Free Declaration - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

C.A. No. 08-MC-63-JJF

VEHICLE SAFETY & COMPLIANCE, LLC, PITTCO CAPITAL PARTNERS, L.P, PITTCO CAPITAL PARTNERS II, L.P., ANDREW SEAMONS , J.R., and J.R. "PITT" HYDE,

DECLARATION OF CATHY L. REESE, ESQUIRE I, Cathy L. Reese, declare as follows: 1. I am a Principal at Fish & Richardson P.C. ("F&R") and I am based out of F&R's

Wilmington, Delaware office. F&R is an international law firm with over 500 attorneys and eleven offices located throughout the United States and in Europe. I make this Declaration of my own personal knowledge, and if called upon as a witness would competently testify to the facts set forth in this Declaration. 2. DigaComm, LLC ("DigaComm") filed suit against the above-referenced

defendants in the U.S. District Court for the Northern District of Illinois. Freeborn & Peters LLP ("Freeborn") represents those defendants in that action. F&R does not represent those defendants in the litigation pending in the U.S. District Court for the Northern District of Illinois and has not entered an appearance in that action.

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3.

DigaComm also filed an arbitration demand against Vehicle IP, LLC ("VIP") and

Bradley Larschan ("Larschan") with the American Arbitration Association ("AAA") in Wilmington, Delaware. Freeborn represents VIP and Larschan in the AAA arbitration. F&R serves as local counsel to VIP and Larschan in the AAA arbitration. Since 2005, F&R has also represented VIP and its corporate parent VSAC in the development and commercialization of their patent portfolio. 4. On February 26, 2008, DigaComm issued two subpoenas to F&R in connection

with the Illinois litigation and AAA arbitration. One of those subpoenas is the subject of DigaComm's petition to show cause filed with this Court on March 31, 2008 (the "Petition"). 5. The subpoena at issue was first served on Friday afternoon, February 29, 2008, on

F&R's registered agent in Delaware, The Corporation Trust Company. The subpoena was routed to F&R's Human Resources Department in Minneapolis, Minnesota on March 4, 2008 and was then forwarded that same day to F&R's Ethics & Conflicts Director and Special Counsel, John Steele ("Steele"), in F&R's Redwood City, California office. 6. In the Petition, DigaComm claims that prior to issuing the subpoena,

DigaComm's counsel requested that I voluntarily accept service of DigaComm's requests for documents. However, I was in a multi-week trial in San Diego, California and, due to an

administrative error, I did not receive that correspondence until after DigaComm filed the Petition. 7. DigaComm's counsel, however, never served the subpoenas on me or any other

F&R attorney involved in the AAA arbitration, and DigaComm never provided a courtesy copy of those subpoenas to me or the other F&R attorneys involved in the AAA arbitration.

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8.

Once the subpoena actually reached Steele in F&R's Redwood City, California

office on March 4, 2008, through service on F&R's registered agent in Delaware, Steele started the extensive process of responding to DigaComm's subpoena and coordinated with the F&R attorneys that may possess documents responsive to DigaComm's subpoena. However, F&R was unable to comply with the DigaComm subpoena by March 18, 2008 and, inadvertently, through miscommunication between Steele and the Delaware office of F&R, failed to make DigaComm's counsel aware of this fact prior to March 23, 2008. 9. On Easter Sunday, March 23, 2008, DigaComm's counsel for the first time

contacted Brian M. Rostocki ("Rostocki") and me in an email regarding the subpoena. Rostocki spoke with DigaComm's counsel that same day, Easter Sunday, and the next day put DigaComm's counsel in contact with Steele. 10. On March 24, 2008, Steele explained to DigaComm's counsel that he needed to

research and coordinate efforts relating to the subpoena. F&R was attempting to coordinate a response to DigaComm's subpoena and believed it was working with DigaComm's counsel in doing so. However, on March 31, 2008, DigaComm filed the Petition. 11. F&R has attempted to resolve this matter with DigaComm's counsel without any

motion practice before this Court. On April 7, 2008, F&R provided DigaComm with its initial objections, responses and document production, and on April 11, 2008 F&R produced and made available for inspection substantially all other relevant, responsive and non-duplicative documents not subject to the attorney-client and work product privileges. 12. F&R has not sought to deliberately or intentionally circumvent the federal

discovery procedures and rules.

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13.

DigaComm also served document requests to VIP on February 21, 2008 in

connection with the AAA arbitration, and identical document requests to VSAC on February 26, 2008 in connection with the Illinois litigation. DigaComm's document requests to VIP and VSAC contain substantially the same document requests in the subpoenas served on F&R. VIP previously provided F&R with a set of documents that are potentially responsive to DigaComm's subpoena. F&R returned a copy of those documents to VIP so that VIP could forward those documents and any additional potentially responsive documents to Freeborn. The documents F&R returned to VIP consist of a bulk of the documents in F&R's possession that would be responsive to DigaComm's subpoena. Freeborn is in the process of reviewing those documents to determine which ones are responsive to DigaComm's requests to VIP and VSAC and are not subject to the attorney-client privilege or work product doctrine. In fact, Freeborn has started to produce those documents that are responsive and not subject to any privilege or immunity. Further, the court in the Illinois litigation ordered that the defendants in the Illinois litigation produce discoverable information, which includes the non-privileged, responsive documents that VIP forwarded to Freeborn, on a rolling basis and that the production be completed by April 21, 2008. 14. 15. DigaComm has refused to withdraw the Petition. Attached as Exhibit A hereto is a true and correct copy of DigaComm's

Complaint filed in the U.S. District Court for the Northern District of Illinois. 16. Attached as Exhibit B hereto is a true and correct copy of the docket in the U.S.

