Plaintiff wants more money, as per the agreement. Defendant (Medbox) contends that the plaintiff wasn't free to make the deal in the first place, has terminated the agreement and wants the $600K that they previously put in returned.
Statement of Facts
7. A Membership Interest Purchase Agreement (the “Agreement”) was entered into,
closed and executed by the Defendant and Darryl Kaplan, Claudio Tartaglia, and Eric Kovan
(collectively hereinafter the “Sellers”) on March 12, 2013. A copy of the Agreement is attached as
Exhibit “A”.
8. Plaintiff Medvend is a third party beneficiary to the Agreement between Medbox and
the Sellers.
9. The Agreement entered into between Medbox and Sellers was for the sale of the
Sellers’ interest in Medvend giving Medbox a fifty (50%) percent ownership of the outstanding
membership interest in Medvend.
10. As part of that Agreement, Medbox agreed to make a necessary cash infusion to the
Medvend of four payments as a working capital loan pursuant to the terms and conditions set forth in
the Agreement at section 5.07. The payments included a Three Hundred Thousand and xx/100
($300,000.00) dollar payment upon the execution and closing of this Agreement, which has been paid
by Medbox, and 3 additional payments of Two Hundred Fifty Thousand and xx/100 ($250,000.00)
dollars within five days after the conclusion of the fiscal year 2013, 2014 and 2015.
11. A payment in the amount of Two Hundred Fifty Thousand and xx/100 ($250,000.00)
dollars was due no later than January 5, 2014, which to date, has not been paid by the Defendant.
12. Failure on the part of Medbox to make payment pursuant to the Agreement is a breach
of the Agreement, and constitutes default pursuant to the Agreement and Secured Promissory Note
(the “Note”). (Exhibit “B” – Secured Promissory Note).
That case was consolidated with one entitled Medbox Incorporated et al v. Kaplan et al previously filed (11/19/13).
There's not a neat "Statement if Facts" to provide for that case, but the gist of it is that Medvend wasn't in a position to enter into the agreement:
14. On May 7, 2013, Medbox was notified for the first time that representations
and warranties made by the defendants (denominated as “Sellers” under the Agreement)
were untrue, incorrect, and false when Medbox received a copy of a lawsuit filed in Oakland
County, Michigan by Envy Tech Fund I, LLC and Envy-Medvend Loan Fund, LLC, a true and correct copy of which is attached to the Complaint (Doc. 1) in this matter as Exhibit 2
(the “Envy-Tech suit”).
....
16. In fact, the Medvend organizational documents precluded the Sellers from
transacting business with their “Transferred Equity Interests.”
A trial is threatened. This is the most recent docket entry*:
10/28/2014 29 AMENDED CASE MANAGEMENT REQUIREMENTS AND SCHEDULING ORDER: Fact Discovery due by 3/3/2015, Expert Discovery due by 5/1/2015, Interim Status Conference RESET for 5/6/2015 at 2:30 PM before District Judge Matthew F. Leitman, Dispositive Motion Cut-off RESET for 6/2/2015, Final Pretrial Conference RESET for 9/16/2015 at 2:00 PM before District Judge Matthew F. Leitman, Bench Trial RESET for 9/28/2015 at 9:00 AM before District Judge Matthew F. Leitman. Signed by District Judge Matthew F. Leitman. (Refer to image for additional dates) (Monda, H) (Entered: 10/28/2014)
Edit: Medbox's version can be seen on p. 31 of their S-1 filing.
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