Plaintiffs/Counter-Defendants’ Motion to Dismiss Defendants Amended Counterclaims against Plaintiffs and Memorandum of Law

Quote from IH Fanboy

Am looking it over now and will let you know my thoughts. BTW, first impression: while parts are certainly heavy in legalese, it isn't gobbledygook, although I can understand why some might think that.

It is not gobbledygook. It is comprehensible as legal language. Much of it is nonsense compared to known fact, but that is a different matter. "Known fact" is, of course, a matter to be determined in court process.

This process resets the Answer clock, otherwise running for Rossi to Answer the countercomplaint, on the claims covered.

The motion makes factual arguments in order to set up a legal argument. The facts alleged contradict what is already in the record as claims by IH, some supported with evidence. In a Motion to Dismiss, factual argument is a no-no. IH made a factual argument in the Motion to Dismiss, and it was a footnote, clearly dicta. Only if fact is uncontroverted and established can it be used to negate a claim and complaint.

The Motion begins with an Introduction giving an alleged factual background. It is heavily conclusory and argumentative. There is no doubt that the counter-defendant may claim those conclusions in defense, as they were claimed in the original complaint. However, they may not be used as evidence to create a cause for dismissal. I'm going to first look at the IH Motion for Dismissal, their Introduction, for comparison.

Quote

The various claims pled in the Complaint all revolve around two central contentions –- that IH and IPH were required to pay Leonardo $89 million under a License Agreement and that Defendants were limited in their use of certain information they received from Plaintiffs. Attached to, and incorporated into, the Complaint, however, is the License Agreement. The plain language of that Agreement, coupled with the admissions in the Complaint, demonstrates that Plaintiffs’ central contentions are incurably flawed: The License Agreement required performance by Plaintiffs within a specific time period, which Plaintiffs acknowledge did not occur within that time period, and the License Agreement permitted IH and IPH – after having paid Plaintiffs over $10 million (which Plaintiffs admit was paid) – virtually unlimited usage of information they received from Plaintiffs.

Plaintiffs’ non-contract claims, brought in an effort to bring parties into this litigation beyond IH and IPH, suffer from additional fatal flaws. Plaintiffs’ misconceived fraud claims are simply efforts to recast breach of contract claims as fraud claims, but this is clearly impermissible. They are not predicated on the breach of any duty independent of contract-created obligations. The Complaint also fails adequately to allege facts in support of Plaintiffs’ non-contract claims, and further suffers from an impermissible lumping together of Defendants without identifying how each Defendant allegedly committed each claimed infraction. For all of these reasons and the additional reasons set forth below, Defendants respectfully request that the Court dismiss the Complaint in its entirety.1 [the footnote was the first hint at actual IH defense, moot for the Motion to Dismiss]

Then IH went over each Count in the Complaint. This was brief and to the point. Some of the IH objections were sustained, some not, and the theme for non-dismissal was that the Judge found, in the Complaint, sufficient cause to think there was some possibility, even if remote, that the Plaintiff might be able to establish what was claimed. For example, it was implied in a Rossi statement that IH was a wholly-owned subsidiary of Cherokee, leading to a conclusion that including Cherokee as a defendant was allowable, until more fact could be on record. that was a false claim or understanding. But the Judge is not sitting in judgment on the truth or falsity of claims. What I saw in the Judge's ruling was that she was willing to go far to interpret the complaint and evidence favorably to the plaintiff, and that was proper, and, we might note, IH did not appeal. Were it improper and with serious consequence, I'd have expected an appeal.

That introduction includes conclusory argument, but it is well-grounded and simple. I expected that the Judge would require the Plaintiff to alleged fact beyond what was alleged, to remedy the problem; for example, estoppel on the time period as being de-facto waived. That IH did not point to the 2nd amendment requirement for a written consent was, I considered, a flaw. I'm not sure that the Answer adequately addresses this, because estoppel here won't fly, or, more to the point, would need to be much more clear.

