Rossi vs IH: (Update: Sep. 9 20– James A. Bass now a Third Party in IH’s Counter Complaint)

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The Wright brothers did this all the time. After the first four powered flights of December 17, 1903, the airplane was turned over and smashed with a gust of wind. It was a cold day, and they debated whether to light the machine on fire for a bonfire to warm up, or whether to box it up and return it to Dayton. In the end they boxed it up. It now hangs in the Smithsonian, the most famous airplane in history. Other airplanes and gliders they flew at Kitty Hawk were abandoned, burned, or donated to local housewives who used the fabric.

You may want to try understanding a post before responding to it. The Wright Brothers didn't use their destruction of a working version as an excuse for not being able to reproduce a working airplane. That is what scammers typically do. It does not mean legitimate scientists might not accidentally destroy something of value from time to time. But claiming you can't reproduce a working version of the most amazing invention of the century because you needed to tear it down to make a better one is ... well ... as dumb as Rossi's claims about his newest creation, the needle sized QuarkX or whatever he called it.

Quote from THHuxley

@Abd,

I'm going to reprise and condense the argument here that remains for me unresolved.

Nice job.

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(1) IHT claim the Florida test was not a GPT because neither Rossi nor they referred to it as such.

This is plausible. Rossi seems to have argued for this not as a GPT but as a "dramatic effort" vis his objection to using the IH premises. That BTW knocks on the head IHFB's comment that IH have not provided premisses for the test. They clearly did provide premises for (a - GPT-like - test). Just not the one Rossi wanted to do with a Rossi-faked customer in a Rossi-faked warehouse.

More accurately, there were two "GPTs." The original GPT was to begin immediately on delivery to IH, in the IH facility. If they did not agree otherwise, the way the Agreement was written, Penon would have been the default ERV. However, one must realize about contract law that agreements are not legally allowed to create unconscionable results. An agreement to abide by the decision of an "ERV" is not absolute, it is understood to be a default position, what will happen routinely, and would only be overturned with clear evidence of fraud or serious error. In normal relations, if there was some error, the parties would negotiate to fix it. Only if they could not agree would there be a need for binding arbitration or court process.

The original GPT was impractical on the face. It was to begin immediately, but it would take time to set up a GPT. The intention was, once set up, for there to be 350 days of performance at the required COP within 400 days from start, did not allow any time for setup. Whoever wrote this was just trying to get some idea down on paper and did not think of the actual practicalities and possible difficulties. My guess is that Rossi came up with the basic idea. In theory, the Validation test was designed to be a full test, of the same plant, so starting the GPT should have been simple. But, in fact, the Validation test was an abortion. Read the documents! IH could easily have refused to accept it, but the goal of IH was actually to give Rossi maximum opportunity to teach them how to make devices that work. They knew, I'm sure, of all the negative arguments about Rossi. To them, it was worth the risk -- no, just call it the expense! -- to "crush the tests," to accomplish one of two goals: learn how to make devices that work in independent testing, starting with their own -- and they had access to the best expertise money could buy -- in which case the IP was worth a trillion dollars, not to put too fine a point on it -- or establish that Rossi had nothing, or if he had something but was hiding it, to own a hedge, making further investment in LENR safe.

The original GPT being impractical, Rossi and IH then agreed, in 2013, to postpone it, to use the Six Cylinder Unit, and to start the test upon written agreement. This was totally normal! This could again have been modified at any time by written agreement of the parties. Ampenergo, by the way, the other party would would have been required to sign, could have been asked to generically consent. But Ampenergo did have an interest. IH was paying them payments that had been due from Rossi, due to the older Ampenergo investment in Leonardo. (I don't know what has happened to that, but Ampenergo is an investor in IHHI, and IH may simply have given them shares in lieu of further payments. That's sane.)

