PINNACLE ENERGY, INC. v. JOHN CALFEE MULVANA as an individual; the LAW OFFICES OF JOHN C. MULVANA; and DOES 1 through 5, inclusive
Plaintiff, Pinnacle Energy, Inc. ("Pinnacle"), by and through its attorneys, Duane Morris LLP, submits this Verified Complaint For: (1) Breach of Contract;
(2) Breach of the Covenant of Good Faith and Fair Dealing;
(3) Money Had and Received; and
(4) Injunctive Relief against Defendants John Calfee Mulvana ("Mulvana"); the Law Offices of John C. Mulvana ("Law Offices"); and DOES 1-5, inclusive, (Mulvana, Law Offices, and DOES are hereinafter sometimes collectively referred to as the "Defendants"), and alleges as follows:
PARTIES AND JURISDICTION
1. Pinnacle Energy, Inc. is a corporation incorporated in the state of Florida with its principal place of business in Charleston, South Carolina.
2. On information and belief; John Calfee Mulvana is a resident of the state of California and presently resides in Orange County, California. At all relevant times herein, Mulvana was and is licensed to practice law in the State of California
3. On information and belief, the Law Offices of John C. Mulvana is located at 100 Pacifica Suite 220, Irvine, California 92618.
4. The true names and capacities, whether individual, corporate, associate, or otherwise, of the defendants herein named as "DOES" 1-5, inclusive, are unknown to Pinnacle, who therefore sues said defendants by such fictitious names pursuant to Code of Civil Procedure section 474, and Pinnacle will amend this Complaint to show their true names and capacities when the same have been ascertained. Pinnacle is informed and believes that all defendants fictitiously sued herein as "DOES" 1-5, inclusive, are in some manner responsible for the acts herein alleged.
5. Pinnacle is informed and believes that at all relevant times mentioned herein, each of the Defendants was the agent, servant, representative, partner, joint venturer, alter ego, coconspirator, and/or employee of each or some of the other Defendants, and in doing the acts mentioned herein was acting within the course and scope of their authority as such and with the express and/or implied approval, permission, knowledge, consent and ratification of all Defendants.
6. Venue is proper pursuant to California Code of Civil Procedure section 395.
7. Pinnacle reserves the right to amend this Complaint upon discovery of new evidence supporting other causes of action.
FACTUAL BACKGROUND
8.Pinnacle entered into a Memorandum of Understanding ("MOU")(1), with Grant A. Liverett of GL Company for SRE, LLC on April 20, 2010. A true and correct copy is attached as Exhibit A.
(1)The MOU was signed by Peter Katzburg, a treasurer/financial officer with Pinnacle. Pinnacle is a start-up company. By and through this transaction, Katzburg committed virtually all of Pinnacle's operating capital to a transaction the validity of which is highly questionable. Pinnacle reserves all of its rights against Katzburg, and others as to the transaction.
9.Pursuant to the terms of the MOU, Pinnacle was to deposit five hundred ninety-two thousand, nine hundred and sixty-eight dollars and seventy-five cents ($592,968.75) (the "Funds") into an escrow account in exchange for the issuance of a valid Standby Letter of Credit for five million dollars ($5,000,000.00).
10. The Funds were to be held in an escrow aecount controlled by the "Neutral Holder", Mulvana and Law Offices.
11. Execution of the Neutral Holder Agreement, which defined the duties of the Neutral Holder, was required by the MOU (Page 2, paragraph 2). Pursuant to the MOU, Liverett was required to execute the Neutral Holder Agreement.
12. A Neutral Holder Agreement was executed by Liverett and Mulvana and a second party on or about April 16, 2010. A true and correct copy of the Neutral Holder Agreement in the form it was delivered to Pinnacle is attached as Exhibit B.
13. Both the MOU and the Neutral Holder Agreement require that Liverett deliver a valid Standby Letter of Credit to Pinnacle within 21 banking days after the escrow funded.
