 930...I hope some progress is made. Been in the system way too long. Shouldn't even be there in the first place.
Cool. Keep up the good work.
Ya...maybe you can find a way to copy them...I can't... most are images.
I have no way of copying it to post it...I could email the files.
I wish I could post this email from mariana g.from 350 to CCGI...she says the amount of stock needs to be reset...the price has been going down cause ceo keeps issuing more shares! hilarious
Some new pacer documents uploaded to the 4020 case(JNS's). Having trouble posting them they're .pdf One of them is huge that I didn't get...one is with the city of chicago law. Multiple emails between 350 and ccgi basically saying it expired and 350 is looking at other options.
I'm surprised CCGI hasn't responded with a filing on pacer...maybe tomorrow or else they feel defeat? JNSH made some pretty aggressive arguments prior to Wed. court appearance.
Court date looks to be moved to next Wed.
UNITED STATES DISTRICT COURT
FOR THE Northern District of Illinois - CM/ECF LIVE, Ver 5.1.1
Eastern Division
Car Charging Group, Inc, et al.
Plaintiff,
v. Case No.: 1:13-cv-03124
Honorable Elaine E. Bucklo
JNS Holding Corporation, et al.
Defendant.
NOTIFICATION OF DOCKET ENTRY
This docket entry was made by the Clerk on Thursday, August 22, 2013:
MINUTE entry before Honorable Elaine E. Bucklo: Status hearing reset to
8/28/2013 at 9:30 AM. Mailed notice (jdh)
ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of
Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was
generated by CM/ECF, the automated docketing system used to maintain the civil and
criminal dockets of this District. If a minute order or other document is enclosed, please
refer to it for additional information.
For scheduled events, motion practices, recent opinions and other information, visit our
web site at www.ilnd.uscourts.gov.
Case: 1:13-cv-03124 Document #: 50 Filed: 08/22/13 Page 1 of 1 PageID #:935
Really can't believe this is taking up the courts time...
A grab from the filing today..
Second, when the stock transaction did close and as part of the closing
documents, the CCGI Parties specifically recognized that 350 Green had previously sold the
Chicago Assets to JNS.
I like this part of docket 47.
First and foremost, it is not surprising that there is nothing in the Exchange Agreement
prohibiting the sale of assets, because the Exchange Agreement is not an asset purchase
agreement, but instead, a stock/membership interest exchange agreement – two completely
different corporate transactions.
This is docket #49
UNITED STATES DISTRICT COURT
FOR THE Northern District of Illinois - CM/ECF LIVE, Ver 5.1.1
Eastern Division
Car Charging Group, Inc, et al.
Plaintiff,
v. Case No.: 1:13-cv-03124
Honorable Elaine E. Bucklo
JNS Holding Corporation, et al.
Defendant.
NOTIFICATION OF DOCKET ENTRY
This docket entry was made by the Clerk on Thursday, August 22, 2013:
MINUTE entry before Honorable Elaine E. Bucklo: JNS Holding Corporation and
JNS Power & Control Systems, Inc.'s Motion to strike [43] is taken under advisement and
will be considered with the motion for summary judgment. Defendant/counter-plaintiffs
Motion to adopt related pleadings [45] is granted. Replies in support of the motion for
partial summary judgment, [41] to be filed by 9/6/2013. Ruling before Honorable Elaine
E. Bucklo on 10/17/2013 at 9:15 AM. Status hearing reset to 10/17/2013 at 9:15 AM.
Mailed notice (jdh)
ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of
Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was
generated by CM/ECF, the automated docketing system used to maintain the civil and
criminal dockets of this District. If a minute order or other document is enclosed, please
refer to it for additional information.
For scheduled events, motion practices, recent opinions and other information, visit our
web site at www.ilnd.uscourts.gov.
Case: 1:13-cv-03124 Document #: 49 Filed: 08/22/13 Page 1 of 1 PageID #:934
There is another on pacer...#48 but it's 214 pages. I don't know what that is.
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
Company, )
)
Plaintiffs/Counter-Defendants, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, a Delaware )
Corporation, and JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation, )
)
Defendants/Counter-Plaintiffs. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 1 of 19 PageID #:701
JNS POWER & CONTROL SYSTEMS, INC.’S AND JNS HOLDING CORPORATION’S
RESPONSE IN OPPOSITION TO PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT
JNS Power & Control Systems, Inc. and JNS Holding Corporation (collectively, “JNS”),
Defendants/Counter-Plaintiffs in Case No. 13 CV 3124, pursuant to Federal Rule of Civil
Procedure 56, submit their Response in opposition to Car Charging Group, Inc.’s (“CCGI”), 350
Holdings, LLC’s (“350 Holdings”), and 350 Green, LLC’s (“350 Green”) (collectively, the
“CCGI Parties”) motion for partial summary judgment on Count II1 of their Amended Complaint
in Case. No. 13 CV 3124, for declaratory judgment regarding the April 17, 2013 Asset Purchase
Agreement entered into between JNS and 350 Green (the “APA”) for the transfer of certain
assets. The CCGI Parties fail to demonstrate that 350 Green did not have the authority, capacity,
and legal right to enter into the APA with JNS. Accordingly, there is no basis under which this
Court could find that the APA is void as a matter of law.
Contrary to the misleading arguments made by the CCGI Parties in their motion, there is
absolutely no provision in the March 8, 2013 Equity Exchange Agreement (the “Exchange
Agreement”), entered into by and among Mariana Gerzanych and Tim Mason (collectively the
“350 Members”) and the CCGI Parties, that barred 350 Green from selling certain assets to JNS
(the “Chicago Assets). Moreover, at the time JNS and 350 Green signed the APA, the Exchange
Agreement was not in effect, and certainly had not closed. Indeed, when the CCGI Parties did
close on their membership interest exchange, the CCGI Parties specifically recognized that 350
1 In their motion for partial summary judgment (13cv3214, Dkt. 41), the CCGI Parties state that they are
seeking partial summary judgment on “Count I” of their complaint. The CCGI Parties again reference
“Count I” in their memorandum in support (13cv3124, Dkt. 41-2), but seek summary judgment on their
declaratory relief claim. Memorandum, p. 3 (13cv3124, Dkt. 41-2). Count I of the CCGI Parties’
Amended Complaint states a claim for tortious interference with contractual relations, while Count II
seeks declaratory relief. (13cv3124, Dkt. 32). Plaintiffs appear to have intended to move for partial
summary judgment on Count II of their Amended Complaint. JNS, therefore, submits this Response to
the arguments for declaratory relief as presented in Plaintiffs’ memorandum.
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 2 of 19 PageID #:702
2
Green had sold the Chicago Assets to JNS. Further, any knowledge JNS may have had regarding
the Exchange Agreement created no impediment to JNS entering into the APA with 350 Green.
Finally, based solely on 350 Green’s representations and warranties contained in the agreement,
the APA is valid and enforceable. Accordingly, the Court should deny the CCGI Parties’ motion
for partial summary judgment on Count II in Case No. 13 CV 3124 on the grounds that the APA
is a valid and enforceable agreement.
I. STATEMENT OF FACTS
The statement of facts is set forth in JNS’s L.R. 56.1(b)(3)(C) Statement of Additional
Material Facts (cited herein as “SAMF, ¶ ”).
II. STANDARD OF REVIEW
Summary judgment is only appropriate when there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). Moreover, if the contract is unambiguous, as the CCGI Parties contend in
their motion, the Court will not look beyond the contract’s four corners in interpreting its
meaning. Central States, Southwest and Southwest Areas Pension Fund v. Waste Management
of Michigan, Inc., 674 F. 3d 630, 634 (7th Cir. 2012); Downs. v. U.S. Army Corps of Eng’rs, 333
Fed. Appx. 403, 414 (11th Cir. 2009). On a motion for summary judgment, the court's task is to
determine “whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.” Searls v.
Glasser, 64 F.3d 1061, 1065 (7th Cir. 1995); see also Wholesale Telecom Corp. v. ITC Deltacom
Commc'ns, Inc., 176 Fed. Appx. 76, 79 (11th Cir. 2006).