District Court for the Northern District of Illinois as of April 14, 2008. 17. Attached as Exhibit C hereto is a true and correct copy of DigaComm's

Arbitration Demand filed with the AAA.

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18.

Attached as Exhibit D hereto are true and correct copies of Service of Process

Transmittals for The Corporation Trust Company. 19. Attached as Exhibit E hereto is a true and correct copy of an email from Stephen

Hackney, Esquire to myself and Brian M. Rostocki, Esquire, dated March 23, 2008. 20. Attached as Exhibit F hereto is a true and correct copy of DigaComm's Requests

for Production of Documents served on VIP and VSAC. 21. Attached as Exhibit G hereto is a true and correct copy of a Minute Order from

the U.S. District Court for the Northern District of Illinois dated April 9, 2008.

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

Dated: April 14, 2008

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Exhibit A Part 1

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EXHIBIT A

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

DigaComm, LLC, Plaintiff,
V.

NOTICE OF REMOVAL
Vehicle Safety and Compliance, LLC, Pittco Capital Partners , LP, Pittco Capital Partners II, LP, J.R. "Pitt" Hyde, III, and Andrew Seamons,

Defendants.

)

PLEASE TAKE NOTICE that Defendants Vehicle Safety and Compliance, LLC ("VSAC"), Pittco Capital Partners, LP, Pittco Capital Partners II, LP (collectively the "Pittco Entities"), J.R. "Pitt" Hyde, III, and Andrew Seamons, give notice of removal and hereby remove the above-captioned action from the Circuit Court of Cook County of the State of Illinois, where it is currently pending, to the United States District Court for the Northern District of Illinois, pursuant to 28 U.S.C. § 1441 et seq. In support of this removal, Defendants state as follows: 1. DigaComm filed this case against Defendants in the Circuit Court of Cook

County of the State of Illinois. The case was assigned number 2007 L 013795. A true copy of the Complaint ("Original Complaint") and First Amended Complaint for Fraud, Tortious Interference, and Unjust Enrichment ("Complaint") are attached hereto as Exhibits A and B respectively.

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AMOUNT IN CONTROVERSY
2. The amount in controversy, exclusive of interest and costs, exceeds $75,000.

Indeed, DigaComm seeks "not less than $200 million" in damages against Defendants. (Ex. B, Cmplt. at Prayer for Relief ¶ (a)) DIVERSITY OF CITIZENSHIP 3. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §

1332. There is complete diversity because all properly joined parties are diverse and the amount in controversy exceeds $75,000. Plaintiff 4. DigaComm is a Delaware limited liability company with its headquarters located

at 400 North Michigan Avenue, Suite 520, Chicago, Illinois. Defendants 5. Pittco Capital Partners, LP is a limited partnership organized under the laws of the

State of Tennessee with its principal place of business in Memphis, Tennessee. 6. Pittco Capital Partners II, LP is a limited partnership organized under the laws of

the State of Tennessee with its principal place of business in Memphis, Tennessee. 7. of Tennessee. 8. Andrew Seamons, a limited partner and Managing Member in both of the Pittco Pitt Hyde, a limited partner in both of the Pittco Entities, is a citizen of the State

Entities, is a citizen of the State of Tennessee. Fraudulently Joined VSAC 9. VSAC is a limited liability company organized under the laws of the State of VSAC is a holding

Delaware with its principal place of business in Memphis, Tennessee.

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company. One of its subsidiaries, Vehicle IP, LLC ("VIP"), is a company whose principal assets are intellectual property. This Court should ignore VSAC's citizenship in determining diversity, however, because DigaComm joined VSAC solely to defeat diversity under 28 U.S.C. § 1441(b). 10. Courts should ignore the citizenship of improperly or fraudulently joined parties

when analyzing whether the parties are diverse. Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993) ("In determining whether there is diversity of citizenship, parties fraudulently joined are disregarded."). "Fraudulent joinder occurs either when there is no possibility that a plaintiff can state a cause of action against nondiverse defendants in state court, or where there has been outright fraud in plaintiffs pleading of jurisdictional facts." Hoosier Energy Royal Elec. Corp., Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1315 (7th Cir. 1994) (quoting Gottlieb, 990 F.2d at 327); see also Schwartz v. State Farm Mut. Auto Ins. Co., 174 F.3d 875, 878-79 (7th Cir. 1999); Poulos v. NAAS Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992). 11. The defendant seeking removal to federal court is entitled to present facts

showing that the joinder is fraudulent. Kocot v. Alliance Mach. Co., 651 F. Supp. 226, 227 (S.D. 111. 1986) ("In support of a removal petition the defendants may submit affidavits and deposition transcripts . . ."); Bodine's Inc. v. Fed. Ins. Co., 601 F. Supp. 47, 49 (N.D. 111. 1984); Faucett v. Ingersoll-Rand Mining & Mach. Co., 960 F.2d 653, 655 (7th Cir. 1992) (relying on defendant's uncontradicted affidavit to establish fraudulent joinder). DigaComm 's Allegations 12. DigaComm claims it introduced and facilitated a deal between VIP and General

Electric ("GE") whereby GE and VIP would partner to monetize VIP's patent portfolio. (Ex. B, Cmplt. ¶ 1) DigaComm also claims that VIP agreed to compensate DigaComm with a portion of the proceeds GE and VIP would potentially generate under their partnership pursuant to two separate purported contracts between VIP and DigaComm. 3

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13.