IH has never acknowledged that what I described above was their strategy. However, when the behavior of someone matches something so bold and brilliant, I really don't care if it was "real." Maybe it was intuition. They have accomplished this goal! And in the odd chance that Rossi somehow wins the suit, IH goes bankrupt and IHHI is holding the new money, untouchable by Rossi. The possibility of Rossi piercing the corporate veil rests on some of the dumbest legal arguments I have ever seen. It depends on a claim of fraudulent intention that could not possibly hold water, given the explicit "entire agreement" clause of the Agreement. It stands in direct contradiction to the Statute of Frauds, which is very well-established contract law. Even if Rossi somehow managed to win in the court of original jurisdiction, there is no way this would survive appeal, and Rossi, quite un-brilliantly, sued a collection of people with access to billions of dollars, making sure by his claim that this full asset base would be available for defense. My guess is that he imagined they would scatter like frightened mice. Wrong. He succeeded in pissing them off. Really, he rips them off for $11.5 million and more, and then sues them for fraud? As Darden said last year, "within reason." Rossi went too far, for sure.

He may have a plan to use this case to leverage investment elsewhere. He can be convincing. "They ripped me off because of a mere technicality, the snakes! But I fooled them! I would much rather deal with you!"

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(2) Abd argues (or half argues) that lack of consent from IH for the Doral test as GPT means Rossi is stuck - it can't be the GPT.

Well, I'll accept that I argue that. There could be ways around it, but they apparently don't exist. Mutual consent was of the essence of the Agreement. In the matter of the missing signatures to the Second Amendment, estoppel on that single point was fairly easy. The party with the obligation to pay had signed it, and for that party to allege lack of signature from two "parties" -- one of them being Rossi under his corporate name , he could just have signed the damn thing at any time -- the other being Ampenergo, his old friends. By the way, I would not rule out a trick: if Rossi had decided he didn't want the second amendment, he could possibly have claimed that "his board" would not let him sign, or he could have asked Ampenergo to do the same, and thus he could have it either way he wanted. The lack of signatures is not trivial. But, here, it would not have been a major obstacle, the major obstacle is really the lack of written agreement to the second test.

The second obstacle was the "Six Cylinder Unit" issue. The real problem was that communication between Rossi and IH broke down. Again, that would have been trivial to fix if the parties continued working together in good faith. Just amend it again, and the written agreement on the start date could have covered all is in one fell swoop. If a real test was being set up, with actual agreement, no difficulty at all. And this is a general principle in business. If everyone significant is on board, you can do almost anything. When one party tries to nail another, without considering the legitimate needs of the other, it spells trouble, and any attorney would have advised Rossi exactly that.

(This is part of why I think that Johnson may not have realized what was going on. If he did, he should be disbarred. If I were his attorney, I could think of defenses that might work, if backed by fact or reasonable possibility. I suspect that he will "come clean," and simply testify to what happened. "Rossi assured me, blah blah.")

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Here I don't agree. We do not yet have evidence IH have agreed to ANY GPT, and if their consent is required then they can gain the benefits of teh contract while avoiding paying simply by withholding this. Inequitable.

What benefits? This is one of the issues in the case. IH obtained no benefit other than the opportunity to spend (or waste) a lot of money. What THH is thinking, if I read this correctly, is that IH could have treated Rossi unfairly by depending on this. Yes, they could have, but Rossi would then have recourse. Due process would require negotiation in good faith, followed by some clear decision either acceptable to all parties (mutual consent as required) or the decision of a court on a far narrower and far easier issue, setting up a fair implementation of the intention of the Agreement. This was a $100 million issue. Not only worth doing right, but also completely necessary. If Rossi was following the advice of counsel, I suspect that he managed to snow his own counsel. He has some very bad habits that are coming back to bite him in the butt. We'll see how his new attorneys do. I could predict what they might negotiate, that IH might accept.

What Rossi attempted, avoiding agreement and setting up a GPT unilaterally, by creating conditions where an appearance of a GPT could arise, and be claimed without obvious lies, was a gross violation of basic business principles. Never, ever, try to screw your partner over. They don't take it well. In this case, what is amazing is how patient and tolerant IH was, but if my model is correct, that was necessary.

They did not just see "he is trying to rip us off," and then react as most people would, they let him prove it beyond a reasonable doubt. That takes gravitas far beyond normal. And the fact is that it worked. The Woodford $50 million was not just an accident, and, not it was not based on the Rossi technology. I am quite sure that Woodford knew that IH had been unable to confirm. They invested because of the obvious IH commitment to "crush the tests," showing that IH was not afraid of "failure." These people have seen enough to know that LENR is real, but that a great deal of basic research needs to be done to bring it into commercial reality (if that is possible! We don't actually know until it is done).