Given this standard, and as demonstrated herein, there is nothing within the four corners
of the Exchange Agreement – an agreement that CCGI admits is unambiguous – that prohibited
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 3 of 19 PageID #:703
3
350 Green from selling its assets to JNS. The undisputed facts in this case are clearly “onesided”
that JNS must prevail as a matter of law, and the CCGI Parties’ motion for partial
summary judgment should be denied.
III. ARGUMENT
A. The Exchange Agreement Did Not Prohibit 350 Green From Selling Its
Assets To JNS.
Tellingly, in all the arguments regarding the Exchange Agreement in their motion, the
CCGI Parties fail to identify any language in the Exchange Agreement by which 350 Green
forfeited the right to contract for the sale of its assets. The reason for this is obvious: no such
language exists.
First and foremost, it is not surprising that there is nothing in the Exchange Agreement
prohibiting the sale of assets, because the Exchange Agreement is not an asset purchase
agreement, but instead, a stock/membership interest exchange agreement – two completely
different corporate transactions. In an asset sale, the assets are sold to the buyer, without any
exchange of ownership of the selling entity. See Selling Your Business: Entity Sale vs. Asset
Sale, http://www.allbusiness.com/print/3881519-1-9a0bs.html. (A copy of which is attached
hereto as Exhibit A). In a stock sale (or in this case a stock/membership interest exchange), the
assets (and liabilities) continued to be owned by the corporate entity (i.e., 350 Green) whose
shares were ultimately sold.
Unlike an asset purchase agreement, there is nothing within the Exchange Agreement
which specifically identifies any of 350 Green’s assets by way of a schedule or otherwise.
Similarly, there is nothing within the Exchange Agreement that prohibits the sale of assets.2 The
2 In the Exchange Agreement, 350 Green represents and warrants that as of March 8, 2013, “there has not
been any material adverse change in the business, operations, properties, assets, or condition (financial or
otherwise) of 350.” SAMF, ¶2, Ex. 2 (Exchange Agreement, §2.17). This statement is a representation
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 4 of 19 PageID #:704
4
Exchange Agreement was clearly a contract for the exchange of stock and not a sale of assets;
and as such, 350 Green, an entity that was in existence at the time of the APA and is still in
existence today, was able to sell certain of its assets to JNS on April 17, 2013.
In their motion, the CCGI Parties state: “[t]he terms of the Exchange Agreement are
unambiguous.” (Dkt. 41-2, p. 8). Moreover, the Exchange Agreement includes the following
integration clause: “This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the parties related to
the subject matter of this Agreement and all prior drafts of this Agreement, all of which are
merged into this Agreement.” SAMF, ¶19, Ex. 1 (Exchange Agreement, §8.5).
It is a well-established principle that the parol evidence rule bars admission of extrinsic
evidence which would vary or contradict the unambiguous language of a contract. In re Yates
Development, 256 F. 3d at 1289 (11th Cir. 2001). In White Const. Co. v. Martin Marietta
Materials, Inc., the court ruled that the “express terms, which were the product of an arms-length
negotiation process with legal representation on both sides, are valid, enforceable, and discharge
any claims based on the LOI [letter of intent].” 633 F. Supp. 2d 1302, 1323 (M.D. Fla. 2009).
In finding for summary judgment against plaintiffs’ claim for breach of contract based on the
LOI, the White Construction court found, “the MSA contains a merger and integration clause
specifically providing that all prior agreements and understanding concerning the subject matter
of the MSA are superseded.” Id. Additionally, “The parol evidence rule bars admission of
extrinsic evidence which would vary or contradict the unambiguous language of a contract. This
of the 350 Members regarding the state of 350 Green as March 8, 2013. It does not, however, operate as
a restriction on the actions of 350 Green to sell certain assets, specifically the assets included in the APA.
The Exchange Agreement further states that the representations and warranties as of March 8, 2013 shall
be true as of the Closing Date and may be waived by the CCGI Entities. In the Addendum to the Equity
Exchange Agreement, the CCGI Parties all agreed to a Closing Date of April 22, 2013 – after the signing
of the APA – and notably, the CCGI Parties specifically recognized that 350 Green previously contracted
to sell the Chicago Assets to JNS. SAMF, ¶39, Ex. 13 (First Addendum, §5).
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 5 of 19 PageID #:705
5
is especially true when the contract contains an integration clause indicating the parties intended
the written agreement to be the entire agreement.” In re Yates Development, Inc., 256 F. 3d at
1289-1290 (applying Florida law). See also Jankovich v. Bowen, 844 F. Supp. 743, 752 (S.D.
Fla. 1994) (holding that had the parties intended to include additional terms in the contract, they
could have indicated such terms in the written agreement, and in the absence of such terms, “the
court must accept the contract as written”).
Notwithstanding this well established law governing contracts and their admission of
unambiguity and the existence of a crystal clear integration clause, the CCGI Parties
inappropriately rely upon the Declaration of Michael Farkas, CCGI’s and 350 Holdings’ CEO, to
argue for the existence of terms in the Exchange Agreement that clearly do not exist. Such a
brazen attempt to rewrite this contract should not be countenanced by the Court. “It is never the
role of a court to rewrite a contract to make it more reasonable for one of the parties to relieve a
party from what turns out to be a bad bargain.” In re Yates Development, Inc., 256 F. at 1290
(applying Florida law). As set forth in JNS’ Motion to Strike which is being filed concurrently
herewith, Farkas’s self-serving testimony about what the parties intended to include in an
unambiguous agreement, or what he wishes now was in the agreement, should be stricken.3
3 Farkas’s declaration is also incredible, given the blatant misrepresentations it contains. For example,
Farkas’s purported statement of fact that the “consideration of payment to the 350 Members under the
Exchange Agreement was based, in part, on the inclusion and value of the Chicago assets” (Dkt. 41-2, p.
4), is categorically false. This allegation is directly contradicted by the plain and unambiguous language
of the Exchange Agreement, which does not list any assets, does not reference the sale of assets, and is
specifically limited to an exchange of stock and membership interests. SAMF, ¶2, Ex. 2 (Exchange
Agreement). Since portions of the declaration are directly contradicted by the documents attached, those
statements should be disregarded. “It has been held that where the allegations of a pleading are
inconsistent with the terms of a written contract attached as an exhibit, the terms of the latter, fairly
construed, must prevail over the averments differing therefrom.” Foshee v. Daoust Const. Co., 185 F.2d
23, 25 (7th Cir. 1950); see also Polzin v. Gage, 636 F.3d 834, 838 (7th Cir. 2011).
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6
Equally disingenuous is the CCGI Parties’ inaccurate reliance upon term sheets between
CCGI and 350 Green that preceded the Exchange Agreement, i.e., the July 5, 2012 Term Sheet4
and the August 29, 2012 Term Sheet (“Aug. Term Sheet”). The CCGI Parties’ reliance on the
Aug. Term Sheet to argue the alleged existence of some sort of a no-shop provision is misleading
and improper in the extreme, given the integration clause set forth in the Exchange Agreement.
SAMF, ¶19, Ex. 1 (Exchange Agreement, §8.5). In addition, the Aug. Term Sheet
acknowledged the understanding of the parties, that the ultimate terms of the agreement between
the CCGI Parties would be contained in the Exchange Agreement. “Consummation of the
Transaction will be subject to the negotiation and execution of a mutually acceptable definitive
membership interest purchase agreement (the ‘Definitive Agreement’) containing customary
terms and conditions for a purchase of this nature.” SAMF, ¶12, Ex. 3 (Aug. Term Sheet, §4).
Furthermore, the Aug. Term Sheet acknowledged that it was not the final agreement between the
parties, but rather, was “intended to be a summary evidencing the terms and conditions on which
the Purchaser is willing to proceed with the Transaction . . . and does not constitute an agreement
to consummate the transaction or to enter into the definitive agreement.” SAMF, ¶12, Ex. 3
(Aug. Term Sheet, §12).5
In applying the principles of the parol evidence rule and integration clauses, the
Exchange Agreement represents the entirety of the deal for the purchase of 350 Green’s
4 The Aug. Term Sheet “replace[d] in its entirety the Term Sheet previously signed by the parties on or
about July 5, 2012.” SAMF, ¶12 (Aug. Term Sheet).
