Case 3:21-cv-01881-JAH-WVG Document 1-2 Filed 11/05/21 PageID.8 Page 1 of 16
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`EXHIBIT A
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`S U M M O N S
`(CITACION JUDICIAL)
`
`NOTICE TO DEFENDANT:
`(AVISO AL DEMANDADO):
`
`ADVANCED TEAR DIAGNOSTICS, LLC, a Delaware limited liability company [see Attachment]
`
`YOU ARE BEING SUED BY PLAINTIFF:
`(LO ESTA DEMANDANDO EL DEMANDANTE):
`
`INNOVATIVE MEDICAL SUPPLIES, LLC, a California limited liability company
`
`I
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`FOR COURT USE ONLY
`(SOLO PARA USO DELA CORTE)
`
`ELECTRONICALLY FILED
`SLfperier Court of Califemia.
`Cotlrrty tf San nieg•
`
`O7j271202'1 at S3:a8:r7 Ptvi
`Clerk of the Superier COurt
`Sy Fyiplissa lraldez,§eputy CIcrH:
`
`NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information
`
`You have 30 CALENDAR DAYS after this summons and legal papers are served on you to fi!e a written response at this court and have a copy
`served on the p!aintifP. A letter or phone call will not protect you. Your written response must be in proper [egal form if you want the court to hear your
`case. There may be a court form that you can use for your response. You can find these court forms and more information at the California Courts
`Online Self-Help Center (www.courtinfo.ca.gov/selfhelp), your county law library, or the courthouse nearest you. If you cannot pay the fi!ing fee, ask the
`court c!erk for a fee waiver form. If you do not fi!e your response on time, you may lose the case by defau!t, and your wages, money, and property may
`be taken without further warning from the court.
`There are other !ega[ requirements. You may want to call an attorney right away. If you do not know an attorney, you may want to call an attorney
`referral service. If you cannot afford an attorney, you may be e!igib!e for free legal services from a nonprofit legal services program. You can locate
`these nonprofit groups at the California Legal Services Web site (troww.lawhelpcalifomia.on3), the California Courts On[ine Self-Help Center
`(www.courtinfo.ca.gov/selfhelp), or by contacting your local court or county bar association. NOTE: The court has a statutory lien for waived fees and
`costs on any sett!ement or arbitration award of $10,000 or more in a civil case. The court's lien must be paid before the court will dismiss the case.
`iAVISO! Lo han demandado. Si no responde dentro de 30 dias, la corte puede decidir en su contra sin escuchar su versibn. Lea la informacion a
`continuacidn.
`Tiene 30 DIAS DE CALENDARIO despues de que le entreguen esta citacion y papeles lega/es para presentar una respuesta por escrito en esta
`corte y hacer que se entregue una copia al demandante. Una carta o una llamada telefonica no lo protegen. Su respuesta por escrito tiene que estar
`en formato legal correcto si desea que procesen su caso en la corte. Es posible que haya un formulario que usted pueda usar para su respuesta.
`Puede encontrar estos formularios de la corte y mas informacion en el Centro de Ayuda de las Cortes de California (www.sucorte.ca.gov), en la
`biblioteca de leyes de su condado o en /a corte que le quede mas cerca. Si no puede pagar la cuota de presentaci6n, pida al secretario de la corte que
`le de un formulario de exencion de pago de cuotas. Si no presenta su respuesta a tiempo, puede perder el caso por incumplimiento y la corte le podri
`quitar su sueldo, dlnero y bienes sin mas advertencia.
`Hay otros requisitos legales. Es recomendable que Ilame a un abogado inmediatamente. Si no conoce a un abogado, puede Ilamar a un servicio de
`remision a abogados. Si no puede pagar a un abogado, es posible que cumpla con /os requfsftos para obtener servicios legales gratuitos de un
`programa de servicios legales sin ffnes de lucro. Puede encontrar estos grupos sin rines de lucro en el sitio web de Califomia Legal Services,
`(wtrow.lawhelpcalifomia.org), en el Centro de Ayuda de las Cortes de Califomia, (tnnvw.sucorte.ca.gov) o poniendose en contacto con la corte o el
`colegio de abogados loca/es. AVISO: Por ley, la corte tiene derecho a reclamar las cuotas y los costos exentos por imponer un gravamen sobre
`cualquier recuperacidn de $10,000 o mas de valor recibida mediante un acuerdo o una conceslon de arbitraje en un caso de derecho civil. Tiene que
`pagar el gravamen de la corte antes de que la corte pueda desechar el caso.
`The name and address of the court is:
`(EI nombre ydireccion de la corte es):
`
`CASE NUMBER: (Numero del Caso):
`37-2021-0t10?20u0-CU-FR-CTL
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`San Diego Superior Court, Hall of Justice, 330 W. Broadway, San Diego, CA 92101
`
`The name, address, and telephone number of plaintiffs attorney, or plaintiff without an attorney, is: (EI nombre, la direccion y el n(imero
`de telefono del abogado del demandante, o del demandante que no tiene abogado, es):
`Benjamin Galdston, Esq., OMNUM LAW APC, 9333 Genesee Avenue, Suite 110, San Diego, CA 92121; Tel: (858) 539-9767
`DATE:
`07/2*~2021
`~~~~~
`Clerk, by
`(Fecha)
`(Secrefario)
`M. Valdez
`(For proof of service of this summons, use Proof of Service of Summons (form POS-010).)
`(Para prueba de entrega de esta citation use e! formulario Proof of Service of Summons, (POS-010)).
`IsEAL]
`NOTICE TO THE PERSON SERVED: You are served
`
`Deputy
`(Adjunfo)
`
`va ~'
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`; Qy •~ t ,~;
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`;#.
`i _ ~ ~
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`1.
`2.
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`3.
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`4.
`nred
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`0
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`as an individual defendant.
`as the person sued under the f[ctitious name of (specify):
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`xx on behalf of (specify):
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`under: =
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`Advanced Tear Diagnostics, LLC, a Delaware limited
`Ilablllt com an
`Y
`p Y
`CCP 416.10 (corporation)
`CCP 416.60 (minor)
`CCP 416.20 (defunct corporation)
`CCP 416.70 (conservatee)
`CCP 416.40 (association or partnership)
`CCP 416.90 (authorized person)
`Limited Liabilit Com an California Cor oration Code 17061
`xx other (specify):
`P Y -
`P
`Y
`by personal delivery on (date): ~~~,pZt
`
`Pa e1of1
`Code of Civil Procedure §§ 412.20• 465
`www.courts.ca.gov
`
`SU MMONS
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`
`
`Form Adopted for Mandatory Use
`~l
`Judicial Council of California
`Titne Served: ~ ~j
`SUM-100 [Rev. July 1, 20~09
`lll"
`,
`(
`For your protection( ~~Wfibjr,~ase p"re
`ss the Clear
`This Form button after you have printed the form.
`
``~
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`] ,
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`Print thlS fOrrll ,_[ Save this form
`
`j Clear this form
`
`

