Well thats interesting ZACK....besides being completely off topic. This case is very weak and im a little shocked how weak it was for a lawyer to actually pass this on and take the risk in FEDERAL COURT, especially if a counter suit is taken...Not a smart move IMO.
The 1st two Affirmations of Defense are enough to prove Jerry innocent and found not guilty. (Lack of Personal Jurisdiction and Failure to Arbitrate) Check out Economic loss rule too
Well I really hope people read this carefully because in my opinion...THIS IS A DISTRACTION FROM WHAT IS REALLY GOING ON WITH EIGH....This has nothing to do with EIGH. Fraud has been committed to ALL EIGH SHAREHOLDERS by brokers, clearing houses, Market Makers, and possibly the TA aswell. With the admissions of "failure to delivers" and attempted cover up of Fraud proven from the latest April 28 Shareholder Update. That is really what is of most importance here.
$My only allowed post of the Day$
AFFIRMATIVE DEFENSES Defendants assert the following affirmative defenses:
FIRST AFFIRMATIVE DEFENSE – LACK OF PERSONAL JURISDICTION
(By All Defendants and as to All Causes of Action) 47. Defendants incorporate paragraphs 1 through 46 above as though repeated here. 48. This Court lacks personal jurisdiction over Defendants, and each of them. No Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page6 of 14 7 ANSWER
defendant resides in California, no defendant was served in California, and no defendant has consented to be sued in California. 49. Additionally, all Defendants lack the minimum contacts with California sufficient to impose jurisdiction. Defendants First in Awareness and Williams’ only contact with California is through two classes taught by Williams in Los Angeles, California, one in December 2009 and one in January 2010. At these classes, Williams taught technical analysis for stock charting and did not advise attendees to purchase any particular stocks. He specifically did not advise the purchase of the CDIV or LUXI stocks at issue here. And, neither Plaintiff nor any person associated with Plaintiff attended these classes. These classes are unrelated to this litigation, which involves two contracts for the sale and delivery of specific stocks directly between two individual investors, each of which was entered into after Plaintiff solicited Williams to sell shares of stock to Plaintiff that Plaintiff had learned Williams held. Because Defendants’ contacts with California are insignificant and are not related to the allegedly wrongful conduct, and because Defendants do not conduct continuous and systematic business within California, asserting personal jurisdiction would violate Defendants’ due process rights. 50. Even if California courts had personal jurisdiction over First in Awareness and Williams, or either of them, this Court lacks personal jurisdiction over Harvey. Harvey’s sole relationship to the at-issue transactions is that she performed receptionist and other clerical duties for the other defendants. Harvey did not negotiate the terms of the sale and was not a party to it, nor did Harvey perform any services beyond traditional receptionist duties, such as answering and returning phone calls, and processing mail. Up to and including the time Plaintiff filed the Complaint, Harvey had never been physically present within the State of California. She has visited California only one time, for a few days, to attend a wedding, in or about March 2011. These contacts are insufficient to establish personal jurisdiction.
SECOND AFFIRMATIVE DEFENSE – FAILURE TO ARBITRATE
(By All Defendants and as to All Causes of Action) 51. Defendants incorporate paragraphs 1 through 50 above as though repeated here. 52. If this Court determines that the requirements of personal jurisdiction are satisfied Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page7 of 14
ANSWER
based on Williams’ contacts with California through Williams’ classes then Plaintiff’s claims are barred based on Plaintiff’s failure to arbitrate according to the terms of a binding agreement between Plaintiff and Williams that was entered into when Plaintiff contracted for his employee to attend Williams’s class. 53. Long before Plaintiff called Williams and asked Williams to sell Plaintiff stock, Plaintiff paid for one of his employees to attend a class taught by Williams in Indianapolis, Indiana. 54. Plaintiff registered and paid for his employee’s class online. In the course of paying for the class online, Plaintiff read and agreed to the terms of a document captioned “RELEASE OF LIABILITY, INDEMNITY, AND HOLD HARMLESS AGREEMENT” (the “Online Waiver”). The Online Waiver included a clause requiring that any dispute arising out of or in any way related to the Online Waiver must be arbitrated in Maricopa County, Arizona. 55. Therefore, if personal jurisdiction may be asserted against Defendants based on any connection between the subject matter of Williams’s classes and the allegations in the Complaint, then Plaintiff is barred by the terms of the Online Waiver from pursuing Plaintiff’s claims outside arbitration.