5 CCGI’s “version” of the Aug. Term Sheet’s restrictions is also erroneous. Under the Aug. Term Sheet,
350 Green agreed: “t will not, and it will cause the members of the Company (and their respective
Representatives) not to take, directly or indirectly, any action to initiate, solicit, negotiate or accept any
offer from any person to sell the Company.” SAMF, ¶12, Ex. 3 (Aug. 2012 Term Sheet, §7). The
restriction agreed to by 350 Green was only not to “sell the Company [350 Green].” There was no
specific restriction on 350 Green’s sale of any of its assets. Moreover, pursuant to the exclusivity
provision of the Aug. Term Sheet, the exclusivity period was limited in time, “from the date hereof
[August 29, 2012] until the Execution Date [of the Exchange Agreement, March 8, 2013].” SAMF, ¶12,
Ex. 4, (Aug. Term Sheet, §7).
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7
membership interests. No language exists in the Exchange Agreement restricting the sale of
assets or relinquishing 350 Green’s capacity to contract. See SAMF, ¶2, Ex. 1 (Exchange
Agreement). The self-serving testimony of Mr. Farkas and the misrepresented interpretations of
prior terms sheets cannot change this undisputed fact. On this ground alone, the Court should
find that 350 Green rightfully sold assets in the April 17, 2013 APA – a valid and enforceable
contract – and deny the CCGI Parties’ partial motion for summary judgment.
B. The Exchange Agreement Could Not Operate To Prohibit 350 Green From
Entering Into The APA With JNS.
JNS submits that the clear language of the Exchange Agreement obviates the need for the
Court to rule on the red herring arguments in the CCGI Parties’ motion, including the argument
that the Exchange Agreement was operative at the time of the APA. The CCGI Parties’
argument and its five (5) page discussion of whether time was of the essence for purposes of the
closing date is completely irrelevant if the Court finds, as it should, that the Exchange
Agreement did not prohibit 350 Green from selling certain of its assets to JNS. Under the clear
terms of the Exchange Agreement, 350 Green could sell its assets regardless of whether the
Exchange Agreement was in effect or not.
Notwithstanding JNS’ position that the Court should rule in its favor based on the
grounds that the Exchange Agreement did not prohibit 350 Green from selling certain of its
assets to JNS, JNS will address the arguments in the CCGI Parties’ motion. As set forth below,
each one of their arguments is factually deficient and legally wrong.
With regard to their first argument that 350 Green was bound to the Exchange Agreement
as of March 8, 2013 (Dkt. 41-2. Memorandum, pp. 7-11), the CCGI Parties ignore four (4) key
points. First, under the terms of the Exchange Agreement and its First Addendum amending the
closing date to April 22, 2013, the stock transaction clearly had not closed on April 17, 2013 –
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 8 of 19 PageID #:708
8
the date of the APA. Second, when the stock transaction did close and as part of the closing
documents, the CCGI Parties specifically recognized that 350 Green had previously sold the
Chicago Assets to JNS. Third, based on the representations and warranties of 350 Green set
forth in the APA, the APA is enforceable, notwithstanding the Exchange Agreement. Finally, as
of the close of business on March 22, 2013, the Exchange Agreement terminated by its own
terms.
1. The Exchange Agreement Did Not Close Until After The APA Was
Executed.
In arguing that 350 Green was bound by the Exchange Agreement as of March 8, 2013,
the CCGI Parties ignore a material undisputed fact, i.e., that the transaction contemplated by the
Exchange Agreement did not close and the assignment and transfer of the membership interests
in 350 Green had not occurred, until the Exchange Agreement closed on April 22, 2013 – after
the APA was signed. SAMF, ¶32, Ex. 13 (First, Addendum, ¶2). Accordingly, as of April 17,
2013, when the APA was signed, 350 Green and its then members retained the ability to enter
into the APA.
Because the Exchange Agreement did not contain any provision limiting 350 Green’s
ability to sell assets between the date of execution and closing, CCGI and 350 Holdings could
only control the assets of 350 Green once the membership interests of 350 Green were
transferred to them under these agreements. Thus, the CCGI Parties are without any legal basis
to now seek the Court to declare the APA, previously entered into by 350 Green, void.
2. The CCGI Parties Closed Their Transaction Subject To 350 Green’s Sale
Of The Chicago Assets To JNS.
It is undisputed that the CCGI Parties did not close their stock/membership exchange
until April 22, 2013, when they signed the First Addendum. SAMF, ¶34, Ex. 13 (First
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 9 of 19 PageID #:709
9
Addendum, ¶2) As part of the closing documents, the CCGI Parties specifically recognized that
350 Green had entered into the APA with JNS, and that the CCGI Parties were proceeding with
the closing subject to the sale of these assets. SAMF, ¶32, Ex. 13 (First Addendum, ¶5). The
specific reference to the APA in the First Addendum undisputedly demonstrates that CCGI
closed the Exchange Agreement and accepted the membership interests of the 350 Members
subject to the APA.
3. Based On 350 Green’s Representations And Warranties, The APA Is
Enforceable Even If The Exchange Agreement Was In Effect And/Or
Prohibited The Sale Of Assets.
In entering into the APA, JNS relied upon the representations and warranties of 350
Green. Specifically, Paragraph 1.1 of the APA states: “Both Seller and Buyer warrant and
represent that the individuals executing this Agreement have the requisite authority to enter into
this Agreement.” Paragraph 1.2 states, “Seller represents and warrants that they have terminated
all other prospective term sheets with any other entity, specifically Car Charging Group, Inc.
(“CCGI”), for the purchase of the assets that are defined herein and that are being sold herein.”
SAMF, ¶¶7-9.6 350 Green further represented that it had the necessary power, authority and
capacity to enter into this Agreement and carry out its obligations without the necessity of any
act or consent of any person or entity. SAMF, ¶10.
JNS was entitled to rely on 350 Green’s representations and warranties, without fear that
such reliance would prove detrimental. “A warranty is an assurance of one party to a contract of
the existence of a fact upon which the other party may rely. It is intended precisely to relieve the
promise of any duty to ascertain the fact for himself.” Capitol Bankers Life Ins. Co. v.
6 It should be noted that the APA, which included 350 Green’s Representations and Warranties, was
drafted principally by DLA Piper – 350 Green’s attorneys. (SAMF, ¶¶11).
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10
Amalgamated Trust & Sav. Bank, No. 92 C 4480, 1993 WL 594103, at *4 (N.D. Ill. May 6,
1993).
JNS had every right to rely on 350 Green’s representations and warranties. After
providing the representations and warranties in the APA, the CCGI Parties, which includes 350
Green, cannot now seek to have the APA declared void.
4. The Exchange Agreement Terminated When It Did Not Close By March
22, 2013, Because Time Was Of The Essence.
The CCGI Parties’ reliance on the fact that 350 Green was bound to the Exchange
Agreement as of March 8, 2013, also ignores the undisputed fact that the parties failed to close
by the specific closing date, i.e., March 22, 2012 (SAMF, ¶¶23,27), relying instead upon the
misplaced argument that the closing date specified in the Exchange Agreement somehow did not
matter. Under the applicable law and undisputed facts, the CCGI Parties’ “time was not of the
essence” argument fails.
First, time will be considered to be “of the essence” when “the terms in this agreement
clearly contained the express provision for payment of a sum certain on a specific date.”
Treasure Coast, Inc. v. Ludlum Constr. Co., 760 So. 2d 232, 235 (Fla. Dist. Ct. App. 2000); see
also Polezoes v. Bartlett, 921 So. 2d 35, 36 (Fla. App. Ct. 2006) (finding, “[a]lthough the
agreement in this case did not contain a time is of the essence clause, the terms in this agreement
clearly contained the express provision for payment of a sum certain on a specific date”). The
Exchange Agreement provided that the closing, “shall take place not later than ten (10) business
days after the effective date,” meaning by March 22, 2013 (“Closing Date”). SAMF, ¶17, Ex. 1
(Exchange Agreement, §1.2). It is undisputed that a specific date was agreed to by the CCGI
Parties for the closing – no later than March 22, 2013. SAMF, ¶23.