`

`SHORT TITLE:
`INNOVATIVE MEDICAL SUPPLIES, LLC v. ADVANCED TEAR DIAGNOSTICS, LLC
`
`CASE NUMeER:
`37-2Oi1-00032GOg-CU-FR-CTL
`
`SUM-200 A
`
`INSTRUCTIONS FOR USE
`-~ This form may be used as an attachment to any summons if space does not permit the listing of all parties on the summons.
`-~ If this attachment is used, insert the following statement in the plaintifF or defendant box on the summons: "Additional Parties
`Attachment form is attached."
`
`List additional parties (Check only one box. Use a separate page for each type of party.):
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`0
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`Plaintiff
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`0
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`Defendant
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`0
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`Cross-Complainant
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`0
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`Cross-Defendant
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`MARCUS W. SMITH, an individual
`And
`DOES 1-5
`
`Form Adopted for Mandatory Use
`Judicial Council of California
`SUM-200(A) [Rev. January 1, 2007]
`For your protection and privacy, please press the Clear
`This Form button after you have printed the form.
`
`ADDITIONAL PARTIES ATTACHMENT
`Attachment to Summons
`_
`_
`Print thiS fOrm
`- --
`_
`----_ _
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`Save this form
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`Page
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`2
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`of
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`Page 1 of 1
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`ELECTFk:0r4ICALLY FILED
`SLIperior Ct+Urt Of' s_alifornia,
`Ci OLinty of ;an Giego
`07127,2021 at iG3:5t :s 7 PI'MI
`Clertr; of tl-ie SLiPerin-r Cntirt
`Ey I'ailelissa tiA. Ide.-t,Oje{atrEy Clerk
`
`BenJ amin Galdston P N 211114)
`OMNUM LAW AP
`9333 Genesee Avenue, Suite 110
`San Diego, California 92121
`Tel.: (858) 539-9767
`
`Counsel for Plaintiff
`
`SUPERIOR COURT FOR THE STATE OF CALIFORNIA
`
`COUNTY OF SAN DIEGO
`
`INNOVATIVE MEDICAL
`SUPPLIES, LLC, a California
`limited liability company,
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`Plaintiff,
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`V.
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`ADVANCED TEAR
`DIAGNOSTICS, LLC, a Delaware
`limited liability company, and
`MARCUS W. SMITH, an
`individual;
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`And DOES 1-5,
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`Defendants.
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`Case No.: 37-202 1-00032~700- C LI- F F,- i1TL
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`COMPLAINT FOR:
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`I FRAUD;
`2 CONSPIRACY TO DEFRAUD;
`3 MONEY HAD AND
`RECEIVED;
`4 CONVERSION;
`5 ACCOUNTING; and
`6 UNJUST ENRICHMENT/
`CONSTRUCTIVE TRUST
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`TURY TRIAL DEMANDED
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`COMPLAINT
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`1
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`2
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`3
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`4
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`5
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`6
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`25
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`28
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`

