Replies to post #129 on My Back Porch

[jhnvtjll]

Here's a copy and paste of the entire document.


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, )
)
Plaintiffs, )
)
Vs. ) Case No. 2013 cv 3124
)
JNS HOLDING CORPORATION, ) Judge
a Delaware corporation, and )
JNS POWER & CONTROL )
SYSTEMS, INC., an Illinois Corporation, ) Jury Demand
)
Defendants. )
COMPLAINT
Plaintiffs, CAR CHARGING GROUP, INC (“CCGI”) and 350 HOLDINGS, LLC (“350
Holdings”) (collectively, “Plaintiffs”), for their complaint against, defendants, JNS HOLDING
CORPORATION (“JNS Holdings”) and JNS POWER & CONTROL SYSTEMS, INC.,
(collectively, “JNS” or “Defendants”), allege as follows:
JURISDICTION AND VENUE
1. This is an action for damages exceeding $75,000, exclusive of interest, costs, and
attorney’s fees, and is within this Court’s jurisdiction pursuant to 28 U.S.C. §1332.
2. Plaintiff CCGI is a Nevada corporation with a principal place of business in
Miami, Florida.
3. Plaintiff 350 Holdings is a Florida limited liability company whose sole member,
CCGI, is a citizen of the State of Florida and the State of Nevada.
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4. Defendant JNS Holding Corp. is a Delaware corporation with a principal place of
business in Arlington Heights, Illinois.
5. Defendant JNS Power & Control Systems, Inc. is an Illinois corporation with a
principal place of business in Arlington Heights, Illinois. Upon information and belief, JNS
Power & Control Systems, Inc. is a wholly owned subsidiary of JNS Holdings Corporation.
6. This Court has jurisdiction pursuant to 28 U.S.C. §1332.
7. Diversity jurisdiction is proper because Plaintiff and Defendants are residents of
different states.
8. Venue is proper in this district pursuant to 28 U.S.C. §1391(a) because a
substantial part of the events or omissions giving rise to the claims occurred, and/or a substantial
part of the property that is the subject of the action is situated in this district.
INTRODUCTION
9. CCGI is a service provider for electric vehicle (“EV”) charging stations across the
United States.
10. CCGI and 350 Green, LLC (“350 Green”), a company which also provides
service for EV charging stations, began negotiation for CCGI’s purchase of all the stock (and via
such acquisition, the de facto purchase of all assets) of 350 Green on or about July 5, 2012, via
the execution of a binding term sheet agreement (the “July Term Sheet”) based on 350 Green’s
contention that it was having trouble with meeting its financial obligations.
11. The July Term Sheet allowed for CCGI to conduct due diligence on 350 Green to
determine if it wished to proceed forward with the negotiation and execution of a final binding
agreement for CCGI to purchase all of the issued and outstanding membership interests of 350
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Green (the “Transaction”), as long as a due diligence investigation was completed in a manner
satisfactory to CCGI.
12. During the course of the parties’ negotiations, CCGI became aware that the 350
Defendants faced potential federal investigations into criminal activities, and had further failed to
abide by almost all of their contractual obligations with vendors and/or clients.
13. Specifically, 350 Green had been awarded grant for $1,911,000 by the City of
Chicago, to install a network of Electric Vehicle (“EV”) charging stations in the Chicago area
(the “Chicago Project”). 350 Green and the City of Chicago executed a contract on October 18,
2010, which called for the Chicago Project to be completed on or about December 31, 2013.
14. However, 350 Green came under investigation due to questionable accounting
practices related to the Chicago Project.
15. In light of certain criminal investigations by the FBI into 350 Green and its
members, and what due diligence by CCGI evidenced as improper accounting activities, CCGI
requested that 350 Green enter into a new binding Term Sheet which was executed on August
29, 2012 (the “August Term Sheet”) and which contained, among 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.
16. 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 or entity to sell 350
Green.
17. After the August Term Sheet was signed, CCGI continued its due diligence
investigation of 350 Green throughout the rest of 2012 and into the beginning of 2013.
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Throughout the due diligence process, CCGI was not provided by 350 Green with the documents
required for the necessary audits, which delayed the parties’ ability to enter into a final binding
agreement.
18. Further, CCGI was required to obtain the City of Chicago’s approval of the
Transaction as a condition of closing. Negotiating the terms and conditions of the assignment
with the City of Chicago took an extensive amount of time, which delayed the ability of CCGI to
close the Transaction.