The first so-called contract is an e-mail exchange between a DigaComm (Id. ¶ 36) In

employee, Jonathan Tunick, and VIP's Chief Executive Officer, Brad Larschan.

that e-mail, dated March 9, 2007, DigaComm asserts, Larschan confirmed his understanding of a prior conversation with Tunick in which he allegedly agreed to pay DigaComm 5% of any transaction arising out of the VIP-GE deal. (Id. ¶¶ 33, 36-37) 14. The second contract on which DigaComm relies to assert its claims is a March 30,

2007 letter agreement (the "Letter Agreement") that attaches a distribution schedule for proceeds to be paid to DigaComm as a percentage of any proceeds VIP potentially would receive from the VIP-GE deal ("Cash Waterfall Proceeds"). The Letter Agreement, which was drafted by

DigaComm and signed by Peter Smith, DigaComm's Managing Member, confirmed DigaComm's acknowledgement that any distribution of Cash Waterfall Proceeds was "subject to approval by a majority of VSAC Preferred Holders" and that such approval had not yet been obtained as of the signing of that Agreement. (Ex. B, Cmplt. at Ex. 4 at p. 2) 15. The Letter Agreement also included an arbitration provision and an integration

clause stating that the Letter Agreement represented the entire understanding between VIP and DigaComm. (Id. at p. 2) 16. A majority of the VSAC Preferred Holders voted against approval of distributions

to DigaComm as provided in the Letter Agreement. (Ex. B, Cmplt. at Ex. 6) DigaComm claims that by voting down the terms of the Letter Agreement, the Preferred Holders caused VIP to renege on the March 9, 2007 "agreement" and the Letter Agreement. (Ex. B, Cmplt. IT 2-3) 17. Claiming the Preferred Holders acted wrongfully by voting down the DigaComm

compensation, DigaComm has brought fraud, tortious interference, and unjust enrichment claims

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against VSAC, two of its Preferred Holders (the Pittco Entities), and two individuals - Pitt Hyde and Andrew Seamans. 18. Prior to filing the present lawsuit, DigaComm filed an arbitration demand against

VIP before the American Arbitration Association in Delaware based on the arbitration provision in the Letter Agreement. (Ex. B, Cmplt. ¶ 7) The central contentions made by DigaComm in the arbitration are identical to those here, i.e., that DigaComm and VIP had a binding agreement entitling DigaComm to a percentage of any potential proceeds obtained by VIP under the VIPGE agreement and that DigaComm is entitled to enforce that agreement. However, despite

DigaComm's allegations in this case that VSAC and VIP are alter egos and that VIP's actions should be imputed upon VSAC, DigaComm did not name VSAC as a defendant in the arbitration or claim that VIP is a sham corporation. 19. In light of DigaComm's allegations here that VSAC should be liable for the

alleged wrongful conduct of VIP and the binding arbitration provision, VIP has filed a claim in the arbitration seeking a ruling from the arbitrator on whether VIP and VSAC are alter egos. Accordingly, that question will be subject to arbitration. DigaComm Has Not Stated, And Cannot State, A Cause Of Action Against VSA C 20. DigaComm's Complaint includes no factual allegations that VSAC itself engaged

in any fraudulent or tortious conduct. Indeed, the only allegations directed against VSAC are made "on information and belief." (See Ex. B, Cmplt. ¶¶ 38, 53, 68) Such allegations alone are insufficient to state a claim, particularly because DigaComm has provided no "grounds for [its] suspicions." Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 974 (7th Cir. 1992) (allegations made upon information and belief "are insufficient, even if the facts are inaccessible to the plaintiff, unless the plaintiff states the grounds for his suspicions").

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21.

Conceding it cannot in good faith assert any allegations demonstrating that VSAC To plead an alter-ego theory, a

acted wrongfully, DigaComm relies on an alter-ego theory.

plaintiff must assert facts demonstrating that "(1) such unity of interest and ownership that the separate personalities of the corporation[s] ... no longer exist;" and (2) "adherence to the fiction of a separate corporate existence would sanction a fraud, promote injustice, or promote inequitable consequences." Jones v. Hoosman, 2006 WL 1302524, at *2 (N.D. Ill. May 9,

2006); see Classic Fire & Marine Ins. Co. v. Illinois Ins. Exchange, 1997 WL 767290, at *5 (N.D. Ill. Dec. 3, 1997); see also Mobil Oil Corp. v. Linear Films, Inc., 718 F. Supp. 260, 271 (D. Del. 1989). 22. DigaComm's allegations here simply do not meet this pleading requirement.

