Unless one is a member of Pacer, not sure links work.
So heres the converted text below.. may be some grammatical errors due to the conversion
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
Civ. A. No. 1:22-CV-10053-WGY
ANSWER AND COUNTERCLAIMS
The defendant, Auctus Fund, LLC ("Auctus") answers the Complaint of Plaintiff PCT, LTD ("PCT") as follows.
PARTIES
1. Admitted.
2. Auctus is without information sufficient to admit or deny the allegations contained within paragraph 2.
3. Admitted.
4. Admitted to the extent that Auctus currently owns shares of PCT common stock.
Further answering, Auctus states that it still holds a Warrant for the purchase of a certain number of additional shares of PCT common stock ("Warrant") and that it is currently a creditor of PCT as a result of PCT's failure to honor the attempted exercise by Auctus of its rights under the Warrant. Auctus is therefore not a "former creditor" of PCT.
JURISDICTION AND VENUE
5. Denied. Auctus denies that the amount in controversy, as determined by the Complaint, exceeds $75,000, and therefore denies that the Court has subject matter jurisdiction over this matter.
6. Admitted.
7. Admitted.
8. Admitted.
FACTUAL ALLEGATIONS
9. Admitted.
10. Admitted.
11. Denied. Further answering, Auctus states that the Conditional Settlement Agreement ("Settlement Agreement") did not resolve, release or otherwise dispose of the rights of Auctus under the Warrant.
12. Denied in that the Settlement Agreement has additional provisions and further answering that the terms of the Settlement Agreement speak for themselves.
13. Denied. Further answering, Auctus states that the Mutual Release did not release any "rights" and further that the release language contained in the Mutual Release was limited to the "open dispute" between PCT and Auctus, which was a dispute regarding only the Note.
14. Denied. The terms of the Settlement Agreement speak for themselves. Further answering, contrary to the assertion of PCT, the Settlement Agreement does not state that the Mutual Release shall be signed "immediately" upon the receipt by Auctus of the final payment by PCT.
15. Admitted.
16. Admitted.
17. Denied. Auctus executed the Mutual Release and provided the same to PCT on February 4, 2022.
18. Denied.
19. Denied. Further answering, Auctus states that the Settlement Agreement did not resolve, release or otherwise dispose of the rights of Auctus under the Warrant.
20. Denied. Further answering, Auctus is without information sufficient to admit or deny the date PCT learned that Auctus had exercised its rights under the Warrant. Further answering, Auctus states that it attempted to exercise the Warrant for 39,339,900 shares on December 10, 2021, but that, in breach of its obligations under the Warrant, PCT did not have sufficient shares in reserve. Further answering, on December 14, 2021, with the knowledge and consent of PCT, Auctus exercised its rights under the Warrant for 2,548,461 shares.
21. Denied.
22. Denied.
23. Denied.
24. Denied.
25. Denied.
26. Admitted only to the extent PCT made a written demand and that PCT stated that it would not permit Auctus to exercise the Warrant for any additional shares of PCT common stock going forward. Otherwise denied. Further answering, PCT sought to have Auctus execute a form of Mutual Release that differed from the Mutual Release attached to the Settlement
Agreement. Further answering, Auctus states that Exhibit A to the Complaint does not include a true and accurate copy of the Settlement Agreement.
27. Admitted only to the extent that PCT made a demand on Auctus. Otherwise denied. Further answering, Auctus states that the Demand speaks for itself. Further answering, Auctus disputes that the Mutual Release contained an obvious scrivener's error.
28. Auctus admits only that it has not returned any stock to PCT. Auctus denies that it has ignored the Demand. Auctus denies that it obtained any stock wrongfully or fraudulently, denies that the Warrant is invalid and denies that it has any obligation to return any stock to PCT. Further answering, on February 4, 2022, Auctus delivered to PCT the executed form of Mutual Release attached to the Settlement Agreement.
29. Denied.
30. Denied.
COUNT ONE
(Breach of Contract)
31. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth herein.
32. Denied.
33. Denied to the extent that PCT is now claiming that any rights Auctus holds under the Warrant were released as part of the Settlement Agreement.
34. Denied.
35. Auctus is without information sufficient to admit or deny PCT's reasoning for entering into the Settlement Agreement or agreeing to the PCT Settlement Obligations.
36. Denied. Auctus executed the Mutual Release and provided the same to PCT on February 4, 2022.
37. Denied. Further answering, Auctus executed the Mutual Release and provided
the same to PCT on February 4, 2022.
38. Denied.
39. Denied. Answering further, Auctus executed the Mutual Release and provided the same to PCT on February 4, 2022.
COUNT TWO
(Breach of Implied Covenant of Good Faith and Fair Dealing)
40. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth here.
41. Paragraph 41 states a legal conclusion to which no answer is required. Denied to the extent that PCT alleges Auctus violated any covenant of good faith or fair dealing and to the extent PCT alleges that Auctus engaged in any conduct that deprived PCT of any benefits.
