`Case 2:16-cv-01790-SDW-LDW Document 1 Filed 03/31/16 Page 1 of 10 PageID: 1
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`LASSER HOCHMAN, LLC
`
`75 Eisenhower Parkway
`Roseland, New Jersey 07068
`973—226~2700
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`973—226-0844 (FAX)
`
`Attorneys for Plaintiff
`rzucker@lasserhochman.com
`
`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEW JERSEY
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`COFUND II LLC,
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`Plaintiff,
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`vs.
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`HITACHI CAPITAL AMERICA CORP,
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`Defendant.
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`Civil Action No.
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`COMPLAINT
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`Plaintiff CoFund II LLC (hereinafter “CoFund”), a New Jersey limited liability company with
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`its principal place of business located at 55 Lane Road, Suite 430, Fairfield, New Jersey 07004,
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`complains of defendant Hitachi Capital America Corp. (hereinafter “Hitachi”)and says:
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`JURISDICTION
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`1.
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`Plaintiff CoFund is a New Jersey limited liability company with its principal place
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`of business located at 55 Lane Road, Suite 430, Fairfield, New Jersey 07004.
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`2.
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`3.
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`Plaintiff CoFund is a citizen of the State of New Jersey.
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`Defendant Hitachi is a Delaware corporation with its principal place of business in
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`the State of Connecticut.
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`4.
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`5.
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`Defendant Hitachi is a citizen of both Delaware and Connecticut.
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`This court has original jurisdiction of this civil action pursuant to 28 U.S.C. §
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`
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`l332(a)(1) in that it is a civil action where the matter in controversy exceeds the sum or value of
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`$75,000.00, exclusive of interest and costs, and is between citizens of different states.
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`FIRST COUNT
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`6.
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`Forest Capital LLC (hereinafter “Forest”) was in the business of factoring and
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`providing other forms of commercial financing to clients with approved credit.
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`7.
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`In order to meet the funding needs of some of Forest’s clients, Forest and CoFund
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`established a framework for CoFund to participate in such funding from time to time.
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`8.
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`On or about January 12, 2012, CoFund entered into a Master Participation Agreement
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`(hereinafter “the MFA”) with Forest Capital, LLC.
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`9.
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`Under the terms of the MPA, from time to time, Forest offered and sold to CoFund,
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`and CoFund accepted and purchased, participations in factoring transactions that Forest made with
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`its clients.
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`10.
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`As security for each participation, Forest granted to CoFund a first priority security
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`interest in the Financing Documents, as defined in the MPA, and the Collateral, as defined in the
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`MPA, relating to each Transaction, as defined in the MPA, to the extent of CoFund’ s pro rata interest
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`in the Transaction.
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`11.
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`To perfect the aforesaid first priority security position in the Financing Documents,
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`on January 23, 2012, CoFund filed a UCC financing statement with the Maryland Division of
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`Assessments and Taxation. The filed financing statement described the covered collateral as “[a]ll
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`right, title and interest of debtor, as lead lender, relating to or arising from extensions of credit by
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`debtor to third—party borrowers from time to time, including, but not limited to, advances against the
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`purchase price of accounts, but only to the extent of secured party’s pro rata interest as a participant
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`therein (if any) pursuant to that certain Master Participation Agreement between debtor and secured
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`party dated January 12, 2012.”
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`12.
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`On or about December 5, 2014, Hitachi and Forest entered into a Loan and Security
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`Agreement whereby Hitachi agreed to lend, and Forest agreed to borrow, moneys to fund Eligible
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`Purchased Accounts as defined in the Loan and Security Agreement.
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`13.
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`To secure the timely repayment of the moneys, Forest granted to Hitachi a security
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`interest in, and a lien on, the Collateral as defined in the Loan and Security Agreement.
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`14.
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`In paragraph 7.7 of the Loan and Security Agreement, Forest represented and
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`warranted to Hitachi that the Collateral, as defined in the Loan and Security Agreement, “is not
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`subject to any liens, mortgages, pledges, encumbrances, claims (legal or equitable), or charges of any
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`kind except Permitted Encumbrances.” The only Permitted Encumbrance was the security interest
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`held by CoFund.
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`15.
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`On December 16, 2014, Hitachi filed a UCC financing statement with the Maryland
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`Department of Assessments and Taxation. The filed financing statement described the covered
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`collateral as “all assets of debtor now owned or hereafter acquired.”
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`16.
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`On or about December 19, 2014, the Hitachi Business Finance Division of Hitachi
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`and CoFund entered into a written Intercreditor Agreement (hereinafter “the Agreement”) whereby
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`the parties agreed on the relative priority of each party’s security interest in the collateral covered
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`by their respective agreements with Forest.
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`17.
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`According to the Agreement, “[t]he lien or security interest of any kind that CoFund
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`‘ may now have or hold in the future with respect to the CoFund Priority Collateral [as defined in the
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`Agreement] shall be superior to any lien or security interest that Hitachi may now have or hereafter
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`
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`acquire in the CoFund Priority Collateral until CoFund terminates its UCC financing statement.
