Industrial Heat’s Motion to Dismiss Denied in Part, Granted in Part

I have a PACER account (it is free for a limited number of document downloads), so here is the Order.

https://groups.yahoo.com/neo/g…n/0024.0_Order_on_MTD.pdf

Those who are rushing to proclaim victory for Rossi should actually read it.

I predicted all counts would be dismissed except for Count 1. I was not as thorough as the Judge in reading the Complaint and assuming that absolutely everything in the Complaint was true if not contracted within the Complaint itself and the Exhibits. She did. (And she took pains to note that her ruling was not affirming any of those claims.) Nevertheless, I predicted partial dismissal, 7 of 8 counts, and the result was 4/8.

She kept Count 1, but ... left the door open for a dismissal later. I predicted it would be kept but that would require allegation of estoppel. She assumed estoppel from other alleged facts. She left he door open on the "six cylinder unit" issue. I suspect that there, though, estoppel might be shown, it will depend on facts not in evidence yet, such as communications between IH and Rossi.

My emphasis added.

Quote

E. Count V: Civil Conspiracy

Here, the relevant Defendants include Cherokee, IH, IPH, Darden, and Vaughn. (See generally Compl.). Cherokee entirely owns and funds IH, one of its holding companies. (See id. ¶¶ 41–43). IPH is a wholly owned subsidiary and holding entity of IH. (See id. ¶ 51). Furthermore, Darden is the CEO of Cherokee and president of IH; and Vaughn is the manager of Cherokee and vice-president of IH. (See id. ¶¶ 9–10). Thus, while Cherokee, IH, and IPH may have separate corporate structures, it is clear they are either subsidiaries or wholly owned holding companies of each other. (See id. ¶¶ 41–51). As such, neither they, nor their individual employees — Darden and Vaughn — may be said to conspire with each other.

So, I notice that what is plainly false is assumed in order to dismiss Count V. The judge does not "know" that it is plainly false, and is here operating within a view of the facts that is entirely unembarrassed by knowledge outside the documents before her, and points of law. That same understanding is then used to allow Count VI to continue.

What we understand is that IH was not formed with funding from Cherokee, but from Darden, Vaughn, and others (such as Dewey Weaver or his own LLC). What Rossi asserts is based on his own memory from conversations in 2012, apparently. He's welcome to testify to that, but it would take additional evidence, my opinion, for this to stand. Darden and Vaughn may also testify. And there is the Agreement itself, which explicitly replaces all prior representations, which is a very common clause in an agreement, precisely and exactly to avoid situations like this. "But you said ....".

Quote

F. Count VI: Fraud and Deceit
[...]
Plaintiffs further allege Defendants misrepresented to them that: (1) Cherokee and IH are the same company; (2) Cherokee entirely owns and funds IH; and (3) Cherokee guaranteed Leonardo would be paid in accordance with the License Agreement.
[...]
The cases cited by Defendants do not address situations, such as here, where several Defendants did not sign the contract, but nonetheless: (1) participated in fraudulently inducing Plaintiffs to sign the contract; and (2) owned or were otherwise substantially related to the Defendants who did sign the contract. (See id.). Due to the particular facts of the instant case, dismissal of the non-signing Defendants is not warranted.

Again, remember, that "facts" here means *everything asserted by Rossi." Including clear error.

As well, Defendants did not allege Statute of Frauds, i.e., a verbal promise to pay where performance is more than a year in the future. In any case, the Count has a snowball's chance in hell of surviving actual litigation, where facts must be proven, not merely alleged. At this point, and on this point, estoppel could not be alleged, there are no continued alleged actions by Cherokee signifying their particiipation. However, it's moot now.

Whether IH will appeal or not, I don't know. The ruling seems sound enough to me. Yes, some of the counts, from known facts, are preposterous, but this is not the basis for the ruling.

Some counts were allowed even where they were quite thin.

Quote

C. Count III: Unjust Enrichment
...
While causes of action may be pleaded in
the alternative, see FED. R. CIV. P. 8(d)(2), a claim of unjust enrichment may only be pleaded in
the alternative where one of the parties asserts the contract governing the dispute is invalid.

Here, Defendants assert the Second Amendment, not the entire License Agreement, is invalid. (See generally Mot.). While the Court has concluded the Second Amendment is valid based on the current record and accepting Plaintiffs’ statements as true, discovery may reveal facts indicating otherwise — i.e., that the six-cylinder unit is distinct from the E-Cat Unit. If, in fact, the Second Amendment is not valid, the License Agreement’s meaning fundamentally changes. In essence, Plaintiffs may not have a cause of action for breach-of-contract pursuant to the License Agreement if it is determined they did not fulfill conditions precedent to fulfillment of the contract. Accordingly, dismissal of Plaintiffs’ unjust enrichment claim is premature.

Let me put it this way: If the Second Amendment is not valid, Plaintiff is screwed on the $89 million payment. However, in that case, there might be an "unjust enrichment" claim, which is entirely separate from the Agreement. So, then, the litigants would examine the facts from that perspective. What "injustice? What "enrichment"? And what damages to plaintiffs?

This judge is doing her job, quite well, her reputation is deserved.

Those who are rooting for Rossi might reflect that continuing Cherokee as a defendant is providing the defense with the resources of a $2.2 billion company. However, I expect to see either an appeal on this point, at this point, or, once there is discovery and other evidence before the Court, as in the Answer to the Complaint, and the plaintiff's reply, a motion for Summary Judgment. The judge hints at Summary Judgment in one of the sections, at least.

