IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION THE UNITED STATES DISTRICT COURT
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FIRST CREDIT CARD CORPORATION, a Florida corporation,
Plaintiff,
vs.
GLOBAL ELECTRONIC TECHNOLOGY, INC., a California corporation,
Defendant.
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Civil Action No. 6:08-CV-1974-ORL-31 GJK
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GLOBAL ELECTRONIC TECHNOLOGY, INC., a California corporation,
Defendant/Counter-Plaintiff,
vs.
FIRST CREDIT CARD CORPORATION, a Florida corporation,
Plaintiff/Counter-Defendant,
AND
JOHN ZIGLAR, an individual, and WHOLESALE TRANSACTIONS.COM, INC., a Florida corporation,
Third Party Defendants.
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Defendant Global Electronic Technology, Inc.’s ANSWER TO COMPLAINT, COUNTERCLAIMS, AND THIRD PARTY CLAIMS
Defendant GLOBAL ELECTRONIC TECHNOLOGY, INC. (“GET”) responds to Plaintiff FIRST CREDIT CARD CORP.’s (“FCCC”) Complaint as follows:
1. In response to Paragraph 1 of FCCC’s Complaint, GET admits that FCCC is a Florida corporation with its principal place of business located in Orange County, Florida.
2. In response to Paragraph 2 of FCCC’s Complaint, GET admits that it is a California corporation with its principal place of business located in Cypress, California.
3. In response to Paragraph 3 of FCCC’s Complaint, GET admits that this Court has subject matter jurisdiction over FCCC’s claims.
4. In response to Paragraph 4 of FCCC’s Complaint, GET denies that venue is proper.
5. In response to Paragraph 5 of FCCC’s Complaint, GET has insufficient information to admit or deny the allegations in Paragraph 5.
6. In response to Paragraph 6 of FCCC’s Complaint, GET admits that Merrick Bank Corporation (“Merrick”) served as the acquiring bank for credit card transactions initiated by merchants contracting with FCCC for processing such transactions.
7. In response to Paragraph 7, GET admits that it is been engaged in the business of providing services of processing credit card transactions for merchants in various locations through the United States of America.
8. In response to Paragraph 8, GET admits that Merrick has served as the acquiring bank for credit card transactions initiated by merchants contracting with GET.
9. In response to Paragraph 9, GET admits that in or about the spring of 2006, FCCC’s President John Ziglar (“Ziglar”) contacted Steven H. Bryson (“Bryson”), GET’s Chief Executive Officer, with the purpose of having GET acquire FCCC’s book of credit card merchant accounts. GET states that FCCC sought to transfer its merchant accounts to GET because it was being terminated by its acquiring bank, which would have led to FCCC being immediately forced out of business. GET denies the remaining allegations in Paragraph 9 of FCCC’s Complaint.
10. In response to Paragraph 10, GET admits that it has provided credit card processing services to the merchant accounts that were assigned to it by FCCC in April 2006.
11. GET admits that, in or about April 2006, it agreed to pay to FCCC ninety percent (90%) of the profits generated by former FCCC accounts which FCCC assigned to GET. GET denies the remaining allegations in Paragraph 11.
12. GET admits that, in or about 2006, a security breach occurred with one of FCCC’s former accounts, resulting in substantial chargebacks which GET initially paid to Merrick.
13. GET admits the facts as alleged in Paragraph 13.
14. GET admits the facts as alleged in Paragraph 14.
15. In response to Paragraph 15, GET responds as follows:
Paragraph 2(a) of the Settlement Agreement and Release (“Settlement Agreement”), attached to FCCC’s Complaint, states in pertinent part:
For so long as there remains outstanding any portion of the Remaining Balance, GET is hereby authorized to retain for credit to the account of FIRST CREDIT the payments due from FIRST CREDIT to GET pursuant to paragraph 2 hereof. In addition, effective January 1, 2008, the fees due to GET pursuant to the Processing Arrangement shall be an amount equal to twenty percent (20%) of the net income generated from the accounts in the FIRST CREDIT Portfolio serviced by GET on and after said date. FIRST CREDIT shall receive the remaining eighty percent (80%) of such net income by ACH to FIRST CREDIT on a monthly basis within five (5) days of GET receiving its disbursement from member bank for the amounts accruing during the immediately preceding month. The payments to FIRST CREDIT under this Agreement shall be net of sums owed to GET. (emphasis added).
Pursuant to the terms of Paragraph 3 of the Settlement Agreement, FCCC is (a) only entitled to the “net income” generated from the assigned accounts, and (b) to the extent that the income is insufficient to pay the $7,368.49 monthly payments FCCC must pay to GET under the Agreement, GET retain whatever funds were generated. “Net income” as used in Paragraph 3 of the Settlement Agreement is the income generated from the assigned accounts outside the $7,368.49 monthly payment due to GET. Contrary to FCCC’s allegations that GET breached the terms of the Settlement Agreement by “failing to pay to Plaintiff when due the remaining eighty percent (80%) . . .”, under the Settlement Agreement, GET may retain any portion of the 80% of income generated from FCCC’s assigned merchant accounts to compensate for any deficiency in the monthly payment that FCCC agreed to pay to GET. FCCC defaulted in payment of its $7,368.49 monthly payments that it agreed to pay in order to compensate GET for its losses relating to the breach by FCCC’s merchants that was involved in the arbitration proceeding. Pursuant to the Settlement Agreement, FCCC’s deficient monthly payments triggered GET’s ability to retain whatever portion of the 80% of income generated from FCCC’s assigned merchant accounts that made up for the difference. (See Settlement Agreement and Release ¶¶ 2-3, attached to FCCC’s Complaint.)
Moreover, pursuant to Paragraph 2(b) of the Settlement Agreement, FCCC promised “to indemnify and hold GET harmless for any and all amounts due to an entity called Calpian, including interest, costs and attorneys fees incurred by GET as a result of FCCC’s non-payment,” for a loan that Calpian made to FCCC, which GET agreed to pay out from the $7,368.49 monthly payments due under the Settlement Agreement. (See Settlement Agreement and Release ¶2(b), attached to FCCC’s Complaint.)
16. GET denies the allegations contained in Paragraph 16.
17. In response to Paragraph 17, GET admits that FCCC brought an action against GET for damages and FCCC alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 17 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
18. In response to Paragraph 18, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 16, as though fully set forth herein.
19. GET denies the allegations contained in Paragraph 19.
20. GET denies the allegations contained in Paragraph 20.
21. GET denies the allegations contained in Paragraph 21.
22. In response to Paragraph 22, GET admits that FCCC has retained counsel relating to this proceeding. GET denies in their entirety all other allegations contained therein.
23. In response to Paragraph 23, GET admits that FCCC brought an action against GET for damages and alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 23 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
24. In response to Paragraph 24, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 23, as though fully set forth herein.
25. GET denies in their entirety those allegations contained in Paragraph 25.
26. GET denies in their entirety those allegations contained in Paragraph 26.
27. GET denies in their entirety those allegations contained in Paragraph 27.
28. GET denies the allegations contained in Paragraph 28.
29. In response to Paragraph 29, GET admits that FCCC brought an action against GET for damages and alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 29 contains any factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
30. In response to Paragraph 30, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 29, as though fully set forth herein.
31. In response to Paragraph 31, GET denies in their entirety those allegations contained in Paragraph 31(a). GET has insufficient information to admit or deny the allegations in Paragraph 31(b) of FCCC’s Complaint.
32. GET denies the allegations contained in Paragraph 32.
33. GET denies the allegations contained in Paragraph 33.
34. GET denies in their entirety those allegations contained in Paragraph 34 and denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
35. In response to Paragraph 35, GET admits that FCCC brought an action against GET for declaratory relief. To the extent that Paragraph 35 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC is entitled to any type of relief whatsoever.
36. In response to Paragraph 36, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 35, as though fully set forth herein.
37. In response to Paragraph 37, GET admits that an actual controversy exists between GET and FCCC within the jurisdiction of this Court. To the extent that Paragraph 37 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC is entitled to any type of relief whatsoever.
38. GET admits the facts as alleged in Paragraph 38.
39. GET denies in their entirety those allegations contained in Paragraph 39.
40. GET denies in their entirety those allegations contained in Paragraph 40 and denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
AFFIRMATIVE DEFENSES
In further answer to FCCC’s Complaint, and as separate and distinct affirmative defenses, GET alleges the following defenses:
41. AS A FIRST, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges that the Complaint and each and every allegation therein, fails to state a claim upon which relief may be granted.
42. AS A SECOND, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges that FCCC’s claims are barred based upon the equitable doctrines of waiver, estoppel, unclean hands and laches.
43. AS A THIRD, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE, GET alleges that FCCC’s Complaint, and each purported cause of action therein, is barred, or any recovery should be reduced, due to the fault of FCCC.
44. AS A FOURTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET is informed and believes and thereon alleges that, by exercise of reasonable efforts, FCCC could have mitigated the amount of damages allegedly suffered, but FCCC failed and/or refused and continues to fail and/or refuse, to exercise efforts to mitigate its damages, and therefore FCCC’s recovery, if any, must be barred or diminished accordingly.