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`18.
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`In relevant part, Section 4 of the Agreement, entitled “Rights and Remedies”,
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`provided as follows:
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`Unless and until and indebtedness owing to Hitachi or CoFund has
`been satisfied in full and the applicable financial documents are
`terminated, Hitachi and CoFund agree that with respect to that
`collateral as to which it is an Inferior Creditor (“Collateral”) it will
`not:
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`A.
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`B.
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`Enforce or seek to realize upon its security interest in or lien
`upon such Collateral;
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`Interfere in any manner with the Superior Creditor’s (i)
`security interest or lien upon such Collateral or (ii) exclusive
`right and discretion, without consultation with or the consent
`of the Inferior Creditor, to enforce, foreclose, and otherwise
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`realize upon such Collateral without regard to the interests of
`the Inferior Creditor and without any obligation to protect or
`preserve the value of such Collateral for such Inferior
`Creditor.
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`C.
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`Notify persons obligated, with respect to such Collateral, to
`remit same (including Proceeds arising there from) to the
`Inferior Creditor.
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`If, notwithstanding the foregoing provisions of this Section 4, any
`party receives Collateral (including Proceeds) with respect to which
`it is an Inferior Creditor and there is unpaid Borrower indebtedness
`due to the Superior Creditor with respect to such Collateral, the
`Inferior Creditor receiving such Collateral shall be deemed to have
`received such Collateral (including Proceeds) for the use and benefit
`of the Superior Creditor and shall hold it
`in trust and shall
`immediately turn it over to the Superior Creditor to be applied upon
`the indebtedness of Borrower.
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`Hitachi shall hold all funds representing CoFund Priority Collateral
`in trust for CoFund.
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`19.
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`Furthermore, on or about December 29, 2014, Manufacturers and Traders Trust
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`
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`Company (hereinafter “M&T”), Forest, and Hitachi entered into a Blocked Account Agreement
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`(hereinafter “the BAA”). Forest deposited into the blocked account all moneys paid to it by its
`clients, and/or Forest’s clients deposited directly into the blocked account moneys that they owed
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`to Forest.
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`In both cases, some of the clients in question were clients with whom CoFund had a
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`participation interest pursuant to the MPA.
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`20.
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`Under the terms of the BAA, Forest was not able to withdraw any moneys from the
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`blocked account. Rather, in accordance with the BAA, M&T “transfer{red], by wire transfer, all
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`available funds on deposit in the Blocked Account to the account of [Hitachi]” maintained at Bank
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`of America in Chicago, Illinois.
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`21.
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`Hitachi has breached its obligations under the Agreement. Among other things,
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`Hitachi has received CoFund Priority Collateral (including Proceeds), but has not turned the same
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`over to CoFund. In addition, some of the moneys deposited into the blocked account represented
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`moneys to which CoFund was entitled under its MPA with Forest, and some of the moneys that
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`Hitachi transferred from the blocked account to its Bank of America account in Chicago represented
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`moneys to which CoFund was entitled under its MPA with Forest.
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`22.
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`The indebtedness owing to CoFund has not been satisfied in full.
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`23.
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`As a result of Hitachi’s breach of its obligations to CoFund under the Agreement,
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`CoFund has been damaged.
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`WHEREFORE, CoFund II LLC demands judgment against defendant Hitachi Capital
`
`America Corp. for:
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`a.
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`An accounting of all moneys deposited into the blocked account that was the subject
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`of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`
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`b.
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`An accounting of all moneys transferred out of the blocked account
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`that was the
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`subject of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`c.
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`An accounting of all moneys advanced by Hitachi to Forest and/or its clients under
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`the Loan and Security Agreement between Hitachi and Forest;
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`d.
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`An accounting of all moneys received by Hitachi under the Loan and Security
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`e.
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`f.
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`g.
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`h.
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`Agreement between Hitachi and Forest;
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`Compensatory damages;
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`Pre—judgment interest;
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`Reasonable attorneys’ fees and expenses; and
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`Costs of suit.
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`SECOND COUNT
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`24.
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`CoFund repeats and makes a part hereof the allegations of the First Count as if the
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`same were set forth at length herein.
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`25.
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`Hitachi was in a fiduciary relationship with CoFund.
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`26.
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`Hitachi owed a fiduciary duty to CoFund.
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`27.
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`Hitachi breached the fiduciary duty that it owed to CoFund.
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`28.
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`As a result of Hitachi’s breach of the fiduciary duty that it owed to CoFund, Cofund
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`has been damaged.
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`WHEREFORE, CoFund II LLC demands judgment against defendant Hitachi Capital
`
`America Corp. for:
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`a.
`
`An accounting of all moneys deposited into the blocked account that was the subject
`
`of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`
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`b.
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`An accounting of all moneys transferred out of the blocked account
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`that was the
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`subject of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`c.