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11
Second, time also will be considered of the essence, “where an express notice has been
given by a party not in default to the other party who is in default, requiring the contract to be
performed within a stated time.” Fertilizer Corp. of America v. P.S. Int’l, Inc., 729 F. Supp. 837,
838 (S.D. Fla. 1989). Contemporaneously with providing the necessary documents and
signatures to CCGI, 350 Green provided notice to CCGI demanding that the closing be
completed as required by the Exchange Agreement. SAMF, ¶22. CCGI received 350 Green’s
notice of demand to close, as 350 Green’s counsel “told [CCGI’s in-house counsel] in no
uncertain terms that 350 would consider the transaction to be expired if not closed by close of
business on March 22, 2013, the date mandated by the Exchange Agreement.” SAMF, ¶¶21,22
(SDNY Dkt. 22, Pierce Dec. ¶5).
Notwithstanding the specific closing date, 350 Green’s demand to close on that date and
the timely delivery of signatures by 350 Green (SAMF, ¶¶17,20,22), on March 22, 2013, CCGI
refused to close, because CCGI wanted new, additional material terms to be included in the deal.
SAMF, ¶23. Instead of providing the CCGI signatures required for the closing (and thus
recognizing the need for a written extension of the closing date), CCGI demanded 350 Green
execute an extension of the closing date, together with a non-compete agreement – obligations
and terms which were not included by the Exchange Agreement. SAMF, ¶23. On March 22,
2013, 350 Green refused to agree to any of these new terms demanded by CCGI and justifiably
considered CCGI’s and 350 Holdings’ failure to close on March 22, 2013 after their demand for
additional material obligations to be a termination of the Exchange Agreement. SAMF, ¶¶26,27;
see Lisbon Holding & Inv. Co. v. Vill. Apt’s, Inc., 237 So. 2d 199, 200 (Fla. Dist. Ct. App. 1970)
(finding defendant was properly ordered to perform when “Plaintiff was ready, willing and able
to perform but that defendant refused to execute a deed in accordance with the terms of the
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12
contract) (citing Enriquillo Exp. & Imp., Inc. v. M.B.R. Indus., Inc., 733 So. 2d 1124, 1127 (Fla.
Dist. Ct. App. 1999)).
C. JNS’s Notice Or Knowledge Of The Exchange Agreement Cannot Void The
APA.
The CCGI Parties lastly argue that JNS’s knowledge of the existence of the Exchange
Agreement somehow renders the APA void as a matter of law. The CCGI Parties attempt to
draw an analogy to cases decided under the Uniform Commercial Code (“UCC”), arguing that
notice of a contract for purchase of the membership interest of 350 Green is analogous to the
requirements to be a bona fide purchaser under the UCC. The CCGI Parties’ UCC argument is
misplaced and unavailing for two reasons: 1) an agreement for exchange of membership
interests is not subject to the requirements of the UCC; and 2) even if UCC principles applied,
there was nothing for JNS to have notice of with regard to any “defect in title or pending claim”
when it signed the APA.
1. A Contract For Exchange Of Membership Interests Is Not Subject To The
Requirements Of The UCC.
The CCGI Parties’ notice argument fails in the first instance for the simple reason that
there are no notice or recording requirements for the purchase of membership interests of a
limited liability corporation, which would make UCC case law applicable or even analogous.
Cases applying the UCC or other purchases of goods, which may be subject to recorded liens are
wholly inapplicable here. “Article 2 of the UCC applies only to sales of goods.” Whitaker v.
T.J. Snow Co., 151 F.3d 661, 665 (7th Cir. 1998) (emphasis added). CCGI’s purchase of the
membership interests of 350 Green was not governed by the UCC. Therefore, whether JNS had
notice of CCGI’s negotiations or as-of-then unperformed contract for assignments of the 350
Members’ membership interests is irrelevant to the enforceability of the APA.
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 13 of 19 PageID #:713
13
2. Even If UCC Principles Were Applicable, There Was Nothing For JNS To
Have Notice Of With Regard To Any “Defect In Title or Pending Claim”
When It Signed The APA.
Moreover, even if there was some sort of obligation by JNS to take notice, there was
nothing to take notice of as of the date of the APA. The APA was signed on April 17, 2012.
SAMF, ¶5. The Exchange Agreement governing the transfer of the 350 Green membership
interests did not close until April 22, 2013 (SAMF, ¶32), and CCGI did not provide value for the
membership interests until after April 29, 2013 – almost two weeks after JNS signed the APA.
SAMF, ¶40.
The facts in the first of two cases cited by the CCGI Parties highlight the inapplicability
of the UCC analogy offered by the CCGI Parties. See Shacket v. Roger Smith Aircraft Sales, 651
F. Supp. 675 (N.D. Ill. 1986); Memorandum (Dkt. 41-2), pp. 13-14. In Shacket, the contract at
issue involved the purchase of a plane and buyer’s claim for declaratory judgment regarding their
purchase of the plane. After seller sold the plane to buyer, and buyer had taken possession, seller
sought to borrow money from a private lender in order to finance the sale of the plane to a
second buyer. Id. at 682-684. The private lender agreed to lend the money to seller, without
performing any due diligence inquiries which “would have quickly uncovered [seller’s] fraud
and would have led to [private lender’s] knowledge of [buyer’s] prior ownership of the Aircraft.”
Id. at 685. In making its decision, the court noted the following tenet: “a buyer or mortgagee is
entitled to property based on whether he, she, or it acquires an interest and gives value for it
before receiving notice of prior unrecorded interest.” Id. at 691.
At the time the APA was entered into by 350 Green and JNS, CCGI had not acquired any
interest in 350 Green. SAMF, ¶¶32,40. As of that date, CCGI had not given any value to 350
Green or 350 Members, which would give rise to any purported claim to the property in
Case: 1:13-cv-03124 Document #: 47 Filed: 08/21/13 Page 14 of 19 PageID #:714
14
question, 350 Green’s assets. The Second Addendum to the Exchange Agreement (“Second
Addendum”), leaves no question that CCGI did not “provide value” for the membership interests
of 350 Green until “seven (7) days after the execution of the Second Addendum to the Equity
Exchange Agreement.” SAMF, ¶40 (Second Addendum, ¶2). The Second Addendum was
executed on April 29, 2013. Id. Therefore, CCGI did not provide any “value,” which would
give rise to a claim to any property of 350 Green, until sometime after April 29, 2013, almost
two weeks after 350 Green had executed the APA. Moreover, knowledge of the Exchange
Agreement, an agreement for the purchase of membership interests some date in the future, is
simply not analogous to the completed sale of goods, as discussed in Shacket.
The CCGI Parties’ reliance on the 1893 case of Lytle v. Town of Lansing, is even more
attenuated. 147 U.S. 59 (1893). In Lytle, the buyer of municipal bonds purchased with
knowledge, from his own attorneys, even though the bonds were invalid and subject to litigation.
The Supreme Court held that in purchasing the bonds with actual notice of the lawsuit regarding
validity of the bonds, Lytle purchased at his own risk. Id. at 70. In this case, unlike the Lytle
case, there is no question of fact that 350 Green owned the assets as of April 17, 2013 and
retained the ability to sell the assets. SAMF, ¶¶32,40. See supra at §11.B.1.
CONCLUSION
There are no questions of law or fact that 350 Green had every right and ability to enter
into the APA, a valid and enforceable contract, with JNS, and that there are no questions of fact
or law that no bases exist to void the APA. Accordingly, summary judgment is inappropriate
and this Court should enter an order denying CCGI Parties’ motion for partial summary
judgment.
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15
WHEREFORE, for the foregoing reasons, JNS respectfully requests that this Court enter
an order:
A. Denying the CCGI Parties’ motion for partial summary judgment on Count II of
the CCGI Parties’ Amended Complaint; and
B. Entering all other relief which this Court deems equitable and just.
Respectfully submitted,
JNS POWER & CONTROL SYSTEMS, INC. and
JNS HOLDING CORPORATION
By: s/ Evan J. Haim
One of Their Attorneys
Patrick E. Deady
Kelly McCloskey Cherf
Evan J. Haim
Hogan Marren, Ltd.
321 N. Clark Street, Suite 1301
Chicago, IL 60654
312-946-1800
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EXHIBIT A
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Selling Your Business: Entity Sale vs. Asset Sale
When selling a business you have two options: You can opt either for an “entity sale” or an
“asset sale.” Making the right choice between the two can help minimize the taxes that you
will owe once the sale is complete.
