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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
`SOUTHEASTERN DIVISION
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`) Case No.
`L&F BRANDS, INC.,
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`) Judge:
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`Plaintiff,
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`) JURY TRIAL DEMANDED
`v.
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`CROWN VALLEY WINERY, INC.,
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`Serve:
`Joe H. Scott, Sr.
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`1065 Executive Pkwy. Ste. 300 )
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`St. Louis, MO 63141 )
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` Defendant.
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`Comes now Plaintiff, by and through its legal counsel, and for its Complaint with Jury
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`COMPLAINT
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`Demand, alleges and avers as follows:
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`JURISDICTION
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`1. Plaintiff L&F Brands, Inc. (hereinafter referred to as “L&F”) is a Nevada for-profit
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`corporation, with its principal place of business in San Antonio, Texas, engaging in business
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`activities throughout various states across the United States, including the State of Missouri.
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`2. Defendant Crown Valley Winery, Inc. (hereinafter referred to as “Crown Valley”) is a
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`Missouri for-profit corporation engaging in business activities with its principal place of business
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`in Missouri and its registered agent in St. Louis County, Missouri.
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`3. The amount in controversy between the parties herein exceeds $75,000, and diversity
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`jurisdiction applies pursuant to 28 U.S.C. § 1332 given the fact that L&F is a Nevada corporation
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`and Crown Valley is a Missouri corporation.
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`4. L&F and Crown Valley entered into a Manufacturing Agreement (attached as Exhibit 1)
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`which states that the parties agree that the exclusive venue for any action in any way relating to
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 2 of 10 PageID #: 2
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`the Agreement shall be the State or Federal Courts having jurisdiction over Ste. Genevieve,
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`Missouri. See Exhibit 1 at 8.
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`FACTS
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`5. L&F was formed in order to operate, market, sell, and distribute adult beverages or
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`alcohol products, with its primary products being chocolate and cream based wine blends and
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`later a cream and coffee based alcohol blend. These products have been marketed under various
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`names, including “CV,” “Els Iced Chocolate,” “Els Iced Chocolate Mint,” and “Els Iced Coffee.”
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`6. These products are produced, batched, blended, and bottled by Crown Valley, and then
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`distributed to wholesale distributors for purposes of ultimate distribution to the general public.
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`7. On March 28, 2018, the parties entered into a Manufacturing Agreement that sets forth
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`specific terms and conditions, including the requirement that Crown Valley produce each L&F
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`product in strict compliance with formulas registered and approved by the Alcohol and Tobacco
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`Tax and Trade Bureau (“TTB”). See Exhibit 1.
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`8. Section 5(b) of the Manufacturing Agreement prohibits Crown Valley from substituting
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`Client Bulk supplies for the production of the product. See Exhibit 1 at 2.
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`9. Section 5(e) of the Agreement requires Crown Valley to blend the product based on a
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`specific recipe given to Crown Valley by L&F. See Exhibit 1 at 2.
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`10. Section 11(b) of the Agreement states that Crown Valley “represents, warrants and
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`covenants that . . . (ii) all Products will be produced and packaged in material accordance with
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`the Client’s specifications.” See Exhibit 1 at 4.
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`11. Section 15 of the Agreement requires Crown Valley to comply with all applicable laws as
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`it relates to the production of the product. See Exhibit 1 at 5.
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`12. Section 21(b) of the Agreement requires Crown Valley to defend, indemnify, reimburse,
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 3 of 10 PageID #: 3
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`and hold L&F harmless from any and all losses, claims, demands, damages, liability, or
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`expenses, including reasonable attorney fees, resulting from any third party claims arising out of
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`any act or omission, or failure to act by Crown Valley, or resulting from any violation of State or
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`Federal Law, any act of willful misconduct, or negligence of Crown Valley. See Exhibit 1 at 8.
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`13. Section 26 of the Agreement allows recoupment of reasonable attorney fees and costs
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`from the “prevailing party.” See Exhibit 1.
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`14. In July 2018, Crown Valley produced 3,136 cases of Els Iced Coffee at the request of
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`L&F.
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`15. In mid-August 2018, L&F discovered that Crown Valley had used the wrong ingredients
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`in producing this batch and that Crown Valley tried to add an additional ingredient after the
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`batch was completed, causing an improper PH level which ultimately led to product failure.
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`16. Despite having knowledge of its mistakes, Crown Valley, by and through its
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`agents/employees, hid and concealed this information from L&F and engaged in willful, wanton,
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`and illegal deceptive practices to cover up its mistakes.
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`17. At the time this conduct was discovered by L&F, it had already distributed over half of
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`the cases to various markets throughout the United States, and L&F was notified by its clients
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`that the product they received was defective.
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`18. In addition to the costs and expenses paid to Crown Valley for the production of this
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`batch, L&F incurred additional costs and expenses to retrieve the defective product from its
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`distributors, to reimburse its clients for costs paid, and to destroy the defective product.
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`19.