19. However, notwithstanding the foregoing, on February 11, 2013, in direct violation
of the ‘no-shop’ provision of the August Term Sheet, a press release was issued by Defendant
JNS Holdings announcing that JNS Power had entered into a Formal Letter of Intent with 350
Green to acquire “certain assets which consists of the Chicago area Grant Agreement, only.”
20. 350 Green never advised CCGI that it had entered into negotiations with any
other bidders for any part of 350 Green.
21. After discovering the existence of the aforementioned press release, CCGI
contacted 350 Green. 350 Green indicated it mistakenly thought that the August Term Sheet had
expired and that the “no shop” provision contained therein was no longer in effect.
22. However, the parties determined that the August Term Sheet was still in effect,
and the “no shop” provision had not expired, as 350 Green had not completed its production of
documents required for a company audit.
23. Consequently, CCGI and 350 Green continued their negotiations, and CCGI
continued with its due diligence period.
24. The final analysis of the due diligence by CCGI determined that the acquisition of
350 Green (without the negative liabilities) would be a favorable risk/reward transaction for
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CCGI and would be crucial in assisting CCGI in meeting the qualifying requirements to submit
its application for the trading of its stock on the NYSE or NASDAQ.
25. Plaintiffs subsequently obtained approval from the City of Chicago to take over
the operations of the Chicago Project from 350 Green.
26. Therefore, on March 8, 2013, after the aforesaid extensive period of due diligence
and negotiation, 350 Green and its members, Mariana Gerzanych (“Gerzanych”) and Timothy
Mason (“Mason”),(collectively, the “350 Members”), and Plaintiffs executed the Exchange
Agreement which was a final binding agreement to purchase the membership interests of 350
Green (hereinafter, the “Exchange Agreement” or “Agreement”). The Exchange Agreement,
among other things, called for the transfer of the membership interests of 350 Green (the “350
Interests”) in exchange for 1,111,111 shares of CCGI common stock (the “CCGI Shares”) to be
provided to the 350 Members. The Exchange Agreement did not fix a definite closing date, but
only indicated that the closing was to take place within ten (10) business days after execution,
which at the latest would have been March 22, 2013.
27. CCGI believed that any confusion on the part of 350 Green with regard to the
Chicago Project was rectified, as the assets in the Chicago Project were included in the
negotiations and were specifically referenced in the final version of the Exchange Agreement.
28. In conjunction with the intended purchase of 350 Green, CCGI made certain
representations to shareholders (including the issuance of a press release when the July Term
Sheet was executed) which resulted in third-party investment into CCGI that otherwise would
not have been made.
29. On or about March 21, 2013, CCGI requested that the parties enter into an
agreement extending the date of closing, and circulated an amendment to the Exchange
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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, which is a standard provision in acquisition agreements of this kind, and
the signing of the Amendment was not a condition of closing the Transaction.
30. CCGI fully intended to close the Transaction even if the 350 Members did not
agree to the Amendment. However, because the Members were out of the country and
unreachable, the Amendment and the extension were neither acknowledged nor signed.
31. Despite the Plaintiffs’ desire to close on the Transaction under the Exchange
Agreement, the 350 Members failed to consummate the closing as contemplated under the
Exchange Agreement despite the fact that the Exchange Agreement did not contain any terms
that allowed the 350 Members to terminate the Exchange Agreement, nor did the Exchange
Agreement indicate that time was of the essence.
32. Further, not only were Plaintiffs not served with any default under the Exchange
Agreement with reasonable notice comply as required under Florida law, during the week of
March 25 – 29, 2013, the 350 Members and CCGI continued to engage in negotiations with
regard to the Equity Exchange, and the audit of 350 Green commenced, as per the terms of the
Exchange Agreement.
33. As a result of the 350 Members’ refusal to close the Transaction, on April 9,
2013, Plaintiffs filed suit 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 (the
“350 Lawsuit”).
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34. Plaintiffs filed an eight (8) count complaint seeking the following: (i) damages
based on counts of breach of contract and breach of the implied covenant of good faith and fair
dealing; against 350 Green and the 350 Members (collectively, “350”), (ii) specific performance
by 350 under the terms of the Exchange Agreement; (iii) a permanent injunction against 350
selling any assets to JNS; and (iv) sought damages due to JNS’ tortious interference with the
Plaintiffs’ contractual relations with 350.