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`An accounting of all moneys advanced by Hitachi to Forest and/or its clients under
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`the Loan and Security Agreement between Hitachi and Forest;
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`d.
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`An accounting of all moneys received by Hitachi under the Loan and Security
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`e.
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`f.
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`g.
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`h.
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`i.
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`Agreement between Hitachi and Forest;
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`Compensatory damages;
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`Punitive damages;
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`Pre—judgment interest;
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`Reasonable attorneys’ fees and expenses; and
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`Costs of suit.
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`THIRD COUNT
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`29.
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`CoFund repeats and makes a part hereof the allegations of the First Count and Second
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`Count as if the same were set forth at length herein.
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`30.
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`Contrary to its Agreement with CoFund, Hitachi has enforced and/or sought to realize
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`upon its security interest in, or lien upon, collateral as to which it is an Inferior Creditor, as defined
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`in the Agreement.
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`31.
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`Contrary to its Agreement with CoFund, Hitachi has tortiously interfered with
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`CoFund’s security interest or lien upon the CoFund Priority Collateral.
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`32.
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`As a result of Hitachi’s tortious interference, CoFund has been damaged.
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`WHEREFORE, CoFund II LLC demands judgment against defendant Hitachi Capital
`
`America Corp. for:
`
`
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`a.
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`An accounting of all moneys deposited into the blocked account that was the subject
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`of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`b.
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`An accounting of all moneys transferred out of the blocked account
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`that was the
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`subject of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`c.
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`An accounting of all moneys advanced by Hitachi to Forest and/or its clients under
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`the Loan and Security Agreement between Hitachi and Forest;
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`d.
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`An accounting of all moneys received by Hitachi under the Loan and Security
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`e.
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`f.
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`g.
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`h.
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`i.
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`Agreement between Hitachi and Forest;
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`Compensatory damages;
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`Punitive damages;
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`Pre—judgment interest;
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`Reasonable attorneys’ fees and expenses; and
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`Costs of suit.
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`FOURTH COUNT
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`33.
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`CoFund repeats and makes a part hereof the allegations of the First Count, Second
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`Count, and Third Count as if the same were set forth at length herein.
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`34.
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`Hitachi has wrongfully exercised dominion and control over moneys belonging to
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`CoFund without CoFund’s authorization and to the exclusion of CoFund’s rights in the moneys.
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`35.
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`CoFund has demanded that Hitachi turn over to CoFund the moneys that Hitachi has
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`wrongfully converted, but Hitachi has refused, and continues to refuse, to do so.
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`WHEREFORE, CoFund II LLC demands judgment against defendant Hitachi Capital
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`America Corp. for:
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`
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`a.
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`An accounting of all moneys deposited into the blocked account that was the subject
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`of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`b.
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`An accounting of all moneys transferred out of the blocked account
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`that was the
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`subject of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`c.
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`An accounting of all moneys advanced by Hitachi to Forest and/or its clients under
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`the Loan and Security Agreement between Hitachi and Forest;
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`d.
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`An accounting of all moneys received by Hitachi under the Loan and Security
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`e.
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`f.
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`g.
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`h.
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`i.
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`Agreement between Hitachi and Forest;
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`Compensatory damages;
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`Punitive damages;
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`Pre—judgment interest;
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`Reasonable attorneys’ fees and expenses; and
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`Costs of suit.
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`FIFTH COUNT
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`36.
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`CoFund repeats and makes a part hereof the allegations of the First Count, Second
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`Count, Third Count, and Fourth Count as if the same were set forth at length herein.
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`37.
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`By reason of Hitachi’s wrongful acts, Hitachi has been unjustly enriched.
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`38.
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`CoFund is entitled to the imposition of a constructive trust on the moneys that Hitachi
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`wrongfully withheld from CoFund.
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`WHEREFORE, CoFund H LLC demands judgment against defendant Hitachi Capital
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`America Corp. for:
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`a.
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`The imposition of a constructive trust on all moneys that Hitachi wrongfully withheld
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`
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`from CoFund;
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`b.
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`An accounting of all moneys deposited into the blocked account that was the subject
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`of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`c.
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`An accounting of all moneys transferred out of the blocked account
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`that was the
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`subject of the Blocked Account Agreement among M&T, Forest and Hitachi;
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`d.
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`An accounting of all moneys advanced by Hitachi to Forest and/or its clients under
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`the Loan and Security Agreement between Hitachi and Forest;
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`e.
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`An accounting of all moneys received by Hitachi under the Loan and Security
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`Agreement between Hitachi and Forest;
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`Compensatory damages;
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`Punitive damages;
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`Pre—judgment interest;
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`Reasonable attorneys’ fees and expenses; and
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`Costs of suit.
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`f.
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`g.
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`h.
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`i.
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`j.
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`LASSER HOCHMAN, LLC
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`Attorneys for Plaintiff
`CoFund II LLC
`
`DATED:
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`March 31, 2016
`
`By:
`
`5/ Richard L. Zucker
`RICHARD L. ZUCKER, ESQ.
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