45. AS A FIFTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET asserts that the alleged damages for which FCCC seeks to hold GET liable resulted in whole or in part from the negligent, deliberate, intentional, and/or unlawful acts or omissions of third parties, and GET is not responsible for or liable to FCCC for any such acts or omissions on the part of third parties.
46. AS A SIXTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges the GET is entitled to recoupment and/or setoff against any recovery that may be awarded in favor of FCCC.
47. AS A SEVENTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET states that, at all times, it acted in good faith and did not induce any acts constituting a cause of action.
48. AS AN EIGHTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET states that any and all actions which FCCC assert were wrongful, if done at all, were justified, ratified, and done with the consent of FCCC.
49. AS AN NINTH SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, at all times relevant to this action, GET acted in a commercially reasonable and lawful manner.
50. AS A TENTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET reserves the right to assert additional affirmative defenses upon revelation of more definitive facts by FCCC and upon GET’s undertaking of discovery and investigation of this matter.
COUNTER-CLAIM against FCCC and third party claim against John Ziglar and Wholesale Transactions.com, Inc.
GET hereby alleges the following counter-claims and third party claims against Plaintiff/Counter-Defendant First Credit Card Corporation (“FCCC") and Third Party Defendants John Ziglar (“Ziglar”) and Wholesale Transactions.com, Inc. (“WTI.” FCCC, Ziglar and WTI are collectively referred to as the “FCCC Parties” where appropriate) as follows:
parties
51. GET is a privately held corporation organized under the laws of the State of California, with its principal place of business located in Cypress, California.
52. FCCC is a privately held corporation organized under the laws of the State of Florida with its principal place of business located in Florida. On information and belief, GET alleges that Ziglar is the president and sole shareholder of FCCC.
53. Ziglar is an individual and the principal of FCCC, with his primary residence located in the State of Florida.
54. WTI is a privately held corporation organized under the laws of the State of Florida with its principal place of business located in Florida. On information and belief, GET alleges that Ziglar is the president and sole shareholder of WTI.
JURISDICTION AND VENUE
55. The Court has subject matter jurisdiction over these counterclaims and third party claims pursuant to 28 U.S.C. § 1332(a)(1), because this action is between a citizen of the State of California and citizens of the State of Florida, and the amount in controversy in this case is in excess of seventy-five thousand dollars ($75,000.00), exclusive of interest, costs and attorney’s fees. Alternatively, the Court has jurisdiction over these counterclaims and third party claims pursuant to 28 U.S.C. § 1367 because the claims form part of the same case or controversy as the claims asserted by FCCC.
56. This Court has personal jurisdiction over FCCC, Ziglar and WTI with respect to GET’s counterclaims and third party claims because, among other things, the FCCC Parties are residents of Florida and have purposely availed themselves of the benefits of this forum with respect to the matter in controversy, and the assertion of jurisdiction over them comports with notions of fair play and substantial justice.
57. Venue is proper in this district pursuant to 28 U.S.C. § 1391(a)(2).
GENERAL ALLEGATIONS
58. GET incorporates by reference the allegations contained in paragraph 51through 57 as though fully set forth herein.
59. GET is an independent sales organization (“ISO”), registered with Merrick Bank, a Utah industrial loan corporation (“Merrick”).
60. FCCC was an ISO with a principal place of business at 625 Main Street, Suite 20, Windermere, Florida 34786. Prior to entering into the agreements at issue herein, FCCC was registered with Merrick.
61. Ziglar is the President and, on information and belief is the sole shareholder of FCCC and is and was at all times relevant hereto the alter ego of FCCC. At all times, there was complete unity of interest between FCCC and Ziglar, such that there was no corporate separateness between FCCC and Ziglar.
62. GET is informed and believes and on that basis alleges that WTI is an ISO with a principal place of business in the same office as FCCC located at 625 Main Street, Suite 20, Windermere, Florida 34786. Ziglar is the President of WTI and, on information and belief, is the alter ego of WTI. GET alleges that, at all times there was complete unity of interest between WTI and Ziglar, such that there was no corporate separateness between WTI and Ziglar.
63. Both FCCC and WTI were inactive Florida corporations, but were reinstated by the Florida Secretary of State on the same day, November 21, 2008.
ASSIGNMENT AGREEMENT AND ARBITRATION
64. In or about the spring of 2006, Ziglar contacted Steve H. Bryson (“Bryson”) with the purpose of having GET acquire FCCC’s book of credit card merchant accounts. FCCC sought to transfer its merchant accounts to GET because it was being terminated by its bank, which would have led to FCCC being immediately forced out of business. On or about April 1, 2006, GET and FCCC entered into an oral agreement in the State of California whereby FCCC completely and irrevocably assigned its merchant accounts to GET (the “Assignment”).
65. Under the terms of the Assignment, FCCC assigned its merchant accounts to GET and irrevocably assigned all right, title and interest to those merchant accounts to GET, retaining only the right to receive some portion of residual income generated by the merchants. FCCC did not retain any ownership, contractual or equitable interest in the merchant accounts.
66. Under the terms of the Assignment, FCCC agreed, among other things, to deliver all merchant accounts to GET free of any claims, liens or encumbrances.
67. Under the terms of the Assignment, FCCC also agreed to be responsible for any losses occasioned to GET in connection with any of merchant accounts FCCC was assigning to GET.
68. In order to complete the assignment of FCCC’s book of merchants to GET, GET and FCCC had to obtain Merrick’s consent to the Assignment. On or about April 25, 2006, FCCC, GET and Merrick entered into a three party “Agreement to Consent to Assignment of Merchant Agreements” (the oral agreement for assignment and Merrick’s consent are collectively referred to as the “Assignment Agreement.”) (See Exhibit 1.)
69. After the Assignment, Merrick required that GET be responsible for “chargebacks”[1] assessed against FCCC’s former merchants.
70. Merrick ultimately assessed against GET, losses of over $700,000 which were caused by one of FCCC’s former merchant accounts, KampCo JC’s Number 7, LLC (“KampCo”), based upon alleged fraudulent conduct perpetrated by the merchant and/or its employees.
71. Pursuant to the terms of the Merchant Agreement signed by KampCo, GET filed a claim against the merchant with the American Arbitration Association (“AAA”), in an effort to recover the losses caused by the chargebacks assessed against KampCo.
72. FCCC intervened in the AAA proceeding as an interested party.
FCCC, ZIGLAR AND GET ENTER INTO A SETTLEMENT AGREEMENT AND RELEASE RELATING TO THE ARBITRATION CONCERNING THE KAMPCO CHARGEBACKS
73. On February 14, 2008, during an informal settlement conference in Long Beach, California, FCCC, Ziglar and GET agreed to settle the dispute relating to the KampCo chargebacks.
74. As part of the Settlement Agreement, FCCC agreed to pay GET for “incurred interest expense, attorneys’ fees, out of pocket costs and other expenses in connection with its relationship” with FCCC concerning KampCo. (See Settlement Agreement pps. 1-2, ¶ 2, attached to FCCC’s Complaint.)
75. After the parties applied various sums GET was holding to fund the settlement, FCCC had a remaining sum of two hundred sixty-five thousand dollars ($265,000) which it was required to pay to GET. (See Settlement Agreement _ p.2, ¶ 2, attached to FCCC’s Complaint.)
76. As part of the Settlement Agreement, FCCC agreed to pay the $265,000 “together with interest thereon at the rate of six and one-half percent per annum (6.5%) in thirty-six (36) equal monthly installments in the approximate sum of $7,368.49 per month (subject to adjustment based upon a detailed amortization schedule), payable on the twentieth (20th) day of each month commencing February 20, 2008.” (See Settlement Agreement _ p.2, ¶ 2(a), attached to FCCC’s Complaint.)
FCCC FAILED TO MAKE THE REQUIRED PAYMENTS UNDER THE SETTLEMENT AGREEMENT
77. The Settlement Agreement provides that GET will first apply the revenue generated by the former FCCC merchants toward the payments required under the Settlement Agreement. If the revenue is insufficient to generate the $7,368.49 required under the Settlement Agreement, the deficiency is to be added to the principal balance owed, until paid. FCCC’s book of former merchants immediately failed to perform, making it impossible to pay to GET the funds it was due under the Settlement Agreement.
78. As of June 2008, FCCC’s book of former merchants has failed to produce sufficient revenue to fund the settlement.
THE FCCC PARTIES HAVE BEEN AND CONTINUE TO MOVE MERCHANT ACCOUNTS IN VIOLATION OF THE SETTLEMENT AGREEMENT
79. Pursuant to paragraphs 5 and page 6 of the Settlement Agreement, FCCC agreed and Ziglar personally agreed to use their best efforts to discourage merchant accounts from leaving GET. (See Settlement Agreement _ p.3-4, ¶ 5 & p.6, , attached to FCCC’s Complaint.) FCCC and Ziglar also agreed that neither Ziglar, his family, employees or related companies would attempt to move merchant accounts away from GET. Id.
