Rossi v. Darden developments - Part 1

I am amazed that Rossi has not presented any evidence to support his assertion that what he did in FL was the GPT. No mention of phone calls, emails, signed agreements, nothing - zero. Nothing that would altered the requirements (of dates, 6 cylinder device, signed agreement…)

I have likely missed it but I find very little “evidence” offered by Rossi for any claims other than the unsigned agreement from his first filing and talk. Even his unsupported claims of Dameron not pointing out problems seem to support IH’s claims that they were not thinking of FL as the GPT until very very late and then the objected quite loudly and even issued a press release.

I am not a lawyer, but it sure doesn’t seem like he has a “snowball’s chance” – at least from what he has shown so far. I don’t think that a federal judge is going to take kindly to his no material evidence just talk approach.

Quote from Bob

You are correct that this could be taken different ways. The English language is often vague.
However, it would be sloppy of them to have made the mistake, but certainly possible. However,
several people have noticed and discussed that Rossi has been using Sock Puppets frequently on JONP,
so this kind of "fit the bill". But again, who knows? But again, I believe it highly unlikely that anyone
would hire "expensive" APCO to craft a few phrases. What would be the need or payback? Probably
very unlikely.

If this is referring to the sock puppets, it would be fairly typical of AR's MO. Strike first and accuse the mark of doing the very thing you've been doing all along. Sends up a cloud of smoke for confusion, and that by the time it clears, there is a new cloud of confusion.

yes, it sure looks like he will not win and, if it continues like this, end up with some major counter suits and potential loss.

My advice to Rossi is (I am not a lawyer however) is to put what is left of the 11 million in a suitcase and move to
Andorra where there is no extradition to the US.
And if he really has a working system to make it in Andorra and market it in the EU.

Quote from Shane D.

In their shoes, I would think his third party defendants (Johnson, Fabiani, Penon, Bass) are reading his every word, to see if he pulls a "wabbit" out of his hat and saves their butts. Looks like that is not going to happen, and they are left to defend themselves.

Instead, Penon gets thrown under the bus. But it's ok, because nobody can apparently find him to serve him. This refers not to the 1MW show, but the earlier show leading to money.

Quote

While Plaintiffs admit that a COP in excess of 10 was achieved during the validation test, Plaintiffs deny any inference that the measurement of the COP was made by the Plaintiffs. To the contrary, the COP measurements were made by the agreed upon third party Expert Responsible for Validation(“ERV”) and the measurement of a COP greater than 10 was reported by the ERV.

Rossi has spoken. We now have his case, in broad terms, and there is a whopper 'hidden' in the middle.

In the first part of his response, Rossi responds to IH's allegations. This is the longer section because IH put forth so many allegations.

Rossi's response in this first part can be summarized [edited by me, sigmoidal, to remove misattribution] as denying all alegations.

As such, there is not much to be learned in this first section.

The next section contains Rossi's affirmative defenses. This is where Rossi asserts his version of why IH is wrong. This is much more informative, as it reveals the case Rossi would try to make to a jury, should the case ever make it that far. Rossi makes 14 such affirmative defenses. I am not a lawyer, but nonetheless I've attempted to summarize them here as I understand them, and briefly opine on their merits. If you'd like to skip to the good part, see 4) below.

1) Voluntary payment. I understand this to essentially mean: "Since IH paid the 11.5 Million to Rossi voluntarily, it's Rossi's. IH doesn't have any basis for getting it back." This might be true if there were no violations of contractual terms, and if there were no fraud. However, IH laid out numerous contractual failings for the 10 million, at least. IH will have to prove breaches of contract, but if successful, I don't see how this defense can be successful for anything but the initial 1.5 million payment.

2)Estoppel, waiver and laches. Here Rossi claims that IH fraudulently induced him into the contract with no ability or intent to pay. This gets to the heart of Rossi's story. He's going to try to make the case that he was suckered into the deal assuming IH had the ability to pay. And he's going to try to make the case that the reason IH is counter suing him and making all these 'false claims' against him is that from the beginning, they never intended to pay, and in any case could not pay him. He then specifically gives an example regarding the 'secret sauce' and Rossi and Cook's scientific article.

This example regarding Cook's publication seems to me to be an absurd defense, since their agreement clearly assigned all rights to IH, limited Rossi on disclosure, while not limiting IH disclosure in any way.

He then claims estoppel, saying that IH understood that the 1 year test was indeed a GPT, behaved that way, and only objected at the end as part of their clever scheme since they never intended to pay.