In an entity sale, you sell either your shares of corporate stock or your membership
interests in an LLC. The business’s assets — equipment, furniture, real estate, inventory,
accounts receivables, etc. — continue to be owned by the entity, and the entity owned by
the buyer. In an asset sale, your corporation or LLC sells its assets to the buyer and you
continue to own the corporate stock or LLC membership interests. In this system, you still
own the entity — although it could end up being worthless.
The legal distinction between an asset sale and an entity sale is important, because it
dictates how you will be taxed and how the buyer will write off the purchase on his or her
tax return. Asset sales typically permit buyers to receive depreciation benefits sooner than
they would with an entity. On the other hand, as a seller you’ll likely come out better from a
tax standpoint by selling the entity, because you’ll be taxed at the low long-term capital
gain rate.
In an asset sale, your part of the tax bill may be composed at the ordinary, higher income
rate. Sellers should be especially wary about using an asset sale for a C corporation,
because with them there is risk of double taxation. This discrepancy is often resolved in a
compromise between the buyer and seller and is reflected in an adjustment of the selling
price or payment terms. If negotiations result in you agreeing to an asset sale, be firm
about getting a high price, because you’ll face appreciably higher taxes and liability risks.
If you do agree to an asset sale, give careful thought to which assets you’ll sell off with the
company. As you prepare for the sale, remove unproductive or nonessential assets from the
business. The buyer isn't likely to pay extra for them, and you may be better off selling
these assets yourself. Valuable assets such as real estate or equipment, and patents,
trademarks, or copyrights that you may want to retain and license back to the buyer can all
become an important negotiation point. By retaining some number of the assets, you can
lower the purchase price and make the business affordable to more buyers. Also, by
retaining real estate from the business you can hold on to rental income for the future and
keep open the option of selling it to the buyer — or someone else — later.
In the case of a sole proprietorship, you can simply retain ownership of those assets that
you want to keep; you won't be taxed on any profits unless and until you sell them. In the
case of partnerships and LLCs, the unwanted assets can be distributed to partners or
members upon liquidation, though the dissolution of the business may mean that individual
partners will have to pay some taxes. And if you’re a corporation and want to remove
assets from the business entity, you may have to purchase them at fair market value, with
the corporation paying tax on any capital gains.
Sellers prefer entity sales over asset sales, because with them any of the company’s
unknown liabilities are transferred to the new owner; whereas in an asset sale the liabilities
remain with the seller. These liabilities might include contract claims, potential product
liability claims, or employee lawsuits resulting from the seller's ownership of the company.
These general rules can be altered in the sales contract, but doing so requires careful legal
drafting by an attorney. In an asset sale, for instance, the contract can require the buyer to
assume certain of the seller’s liabilities. In consideration of the fact that third parties will not
be bound by the contract’s terms, the contract may also incorporate escrow arrangements
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element is left out, general rules will apply.
For more on the tax consequences inherent in business sales, read Tax Concerns When
Selling Your Business. Be sure to also check out What To Look For When Buying a
Business for additional information on this topic.
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IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
Company, )
)
Plaintiffs/Counter-Defendants, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, a Delaware )
Corporation, and JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation, )
)
Defendants/Counter-Plaintiffs. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
NOTICE OF MOTION
To: See Attached Service List
PLEASE TAKE NOTICE that on August 27, 2013 at 9:30 a.m., or as soon thereafter as
counsel may be heard, I shall appear before the Honorable Elaine E. Bucklo in Courtroom 1441
at the Dirksen Federal Building located at 219 S. Dearborn Street in Chicago, Illinois, and then
and there present Defendants/Counter-Plaintiffs’ Motion to Adopt Related Pleadings, a copy of
which is attached to this notice and is hereby served upon you.
Case: 1:13-cv-03124 Document #: 46 Filed: 08/21/13 Page 1 of 2 PageID #:699
2
JNS POWER & CONTROL SYSTEMS,
INC., and JNS POWER & CONTROL
SYSTEMS, INC
By: s/ Kelly McCloskey Cherf
One of Their Attorneys
Kelly McCloskey Cherf
Patrick E. Deady
Evan J. Haim
Hogan Marren, Ltd.
321 N. Clark Street, Suite 1301
Chicago, IL 60654
312-946-1800
CERTIFICATE OF SERVICE
I, Kelly McCloskey Cherf, hereby certify that on this 21st day of August, 2013, and in
accordance with the General Order on Electronic Case Filing (ECF), I served the foregoing
Defendants/Counter-Plaintiffs’ Motion to Adopt Related Pleadings, upon the below-named
individuals by electronic transmittal through the CM-ECF electronic filing system.
Steven L. Baron Michael I. Bernstein
Natalie A. Harris The Bernstein Law Firm
Mandell Menkes LLC 1688 Meridian Avenue, Suite 418
One North Franklin Street, Suite #3600 Miami Beach, Florida 33139
Chicago, Illinois 60606 Telephone: (305) 672-9544
Telephone: (312) 251-1000 Facsimile: (305) 672-4572
Facsimile: (312) 251-1010 e-mail: michael@bernstein-lawfirm.com
e-mail: sbaron@madellmenkes.com
e-mail: nharris@mandellmenkes.com
/s/ Kelly McCloskey Cherf
Case: 1:13-cv-03124 Document #: 46 Filed: 08/21/13 Page 2 of 2 PageID #:700
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
Company, )
)
Plaintiffs/Counter-Defendants, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, a Delaware )
Corporation, and JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation, )
)
Defendants/Counter-Plaintiffs. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
DEFENDANT/COUNTER-PLAINTIFFS’ MOTION TO ADOPT RELATED PLEADINGS
JNS Holding Corporation (“JNS Holding”) and JNS Power & Control Systems, Inc.
(“JNS Power”) (collectively, “JNS”), Defendants/Counter-Plaintiffs in Case No. 13cv3124, by
and through their undersigned counsel, hereby move this Court to allow JNS to adopt all of its
pleadings related to JNS Power’s Motion for Partial Summary Judgment on Count I for specific
performance in Case No. 13cv4020 (13cv4020, Dkt. 33, 34, 35), for its Counterclaim for specific
performance in Case No.13cv3124. In support hereof, JNS states as follows:
Case: 1:13-cv-03124 Document #: 45 Filed: 08/21/13 Page 1 of 2 PageID #:697
2
1) JNS’s Counterclaim for specific performance in Case No. 13cv3124 is nearly
identical to Count I for specific performance in Case No. 13cv4020.
2) Both Count I in JNS Power’s Complaint in the 13cv4020 case (Dkt. 1) and Count
I in JNS’s Counterclaim in the 13cv3124 case (Dkt. 42) seek specific performance of the same
agreement, i.e., the April 17, 2013 Asset Purchase Agreement (“APA”) between JNS Power and
350 Green, LLC (“350 Green”).
3) JNS Power’s Motion for Partial Summary Judgment in the 13cv4020 case and
Count I of the JNS Counterclaim in the 13cv3124 case concern related parties in related lawsuits
and raise the same legal issue, whether specific performance is appropriate under the APA.
4) This Motion to Adopt is filed to address any administrative house-keeping issues
related to this Court’s June 26, 2013 Order (Dkt. 31) consolidating these matters.
WHEREFORE, JNS respectfully requests that this Court enter an Order in the 13cv3124
case authorizing JNS to adopt, as their factual assertions and legal arguments against Car
Charging Group, Inc., 350 Holdings, LLC, and 350 Green in the 13cv3124 case, the factual
assertions and legal arguments set forth in JNS Power’s Motion for Partial Summary Judgment,
Memorandum, and Local Rule 56.1(a)(3) Statement of Facts (13cv4020, Dkt. 33-35), and all
subsequent briefing in relation thereto.
Date: August 21, 2013 Respectfully submitted,
JNS Holding Corporation and
JNS Power & Control Systems, Inc.,
By: s/ Kelly McCloskey Cherf
KELLY MCCLOSKEY CHERF One of Their Attorneys
PATRICK E. DEADY
EVAN J. HAIM
HOGAN MARREN, LTD.