42. Denied.
43. Denied. Auctus executed the Mutual Release and provided the same to PCT on February 4, 2022. Answering further, Auctus states that the Settlement Agreement did not resolve, release or otherwise dispose of any rights of Auctus under the Warrant. Further answering, Auctus denies that its rights under the Warrant fall within the scope of the Mutual Release and admits that it claims that it has maintained all of its rights under the Warrant.
44. Denied.
45. Denied.
46. Denied.
COUNT THREE
(Reformation of Mutual Release)
47. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth here.
48. Denied in that the Settlement Agreement has additional provisions and further answering that the terms of the Settlement Agreement speak for themselves.
49. Denied.
50. Denied in that the Settlement Agreement has additional provisions and further answering that the terms of the Settlement Agreement speak for themselves. Admitted to the extent that the language of the Settlement Agreement speaks for itself.
51. Denied.
52. Denied.
53. Admitted to the extent that PCT provided Auctus with a revised Mutual Release.
Otherwise denied.
54. Denied. Further answering, paragraph 54 contains conclusions of law to which no
answer is required.
COUNT FOUR
(Fraud)
55. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth here.
56. Denied.
57. Denied.
58. Denied.
59. Admitted to the extent that Standard Registrar honored the exercise by Auctus of its rights under the Warrant for 2,548,461 shares. Denied as to the value of the shares in that the value constantly fluctuates.
60. Denied.
61. Denied.
COUNT FIVE
(Conversion)
62. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth here.
63. Denied. Answering further, Auctus states that the transfer to Auctus of 2,548,461 shares of PCT common stock was authorized.
64. Denied.
65. Denied.
66. Denied.
67. Denied.
COUNT SIX
(Unjust Enrichment)
68. Auctus reasserts and incorporates by reference its responses to all of the preceding paragraphs as if fully set forth here.
69. Admitted only to the extent that Auctus received 2,548,461 shares of PCT common stock. Otherwise denied.
70. Denied.
71. Denied.
72. Denied.
73. Denied.
AFFIRMATIVE DEFENSES
1. The Court lacks subject matter jurisdiction over PCT's claims.
2. The Complaint fails to state a claim upon which relief may be granted.
3. PCT has waived its claims related to the Warrant.
4. PCT is estopped from asserting its claims related to the Warrant.
5. PCT is seeking to recover lost profits or damages that are completely speculative in nature.
6. PCT has failed to state with particularity the circumstances constituting fraud as required by Federal Rule of Civil Procedure 9(b).
7. Auctus is discharged of all liability because it has fully performed and discharged all of its duties under the Settlement Agreement, including but not limited to, providing PCT with an executed copy of the Mutual Release.
8. Auctus acted in good faith by exercising its rights under the Warrant, based on the fact that the Warrant was not explicitly released by the Settlement Agreement or Mutual Release, and the release of the Warrant was never discussed at any point during the settlement negotiations.
COUNTERCLAIMS OF AUCTUS
Auctus asserts the following counterclaims:
JURISDICTION
1. The counterclaim plaintiff, Auctus Fund, LLC ("Auctus"), brings these counterclaims in response to the Complaint brought by counterclaim defendant PCT, LTD ("PCT") against Auctus.
FACTS
2. On March 13, 2019 Auctus entered into a Securities Purchase Agreement ("Purchase Agreement") with PCT for the purchase of a Convertible Promissory Note ("Note") from PCT in the original principal amount of $75,000. PCT also issued a warrant to Auctus for the purchase of a certain number of shares of PCT common stock ("Warrant").
3. On October 16, 2019, Auctus notified PCT that it was in default under the Note.
4. After negotiations between PCT and Auctus, the parties entered into a Conditional Settlement Agreement ("Settlement Agreement") dated October 26, 2020 in order to resolve PCT's default under the Note.
5. At no point in time during settlement negotiations did PCT and Auctus discuss the release or discharge of the Warrant as part of the Settlement Agreement.
6. Neither the Settlement Agreement nor the Mutual Release executed by PCT and Auctus in connection with the Settlement Agreement refer in any way to the Warrant.
7. The Settlement Agreement and Mutual Release do not release, resolve or otherwise dispose of any rights of Auctus under the Warrant.
8. On December 10, 2021, Auctus attempted to exercise its rights under the Warrant to acquire 39,339,900 shares of common stock of PCT.
9. PCT had an obligation to reserve sufficient shares of common stock of PCT such that Auctus could exercise its rights under the Warrant.
10. On December 13, 2021, Auctus was advised by Standard Registrar and Transfer Company that PCT had failed to reserve sufficient shares of common stock for the exercise by Auctus of its rights under the Warrant to obtain 39,339,900 shares of common stock of PCT.
11. On December 14, 2021, Auctus exercised its rights under the Warrant to acquire 2,548,461 shares of common stock of PCT. The exercise by Auctus of its rights under the Warrant to acquire 2,548,461 shares of common stock of PCT was consented to and approved by PCT.
