1 LEE HARDEE ... and

2 LAW OFFICES OF BAIRD A. BROWN APC 3055 Wilshire Boulevard, Suite 1200

3 Los Angeles, CA 90010

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Telephone: (213) 487-8880 Attorneys for Plaintiff

8 ... COURT ...

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11 KWANGSUN EDMONSTON,

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13 V.

Plaintiff,

14 APT GROUP, INC.; APT IP HOLDINGS, INC.; AMERICAN PERFORMANCE

15 TECHNOLOGIES, LLC; AMERICAN POWERSPORT AND UTILITY PRODUCTS,

16 LLC; TROY COVEY; WILLIAM MAHER; and MAZUMA CREDIT UNION,

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Defendants.

20 Plaintiff complains as follows:

Case No.

COMPLAINT FOR CONVERSION, BREACH OF CONTRACT, BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING, FOR DECLARATORY AND ANCILLARY RELIEF, VIOLATION OF THE MISSOURI FRAUDULENT TRANSFER ACT, AND CIVIL CONSPIRACY

21 1. Defendants APT GROUP, INC. and APT IP HOLDINGS, INC. are corporations

22 with their principal places of business located in Kansas City, Missouri.

23 2. Defendants AMERICAN PERFORMANCE TECHNOLOGIES, LLC and

24 AMERICAN POWERSPORT AND UTILITY PRODUCTS, LLC are limited liability

25 companies with their principal places of business located in Kansas City, Missouri.

26 3. Defendants APT GROUP, INC., APT IP HOLDINGS, INC., AMERICAN

27 PERFORMANCE TECHNOLOGIES, LLC and AMERICAN POWERSPORT AND UTILITY

28 PRODUCTS, LLC are collectively referred to below as "APT."

1 COMPLAINT

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4. On information and belief defendant Troy Covey ("Covey") is a Missouri resident and CEO of the APT entities.

5. On information and belief defendant William Maher ("Maher") is a Missouri

resident and CFO of the APT entities.

6. Defendant Mazuma Credit Union's ("Mazuma") principal place of business is located in Kansas City, Missouri.

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FIRST CAUSE OF ACTION

(Conversion) Plaintiff incorporates by reference paragraphs 1 through 6 above.

In 2007, plaintiff and APT IP Holdings, Inc. entered into a contract for the sale by

11 plaintiff and the purchase by APT of a carburetor patent.

12 9. APT defaulted on its payment obligations to plaintiff, and in 2011 plaintiff filed

13 suit against certain of the APT entities.

14 10. The action settled in 2012. The settlement was documented in a settlement

15 agreement and in a 2014 amendment thereto. Copies of the settlement agreement and its

16 amendment are attached hereto as Exhibits 1 and 2, respectively.

17 11. The 2012 settlement agreement provided in part that APT would execute an

18 Assignment of the patent to plaintiff, along with the assignment of all improvements, inventions,

19 trade secrets and know-how related to the patent, and deliver the Assignment to a third party;

20 further, that upon a default by APT, at plaintiffs election, either the Assignment would be

21 delivered to plaintiff or plaintiff would file for a consent judgment in the amount owed under the 22 settlement agreement.

23 12. The settlement agreement contains APT' s representations that the patent is not

24 subject to any liens, claims, or security interest, and that APT would not encumber, sell, transfer, 25 license or assign the patent without plaintiffs consent.

26 13. APT thereafter defaulted on its payment obligations under the settlement

27 agreement.

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2 COMPLAINT

1 14. Plaintiff then discovered that subsequent to the execution of the settlement

2 agreement Mazuma, APT, Covey and Maher encumbered the patent by giving a security interest

3 therein to Mazuma. The effect was to destroy the value of the Assignment of the patent to

4 plaintiff.

5 15. At all times relevant herein plaintiff was and is the equitable owner of the patent.

6 16. Defendants have wrongfully exerted dominion over the patent. Defendants'

7 conduct constitutes a denial of plaintiffs rights in the property, is inconsistent with plaintiffs

8 rights, and represents a conversion of plaintiffs property.

9 17. The patent had a value in excess of $1,287,500. Defendants have reduced the 10 value of the patent to plaintiff to a nominal sum. Plaintiff has been damaged accordingly.

