william g. bussen v. westpark capital financial servics llc et al notice of removal

8/11/2019 WILLIAM G. BUSSEN v. WESTPARK CAPITAL FINANCIAL SERVICS LLC et al notice of removal

1/60

Case 2:14-cv-06609-PSG-VBK Document 1 Filed 08/22/14 Page 1 of 60 Page ID #:5


2/60

TO

THE

CLERK OF

THE ABOVE-ENTITLED

COURT ANTI

TO

2

PLAINTIFF

WILLIAM

G.

BUSSEN,

AND HIS

COUNSEL

OF

RECORD:

3

PLEASE

TAKE

NOTICE that Defendant

Allianz Life

Insurance Company

4

of

North America

Allianz

hereby removes

to

this

Court

the

State

Court

action

5

described

herein and

avers

as

follows:

6

On

or about

July 18,

2014,

Plaintiff

William

G.

Bussen

Bussen

7 commenced

an

action

against Allianz

in

the

Superior

Court of

the

State of

8

California

fo r

the County of Los

Angeles

entitled

William

G.

Bussen

v

Westpark

9 Capital financial

Services,

LLC, et

al.,

Case

No. BC

552000 State

Court

10

Action .

True

and correct

copies of the

Summons

and

Complaint

in the

State

Court Action

are

attached

hereto

as

part

of

Exhibit

12

2. Plaintiff

William

G.

Bussen,

as

alleged

in

the Complaint,

is a

resident

13

of

the State

of

Missouri. Defendant

Allianz

is a

Minnesota corporation

with

its

14 principal

place of

business

in Golden

Valley,

Minnesota,

and

Allianz

is

informed

15

and believes

and alleges

thereon that Defendant

Westpark

Capital Financial

16 Services,

LLC

is

a

California

limited liability

company

with its principal

place

of

17 business

in

Los

Angeles,

California.

18

3.

On

or about July

24,

2014,

Allianzs

registered

agent

for service

of

19

process was

personally served

by

Bussen

with a

copy

of the

Summons

and

20

Complaint

in the State Court

Action.

21

4.

This

Notice

of Removal

is

filed

within

less than thirty

30 days

from

22 the

time Allianz

first had notice, through

service

or otherwise,

of the initial

23 pleadings

setting

forth

Bussens

claims

for

relief, and therefore

is within

the time

24

provided

by

law.

25 5.

To

the best of Allianzs

knowledge,

no

further proceedings

have

taken

26

place in the

State

Court

Action

other than

the

filing

of

the Summons

and

27

Complaint.

All

of

the

process,

pleadings

and

orders

served upon

or received

by

28 Allianz

in

this case

are

attached

as

Exhibit

to this

Notice.

36195393.2



3/60

6.

Allianz

is informed and

believes

and

alleges

thereon

that

no

2 Defendant

other

than

Allianz

has yet

been

served with the

Summons and

3 Complaint

in

the

State

Court

Action.

While

a

proof

of

service on

Allianz

has been

4

filed

in

the

State

Court Action

no

such

proof of

service

on

any

other

Defendant

5

has

been

filed

in

the State

Court

Action

as

of

the date

of

this

removal.

A true and

6 correct copy of

that

Proof of

Service on

Allianz

and the

State

Court

Action

7

computerized docket is attached

collectively as

Exhibit

2.

7.

The

State

Court Action

is, based on

the following

facts, a

civil

action

9

of

which

this

Court

has original

jurisdiction pursuant

to

2 U.S.C.

Sections

1331,

10 1367, and

1441(a):

Bussen

alleges

in his

Complaint a

claim

arising

under the

12 laws

of

the

United

States,

specifically

a

claim

for

alleged

fraud

in

13 connection

with

the

purchase

or

sale of

securities

under Section

10(b)

14

of

the Exchange Act

of

1934

and

Rule

l0 b - 5 thereunder,

15

specifically

alleging that Defendants

supposedly

offered

and

sold

a

16 purported

security by means

of

both written

and oral

communications

17

which

allegedly included

untrue statements

of

material

fact

and

18 allegedly

omitted

to state facts necessary

in order

to

make

the

19

statements in light

of the

circumstances

under which

they

were

made,

20

purportedly

not misleading.

Complaint Fifih

Cause

of

Action

21

22

23

24

/1/

25

II

26

/7/

27

/1/

28

/7/

2

36195393.2



4/60

8.

Pursuant

to

the requirements

of 28

U.S.C.

Section

1446 d , Allianz

2 will promptly serve notice

of

the

filing

of

this Notice

of

Removal to Bussen

through

his counsel of record and will

promptly file with

the

Clerk

of the

State

4

Court

a

copy

of

the

Notice

of

Removal

6

ated

August 21, 2014

CARLTON

FIELDS

JORDEN

BURT LLP

MARK A.

NEUBAUER

7

MICHAEL A.

VALERIO

9

By: Zt

Attorney

for

Defenant

Allianz

Life

11

Insurance Companytof

North America

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

36195393 2



5/60

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8/60

WESTPARK

CAPITAL

FiNANCIAL

SERVICES LLC

a

California

Limited

Liability

Company;

ALLIANZ

LIFE

f

NS

UP

JN

COMPANY

OF

NORTH

AIVfERICA,

a

Minnesota

Corporation;

anc

DOES

through

100,

inclusive

Defendants.

PV

UL

18Z0h1t

Shorn

C let

EXocuwa

icUtIIL

By:

.1ud

L5ra

Deputy

CaseNo.

