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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 1 of 8
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
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`EAGLE MOON HEMP, LLC, a New Mexico Limited
`Liability Company,
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`Plaintiff,
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`ISOLATE EXTRACTION SYSTEMS, INC., a Colorado
`Corporation,
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`CIV No. 1:22-cv-170
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`Defendant.
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`COMPLAINT TO RESCIND CONTRACT FOR MISREPRESENTATION,
`TO RECOVER DAMAGES FOR MISREPRESENTATION AND FOR RESTITUTION
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`Eagle Moon Hemp, LLC, through its undersigned attorneys, states its Complaint as
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`follows:
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`PARTIES AND JURISDICTION
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`1.
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`The Plaintiff Eagle Moon Hemp, LLC brings this action to rescind a contract by
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`which it purchased isolate extraction machinery from the Defendant Isolate Extraction Systems,
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`Inc., to recover damages for misrepresentation and violations of the Colorado Consumer Protection
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`Act, and for restitution.
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`2.
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`The Plaintiff, Eagle Moon Hemp, LLC (“EMH”) is a New Mexico limited liability
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`company with its principal place of business located in New Mexico.
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`3.
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`The Defendant Isolate Extraction Systems, Inc. (“IES”) is a Colorado business
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`corporation with its principal place of business located in Colorado.
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 2 of 8
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`4.
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`There is complete diversity between the parties and the amount in controversy is in
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`excess of $75,000. This Court therefore has jurisdiction of this case pursuant to 28 U.S.C. § 1332,
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`and personal jurisdiction over the parties.
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`FACTUAL ALLEGATIONS
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`5.
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`EMH is engaged in the business of growing hemp, extracting distillates from hemp,
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`selling hemp distillates, and manufacturing and selling products containing hemp distillates.
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`6.
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`IES manufactures and offers for sale to the public machinery that can extract
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`distillates from hemp, including a high capacity machine known as the CDMH 200-2x-2f
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`extraction machine. (“High Capacity Extraction Machine”).
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`7.
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`During early 2019, representatives of EMH, Zachary Penn (“Penn”) and Preston
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`Tharp (“Tharp”), met with a sales representative of IES, John Knight (“Knight”), to discuss the
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`capabilities of the extraction machines manufactured by IES, the appropriateness of those
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`extraction machines for use in EMH’s business, and the possible purchase of IES extraction
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`machines by EMH. Knight made the following material representations of fact regarding the High
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`Capacity Extraction Machine (“Representations”):
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`A.
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`That the High Capacity Extraction Machine was the best extraction machine
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`in the world, and could reliably process one thousand pounds of hemp per day;
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`B.
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`That IES had already manufactured several of the High Capacity Extraction
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`Machines;
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`C.
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`That a High Capacity Extraction Machine was in service and performing
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`successfully at a hemp processing facility in Oklahoma; and
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`2
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 3 of 8
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`D.
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`That the High Capacity Extraction Machine would be delivered and
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`installed within ninety (90) days from the date EMH signed an agreement to purchase the machine.
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`8.
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`Knight made the representations as IES’s agent, in the course of IES’s business,
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`knowing and intending that EMH would rely on the Representations in deciding whether to enter
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`into a contract to purchase a High Capacity Extraction Machine for use in EMH’s business.
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`9.
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`Penn and Tharp asked Knight if they could view the High Capacity Extraction
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`Machine that Knight represented was in service in Oklahoma, but Knight represented to Penn and
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`Tharp that the owner of the machine was very protective of its operations and would not permit a
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`competitor to view its operations.
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`10.
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`On January 28, 2019, EMH, in reasonable and justifiable reliance on the
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`Representations, agreed to purchase, and signed a contract to purchase, a High Capacity Extraction
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`Machine from IES for the amount of $1,450,000, plus additional amounts for a service plan,
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`training, and crating. A true and correct copy of the contract (“Sales Agreement”) is attached as
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`Exhibit A.
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`11.
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`In February 2019, IES prepared and signed a second contract which contains the
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`same terms and conditions stated in Sales Agreement, under which IES sold, and EMH purchased,
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`in addition to the High Capacity Extraction Machine, a smaller capacity extraction machine for the
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`amount of $340,000. Upon information and belief, EMH never signed the second Sales
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`Agreement.
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`12.
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`Despite IES’s representation that the High Capacity Extraction Machine would be
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`delivered and installed within ninety (90) days from the date EMH signed an agreement to
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`purchase the machine, IES did not deliver the machine until October 2019.
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`3
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 4 of 8
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`13.
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`From the date of the installation of the High Capacity Extraction Machine through
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`February 2021, the High Capacity Extraction Machine was inoperable more than fifty percent of
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`the time. Mitch Vander Wall (“Vander Wall”), IES’s customer support manager, acknowledged in
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`a January 15, 2021 email to Tim Morales (“Morales”) of EMH, that IES had recorded twenty-nine
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`formal warranty “cases” for the machine, and “certainly more requests for support.”
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`14.
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`Although IES attempted to remedy the High Capacity Extraction Machine’s
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`multiple defects in February and March 2021, it was unable to get the machine working as IES
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`represented it would before EMH purchased the machine.
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`15.
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`By email dated Wednesday, May 5, 2021, Morales informed Vander Wall that
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`EMH had decided to ship the High Capacity Extraction Machine back to IES, and that EMH was
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`going to begin disassembly of the machine for shipping. Following that communication, Vander
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`Wall asked if EMH wanted IES to re-sell the machine for EMH. Vander Wall then forwarded a
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`proposed consignment agreement to Morales, which was entirely one-sided in favor of IES, and
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`completely unacceptable to EMH.