DigaComm claims that "VIP and VSAC share a unity of interest such that their separate personalities no longer exist and VIP is, in reality, a sham for VSAC." (Ex. B, Cmplt. ¶ 73) To support this assertion, DigaComrn alleges that: (a) VSAC owns 100% of VIP; (b) there is overlap between the officers and employees of VIP and VSAC; (c) VIP and VSAC share office space; and (d) VSAC's Preferred Holders needed to approve the DigaComm compensation agreement. (Id. ¶ 74) These allegations do not demonstrate VIP was a mere instrumentality of VSAC, and they are, accordingly, insufficient as a matter of law. See Sumner Realty Co. v.

Willcott, 148 II1.App.3d 497, 502 (5th Dist. 1986); Hornsby v. Hornsby's Stores, Inc., 734 F. Supp. 302, 307-308 (N.D. Ill. 1990). 23. DigaComm's remaining alter-ego allegations are mere conclusions - "VSAC and

VIP have ignored the formalities of separate corporate existence" and "[a]dherence to the fiction that VIP and VSAC are separate entities would sanction a fraud and promote injustice." (Ex. B, Cmplt. ¶¶ 75-76) DigaComm provides no facts to support these allegations. For example,

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DigaComm does not allege that VIP was created to defraud DigaComm or even hint at what injustice would result if VIP and VSAC are treated as separate entities. Accordingly, these

allegations are insufficient. Lynch Ford v. Ford Motor Co. Inc., 934 F. Supp. 1005, 1007 (N.D. Ill. 1996); Mobil Oil, 718 F. Supp. at 267. 24. There is a reason DigaComm cannot provide facts to support its alter-ego

allegations: they are utterly unfounded. And DigaComm knows it. DigaComm sued only VIP in the arbitration. If VIP is just a "sham" as DigaComm alleges, and the real party is VSAC,

DigaComm presumably would have sued VSAC in the arbitration because VSAC would also be subject to the arbitration provision. It did not. 25. Moreover, DigaComm makes no allegations in the arbitration that VIP is a mere

instrumentality of VSAC or that VIP may be unable to satisfy a judgment. Poulos, 959 F.2d at 74. Nor could it make such allegations. VIP was formed in 2005, years before it entered into the DigaComm contract. (Declaration of Bradley Larschan ¶ 3, Ex. C hereto) VIP is adequately capitalized, observes corporate formalities, has functioning officers and directors, holds regular required meetings of its own board of directors, maintains all required corporate records, and maintains separate bank accounts and financial statements from VSAC. (Id. ¶¶ 6-17) 26. Even if VIP and VSAC were alter egos, as DigaComm alleges, VSAC would be

the party-in-interest to the contract between VIP and DigaComm. Disputes under that contract, as DigaComm admits, must be brought in arbitration. allegations, VSAC is not a proper party to this case. 27. In short, DigaComm's allegations are insufficient as a matter of law and And because there is no possibility that DigaComm can state a Thus, even under DigaComm's

inaccurate as a matter of fact.

cause of action against non-diverse VSAC, VSAC was fraudulently joined as a defendant in this

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case. Hoosier Energy, 34 F.3d at 1315; see also Schwartz, 174 F.3d at 878-79; Poulos, 959 F.2d at 73. VSAC' s citizenship should not be considered for purposes of determining diversity.

Gottlieb, 990 F.2d at 327. REMOVAL IS PROPER 28. The Court has subject matter over this action pursuant to 28 U.S.C. § 1332. As

demonstrated above, Defendant VSAC was fraudulently joined as a defendant in this action and its citizenship should be disregarded. There is complete diversity of citizenship between all of the properly joined parties and the amount in controversy, exclusive of interest and costs, exceeds $75,000. 29. This action is removable pursuant to 28 U.S.C. § 1441 because it originally could

have been brought in this Court. 30. This action is removable pursuant to 28 U.S.C. § 1441(b) because none of the

properly joined defendants is a citizen of the same state as DigaComm. As demonstrated above, Defendant VSAC was fraudulently joined as a defendant in this action and its citizenship should be disregarded. parties. 31. This Notice of Removal is being filed in the United States District Court for the There is complete diversity of citizenship between all of the properly joined

district in which the action is currently pending, pursuant to 28 U.S.C. § 1441(a). 32. None of the Defendants received DigaComm's Original Complaint. (See

Declaration of J. Raymond Bilbao ("Bilbao Decl.") ¶ 4, Ex. D hereto; Declaration of Andrew Seamons ("Seamons Decl.") ¶ 4, Ex. E hereto; Declaration of J.R. Hyde, III ("Hyde Decl.") ¶ 3, Ex. F hereto) Defendants VSAC, Andrew Seamons, and Pitt Hyde first received the First

Amended Complaint on December 17, 2007. (Ex. D, Bilbao Decl. ¶ 3; Ex. E, Seamans Decl. ¶ 4; Ex. F, Hyde Decl. ¶ 2) The Pittco Entities first received the First Amended Complaint on

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December 18, 2007. (Ex. E, Seamons Decl. ¶ 6) Accordingly, removal is timely filed within 30 days of receipt of the First Amended Complaint. 28 U.S.C. § 1446(b). 33. Each of the Defendants has consented to removal. VSAC's consent to removal is See Jonathan Pepper Co. v.

not necessary because it was fraudulently joined to this action.