O

OO

COMPLAINT

FO

R:

1) BREACH

OP

FIDUCIARY

DUTY

2)

N

EG

LIG

EN

CE

;

3)

N

EG

LIG

EN

T

M

ISR

EP

RE

SEN

TA

TI

ON

;

4)

FRAUD

AND

IN

TEN

TI

ON

AL

M

IS

RE

PR

ESE

NT

AT

IO

N;

5) FRAUD

IN

C

ON

NE

CT

IO

N

w

TH

E

PURCHASE

OR

SALE

OF

SE

CU

RIT

IE

S

6)

BREACH

O

F

CONTRACT;

7) BREACH

OF

TH

E

COVENANT

OF

GOOD

F

AIT

H

AND

FA

IR

DEALING;

8)

UNFAIR

BUSINESS

P

RA

CT

IC

ES IN

VIOLATION

OF

S

ECT

iO

N

17200

OF

THE

CALIFORNIA

BUSINESS

AND

P

RO

FE

SS

ION

S

CODE;

9)

CONVERSION;

and

10 )

V

IOL

AT

IO

N OF

CA

LIF

OR

NI

A

PENAL

CODE

496.

JURY

TR

IAL

DEMANDED

COMPLArNT

PY

HOLMES

TAYLOR

JoNEs

LL

P

Andrew

B.

Holmes

SBN:

185401)

abh

olm

es

htii

aw.

com

801

SouthFigueroa

Street Suite

2170

Lo

sA

nge

les

California

90017

Tel:

r

3

985 2200

Fax:

C213)

973 6282

Attorneys

for

Plaintiff

William

G.

Bus

sen

SUPERIOR

CO

UR

T

OF THE STATE

OF

CA

LI

FO

RN

IA

COUNTY

OF

LOS

ANGELES

WILLIAM

G.

BUSSEN an

individual

Plaintiff

vs.

r4

t

Z

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23

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25

26

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EX

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ir

iden

titi

es are

24

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12.

Furthe r,

Plaintiff

explained

to

Defendants that he

wanted

to

retire

e

arly

,

a

nd

2

5

wo

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26

al

low

ing him

to

r

etir

e.

D

efe

nda

nts

as

sur

ed

P

lain

tiff

that

b

eca

use o

f th

e

7

%

gu

ara

ntee

in

t

he

27

a

nnu

ity

,

Pl

ain

tiff co

uld r

etir

e.

28

O

MP

L

IN

T

EX

H

I IT



11/60

13.

But

for

Defendants

representations, Plaintiff

would

have continued

working

2

and

saving towards

a

larger nest-egg

to

provide

him

with

an

income sufficient

to

support

his

retirement income needs.

4

14. Plaintiff

in

fact

relied

on

Defendants

false

promises, retired

early,

and

became

unable

to

earn

income

as

a result.

6

15.

While

Defendants,

by

and through

Philpot,

provided

a prospectus

for

an

7

Allianz

Rewards

annuity,

Plaintiff did

not understand

the prospectus,

and

therefore

asked

8

Defendants,

by

and

through Philpot,

for an explanation

of the annuity.

9

16.

Defendants

made

the

following written representations

via

email

to

Plaintiff

on

10

March

28, 2006 at 10:14 a.m.:

11

The annuity

would allow

for

9% annual

withdrawals;

12

The annuity

would have

a

balance

of

between

387,000 (Worst Case

pushina

the

extreme)

and

548,000

(Best Case

conservative

13

estimat at

the end of

the tenth

policy

year

even with the

9%

annual

withdrawa[s.

14

15

A

true

and

correct

copy

of

this

email

is

attached

hereto

as Exhibit

A.

16

17.

Plaintiff also

understood

from

Defendants

(through

Philpot),

as

confirmed

by

17

the

e-mail, that the ending value

could be

annuitized

or could be

left

in

place

with

the

18

guarantees

remaining

viable.

19

18. As

a result

of

and

in reliance

on the explicit

representations

of

Defendants,

20

Plaintiff paid

448,062.35

for

Allianz

Rewards

annuity

Contract

DA026630

(annuity)

on

21

or

about

April

19, 2006,

and Defendants,

through

Philpot, set up

a monthly

withdrawal

22

program of

3,750 ( 45,000

per

year)

so

that

Plaintiff

could retire

early

and

live

off

his

23

annuity.

24

19.

Defendants, through Philpot, acting

as a

discretionary investment

advisor,

25

directed

the

investments within the

annuity,

without

consulting

Plaintiff,

pursuant

to

an

26

authorization

for

him to

do so

that is right

on

the

application

(See

application

at

number

8;

a

true and

correct copy

of the application

is

attached

hereto

as

Exhibit

B).

Aside from this,

28

Plaintiff

never

signed

authorizations

or gave

investment

instructions.

Plaintiff

was

relying

-3-

COMPLAINT

EXHI IT

9



12/60

entirely

on

Defendants

to

obtain

the

promised

returns.

On

information

and

belief,

2

Defendants (through

Phulpot)

changed the

investment

program within

a

couple

of

months

of

3

opening

the annuity.

4

20.

At

some

point prior

to the

purchase

of

the

annuity,

Defendants (through

5

Philpot)

told

laintiff

that

the

investments did

not

matter

so much

because

of

the

guaranty,

6

and

that

the only effect

of

the investments

would

be

to

improve

upon

the

7

guaranteed

7

return.

8

21.

laintiff turned 62

years

old

in 2012,

and

as

a

result

emailed

questions

to

9

Defendants, by

and through Philpot, on

December

11,

2012

regarding whether

to take

his

10

social

security

at

that

time.

Such

a

decision depended

on

verification

that

the

promised

11

contract

value

would

be

there

at

the end

of the

tenth

policy

year

in

2016.

12

22.

laintiff had

a

vecy

difficult

time

getting

Phulpot

to respond

to him,

but

finally

13

spoke

with Philpot

in

early 2013. Philpot told

Plaintiff

to take

his

social

security

because

the

14

annuity

value

could drop

to

zero.