So, the Rossi Introduction. It is longer and my starting impression is that it includes much argumentative dicta, generally about imputing motive or reprehensibility. I will go over it piece by piece.

Quote

On April 5, 2016, Plaintiffs ROSSI and LEONARDO were forced to commence the above
styled lawsuit as a result of, inter alia, Defendants IH and IPH’s breach of a provision of the
parties’ License Agreement which required IH (and assignee IPH) to pay to Plaintiffs Eighty-Nine
Million Dollars ($89,000,000.00). See (DE:1).

The nonpayment of $89 million is an acknowledged fact. Whether or not this was a breach of the Agreement is what the case is about. DE:1 is Docket Exhibit 1, the Complaint. "Forced" is argumentative and irrelevant. The date of the filing is moot. When the suit was filed, the alleged payment was not yet past due, however. IH has not elected to point this out because it's really moot. They were not going to pay and Rossi probably knew that long before then.

Quote

The aforementioned payment came due after a
nearly yearlong operational test performed by a, mutually agreed upon, independent third party
expert. (DE:1) (DE:30, ¶67).

That the "third party expert" was independent is challenged in the Answer. That this expert was "agreed upon" for the purpose of that test is challenged. Rossi is here repeating the claim of the Complaint. I have included the cited Answer paragraph in the quotation. There are two paragraph 67s in the Answer. Neither establishes the point, that the test was "performed by a mutually agreed upon, independent third party expert. This is an error. It could also be deliberate diversion, but let's not go there.

Annesser does not reference the relevant paragraph in the Complaint (DE:1). The first mention in the Complaint of "the ERV" for the "GPT" is paragraph 65:

Quote

65. Accordingly, on January 28,2015, the ERV prepared and submitted to the parties
a proposed test protocol for the Guaranteed Performance Test. After suggesting minor changes to
the test protocol, and clarifying other points, DARDEN on behalf of IH andlor IPH agreed to the
test protocol prior to the commencement of the Guaranteed Performance Test.

IH's Answer to that is:

Quote

65. Defendants deny the allegations in Paragraph 65.

And they went on with something much more specific:

Quote

66. Defendants deny that the test referenced in Paragraph 66 was the Guaranteed
Performance to be performed under the License Agreement. Defendants lack sufficient
knowledge or information to admit or deny that Penon performed a thorough inspection of or
installed his monitoring equipment on the Plant on February 19, 2015. Defendants deny the
remaining allegations in Paragraph 66.

"ERV" is a role defined by some agreement. For there to be an "ERV" there must be a GPT first, and the parties must agree on the ERV. The way the Agreement is worded, there may be an assumption that the same ERV will continue for the GPT as in the Validation Test, (where Penon is, without argument, the ERV), but given that the start of the test must be agreed upon in writing, if that is not satisfactory to IH, they have some power in negotiation. However, it does not appear that Rossi invited them to approve the start of the GPT, nor to approve Penon as ERV, but only set up Penon as an expert to measure results. IH, by this time, would have been suspicious, and that is exactly why Rossi would not ask, but would attempt an end run around the requirement. But that is not important here, exactly, the point here is that Rossi is emphasizing fact which he knows as contested as a basis for the arguments to come.

(continued)

(continued)

Quote

During such test, Defendants had two full time representatives
present at all times relevant thereto. (DE:1) (DE:30, ¶67).

Paragraph 67 is quoted above. It is not evidence that these were "representatives" to "such test." It is also irrelevant. Rossi has made this argument many times, that IH objections are preposterous because they had two representatives. However, only one of them was charged, as far as we known, with a reporting requirement, and both were there primarily to "help Rossi." Fabiani, with a contractual reporting requirement, apparently developed the control systems for the reactor. (And failed to report, at least partially.) He would not be considered independent because of strong prior connection with Rossi. Barry West might be independent, but was clearly under the authority of Rossi. If Rossi had told him not to tell IH something, a problem might have arisen, but so far, there is no allegation of that and IH has no problem with West. Essentially, his job could have been to use a soldering gun, and other tasks for a technician.