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`1
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`TABLE OF CONTENTS
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`Pa e s I
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`II
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`111.
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`INTRODUCTION ...........................................................................................1
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`THE PARTIES ................................................................................................2
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`A.
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`Plaintiff ...................................................................................................2
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`B. Defendants ..............................................................................................2
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`I III.
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`JURISDICTION AND VENUE ......................................................................3
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`I IV. FACTUAL ALLEGATIONS ..........................................................................3
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`2
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`3
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`4
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`5
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`6
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`8
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`9
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`10
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`11
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`121
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`13 I
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`I V.
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`141
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`A.
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`B.
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`IMS Agrees to Help ATD Commercialize and Sell
`Its TearScan 300 Ophthalmic Testing System .......................................3
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`IMS Advances ATD Nearly $300,000 and Defendants
`Promise IMS Equity Interest Units in ATD ...........................................4
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`C.
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`IMS Contributes Hundreds of Labor Hours to ATD ..............................5
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`CAUSES OF ACTION ....................................................................................6
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`FIRST CAUSE OF ACTION
`Fraud — Against Defendants ATD and Smith ..................................................6
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`,
`SECOND CAUSE OF ACTION
`Conspiracy to Defraud — Against Defendants
`ATD and Smith and DOES 1-5 .......................................................................7
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`THIRD CAUSE OF ACTION
`Money Had and Received — Against Defendants ATD
`and Smith and DOES 1-5 ................................................................................8
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`FOURTH CAUSE OF ACTION
`Conversion — Against Defendants ATD and Smith and DOES 1-5 ................8
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`FIFTH CAUSE OF ACTION
`Accounting — Against Defendants ATD and Smith ........................................9
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`SIXTH CAUSE OF ACTION
`Unjust Enrichment/Constructive Trust —
`Against Defendants ATD and Smith .............................................................10
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`VI.
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`PRAYER FOR RELIEF ................................................................................11
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`VII. DEMAND FOR JURY TRIAL .....................................................................11
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`COMPLAINT
`i
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`15
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`16
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`17
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`18
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`19 I
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`20 I
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`21 I
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`22
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`25
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`26
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`27
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`28
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`