35. Plaintiffs argued that under Florida law, which governed the Exchange
Agreement, 350 breached the terms of the Exchange Agreement by refusing to close, as Florida
law holds that time is not of the essence unless a contract expressly provides. Therefore, as the
Exchange Agreement did not contain a “time is of the essence” clause and 350 did not fix a
definite date in the future for performance and notify Plaintiffs of same, under Florida law, there
was a binding contract between Plaintiffs and 350, even though the Transaction did not close by
the time allotted in the Exchange Agreement.
36. In conjunction with the 350 Lawsuit, Plaintiffs moved, on an emergency basis, for
the District Court to temporarily enjoin 350 from selling any assets to JNS (who was named as a
party to the case) pending the outcome of the underlying litigation. The basis of Plaintiffs’
request for the temporary injunction was that: (a) 350’s actions were extremely prejudicial and
detrimental to CCGI, because, in conjunction with the intended purchase of 350 Green, CCGI
made certain representations to shareholders (including the issuance of a press release when the
July Term Sheet was executed) which resulted in third-party investment into CCGI that
otherwise would not have been made; (b) the refusal of 350 to close could cause (x) permanent
damage to the reputation of CCGI and the corresponding impairment of any chance of CCGI
becoming an effective player in the EV industry; (y) the erosion the business relationships
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between CCGI and its currently existing and potential investors; and (z) the impairment CCGI’s
ability to become listed on the NYSE or NASDAQ. Lastly, there was concern by the Plaintiffs
that if 350 Green’s assets were sold, based on the financial state of 350 Green at the time of the
closing, 350 Green’s assets would be completely depleted should any sale to any other party
occur.
37. A conference regarding Plaintiffs’ motion for temporary injunctive relief was held
on April 15, 2013 before the Honorable Jesse Furman at which time counsel for both 350 and
JNS appeared. Judge Furman ordered that the parties conduct limited discovery based on the
allegations set forth in Plaintiff’s motion seeking temporary injunctive relief, and scheduled a
hearing on Plaintiff’s Motion for temporary injunctive relief to take place on April 29, 2013.
38. Plaintiffs and 350 entered into subsequent settlement negotiations, which
culminated on April 22, 2013, with Plaintiffs and 350 closing the Transaction as contemplated
under the Exchange Agreement. The Chicago Assets, as well as certain liabilities associates with
the Chicago Project, were specifically included in the addendum to the Exchange Agreement.
39. However, due to the negotiations that took place during the period of litigation,
the parties executed an addendum to the Exchange Agreement, wherein Plaintiffs were forced to
pay the 350 Members a significant amount of cash, and a reduced amount of stock. The original
Exchange Agreement called for merely an exchange of stock.
40. Plaintiffs now own all of the interests of 350 Green.
41. However, during the pendency of the lawsuit, it was discovered that on April 17,
2013 after JNS’s counsel of record (Randall S. Newman, Esq.) had both been served with the
350 Lawsuit, thereby placing JNS on actual notice of the existence of a binding contract between
Plaintiffs and 350 and had appeared in Court as Ordered by Judge Fruman, 350 Green and JNS
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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 an fifty-one (51)
chargers that were to be installed for the Chicago Project (the “Chicago Assets”). It was further
learned that, in an effort to thwart an unfavorable ruling on Plaintiffs’ motion for a temporary
injunction that might prevent 350 Green and JNS Power from consummating their transaction,
the closing of the APA was set to take place on April 29, 2013, the same day that the hearing on
Plaintiffs’ motion for temporary injunctive relief in the 350 Lawsuit was to be conducted.
42. The refusal of the 350 Members to close the transaction and the subsequent
execution of an agreement with JNS Power is evidence that notwithstanding the “no shop”
provision of the August Term, JNS and the 350 Members had engaged in solicitation and
negotiation for JNS to acquire 350 Green during the period 350 Green was to be negotiating
exclusively with CCGI.
43. Further JNS has intentionally interfered with the contract between 350 and
Plaintiffs, to which it was fully aware in an attempt to damage Plaintiffs.
COUNT I
(Tortious Interference with Contractual Relations)
44. Plaintiffs hereby re-allege and re-assert the allegations set forth in paragraphs 1 -
43, as if fully set forth herein.
45. On August 29, 2012, CCGI and 350 entered into the August Term sheet, wherein
the parties agreed that during the Investigation Period, 350 would not take any action to initiate,
solicit, negotiate or accept any offer from any person to sell the 350 Green assets.