14. Pursuant to the MOU (Page 3), if Liverett failed to deliver a valid five million dollar ($5,000,000.00) Standby Letter of Credit to the Neutral Holder within 21 banking days after the escrow funded, then on Pinnacle's demand the Neutral Holder was required to return the Funds held by him in escrow to Pinnacle without delay.
15. Pursuant to the Neutral Holder Agreement (page 3, paragraph I), if the valid five million dollar ($5,000,000.00) Standby Letter of Credit was not delivered to Pinnacle and Pinnacle's bank account within 21 banking days after the escrow funded, then on Pinnacle's demand the Neutral Holder was required to return the Funds held by him in escrow to Pinnacle without delay.
16. On May 24,2010, Pinnacle funded the escrow account with the Funds.
17. After the eserow was funded on May 24, 2010, Liverett provided Pinnacle with a document that he represented was a valid Standby Letter of Credit ("Liverett's SLC"). A true and correct copy of Liverett's SLC is attached as Exhibit C.
18. Pinnacle presented Liverett's SLC to three separate banking institutions. All three banks rejected Liverett's SLC and advised Pinnacle that Liverett's SLC was not a valid Standby Letter of Credit.
19. On June 23, 2010, Pinnacle, through its counsel, sent a letter to Mulvana and Law Offices demanding the return of the Funds in the escrow account because Pinnacle had not received a valid Standby Letter of Credit. A true and correct copy is attached as Exhibit D.
20. Defendants did not respond to the June 23rd letter and did not return the Funds to Pinnacle. Accordingly, on June 25, 2010 Pinnacle, through its counsel, also emailed Mr. Mulvana and again demanded that he return the Funds as requested in the June 23rd letter. A true and correct copy is attached as Exhibit E. Defendants continued to refuse to return the Funds or respond to the June 23 letter or the June 25th email.
21. Finally, on June 28,2010 Pinnacle, through its counsel, sent another letter to Mulvana and Law Offices again demanding the return ofthe Funds held in the escrow acccunt, and further advised that if the Funds were not retumed by the close of business on June 28,2010 legal proceedings would be brought. A true and correct copy is attached as Exhibit F. Defendants did not return the Funds held in escrow and did not respond to the June 28th letter.
FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT (Against AU Defendants)
22. Pinnacle repeats and re-alleges paragraphs 1 through 21 above.
23. The Neutral Holder Agreement was executed by Liverett, Mulvana, and a second party to engage Mulvana as the neutral holder for purposes of the MOU transaction.
24. Pinnacle has fully performed all obligations.
25. Defendants were required to hold the Funds in an escrow account until either a valid Standby Letter of Credit was delivered to Pinnacle or, if no delivery occurred, until Pinnacle demanded return of the Funds.
26. A valid Standby Letter of Credit was not delivered to Pinnacle within 21 banking days from May 24,2010.
27. Since a valid Standby Letter ofCredit was not delivered, Pinnacle is entitled to the return ofthe Funds on its demand.
28. Pinnacle demanded return of the Funds. (Exhibit D, E, and F)
29. Defendants willfully refused and continue to refuse to return the Funds to Pinnacle.
30. Pinnacle has been damaged by Defendants' refusal to return the Funds.
31. Pinnacle is entitled to damages in the amount of the Funds.
SECOND CAUSE OF ACTION FOR BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING (Against AU Defendants)
32. Pinnacle repeats and re-alleges paragraphs 1 through 31 above.
33. Pinnacle and Mulvana entered into the Neutral Holder Agreement.
34. Pinnacle did everything it was required to do under the Neutral Holder Agreement.
35. Defendants were required to hold the Funds in an escrow account until either a valid Standby Letter of Credit was delivered to Pinnacle or, if no delivery occurred, until Pinnacle demanded return ofthe Funds.
36. A valid Standby Letter of Credit was not delivered to Pinnacle within 21 banking days from May 24,2010.
37. Since a valid Standby Letter of Credit was not delivered, Pinnacle is entitled to the return of the Funds on its demand.