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`1
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`Plaintiff INNOVATIVE MEDICAL SUPPLIES, LLC ("Plaintiff ' or "IMS"),
`2 by and through its attorney, alleges the following based upon personal knowledge as
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`3
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`to allegations concerning itself and upon information and belief, including the
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`4 ~ I investigation of its counsel, as to all other allegations against Defendants
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`5 11 ADVANCED TEAR DIAGNOSTICS, LLC ("ATD") and MARCUS W. SMITH
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`6 ~ I("Smith" and, together with ATD, each a"Defendant" and collectively the
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`7 ~ I "Defendants"):
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`8
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`I.
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`INTRODUCTION
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`~!l
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`1.
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`This action arises from Defendants' scheme to defraud Plaintiff IMS in
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`10 connection with a joint venture to commercialize ATD's medical device product, an
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`11 FDA-cleared ophthalmic diagnostic system used to test and diagnose various dry-
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`12 I I eye conditions.
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`13
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`2.
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`Since January 2019, Plaintiff IMS has been the sole authorized
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`14 II distributor for Defendant ATD's "TearScan 300" device and related testing
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`15 I products. Plaintiff IMS also is a joint venturer with Defendant ATD, having
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`16 advanced nearly $300,000 and devoted hundreds of labor hours to help Defendants
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`17 overcome certain logistical and supply-chain challenges during the recent pandemic.
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`lm
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`3.
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`Unbeknownst to Plaintiff IMS, Defendant ATD and its President and
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`19 I Chief Executive Officer, Defendant Smith, did not use IMS's funds for their agreed-
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`upon purpose. Instead, Defendant Smith stole IMS's money and apparently used it
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`21 for personal expenditures and other projects unrelated to the parties' joint venture.
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`22 Moreover, it is now evident that Defendants never intended to act in good faith in
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`23 the joint venture. Defendants exploited Plaintiff's labor so that ATD could sell all
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`24 rights to its TearScan 300 testing system to the highest bidder.
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`25
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`4.
`As a result of Defendants' fraudulent scheme, Plaintiff IMS has
`26 I suffered more than $280,000 in out-of-pocket losses and lost over $5 inillion in net
`27 profits projected through January 2023 alone.
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`28
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`COMPLAINT
`1
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`

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`1 II. THE PARTIES
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`2
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`3
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`4
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`5
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`6
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`7
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`A.
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` Plaintiff
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`5.
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`Plaintiff IMS is a California limited liability company and medical
`supplies distributor. Founded in 2017, Plaintiff IMS is headquartered and maintains
`its principal place of business in San Diego, California.
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`B.
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`6.
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`I)efendants
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`Defendant ATD is a Delaware limited liability company. ATD's
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`8 headquarters and principal place of business is located at 1500 1 st Avenue North,
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`9 Suite B 108, Birmingham, Alabama. Among other things, ATD developed the
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`10 TearScan 300 point-of-care lab testing system used to test and diagnose dry-eye
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`11 conditions.
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`12
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`7.
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`Defendant Smith is the President and Chief Executive Officer of ATD.
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`13
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`I Defendant Smith is a resident of the State of Alabama.
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`14
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`8.
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`The true names and capacities of Defendants DOES 1-5, inclusive, are
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`15 unknown to Plaintiff, who therefore sues said Defendants by such fictitious names.
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`16 Plaintiff is informed and believes and thereon alleges that each Defendant designated
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`17
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`herein as a fictitiously nained Defendant is in some manner responsible for the
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`events and happenings herein referred to, either contractually or tortiously, and
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`19 caused the damage to the Plaintiff as herein alleged. When Plaintiff ascertains the
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`20
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`true names and capacities of DOES 1-5, inclusive, Plaintiff will ask leave of this
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`21 Court to amend this complaint by setting forth the same.
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`22
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`23
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`9.
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`Plaintiff is informed and believes, and on that basis alleges, that at all
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`times mentioned herein, one or more of each named and/or unnamed Defendants
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`24 were in some fashion, by contract or otherwise, the co-conspirators, agents, partners,
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`25
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`successors, assigns, joint ventures, or co-ventures of one or more of the remaining
`26 named and/or unnamed Defendants, and as hereinafter alleged, were acting within
`that capacity.
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`27
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`28
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`COMPLAINT
`2
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`1
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`2
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`III. JURISDICTION AND VENUE
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`10. This Court has jurisdiction over Defendant ATD because it is
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`3 authorized to, and does in fact, conduct business in California.
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`4
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`5
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`11. This Court has jurisdiction over the Defendants because they each have
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`intentionally availed themselves of the benefits of California such that California
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`6 can exercise personal jurisdiction over them.
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`7
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`12. Venue is proper in this judicial district because Defendants transact
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`8 business in San Diego County and a substantial part ofthe events or omissions which
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`9 gave rise to the claims asserted herein occurred in San Diego County.
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`10
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`11
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`12
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`13
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`14
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`IV. FACTUAL ALLEGATIONS
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`A.
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`IMS Agrees to Help ATD Commercialize and
`Sell Its TearScan 300 Ophthalmic Testing System
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`13.
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`In 2017, ATD coinpleted development of
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`its TearScan 300
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`immunoassay system, which consists of an automated colorimetric photometer
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`15
`("reader") and two FDA marlcet cleared point-of-care quantitative diagnostic
`16 ophthalmic lab tests to detect and measure in patient tear samples: (i) Lactoferrin;
`17 and (ii) Immunoglobulin E("IgE"). Low levels of Lactoferrin indicate inadequate
`18 glandular tear production. High levels of IgE indicate an active ocular allergy. The
`19 TearScan 300 system is the only FDA cleared point-of-care lab testing system for
`20 use in diagnosing and treating dry eye conditions. ATD also intended to develop and
`21 bring to market additional tests and systems to diagnose and treat other ocular
`22
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`surface disorders.
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`23
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`14. ATD, however, lacked the sales and distribution infrastructure and
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`24 other expertise necessary to commercialize the TearScan 300 and subsequently
`25 developed products. In response, IMS was formed in 2017 as a medical device
`26 distributor to help Defendant ATD manufacture, sell and distribute the TearScan 300
`27
`testing system and other products.
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`28
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`COMPLAINT
`~ ~
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`