46. However, on February 11, 2013 a press release was issued by 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.”
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47. 350 purposely failed to inform CCGI that they had entered into negotiations with
any other bidders for any part of 350 Green, and CCGI only found out about it by coming across
the press release issued by JNS Holdings.
48. 350 Green entered into an agreement with JNS Power even though CCGI did not,
and in fact could not complete its due diligence investigation of 350 Green due to 350 Green’s
failure and refusal to provide CCGI and its accountants with certain documents required for
CCGI’s audit of 350 Green. Therefore, the terms and conditions of the August Term Sheet were
still in effect between 350 Green and CCGI at the time 350 Green entered into an agreement with
JNS Power.
49. On March 8, 2013 Plaintiffs and 350 entered into the Exchange Agreement
wherein the 350 Defendants would transfer 350 Interests (and by default, all assets owned by
350, inclusive of the Chicago Assets) in exchange for the CCGI Shares to be provided to the 350
Members.
50. Upon information and belief, prior to the time of closing, JNS continued to
negotiate with 350 and its creditors for the sale of the Chicago Assets.
51. At the time JNS negotiated with 350 for the Chicago Assets, JNS knew that 350
had a binding agreement with Plaintiffs for Plaintiffs’ purchase of the 350 Membership Interests
and which included, the Chicago Assets.
52. On April 17, 2013, JNS Power executed the APA wherein JNS Power purchased
the Chicago assets from 350 Green.
53. In fact, JNS was completely cognizant of the situation with regard to 350 Green’s
relationship with CCGI, as evidenced by Section 1.3 of the APA which disingenuously states
that JNS Power “represents that it has not contributed in any way to the termination of that
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relationship or interfered with the CCGI relationship.”
54. JNS acted for a wrongful purpose and/or used unfair or improper means in
seeking to interfere with Plaintiffs’ contractual relationship with 350 with reckless disregard for
the consequences of their actions and potential repercussions of the Transaction failing to close
and the harmful effect of same on the stock price of GCCI, the confidence of CCGI’s current and
potential investors and the ability of CCGI to apply for listing on the NASDAQ or NYSE.
55. The Defendants’ wrongful actions have resulted in Plaintiffs being forced to
expend significant legal fees in the 350 Litigation which Plaintiffs were required to file to protect
their rights under the Exchange Agreement in an attempt to avert any damage to any contractual
and business relationships, including the ability of CCGI to become listed on NASDAQ or
NYSE, which application and listing is time sensitive and the complete damage caused by such
lost opportunity as a direct and proximate cause of actions of JNS will be impossible to ascertain
and will not be recoverable.
56. The Defendants’ wrongful conduct has resulted in Plaintiffs entering into an
Amendment of the Exchange Agreement whereby Plaintiffs have to now make cash payments to
the 350 Members, which will cause difficulty for CCGI, a relatively new company that is trying
to establish itself as a significant force in the EV industry.
57. As a direct and proximate result of the conduct of Defendants, Plaintiffs have
suffered general and special pecuniary and non-pecuniary damages in an amount to be proven at
trial.
58. Defendants’ actions were undertaken willfully, wantonly, maliciously and in
reckless disregard for Plaintiffs’ rights, and as a direct and proximate result thereof Plaintiffs
suffered economic damage in a total amount to be proven at trial, therefore Plaintiffs seek
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exemplary and punitive damages in an amount sufficient to deter said Defendants and others
from similar future wrongful conduct.
WHEREFORE, Plaintiffs demand judgment against Defendants JNS Holdings and JNS
Power for tortuous interference with contract in a total amount to be proven at trial, as well as
exemplary and punitive damages in an amount sufficient to deter said Defendants JNS Holdings
and JNS Power, and others from similar future wrongful conduct as well as costs and legal fees
and such other and further relief as this Court deems just and proper.
COUNT II
(Declaratory Judgment)
59. Plaintiffs hereby re-allege and re-assert the allegations set forth in paragraphs 1 -
43, as if fully set forth herein.
60. On March 8, 2013, Plaintiffs and 350 entered into the Exchange Agreement
wherein the 350 Members would transfer the 350 Interests in exchange for the CCGI Shares to
be paid to the 350 Members.
61. The Exchange Agreement is governed by the laws of the State of Florida.
62. The Exchange Agreement states, in pertinent part, “…Closing shall take place no
later than ten (10) business days after the Effective Date.” The Effective Date, as defined under
the Agreement, is March 8, 2013. Therefore, under the terms of the Agreement, the closing was
to occur on or before March 22, 2013.