Hartford Cas. Ins. Co., 381 F. Supp. 2d 730, 731-32 (N.D. III. 2005) (improperly joined defendants need not consent to removal) (citing Shaw v. Dow Brands, Inc., 994 F.2d 364, 369 (7th Cir. 1993)). Removal. 34. No other papers, pleadings, process or other orders have been served on Nevertheless, out of an abundance of caution, VSAC joins this Notice of

Defendants in connection with this action. There are no motions currently pending in the Circuit Court of Cook County of the State of Illinois as of the time of the filing of this Notice of Removal. 35. None of Defendants or their counsel have entered an appearance, filed any

responsive pleadings, or filed any papers responding to DigaComm's Original Complaint or First Amended Complaint in the Circuit Court of Cook County of the State of Illinois. 36. Pursuant to 28 U.S.C. §1446(d), written notice of the filing of this Notice of

Removal has been given to all adverse parties and a copy of the Notice of Removal has been filed with the clerk of the Circuit Court of Cook County of the State of Illinois. 37. Pursuant to 28 U.S.C. § 1446(a), a true copy of all process, pleadings, and orders

that have been filed and/or entered with the Circuit Court of Cook County of the State of Illinois, or served upon Defendants in connection with this action, except the Original Complaint and the First Amended Complaint (which are attached as Exs. A and B hereto) is attached hereto as Exhibit G.

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WHEREFORE, Defendants respectfully request that this cause proceed in this Court as an action properly removed, pursuant to 28 U.S.C. §§ 1332(a), 1441 and 1446, thereto.

DATED: January 15, 2008

Respectfully submitted,

/s/ Kellye L. Fabian Michael D. Freeborn John Z. Lee Kellye L. Fabian FREEBORN & PETERS LLP 311 S. Wacker Drive, Suite 3000 Chicago, Illinois 60606 Ph: (312) 360-6000 Fx: (312) 360-6996 Counsel for Defendants

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CERTIFICATE OF SERVICE
I certify that a copy of the foregoing Notice of Removal was served via U.S. Mail and hand delivery on January 15, 2008 upon: Reed S. Oslan, P.C. Stephen C. Hackney Matthew E. Nirider KIRKLAND & ELLIS LLP 200 E. Randolph Drive Chicago, Illinois 60601 Ph: (312) 861-2157 Fx: (312) 861-2200

/s! Kellye L. Fabian

1459460v2

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EXHIBIT A
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IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS LAW DIVISION DigaComm, LLC, ) Plaintiff, No. V. Vehicle Safety and Compliance , LLC, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, J.R. "Pitt" Hyde III, Andrew Seamons, and John Does 1 - 10,
Defendants.
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COMPLAINT FOR FRAUD, TORTIOUS INTERFERE&kE_z.;; -AND-1rFN-JUST-ENRIC-11MEAtT In support of its Complaint, DigaComm, LLC ("DigaComm") states as follows: o 1. Through this complaint, DigaComm seeks compensation it is due for introducing

Vehicle IP, LLC ("VIP"), a wholly-owned subsidiary of Vehicle Safety and Compliance LLC ("VSAC"), to General Electric ("GE") and facilitating a deal in which GE would partner with VIP and VSAC to monetize a portfolio of valuable patents. The patents in question are valued at $4 billion dollars.

2.

After the parties negotiated an agreement to compensate DigaComm with a

portion of the proceeds generated by the GE joint venture, DigaComm went to work. Its efforts for the benefit of VIP and VSAC quickly bore fruit. On August 16, 2007, GE and VIPIVSAC closed on their joint venture agreement.

3.

Apparently not content with the billions they stood to make from the GE joint

venture, VSAC and its Preferred Holders caused VIP to renege on its agreement to compensate

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DigaComm. On September 7, 2007, VIP Chief Executive Officer Brad Larschan informed DigaComm's Managing Member Peter Smith that DigaComm would be paid nothing for procuring the GE joint venture.

4_

DigaComm brings this action against VSAC, Andrew Seamons, J.R "Pitt" Hyde

III, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, and John Does 1 -10 (representing the unknown VSAC Preferred Holders who voted against compensating DigaComm). PARTIES 5. Plaintiff DigaCornm is a Delaware limited liability company headquartered in

Chicago, Illinois. Its address is 400 North Michigan Avenue, Suite 520, Chicago, Illinois, 60611. DigaComm was founded in 1997 and is a Chicago private investment firm specializing in early stage venture capital rounds. DigaComm's managing members are Peter Smith and Robert Spillane. Defendant VSAC is a Delaware limited liability company headquartered in

6.

Memphis, Tennessee . Its address is 5101 Wheelis Drive, Suite 100, Memphis , Tennessee, 38117 . VSAC is the sole member of VIP, and thus, the sole owner of VIP. Related Party VIP is a Delaware limited liability company headquartered in

7.