`

`1
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`3
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`15.
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`Since 2017, the two companies have worlced closely to bring the
`2 TearScan 300 testing systein to marlcet. Among other things, IMS has been
`instrumental in identifying, vetting and securing suitable suppliers for the various
`4 components used in the TearScan 300 testing system. IMS has also advanced funds
`5 and provided scores of labor hours to support ATD and the parties' joint effort to
`6 bring the TearScan 300 testing system to marlcet.
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`7
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`16.
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`In January 2019, ATD and IMS executed a distributor agreement that,
`8 among other things, appointed IMS as the exclusive independent distributor for the
`9 TearScan 300 testing system for certain states and "big box" retailer eye centers, and
`10 also granted IMS non-exclusive distribution rights in other territories.
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`11
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`12
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`B.
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`IMS Advances ATD Nearly $300,000 and Defendants
`Promise IMS Equity Interest Units in ATD
`
`13
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`17. As of March 2019, ATD laciced sufficient capital to manufacture and
`14 deliver to IMS the TearScan 300 testing systems that IMS projected its customers
`15 would order. Defendants asked IMS, as its joint venturer, to advance funds so that
`16i ATD could purchase the components from suppliers necessary to manufacture and
`17 I deliver the TearScan 300 testing systems. Defendants promised IMS that ATD
`18, would repay or credit the funds and also deliver equity interests in the form of
`19 certificated securities— or four "units"— in ATD worth at least $252,000 at the time
`20 of issuance.
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`21
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`18.
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`IMS agreed to ATD's request for worlcing capital and, in reliance on
`22 ATD's promises, advanced the following amounts between March 2019 and March
`23
`2020:
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`24
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`25
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`26
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`27
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`28
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`DATE
`03/11/19
`06/10/19
`06/10/19
`08/08/19
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`AMOUNT
`$12,833
`$37,167
`$666
`$44,000
`
`PURPOSE
`20 Readers lst a ment)
`20 Readers 2nd a ment)
`20 Readers 3rd a inent
`4,000 Lactoferrin cassettes lst a ment
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`COMPLAINT
`4
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`