11 18. Plaintiff is entitled to recover interest at the rate of 10% on the value of the patent

12 commencing July 1, 2013.

13 19. By reason of the conversion, plaintiff is entitled to recover fair compensation in a

14 sum to be established according to proof for the time and money she properly expended,

15 including attorney fees, trying to protect her property rights.

16 20. In doing the foregoing acts, defendants acted in a willful, wanton, malicious,

1 7 oppressive, and fraudulent manner toward plaintiff, and in conscious disregard of plaintiffs

18 known rights, with the intention of benefiting themselves financially, and with the intent of, or a

19 conscious disregard of the probability of, causing plaintiff injury. In so acting, defendants 20 intended to and did vex, annoy, injure, and harass plaintiff, and consciously disregarded her 21 rights, so as to warrant the assessment of exemplary and punitive damages against defendants in

22 a sum to be established according to proof.

23 SECOND CAUSE OF ACTION

24 (Breach of Contract- APT Defendants) 25

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Plaintiff incorporates by reference paragraphs 1 through 20 above.

The APT defendants have breached their obligations under the Settlemen

27 Agreement and the Amendment thereto by failing to make payments when due, and b

28 encumbering the patent preventing and frustrating plaintiffs option to elect to receive the paten

3 COMPLAINT

1 free and clear of all encumbrances upon the APT defendants' breach of the Settlemen

2 Agreement and Amendment thereto. See Exhibits 1 and 2.

3 23. Plaintiff has performed all of her obligations pursuant to said agreements.

4 24. As a direct and proximate result of defendants breache( es), plaintiff has bee 5 damaged.

6 25. The patent had a value in excess of $1,287,500. Defendants have reduced th 7 value of the patent to plaintiff to a nominal sum. Plaintiff has been damaged accordingly.

8 26. Plaintiff is entitled to recover interest at the rate of 10% on the value of the paten

9 commencing July 1, 2013.

10 27. By reason of the breach of contract, and the conversion, plaintiff is entitled t

11 recover fair compensation in a sum to be established according to proof for the time and mone

12 she properly expended, including attorney fees, trying to protect her property rights.

13 THIRD CAUSE OF ACTION

14 (Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing) 15 28. Plaintiff incorporates by reference paragraphs 1through27 above.

16 29. The settlement agreement contains APT's representations that the patent is no

17 subject to any liens, claims, or security interest, and that APT would not encumber, sell, 18 transfer, license or assign the patent without plaintiffs consent.

19 30. The APT defendants, Covey and Maher occupied a position where they wer

20 entrusted with the patent, had assured and promised that it would not be encumbered, an

21 retained use of the patent, all the while leading Plaintiff to believe that the patent had not bee

22 encumbered and even offering for Plaintiff to take the patent when the APT defendant

23 breached their payment obligations.

24 31. Plaintiff relied on the APT defendants, Covey and Maher to keep the patent fre

25 from encumbrances.

26 32. Defendants, in engaging in the foregoing acts, engaged in grievous and perfidiou

27 misconduct thereby subjecting them to liability in tort for their misconduct. 28

4 COMPLAINT

1 33. Plaintiff has been damaged according to proof by defendants' breach of th

2 agreement's implied covenant of good faith and fair dealing.

3 34. In doing the foregoing acts, defendants acted in a willful, wanton, malicious,

4 oppressive, and fraudulent manner toward plaintiff, and in conscious disregard of plaintiffs

5 known rights, with the intention of benefiting themselves financially, and with the intent of, or

6 a conscious disregard of the probability of, causing plaintiff injury. In so acting, defendants 7 intended to and did vex, annoy, injure, and harass plaintiff, and consciously disregarded her 8 rights, so as to warrant the assessment of exemplary and punitive damages against defendants

9 in a sum to be established according to proof.

10 FOURTH CAUSE OF ACTION

11 (Declaratory and Ancillary Relief) 12 3 5. Plaintiff incorporates by reference paragraphs 1 through 34 above.

13 36. A controversy has arisen and now exists between plaintiff and defendants relative

14 to their rights and duties.

15 37. Plaintiff contends that Mazuma's security interest in the patent is void and

16 unenforceable.

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Defendants contend to the contrary.

Plaintiff desires a judicial declaration and determination of her rights herein. A judicial declaration and determination of the parties' rights and duties is

20 necessary and appropriate at this time under the circumstances.