Quote

In and [sic] unfounded attempt to justify their
non-payment, Defendants IH and IPH filed their Amended Counterclaim and Third Party claims
alleging that Plaintiffs breached the License Agreement and committed other non-contract related
offenses. See (DE:30).

Whether or not the claims are unfounded is, of course, to be determined in discovery and trial. There are breaches alleged. Such breaches may or may not justify non-payment. All the offenses I have seen were Agreement-related. Maybe I missed some. I will study the specific claims separately. The ascription of motive, ("in an unfounded attempt") is argumentative and conclusory, for sure. Not factual. Referring to the entire and lengthy document is useless. What paragraphs? But this is an Introduction. Annesser may be more specific later.

Quote

Moreover, as a red-herring, Defendants IH and IPH assert claims against
most of the persons and/or entities who were involved in the testing of the underlying licensed
technology including, but not limited to, IH’s own consultant and the independent third party
expert selected by IH to evaluate the licensed technology. (DE:30).

Were I the judge, I might be mildly offended at the idea that I could be successfully distracted from the real issues by a frivolous claim ("a red herring.")

Fabiani and Penon are "IH's own consultant" and the "independent third party expert," who rather obviously were not independent. They were both chosen by Rossi, though IH does not emphasize that for Fabiani, they do for Penon, as to being the ERV for the Valdiation Test. They may have paid Penon for monitoring the Plant, but he was at least partially dysfunctional for that. IH then suspects that Penon's certification of the Validation test was also fraudulent.

This is, however, not "most of the persons who were involved in testing the underlying licensed technology. There were many tests, peformed by various entities, including, and highly significantly, IH"s own tests of the devices ("the underlying technology"). IH has not asserted claims against most of those invoved. Only Rossi, Penon, and Fabiani. Only by limiting the examination to the alleged GPT, which was not a test, per se, of the underlying technology, could this claim be made.

Once again, this is moot. The motivation for a lawsuit is not an issue in the suit. If it is frivolous, without foundation, as expressed, it can be dismissed, but why it was frivolous makes no difference legally. It could be a mistake, it could be stupid, or it could be vicious and an attempt to injure. None of that is relevant to a motion to dismiss. A motion to dismiss must be based on a showing that the claims in the complaint, even if all true, are legally insufficient to establish the basis for a lawsuit.

Quote

A plain reading of the Defendant’s Counterclaim demonstrates that the Defendants themselves are unable to distinguish between the rights, obligations and actions of IH as opposed to its apparent alter ego IPH. Notwithstanding Defendants’ numerous factual misrepresentations,1 as discussed more fully below, Defendants claims are both factually and legally deficient and cannot stand as a matter of law.

This is completely weird. IPH is a wholly-owned subsidiary of IH, and, as such, is largely indistinguishable.

Footnote 1 is this:

Quote

1 Defendants’ factual inaccuracies are not properly considered in a Motion to Dismiss therefore will not be discussed herein.

That footnote more or less mirrors the IH footnote, though IH gave much more information in it, including what might be called the "fundamental problem," that they were unable to verify the IP independently. The Rossi version provides no clue.
Now, this IPH thing. IPH is a holding company, wholly-owned by IH. The First Amendment clearly specifies that IH may sublicense, and no party may assign the license without the consent of all the parties, but adds that consent is given for subsidiaries which are "wholly-owned," and that such assignment does not relieve the parties of any responsibilities under the Agreement.

If one of IH or IPH has a right or responsibility, I read that they both do, it is joint. Rossi sued them both, and IH has not complained about that.

Quote

For the reasons set forth below, Plaintiffs respectfully move this Court to dismiss the Amended Counterclaims.

I may examine, in future posts, the specific counts.

Jed:

Quote

Those people at I.H. would not get themselves embroiled in a lawsuit for $267 million if they had evidence for excess heat. They are not fools. It is costing them lots of money, effort and time to defend against the lawsuit. If Rossi's device worked it would be worth billions and they would pay $89 million without hesitation. If they were willing to pay $11 million before, why would they not be willing to pay $89 million now? That makes no sense...