This

was

the

first time

Plaintiff

learned

that

the annuity

15

might not

perform

according

to the

written

Best

Case

and

Worst Case

guarantees

16

provided

by Defendants

(through

Philpot).

Whe

Plaintiff

asked about

the

7

contractual

17

guarantee,

Philpot said

he

would

have to get

back

to h im,

but

never

did.

18

23.

Since then,

Plaintiff has

made multiple

requests

for the back-up

relied

on

by

19

Defendants

agent

Philpot

for

the March

28, 2006

email,

but

has

never

received

anything.

20

24.

Contrary

to the

statements

made

to Plaintiff

by

Defendants

(through

Philpot),

21

under

no circumstances was

the balance

specifically

stated

in

Philpots

email

available

for

22

withdrawal at the

end

of

years.

23

25.

Notwithstanding

Defendants

representations

and

guarantees,

Plaintiffs

24

annuity has

a

value

(as

of

June

30,

2014)

of

130,357.70. (A

true

and

correct

copy

of

the

25

Allianz Rewards

account

statement

reflecting

this

value

is

attached

hereto

as

xhibit

C.)

26

26.

As

a

result

of

Defendants

actions,

Plaintiff

is fearful

for

his

and

his

familys

27

well-being as

a

result

of

discovering that

they

wilt

no t

have

sufficient

funds

to provide

for

28

them

during their

retirement.

-4-

OMPL INT

X

HI

IT

10



13/60

AP

PL

ICA

BL

E

F

IN

RA RU

LE

S

2

27. FINRA Rule 2010

is

entitled Standards

of

Commercial Honor and Princ iples

3

o

f Tr

ade

an

d

stat

es: A m

em

ber,

in

th

e con

duc

t

o its

bus

ine

ss, sha

ll obs

erv

e

hig

h

4

sta

nda

rds

of

com

me

rci

al

h

ono

r an

d

j

ust an

d equ

itab

le

p

rinc

ipl

es

of

trad

e.

5

2

8. As

a re

sul

t

of D

efe

nda

nts

act

ion

s,

as

d

esc

ribe

d

a

bov

e, D

ef

end

ant

s

v

iol

ated

6

th

isFI

NR

AR

ule

O

lO

7

29.

fIN

RA R

ule 202

0, ent

it led Us

e

o

f

Ma

nip

ulat

ive

,

Dec

ept

ive

o

r

O

the

r

8

fr

aud

ule

nt

De

vice

s sta

tes:

N

o

m

em

be

r

s

ha l

l ef

fec

t any

tr

ans

acti

on in,

or

indu

ce

the

9

pu rchase or sale

of,

any security by means

of

ny

manipulative, deceptive or other

fraudu lent

10

de

vice

or

con

triv

anc

e.

11

30

.

D

efe

nda

nts

o

ral

and

wr

itte

n stat

eme

nts

wer

e

m

ad

e in

or

der to c

aus

e P

lain

tiff

12

to i

nve

st. A

s

des

crib

ed ab

ove

, tho

se

s

ta te

me

nts wer

e man

ipu

lat

ive and

lor

dec

epti

ve,

a

nd

13

th

ere

for

e

v

iola

te

FIN

RA

Ru

le

20

20.

14

3

FI

NR

A

R

ul

e

2

111

, e

nti

tled

Su

itab

ility

,

sta

tes

:

15

a A m

em

be

r

or an

ass

oc ia

ted

pe

rso

n

m

ust

h

ave

a

re

aso

nab

le ba

sis

to

bel

iev

e

th

at

a

rec

om

me

nde

d

tr

ans

acti

on

or

in

ves

tme

nt

stra

teg

y

inv

olv

ing

a se

cur

ity

o

r

16

secu

rit

ies is

sui

tab

le

fo

r

th

e

cust

om

er, b

ase

d

o

n

th

e

inf

orm

ati

on

o

bta

ine

d

through

the

reasonable

diligence

of

the

member

or associated person

to

17

a

sce

rtai

n the

cu

stom

er

s

inv

estm

en

t

pro

file.

A

cus

tom

er

s

i

nve

stm

en

t

pr

ofil

e

inc

lud

es,

b

ut

is

not

lim

ite

d

to,

the cus

tom

er

s

a

ge,

oth

er

in

ves

tme

nts

,

f

inan

cia

l

18

sit

uat

ion

a

nd n

eed

s,

tax

s

tatu

s,

i

nve

stm

ent

ob

ject

ive

s, in

ves

tme

nt

e

xp

erie

nce

,

inv

est

men

t

tim

e

ho

rizo

n,

liq

uid

ity

n

eed

s,

ris

k tole

ran

ce,

an

d any

oth

er

19

in

form

ati

on

the

c

us to

me

r

m

ay d is

clo

se to th

e

m

em

be

r

or

asso

cia

ted

p

ers

on in

c

onn

ect

ion

wIt

h

su

ch

r

eco

mm

end

ati

on .

2

0

32.

As

a res

ult of t

he

actu

al

pe

rfo

rma

nce

and li

mit

atio

ns o th

e

an

nui

ty sol

d

to

2

1

P

lain

tiff

,

a

nd in

ligh

t

of

the in

ves

tme

nt

ob j

ecti

ves Pl

ain

tiff

sp

eci

fica

lly

sta

ted

to

De

fend

an

ts

2

2

thr

oug

h

P

hilp

ot

,

t

he

ann

uit

y

was a

n

u

nsu

itab

le

inv

estm

en

t.

23

3

3.