80. In fact, Paragraph 5 of the Settlement Agreement provides:
Neither FIRST CREDIT, nor any affiliates, employees, agents, related companies or other companies owned in whole or in part by John Ziglar or his family, or employees shall move or attempt to acquire or move any existing accounts within the FIRST CREDIT Portfolio from processing by GET for thirty-six (36) months from the date hereof. John Ziglar shall endeavor in good faith to discourage any existing accounts from leaving GET for thirty-six (36) months . . . .
81. FCCC and Ziglar have been actively soliciting and moving the former FCCC merchant accounts to WTI in direct violation of the express terms of the Settlement Agreement. (See Settlement Agreement p.3-4, ¶ 5, attached to FCCC’s Complaint.). Upon information and belief, FCCC and Ziglar have conferred with third parties to contact merchants without GET’s knowledge or consent and transition their accounts to WTI.
82. Since February 14, 2008, FCCC and Ziglar have moved at least 10 merchant accounts from GET to WTI.
83. FCCC and Ziglar have attempted, by using WTI, to conceal the fact that they are poaching accounts in violation of the terms of the Settlement Agreement.
THE FCCC PARTIES ATTEMPT TO CONCEAL THE FACT THAT THEY ARE RAIDING GET’S MERCHANT ACCOUNTS
84. Ziglar is using his newly reinstated Florida corporation, WTI, rather than FCCC to house the merchant accounts he is wrongfully acquiring from GET in an effort to cloak the fact that he is directly violating the terms of the Settlement Agreement.
85. GET’s claims against the FCCC Parties arise from and relate to a conspiracy by and between FCCC, Ziglar and WTI to wrongfully misappropriate, move and conceal merchant accounts that were assigned to GET. Ziglar and the companies he controls, FCCC and WTI agreed to develop and employ a plan with a specific intent to move accounts from GET, and to conceal such accounts in violation of the Settlement Agreement. Upon information and belief, Ziglar used third parties to entice merchant accounts to leave GET. These third parties informed the merchants about Ziglar’s newly formed company,WTI, and encouraged all the merchants that had been assigned by FCCC to leave GET and re-sign with Ziglar’s company. The FCCC Parties acted to the detriment of GET, after the accounts were transferred and in furtherance of the conspiracy by concealing the location of the accounts, and misrepresenting their actions to GET. GET has suffered damages as a result of the conspiracy.
THE VISITOR CENTER, INC. CHARGEBACKS
86. Shortly after the Settlement Agreement was executed, GET was again held responsible for “chargebacks” related to costs assessed against another one of FCCC’s former merchant accounts. This time the chargebacks relate to The Visitor Center Inc. (“TVC”). The chargebacks and other costs incurred by GET in connection with TVC total over $700,000.
87. Neither FCCC nor Ziglar has indemnified GET for these losses as required under the Assignment Agreement.
88. FCCC is liable to GET for the full amount of the TVC chargebacks, attorneys fees and costs incurred by GET to pursue this claim.
BASIS FOR CLAIMS
89. The claims alleged herein relate to FCCC’s and Ziglar’s breach of the terms of the Settlement Agreement and the Assignment Agreement.
90. At all times relevant hereto, GET performed its obligations under the Settlement Agreement and the Assignment Agreement, while FCCC and Ziglar materially breached the terms of the agreements.
91. Further, since FCCC and Ziglar made misrepresentations and omissions to GET, GET has asserted claims of direct fraudulent misrepresentation against FCCC and Ziglar. As to WTI, GET’s claims of wrongdoing relate to WTI’s wrongful acquisition of merchant accounts through the actions of its principal, Ziglar.
I.
FIRST CLAIM FOR RELIEF
FIRST CLAIM FOR RELIEF
BREACH OF CONTRACT - SETTLEMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC)
92. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
93. FCCC and GET are parties to the Settlement Agreement.
94. At all times relevant hereto, FCCC was the alter ego of Ziglar.
95. Paragraph 2(a) of the Settlement Agreement provides, in pertinent part:
FIRST CREDIT shall pay to GET the Remaining Balance, together with interest thereon at the rate of six and one-half percent per annum (6.5%) in thirty-six (36) equal monthly installments in the approximate sum of $7,368.49 per month (subject to adjustment based upon a detailed amortization schedule), payable on the twentieth (20th) day of each month commencing February 20, 2008 . . . .
96. The Settlement Agreement defines the “Remaining Balance” as used in paragraph 2(a) as the “interest expense, attorneys fees, out of pocket costs and other expenses” incurred by GET that totaled “$265,000.” (See Recitals of the Settlement Agreement p.1, ¶ 2, attached to FCCC’s Complaint.) At all times relevant hereto, GET performed its obligations under the Settlement Agreement and the Assignment Agreement while FCCC materially breached the terms of the Settlement Agreement and also breached the terms of the Assignment Agreement.
97. Contrary to the terms of the Settlement Agreement, FCCC and Ziglar failed to make the required payments under the Settlement Agreement beginning in June 2008 and continuing to the date of this Complaint.
98. As a direct and proximate result of FCCC’s and Ziglar’s material breach of the Settlement Agreement, as of the date of this Counterclaim GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding sixty-six thousand and three hundred sixteen dollars ($66,316).
II.
SECOND CLAIM FOR RELIEF
SECOND CLAIM FOR RELIEF
BREACH OF CONTRACT - SETTLEMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
99. GET incorporates by reference the allegations contained in paragraphs 51 through 97 as though fully set forth herein.
100. FCCC, Ziglar, and GET are parties to the Settlement Agreement.
101. Ziglar executed the Settlement Agreement agreeing to “be bound to the obligations personal to him as set forth in Paragraph 5 . . . .” (See Settlement Agreement _, p.6, attached to FCCC’s Complaint.)
102. FCCC and Ziglar have encouraged and continue to encourage merchants to transfer their business away from GET and to Ziglar’s newly reinstated company, WTI.
103. As a direct and proximate result of FCCC’s and Ziglar’s material breach of the Settlement Agreement, merchant accounts were transferred and GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding seventy-five thousand and no/100 dollars ($75,000).
II.
THIRD CLAIM FOR RELIEF
THIRD CLAIM FOR RELIEF
BREACH OF CONTRACT - ASSIGNMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
104. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
105. GET and FCCC are parties to an oral contract whereby FCCC assigned all of its rights, title and interest to all FCCC merchant accounts to GET.
106. At all times, FCCC was the alter ego of Ziglar.
107. FCCC agreed to, among other things, remain responsible for all losses relating to merchant accounts, including but not limited to chargebacks and fines assessed by various credit card associations and/or Merrick on account of the losses caused by the former FCCC merchant accounts.
108. GET has been required to expend funds in excess of six hundred and ninety-eight thousand dollars ($698,000) in connection with the TVC chargebacks. FCCC has failed to pay for the chargebacks relating to the merchant account of TVC.
109. GET, by contrast, has performed all obligations under the contract.
110. As a direct and proximate result of FCCC’s material breach of the contract, GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding six hundred and ninety-eight thousand dollars ($698,000).
III.
FOURTH CLAIM FOR RELIEF
FOURTH CLAIM FOR RELIEF
FRAUD IN THE INDUCEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
111. GET incorporates by reference the allegations contained in paragraphs 51 through 97 as though fully set forth herein.
112. On February 14, 2008, FCCC and Ziglar made false representations to GET regarding their intent to move of the former FCCC merchant accounts away from GET.
113. Both FCCC and Ziglar specifically represented in the Settlement Agreement, which was executed on February 14, 2008, that:
Neither FIRST CREDIT, nor any affiliates, employees, agents, related companies or other companies owned in whole or in part by John Ziglar or his family, or employees shall move or attempt to acquire or move any existing accounts within the FIRST CREDIT Portfolio from processing by GET for thirty-six (36) months from the date hereof. John Ziglar shall endeavor in good faith to discourage any existing accounts from leaving GET for thirty-six (36) months . . . .
114. In fact, on February 14, 2008, FCCC and Ziglar intended and since that time have used WTI to do exactly what the Settlement Agreement prohibits. Indeed since February 2008, at least 10 merchants that were previously assigned to GET have moved their accounts to WTI. Some of these merchants have expressly indicated that they were contacted by WTI and requested to transfer. For example, Sarasota DanceSport and Aesthetic Dental Care, LLC (both merchants that were assigned to GET and contemplated by the Settlement Agreement) indicated that they were contacted by WTI and asked to move their accounts. Both of these merchants have since moved their accounts. Other merchants were contacted by third parties that the FCCC Parties used to cloak their efforts to move the merchant accounts. The third parties encouraged the merchants to move their accounts explaining that Ziglar formed WIT in order to service their accounts.
115. GET alleges that when entering into the Settlement Agreement FCCC and Ziglar had no intent to comply with the terms of the Settlement Agreement and they knew that the promises contained therein were, therefore, false when they were made. This is evident from the fact that immediately after the Settlement Agreement was executed, Ziglar acting through FCCC, WTI and/or their agents began to contact merchants and encourage them to move their accounts to WTI.
116. FCCC and Ziglar intended for GET to rely on the falsity of the misrepresentations and induce GET into entering into the Settlement Agreement in order to dispose of the AAA arbitration.