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Of course Abd rightly points out that other aspects of this contract are inequitable. It is a clearly bad contract - a good match for Rossi's many many clearly bad demos and tests.

While it is theoretically possible for Rossi to show estoppel on the written agreement issue, that requires a showing that there was the unwritten equivalent, and it appears that there is no evidence for that. Rossi's use of the words "Guaranteed Performance Test" over and over is "conclusory," not factual. He claims that Darden agreed with Penon on the measurement methods to be used in the "GPT," but, what exactly was said or written? It is not alleged and it is not in evidence or specific allegation. Given what else we have, my default assumption -- rebuttable with evidence -- is that there was no such agreement, just as Rossi, later describing the move to Doral in terms of the "GPT," does not match his actual communications at the time. Rossi attempted to reinvent history.

While the agreement was massively defective, that, in itself, was not the problem. Rossi could easily have followed the Agreement, if he had a 1 MW plant that actually worked. It would have been almost trivial. That he, instead, set up a phony customer and conditions where he had total control completely defeated the purpose of a GPT, intended, on the face, to be independent confirmation. In a real GPT, IH engineers would have had full access, and if they were not allowed to touch the plant itself, they would have been able to measure the power completely independently, at the dissipation side, and they could have been sure of the results. It simply is not that difficult, if the real experts have real control of that much of the test.

That the plant required his constant attention, by the way, would be a huge ref flag. This was clearly not ready for commercial application, at best. Managed tests of individual reactors would have been far easier and far less stressful. This is what an actual developer and manufacturer would want to know for quality control: MTBF, failure modes, fuel life, all that. The entire concept of building a 1 MW unit before having that all completely nailed was insane. Rossi did this because of the dramatic impact, it's obvious. It also allowed him to avoid scrutiny to a degree. "You want to test my E-Cat? Great! $1.5 million please!" The whole 1 MW plant, according to the Rossi email, cost $200,000. Suppose we are talking about 4 Tigers. That is $50,000 each.

Rossi, though, was paranoid that someone would reverse engineer the plant. This could entirely be deception, an excuse, but if true, it was insane. This sells on Planet Rossi because the Planet generally shares a highly suspicious view of business and of investors. They are all greedy bastards who will screw you over if they have a chance. This is what I'd call a disempowering story. By all means, protect yourself, and Shit Happens, but life is not like that, normally. Business runs on trust, basically. Sure, come between an animal and its meat, you can get hurt. But don't do that!

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Given the potential lack of equity on both sides, and the terrible nature of the contract, I don't think any legalistic argument based on the letter of the contract is likely to win this.

I disagree, and here is why: the requirement for written agreement is not just some stupid requirement, it reflected fundamental legal principles. It is, therefore, enforceable. Where such enforcement is inequitable, yes, it is possible to defeat that, but it is not inequitable here.

Consider the possibility that the 1 MW plant actually worked and works. The equitable solution would be to set up a full and fair GPT, not to take a phony and corrupt test as being real, in order to force IH to pay money that they don't have and cannot obtain without clear independent testing (or at least their own tests that they are satisfied with.) The reason is that they must disclose relevant facts to investors. Their own inability to make devices that work is fatal to their ability to raise the funding necessary -- not just the $89 million but much more to fully develop the technology and either bring it to market or license it to those who do. Even if the ERV report was perfect, the test failed because of the failure to set up conditions that would create confidence.

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That applies to Rossi (the ERV said it so its true) even more than to IH (we never agreed it is the GPT so it can't be that).

I assume that Darden believes he never consented. And this would be a completely adequate reason to not pay. This would become inequitable if he refused to allow a GPT to be set up, but there is zero evidence of this!

As to Rossi's claim of fraud, based on an alleged intention to rip him off by not paying, as long as there is reason to not pay, unaddressed, imputing fraud from failure to pay is utterly beyond the pale. In general, failure to pay cannot be used to claim fraud. It is possible that some exception exists somewhere, but I see no sign of such in the pleadings. The Rossi case is so badly flawed, that any sane attorney would not have filed it except on direct order from the client. I've been sued a few times, and two or three times the client told their attorney not to talk to me. It was such a stupid move, they cost themselves much. One of them probably lost about $30,000 by this. We got exactly what we wanted and what we would have agreed to without any legal action. When people are certain they are Right and the defendant is Wrong and Bad, it can get very expensive.