FI

NR

A

Ru

le 2

21

0,

ent

itle

d C

om

mu

nic

atio

ns

w

ith the

Pu

blic

sta

tes ,

in

24

r

elev

ant

pa

rt:

2

5

d

C

on

tent St

and

ard

s

2

6

1

G

en

era

l

S

tand

ard

s

A A

ll

m

em

ber

com

mu

mc

atio

ns m

us

t

be

bas

ed on pri

nci

ple

s

o

f

2

7

fa

ir

de

alin

g

a

nd

goo

d

fa

ith,

m

us

t

be

f

air a

nd ba

lan

ced

,

a

nd

mu

st

pr

ovi

de

a

s

oun

d

bas

is

for ev

alu

atin

g

the

fac

ts i

n re

ga

rd

to

any

p

arti

cula

r

sec

urit

y

28

or

typ

e o

f

sec

urit

y,

i

ndu

str

y, o

r

se

rvic

e.

No

m

em

ber m

ay

om

it

any

OMPL INT

EX

H

IBIT

11



14/60

material

factor

qualification

if the

omission,

in

light

of

the

context

of

I

the

material

presented,

would

cause the

communications

to

be

misleading.

2 B

No

member

may

make

any

false

exaggerated

unwarranted promissory

or misleading

statement

or

claim

in

any

communication.

No

member

may

publish,

circulate

or

distribute

any

communication

that the

member knows

or has

reason

to know contains

4

any untrue statement

of

a material

fact

or is otherwise

false

or

misleading.

5

C

Infonnation

may be

placed

in

a

legend

or

footnote

only

in

the event

that

such

placement

would

not

inhibit

an

investors

6

understanding

of the

communication.

D Members

must

ensure

that

statements

are

clear

and

not

7

misleading

within

the

context

in which

they

are

made

and that

they

provide

balanced treatment

of

risks

and

potential

benefits.

8

Communications

must

be

consistent with

the

risks

of

fluctuating

prices

and

the

uncertainty of dividends,

rates

of return

and

yield inherent

to

9

investments.

CE

Members

must

consider

the

nature

of the

audience

to which

10

the

communication

will

be

directed

and

must provide

details

and

explanations

appropriate

to

the audience.

11

F

Communications

may

not predict

or project

performance

imply

that

past performance

will recur

or

make any

exaggerated

or

12

unwarranted

claim,

opinion or

forecast...

Id.,

emphasis added.

14

34. The

email

Exhibit

A contains

exactly

the type

of

prohibited

performance

15

predictions specifically

forbidden

by

this FINRA

rule.

=

16

35.

FINRA Rule 3110,

entitled

Supervision,

states at

subdivision

a :

17

Each

member

shall establish

and

maintain

a

system

to

supervise

the

activities

of

each associated person

that is

reasonably

designed

to

achieve

compliance

18

with

applicable securities

laws

and

regulations,

and

with

applicable

FI

IR

rules.

19

Rule

3110

further

states, in

relevant

part:

20

b

Written Procedures

21

22

23

4

Review of Correspondence

and Internal

Communications

The supervisory

procedures required

by

this

paragraph

b

shall

include

4

procedures

for the review

of incoming

and

outgoing

written

including

electronic correspondence

and

internal

communications

relating

to the

25

members

investment

banking

or

securities

business.

The

supervisory

procedures

must

be

appropriate

for

the

members

business,

size,

structure,

and

26

customers. The

supervisory

procedures

must require the

members

review

of:

27

A

incoming

and outgoing

written

including

electronic

cOrrespondence to properly

identify

and handle in accordance

with

finn

8

procedures, customer

complaints,

instructions,

funds and

securities,

and

-6-

COMPLAINT

EX

HI

IT

12



15/60

communications

that are

of

a

subject

matter

that

require

review under

FINRA

rules

and federal

securities

laws.

2

36.

On

information

and

belief, Philpot

s

use

of

an

outside

email to communicate

with

Plaintiff

see

Exhibit

A,

which was

sent

from

Philpots

AOL email

account

reflects

4

Defendants

failure to properly

supervise

Philpot

pe r FINR

Rule

3110, and, as

per FINRA

5

Rule

3110 a ,

final

responsibility

for

proper

supervision

shall

rest with

the

member.

6

FifiST CAUSE

OF

CTION

BREACH

OF FIDUCIARY

DUTY

7

Against

All Defendants

8

37.

Plaintiff re-alleges and

reincorporates

each

and every

allegation

contained

in

9

the

General Allegations

and all

previous paragraphs of

all

previous sections

and Causes

of

10

Action

in this Complaint,

inclusive,

as though

fully set

forth herein.

11

32.

Plaintiff

is

a

securities brokerage

client of

Defendant

WESTPARK.

Defendant

12

WESIP RK through

Philpot

had discretionary

control

over

Plaintiffs

investments,

and

a

13

confidential relationship

existed

between

Plaintiff

and Defendant

WESTPARK

through

L

14

Phflpot , as

Plaintiff reposed

trust

and

confidence

in the

integrity

and fidelity

of

Defendant

15

WESIT RK directly

and through

Philpot .

As

such,

Defendant

WESTPARK

owed

a

16

fiduciary

duty

to

Plaintifl

17

39. Plaintiff is also a

client

of

Defendant

ALLIANZ.

As

described

above

Plaintiff

18

told

Philpot,

an

agent

of

Defendant

ALLIANZ,

what

his

investmentinsurance

needs

and

19

goals

were,

and

Philpot

then

told Plaintiff

about the

ALLIANZ

product

and

made

the

20

misrepresentations

listed

above.

The

particular

ALLIANZ

annuity

product

was

selected by

21

PhHpot for

Plaintiff

as

appropriate

for

Plaintiff

in

light

of

Plaintiffs

expressed

needs

and

22

desires.

Because of

Philpot/ALLIANZs

role

in

advising

Plaintiff

ofthe appropriate

annuity

23

for

Plaintiffs

particular

needs

and

goals,

Philpot

was also acting

as

an

agent

for

Plaintiff.