117. Furthermore, FCCC and Ziglar have purposely concealed the fact that WTI is, in fact, another alter ego of Ziglar. The transparent attempt by FCCC and Ziglar to hide the fact that they are poaching FCCC former merchant accounts for WTI is an actionable omission.
118. By way of the misrepresentations and omissions, FCCC and Ziglar intended to deceive and defraud GET.
119. GET reasonably and justifiably relied on the truth of FCCC’s and Ziglar’s representations. GET reasonably believed that the promises made in the Settlement Agreement were legitimate and made for the benefit of all parties in settling the dispute related to the AAA arbitration. GET had no reason to believe that FCCC and Ziglar would actively misrepresent their intentions when entering into the Settlement Agreement, and GET justifiably relied on FCCC’s and Ziglar’s promises in agreeing to the terms of the Settlement Agreement.
120. As a proximate result of the foregoing, and GET’s reasonable reliance on it, GET has been damaged in an amount subject to proof, but exceeding seven hundred and fifty thousand dollars ($750,000), plus interest and costs, as will be shown at trial.
121. FCCC’s and Ziglar’s false and fraudulent representation constituted the tort of fraudulent inducement under Florida law. Bradley Factor, Inc. v. U.S., 86 F. Supp. 2d 1140, 1146 (M.D. Fla. 2000) (applying Florida law) (fraud in the inducement occurs where one party's ability to negotiate and make informed decisions as to the contract is undermined by the other party's precontractual fraudulent behavior); HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238, 1239 (Fla.1996) (holding that “[w]here a contract exists, a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract. Fraudulent inducement is an independent tort in that it requires proof of facts separate and distinct from the breach of contract.).
IV.
FIFTH CLAIM FOR RELIEF
FOR DAMAGES BASED ON CONSPIRACY
(Against Plaintiff/Counter-Defendant FCCC, and Third Parties Ziglar and WTI)
122. GET incorporates by reference the allegations contained in paragraphs 51 through 91 and 112 through 115 as though fully set forth herein.
123. GET is informed and believes and thereon alleges that prior to the wrongful transfer of the merchant accounts referenced herein the FCCC Parties knowingly entered into an agreement with each other to move the accounts from GET, to conceal the accounts, and to misappropriate the merchant accounts for their collective benefit.
124. WTI agreed to assist FCCC and Ziglar in concealing the misappropriated merchant accounts in order to attempt to avoid direct violation of the Settlement Agreement with GET. Upon information and belief, the FCCC,Ziglar and WTI conferred with third parties and directed them to contact the assigned merchants. The third parties made telephone calls and sent e-mails to the merchants and encouraged them to leave GET and join WTI. The FCCC Parties used the third parties to conceal their conspiracy to move the merchant accounts. The FCCC Parties used the third parties to explain to all the merchants that Ziglar formed WTI in order to service their accounts.
125. The FCCC Parties furthered their conspiracy and lent aid and encouragement to or ratified and adopted the acts of each of the other co-conspirators by engaging in a series of transfers, as agents for each other, between each other to move, and misappropriate the merchant accounts from GET.
126. WTI has acted to conceal the fact that Ziglar and FCCC are the source of the merchant accounts it has acquired.
127. The FCCC Parties have actively participated in the concealment, and omission of accurate facts to GET regarding the whereabouts of the accounts and movement of the accounts. GET is informed and believes and thereon alleges that, to date, the FCCC Parties’ concealment and omissions continue.
128. On account of the foregoing, GET has been damaged in an amount subject to proof, but exceeding seven hundred and fifty thousand dollars ($750,000) plus interest and costs, as will be shown at trial.
V.
SIXTH CLAIM FOR RELIEF
SIXTH CLAIM FOR RELIEF
INTENTIONAL INTERFERENCE WITH BUSINESS RELATIONSHIPS
(Against Plaintiff/Counter-Defendant FCCC, and Third Parties Ziglar and WTI)
129. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
130. GET alleges that contracts existed between GET and merchants, which had been assigned to GET by virtue of the Assignment Agreement, for GET to provide credit card processing services to these assigned merchants.
131. GET alleges that the FCCC Parties intentionally interfered with the contract between GET and the assigned merchants.
132. FCCC and Ziglar knew of the contracts because they were parties of the Assignment Agreement. Upon information and belief, GET believes that WTI knew of the contracts because it is an alter ego of Ziglar and was used to transfer and conceal the assigned merchants in an effort to circumvent breach of the Settlement Agreement.
133. The FCCC Parties intended to disrupt the performance of the contracts relating to the assigned merchants by contacting them directly and encouraging them to move their accounts.
134. The FCCC Parties conduct prevented the performance of the GET’s contracts by transferring the assigned merchants to WTI for processing services.
135. GET has suffered resulting damage in form of lost revenue relating to the misappropriated merchant accounts in an amount subject to proof, but exceeding seventy-five thousand and no/100 dollars ($75,000).
136. The FCCC Parties’ conduct was a substantial factor in causing GET’s harm.
VI.
SEVENTH CLAIM FOR RELIEF
SEVENTH CLAIM FOR RELIEF
CLAIM FOR INJUNCTION
(Against FCCC, Ziglar and WTI)
137. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
138. GET is entitled to an injunction preventing the FCCC Parties, or any other entity or individual acting in concert with or at the direction of any of the FCCC Parties, from moving or otherwise encouraging merchants to move their accounts away from GET.
139. GET seeks injunctive relief from the Court that the FCCC Parties cease and desist actions that encourage merchants to move their accounts away from GET to WTI, FCCC or any other ISO, and that the FCCC Parties be enjoined from taking any such action; as well as such other and further relief as the Court deems appropriate.
VI.
EIGHTH CLAIM FOR RELIEF
EIGHTH CLAIM FOR RELIEF
DECLARATORY RELIEF
(Against FCCC, Ziglar and WTI)
(28 U.S.C. § 2201, ET SEQ.)
140. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
141. GET contends that FCCC has materially breached its agreements with GET by failing to perform under the terms thereof, and that no further payment under the Settlement Agreement is due to FCCC.
142. An actual controversy has arisen and now exists between the parties as set forth in detail above. GET therefore requests a judicial declaration that it has no further obligations with respect to payments to be made to FCCC relating to the Settlement Agreement.
JURY TRIAL DEMAND
GET demands trial by jury of all issues and claims so triable.
RELIEF REQUESTED
WHEREFORE, GET prays for judgment as follows:
1. That FCCC take nothing by way of its Complaint;
2. That said Complaint, and each claim for relief therein against GET, be dismissed with prejudice and at FCCC’s cost;
3. For damages in an amount according to proof but not less than $2,400,000 and for pre-judgment interest;
4. For attorneys’ fees and costs of suit incurred by GET pursuant to paragraph 13 of the Settlement Agreement and as may be available by law;
5. For injunction preventing FCCC, Ziglar or WTI, or any other entity or individual acting in concert with or at the direction of them, from moving or otherwise encouraging merchants to move their accounts away from GET;
6. For a judicial declaration pursuant to 28 U.S.C. § 2202 that GET owes to FCCC no further payments; and
7. For such other and further relief as the Court deems just and proper under the facts and circumstances of this case.
DATED: January _, 2010 s/
RICHARD L. MARTENS
Florida Bar No.: 219908
TRIAL COUNSEL
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
Attorneys for Defendant GLOBAL ELECTRONIC TECHNOLOGY, INC.
CASEY, CIKLIN, LUBITZ, MARTENS & O’CONNELL
515 North Flagler Drive, 19th Floor
West Palm Beach, FL 33401
Telephone: (561) 832-5900
Facsimile: (561) 833-4209
CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 3.01(G)
I HEREBY CERTIFY that prior to making the instant motion, I conferred with counsel for FCCC in a good faith effort to resolve the issue raised by the motion, and was unable to reach a resolution.
s/ A. Patricia Morales-Christiansen___
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on March _, 2009, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system.
s/ A. Patricia Morales-Christiansen___
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
1 A chargeback is a reversal of a payment card transaction initiated by the consumer who holds the card or the bank that issued the card used in the purchase . . . . A chargeback usually occurs when a consumer files a dispute with their bank of credit/debit card provider. This can happen when a consumer discovers fraudulent or improper transactions on their card statement or online account view. Wikipedia http://en.wikipedia.org/wiki/Chargeback (defining chargebacks). See generally Nova Information Sys., Inc. v. Greenwich Ins. Co., 365 F.3d 996, 1003 (11th Cir. 2004) (discussing chargebacks). See also Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146, 1158 (C.D. Cal. 2002) (“Chargebacks are requests for reversals of credit card charges and are often tied to customer complaints.”).
GET Answers FCCC Complaint
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION THE UNITED STATES DISTRICT COURT
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FIRST CREDIT CARD CORPORATION, a Florida corporation,
Plaintiff,
vs.
GLOBAL ELECTRONIC TECHNOLOGY, INC., a California corporation,
Defendant.
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Civil Action No. 6:08-CV-1974-ORL-31 GJK
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GLOBAL ELECTRONIC TECHNOLOGY, INC., a California corporation,
Defendant/Counter-Plaintiff,
vs.