`

`
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`1
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`2
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`3
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`4
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`5
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`6
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`7
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`8
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`9
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`10
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`11
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`12
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`13,
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`14
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`15
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`16
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`17
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`18
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`19
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`20
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`21
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`22
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`23
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`24
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`25
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`26
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`27
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`28
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`DATE
`09/27/19
`09/30/19
`10/25/19
`11/01/19
`01/13/20
`02/11/20
`03/13/20
`05/14/20
`11/23/20
`03/09/20
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`
`AMOUNT
`$15,000
`$15,000
`$7,500
`$7,500
`$38,920
`$15,000
`$20,000
`$20,000
`$38,000
`$9,000
`$280,586 TOTAL
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`PURPOSE
`4,000 Lactoferrin cassettes 2nd a ment
`4,000 Lactoferrin cassettes (3rd a ment
`4,000 Lactoferrin cassettes (4th a ment)
`4,000 Lactoferrin cassettes (5th a ment)
`3,500 I E cassettes (lst a ment)
`3,500 I E cassettes (2nd a ment)
`3,500 I E cassettes 3rd a ment
`3,500 I E cassettes 4th a ment
`Mold for test cassettes
`GenPriine De osit
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`19. To date, ATD has failed to repay any of the funds advanced by IMS or
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`deliver the promised equity interest securities or "units" in ATD. Moreover, despite
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`IMS's repeated requests, ATD has refused to provide an accounting for the funds
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`advanced by IMS.
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`C.
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`20.
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`IMS Contributes Hundreds of Labor Hours to ATI)
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`In January 2020, IMS began accepting orders for the TearScan 300
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`testing system from customers. By March 2020, in reliance on ATD's promise to
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`deliver their ordered TearScan 300 testing systems, IMS's customers began
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`obtaining their FDA required CLIA certifications—typically, a 30- to 60-day
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`process—to be authorized to administer the TearScan 300 tests.
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`21. However, beginning in March 2020, ATD began to experience
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`temporary supply chain disruptions due to the global coronavirus pandemic. For
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`example, the TearScan 300 reader previously was manufactured in Germany. When
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`the manufacturer temporarily shut down due to the pandemic, IMS identified a new
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`manufacturer, GenPrime, located in the United States. This manufacturer provided
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`a superior reader unit, at a lower per-unit cost, and avoided the shipping costs and
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`delays, as well as customs duties, associated with the prior German manufacturer.
`Similarly, ATD's testing cassettes previously were manufactured in
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`22.
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`Taiwan and supplied through a New York distributor. The Taiwanese manufacturer
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`COMPLAINT
`5
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`

`

`1
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`5
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`7
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`temporarily ceased operations and the New York distributor went out of business in
`2 or around March 2020. In response, IMS commissioned a new mold at a cost of
`3 $38,000, advanced by IMS, with a domestic manufacturer. As with the reader, the
`4 new U.S. cassette manufacturer provided a superior coinponent product at a
`significantly lower cost without the added costs and delays of foreign manufacturers.
`6 As but another example, IMS's CEO flew to Birmingham, Alabama, and spent more
`than a weelc helping ATD to assemble and package test cassettes. IMS's CEO
`subsequently drove those cassettes back to San Diego to be ready for delivery to
`IMS customers once the remaining TearScan 300 testing system components were I
`10 available.
`
`8
`
`9
`
`11
`
`12
`
`13
`
`23.
`
`In total, IMS contributed hundreds of labor hours and incurred
`
`thousands of dollars in out-of-pocket costs (not accounted for in the "advanced
`funds" described above) to help ATD overcome supply chain and related issues.
`
`14 These effoi-ts have benefited ATD by, among other things, reducing costs and lead
`times, thus increasing profitability and supply chain efficiency.
`
`15
`
`16 V.
`
` CAUSES OF ACTION
`
`17
`
`18
`
`19
`
`20
`
`21
`
`FIRST CAUSE OF ACTION
`Fraud
`Against Defendants ATD and Smith
`
`24. Plaintiff hereby incorporates the above allegations by reference as
`I though fully set forth herein.
`
`25. Defendants knowingly made false representations to Plaintiff and made
`22 '
`23 promises without any intent to perform on the promises when Defendants solicited
`funds, requested assistance and made promises to repay IMS and provide IMS with
`24
`25 "units" evidencing IMS's equity interests in ATD.
`26. Plaintiff justifiably relied on Defendants' representations and promises
`that Plaintiff would be repaid monies advanced to ATD and compensated for time,
`
`26
`
`27
`
`28
`
`COMPLAINT
`6
`
`