24

As

such,

a

confidential relationship existed between Plaintiff

and

Defendant ALLIANZ

25

through

Philpot ,

as

Plaintiff

reposed trust

and

confidence

in

the

integrity and

fidelity

of

26

Defendant

ALLIANZ

directly

and

through

Philpot . As

such,

Defendant ALLIANZ

owed

a

7

fiduciary

duty

to

Plaintiff.

28

-7-

COMPL INT

EXHI IT

13



16/60

40.

Defendants, and

each

of

them, breached their fiduciary duty

to Plaintiff

by

2

engaging

in

the course

of

conduct alleged herein.

3

41.

Defendants, and each of them,

breached their fiduciary

duties

to Plaintiff

by

4

engaging

in

the course

of

conduct alleged herein,

and

such course of conduct was pursued

5

without

due

regard

for

and in reckless

and

conscious

disregard

of

the consequences and

6

damage

to

Plaintiff Upon

information and belief,

each Defendant,

individually, aided

and

7

abetted

the

breach

of

fiduciary duty

by

each other Defendant.

8

42.

Defendants

pursued

such

course

of conduct

negligently

and/or

intentionally

9

while disregarding the rights

of Plaintiff

and

with

a

negligent and/or fraudulent and/or

10

reckless

disregard

of

the likelihood of

causing

Plaintiff

economic damage and/or

at

all

times

to

further

their

own

economic

interest

at

the expense of Plaintiffs

economic

interest.

12

43.

As a

proximate

result

of

the

conduct

of

Defendants

as

herein

alleged,

Plaintiff

13

has been

damaged in

a

sum

according to proof

at

time

of

trial,

including

interest,

attorneys

14

fees and costs .

15

SE OND USE

OF CTION

NEGLIGENCE

16

Against All

Defendants

17

44.

Plaintiff

re-alleges and

reincorporates

each

and

every

allegation contained

in

12

the

General

Allegations

and all previous paragraphs

of

all

previous

sections and

Causes

of

19

Action

in

this

Complaint,

inclusive, as though

fully

set forth

herein.

20

45.

A

special

relationship

of

trust

and

confidence

existed between

Plaintiff

and

21

Defendants. As

alleged herein, Defendants

owed

a

duty

including a

fiduciary duty

to

22

Plaintiff. Defendants breached

that duty by their

actions and

inactions, as alleged

herein.

23

46.

As

a

proximate

result

of

the

negligent

conduct of

Defendants

as

herein alleged,

24

Plaintiff

has incurred damages

in

an

amount

according

to

proof

at time

of

hearing,

including

25

interest,

attorneys

fees

and

costs.

26

27

III

28

/1/

-8-

COMPL INT

EXHI IT

14



17/60

T

HIR

D

C

AU

SE

OF A

CT

ION

NEGLIGENT

MISREPRESENTAITON

2

Ag

ain

st

Al

l

De

fen

dan

ts

47

Pla

intif

f

r

e-al

leg

es and

re

inco

rpo

rat

es

e

ach

a

nd eve

ry

al

leg

atio

n con

tain

ed

in

4

the

Gen

era

l

Al

leg

atio

ns

an

d

all

p

rev

iou

s pa

rag

rap

hs

of

all

p

rev

iou

s sec

tion

s

and

Cau

ses of

5

A

ctio

n

i

n

th

is C

om

pla

int

,

inc

lusi

ve,

as

th

oug

h

f

ully

se

t

fo

rth

here

in.

6

48 P

lai

ntif

f

a

lleg

es on in

for

mat

ion

an

d bel

ief th

at

eac

h of

th

e

r

epr

ese

nta

tion

s

7

des

cri

bed abo

ve

w

as fa

lse

or mi

sle

adin

g

w

he

n

ma

de

by

D

efe

nda

nts

as de

scr

ibed

a

bov

e,

8

w

as

m

ad

e

with

ou

t a r

eas

ona

ble

bas

is f

or

b

elie

vin

g

it

to

b

e t

rue

.

T

he rep

res

ent

atio

ns w

ere

9

made with the intent

to induce

Plaintiffs

reliance

thereon,

and

Plaintiff

did, in fact,

1

r

eas

ona

bly

re

ly

on

De

fen

dan

ts

repr

ese

nta

tion

s i

n his

d

ec

isio

n

t

o

in

ves

t wit

h

De

fen

dan

ts

as

h

erei

n

al

leg

ed.

12

49 Eac

h

o

f

th

e

De

fen

dan

ts

ha

d

a

du

ty

to

disc

los

e

the

true

in

for

ma

tion o

n

the

13

gr

oun

ds

th

at th

e in

form

ati

on

w

as ma

ter

ial

to

t

he inv

est

me

nts

all

ege

d

here

in.

D

efen

dan

ts

14

fa il

ure

to

di

sclo

se

t

hes

e

ma

teri

al

fac

ts

to P

lai

ntif

f,

th

ere

fore

,

con

stit

utes

neg

lig

en t

I i

15

mis

rep

rese

nta

tion

.

16

5

Ha

d Pla

int

iff

kn

ow

n o

f

the

t

rue

fa

cts

as

de

scr

ibed

h

erei

nab

ove

, P

lain

tif

f

wo

uld

17

no

t

h

ave

in

ve

sted

,

n

or reti

red

e

arly

,

f

org

oin

g

a

ddi

tion

al

c

om

pen

sati

on

and

m

ak

ing

nee

ded

18

add

itio

na

l

c

on

trib

utio

ns

to

his

re

tire

me

nt

sa

ving

s.