FIRST CREDIT CARD CORPORATION, a Florida corporation,
Plaintiff/Counter-Defendant,
AND
JOHN ZIGLAR, an individual, and WHOLESALE TRANSACTIONS.COM, INC., a Florida corporation,
Third Party Defendants.
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Defendant Global Electronic Technology, Inc.’s ANSWER TO COMPLAINT, COUNTERCLAIMS, AND THIRD PARTY CLAIMS
Defendant GLOBAL ELECTRONIC TECHNOLOGY, INC. (“GET”) responds to Plaintiff FIRST CREDIT CARD CORP.’s (“FCCC”) Complaint as follows:
1. In response to Paragraph 1 of FCCC’s Complaint, GET admits that FCCC is a Florida corporation with its principal place of business located in Orange County, Florida.
2. In response to Paragraph 2 of FCCC’s Complaint, GET admits that it is a California corporation with its principal place of business located in Cypress, California.
3. In response to Paragraph 3 of FCCC’s Complaint, GET admits that this Court has subject matter jurisdiction over FCCC’s claims.
4. In response to Paragraph 4 of FCCC’s Complaint, GET denies that venue is proper.
5. In response to Paragraph 5 of FCCC’s Complaint, GET has insufficient information to admit or deny the allegations in Paragraph 5.
6. In response to Paragraph 6 of FCCC’s Complaint, GET admits that Merrick Bank Corporation (“Merrick”) served as the acquiring bank for credit card transactions initiated by merchants contracting with FCCC for processing such transactions.
7. In response to Paragraph 7, GET admits that it is been engaged in the business of providing services of processing credit card transactions for merchants in various locations through the United States of America.
8. In response to Paragraph 8, GET admits that Merrick has served as the acquiring bank for credit card transactions initiated by merchants contracting with GET.
9. In response to Paragraph 9, GET admits that in or about the spring of 2006, FCCC’s President John Ziglar (“Ziglar”) contacted Steven H. Bryson (“Bryson”), GET’s Chief Executive Officer, with the purpose of having GET acquire FCCC’s book of credit card merchant accounts. GET states that FCCC sought to transfer its merchant accounts to GET because it was being terminated by its acquiring bank, which would have led to FCCC being immediately forced out of business. GET denies the remaining allegations in Paragraph 9 of FCCC’s Complaint.
10. In response to Paragraph 10, GET admits that it has provided credit card processing services to the merchant accounts that were assigned to it by FCCC in April 2006.
11. GET admits that, in or about April 2006, it agreed to pay to FCCC ninety percent (90%) of the profits generated by former FCCC accounts which FCCC assigned to GET. GET denies the remaining allegations in Paragraph 11.
12. GET admits that, in or about 2006, a security breach occurred with one of FCCC’s former accounts, resulting in substantial chargebacks which GET initially paid to Merrick.
13. GET admits the facts as alleged in Paragraph 13.
14. GET admits the facts as alleged in Paragraph 14.
15. In response to Paragraph 15, GET responds as follows:
Paragraph 2(a) of the Settlement Agreement and Release (“Settlement Agreement”), attached to FCCC’s Complaint, states in pertinent part:
For so long as there remains outstanding any portion of the Remaining Balance, GET is hereby authorized to retain for credit to the account of FIRST CREDIT the payments due from FIRST CREDIT to GET pursuant to paragraph 2 hereof. In addition, effective January 1, 2008, the fees due to GET pursuant to the Processing Arrangement shall be an amount equal to twenty percent (20%) of the net income generated from the accounts in the FIRST CREDIT Portfolio serviced by GET on and after said date. FIRST CREDIT shall receive the remaining eighty percent (80%) of such net income by ACH to FIRST CREDIT on a monthly basis within five (5) days of GET receiving its disbursement from member bank for the amounts accruing during the immediately preceding month. The payments to FIRST CREDIT under this Agreement shall be net of sums owed to GET. (emphasis added).
Pursuant to the terms of Paragraph 3 of the Settlement Agreement, FCCC is (a) only entitled to the “net income” generated from the assigned accounts, and (b) to the extent that the income is insufficient to pay the $7,368.49 monthly payments FCCC must pay to GET under the Agreement, GET retain whatever funds were generated. “Net income” as used in Paragraph 3 of the Settlement Agreement is the income generated from the assigned accounts outside the $7,368.49 monthly payment due to GET. Contrary to FCCC’s allegations that GET breached the terms of the Settlement Agreement by “failing to pay to Plaintiff when due the remaining eighty percent (80%) . . .”, under the Settlement Agreement, GET may retain any portion of the 80% of income generated from FCCC’s assigned merchant accounts to compensate for any deficiency in the monthly payment that FCCC agreed to pay to GET. FCCC defaulted in payment of its $7,368.49 monthly payments that it agreed to pay in order to compensate GET for its losses relating to the breach by FCCC’s merchants that was involved in the arbitration proceeding. Pursuant to the Settlement Agreement, FCCC’s deficient monthly payments triggered GET’s ability to retain whatever portion of the 80% of income generated from FCCC’s assigned merchant accounts that made up for the difference. (See Settlement Agreement and Release ¶¶ 2-3, attached to FCCC’s Complaint.)
Moreover, pursuant to Paragraph 2(b) of the Settlement Agreement, FCCC promised “to indemnify and hold GET harmless for any and all amounts due to an entity called Calpian, including interest, costs and attorneys fees incurred by GET as a result of FCCC’s non-payment,” for a loan that Calpian made to FCCC, which GET agreed to pay out from the $7,368.49 monthly payments due under the Settlement Agreement. (See Settlement Agreement and Release ¶2(b), attached to FCCC’s Complaint.)
16. GET denies the allegations contained in Paragraph 16.
17. In response to Paragraph 17, GET admits that FCCC brought an action against GET for damages and FCCC alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 17 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
18. In response to Paragraph 18, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 16, as though fully set forth herein.
19. GET denies the allegations contained in Paragraph 19.
20. GET denies the allegations contained in Paragraph 20.
21. GET denies the allegations contained in Paragraph 21.
22. In response to Paragraph 22, GET admits that FCCC has retained counsel relating to this proceeding. GET denies in their entirety all other allegations contained therein.
23. In response to Paragraph 23, GET admits that FCCC brought an action against GET for damages and alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 23 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
24. In response to Paragraph 24, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 23, as though fully set forth herein.
25. GET denies in their entirety those allegations contained in Paragraph 25.
26. GET denies in their entirety those allegations contained in Paragraph 26.
27. GET denies in their entirety those allegations contained in Paragraph 27.
28. GET denies the allegations contained in Paragraph 28.
29. In response to Paragraph 29, GET admits that FCCC brought an action against GET for damages and alleges that they “exceed seventy-five thousand and no/100 dollars ($75,000.00).” To the extent that Paragraph 29 contains any factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
30. In response to Paragraph 30, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 29, as though fully set forth herein.
31. In response to Paragraph 31, GET denies in their entirety those allegations contained in Paragraph 31(a). GET has insufficient information to admit or deny the allegations in Paragraph 31(b) of FCCC’s Complaint.
32. GET denies the allegations contained in Paragraph 32.
33. GET denies the allegations contained in Paragraph 33.
34. GET denies in their entirety those allegations contained in Paragraph 34 and denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
35. In response to Paragraph 35, GET admits that FCCC brought an action against GET for declaratory relief. To the extent that Paragraph 35 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC is entitled to any type of relief whatsoever.
36. In response to Paragraph 36, GET repeats and incorporates herein by reference each and all of the denials, admissions, and averments set forth above in paragraphs 1 through 35, as though fully set forth herein.
37. In response to Paragraph 37, GET admits that an actual controversy exists between GET and FCCC within the jurisdiction of this Court. To the extent that Paragraph 37 contains any other factual assertions or conclusions, GET denies each and every such assertion and, without limiting the generality of the foregoing, denies specifically that FCCC is entitled to any type of relief whatsoever.
38. GET admits the facts as alleged in Paragraph 38.
39. GET denies in their entirety those allegations contained in Paragraph 39.
40. GET denies in their entirety those allegations contained in Paragraph 40 and denies specifically that FCCC has been damaged as averred or damaged in any way or in any amount whatsoever.
AFFIRMATIVE DEFENSES
In further answer to FCCC’s Complaint, and as separate and distinct affirmative defenses, GET alleges the following defenses:
41. AS A FIRST, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges that the Complaint and each and every allegation therein, fails to state a claim upon which relief may be granted.
42. AS A SECOND, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges that FCCC’s claims are barred based upon the equitable doctrines of waiver, estoppel, unclean hands and laches.
43. AS A THIRD, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE, GET alleges that FCCC’s Complaint, and each purported cause of action therein, is barred, or any recovery should be reduced, due to the fault of FCCC.
44. AS A FOURTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET is informed and believes and thereon alleges that, by exercise of reasonable efforts, FCCC could have mitigated the amount of damages allegedly suffered, but FCCC failed and/or refused and continues to fail and/or refuse, to exercise efforts to mitigate its damages, and therefore FCCC’s recovery, if any, must be barred or diminished accordingly.