`

`1 work and out-of-pocicet costs in the form of "units" evidencing equity interests in
`
`2 ATD. Consequently, at the time of Defendants' representations and promises,
`
`3 Plaintiff had no reason to suspect that Defendants did not intend to honor their
`
`4 agreements and promises.
`
`5
`
`27. To date, Defendants have not repaid IMS or delivered the promised
`
`6 equity interest "units" in ATD.
`
`7
`
`28. As a direct and proximate result of Defendants' breaches, Plaintiff has
`
`8 been harmed and suffered damages.
`
`9
`
`29.
`
`In doing these acts, Defendants acted with oppression, fraud, or malice
`
`10 as defined by California Civil Code Section 3294(c), and Plaintiff is therefore
`
`11 entitled to punitive and/or exemplary damages under California Civil Code Section
`
`12 3294.
`
`13
`
`14
`
`15
`
`16
`
`17
`
`SECOND CAgJSE OF ACTION
`Conspiracy to Defraud
`Against Defendants ATD and Smith and DOES 1-5
`
`30. Plaintiff hereby incorporates the above allegations by reference as
`
`though fully set forth herein.
`
`31. Defendants were each aware that the others were committing fraud,
`
`19
`
`including against Plaintiff. As alleged above, Defendants and DOE Defendants 1-5
`
`20 were aware that Defendants ATD and Smith were soliciting funds, time and labor
`
`21
`
`from Plaintiff and that Plaintiff expected to be repaid, compensated, and receive
`
`22 equity interest "units" in ATD.
`
`23
`
`24
`
`32. To date, Defendants have not repaid or compensated IMS, or delivered
`
`the promised equity interest "units" in ATD.
`
`25
`
`33. As a direct and proximate result of Defendants' breach, Plaintiff has
`26 been harmed and suffered damages.
`
`27
`
`28
`
`COMPLAINT
`7
`
`

`

`1
`
`3
`
`34.
`
`In doing these acts, Defendants acted with oppression, fraud, or malice
`2 as defined by California Civil Code Section 3294(c), and Plaintiff is therefore
`entitled to punitive andlor exemplary damages under California Civil Code Section
`4 13294.
`
`5
`
`6
`
`7
`
`THIRD CAUSE OF ACTION
`Money Had and Received
`Against Defendants ATD and Smith and DOES 1-5
`
`35. Plaintiff hereby incorporates the above allegations by reference as
`8
`9 I though fully set forth herein.
`36. Defendants have received money in an amount of at least $280,586 that
`10
`11 was intended to be held by Defendants ATD and Smith for the benefit of Plaintiff
`12 Iand used to advance the parties' joint venture.
`37. The money that Defendants received was not used for the benefit of
`13
`14 Plaintiff or to advance the parties' joint venture, and Defendants have not repaid the
`15 money to Plaintiff. Plaintiff understands that Defendants ATD and Smith used
`16 Plaintiffs' funds for other purposes and for the sole benefit of Defendants ATD and
`17 Smith.
`38. Accordingly, Plaintiff is entitled to recover the inoney that was received
`18
`19 I by Defendants plus interest at the legal rate.
`FOURTH CAUSE OF ACTION
`20 I
`Conversion
`Against Defendants ATD and Smith and DOES 1-5
`
`21
`
`22
`
`23
`
`24
`
`39. Plaintiff hereby incorporates the above allegations by reference as
`
`though fully set forth herein.
`
`40. Defendants have received money in an amount of at least $280,586 that
`25
`26 was intended to be held by Defendants ATD and Smith for the benefit of Plaintiff
`27 and used to advance the parties' joint venture.
`
`28
`
`COMPLAINT
`8
`
`

`

`1
`
`41. The money that Defendants received was not used for the benefit of
`2 Plaintiff or to advance the parties' joint venture, and Defendants have not repaid the
`3 money to Plaintiff. Plaintiff understands that Defendants ATD and Smith used
`4 Plaintiffs' funds for other purposes and for the sole benefit of Defendants ATD and
`
`5
`
`6
`
`I Smith.
`
`42. Plaintiff has made numerous demands on Defendants for an accounting
`
`7 of those funds and has also made nuinerous deinands on Defendants for repayment
`
`8 of those funds, to no avail.
`
`9
`
`43. Defendants have wrongfully and without authorization assumed control
`
`10 and ownership over the funds and refused to provide them to Plaintiff.
`
`11
`
`44. As a direct, foreseeable, and proximate result of Defendants'
`
`12 conversion of Plaintiff's funds, Plaintiff has been damaged in an ainount to be
`
`13 proven at trial.
`
`14
`
`15
`
`16
`
`17
`
`FIFTH CAUSE OF ACTION
`Accounting
`Against Defendants ATD and Smith
`
`45. Plaintiff hereby incorporates the above allegations by reference as
`
`18 I though fully set forth herein.
`
`19
`
`46. Defendants have received money in an amount of at least $280,586 that
`
`20 I was intended to be held by Defendants ATD and Smith for the benefit of Plaintiff
`
`21 and used to advance the parties' joint venture. Plaintiff understands that Defendants
`
`22 ATD and Smith used Plaintiff's funds for other purposes and for the sole benefit of
`
`23 Defendants ATD and Smith.
`
`24
`
`47. The money that Defendants received was not used for the benefit of
`25 Plaintiff or to advance the parties' joint venture, and Defendants have not repaid the
`
`26 money to Plaintiff.
`
`27
`
`28
`
`COMPLAINT
`9
`
`