63. 350 Green and the 350 Members went as far as to provide Plaintiffs with their
executed signature pages, thereby wholly accepting all terms of the deal, which evinced its
intention to enter into the terms of the agreement with Plaintiffs as was the parties’
understanding.
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64. On or about March 21, 2013, Plaintiffs circulated an amendment to the Exchange
Agreement 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.
65. 350 failed to respond to CCGI’s request regarding the execution of the
Amendment until after the proposed closing date of March 22, 2013 had passed.
66. At no time on or prior to March 22, 2013 did Plaintiffs ever indicate they did not
intend to close the Transaction with 350.
67. No written demand to close or notice of default had been provided from 350 to
CCGI, and all of the final closing documents were delivered between the parties.
68. Plaintiffs performed all of the conditions of the Exchange Agreement that were
required, and were willing to accept 350’s acknowledgment of the closing of the Transaction,
and were read to issue the CCGI Shares to the 350 Members.
69. However, despite delivery of all such documents and CCGI’s intent to close on
that date, the 350 Members informed CCGI of their intent to terminate the Exchange Agreement
and to renew their discussion with other companies for the sale of 350 Green.
70. Moreover, 350 failed to provide Plaintiffs notice of any default under the
Exchange Agreement demanding closing and providing a reasonable time after demand for
performance by Plaintiffs as required under applicable Florida law by which the Exchange
Agreement is governed.
71. Therefore, neither the terms of Exchange Agreement nor applicable Florida law
permitted 350 to terminate the Exchange Agreement. Consequently, Plaintiffs contend that
under Florida law, the Exchange Agreement has always remained valid, and any agreements that
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350 executed to sell any of the assets after the execution of the Exchange Agreement of 350
Green are void as a matter of law.
72. Notwithstanding the foregoing, on April 17, 2013, 350 Green and JNS Power
executed the APA, wherein 350 Green agreed to sell the Chicago Assets to JNS Power. The
transaction between JNS Power and 350 Green is set to close on April 29, 2013.
73. However, on April 22, 2013, Plaintiffs and 350 executed an Amendment to the
Exchange Agreement and closed the Transaction. The Chicago Assets and liabilities associated
therewith were specifically contemplated by the parties and included in CCGI’s purchase price
of the 350 Membership Interests.
74. As a result, Plaintiffs now own all interests of 350 Green.
75. A dispute has arisen and exists between Plaintiffs and Defendants concerning the
validity of the APA.
76. Specifically, Plaintiffs assert that the pursuant to the terms of the Exchange
Agreement, under Florida law, the Exchange Agreement was always been binding on 350.
Consequently, any agreement 350 entered into to sell any of 350 Green’s assets after the
execution of the Exchange Agreement are null and void because 350 did not have authority to
enter into any such agreement.
77. Defendants plan on moving forward with the purchase of the Chicago Assets
pursuant to the terms of the APA.
78. Defendants are not holders in due course as they were fully aware of the existence
of the Exchange Agreement and the pending 350 Lawsuit prior to executing their April 17, 2013
agreement with 350.
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79. Consequently, declaratory relief is presently necessary and appropriate so that
Plaintiffs may determine their rights under the APA.
80. Specifically, Plaintiffs are entitled to a decree from this Court that the Asset
Purchase Agreement executed by JNS Power and 350 is void as a matter of law, as under Florida
law, the Exchange Agreement was always been binding on 350 and the Chicago Assets
delineated therein were already pledged to Plaintiffs who have now own the Chicago Assets in
accordance with the Exchange Agreement.
WHEREFORE, Plaintiffs respectfully request this Court declare that the Asset Purchase
Agreement executed by JNS Power and 350 Green is void as a matter of law, as well as such
other and further relief this Court deems just and proper.
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JURY DEMAND
DEMAND is hereby made for a trial by jury of all issues so triable.
Dated: April 25, 2013 CAR CHARGING GROUP, INC. and
350 HOLDINGS, LLC
By: /s/Steven L. Baron
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: [phone]
Facsimile: [phone]
e-mail: [e-mail]
e-mail: [e-mail]
Michael I. Berstein (to be admitted pro hac vice)
The Bernstein Law Firm
1688 Meridian Avenue, Suite 418
Miami Beach, Florida 33139
Telephone: [phone]
Facsimile: [phone]
e-mail: [e-mail]
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[Chili Palmer]

That argument wont wash as 350 signed the new agreement.