No evidence to support this is provided.

3) Unclean Hands. IH "never had the means, nor the intention..." to pay. No evidence provided.

Although this seems like a weak defense, it might be the best one Rossi has. However, this is unlikely to succeed, because we know from their tax filings that they had (and presumably still have) 50 Million available. While not the full amount, given their history, it seems unlikely that a jury would conclude that they couldn't raise the additional 39 Million. Further, Rossi sued them before any payment could have been due, had his version of the story been true.

4) Ratification. Rossi states that "prior to agreeing to the Term Sheet, IH had knowledge as to the facts and circumstances to which they now complain".

This short and simple Affirmative Defense is actually the most interesting Affirmative Defense of them all!

Why? Because it shows us that he really is making the absurdly ridiculous assertion that the Term Sheet is the GPT agreement! Now we finally know for sure. He really is going to try to make this case that he rightfully should receive the 89 Million payment based on the Term Sheet. This is so informative because it reveals that there is no other document for a GPT! If there were another document, he would have certainly referred to it in this Affirmative Defense No. 4 (or elsewhere). But he doesn't. This is remarkable. I think this the clearest evidence yet that Rossi is insane. We know he himself presented this Term Sheet agreement as a "masterpiece" to IH when he created it - it seems he believed his own lies!

I think the Term Sheet as GPT agreement "speaks for itself" as Rossi (or Annesser) frequently says in this response. But it needed any further context, IH has provided it in their response and counter-claims.

5) Antecedent breach. IH demands for E-Cat licenses were made prior to final payment

I'm not sure how relevant this is, since there are no E-Cats to license or sell. In any case, the 10M payment was for the IP, with IH claiming Rossi didn't deliver, or didn't work (or both).

6) No 'certificate of authority' for a foreign corporation.

Now we're well into the "throw everything on the wall to see if anything sticks" territory.

7) Acquiescence. Reference 2 above.

ibid. Why try to make this point twice? I would think this makes Annesser look sloppy.

8 ) Judicial estoppel. IH asserts Leonardo lacks standing, but IH is suing Leonardo.

Well, maybe... But they're also suing Rossi individually. One or the other (or both) are getting sued.

9) Lack of Capacity. IPH has the rights, not IH.

Here is the defense we could anticipate from Rossi's Motions To Dismiss: IH is not IPH and can't bring suit.

More 'see what sticks' (SWS)?

10) Merger and Integration. More SWS

11) Failure to Mitigate Damages. Here we see Rossi alleging that IH did not take any steps to mitigate damage even though they "knew well before Feb 15, 2016 that Rossi and Leonardo could not achieve GPT"

This might be an effective defense if there was a credible signed GPT document. But now we know that Rossi is asserting that the Term Sheet IS the GPT agreement. Good luck with that! Also, in order for this defense to prevail, it would need to be true that 'Leonardo could not achieve GPT'. If this defense succeeds, isn't that a pyrrhic victory of sorts? I.e "You're wrong because you knew this GPT was a scam long ago". Maybe this is the Bob Dylan "If you ain't got nothin', you got nothin' to loose" defense.

12) Recoupment and Set Off. Argument to limit damages IH should receive from Rossi (if any) due to 'prior breaches' (by IH) of the license.

13) Modification. IH's 'conduct and oral agreements' agreed to a year-long test which they are now claiming breach and non-performance.

This seems like a repeat of 2) above. In any case, it confirms that there was no written GPT. This defense just confirms the most important information (Defense #4) regarding this entire response.

14) Promissory Estoppel. This sounds more like a summary then a new defense. It repeats defenses 2, 3, 4, 7, 11, and 13, some of which are repeats themselves (7, 13). To me this makes Annesser look flailing and clumsy.

Finally, there is information in what does NOT exist in the defenses. For instance, there is no allegation that IH accepted payment for any of the heat per the Term Sheet. If they had accepted payment, surely Rossi would have used this as evidence that they agreed to the Term Sheet. But he does not.

Abd postulated a Wabbit in order to make contingencies on conclusions, given the lack of information. Actually, I think he would agree that there are two wabbit contingencies: 1) A signed, valid GPT (not Term Sheet) is a definite wabbit; 2) A real JMP company using real heat to make a real product is another wabbit.

Of these, Abd argued, and I agree, that really the first is the only one that matters legally in this court case. What Rossi's response shows is that there is no wabbit #1. We don't really need to provide that contingency any more. Rossi has no hope of winning this case. At this point, it seems it's only a matter of how badly he loses the case (damages paid to IH).