I agree with most of that. But they did act as fools when they apparently accepted the word of the Swedish professors and Levi and Rossi's own data as proof that the ecat worked. One can only hope that they have wised up. It seems they have with respect to Rossi but I think they are still being duped by Brillouin and who knows who else. Will they learn the lesson FIRST test PROPERLY and only then invest? I doubt it. Not until several other of their projects crashes and burns. Which may not be long, especially if they insist on proper testing now.

But yeah, of course anyone with the cash would be willing to pay $100M +/- for the exclusive rights to develop and sell working very high power LENR reactors or boilers. Not doing do would be sheer folly... if, of course, the reactors and boilers really worked.

It just got very hot in Florida. Document 42 reveals the result of the hearing two days ago. Document 43 is a Motion for Judgment on the pleadings by Darden, as to Count I. This would be Summary Judgment on the core of the Rossi case.

Remarkably, they do not yet assert a failure to obtain written consent to the GPT, they simply rely on the language of the Second Amendment and the issue that what was tested in Doral was not the plant as described there ("Six Cylinder Unit."). Obviously, had they consented to a substitute test, that would estop this claim. But it's looking like they never consented.

It occurs to me to describe this as the Chinese water torture, they are taking apart the Rossi claim one drip at a time. They have not yet made the strongest argument. It is quite interesting tactically.

As long as the Motion is not frivolous -- and this is not frivolous -- they can file as many of these as they like. This is different from the MTD version because there is now more evidence in the Record.

Rossi had until today, I think, to file a response to the IH Answer. He hasn't, and he did not object to the Answer itself, only to the Affirmative Defenses.

If I were of a conspiratorial mind, I'd think that Jones Day set up those vague defenses to distract the hell out of Annesser. But I'm not.

I should have the two new documents up in a few minutes.

One can well imagine what all this back and forth of large amounts of original text is costing Rossi and IH. Well... they both deserve it but as we've said before, the lawyers always win.

This article on fees is from 2014 and that time, Jones Day was a comparatively reasonable $445 per hour.

http://abovethelaw.com/2014/01…st-partner-billing-rates/

Quote from IH Fanboy

There is nothing easy about litigation, even if the facts are on your side. But, I generally agree that if it actually works, it will come out during the litigation/trial.

This trope is repeated on Planet Rossi, and some others think so. No, the trial is not about whether or not the technlogy works. It is about whether or not Rossi disclosed it fully, and then whether or not the GPT was properly performed and assessed. If so, then, unless there were other failures to perform that were critical and not readily ameliorated, IH owes Rossi $89 million. The fraud claim will fail unless there is evidence for actionable deceit (so far, there is none.)

Quote from JedRothwell

IH Fanboy wrote:
Deja vu!!! Blocking patents--YES! Patented claims for which the claims have been designed-around--NO! I am suggesting the latter, not the former.

The I.H. patent was an improvement, not a blocking patent. If that patent succeeded, I.H. and all companies that use it would have to pay Rossi, as I said.

Jed is quite correct here. I've discussed that IH patent at length with a patent attorney. First of all, it named Rossi as inventor. The alleged problem is that it named a co-inventor. However, this was the Lugano device or based on it. IH made that device, and there may have been ideas from the IH engineer, so it was legally necessary to include his name.

That patent was quickly filed before the Lugano report. That report would have invalidated the patent. Some Rossi patents around the world were apparently rejected precisely because of this. The patent was amended to fix problems. All of this was to protect the Rossi IP. This was not in any way illegal or improper, and they were explicitly allowed to do this by the agreement. Rossi was not harmed by that patent and possibly protected. But Rossi is insane. The evidence for that is overwhelming. It seems to be getting worse.

The words "ungrateful wretch" come to mind. I wonder why.

Quote from IH Fanboy

I didn't say this is what the trial is about. But that is what will come out.

If it comes to trial and if the various serious problems in the way of that don't stop it, then what might come out is what? Evidence of other tests will not actually be relevant. It's very obvious that the Doral test was not "neutral" and "independent." Rossi ran the show, intensely. So doubt will remain no matter what the trial decides.