Notice this:

Quote

A. Count I: Breach of Contract for Non-Payment
...
Regarding Defendants’ “six-cylinder” argument, there is insufficient information in the record to determine whether the six-cylinder unit is simply another name for the E-Cat Unit. Accordingly, the Court will allow discovery to proceed on this matter before ruling. Thus, the Court declines to dismiss Count I.

Translation: The court might rule differently later, i.e., in Summary Judgment. However, I'd think that this would be an issue of fact, so a Jury ruling might be required. On the other hand, if the unit is actually a different unit than was contemplated in the Agreement, which might be established without controversy, Count 1 could be toast. She is only saying that if this is a difference in name only, it's not important.

Quote

Taking these allegations as true, it is plausible Defendants’ disclosure of the E-Cat IP to Plaintiffs’ third-party competitors may have constituted trade secret misappropriation. Accordingly, dismissal of Count IV is unwarranted at this time.

This is one point where it occurs to me to disagree with the judge. A license with right to sublicense must allow disclosure of all that is necessary to make the product. There is no allegation of any specific "competitor" in the Complaint. But ... again, she is simply giving the plaintiff an opportunity to make the case. This is no guarantee that it will reach the jury. While I disagree, her ruling is certainly within reason.

The dismissed counts were dismissed "without prejudice." This means that the plaintiff is not barred from filing a new case on the points, and may even be able to file a motion to restore a Count given strong enough reason. The Plaintiff, at this point, if I am correct, may still request leave of the Court to amend the Complaint.

Quote from Alan Fletcher

Another copy at : <a href="http://www.e-catworld.com/wp-content/uploads/2016/07/Motion-to-Dismiss-Judgment-Rossi_et_al_v_Darden_et_al__flsdce-16-21199__0024.0.pdf" class="externalURL" rel="nofollow" target="_blank">e-catworld.com/wp-content/uplo…sdce-16-21199__0024.0.pdf</a>

Thanks. If anyone wants to study the case, so far, all the major documents are hosted at https://groups.yahoo.com/neo/g…tex/files/Rossi_v_Darden/. I gave them filenames and descriptions so you can find the document you might want, in one place. (Only some early technical pages are not included, like waiver of summons, and the essence of those is easily visible in the docket (which is also linked there). To see files in that yahoogroup filespace, it might be necessary to join the list. That's free and quick; one needs a yahoo account.

I don't think IH will "deal". I think they will argue that Rossi's claims for the ecat and the megawatt plant were fraudulent to begin with because Rossi had no reason to believe that the ecat worked and because he did everything he could to defeat attempts at proper testing. Also because he rigged every demo and every test.

Quote from Wyttenbach

Abd Ul-Rahman Lomax wrote:

This would be a 300% missrate then... (4 items stay instead of 1) Nevertheless a good result for an amateur.

Actually, there were eight counts and I made a prediction on each. I was correct on 5, and incorrect on 3. That's a 62% success rate, in a situation where Motions to Dismiss face great difficulty.

Professionals will avoid making predictions on issues like this, because how the judge will take the arguments can be highly unpredictable. I understand the judge's reasoning with every count.

What caused my errors was that she actually did assume that all alleged facts were true, in full detail, whereas I knew that some were blatantly false, and that affected my judgment. Further, she hinted at the possibilities of a complete dismissal, later, after there is more in the record, which would include the clear facts that I knew.

Such as the matter of alleged Cherokee full ownership of IH. That then requires her to consider Cherokee an actor and thus responsible. Yet this is completely false and easily established as such.

A little factoid: IH is now apparently owned by IHHI (the "parent company" as stated before the Court), and ... an investor in IHHI is Ampenergo, a "missing signature" on the 2nd amendment. Is this relevant to anything? I don't know, but it does open up some possible speculations. My guess: irrelevant.

Quote from Abdel Ramen Lameox

Actually, there were eight counts and I made a prediction on each. I was correct on 5, and incorrect on 3. That's a 62% success rate

Seriously, those mental contortions are appalling

There is a word for people like you, it's used to describe royalty company wearing colorful patchwork clothes, and a cap on the extremities of which bells are jingling

Quote from frankwtu

PS: Sorry, I cant get rid of the line through, its all relevant.

Oh, how embarrassing. It's in the edit menu. Edit the post, and highlight the relevant text, and then you should see the S with a horizontal line through it ("strike out") highlighted. Press that button, the strikeout should disappear.

This wasn't a bad post, though a bit thin. This is the kind of writing that will actually teach you something. I have comments on various aspects of the ruling, having studied all this extensively pre-ruling. I wonder if people want to see them here?

Frank, I am no lawyer so I don't know how proof that Rossi committed fraud will be obtained. It may be a complicated process involving expert opinion that upon reviewing the data presented to IH, it was flawed or contrived and Rossi would or should have known it was. It may take the shape of compelling Rossi to obtain an ecat test from a truly independent and truly competent organization or agency, in an effort to demonstrate whether it objectively does or does not work. And whether Rossi knew or should have known it. I hope for that. But like Sniffex in a similar situation with their suit against James Randi for defamation, Rossi would drop the suit before the test was ever done... because he knows damn well how it would come out!

Then, there would be a countersuit, I think. I hope!