From my perspective, we now know that Rossi has no realistic hope of prevailing in this legal action.

Wabbit #2 would be a nearly incomprehensible win for LENR and mankind generally.

Sadly, I believe this response by Rossi makes the probability of wabbit #2 existing at least an order of magnitude less likely than the already minuscule probability of before.

P.S. Abd, I for one, miss your commentary. It would be much higher quality than mine.

Nice work Sig - interesting observations and thoughts. I agree that LF is diminished without Abd's contributions to help everyone understand the complexities and nuances of the R v IH litigation. His combined counter-complaint / R answer was a lot of work and is useful in context. The LF community misses his color-commentary and counter to the Rossi remnant and bias that continues to infest this place.

Another striking observation that can now be made with R's answer is his apparent hanging of Johnson, Fabiani and Bass out to dry. He has been indirectly encouraging them to hang in there with him until he delivers an effective legal blow to IH with purported evidence. It is becoming clear that he does not have that evidence and it might soon be every man (including the woman) for himself on Planet Rossi. This tactic reminds me of Saddam's strategy when he told his divisions that their neighboring team is the one with the WMDs and to stand tall / fight. No such weapons existed then and that may apparently is the case for R as well. The legal / financial jeopardy continues to increase for Rossi, Johnson, Fabiani, Bass and Penon.

From Rossi's response, here is the entirety of Affirmative Defense No. 4

Quote

Affirmative Defense No. 4:

Counter-Plaintiffs’ claims are barred by the doctrine of ratification. Counter-Plaintiffs, prior to the selection of Fabio Penon as the ERV, and prior to agreeing to the Term Sheet, had knowledge as to the facts and circumstances to which they now complain. (DE 78: ¶ 8, 69 -71, 73-75). Despite having this knowledge Counter-Plaintiffs’ allowed Counter-Defendants to continue to conduct a year-long test of the E-Cat technology, knowing all along they were goingto use these same facts as an excuse not to fulfill their own contractual obligations.

As is obvious from my previous post, I find this reveals an astounding lack of evidence on Rossi's part. If he had any evidence, I would expect a response along the lines of:

"Doctrine of Ratification: Despite prior knowledge of the signed GPT agreement (see Exhibit XX), the terms of which were negotiated before commencement of the test (see Exhibit YY, containing drafts and email exchanges regarding the GPT agreement terms), Counter-Defendants complain and assert breach of contract (in IH's 3rd amended response DE 78: etc.), (which violates the Doctrine of Ratification)."

Instead, we have; "...prior to agreeing to the Term Sheet, [IH] had knowledge as to the facts and circumstances to which they now complain."

But the reference to IH's 3rd amended response, DE 78 ¶ 8, 69 -71,73-75 does not seem particularly helpful to Rossi's case. Here is the relevant excerpts from IH's response in line 71 and 75 (sentences 69, 70, 74 and 75 just deny Rossi's allegations and don't provide any other insight):

Quote

...73. Defendants note that there were many flaws in how the purported Guaranteed Performance test referenced in Paragraph 71 was performed. Several, but by no means all, of those flaws were identified in a document provided to Penon on March 25, 2016. A copy of this document is attached hereto as Exhibit 5.

And 75:

Quote

...75. Defendants deny that the test referenced in Paragraph 73 was the Guaranteed Performance to be performed under the License Agreement. Defendants state that Penon’s report speaks for itself, and therefore deny any allegations in Paragraph 73 inconsistent therewith. Defendants deny Plaintiffs’ allegations in Paragraph 73 regarding the amount of energy produced by the Plant during the testing period; see Ex. 1.

So Rossi is trying to make a defense that IH already knew that the purported GPT wasn't going to work, then references the section where IH denies that there even was any GPT agreement, documents the flaws in the 'test' (exhibit 5), and states that IH allowed the one year test to go on even though they had agreed to the Term Sheet. This seems like a contorted argument. And further, the Term Sheet Rossi references in Defense #4 (which is exhibit 17) says absolutely nothing about a GPT, any protocol, any minimum performance, etc.

The Term Sheet is an E-Cat rental agreement that states what rent payments would be made to IH (owner of the E-Cat) from JMP based on output, what personnel would be involved, and what rights of entry and protections (trade secret protection, insurance, revocation, etc.) IH had.