12. PCT has failed to reserve adequate shares of common stock for Auctus to exercise its rights under the Warrant.
13. PCT has refused to honor the exercise by Auctus of its rights under the Warrant.
14. PCT has asserted that Auctus released its rights under the Warrant.
15. PCT has asserted that Auctus wrongfully attempted to exercise its rights to acquire shares of common stock of PCT.
16. PCT has asserted that Auctus wrongly exercised its rights to acquire shares of common stock of PCT.
17. Auctus asserts that PCT has breached the Warrant by failing to reserve adequate shares of common stock.
18. Auctus asserts that PCT has breached the Warrant by failing to honor the attempted exercise by Auctus of its rights under the Warrant to acquire 39,339,900 shares of common stock of PCT.
19. Auctus asserts that it rightfully obtained 2,548,461 shares of common stock of
PCT.
20. Auctus asserts that it has not released any of its rights under the Warrant and that it has maintained all of its rights under the Warrant.
21. Auctus delivered an executed Mutual Release to PCT on February 4, 2022 and has completed all of its obligations under the Settlement Agreement.
Counterclaim Count One Declaratory Judgment [28 U.S. Code §2201)
22. Auctus repeats and realleges the allegations contained in Counterclaims paragraphs 1 through 21 as though fully set forth herein.
23. PCT asserts that Auctus has waived any rights it held under the Warrant as part of the Settlement Agreement and Mutual Release.
24. Auctus disputes that it has released any of its rights under the Warrant, and asserts that it maintains all of its rights under the Warrant.
25. An actual controversy therefore exists between Auctus and PCT about whether the Settlement Agreement and Mutual Release released any rights of Auctus under the Warrant.
26. Pursuant to 28 U.S. Code §2201, Auctus is entitled to a declaration that the Settlement Agreement and Mutual Release did not resolve, release or otherwise dispose of any rights of Auctus under the Warrant and that Auctus is entitled to retain the 2,548,461 shares of PCT common stock it acquired pursuant to its exercise of rights under the Warrant.
Counterclaim Count Two Breach of Contract
27. Auctus repeats and realleges the allegations contained in Counterclaims paragraphs 1 through 26 as though fully set forth herein.
28. Auctus entered into the Settlement Agreement with PCT, for good and valuable consideration, in order to resolve disputes relating to the Note.
29. The Settlement Agreement and Mutual Release did not resolve, release or otherwise dispose of any rights of Auctus under the Warrant.
30. PCT has refused to honor the rights of Auctus under the Warrant and has breached the Warrant by failing to reserve an adequate number of shares of common stock of PCT for Auctus to exercise its rights under the Warrant.
31. PCT breached the Warrant by not permitting Auctus to exercise its rights under the Warrant on December 10, 2021 to acquire 39,339,900 shares of common stock of PCT.
32. By refusing to honor the exercise by Auctus of its rights under the Warrant, PCT has caused Auctus to incur substantial damages.
33. By reason of the foregoing, Auctus is entitled to an award of compensatory and consequential damages, together with attorneys' fees, costs and expenses.
JURY DEMAND
Auctus demands a trial by jury on all issues, claims and defenses so triable.
DEMAND FOR RELIEF
WHEREFORE, Auctus prays that the following relief and judgment be entered:
1. That judgment be entered in favor of Auctus and against PCT on all claims asserted by PCT in its Complaint.
2. That judgment be entered in favor of Auctus and against PCT on all claims asserted by Auctus in its Counterclaim.
3. That judgment be entered in favor of Auctus and against PCT under Count I of the Counterclaim of Auctus, declaring that the Settlement Agreement and Mutual Release did not resolve, release or otherwise dispose of any rights of Auctus under the Warrant and that Auctus is entitled to retain the 2,548,461 shares of PCT common stock it acquired pursuant to its exercise of rights under the Warrant.
4. That judgment be entered in favor of Auctus and against PCT under Count II of the Counterclaim of Auctus and that Auctus be compensated for its compensatory and consequential damages to be proven at trial.
5. That Auctus be awarded its attorneys' fees, costs and expenses.
6. That Auctus be awarded its costs and such other relief to which it may be entitled at law or in equity and to which this Court deems just and proper.
Respectfully submitted, AUCTUS FUND, LLC
By its attorneys:
Isl Charles R. Bennett Charles R. Bennett (BBO No. 037380) William R. Moorman (BBO No. 548593) MURPHY & KING, P.C.
28 State Street, Suite 3101
Boston, Mass. 02109
(617) 423-0400
cbennett((1)murphvking.com wmoorman(ii>1nurphyking.com
Dated: June 22, 2022
CERTIFICATE OF SERVICE
I certify that this document, filed through the CM/ECF system, will be sent electronically to the registered participants as identified on the NEF and paper copies will be sent to those indicated as non-registered participants on June 22, 2022.
Isl Charles R. Bennett
Charles R. Bennett
810855