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Going to the "reality" of it we have a test which was clearly faked, and which IH clearly did not have access to validate, with an ERV who we are pretty sure now will not stand up and be counted in the US (very sensibly) who stopped answering polite letters from IH before the end of the test.

Well, generally, yes, but Exhibit 5 was a memorialization of verbal communication in February, at the end of the test in February, and written and delivered to Penon on March 25, before the report was issued on March 28. (Dates from the IH Second Amended Answer). I don't know if there was earlier communication breakdown. We have only seen a small fraction of the evidence that would exist.

We also, on a separate axis, have a claim for 1MW generation of heat in a warehouse with no way to dissipate this (if IH photos of broken unused fans in vents etc are to be believed). It would require a super-strenth fan to vent enough air volume to disspiate 1MW even at +10C temperature differential to ambient. That would make any florida warehouse unlivable in Summer I'd expect?

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So I see IH as winning hands down on "real" considerations, but the matter based on the letter of the contract is complicated because the contract was clearly stupid and inequitable in both directions, as was the conduct of the test.

Both. Unless Rossi presents much more than he has, all roads lead to Rome. The written agreement issue is not merely the "letter of the contract," it was a fundamental requirement, and requirements like this are intended to avoid complicated and expensive legal action. Once it is obvious that the issue at contention is clearly covered by written agreement, and is not inequitable (i.e, not covered by evidence for estoppel), that is properly enough for Summary Judgment.

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(4) The "They would all have fried!" argument.

Airflow calculations for the record (approx):

Air density 1 kg/m^3
Air specific heat: 1 kJ/kgK

Air flow needed to limit temp rise in factory to +10C = 100kg/sec = 100m^3/sec or 360000m^3/hour

Heavy duty industrial ventilation fan: tombling.com/cooling/electric-fan.htm
1.35m^3/sec.

Biggest factory roof exhaust fan I can find: industrialfansdirect.com/IND-FA-R-M/LFI-RTA48T10750.html
18,000 cfm = 35/60 m^3/s = 0.5 m^3/s

You'd need a lot of these! That much heat cannot be vented without rows of vents and heavy-duty fans driving each one, or a cooling tower!

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Yeah. I have not verified the calculations, I'm running seat-of-the-pants here. A megawatt is the equivalent of over 650 1500 watt routine electric space heaters. This was not a very large warehouse, You did not give the cubic footage, but obviously must have used it. The rear doors could have been open with the heat being blown out the back. It would have been quite warm outside the warehouse in the back. The necessary dissipation could have been reduced by endothermic product, but this would have require much product to be removed from the warehouse. As I have mentioned, the "secrecy" wall would have tended to inhibit this, but nobody has reported seeing any ventilation equipment at all. The reactor was operating, supposedly, 24/7.

It gets ridiculous. It is far simpler, legally, to ask Rossi how the heat was dissipated, under oath. I'm sure they have, or will. Rossi is quite accustomed to lying and misleading on his blog. I got to see that personally, with that silly affair of "kWh/h." If he tries this in court or in deposition process, they will nail him to the wall as an example for future generations.

Quote from IH Fanboy

No, don't be taken by all of the nonsense. It would require a single chimney with reasonable diameter to vent the heat. No venting of steam required since it was being condensed back to water. IH supposedly checked for heat coming from the roof, but we have no information of when, how often, what their readings were, etc. Just a claim. When I pressed on this some more, not a peep. So maybe they took their IR camera up on the roof one or two times. But the heat release through the ceiling was most likely intermittent anyway.

What I see here is that specific calculations are being rejected in favor of vague speculation. Sure. A single chimney. Of what dimensions? And would convection be enough or would forced air be necessary?

IH is not about to reveal what they have in store, outside of court process. So what IHFB "pressed" is irrelevant. Dewey Weaver is not IH, though he is an insider, basically a consultant and investor. Dewey hinted at IR evidence. I am not depending on that, though I generally trust him and everything he has written -- as to fact, distinct from conclusory statements -- has, so far, checked out.

"Intermittent"? The plant operated 24/7, supposedly. If emission is intermittent, where is the energy stored? Bottom line, the heat dissipation issue is not going away because someone says "you have not proven that a megawatt is impossible."