21 41. Plaintiff is entitled to recover reasonable attorney fees herein pursuant to the

22 settlement agreement.

23 FIFTH CAUSE OF ACTION

24 (Violation Of The Missouri Uniform Fraudulent Transfer Act RSMO. 428.005 et seq.) 25 42. Plaintiff incorporates by reference paragraphs 1through41 above.

26 43. The APT Defendants, Covey and Maher caused the patent to be encumbered in

27 violation of the Settlement Agreement and RSMO 428.005 et seq by granting Mazuma a security

28 interest in the patent in connection with a loan or refinancing with Mazuma.

5 COMPLAINT

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44. The transfer or encumbrance by the APT Defendants, Covey and Maher to

Mazuma is fraudulent as to plaintiff because:

a. Upon information and belief the transfer was made with the actual intent

to hinder, delay or defraud plaintiff with respect to her interest in the patent; and

b. The APT Defendants, Covey and Maher retained possession and control

of the patent; and

7 c. The transfer or encumbrance was not disclosed to plaintiff at the time it

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d. Upon information and belief, the transfer or encumbrance occurred shortly

before or shortly after a substantial debt was incurred.

45. Plaintiff asserts, upon information and belief, that if Mazuma had done normal

due diligence it would have discovered the prohibition against encumbrance as a result of the

Settlement Agreement between the APT Defendants and Edmonston. Instead, on information

and belief, Mazuma failed to act in good faith, failed to receive reasonably equivalent value, and

intentionally aided the fraudulent transfer.

46. Plaintiff seeks avoidance of the transfer or obligation to the extent necessary to

satisfy plaintiffs claims and/or any other relief the circumstances may require.

SIXTH CAUSE OF ACTION

(Civil Conspiracy) 4 7. Plaintiff incorporates by reference paragraphs 1 through 46 above.

48. Upon information and belief, the APT Defendants, Covey, Maher and potentially

others, desired to prevent plaintiff from obtaining the patent as a result of the breach(s) of the Settlement Agreement by the APT defendants.

49. Upon information and belief, the APT Defendants, Covey, Maher and potentially

others determined that granting a security interest in the patent to Mazuma would prevent

plaintiff from obtaining her rightful interest in the patent upon breach by the APT defendants of

the Settlement Agreement.

6 COMPLAINT

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50. Upon information and belief, there was a meeting of the minds of the APT

defendants, Covey, Maher and others to encumber the patent by granting a security interest in the

patent to Mazuma in violation of the APT defendants' obligations in the Settlement Agreement.

51. The APT defendants, Covey, Maher and potentially others committed an overt

unlawful act in furtherance of the conspiracy by granting a security interest in the patent to

Mazuma in violation of the Settlement Agreement.

52. Plaintiff asks the Court to issue its order voiding the transfer/security interest

granted to Mazuma and/or such other relief as is equitable and just under the circumstances. 53. As a direct and proximate result of the APT Defendants, Covey, Maher and

potentially others' acts, plaintiff has been damaged in an amount yet to be determined, but

believed to be in excess of $1,287,500.

54. In doing the foregoing acts, defendants acted in a willful, wanton, malicious,

oppressive, and fraudulent manner toward plaintiff, and in conscious disregard of plaintiffs

known rights, with the intention of benefiting themselves financially, and with the intent of, or a

conscious disregard of the probability of, causing plaintiff injury. In so acting, defendants intended to and did vex, annoy, injure, and harass plaintiff, and consciously disregarded her rights, so as to warrant the assessment of exemplary and punitive damages against defendants in

a sum to be established according to proof.

WHEREFORE, plaintiff prays for judgment as follows: 1. For the net value of the property converted in a sum to be established according to

proof;

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COMPLAINT

For prejudgment interest commencing July 1, 2013 at the legal rate of 10% on the value of the property;

For damages for time and money properly expended in pursuit of the converted

property in a sum to be established according to proof;

For damages for the proximate and foreseeable loss resulting from the conversion

in a sum to be established according to proof;

For punitive damages according to proof;

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For a declaration and determination that Mazuma's security interest in the patent

is void and unenforceable;

For reasonable attorney fees;

For costs of suit; and

For such other relief as the court deems proper.

DATED: October 6, 2015

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8 COMPLAINT