45. AS A FIFTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET asserts that the alleged damages for which FCCC seeks to hold GET liable resulted in whole or in part from the negligent, deliberate, intentional, and/or unlawful acts or omissions of third parties, and GET is not responsible for or liable to FCCC for any such acts or omissions on the part of third parties.
46. AS A SIXTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET alleges the GET is entitled to recoupment and/or setoff against any recovery that may be awarded in favor of FCCC.
47. AS A SEVENTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET states that, at all times, it acted in good faith and did not induce any acts constituting a cause of action.
48. AS AN EIGHTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET states that any and all actions which FCCC assert were wrongful, if done at all, were justified, ratified, and done with the consent of FCCC.
49. AS AN NINTH SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, at all times relevant to this action, GET acted in a commercially reasonable and lawful manner.
50. AS A TENTH, SEPARATE, DISTINCT, AFFIRMATIVE DEFENSE to the Complaint, GET reserves the right to assert additional affirmative defenses upon revelation of more definitive facts by FCCC and upon GET’s undertaking of discovery and investigation of this matter.
COUNTER-CLAIM against FCCC and third party claim against John Ziglar and Wholesale Transactions.com, Inc.
GET hereby alleges the following counter-claims and third party claims against Plaintiff/Counter-Defendant First Credit Card Corporation (“FCCC") and Third Party Defendants John Ziglar (“Ziglar”) and Wholesale Transactions.com, Inc. (“WTI.” FCCC, Ziglar and WTI are collectively referred to as the “FCCC Parties” where appropriate) as follows:
parties
51. GET is a privately held corporation organized under the laws of the State of California, with its principal place of business located in Cypress, California.
52. FCCC is a privately held corporation organized under the laws of the State of Florida with its principal place of business located in Florida. On information and belief, GET alleges that Ziglar is the president and sole shareholder of FCCC.
53. Ziglar is an individual and the principal of FCCC, with his primary residence located in the State of Florida.
54. WTI is a privately held corporation organized under the laws of the State of Florida with its principal place of business located in Florida. On information and belief, GET alleges that Ziglar is the president and sole shareholder of WTI.
JURISDICTION AND VENUE
55. The Court has subject matter jurisdiction over these counterclaims and third party claims pursuant to 28 U.S.C. § 1332(a)(1), because this action is between a citizen of the State of California and citizens of the State of Florida, and the amount in controversy in this case is in excess of seventy-five thousand dollars ($75,000.00), exclusive of interest, costs and attorney’s fees. Alternatively, the Court has jurisdiction over these counterclaims and third party claims pursuant to 28 U.S.C. § 1367 because the claims form part of the same case or controversy as the claims asserted by FCCC.
56. This Court has personal jurisdiction over FCCC, Ziglar and WTI with respect to GET’s counterclaims and third party claims because, among other things, the FCCC Parties are residents of Florida and have purposely availed themselves of the benefits of this forum with respect to the matter in controversy, and the assertion of jurisdiction over them comports with notions of fair play and substantial justice.
57. Venue is proper in this district pursuant to 28 U.S.C. § 1391(a)(2).
GENERAL ALLEGATIONS
58. GET incorporates by reference the allegations contained in paragraph 51through 57 as though fully set forth herein.
59. GET is an independent sales organization (“ISO”), registered with Merrick Bank, a Utah industrial loan corporation (“Merrick”).
60. FCCC was an ISO with a principal place of business at 625 Main Street, Suite 20, Windermere, Florida 34786. Prior to entering into the agreements at issue herein, FCCC was registered with Merrick.
61. Ziglar is the President and, on information and belief is the sole shareholder of FCCC and is and was at all times relevant hereto the alter ego of FCCC. At all times, there was complete unity of interest between FCCC and Ziglar, such that there was no corporate separateness between FCCC and Ziglar.
62. GET is informed and believes and on that basis alleges that WTI is an ISO with a principal place of business in the same office as FCCC located at 625 Main Street, Suite 20, Windermere, Florida 34786. Ziglar is the President of WTI and, on information and belief, is the alter ego of WTI. GET alleges that, at all times there was complete unity of interest between WTI and Ziglar, such that there was no corporate separateness between WTI and Ziglar.
63. Both FCCC and WTI were inactive Florida corporations, but were reinstated by the Florida Secretary of State on the same day, November 21, 2008.
ASSIGNMENT AGREEMENT AND ARBITRATION
64. In or about the spring of 2006, Ziglar contacted Steve H. Bryson (“Bryson”) with the purpose of having GET acquire FCCC’s book of credit card merchant accounts. FCCC sought to transfer its merchant accounts to GET because it was being terminated by its bank, which would have led to FCCC being immediately forced out of business. On or about April 1, 2006, GET and FCCC entered into an oral agreement in the State of California whereby FCCC completely and irrevocably assigned its merchant accounts to GET (the “Assignment”).
65. Under the terms of the Assignment, FCCC assigned its merchant accounts to GET and irrevocably assigned all right, title and interest to those merchant accounts to GET, retaining only the right to receive some portion of residual income generated by the merchants. FCCC did not retain any ownership, contractual or equitable interest in the merchant accounts.
66. Under the terms of the Assignment, FCCC agreed, among other things, to deliver all merchant accounts to GET free of any claims, liens or encumbrances.
67. Under the terms of the Assignment, FCCC also agreed to be responsible for any losses occasioned to GET in connection with any of merchant accounts FCCC was assigning to GET.
68. In order to complete the assignment of FCCC’s book of merchants to GET, GET and FCCC had to obtain Merrick’s consent to the Assignment. On or about April 25, 2006, FCCC, GET and Merrick entered into a three party “Agreement to Consent to Assignment of Merchant Agreements” (the oral agreement for assignment and Merrick’s consent are collectively referred to as the “Assignment Agreement.”) (See Exhibit 1.)
69. After the Assignment, Merrick required that GET be responsible for “chargebacks”[1] assessed against FCCC’s former merchants.
70. Merrick ultimately assessed against GET, losses of over $700,000 which were caused by one of FCCC’s former merchant accounts, KampCo JC’s Number 7, LLC (“KampCo”), based upon alleged fraudulent conduct perpetrated by the merchant and/or its employees.
71. Pursuant to the terms of the Merchant Agreement signed by KampCo, GET filed a claim against the merchant with the American Arbitration Association (“AAA”), in an effort to recover the losses caused by the chargebacks assessed against KampCo.
72. FCCC intervened in the AAA proceeding as an interested party.
FCCC, ZIGLAR AND GET ENTER INTO A SETTLEMENT AGREEMENT AND RELEASE RELATING TO THE ARBITRATION CONCERNING THE KAMPCO CHARGEBACKS
73. On February 14, 2008, during an informal settlement conference in Long Beach, California, FCCC, Ziglar and GET agreed to settle the dispute relating to the KampCo chargebacks.
74. As part of the Settlement Agreement, FCCC agreed to pay GET for “incurred interest expense, attorneys’ fees, out of pocket costs and other expenses in connection with its relationship” with FCCC concerning KampCo. (See Settlement Agreement pps. 1-2, ¶ 2, attached to FCCC’s Complaint.)
75. After the parties applied various sums GET was holding to fund the settlement, FCCC had a remaining sum of two hundred sixty-five thousand dollars ($265,000) which it was required to pay to GET. (See Settlement Agreement _ p.2, ¶ 2, attached to FCCC’s Complaint.)
76. As part of the Settlement Agreement, FCCC agreed to pay the $265,000 “together with interest thereon at the rate of six and one-half percent per annum (6.5%) in thirty-six (36) equal monthly installments in the approximate sum of $7,368.49 per month (subject to adjustment based upon a detailed amortization schedule), payable on the twentieth (20th) day of each month commencing February 20, 2008.” (See Settlement Agreement _ p.2, ¶ 2(a), attached to FCCC’s Complaint.)
FCCC FAILED TO MAKE THE REQUIRED PAYMENTS UNDER THE SETTLEMENT AGREEMENT
77. The Settlement Agreement provides that GET will first apply the revenue generated by the former FCCC merchants toward the payments required under the Settlement Agreement. If the revenue is insufficient to generate the $7,368.49 required under the Settlement Agreement, the deficiency is to be added to the principal balance owed, until paid. FCCC’s book of former merchants immediately failed to perform, making it impossible to pay to GET the funds it was due under the Settlement Agreement.
78. As of June 2008, FCCC’s book of former merchants has failed to produce sufficient revenue to fund the settlement.
THE FCCC PARTIES HAVE BEEN AND CONTINUE TO MOVE MERCHANT ACCOUNTS IN VIOLATION OF THE SETTLEMENT AGREEMENT
79. Pursuant to paragraphs 5 and page 6 of the Settlement Agreement, FCCC agreed and Ziglar personally agreed to use their best efforts to discourage merchant accounts from leaving GET. (See Settlement Agreement _ p.3-4, ¶ 5 & p.6, , attached to FCCC’s Complaint.) FCCC and Ziglar also agreed that neither Ziglar, his family, employees or related companies would attempt to move merchant accounts away from GET. Id.