19

51

As

a

prox

im

ate

r

esu

lt

of

th

e

con

duc

t

of De

fen

dan

ts

as

h

ere

in

al

lege

d,

Pla

inti

ff

ha

s

in

cu

rred

dam

ag

es

in th

at P

lai

ntif

f

w

as in

duc

ed

to i

nve

st, all b

y rea

son

o

f

whi

ch

P

lai

ntif

f

21

ha

s

be

en

da

ma

ged

i

n

at le

ast

a

su

m in exc

ess of

the

jur

isdi

ctio

nal

a

mou

nt

of

t

his

Co

urt

, and

2

2

ad

diti

ona

l

a

mo

unt

s

ac

cord

ing

to

p

roo

f

at ti

me

o

f

tr

ial,

i

ncl

udi

ng

inte

res

t,

a

ttor

ney

s

fe

es

and

23

co

sts.

F

OU

RT

H C

AU

SE

OF

AC

TIO

N

FR

A

UD

AN

D IN

TE

NT

ION

A

L M

ISR

EP

RE

SEN

TA

TI

ON

2

5

A

gai

nst All

D

ef

end

ants

26

52

P

lain

tiff re

-all

ege

s

a

nd

rein

co

rpor

ate

s

ea

ch

and e

ver

y

alle

gat

ion

co

nta

ine

d in

2

7

t

he

G

ene

ral

Al

lega

tio

ns

and

all

pre

vio

us

p

arag

rap

hs of

all

p

rev

ious

se

ctio

ns

an

d C

aus

es

o

f

2

8

Ac

tio

n

in

th

is

Co

mp

lain

t,

in

clu

sive

,

as thou

gh f

ully

s

et

fo

rth

he

rei

n.

COMPL INT

EX

HI

BIT

15



18/60

53.

At

the

time

that

laintiff

was induced

to

make

the

investments

alleged

herein,

2

and

continuing thereafter,

Plaintiff

was

led

to believe

that

the

representations

made

by

Defendants

and

delivered

to

Plaintiff

as

alleged

herein, were

true.

4

54.

When

Defendants, and each

of them,

made

or

adopted

the above

5

representations,

they

knew

or

were

reckless

in not knowing

them

to

be false

and

made

6

these

representations

with

the

intention

to

induce

Plaintiff

to

act

in

reliance

on

these

7

representations

in

the manner

herein

alleged

by purchasing

the

annuity.

8

55.

laintiff

at

the

time

these representations

were

made

by

Defendants, and

each

9

of

them, and

at

the time

Plaintiff

took

the

actions

herein

alleged, was

unaware

of

the

falsity

10

of

Defendants

representations

and

believed

them

to

be

true.

In reliance

on

these

representations,

Plaintiffwas induced

to

and

did

invest.

12

56.

Had

Plaintiff

known

of

the

true

facts

as

described

hereinabove,

Plaintiff

would

s

13

not have

invested,

no r

retired

early,

forgoing additional

compensation

and

making

needed

14

additional contributions

to

his

retirement

savings.

15

57.

Plaintiffs

reliance

on

the

representations

of

Defendants

was justified

because

16

of

Plaintiffs

lack

of investment

sophistication,

Defendants

superior

knowledge

and

17

expertise,

as

well

as

the

written

projections and guarantees

provided.

18

58.

As

a proximate

result

of

the

conduct

of Defendants

as herein

alleged,

laintiff

19

has

incurred

damages

in

that

Plaintiff

was

induced

to

invest,

all

by

reason

of

which

Plaintiff

20

has been

damaged

in

at

least

a

sum

in excess

of

the

jurisdictional

amount

of

this Court,

and

21

additional

amounts according

to

proof

at time

of

trial.

22

59.

As

a

further result

of

Defendants

actions,

Plaintiff

is

fearful

for

his

and

his

23

familys

well-being

as a

result

of

discovering

that

they

will

not have

sufficient

funds

to

24

provide

for

them

during their retirement.

25

60.

The aforementioned

conduct

of

Defendants,

ahd

each

of them,

was

an

26

intentional

misrepresentation,

deceit,

or

concealment

of

a

material

fact

known

to each

of

the

27

defendants with

the

intention

on

the

part of

the

defendants

of

thereby

depriving

Plaintiff

of

28

property

or

legal

rights

or

otherwise

causing

injury, and

was

despicable

conduct

that

-10-

OMPL INT

XH

I I

T

16



19/60

subjected

Plaintiff to

a cruel

and

unjust

hardship

and conscious

disregard

ofPlaintiffs

2

rights,

so

as to

justify

an award

of

exemplary and punitive damages.

3

FIFTH

CAUSE

OF

ACTION

4

FRAUD

IN

CONI>JECIION

WITH

THE

PURCHASE

OR

SALE

Of

SECURITIES

Violation

of

10 b

of

the

Exchange

Act

of

1934,

and

Rule

I Ob-5

thereunder

5

Against

All

Defendants

6

61.

Plaintiff

re-alleges

and

reincorporates each and

every

allegation

contained

in

7

the

General

Allegations

and

all previous

paragraphs

of

all

previous sections

and Causes

of

8

Action

in

this Complaint,

inclusive,

as

though

fully

set

forth

herein.

9

62.

Defendants, and each

of

them,

by

engaging

in

the

conduct

described above,

10

offered

and

sold

a

security

in the

state

of

California

by

means

of both written

and

oral

communications

which

included

untrue

statements

of

material fact

and

omitted

to

state

12

material

facts necessary

in

order to make

the

statements

made, in light

of the

circumstances

13

under

which

they were

made,

not misleading.

14

63.

As a

proximate

result

of

the

conduct

of

Defendants

as herein

alleged,

Plaintiff

15

has

incurred damages

in

that

Plaintiff

was induced

to invest

in

the fraudulent

investment

16

scheme, all by reason

of

which Plaintiff

has been

damaged

in

at least a

sum in

excess

of the

17

jurisdictional

amount

of

this

Court,

and

additional

amounts

according

to

proof at

time

of

18

trial, including

interest,

attorneys

fees and

costs.

19

64.