Memphis, Tennessee. Its address is 5101 Wheelis Drive, Suite 100, Memphis, Tennessee, 38117. VSAC is VIP's sole member. VIP is not a named defendant in this complaint because DigaComm's dispute with VIP is subject to an arbitration clause. DigaComm has initiated arbitration proceedings against VIP, and those proceedings are ongoing.

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8.

Defendant J.R. "Pitt" Hyde III is a resident of Tennessee. His address is 6058

Shady Grove Road, Memphis, Tennessee, 38103. Mr. Hyde is a prominent Memphis businessman and is the founder of the AutoZone chain of auto parts stores . Upon information and belief, Mr. Hyde is one of the partners of Pittco Capital Partners, LP and Pittco Capital Partners 11, LP.

9.

Defendant Pittco Capital Partners, LP is a Tennessee limited partnership with its

principal place of business at 6075 Poplar Avenue , Suite 335, Memphis, Tennessee, 38119. Pittco Capital Partners, LP is a Preferred Holder of VSAC. Defendant Pittco Capital Partners II , LP is a Tennessee limited partnership with

10.

its principal place of business at 17 W. Pontotoc, Suite 200, Memphis, Tennessee, 38103. Pittco Capital Partners II, LP is a Preferred Holder of VSAC. Defendant Andrew Seamons is a resident of Tennessee . His address is 2910

It.

Garden Lane, Memphis, Tennessee , 38111. Upon information and belief, Mr. Seamons is one of the partners of Pittco Capital Partners, LP and Pittco Capital Partners 11, LP. Upon information and belief, Mr. Seamons is J.R . "Pitt" Hyde III's agent. Mr. Seamans is also Chairman of the Board of VIP. John Does I - 10 represent the unknown VSAC Preferred Holders who voted to

12.

reject DigaComm ' s compensation . After due inquiry, the proper names of John Does 1 - 10 are unknown. (A copy of the affidavit of DigaComm's counsel to this effect is attached as Exhibit 1 .) Upon information and belief, John Does I - 10 are residents of Tennessee.

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JURISDICTION AND VENUE 13. This Court has personal jurisdiction over the defendants because they,

individually and through agents, transacted business in Illinois by engaging DigaComm, a limited liability company headquartered in Chicago, Illinois, to introduce VIP to John Hall, then a GE executive based in Chicago, Illinois. The introduction and at least two other meetings took place in Chicago, Illinois. In addition, the harm caused to DigaComm by the defendants occurred in Illinois.

14.

This complaint arises out of the defendants' and their agents' transaction of

business in Chicago, Illinois. The exercise of jurisdiction over the defendants in this case is consistent with the

15.

requirements of due process.

16.

Venue is proper because all of the portions of the transaction that occurred in

Illinois occurred in Cook County. Venue is further proper because all of the defendants are nonresidents of Illinois. STATEMENT OF FACTS 17. VSAC and VIP are patent "trolls" - entities whose principal assets are

intellectual property but which do not otherwise operate active businesses. The patents at the center of this lawsuit involve motor vehicle communication technology . VIP and VSAC value these patents at $4 billion.

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18.

The patents in question were acquired during the bankruptcy of then-holder

Remote Dynamics , Inc. in 2004 . Raymond Bilbao , formerly General Counsel to Remote Dynamics, Inc., followed the patents to VIP and now serves as VSAC ' s General Counsel. The capital used to acquire the patents and develop them was provided to VIP by

19.

VSAC, its sole member. VSAC is believed to have invested approximately $5 million in capital, by way of loans or capital contributions.

20.

After acquiring the patents, VIP set about its efforts to monetize those patents.

The principal method for a patent troll to monetize intellectual property is to sue patent infringers for damages. Alternatively, a patent troll can monetize a patent by entering into licensing agreements with businesses interested in utilizing the technology.

21.

In 2006, VIP entered into discussions regarding its patent portfolio with the

Boston intellectual property firm Fish & Richardson . Under the proposals, Fish & Richardson agreed to invest between 30 and 100% of its fee in return for participation in any damages or licensing fees received through its suits against infringers of certain patents.

22.

In December 2006, an attorney at Fish & Richardson named Michael Bunis

contacted DigaComm Principal Jonathan Tunick and encouraged DigaConun to investigate the VIP portfolio. Mr. Bunis was aware of DigaComm ' s work on a previous transaction between SightSound Technologies, Inc. ("SightSound") and GE and believed that DigaComm was wellpositioned to assist VIP to achieve a similar venture with GE_

23.

DigaConun was, indeed , well-positioned to assist VIP. In July 2005, it had

entered into an agreement with SightSound under which it had agreed to assist SightSound to

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form a joint venture with General Electric. The SightSound/GE joint venture was structured as follows: (a) SightSound would contribute its patents to a special purpose entity; and (b) GE would contribute necessary capital and would use its experience and sophistication to monetize the patents, either by negotiating license agreements or by enforcing SightSound's patents against infringers.

24.

In return for facilitating the SightSound/GE joint venture, DigaComm was to

receive 5% of any amounts generated by the joint venture after certain amounts (such as GE's capital investment) were repaid.

25.

The SightSound/GE joint venture closed successfully in mid-2005. Though the

patents in that matter are currently under re-examination by the Patent and Trademark Office, DigaComm will receive the 5% owed to it for facilitating the transaction once the patents emerge from the re-examination process.