THIRD AFFIRMATIVE DEFENSE – IMPROPER VENUE
(By All Defendants and as to All Causes of Action) 56. Defendants incorporate paragraphs 1 through 55 above as though repeated here. 57. This Court is not a proper venue under 28 U.S.C. § 1391(a). No defendant resides in California, nor did a substantial part of the events or omissions on which Plaintiff’s claims are based occur within California (Plaintiff reached out to Williams, a resident of Arizona). Additionally, as explained in paragraphs 47 through 50 above, personal jurisdiction cannot be established against Defendants, or any of them, within the Northern District of California. 58. Because no grounds for venue under 28 U.S.C. § 1391(a) exist, Plaintiff’s claims cannot proceed in this Court.
FOURTH AFFIRMATIVE DEFENSE – ECONOMIC LOSS RULE
(By All Defendants and as to All Causes of Action) Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page8 of 14
ANSWER
59. Defendants incorporate paragraphs 1 through 58 above as though repeated here. 60. Plaintiff entered into two contracts with Williams. First, Plaintiff contracted with Williams to receive a specific number of shares of CDIV stock at a specific price. Next, Plaintiff contracted with Williams to receive a specific number of shares of LUXI stock at a specific price. Even if Plaintiff’s allegations were true, they all arise from these contracts. And, all of Plaintiff’s alleged losses are purely economic. 61. Essentially, Plaintiff alleges that Defendants did not perform on these contracts in that he failed to deliver securities—but Plaintiff failed to assert a claim for breach of contract and instead asserted claims seeking tort damages. Even Plaintiff’s first cause of action for “Rescission and Restitution” is nothing more than a thinly concealed tort claim. In that cause of action, in paragraph 24 of the Complaint, Plaintiff alleges that Williams and First in Awareness committed some unidentified fraud and requests punitive damages. Because none of the allegations are independent from the contracts at issue Plaintiff’s tort claims are barred by the economic loss rule.
FIFTH AFFIRMATIVE DEFENSE – WAIVER
(By All Defendants and as to All Causes of Action) 62. Defendants incorporate paragraphs 1 through 61 above as though repeated here. 63. Plaintiff, on at least two separate occasions, waived his right to complain about the lack of adequate disclosures, the sales of the stocks at issue, or the inherent risks involved in securities trading. 64. Long before Plaintiff asked Williams to sell Plaintiff the CDIV and LUXI shares at issue, Plaintiff wanted to learn about participating in “float lock downs,” the trading strategy advocated and taught by Williams. 65. To that end, Plaintiff sent one of his employees to Indianapolis, Indiana, to attend one of the classes taught by Williams. 66. Additionally, when Plaintiff paid for the class online, he read and agreed to the Online Waiver. The Online Waiver included an “Acknowledgment of Risks” that explained: a. that Williams “is not a stock broker or financial advisor”; b. that Williams “does not promote any recommendation to buy or sell stock”; Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page9 of 14
ANSWER
c. that Williams is only teaching “his methodology of trading, purchasing, and holding stocks,” as opposed to advising the purchase of particular stocks; d. that trading stocks—and especially penny stocks [like CDIV and LUXI]—is inherently risky; and e. that the attendee “agrees to assume complete and full responsibility for the outcome of all trading decisions made, including, but not limited to, loss of capital.” 67. Additionally, when Plaintiff reviewed and accepted the Online Waiver, Plaintiff expressly agreed to waive any and all claims Plaintiff had against Defendants arising from or relating to Plaintiff’s participation in any stock trading activities or the classes themselves. 68. At the Indianapolis class, Plaintiff’s employee further received and signed a document (the “Seminar Waiver”) that contained the same disclosures and release agreements as the Online Waiver. 69. On information and belief, Plaintiff received, read, and understood the disclosures contained in the Seminar Waiver. 70. Finally, when Plaintiff called Williams to solicit Williams’s sale to him of CDIV and LUXI stocks, Williams made the following additional oral disclosures (the “Phone Waiver”): a. that Williams was not a stock broker; b. that, based on Plaintiff’s representations, Williams understood that Plaintiff wanted to purchase the LUXI and CDIV shares from Williams so he could participate, with a group of investors, in two “float lock downs,” one involving the LUXI shares and one involving the CDIV shares; c. that it takes a long time for a transfer agent to break up a certificate (regularly as long as sixty days); and d. that other investors wanted to purchase some of the LUXI shares Williams owned and therefore, for the sake of efficiency, Williams would not send his LUXI certificate to the transfer agent, to be broken up and distributed, until Williams had finalized all related sales at a future and uncertain date. Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page10 of 14 11 ANSWER
71. Plaintiff made no indication that he did not understand the disclosures made in the Phone Waiver and, in fact, expressly acknowledged he understood that the LUXI shares he purchased would not be available for a long time. 72. Plaintiff’s acknowledgment of these disclosures bars the Complaint.