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`Further, and in addition to the monetary losses described above, L&F lost, and to
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`date has been unable to recoup, sales in certain markets due to its delivery of the defective
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`product.
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 4 of 10 PageID #: 4
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`20. In view of existing demand for the product in the marketplace, in October 2018, Crown
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`Valley produced the last batch of Els Iced Coffee for L&F.
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`21. By October 2018, L&F had discovered that many cases of this batch of Els Iced Coffee
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`were contaminated with bacteria which ultimately leads to product failure.
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`22. The bacterial contamination in these additional cases was caused by Crown Valley’s
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`failure to produce the product in a clean, sanitary environment or otherwise using unsanitary
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`production equipment. Due to the actual bacterial contamination or chance of contamination,
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`L&F could not sell over 6000 cases of the Els Iced Coffee.
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`23. L&F incurred additional expenses for the production cost and destruction of this
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`additional defective product made by Crown Valley.
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`24. In September 2018, Crown Valley told L&F that it had additional Coffee Cream that
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`would be available for future product blending, and based on this information L&F agreed to
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`purchase 12 “totes” of this ingredient from Crown Valley.
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`25. Despite Crown Valley receiving payment in full for this ingredient, L&F discovered that
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`Crown Valley never ordered, received, or utilized this ingredient in any L&F product.
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`COUNT I
`Breach of Contract
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`26. L&F re-alleges Paragraphs 1 through 25 as though fully rewritten herein.
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`27. Crown Valley had a written contractual duty to manufacture L&F’s product in
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`accordance with specific formulas registered and approved by the TTB. See Exhibit 1.
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`28. Crown Valley breached this duty by using the wrong ingredient to produce L&F’s
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`product and by producing the product in a non-sterile environment, as well as failing to disclose
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`such conduct.
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`29. As a direct result of Crown Valley’s contractual breach, L&F suffered monetary damage
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 5 of 10 PageID #: 5
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`later described herein.
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`COUNT II
`Breach of Express Warranty
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`30. L&F re-alleges Paragraphs 1 through 29 as though fully rewritten herein.
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`31. Section 11(b) of the Manufacturing Agreement contains an express warranty by Crown
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`Valley that it would produce all product in material accordance with L&F’s specifications. See
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`Exhibit 1 at 4.
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`32. Crown Valley breached this warranty by using ingredients not contained in the
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`specifications furnished by L&F.
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`33. As a direct and proximate cause of this breach, L&F sustained monetary damage as later
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`described herein.
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`COUNT III
`Breach of Implied Warranty of Good Faith
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`34. L&F re-alleges Paragraphs 1 through 33 as though fully rewritten herein.
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`35. Section 1-304 of the Uniform Commercial Code imposes a legal duty or obligation on a
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`contractual party to exercise good faith in carrying out the duties, obligations, and terms of a
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`contractual agreement.
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`36. Crown Valley breached that duty to L&F by manufacturing product utilizing incorrect
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`ingredients, by manufacturing product in a non-sterile environment or otherwise using non-
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`sterile equipment, by charging L&F for supplies or ingredients that Crown Valley never acquired
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`on its behalf, and by engaging in willful, wanton, or deceptive practices in hiding its malfeasance
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`from L&F.
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`37. As a direct and proximate cause of these breaches, L&F sustained monetary damages
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`later described herein.
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 6 of 10 PageID #: 6
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`COUNT IV
`Fraud
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`38. L&F re-alleges Paragraphs 1 through 37 as though fully rewritten herein.
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`39. Crown Valley falsely represented to L&F that the product was manufactured with the
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`correct ingredients and allowed the defective product to enter the marketplace and be distributed
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`to L&F’s clients.
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`40. Crown Valley knew or should have known that it had used incorrect ingredients in
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`manufacturing product for L&F, yet it never informed L&F of these mistakes.
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`41. Crown Valley additionally falsely represented that it could safely add an additional
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`ingredient after the batch was completed to adjust the taste without causing or increasing the risk
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`of an improper PH level.
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`42. Crown Valley knew or should have known that it could not safely add an additional
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`ingredient after the batch was completed to adjust the taste without causing or increasing the risk
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`of an improper PH level.
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`43. Crown Valley additionally falsely represented that it was producing the product in a
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`clean, sanitary environment.
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`44. Crown Valley knew or should have known that it was not producing the product in a
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`clean, sanitary environment and that there was a high risk of bacterial contamination.
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`45. Crown Valley further represented that L&F could purchase an additional ingredient from
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`Crown Valley, but despite being paid in full by L&F for this ingredient, Crown Valley failed to
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`order, receive, or utilize this ingredient in any L&F product.
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`46. Crown Valley made such false representations to induce L&F’s reliance on the truth of
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`the statements, and L&F relied on the statements with ignorance as to their falsity by (1) selling
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 7 of 10 PageID #: 7
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`and distributing the defective product in the marketplace and (2) paying Crown Valley in full to
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`purchase the additional ingredient.