80. In fact, Paragraph 5 of the Settlement Agreement provides:
Neither FIRST CREDIT, nor any affiliates, employees, agents, related companies or other companies owned in whole or in part by John Ziglar or his family, or employees shall move or attempt to acquire or move any existing accounts within the FIRST CREDIT Portfolio from processing by GET for thirty-six (36) months from the date hereof. John Ziglar shall endeavor in good faith to discourage any existing accounts from leaving GET for thirty-six (36) months . . . .
81. FCCC and Ziglar have been actively soliciting and moving the former FCCC merchant accounts to WTI in direct violation of the express terms of the Settlement Agreement. (See Settlement Agreement p.3-4, ¶ 5, attached to FCCC’s Complaint.). Upon information and belief, FCCC and Ziglar have conferred with third parties to contact merchants without GET’s knowledge or consent and transition their accounts to WTI.
82. Since February 14, 2008, FCCC and Ziglar have moved at least 10 merchant accounts from GET to WTI.
83. FCCC and Ziglar have attempted, by using WTI, to conceal the fact that they are poaching accounts in violation of the terms of the Settlement Agreement.
THE FCCC PARTIES ATTEMPT TO CONCEAL THE FACT THAT THEY ARE RAIDING GET’S MERCHANT ACCOUNTS
84. Ziglar is using his newly reinstated Florida corporation, WTI, rather than FCCC to house the merchant accounts he is wrongfully acquiring from GET in an effort to cloak the fact that he is directly violating the terms of the Settlement Agreement.
85. GET’s claims against the FCCC Parties arise from and relate to a conspiracy by and between FCCC, Ziglar and WTI to wrongfully misappropriate, move and conceal merchant accounts that were assigned to GET. Ziglar and the companies he controls, FCCC and WTI agreed to develop and employ a plan with a specific intent to move accounts from GET, and to conceal such accounts in violation of the Settlement Agreement. Upon information and belief, Ziglar used third parties to entice merchant accounts to leave GET. These third parties informed the merchants about Ziglar’s newly formed company,WTI, and encouraged all the merchants that had been assigned by FCCC to leave GET and re-sign with Ziglar’s company. The FCCC Parties acted to the detriment of GET, after the accounts were transferred and in furtherance of the conspiracy by concealing the location of the accounts, and misrepresenting their actions to GET. GET has suffered damages as a result of the conspiracy.
THE VISITOR CENTER, INC. CHARGEBACKS
86. Shortly after the Settlement Agreement was executed, GET was again held responsible for “chargebacks” related to costs assessed against another one of FCCC’s former merchant accounts. This time the chargebacks relate to The Visitor Center Inc. (“TVC”). The chargebacks and other costs incurred by GET in connection with TVC total over $700,000.
87. Neither FCCC nor Ziglar has indemnified GET for these losses as required under the Assignment Agreement.
88. FCCC is liable to GET for the full amount of the TVC chargebacks, attorneys fees and costs incurred by GET to pursue this claim.
BASIS FOR CLAIMS
89. The claims alleged herein relate to FCCC’s and Ziglar’s breach of the terms of the Settlement Agreement and the Assignment Agreement.
90. At all times relevant hereto, GET performed its obligations under the Settlement Agreement and the Assignment Agreement, while FCCC and Ziglar materially breached the terms of the agreements.
91. Further, since FCCC and Ziglar made misrepresentations and omissions to GET, GET has asserted claims of direct fraudulent misrepresentation against FCCC and Ziglar. As to WTI, GET’s claims of wrongdoing relate to WTI’s wrongful acquisition of merchant accounts through the actions of its principal, Ziglar.
I.
FIRST CLAIM FOR RELIEF
FIRST CLAIM FOR RELIEF
BREACH OF CONTRACT - SETTLEMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC)
92. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
93. FCCC and GET are parties to the Settlement Agreement.
94. At all times relevant hereto, FCCC was the alter ego of Ziglar.
95. Paragraph 2(a) of the Settlement Agreement provides, in pertinent part:
FIRST CREDIT shall pay to GET the Remaining Balance, together with interest thereon at the rate of six and one-half percent per annum (6.5%) in thirty-six (36) equal monthly installments in the approximate sum of $7,368.49 per month (subject to adjustment based upon a detailed amortization schedule), payable on the twentieth (20th) day of each month commencing February 20, 2008 . . . .
96. The Settlement Agreement defines the “Remaining Balance” as used in paragraph 2(a) as the “interest expense, attorneys fees, out of pocket costs and other expenses” incurred by GET that totaled “$265,000.” (See Recitals of the Settlement Agreement p.1, ¶ 2, attached to FCCC’s Complaint.) At all times relevant hereto, GET performed its obligations under the Settlement Agreement and the Assignment Agreement while FCCC materially breached the terms of the Settlement Agreement and also breached the terms of the Assignment Agreement.
97. Contrary to the terms of the Settlement Agreement, FCCC and Ziglar failed to make the required payments under the Settlement Agreement beginning in June 2008 and continuing to the date of this Complaint.
98. As a direct and proximate result of FCCC’s and Ziglar’s material breach of the Settlement Agreement, as of the date of this Counterclaim GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding sixty-six thousand and three hundred sixteen dollars ($66,316).
II.
SECOND CLAIM FOR RELIEF
SECOND CLAIM FOR RELIEF
BREACH OF CONTRACT - SETTLEMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
99. GET incorporates by reference the allegations contained in paragraphs 51 through 97 as though fully set forth herein.
100. FCCC, Ziglar, and GET are parties to the Settlement Agreement.
101. Ziglar executed the Settlement Agreement agreeing to “be bound to the obligations personal to him as set forth in Paragraph 5 . . . .” (See Settlement Agreement _, p.6, attached to FCCC’s Complaint.)
102. FCCC and Ziglar have encouraged and continue to encourage merchants to transfer their business away from GET and to Ziglar’s newly reinstated company, WTI.
103. As a direct and proximate result of FCCC’s and Ziglar’s material breach of the Settlement Agreement, merchant accounts were transferred and GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding seventy-five thousand and no/100 dollars ($75,000).
II.
THIRD CLAIM FOR RELIEF
THIRD CLAIM FOR RELIEF
BREACH OF CONTRACT - ASSIGNMENT AGREEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
104. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
105. GET and FCCC are parties to an oral contract whereby FCCC assigned all of its rights, title and interest to all FCCC merchant accounts to GET.
106. At all times, FCCC was the alter ego of Ziglar.
107. FCCC agreed to, among other things, remain responsible for all losses relating to merchant accounts, including but not limited to chargebacks and fines assessed by various credit card associations and/or Merrick on account of the losses caused by the former FCCC merchant accounts.
108. GET has been required to expend funds in excess of six hundred and ninety-eight thousand dollars ($698,000) in connection with the TVC chargebacks. FCCC has failed to pay for the chargebacks relating to the merchant account of TVC.
109. GET, by contrast, has performed all obligations under the contract.
110. As a direct and proximate result of FCCC’s material breach of the contract, GET has suffered and continues to suffer damages, including consequential damages, in an amount subject to proof, but exceeding six hundred and ninety-eight thousand dollars ($698,000).
III.
FOURTH CLAIM FOR RELIEF
FOURTH CLAIM FOR RELIEF
FRAUD IN THE INDUCEMENT
(Against Plaintiff/Counter-Defendant FCCC and Third Party Ziglar)
111. GET incorporates by reference the allegations contained in paragraphs 51 through 97 as though fully set forth herein.
112. On February 14, 2008, FCCC and Ziglar made false representations to GET regarding their intent to move of the former FCCC merchant accounts away from GET.
113. Both FCCC and Ziglar specifically represented in the Settlement Agreement, which was executed on February 14, 2008, that:
Neither FIRST CREDIT, nor any affiliates, employees, agents, related companies or other companies owned in whole or in part by John Ziglar or his family, or employees shall move or attempt to acquire or move any existing accounts within the FIRST CREDIT Portfolio from processing by GET for thirty-six (36) months from the date hereof. John Ziglar shall endeavor in good faith to discourage any existing accounts from leaving GET for thirty-six (36) months . . . .
114. In fact, on February 14, 2008, FCCC and Ziglar intended and since that time have used WTI to do exactly what the Settlement Agreement prohibits. Indeed since February 2008, at least 10 merchants that were previously assigned to GET have moved their accounts to WTI. Some of these merchants have expressly indicated that they were contacted by WTI and requested to transfer. For example, Sarasota DanceSport and Aesthetic Dental Care, LLC (both merchants that were assigned to GET and contemplated by the Settlement Agreement) indicated that they were contacted by WTI and asked to move their accounts. Both of these merchants have since moved their accounts. Other merchants were contacted by third parties that the FCCC Parties used to cloak their efforts to move the merchant accounts. The third parties encouraged the merchants to move their accounts explaining that Ziglar formed WIT in order to service their accounts.
115. GET alleges that when entering into the Settlement Agreement FCCC and Ziglar had no intent to comply with the terms of the Settlement Agreement and they knew that the promises contained therein were, therefore, false when they were made. This is evident from the fact that immediately after the Settlement Agreement was executed, Ziglar acting through FCCC, WTI and/or their agents began to contact merchants and encourage them to move their accounts to WTI.