321 N. Clark Street, Suite 1301
Chicago, Illinois 60654
(312) 946-1800
Case: 1:13-cv-03124 Document #: 45 Filed: 08/21/13 Page 2 of 2 PageID #:698
Let's see that spread tighten up.
Someone is showing 2.6m at .0079 for sale.
August 27
Learn me...how can anyone invest in something with 400k in revenues for 4 years and a market cap of 67 million? That is at best, looking 5-10 years forward.
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada )
Corporation and 350 HOLDINGS, LLC, )
a Florida limited liability company, and )
350 GREEN, LLC, a Virginia limited liability )
company, )
)
Plaintiffs, ) Case No. 13 CV 03124
)
v. ) Judge Elaine E. Bucklo
)
JNS HOLDING CORPORATION, )
a Delaware Corporation, and )
JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation )
)
Defendants. )
)
)
JNS POWER & CONTROL SYSTEMS, INC., )
an Illinois Corporation, ) Case No. 13 CV 04020
)
Plaintiff, ) Reassigned for relatedness to
)
v. ) Judge Elaine E. Bucklo
)
350 GREEN, LLC, a Virginia limited )
liability company, )
)
Defendant. )
JNS HOLDING CORPORATION AND JNS POWER & CONTROL SYSTEMS, INC.’S
MOTION TO STRIKE
JNS Holding Corporation and JNS Power & Control Systems, Inc. (collectively “JNS”), Defendants in Case No. 13 CV 03124, by and through their undersigned counsel, hereby move this Court to: (1) strike certain declarations made in the Declaration of Michael D. Farkas (“Farkas”) (Dkt. 41-3); (2) strike certain statements made as part of Car Charging Group, Inc. (“CCGI”), 350 Holdings, LLC (“350 Holdings”) and 350 Green, LLC’s (“350 Green”)
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 1 of 12 PageID #:683
2
(collectively referred to as the “CCGI Parties”) Statement of Material Facts (Dkt. 41-1); and (3) disregard certain portions of the CCGI Parties’ Memorandum in Support of their Motion for Summary Judgment (the “Memorandum”) (Dkt. 41-2).
BACKGROUND
On August 5, 2013, the CCGI Parties filed a motion for partial summary judgment on their Count II for declaratory judgment in Case No. 13 CV 03124, seeking a declaration that the April 17, 2013 Asset Purchase Agreement between JNS Power and 350 Green (the “APA”) is void because of the March 8, 2013 Equity Exchange Agreement between the CCGI Parties, Mariana Gerzanych (“Gerzanych”), and Timothy Mason (“Mason”) (collectively, Gerzanych and Mason referred to as the “350 Members”) (the “Exchange Agreement”).1 JNS also has filed a motion for partial summary judgment on its Count I in Case No. 13 CV 04020, for specific performance of the APA.2 The motions for partial summary judgment filed by all the parties are based entirely upon the enforceability of two agreements, the APA and the Exchange Agreement – agreements which the parties contend are unambiguous and both of which include integration clauses.3 Moreover, for purposes of the cross-motions, the parties agreed that depositions of the
1 In their motion for partial summary judgment (Dkt. 41), the CCGI Parties state that they are seeking partial summary judgment on “Count I” of their complaint. The CCGI Parties again reference “Count I” in the Memorandum (Dkt. 41-2), but seek summary judgment on their declaratory relief claim. (Dkt. 41-2, p.3). Count I of the CCGI Parties’ Amended Complaint states a claim for tortious interference with contractual relations, while Count II seeks declaratory relief. (Dkt. 32). The CCGI Parties appear to have intended to move for partial summary judgment on Count II of their Amended Complaint. JNS, therefore, has proceeded by responding to the arguments for declaratory relief as presented in the Memorandum.
2 This Court’s June 26, 2013 Minute Order granted the CCGI Parties’ motion for reassignment and to consolidate; however, based on the Court’s subsequent orders, Case No. 13 CV 04020 has not been consolidated with the instant matter. (Dkt. 31).
3 Section 8.5 of the Exchange Agreement (the “Integration Clause”) states:
This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with the Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 2 of 12 PageID #:684
3
parties negotiating these various agreements would not be necessary and have stipulated to the authenticity of the documents produced during the expedited discovery period. (Dkt. 41-1, p. 2 n.1).
Given these agreements and stipulations, as well as the clear language in the subject agreements, it is inconceivable that CCGI would instead rely upon a self-serving declaration of CCGI’s and 350 Holdings’ CEO, which includes descriptions of prior negotiations and agreements between CCGI and 350 Green, inadmissible hearsay, and other extrinisic evidence, all for the purpose of misconstruing admittedly unequivocal and integrated terms of the Exchange Agreement. (Dkt. 41-2, p. 8). As set forth below, the allegations in the Declaration, and the Rule 56.1 statements for which they purport to support, are inadmissible for purposes of the motion for partial summary judgment and should be stricken by the Court. The identified sections in the CCGI Parties’ memorandum in support of their motion for partial summary judgment should likewise be disregarded.
LEGAL STANDARD
Statements made in a memorandum of law in support of a motion for summary judgment must be supported by the record and should cite to the Local Rule 56.1 statement of facts only. Alvi v. Metro. Water Reclamation Dist. of Greater Chi., No. 04 C 5999, 2006 WL 1762032, at *2 (N.D. Ill. June 23, 2006). Unsupported statements made in a memorandum of law in support of a
merged into this Agreement. No prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit involving this Agreement.
(Dkt. 41-4, p. 23).
Section 3.4 of the APA states:
This Agreement embodies the entire agreement and understanding among the Parties hereto regarding the subject matter hereof, and replaces and supersedes any prior agreements between the Parties, oral or written, related to the subject matter hereof.
(Dkt. 41-5, p. 4). Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 3 of 12 PageID #:685
4
motion for summary judgment should be disregarded by the Court. LaSalvia v. City of Evanston, 806 F. Supp. 2d 1043, 1046 (N.D. Ill. 2011).
Pursuant to Rule 56(c)(4) of the Federal Rules of Civil Procedure (“Rule(s)”), a declaration in support of a motion for summary judgment must be made on personal knowledge and set out facts that would be admissible in evidence. When a contract is fully integrated, extrinsic evidence of prior or contemporaneous representations or agreements is inadmissible to vary, contradict, or affect the construction of the unambiguous language of the contract. 4 Caplen v. Guardian Life Ins. Co., No. 96-8359-CIV-RYSKAMP, 1996 WL 1057652, at *5 n.5 (S.D. Fla. Oct. 22, 1996) (citing First Union Discount Brokerage Servs. v. Milos, 744 F. Supp. 1145, 1153 (S.D. Fla. 1990)); Duval Motors Co. v. Rogers, 73 So. 3d 261, 265 (Fla. Dist. Ct. App. 2011). The parol evidence rule applies to all prior representations, whether oral or written. Duval Motors Co., 73 So. 3d at 265-66.
Pursuant to Rule 801 of the Federal Rules of Evidence, hearsay is any statement, other than one made by the declarant while testifying at trial or hearing, offered to prove the truth of the matter asserted. Hearsay is inadmissible in summary judgment proceedings to the same extent that it is inadmissible at trial. Dove v. Celco P’ship, No. 8:11-CV-1824-T-30TGS, 2013 WL 130240, at *4 (M.D. Fla. Jan. 11, 2013); Menard, Inc. v. Wells Mfg. Co., No. 03 C 8313, 2007 WL 2688445, at *7 (N.D. Ill. Sept. 11, 2007).
ARGUMENT
Declarations made in paragraphs 4, 5, 6, 8, 9, 16, 17, 18, and 27 of the Declaration violate the parol evidence rule and/or are impermissible hearsay and should be stricken. As allegations made in statements 1, 2, 4, 5, 7, 8, 10, 11, 12, 13, 27, and 28 of the Statement of
4 Pursuant to section 8.11 of the Exchange Agreement, the Exchange Agreement shall be interpreted under Florida law. (Dkt. 41-4, p. 24). Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 4 of 12 PageID #:686
5
Material Facts are based upon these inadmissible declarations, these statements also are improper and must be stricken from the record and not relied upon for purposes of the CCGI Parties’ motion for partial summary judgment. Further, portions of the CCGI Parties’ “Uncontested Facts” and “Argument” sections of the Memorandum are completely unsupported, either because of the CCGI Parties’ failure to cite the record or because the underlying declarations are inadmissible, and therefore, these portions of the Memorandum should be disregarded by the Court for summary judgment purposes.