38. Defendants have unfairly interfered with Pinnacle's right to the retum of all the Funds by refusing to return the Funds upon demand.
39. Pinnacle has been harmed by Defendants' conduct.
40. Pinnacle is entitled to damages to be proven at trial.
THIRD CAUSE OF ACTION FOR MONEY HAD AND RECEIVED (Against All Defendants)
41. Pinnacle repeats and re-alleges paragraphs 1 through 40 above.
42. Mulvana received the Funds from Pinnacle. Those Flmds were to be used to pay for a valid Standby Letter of Credit, or returned to Pinnacle if no valid Standby Letter of Credit was issued within 21 banking days ofthe deposit ofthe Funds in escrow.
43. No valid Standby Letter of Credit was delivered to Pinnacle.
44. Pinnacle demanded return of the Funds from Mulvana and Law Offices.
45. Mulvana and Law Offices refuse to return the Funds to Pinnacle.
46. Pinnacle is entitled to damages in the amount of the Funds.
FOURTH CAUSE OF ACTION FOR INJUNCTIVE RELIEF (Against AU Defendants)
47. Pinnacle repeats and re-alleges paragraphs 1 through 46 above.
48. Pinnacle is entitled to an injunction against the Defendants barring them from transferring, encumbering, secreting, hiding, or otherwise affecting or disposing ofany money held in the escrow account pursuant to the MOU and the Neutral Holder Agreement.
49. In particular, Pinnacle is entitled to an injunction barring Defendants from taking any actions affecting the transfer of any money held in the escrow account without Pinnacle's cxpress written consent.
50. Pinnacle has a protectable right pursuant to the MOU and thc Neutral Holder Agreemcnt.
51. Pinnacle believes that the Defendants or a third party may attempt to interfere with Pinnacle's right to the return of the Funds held in the escrow acount.
52. Pinnacle will suffer irreparable harm if the requested injunction is not granted because once thc Funds are distributed Pinnacle may not be able to recover them from another source.
53. There is no adequate remedy at law because the Defendants have refused. and continue to refuse to adhere to the Neutral Holder Agreement.
54. Pinnacle is informed and believes that Defendants will continue to refuse to return the Funds and Defendants may distribute the Funds to an unauthorized party.
55. Pinnacle has a likelihood of success on the merits because Pinnacle has fully performed its contractual obligations under thc MOU and the Neutral Holder Agreement, and the Defendants have repeatedly breached their obligations and acted negligently or in bad faith.
56. As a result thereof, Pinnacle seeks an order requiring Defendants to show cause, if they have any, why they should not be enjoined from transferring, the Funds during thc pendency of this action.
PRAYER
WHEREFORE, Pinnacle prays for judgment against Defendants and each ofthem as follows:
A. For breach of contract of paragraph I, subparagraph 4 of the Neutral Holder Agreement, to require Defendants to return the Funds to Pinnacle;
B. For an injunction against Defendants prohibiting them from taking any actions to transfer, encumber, secret, hide, conceal or otherwise affeet or dispose of any of the Funds held in escrow pursuant to the MOU and Ncutral Holder Agreement;
C. For damages tor Defendants' willful refusal to return the Funds to Pinnacle as required by the Neutral Holder Agreement, the June 23rd Letter, the June 25th Email, and the June 28th Letter;
D. For costs of suit;
E. For interest on the amounts in escrow;
F. For all other obligations and amounts to be proven at trial; and
G. For such other and further relief as the Court deems just and proper.
Dated: June 30, 2010 DUANE MORRIS LLP
Patricia P. Hollenbeck
Heather U. Guerena
Attorneys for Pinnacle Energy, Inc.
I, the undersigned, certify and declare that I have read the foregoing Verified Complaint and know its contents. I am the Chief Executive Officer for Pinnacle Energy Inc., the plaintiff in this action, and am authorized to make this verification for and on its behalf, and I make this verification for that reason. The matters stated in the Verifled Complaint are true and correct except for those matters stated on information and belief. As to those, I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed this 30 day of June 2010
Brian Sorrentino