The

aforementioned

conduct

ofDefendants,

and

each

of them,

was

an

20

intentional misrepresentation,

deceit,

or

concealment of

a material

fact

known

to

each

of the

21

defendants with

the

intention

on

the

part of the

defendants

of

thereby

depriving

Plaintiff

of

22

property

or

legal

rights

or otherwise causing

injury, and

was despicable

conduct

that

23

subjected

Plaintiff to

a

cruel

and

unjust hardship

and conscious

disregard

of

Plaintiffs

rights,

so

as

to

justify

an award

of

exemplary and punitive damages

25

III

26

III

7

7

28

III

ii

COMPL INT

XH

I

IT

17



20/60

SIXTH

CAUSE

OF CTION

BREACH

OF

CONTRACT

2

Against

All

Defendants

65.

Plaintiff re-alleges

and

reincorporates

each

and every

allegation

contained

in

4

the

General

Allegations

and

all

previous paragraphs

of all previous

sections

and

Causes

of

5

Action in

this

Complaint,

inclusive,

as

though

fully set forth

herein.

6

66.

Defendants

through

Philpot agreed

to

provide

Plaintiff

with an

annuity

7

product

that performed

according to the

representations

made

in

Exhibit

A in exchange

for

8

Plaintiffs

investment. That

agreement

constitutes

a contract.

9

67.

Plaintiff

has, at

all

times,

performed each

and

every condition,

covenant

and

10

obligation

required

of

Plaintiff

under

the

parties

contracts

except for the

performance

of

such conditions,

covenants

and obligations

which

have

been

waived,

prevented

or

excused.

12

68.

Defendants

have

failed to honor

its

obligations

under,

and has

materially

13

breached,

the contrac ts and the

implied covenants

therein

by,

among other

things,

failing

to

4

14

abide

by

their

terms

and

conditions,

including

but not limited

to

misrepresentation

of

15

material

facts

and

arbitrary

and

improper

failure

to disclose

material

facts, to

Plaintiff.

16

69.

Plaintiff

did

not discover Defendants

breach

of contract

until

within

two years

17

of

the f il ing of

this

Complaint.

18

70.

As

a proximate

result of the

conduct

of

Defendants

as herein

alleged,

Plaintiff

19

has incurred

damages

in that

Plaintiff

was

induced

to

invest

in reliance

on the

terms

of the

20

contract

described above,

all by

reason

of

which Plaintiff has

been

damaged

in

at

least a

sum

21

in

excess

of

the jurisdictional amount

of

this

Court,

and

additional

amounts

according

to

22

proof

at

time of trial,

including interest,

attorneys

fees

and

costs.

23

SEVENTH

CAUSE

OF

ACTION

BREACH

OF THE

COVENANT

OF

GOOD FAITH AND

F IR

DEALING

24

Against

All Defendants

25

71.

Plaintiff re-alleges

and

reincorporates

each

and

every

allegation

contained

in

the

General

Allegations

and all previous

paragraphs

of

all previous

sections

and

Causes

of

27

Action

in

this

Complaint,

inclusive,

as

though

fully

set

forth

herein.

28

-12-

COMPLArNT

EXHI IT

18



21/60

72. Implied in

the agreement

between

Plaintiff and

Defendants

described above

is

2

a

covenant

of

good

faith and

fair dealing.

The covenant

provides

that

no pafty

will

do

anything

that

will

have

the

effect

of

iinpafring,

destroying

or

injuring

the rights of

the

other

party

to

receive the

benefits

of their

agreement.

The

law

implies

a

covenant

in

all

5

agreements that

each

party

will

do

all

things reasonably

contemplated

by the terms of

the

6

agreement

to

accomplish

its

purpose.

7

73,

By

performing

the

acts described

above,

Defendants

have

breached

the

8

covenant

of

good

faith

and

fair

dealing

by violating

the spirit

of

the

agreement.

9

74.

As a

proximate result

of

the

conduct

of

Defendants

as

herein alleged,

Plaintiff

10

has

incurred damages

in

at

least

a sum in

excess

of the

jurisdictional amount

of this

Court,

and

additional

amounts

according to

proof at

time

of

trial,

including

interest,

attorneys

fees

12

andcosts

13

EIGHTH

CAUSE

OF

ACTION

14

UNFAIR

BUSINESS

PRACTICES

In

Violation

of

17200

et

seq.

of

the

California

Business

and

Professions

Code

15

Against

All Defendants

16

75.

Plaintiff

re-alleges

and

reincorporates

each

and

every allegation

contained

in

17

the

General

Allegations and

all

previous

paragraphs

of

all

previous

sections

and

Causes

of

18

Action

in

this

Complaint,

inclusive,

as though

fully

set

forth

herein.

19

76.

Pursuant

to

17200

et seq.

of

the

California

Business

and

Professions

Code,

20

unfair

business

practices

include

any

unlawful,

unfair

or fraudulent

business

practice.

The

21

fraudulent

and

unlawful

conduct

ofDefendants

as

alleged

herein

is an

unlawful

and

22

fraudulent practice

within

the

provisions

of

17200

et

seq.

of

the

California

Business

and

23

Professions Code, and,

accordingly,

constitutes

a violation

of

17200

et

seq.

of

the

California Business

and

Professions

Code.

25

77.

As a

direct and

proximate result

of the

unfair

business

practices

of

Defendants

6

as

herein

alleged,

Plaintiff

has

incurred

damages

in

that

Plaintiffwas

induced

to invest

in

the

27

fraudulent investment scheme,

all

by

reason

ofwhich

Plaintiff is

entitled

to

restitution

in

an

28

-13-

COMPLAINT

X

HI

IT

19



22/60

I

amount

according

to proof

at

time

of trial, plus

interest,

attorneys

fees

pursuant

to

2

California

Code

of

Civil Procedure

1021.5, and

costs.