SIXTH AFFIRMATIVE DEFENSE – ESTOPPEL
(By All Defendants and as to All Causes of Action) 73. Defendants incorporate paragraphs 1 through 72 above as though repeated here. 74. Plaintiff intended for Defendants to rely, and Defendants did rely, upon Plaintiff’s acknowledgement of the disclosures and releases in the Online Waiver, the Seminar Waiver, and the Phone Waiver. Therefore, Plaintiff’s Complaint is barred by the doctrine of estoppel.
SEVENTH AFFIRMATIVE DEFENSE – ASSUMPTION OF RISK
(By All Defendants and as to All Causes of Action) 75. Defendants incorporate paragraphs 1 through 74 above as though repeated here. 76. Plaintiff received multiple disclosures regarding the nature of the intended transactions, the uncertainty as to the delivery date of the shares at issue, and the inherent risks involved in trading stocks. By proceeding despite receiving the Seminar Waiver, the Online Waiver, and the Phone Waiver, Plaintiff expressly assumed the risks of purchasing the stocks and is thus barred from recovery.
(By All Defendants and as to All Causes of Action) 77. Defendants incorporate paragraphs 1 through 76 above as though repeated here. 78. Plaintiff’s alleged losses derive, in whole or in part, from his own conduct. Plaintiff elected to invest in risky stocks and engage in transactions that would take a significant amount of time to complete. Plaintiff knew, or should have known, that the value of these stocks would fluctuate and that it was possible for the stocks to lose value. 79. Essentially, Plaintiff is trying to pass the risks he incurred to Defendants. Any recovery Plaintiff is entitled to should be offset by the extent to which Plaintiff’s own negligence caused his alleged losses. Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page11 of 14 12 ANSWER
NINTH AFFIRMATIVE DEFENSE – NOVATION
(By All Defendants and as to the First and Fourth Causes of Action) 80. Defendants incorporate paragraphs 1 through 79 above as though repeated here. 81. To the extent that Defendants in any way failed to timely transfer the certificates for the CDIV and LUXI shares to Plaintiff, Plaintiff’s claim for rescission and restitution fails because Plaintiff already accepted a substitute agreement. 82. As described in paragraph 17 above, on or about September 10, 2010, Williams called Plaintiff, as Plaintiff had requested. Plaintiff explained that he still wanted to purchase the LUXI shares and participate in the planned CDIV and LUXI float lock downs, but that he was having trouble paying his taxes and needed money. Plaintiff never asked for a refund, but instead asked Williams if Williams would lend Plaintiff the money Plaintiff needed. 83. Williams agreed to lend Plaintiff the money he said he needed. 84. The agreement between Williams and Plaintiff, whereby Williams agreed to lend Plaintiff money to cover Plaintiff’s tax expenses, constitutes a new agreement that subsumes any breached obligation Defendants had regarding the alleged failure to sooner transfer the CDIV and LUXI shares to Plaintiff. Therefore, Plaintiff’s claim for rescission and restitution of the agreements for CDIV and LUXI shares is barred by novation.
TENTH AFFIRMATIVE DEFENSE – FAILURE TO STATE A CLAIM
(By All Defendants and as to All Causes of Action) 85. Defendants incorporate paragraphs 1 through 84 above as though repeated here. 86. All of Plaintiff’s claims allege, in a conclusory fashion, some fraudulent representation(s). (See, e.g., ¶¶ 24, 30, 39, 42.) Beyond vague allusions to misrepresentations, however, Plaintiff fails to plead fraud with the particularity required. Also, California law does not recognize any cause of action for “conspiracy.” Plaintiff’s Complaint fails in these, and in other and further ways, to state any claim upon which relief may be granted.
PRAYER FOR RELIEF
Defendants therefore pray for the following relief: 1. Dismissal of the complaint with prejudice; Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page12 of 14 13
ANSWER
2. Costs of suit; and 3. Such other and further relief as this Court deems just and proper. DATED: April 11, 2011 Gallo & Associates By: /s/ Patrick V. Chesney Patrick V. Chesney Attorneys for Defendants First in Awareness, LLC, Williams, and Harvey Case3:11-cv-01452-EDL Document6 Filed04/11/11 Page13 of 14
AI