Minor doubt was created when IH made a press release that wasn't effusive about Rossi.
It inicreased substantially when Rossi filed the suit.
It went astronomical when IH announced that they had been unable to confirm the Rossi claims.

That will stand, no matter what the trial decides.

Quote from Shane D.

Mr.SS,

I had hoped Rossi would defend himself in this MTD by stating IH had, in fact, replicated his tech. He did not though, and instead referred to the supposed third party results. Why, if he knew of, participated in, or seen IH replicate would he not mention it by now?

This would belong in a reply to the Answer. It could not be part of a Motion to Strike (which is equivalent to a motion to Dismiss.) It would be a new factual allegation, not part of the pleadings yet.

Quote

Considering that he announced 8 July 2013 on his JONP that IH had built an Ecat from scratch, bought then mixed the fuel, started it, ran it and it performed as advertised, I kind of expected to see that, or something along those lines, reflected somewhere in his filings by now. But nope, he has not. Very odd if you ask me. That tells me IH was not successful, and Rossi is fully aware they were not...but could be wrong. Maybe as IHFB says, this is not the time for facts...although I find it strange that basic facts like this, and whether or not there is a real customer, at the heart of the allegations would not be known.

Rossi has not replied to the Answer, not yet. It might be late. Darden has filed a Motion for Judgment on Count I, which is more or less equivalent here to Summary Judgment.

That might fail, but then, they pull out the big gun, the probably unanswerable argument. It's only been hinted at. It's a probable missing essential element for Rossi's claim, not addressed by Rossi as it would have been if it existed. A written agreement to the start of a Guaranteed Performance Test.

Quote from Eric Walker

Just added to the <a href="https://drive.google.com/drive/folders/0BzKtdce19-wyb1RxOTF6c2NtZkk" class="externalURL" rel="nofollow" target="_blank">link above</a>: &quot;42 - Order on informal discovery conference.pdf&quot;.

These links don't work for me. I can see some of the case files there, but not the ones you have put up. This was not an "informal discovery conference." It was a hearing before the magistrate, addressing subpoenas, and what they are is fascinating.

The hearing was about "third party subpoenas," motions to quash service. I think I can guess why three were quashed. The fourth, though, was not quashed and JM Products was given four days to provide a current phone number and address for James Bass or else the subpoena to T-Mobile -- the cell phone provider -- would be allowed. JMP has been hiding Bass. Cool, eh?

Document 43 is now up, and it is a motion for summary judgment, as I read it, on "Count 1" -- the core of the Rossi complaint.

Quote from IH Fanboy

Not necessarily. And this is the calculus. They improved it (presumably designing-around Rossi's claims). They own the improvement.

They own the improvement, so if it is necessary for some device, someone required to pay license fees would have to pay for the right to use that improvement. If the improvement is not necessary, it's moot. And Rossi is an inventor on this patent. He's not excluded or prohibited from using the patent, per se.

I'm not familiar with all the complexities of co-invention, but co-inventors can be people who have made any suggestion incorporated in the patent, if it is non-obvious. If the co-invention claim was not substantial or was obvious, it's moot. Many don't seem to understand how patents work. You can file all kinds of garbage. There are "rules" against it, but the penalty is that if you file a defective patent, and even if it is granted, it is unenforceable.

I've never heard of anyone prosecuted for filing a defective patent, though a patent lawyer could be sued for incompetent prosecution of a patent. I.e., malpractice.

Quote from Abd Ul-Rahman Lomax

Quote from Eric Walker: “Leonardo's Motion to Dismiss IH's amended Answer, which was just added to the docket:

drive.google.com/drive/folders/0BzKtdce19-wyb1RxOTF6c2NtZkk

The file is &quot;41 - Motion to dismiss - Leonardo.pdf&quot;.”
Thanks. Again I missed…

Why could file 40 not be displayed?

What was file 40?

Was file 40 something confidential? Was it the ERV report?