`

`48. Defendants have wrongfully and without authorization assumed control
`1
`2 I and ownership over Plaintiff's funds. Upon information and belief, Defendants have
`3 not used Plaintiff's advanced funds for their intended and agreed-upon purpose.
`
`4
`
`49. Plaintiff has made numerous demands on Defendants for an accounting
`
`5
`
`I of Plaintiff's advanced funds.
`
`6 I
`
`50. As a direct, foreseeable, and proximate result of the conversion of
`
`7 I Plaintiff's funds, Plaintiff has been damaged in an amount to be proven at trial.
`
`8
`
`9
`
`10
`
`11
`
`SIXTH CAUSE OF ACTION
`Unjust Enrichment/Constructive Trust
`Against Defendants ATD and Smith
`
`51. Plaintiff hereby incorporates the above allegations by reference as
`
`12 I though fully set forth herein.
`
`13
`
`52. Unjust enrichinent, or restitution, may be alleged where a defendant
`
`14 unjustly obtains and retains a benefit to the plaintiff's detriment, and where such
`
`15
`
`16
`
`17
`
`retention violates fundamental principles of equity, justice, and good conscience.
`
`53. Defendants are each holding funds that properly belong to Plaintiff.
`
`54. However, the funds owed to Plaintiff are now commingled with other
`
`18 ATD inonies or have been misused for other purposes that were not intended or
`
`19 agreed upon by the parties. Nevertheless, the funds are identifiable, and there is a
`
`20 direct change from the funds advanced by Plaintiff to ATD and subsequently
`
`21 diverted to the person or persons currently in possession of Plaintiff's money.
`
`22
`
`23
`
`55. Defendants have each received and retained a portion of Plaintiffs
`
`funds. Under principles of equity and good conscience, Defendants should not be
`
`24 permitted to retain any of Plaintiff s funds.
`
`56. Plaintiff seeks the imposition of a constructive trust on all money
`transferred to Defendants or, should Defendants lack sufficient funds, imposition of
`
`25
`
`26
`
`27
`
`28
`
`COMPLAINT
`10
`
`

`

`ll I a constructive trust over ATD assets of equivalent value. In the alternative, Plaintiff
`requests that all such sums should be disgorged.
`2
`
`3 VI. PRAYER F®R RELIEF
`Plaintiff prays for judgment against Defendants, and each of them, and the
`
`4
`
`5
`
`following remedies:
`A. Compensatory damages and other special, general and consequential
`7 damages according to proof.
`
`61
`
`8
`
`B.
`
`Punitive and exemplary damages.
`IZestitution and disgorgement of all profits and unjust enrichment that
`C.
`9
`10 Defendants have obtained as a result of their fraudulent conduct described herein.
`D. A constructive trust for the benefit of Plaintiff in an amount, or of ATD
`12 assets, equal to all funds advanced by Plaintiff totaling at least $280,586.
`E. An accounting from Defendants of all funds advanced by Plaintiff.
`
`11
`
`13
`
`14
`
`15
`
`16
`
`Pre judgment interest.
`F.
`G. Attorneys' fees and costs of suit to the extent permitted by law.
`Such other relief as the Court determines just and proper.
`H.
`
`17 I VII. DEMAND FOR JZJRY TRIAL
`Plaintiff requests a jury trial for all counts for which a trial by jury is permitted
`
`:
`
`19
`
`by law.
`
`20
`
`Date: July 27, 2021
`
`IZespectfully submitted,
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`~
`
`13y.
`Benjamin Ualels Qn\{~SBN 211114)
`®MNUM LAyV~~
`9333 Genesee Avenue, Suite 110
`San Diego, CA 92121
`Tel: (858) 539-9767
`Email: bgaldston@omnumlaw.com
`Counsel for PlaintiffInnovative Medical
`Supplies, LLC
`
`COMPLAINT
`11
`
`