26.

Aware of DigaComm' s experience and success on the SightSound transaction,

Fish & Richardson 's Mr. Bunis contacted Jonathan Tunick of DigaComm and suggested that DigaComm talk to Bradley Larschan, VIP's CEO.

27.

In January 2007, Mr. Tunick contacted Mr. Larschan in order to explore the

possibility of facilitating a joint venture between VIP and GE. Mr. Larschan had been waiting for Mr. Tunick's call and was receptive to the idea. Upon information and belief, VSAC and its Preferred Holders authorized and/or approved all actions taken by VIP in connection with its communications with DigaComm.

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28.

Mr. Larschan eagerly embraced the idea of a joint venture with GE because GE

was a market participant in the very fields encompassed by the VIP patents. Because of GE's status as a market participant, Mr. Larschan believed that GE had a stronger legal footing for enforcing the patents and that GE could do so without being perceived as a patent troll. In fact, Mr. Larschan had previously authored an article in which he explained how a recent intellectual property decision by the United States Supreme Court made a market participant like GE a valuable, if not indispensable, ally in enforcing patents. (A copy of Mr. Larschan's article is attached as Exhibit 2.)

29.

On February 6, DigaComm hosted Mr. Larschan and Mr. Bilbao at its offices in

Chicago . During this meeting, DigaComm again raised the idea of working with VIP to secure an agreement with GE similar to the SightSound transaction. Mr. Larschan reiterated his interest in the idea. The next day, Mr. Larschan called from the airport and told W. Tunick that VIP "really liked" the idea of pursuing a deal with GE and inquired about the next steps. Mr. Tunick promised to coordinate with John Hall of GE, the executive involved in the SightSound transaction.

30.

On February 13, 2007, Mr. Larschan emailed to Mr. Hall of GE a set of financial

projections for each of VIP 's three intellectual property groups . Acknowledging DigaComm's role as the facilitator of the transaction , on February 16, 2007 , Mr. Larschan asked whether Mr. Tunick would follow up with General Electric. Mr. Tunick agreed to do so the same day.

31.

On February 17, 2007, Mr. Larschan thanked Mr. Tunick for his continued efforts

with respect to GE and requested a copy of the SightSound transaction so that he could

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"advocate for it" with VSAC and the VSAC Preferred Holders. DigaComm complied with Mr. Larschan's request.

32.

On February 27, 2007, Mr. Larschan again thanked Mr. Smith and Mr. Tunick for

"pushing along the GE deal," noting that it "could be a great opportunity."

33.

On March 7, Mr. Tunick and Mr. Larschan spoke by telephone regarding

DigaComm's compensation. By this time, DigaComm had scheduled a meeting with John Hall of GE that was to take place the following day in Chicago. Mr. Tunick said that DigaComm was looking for a 10% piece of any transaction in return for bringing the transaction to VIP's attention. Mr. Tunick emphasized that if VIP and DigaComm were not able to agree on DigaComm's compensation, the March 8 meeting with GE would be cancelled.

34.

Mr. Larschan pushed back. He said that 10% was not acceptable to VIP or

VSAC , but that 5% was "not a problem" and was the "market rate ." Mr. Tunick agreed that DigaComm would accept 5%.

35.

On March 8, 2007, John Hall of General Electric met with.Mr. Larschan and ... .

others of VIP and made a power-point presentation reflecting GE's view of how best to monetize the patents in question.

36.

At the conclusion of the meeting, Mr. Hall asked what VIP wanted from GE. Mr.

Larschan said "we want what you did on the SightSound deal." The meeting ended on a positive note. Mr. Hall agreed to speak with Todd Dickinson, GE's head of intellectual property.

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37.

On March 9, Mr. Tunick emailed Mr . Larschan to report on a conversation he had

had with John Hall of GE. In his email , he noted the parties agreement with respect to DigaComm's 5% compensation: Brad - I will report to you on John Hall's conversation with Todd Dickenson, but before doing so I want to ensure that we have agreement on our own working arrangement. As you and I agreed prior to our meeting , the waterfall splits will be 50% GE, 45% VIP and 5% DigaComm. Please fire me back an email confirming our prior understanding. 38. Eager to learn of the new development and keep the deal on track , Mr. Larschan

confirmed Mr. Tunick's understanding of the parties ' agreement as to DigaComm's compensation: Jonathan, This represents our understanding of the percentage split. I look forward to hearing about John 's conversation with Todd. (A copy of this email chain is attached as Exhibit 3.) 39. With the GE deal progressing smoothly and with VIP having established direct

contacts with GE, VSAC apparently felt free to interfere with VIP's March 9, 2007 promise to pay DigaComm 5%. On March 29, 2007, VSAC' s Mr_ Bilbao informed Mr. Tunick during a telephone call that VIP was no longer willing to pay DigaComm 5%. Mr . Bilbao said that 5% "did not work optically" and that Mr. Larschan was no longer willing to pay the 5% he had previously promised. Upon information and belief, VSAC and its Preferred Holders authorized and/or approved Mr. Bilbao's and Mr. Larschan ' s actions.

40.