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`47. L&F had the right to rely on the truth of statements by Crown Valley in the course of its
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`business, and was consequently and proximately injured by the false statements in that they
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`substantially interfered with L&F’s business of operating, marketing, selling, and distributing
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`adult beverages or alcohol products and damaged L&F’s reputation.
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`48. As a result of this willful, wanton, outrageous, and malicious behavior, L&F incurred
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`monetary damage as later described herein, including the loss of sales and/or profit, and is
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`entitled to punitive damages and reasonable attorney fees.
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`COUNT V
`Unjust Enrichment
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`49. L&F re-alleges Paragraphs 1 through 48 as though fully rewritten herein.
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`50. L&F paid Crown Valley in full for the additional ingredient which Crown Valley
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`represented was available for purchase from one of its other customers.
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`51. Crown Valley accepted the payment and, as Crown Valley failed to order, receive, or
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`utilize this ingredient in any L&F product, it was thus enriched.
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`52. It would be unjust to allow Crown Valley to retain the benefit of the payment because the
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`money was never utilized to benefit L&F as promised, and L&F is entitled to reimbursement for
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`the money paid for these goods.
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`COUNT VI
`Money Had and Received
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`53. L&F re-alleges Paragraphs 1 through 52 as though fully rewritten herein.
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`54. Crown Valley received money from L&F for the additional ingredient which Crown
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`Valley represented was available for purchase from one of its other customers.
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 8 of 10 PageID #: 8
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`55. Crown Valley accepted and appreciated the benefit of the money yet failed to order,
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`receive, or utilize this ingredient in any L&F product.
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`56. Crown Valley’s acceptance and retention of L&F’s money for the purchase of the
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`additional ingredient was unjust.
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`COUNT VII
`Violation of Federal TTB laws
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`57. L&F re-alleges paragraphs 1 through 56 as though fully rewritten herein.
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`58. Section 5.26 and 5.27 of the TTB regulations (27 CFR §§ 5.26 and 5.27) require
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`registration and approval of distilled spirits as well as strict compliance with approved formulas.
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`59. Crown Valley violated federal law by using ingredients that deviate from the approved
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`and registered formulas with TTB.
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`60. Crown Valley had knowledge that it deviated from the approved formula and failed to
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`disclose this fact to L&F.
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`61. As a direct and proximate cause of these legal violations, L&F is now subject to possible
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`federal fines/costs and incurred monetary damages as later described herein.
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`COUNT VIII
`Indemnification
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`62. L&F re-alleges paragraphs 1 through 61 as though fully rewritten herein.
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`63. The Manufacturing Agreement states that Crown Valley shall indemnify and hold L&F
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`harmless for any and all claims, losses, expenses, damages, and liabilities, including reasonable
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`attorney fees and costs, for any act or omission or failure to act or for violation of State or
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`Federal Law or for willful or wanton misconduct. See Exhibit 1 at 8.
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`WHEREFORE, Plaintiff prays for judgment against Defendant as follows:
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 9 of 10 PageID #: 9
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`As and for Counts One, Two, Three, and Seven of Plaintiff’s Complaint, Plaintiff prays
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`for judgment against Defendant for a monetary amount in excess of $75,000.00, plus statutory
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`interest from the date of judgment, reasonable attorney fees, costs of this action, and for any and
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`all other relief as this Court deems just and proper.
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`As and for Count Four of Plaintiff’s Complaint, Plaintiff prays for judgment against
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`Defendant in the amount of $500,000.00, plus punitive damages and reasonable attorney fees and
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`costs, and for any and all other relief as this Court deems just and proper.
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`As and for Counts Five and Six of Plaintiff’s Complaint, Plaintiff prays for judgment
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`against Defendant in the amount of $38,000.00, and for any and all other relief as this Court
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`deems just and proper.
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`As and for Count Eight of Plaintiff’s Complaint, Plaintiff prays for judgment against
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`Defendant in the amount of $74,000.00, reasonable attorney fees and costs and for any and all
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`other relief as this Court deems just and proper.
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`Respectfully submitted,
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`/s/ Timothy W. Rudolph
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`W. Dudley McCarter, #24939MO
`John P. Torbitzky, #65233MO
`Timothy W. Rudolph, #68361MO
`7777 Bonhomme, Ste. 1400
`St. Louis, MO 63105
`Phone: (314) 862-3800
`Fax: (314) 862-3953
`dmccarter@bmplaw.com
`jtorbitzky@bmplaw.com
`trudolph@bmplaw.com
` Attorneys for Plaintiff
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`Case: 1:19-cv-00134-SNLJ Doc. #: 1 Filed: 08/12/19 Page: 10 of 10 PageID #: 10
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`Joseph J. Solomon, #0021527OH
`Jones & Solomon
`Two Maritime Plaza 3rd Flr.
`Toledo, Ohio 43604
`Phone: (419) 246-2022
`Fax: (419) 243-8953
`jsattorneyslaw@gmail.com
`Attorney for Plaintiff, pending admission pro hac
`vice
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