116. FCCC and Ziglar intended for GET to rely on the falsity of the misrepresentations and induce GET into entering into the Settlement Agreement in order to dispose of the AAA arbitration.
117. Furthermore, FCCC and Ziglar have purposely concealed the fact that WTI is, in fact, another alter ego of Ziglar. The transparent attempt by FCCC and Ziglar to hide the fact that they are poaching FCCC former merchant accounts for WTI is an actionable omission.
118. By way of the misrepresentations and omissions, FCCC and Ziglar intended to deceive and defraud GET.
119. GET reasonably and justifiably relied on the truth of FCCC’s and Ziglar’s representations. GET reasonably believed that the promises made in the Settlement Agreement were legitimate and made for the benefit of all parties in settling the dispute related to the AAA arbitration. GET had no reason to believe that FCCC and Ziglar would actively misrepresent their intentions when entering into the Settlement Agreement, and GET justifiably relied on FCCC’s and Ziglar’s promises in agreeing to the terms of the Settlement Agreement.
120. As a proximate result of the foregoing, and GET’s reasonable reliance on it, GET has been damaged in an amount subject to proof, but exceeding seven hundred and fifty thousand dollars ($750,000), plus interest and costs, as will be shown at trial.
121. FCCC’s and Ziglar’s false and fraudulent representation constituted the tort of fraudulent inducement under Florida law. Bradley Factor, Inc. v. U.S., 86 F. Supp. 2d 1140, 1146 (M.D. Fla. 2000) (applying Florida law) (fraud in the inducement occurs where one party's ability to negotiate and make informed decisions as to the contract is undermined by the other party's precontractual fraudulent behavior); HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So.2d 1238, 1239 (Fla.1996) (holding that “[w]here a contract exists, a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract. Fraudulent inducement is an independent tort in that it requires proof of facts separate and distinct from the breach of contract.).
IV.
FIFTH CLAIM FOR RELIEF
FOR DAMAGES BASED ON CONSPIRACY
(Against Plaintiff/Counter-Defendant FCCC, and Third Parties Ziglar and WTI)
122. GET incorporates by reference the allegations contained in paragraphs 51 through 91 and 112 through 115 as though fully set forth herein.
123. GET is informed and believes and thereon alleges that prior to the wrongful transfer of the merchant accounts referenced herein the FCCC Parties knowingly entered into an agreement with each other to move the accounts from GET, to conceal the accounts, and to misappropriate the merchant accounts for their collective benefit.
124. WTI agreed to assist FCCC and Ziglar in concealing the misappropriated merchant accounts in order to attempt to avoid direct violation of the Settlement Agreement with GET. Upon information and belief, the FCCC,Ziglar and WTI conferred with third parties and directed them to contact the assigned merchants. The third parties made telephone calls and sent e-mails to the merchants and encouraged them to leave GET and join WTI. The FCCC Parties used the third parties to conceal their conspiracy to move the merchant accounts. The FCCC Parties used the third parties to explain to all the merchants that Ziglar formed WTI in order to service their accounts.
125. The FCCC Parties furthered their conspiracy and lent aid and encouragement to or ratified and adopted the acts of each of the other co-conspirators by engaging in a series of transfers, as agents for each other, between each other to move, and misappropriate the merchant accounts from GET.
126. WTI has acted to conceal the fact that Ziglar and FCCC are the source of the merchant accounts it has acquired.
127. The FCCC Parties have actively participated in the concealment, and omission of accurate facts to GET regarding the whereabouts of the accounts and movement of the accounts. GET is informed and believes and thereon alleges that, to date, the FCCC Parties’ concealment and omissions continue.
128. On account of the foregoing, GET has been damaged in an amount subject to proof, but exceeding seven hundred and fifty thousand dollars ($750,000) plus interest and costs, as will be shown at trial.
V.
SIXTH CLAIM FOR RELIEF
SIXTH CLAIM FOR RELIEF
INTENTIONAL INTERFERENCE WITH BUSINESS RELATIONSHIPS
(Against Plaintiff/Counter-Defendant FCCC, and Third Parties Ziglar and WTI)
129. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
130. GET alleges that contracts existed between GET and merchants, which had been assigned to GET by virtue of the Assignment Agreement, for GET to provide credit card processing services to these assigned merchants.
131. GET alleges that the FCCC Parties intentionally interfered with the contract between GET and the assigned merchants.
132. FCCC and Ziglar knew of the contracts because they were parties of the Assignment Agreement. Upon information and belief, GET believes that WTI knew of the contracts because it is an alter ego of Ziglar and was used to transfer and conceal the assigned merchants in an effort to circumvent breach of the Settlement Agreement.
133. The FCCC Parties intended to disrupt the performance of the contracts relating to the assigned merchants by contacting them directly and encouraging them to move their accounts.
134. The FCCC Parties conduct prevented the performance of the GET’s contracts by transferring the assigned merchants to WTI for processing services.
135. GET has suffered resulting damage in form of lost revenue relating to the misappropriated merchant accounts in an amount subject to proof, but exceeding seventy-five thousand and no/100 dollars ($75,000).
136. The FCCC Parties’ conduct was a substantial factor in causing GET’s harm.
VI.
SEVENTH CLAIM FOR RELIEF
SEVENTH CLAIM FOR RELIEF
CLAIM FOR INJUNCTION
(Against FCCC, Ziglar and WTI)
137. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
138. GET is entitled to an injunction preventing the FCCC Parties, or any other entity or individual acting in concert with or at the direction of any of the FCCC Parties, from moving or otherwise encouraging merchants to move their accounts away from GET.
139. GET seeks injunctive relief from the Court that the FCCC Parties cease and desist actions that encourage merchants to move their accounts away from GET to WTI, FCCC or any other ISO, and that the FCCC Parties be enjoined from taking any such action; as well as such other and further relief as the Court deems appropriate.
VI.
EIGHTH CLAIM FOR RELIEF
EIGHTH CLAIM FOR RELIEF
DECLARATORY RELIEF
(Against FCCC, Ziglar and WTI)
(28 U.S.C. § 2201, ET SEQ.)
140. GET incorporates by reference the allegations contained in paragraphs 51 through 91 as though fully set forth herein.
141. GET contends that FCCC has materially breached its agreements with GET by failing to perform under the terms thereof, and that no further payment under the Settlement Agreement is due to FCCC.
142. An actual controversy has arisen and now exists between the parties as set forth in detail above. GET therefore requests a judicial declaration that it has no further obligations with respect to payments to be made to FCCC relating to the Settlement Agreement.
JURY TRIAL DEMAND
GET demands trial by jury of all issues and claims so triable.
RELIEF REQUESTED
WHEREFORE, GET prays for judgment as follows:
1. That FCCC take nothing by way of its Complaint;
2. That said Complaint, and each claim for relief therein against GET, be dismissed with prejudice and at FCCC’s cost;
3. For damages in an amount according to proof but not less than $2,400,000 and for pre-judgment interest;
4. For attorneys’ fees and costs of suit incurred by GET pursuant to paragraph 13 of the Settlement Agreement and as may be available by law;
5. For injunction preventing FCCC, Ziglar or WTI, or any other entity or individual acting in concert with or at the direction of them, from moving or otherwise encouraging merchants to move their accounts away from GET;
6. For a judicial declaration pursuant to 28 U.S.C. § 2202 that GET owes to FCCC no further payments; and
7. For such other and further relief as the Court deems just and proper under the facts and circumstances of this case.
DATED: January _, 2010 s/
RICHARD L. MARTENS
Florida Bar No.: 219908
TRIAL COUNSEL
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
Attorneys for Defendant GLOBAL ELECTRONIC TECHNOLOGY, INC.
CASEY, CIKLIN, LUBITZ, MARTENS & O’CONNELL
515 North Flagler Drive, 19th Floor
West Palm Beach, FL 33401
Telephone: (561) 832-5900
Facsimile: (561) 833-4209
CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 3.01(G)
I HEREBY CERTIFY that prior to making the instant motion, I conferred with counsel for FCCC in a good faith effort to resolve the issue raised by the motion, and was unable to reach a resolution.
s/ A. Patricia Morales-Christiansen___
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on March _, 2009, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system.
s/ A. Patricia Morales-Christiansen___
A. PATRICIA MORALES-CHRISTIANSEN
Florida Bar No.: 0027634
1 A chargeback is a reversal of a payment card transaction initiated by the consumer who holds the card or the bank that issued the card used in the purchase . . . . A chargeback usually occurs when a consumer files a dispute with their bank of credit/debit card provider. This can happen when a consumer discovers fraudulent or improper transactions on their card statement or online account view. Wikipedia http://en.wikipedia.org/wiki/Chargeback (defining chargebacks). See generally Nova Information Sys., Inc. v. Greenwich Ins. Co., 365 F.3d 996, 1003 (11th Cir. 2004) (discussing chargebacks). See also Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146, 1158 (C.D. Cal. 2002) (“Chargebacks are requests for reversals of credit card charges and are often tied to customer complaints.”).