MNTH

USE

OF

ACTION

4

CONVERSION

Fo r

Violation

of California

Penal

Code

496

5

Against All Defendants)

6

78. Plaintiff

re-alleges

and

reincorporates each

and every

allegation

contained

in

7

the General

Allegations and all previous

paragraphs

of all

previous

sections

and

Causes

of

8

Action

in

this Complaint,

inclusive,

as though

fully

set

forth

herein.

9 79.

Plaintiff

is,

and

at

all

times

relevant

herein was, the owner

of

or

entitled

to

10

immediately

possess

an annuity

worth

at

least

387,000 ten

years

after his initial

purchase

in

2006.

12

80.

Using simple math, in light

of

the

initial investment

of

448,062.35,

the

annual

o

13

45,000

withdrawal

described

above, and

the

promised

performance

of the

annuity,

the

Lfl

3

14

value

of the

annuity

as of

April, 2014

should

have been

no

less than

404,163.51.

After

15

adjusting

for

the

two

withdrawals

after

the anniversary

date

see Exhibit

C,

page

2),

the

16

value

in

April

2014 was

only

137,857.70,

for

a

difference

of

266,305.81.

17

81.

Defendants

wrongfully interfered

with Plaintiffs

interest

in

the

above-

18

described

property

by

diverting from Plaintiff

the

identifiable

sum as

of

April

2014)

of

19

266,305.81

by

misappropriating

and

depositing

said

sums

into Defendants

own accounts,

20

and refusing

to

return

the

money to

Plaintiff.

21

82.

While

Defendants

originally

came

into

the

possession

of

the

converted

22

property when Plaintiff invested

as

described

above),

Defendants

have

improperly

retained

23

it

despite

demands

by

Plaintiff

for

return

of

the property.

24

83.

While

Plaintiff believes demand

for

return

of his converted

property

has

25

already

been

made, this Complaint

serves

as

a

further such

demand.

26

24. Each

Defendant

conspired

with each

of

the other

Defendants

to convert

the

27

above-listed

property,

so

that

the

activities

of

one

are

attributable

to

all.

28

-14-

COMPLAINT

EXHIBIT



23/60

85. As

a

r

esu

lt of

D

efen

da

nts

acts o

f

c

on

vers

ion

,

P

lai

ntif

f

h

as

b

een

dam

ag

ed

in

2

the

su

m

or

sum

s

t

o

be

pr

ove

n

a

t

tha

i,

i

nc l

ud i

ng a

ll

com

pe

nsa

tory

dam

ag

es.

Pla

int

iff

is

3

f

ur th

er en

title

d

to

co

mp

ens

atio

n

fo r

the

tim

e

an

d

m

one

y

e

xpe

nde

d

in

pur

suit o

f

t

he

pr

ope

rty

.

4

TE

NT

H

U

SE OF

TI

ON

5

TR

EB

LE D

AM

AG

ES

F

or

V

iol

atio

n

of Ca

lifo

rni

a

Pen

al

Co

de

4

96

6

A

gai

ns t

All Def

end

an t

s)

7

86.

Pl

ain

tiff

r

e-a

lleg

es

a

nd

rei

nco

rpo

rate

s

ea

ch

a

nd

ev

ery alle

ga t

ion c

on

tain

ed

in

8

th

e

Gen

era

l

All

ega

tion

s an

d all

pret4rious

par

agr

aph

s of

all

pre

vio

us

sec

tio

ns

a

nd

C

aus

es of

9

Action

in

this Complaint , inclusive,

as

though

fully

set forth herein.

10

87.

D

efe

nd

ants

ca

use

d

Pla

int

iff to

tra

nsf

er

to D

ef

end

an t

s

at le

ast

2

66,

305

.81

11

b

elo

ng i

ng

t

o Pla

int

iff.

12

88.

D

efe

nd

ants

ha

ve reta

ine

d

the

en ti

re

2

66,3

05

.81

in

fun

ds

b

elo

ngi

ng

to

13

Pla

inti

ff.

14

89.

I

n

so

d

oin

g,

D

ef

end

ants h

ave

k

now

in

gly rec

eive

d

an

d

are de li

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s

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section

496 c) permits

c{a]ny

person who has been

inju

red b

y

a

vio

lati

on

of su

bd

ivis

ion a or

b)

to

bri

ng

an act

ion

to rec

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r

t

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d

am

age

s.

25

6

I

d., 1045.

27

8

1/

OMPL INT

X

HI

IT

2

1



24/60


25/60

UNDER

TH E SIXTH

CAUSE

Of

ACTION

2

18

for rescission

as

determined

according to

proof

at

time of

trial;

3

19

For

general damages

in an amount

according to

proof

at time

of trial;

4

20 Fo r

interest

in an

amount according

to proof

at

time

of

thai;

5

21 Fo r

attorneys

fees and

costs;

6

UNDER

TH E

SEVENTH

CAUSE

OF

ACTION

7

22

For

general

damages

in

an amount

according

to

proof

at

time

of

trial;

8

23 Fo r interest

in

an

amount

according

to proof

at

time

of

trial;

9

24

Fo r attorneys

fees and

costs;

10

UNDER

TH E

EIGWfH

CAUSE

OF

ACTION

25

for

restitution

in

an amount according to

proof

at

time of

trial;

12

26 for

interest

in an

amount

according

to

proof at

time

of

trial;

13

27

Fo r

attorneys

fees

and costs pursuant

to

California Code

ofProcedure

14

1021 5;

15

UNDERTHENIIJTHCAUSEOFACTION

16

28

For

damages

according to proof

at

time

of trial;

17

29

for

compensation

for the time

and

money

expended

in

pursuit

of

the property;

18

UNDER

THE

TENTH

CAUSE OF

ACTION

19

30

for

treble damages

in

an

amount

according to

william g. bussen v. westpark capital financial servics llc et al notice of removal

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