It is quite possible to handle a megawatt, even easy. The problem is that it would take very visible measures, unless something drastic were done to hide them, and why would one want to hide them?

This is all grasping at straws, desperate to preserve the possibility that the Plant actually generated a megawatt. This would be normal debate process, some of us are trained to "never say die." I.e., never to admit error or that one might have been backing some error. There can be a value to persistence, but it also can be fatal.

My oldest son was about twelve years old, walking in the San Cristobal mountains of New Mexico with a friend about the same age. My son said, "Watch out! That's poison oak!" His friend said, "No, it isn't." My son said "It is." And his friend said, "I know this isn't poison oak!" and he rubbed his face with it, "See!"

He did not die and he did not go blind, but he was hospitalized for days, temporarily blind (and in pain) because of how badly his face had swollen up. Maybe that's a great lesson to learn when one is twelve. Better then than later. Some of us did not have that opportunity.

What THH asserted is very ordinary reasoning. For starters, it would be useful to recognize that. That is not the same as giving up, it is just recognizing the appearance of things.

At this point, all the evidence we have indicates the lack of adequate cooling. That is rebuttable, but if it is not rebutted, it is going to stand. I doubt that this issue could lead to Summary Judgment (though maybe ....) But at trial, the absence of a plausible means of dissipating the heat is easy to show to a jury, it does not require extensive technical expertise. Just remember, over 650 1500 watt space heaters....

Quote from IH Fanboy

You make the same mistake as Jed and assume that the heat would be openly dissipated into the factory interior, and then attempted to be blown out. Who would do that?

Those who readily accuse others of mistakes would do well to consider their own position carefully.

When IH first amended their answer, they added Exhibit 26, which is two photographs of the warehouse roof interior, over the power plant container, plus one of the "customer area," showing the customer area, and including the roof over it.

If I were there photographing the warehouse for the possibility of an upcoming lawsuit -- and IH knew this was coming, it is rather obvious -- I would have taken many photos so that every part of the roof was visible, and every part of the room that I had access to. Easy to do, and video might have been used. The full set of photos would not be published as an Exhibit at this point, just enough to establish the point, not to nail it down completely and with no room for doubt. At this point, it is quite enough to establish a claim.

What can be seen of the customer area establishes a ready presumption that heat generated in the customer area would be going into the warehouse interior, there is no duct work or other visible sign of measures for conducting heat. We can imagine that the heat is going down the drain, and this has been explored by some. Bottom line, impractical and probably quite expensive! Now, it could also be claimed that the cooling equipment was removed, but when? And why? (we don't know when those photos were taken).

Removal of the duct work would still leave a trace of the venting, the chimney.

No, this is Occam's Razor. No provision was installed for handling a megawatt of power. Rossi's first answer on this question on his blog was "endothermic chemical reaction," which is implausible because of the need to deal with product. A whole lot of product, and issues of efficiency limit this. If the "endothermic reaction" was melting ice, it could handle all the power efficiently, but ... ice is expensive and a lot would have to be delivered. The water, though, could go down the drain.

Realistic endothermic commercial chemical process is very unlikely to be anywhere near as efficient as melting ice (that is actually 100% efficient, so it could provide a measure of how much "product" would have to be moved), and, again, why? Because the chemical process would not necessarily be 24/7 -- there would be process shutdown -- there would have to be a means of dissipating the full megawatt on hand, even if endothermy normally handled it. This then takes us back to Occam's Razor.

No provision was made for power dissipation because Rossi knew that there was no power like that. Or, again, a simple possibility: he's crazy. It did not enter his head at all, that there was any problem. He happily looked at his measures -- ones known since 2011 to be defective -- and saw a megawatt and it made him happy.

Truly remarkable, if Rossi told the truth: Penon claimed it was "not necessary" to look at the customer area. I.e., it was "not necessary" to have any check or verification of his personal judgments. "Nuclear engineer"? No nuclear power plant depends on the expertise of a single person. Everything is checked and double-checked and triple-checked and tested and validated. Any engineer that thought it unnecessary to have his own work checked would not survive as a "nuclear engineer."

I'm going to agree with Jed. Penon was incompetent at best and possibly deliberately fraudulent. There is a high possibility that he will not be found, that he will hide and avoid service of process.