A. Paragraphs 4, 5, 6, and 9 Of The Declaration Are Inadmissible Parol Evidence As They Seek To Affect The Construction Of The Exchange Agreement Through Reliance On Prior Agreements.
The CCGI Parties allege that summary judgment is appropriate because the Exchange Agreement prohibited 350 Green and the 350 Members from entering into the April 17, 2013 APA with JNS. (Dkt. 41-2, p. 2). The CCGI Parties admit that the Exchange Agreement is unambiguous. (Dkt. 41-2, p. 8). Moreover, the Integration Clause under section 8.5 of the Exchange Agreement rendered the Exchange Agreement fully integrated. See Duval Motors Co. 73 So. 3d at 265-66. Therefore, pursuant to the Integration Clause and the parol evidence rule, extrinsic evidence of prior or contemporaneous agreements may not be used to affect the construction of the Exchange Agreement. Duval Motors Co., 73 So. 3d at 265-66.
Paragraphs 4, 5, 6, and 9 of the Declaration violate the parol evidence rule. These paragraphs include Farkas’ testimony regarding negotiations underlying a July 5, 2012 Membership Interest Purchase Term Sheet between CCGI and 350 Green (the “July Term Sheet”), as well as Farkas’ interpretation of the July Term Sheet and an August 29, 2012 Membership Interest Purchase Term Sheet between CCGI and 350 Green (the “August Term
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 5 of 12 PageID #:687
6
Sheet”). The July Term Sheet was superseded by the August Term Sheet,5 and both the July and August Term Sheets were superseded by the Exchange Agreement through the Integration Clause. (Dkt. 41-4, p. 23). Farkas’ representations regarding prior agreements violate the parol evidence rule and should be stricken.
Further, statement 1, the second sentence of statement 2, and statement 5 of the Statement of Material Facts are founded, in their entirety, upon paragraphs 4, 6, and 9 of the Declaration. These declarations are inadmissible parol evidence, and therefore, statements made in reliance on these declarations are unsupported and should be stricken.
Unsupported statements made in a memorandum of law in support of a motion for summary judgment should also be disregarded by the Court. LaSalvia, 806 F. Supp. 2d at 1046. Paragraph 1 of the “Uncontested Facts” section of the Memorandum cites to paragraphs 4, 5 and 6 of the Declaration, and paragraph 3 of the Uncontested Facts section of the Memorandum cites to paragraph 9 of Declaration. As paragraphs 4, 5, 6, and 9 of the Declaration should be stricken, paragraphs 1 and 3 of the Uncontested Facts section of the Memorandum are unsupported and should be disregarded.
For these reasons, JNS requests that this Court enter an Order: (1) striking paragraphs 4, 5, 6 and 9 of the Declaration; (2) striking statement 1, the second sentence of statement 2, and statement 5 of the Statement of Material Facts; and (3) and disregarding paragraphs 1 and 3 of the Uncontested Facts section of the Memorandum.
B. Paragraph 16 And The First Sentence Of Paragraph 17 Of The Declaration Are Inadmissible Parol Evidence As They Seek To Introduce An Interpretation Beyond The Plain And Unambiguous Language Of The Exchange Agreement.
When a contract is clear and unambiguous, “the language itself is best evidence of the
5 The August Term Sheet was “intended to replace in its entirety the Term Sheet previously signed by the parties on or about July 5, 2012.” (Dkt. 41-3, p. 71). Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 6 of 12 PageID #:688
7
parties’ intent and its plain meaning controls;” therefore, absent ambiguity, the Court may not consider evidence outside the plain language of the contract. Stock Fraud Prevention, Inc. v. Stock News Info, LLC, No. 11-80764-CIV, 2012 WL 664381, at *7 (S.D. Fla. Feb. 28, 2012). CCGI has admitted the Exchange Agreement is unambiguous. (Dkt. 41-2, p. 8). Nevertheless, in direct violation of the parol evidence rule, paragraph 16 of the Declaration provides Farkas’ incorrect interpretation of what led up to the Exchange Agreement, what that Agreement “called for” and what it “contemplated.” (Dkt. 41-3, ¶16). In paragraph 17 of the Declaration, the CCGI Parties attempt to misdirect the Court by providing Farkas’ inaccurate interpretation as to whether the Exchange Agreement includes a time is of the essence provision, a time for closing, and a default provision. As the Exchange Agreement is fully integrated, consideration of Farkas’ interpretation, rather than the plain language of the contract, clearly violates the parol evidence rule. Therefore, JNS requests that this Court enter an Order striking paragraph 16 and the first sentence of paragraph 17 of the Declaration.
Statements 7, 8, 10, 11, and 12 of the Statement of Material Facts are founded, in their entirety, upon paragraph 16 and the first sentence of paragraph 17 of the Declaration, which are inadmissible parol evidence. Therefore, these statements are unsupported and should be stricken.
Paragraph 5 of the Uncontested Facts section of the Memorandum cites to paragraph 16 of the Declaration, and paragraph 6 of the Uncontested Facts section of the Memorandum cites to the first sentence of paragraph 17 of the Declaration. These declarations are impermissible parol evidence and should be stricken. Further, paragraph 2, the last sentence of paragraph 3, and the first sentence of paragraph 6 of the “Argument” section of the Memorandum, although without citation, can only find support in statements 10, 11, and 12 of the Statement of Material Facts,
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 7 of 12 PageID #:689
8
which, as set forth in the preceding paragraph, should also be stricken. Therefore, the Court should disregard paragraphs 5 and 6 of the Uncontested Facts section, as well as the first sentence of paragraph 2, the last sentence of paragraph 3, and the first sentence of paragraph 6 of section B of the Argument section of the Memorandum. See LaSalvia, 806 F. Supp. 2d at 1046.
For these reasons, JNS requests that this Court enter an Order: (1) striking paragraph 16 and the first sentence of paragraph 17 of the Declaration; (2) striking statements 7, 8, 10, 11, and 12 of the Statement of Material Facts; and (3) disregarding paragraphs 5 and 6 of the Uncontested Facts section and the first sentence of paragraph 2, the last sentence of paragraph 3, and the first sentence of paragraph 6 of section B of the Argument section of the Memorandum.
C. The Third, Fourth And Fifth Sentences Of Paragraph 27 Of The Declaration Are Inadmissible Parol Evidence As They Seek To Introduce An Interpretation Beyond The Plain Language Of The Addendum To The Exchange Agreement.
Paragraph 27 of the Declaration discusses the April 22, 2013 Addendum to Equity Exchange Agreement between the CCGI Parties and the 350 Members (the “Addendum”). Paragraph 13 of the Addendum states:
This Exchange Addendum contains the entire understanding between the Parties with respect to the subject matter hereof. Neither this Exchange Addendum nor any provision hereof may be modified, amended, changed, and waived, except in writing and signed by the Party against whom enforcement is sought.
(Dkt. 41-5, p. 20). Like the Exchange Agreement, the Addendum is a fully integrated agreement, and absent ambiguity, the Court may not consider evidence outside the plain language of the contract. Stock Fraud Prevention, Inc., 2012 WL 664381, at *7. Although the CCGI Parties have not alleged any ambiguous language under the Addendum, they have inappropriately relied on the third, fourth, and fifth sentences of paragraph 27 of the Declaration, which provide Farkas’ incorrect interpretation of the Addendum, to support their Statement of Material Facts. In the third and fifth sentences, Farkas sets out his interpretation of the
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 8 of 12 PageID #:690
9
consequences of the Addendum, and in the fourth sentence, he provides his interpretation as to what the Addendum contemplates. As this interpretation goes beyond the plain language of the Addendum, this testimony is wholly inappropriate and constitutes parol evidence. Therefore, the third, fourth and fifth sentences of paragraph 27 of the Declaration should be stricken.
Statements 27 and 28 of the Statement of Material Facts are founded, in their entirety, upon the third, fourth, and fifth sentences of paragraph 27 of the Declaration, which are inadmissible parol evidence. Therefore, statements 27 and 28 are unsupported and should be stricken. Further, as the last sentence of paragraph 12 of the Uncontested Facts section of the Memorandum relies entirely on the fifth sentence of paragraph 27 of the Declaration, the last sentence of paragraph 12 of the Uncontested Facts section of the Memorandum is unsupported and should be disregarded by the Court. See LaSalvia, 806 F. Supp. 2d at 1046.