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`16.
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`EMH has not used, and has not been able to use, the High Capacity Extraction
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`Machine since March 2021. The machine is worthless to EMH and is taking up needed space in
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`EMH’s facility.
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`17.
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`EMH has given notice to IES that it has rescinded the Sales Agreement, and
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`demanded that IES take possession of the High Capacity Extraction Machine and return the
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`purchase price to EMH. IES has refused to do so.
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`4
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 5 of 8
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`COUNT I
`RESCISSION FOR MISREPRESENTATION
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`18.
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`EMH incorporates the Factual Allegations by reference as though set forth in detail
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`here.
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`19.
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`IES’s Representation that the High Capacity Extraction Machine was the best
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`extraction machine in the world, and could reliably process one thousand pounds of hemp per day
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`was not true when made.
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`20.
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`Upon information and belief, IES’s Representations that IES had already
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`manufactured several High Capacity Extraction Machines, that a High Capacity Extraction
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`Machine was in service and performing successfully at a hemp processing facility in Oklahoma,
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`and that the High Capacity Extraction Machine would be delivered and installed within ninety (90)
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`days from the date EMH signed an agreement to purchase the machine, were not true when made.
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`21.
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`IES either negligently, or intentionally with the intent to deceive EMH, made the
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`untrue Representations in order to induce EMH to enter into the Sales Agreement.
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`22.
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`EMH reasonably and justifiably relied on the Representations to its detriment in
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`entering into the Sale Agreement.
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`23.
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`EMH is entitled to rescission of the Sales Agreement and return of the purchase
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`price ($1,450,000), and the amounts paid by EMH for a service plan ($90,625), for start up and
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`training ($3,000) and for crating ($1,500).
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`WHEREFORE, EMH requests the Court enter an order confirming EMH’s rescission of
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`the Purchase Agreement, and ordering IES to return the full amount of the purchase price of the
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`High Capacity Extraction Machine, including additional charges, to EMH, that the Court award
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`5
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 6 of 8
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`interest on the full amount of the purchase price from the date of payment by EMH, and that the
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`Court grant such other and further relief as is appropriate under the circumstances.
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`COUNT II
`DAMAGES FOR MISREPRESENTATION
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`24.
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`EMH incorporates the Factual Allegations and the allegations of Count I by
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`reference as though set forth in detail here.
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`25.
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`As a direct and proximate result of EMH’s reliance of the IES’s false
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`Representations, EMH, has suffered damages, including, but not limited to the amounts EMH paid
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`to purchase the High Capacity Extraction Machine, loss of business, and the loss of productive
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`time of EMH’s employees.
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`26.
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`IES made the false Representations with reckless disregard of the rights of EMH.
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`WHEREFORE, EMH requests an award of compensatory damages in an amount to be
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`proven at trial, an award of punitive damages, and such other and further relief as is appropriate
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`under the circumstances.
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`COUNT III
`VIOLATIONS OF COLORADO CONSUMER PROTECTION ACT
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`27.
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`EMH incorporates the Factual Allegations and the allegations of Counts I and II by
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`reference as though set forth in detail here.
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`28.
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`Under the Colorado Consumer Protection Act, Colo. Rev. Stat. Ann. § 6-1-101, et
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`seq. (“CCPA”) a person engages in a deceptive trade practice when, in the course of the person's
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`business, the person, either knowingly or recklessly, makes a false representation as to the
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`characteristics or benefits of goods, or represents that goods of a particular standard, quality, or
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`6
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 7 of 8
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`grade, if he knows or should know that they are of another. Colo. Rev. Stat. Ann. § 6-1-105(e) and
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`(g).
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`29.
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`By making the false Representations referenced above, IES engaged in deceptive
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`trade practices as defined in the CCPA.
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`30.
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`EMH, as a consumer of the IES’s High Capacity Extraction Machine, has standing
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`to assert claims against IES under the CCPA.
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`31.
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`As a direct and proximate result of IES’s deceptive trade practices, EMH, has
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`suffered damages, including, but not limited to the amounts EMH paid to purchase the High
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`Capacity Extraction Machine, loss of business, and the loss of productive time of EMH’s
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`employees.
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`32.
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`IES made the false Representations with reckless disregard of the rights of EMH.
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`WHEREFORE, EMH requests an award of compensatory damages in an amount to be
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`proven at trial, an award of treble damages, its costs and attorney fees, and such other and further
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`relief as is appropriate under the circumstances.
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`COUNT IV
`RESTITUTION- UNJUST ENRICHMENT
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`33.
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`EMH incorporates the Factual Allegations and the allegations of Counts I, II and
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`III by reference as though set forth in detail here.
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`34.
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`At EMH’s expense, IES obtained a benefit consisting of the money that EMH paid
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`for the High Capacity Extraction Machine under circumstances that would make it unjust for IES
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`to retain the benefit of its receipt of those funds without returning those funds to EMH.
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`7
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`Case 1:22-cv-00170 Document 1 Filed 01/20/22 USDC Colorado Page 8 of 8
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`WHEREFORE, EMH requests the Court to award restitution of the funds that EMH paid
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`for the High Capacity Extraction Machine, and for such other and further relief as is appropriate
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`under the circumstances.
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`Respectfully submitted,
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`By:
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`SOMMER, UDALL, HARDWICK &
`JONES, P.A.,
`Attorneys for Plaintiff
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`/s/ Jack N. Hardwick
`Jack N. Hardwick
`P.O. Box 1984
`Santa Fe, New Mexico 87504-1984
`(505) 982-4676
`jnh@sommerudall.com
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`8
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