And then in defense 13, Rossi claims that IH engaged in "conduct and oral agreements with respect to the methodologies and actual equipment being tested", upon which they "now seek to their claims of both non-performance and breach". Again, this shows that Rossi is unable to cite any document to support his defense, and so asserts IH's 'conduct and oral agreements'.

Is the rationale behind this defense that IH is complaining about the non-performance and breach of a test that IH does not recognize as a test? I suppose this might be a defense against the counter-claim damages.

But as others have noted, Rossi's assertion that the one year test was an agreed upon GPT has no evidence to support it except 'Rossi says'.

Yes, it will be interesting to see if the judge decides there are 'facts' that need to be established by jury decision in order to rule on this case. I suspect that there are at least some disputed facts that, assuming no settlement, the judge would defer to jury trial. If so, this may take awhile.

Last I checked, I am definitely not Abd, but who knows what might happen in the future .

Seriously, to his credit, Abd (usually) tried to be far more objective than I when weighing arguments. That takes mental work that I'm too lazy to do, but it made his comments more interesting. (Occasionally he fell into grumpy old man mode - but who can blame him? I get grumpy and I'm not that old!)

I do take your comment as a compliment though.

In any case, in the short time I've been here and read responses by Abd and others, I've learned a lot.

I'm thankful for that.

Is it expected to provide proof of what you are writing in those kinds of legal documents?

Which of the "Penon" reports was written by someone else, then simply endorsed by Penon?

It sure seems like Rossi has nothing. He has supplied (to our knowledge) nothing that would support his assertion that the work in FL was the GPT. It seems like he would offer something. Dates of conversations, emails, signed agreements, agreement to delay the start of the testing,… something, anything.

What does Rossi have that shows an agreed to start date of Feb 20? There seems nothing in the record other than Rossi said on his blog that he was starting some long test without any mention of what kind of test. It clearly was not a test of his 6 cylinder device.

Then even if you think that he will pull out something that to hint that the FL testing was the GPT, there is nothing yet in the public records that Penon actually approved and “signed off” on the test as valid. There is also nothing in the records yet that show that Penon actually made the measurements required (measuring the heated fluid out of the device not cold water returned into the device, etc). It only appears that Rossi made the measurements and not Penon. That is the next fatal mistake that must be overcome and Penon is nowhere to be found to attest to the report and conclusion. My first question to him would be: did he personally make the measurements?

Rossi has lost this case even if he ever had any working device (which I doubt he had in FL).

I am not sure where right now, but I think that Rossi admitted that Penon was there in Fl only quarterly.

The agreement required the “ERV to measure” things like the heated fluid from the device. However, it appears that he did not take the measurements and instead it was Rossi that took the data and then gave it to Penon.

Perhaps he took data remotely via the net or something??? So far Penon’s reports and conclusions are not in evidence. Just some ideas about some possible testing of some unidentified device. That will be a very large problem for Rossi. Without Penon’s testimony or at least sworn statements, any reports may just be hearsay since there would be little to show a chain of evidence back to Penon.

My guess is it will just be another “Rossi says” this is Penon’s report and he actually took data as the ERV and represented it without question to IH each quarter as the GPT and not just a research testing of power production. Now if Rossi can show that Penon actually handed the reports to IH and they clearly are marked as GPT quarterly reports, then it might be different. But my guess is also that Rossi has no such evidence.

The next domino to fall will likely be Penon’s reports. Jed pointed out that Penon’s data showed excess heat and uniform temperatures (identical to previous days) even when the entire reactor was shut down for repairs. It will be interesting to question Penon if there is an error in his data or if Rossi’s claim of shutting down the reactor was the truth and how did he get the data for those days. My guess is that Penon’s “reports” where from whatever information Rossi gave him and Penon made no indication that they were for a GPT, at least not the early reports.

This is just one of many questions that will likely not be good for Rossi’s case. I can understand why Penon is hiding. Rossi’s friends will likely start “feeling the heat” (even if there was no heat produced in Fl).

Quote from sigmoidal

[Jesse] Jackson famously once said: "I deny the allegations, and I deny the alligator".

That was Amos and Andy, a famously racist program. If you meant that as a joke, it wasn't a bit funny.

@Shane D.,
One of the reports "authored" by Penon, long before the Doral diversion, was reported to be mostly authored by others (explaining away some sloppy part somewhere) and Penon merely signed the final version. This was discussed on the forum before, where the consensus was that if Penon officially signed the report, then he is essentially responsible for the content, warts and all, once he applies his name and professional status to it.

This seems relevant at this particular junction of the the Doral court case drama, no?