Therefore, JNS requests that this Court enter an Order: (1) striking the third, fourth, and fifth sentences of paragraph 27 of the Declaration; (2) striking statements 27 and 28 of the Statement of Material Facts; and (3) disregarding the last sentence of paragraph 12 of the Uncontested Facts section of the Memorandum.
D. Paragraph 18 Of The Declaration Contains Parol Evidence And Hearsay Inadmissible Against JNS.
Paragraph 18 attaches as an exhibit the March 21, 2013 email from John Pierce, Esq., 350 Green’s attorney at the time, to Kylie Wagenet, General Counsel of CCGI. The email itself is admissible pursuant to the stipulation of the parties with respect to their business records. (See Dkt. 41-1, p. 2 n.1). The first sentence of paragraph 18, however, is Farkas’ self-serving description of the March 18, 2013 transmittal by 350 Green and the 350 Members of the executed signature pages, which were actually attached to Mr. Pierce’s March 21, 2013 email. The first sentence of paragraph 18 includes Farkas’ misleading suggestion that this “evidenced
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 9 of 12 PageID #:691
10
their intention to enter into the terms of the agreement” and his unsupported assertion that this “was the parties’ understanding.”
Clearly, this statement is inadmissible under the parole evidence rule to the extent it attempts to construe the unambiguous language of the Exchange Agreement. In addition, it is Farkas’ interpretation of what 350 Green, which was not owned or controlled by CCGI or 350 Holdings at the time, intended with respect to the Exchange Agreement or what “the parties” – both CCGI and 350 Green – understanding of that Agreement was. For this additional reason, this statement is irrelevant to the issues before the Court.6
For these reasons, and given the clear violation of the parol evidence rule, the first sentence of paragraph 18 of the Declaration must be stricken as inadmissible as a statement of 350 Green and because of the parol evidence rule. Moreover, as statement 13 of the Statement of Material Facts is founded, in its entirety, upon paragraph 18 of the Declaration, statement 13 is unsupported and should be stricken.
For these reasons, JNS requests that this Court enter an Order: (1) striking paragraph 18 of the Declaration; and (2) striking statement 13 of the Statement of Material Facts.
E. The Second Sentence Of Paragraph 8 Of The Declaration Is Inadmissible Hearsay.
The second sentence of paragraph 8 of the Declaration is based upon information allegedly obtained from conversations with Amber Ritter, Senior Counsel with the City of Chicago Department of Law, Aviation, Environmental, Regulatory and Contracts Division. Pursuant to Rule 801 of the Federal Rules of Evidence, a statement offered for the truth of the
6 To the extent this Court needs to determine whether the Exchange Agreement was still in effect after CCGI and 350 Holdings refused to close the transaction on March 22, 2013, the Court is limited to the actions and statements of 350 Green and its members and agents at the time of that transaction. Farkas, CCGI and 350 Holdings, although they allegedly controlled all of the membership interests of 350 Green as of April 22, 2013, cannot speak to the actions and intentions of 350 Green at the time relevant to this Court’s consideration of this issue. Only the 350 Members and their agents can do that. Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 10 of 12 PageID #:692
11
matter asserted that is offered by someone other than the declarant is inadmissible hearsay. Therefore, Farkas is prohibited from offering into evidence statements made by Amber Ritter, for the truth of those matters, and therefore, the second sentence of paragraph 8 of the Declaration should be stricken. Dove, 2013 WL 130240, at *4; Menard, Inc., 2007 WL 2688445, at *7.
The second sentence of statement 4 of the Statement of Material Facts and paragraph 2 of the Uncontested Facts section of the Memorandum are founded, in their entirety, upon the second sentence of paragraph 8 of the Declaration, which is inadmissible hearsay. Therefore, the second sentence of statement 4 of the Statement of Material Facts is unsupported and should be stricken, and paragraph 2 of the Uncontested Facts section is unsupported and should be disregarded.
For these reasons, JNS requests that this Court enter an Order: (1) striking the second sentence of paragraph 8 of the Declaration; (2) striking the second sentence of paragraph 4 of the Statement of Material Facts; and (3) disregarding paragraph 2 of the Uncontested Facts section of the Memorandum.
F. Paragraphs 4, 10 And 11 Of The “Uncontested Facts” Section Of The Memorandum Should Be Disregarded As Unsupported.
Statements made in a memorandum of law in support of a motion for summary judgment that do not cite to the record should be disregarded. Alvi, 2006 WL 1762032, at *2. The CCGI Parties fail to provide any basis upon which they rely in making the assertions set forth in paragraphs 4, 10, and 11 of the Uncontested Facts section of the Memorandum. Therefore, JNS respectfully asks that paragraphs 4, 10, and 11 of the Uncontested Facts section of the Memorandum are disregarded as unsupported.
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12
CONCLUSION
WHEREFORE, for the foregoing reasons, JNS Holding Corporation and JNS Power & Control Systems, Inc. respectfully request that this Court enter an order:
A. Striking paragraphs 4, 5, 6, 9, 16, and 18 of the Declaration of Michael D. Farkas, in their entirety;
B. Striking the second sentence of paragraph 8, the first sentence of paragraph 17, and the third, fourth, and fifth sentences of paragraph 27 of the Declaration of Michael D. Farkas;
C. Striking statements 1, 5, 7, 8, 10, 11, 12, 13, 27, and 28 of the CCGI Parties’ Statement of Material Facts, in their entirety;
D. Striking the second sentence of statement 2 and the second sentence of statement 4 of the CCGI Parties’ Statement of Material Facts;
E. Disregarding paragraphs 1, 2, 3, 4, 5, 6, 10, and 11 of the Uncontested Facts section of the CCGI Parties’ Memorandum;
F. Disregarding the last sentence of paragraph 12 of the Uncontested Facts section of the CCGI Parties’ Memorandum;
G. Disregarding the first sentence of paragraph 2, the last sentence of paragraph 3, and the first sentence of paragraph 6 of section B of the Argument section of the CCGI Parties’ Memorandum; and
H. Entering all other relief which this Court deems equitable and just.
Respectfully submitted,
JNS HOLDING CORPORATION and
JNS POWER & CONTROL SYSTEMS, INC.
By: s/ Kelly McCloskey Cherf
One of Their Attorneys
Patrick E. Deady
Kelly McCloskey Cherf
Evan J. Haim
Hogan Marren, Ltd.
321 N. Clark Street, Suite 1301
Chicago, IL 60654
312-946-1800
Case: 1:13-cv-03124 Document #: 43 Filed: 08/21/13 Page 12 of 12 PageID #:694
3.2. 350 Green hereby agrees to defend, hold harmless and expeditiously
indemnify JNS from, against and with respect to any and all liability, claim, loss,
damage, obligation, cost or expense arising out of the 350 Green’s material breach
or violation of any representation, provision, warranty, or covenant contained in
this Agreement, including reasonable attorneys’ fees, and other reasonable costs
incurred in the defense of any legal proceedings asserting such a claim.
3.3. 350 Green hereby agrees to indemnify and hold Buyer harmless from any
and all liability, action, lawsuit, expenses or damages directly associated with
CCGI’s failure to close the Equity Exchange Agreement, dated March 8, 2013,
with 350 Green; provided, however, that 350 Green shall not indemnify or hold
harmless Buyer from any and all liability, action, lawsuit, expenses or damages
involving: (a) JNS’s independent interaction with CCGI that was initiated either:
(i) by JNS with CCGI or (ii) by CCGI with JNS, or (b) JNS’s independent
interaction with any third party such as the City of Chicago and EFACEC, in
relation to the Grant. Seller further agrees to indemnify and hold JNS harmless
from any and all liability, action, lawsuit, expenses or damages directly in relation
to any and all creditors of Seller who have been identified by 350 Green and
disclosed by 350 Green to JNS in relation to the Grant and as set forth
Wow...14 million shares issued so far this year.
It was sent with the pdf...page 41-65..just can't copy and paste those pages.