DigaConun viewed Mr. Bilbao's and Mr. Larschan 's position as a radical change

from the prior agreement to pay 5% . Rather than allow a complete breakdown in the relationship that might threaten the GE deal, Mr. Smith and Mr. Tunick proposed a tiered fee schedule. On March 30, 2007, DigaComm and VIP agreed to a tiered fee agreement under which DigaComm 9

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would receive the following percentages of amounts generated by the GENIP joint venture (less the VSAC and GE capital contributions): Amounts generated by the joint venture Up to $300 million Between $300 and $500 million Between $500 and $750 million Between $750 million and I billion Between $l billion and $ 1.5 billion Between $1 . 5 billion and $2 billion Over $2 billion 41. DigaComm's share 5% 4% 3.5% 2.5% 2.0%
1.5% 1%

Under the agreed upon compensation schedule, DigaComm stood to earn up to

$ 76 million for bringing the GE opportunity to VIP's $4 billion patent portfolio.

42.

As Friday, March 30, 2007 wound to a close , VIP insisted for the first time that

the letter agreement be "subject to the approval of a majority of the VSAC Preferred Holders." DigaComm objected to this change. Mr. Larschan assured Mr. Smith, however, that the approval process was a mere formality. VIP promised to recommend to the VSAC Preferred Holders that they approve the DigaComm letter agreement "as soon as practicable."

43.

As a further sign that the approval process was nothing to be concerned about,

VIP solicited Andrew Seamons' approval of the DigaCommNIP letter agreement on March 30, 2007. That same day, Mr. Seamons approved the deal on behalf of the VSAC Preferred Holders. VSAC' s Mr. Bilbao informed DigaComm of Mr . Seamons' approval. (A copy of this email is attached as Exhibit 4.)

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44.

In addition, Mr. Larschan told Mr . Tunick that the other VSAC Preferred Holders

would "follow the lead" of Mr. Seamons . Mr. Larschan emphasized that the approval provision was not a problem because "you already have the votes."

45.

On the basis of Mr. Larschan 's, Mr. Bilbao's, and Mr. Seamans ' representations,

DigaConun entered into a letter agreement with VIP late in the day on March 30, 2007 . (A copy of this letter agreement is attached as Exhibit 5.)

46.

At all relevant times, GE approved of and was grateful for DigaComm ' s efforts in

bringing to its attention the VIP opportunity and understood that DigaComm would receive a participation percentage for its efforts.

47.

On April 2, DigaComm coordinated a meeting in Memphis so that VSAC's

Preferred Holders could meet Mr . Hall of GE in person. Because of flight delays, Mr. Smith of DigaComm was not able to make the initial meeting. Mr. Hall reported to him that the meeting had gone well. The V SAC Preferred Holders had believed GE to be too good to be true. Mr. Hall's understanding was that the VSAC Preferred Holders were very receptive to a deal with GE, and wanted to advance the deal by meeting with the GE licensing personnel who would also be involved in the joint venture.

48.

At no point during the April 2 meeting did VSAC, Mr. Seamons, Mr. Hyde, Pittco

Capital Partners, LP, Pittco Capital Partners II, LP, or any John Doe ever disparage DigaComm's role in the GE/VIP transaction or inform DigaComm that the VSAC Preferred Holders had yet to approve its compensation.

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49.

Mr. Smith's flight arrived in time for dinner in Memphis on April 2. That dinner

was attended by Smith, Mr. Hall, Mr. Larschan, and Pitt Hyde's representative Mr. Seamons. At no time during this dinner did Mr. Seamons question DigaComm ' s participation or inform DigaComm that the VSAC Preferred Holders had not yet approved the DigaComm letter agreement- Mr. Hall also told Mr. Smith that he had informed the VSAC Preferred Holders of the importance of DigaComm to the effort and had received no objections-

50.

On May 8, a second meeting was held in Memphis so that the VSAC Preferred

Holders could meet the GE licensing people- Jonathan Tunick attended this meeting on behalf of DigaComm . At no point during this meeting did VSAC, Mr. Seamons, Mr. Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II , LP, or any John Doe ever question DigaComm ' s role in the GE transaction or inform DigaComm that the VSAC Preferred Holders had yet to approve its compensation.

51.

The May 8 meeting was a success - the VSAC Preferred Holders decided to

proceed with the GE joint venture.

52.

On June 12, 2007, John Hall contacted Mr. Smith and informed him that GE's

law firm, Latham & Watkins, needed a copy of the DigaComm letter agreement so that they could write in DigaComm ' s compensation to the joint venture agreement . Mr. Smith obliged by sending Mr. Hall a copy of the DigaComm letter agreement with VIP . Mr. Smith ' s letter states "1 am sending a copy of this letter to Brad Larschan in the event that you or your associates need additional information from either of us." (A copy of Mr. Smith's letter is attached as Exhibit 6.)

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53.

At no time did Mr. Larschan, VSAC, Mr. Seamons, Mr_ Hyde, or any of VSAC's

Preferred Holders object or inform Mr. Smith that the DigaComm letter agreement was invalid or that it had not yet been approved.

54.

Mr. Larschan did take action, however- Mr. Larschan directed VIP's lawyers to

object to any inclusion of DigaComm in the joint venture documents . Upon information and belief, VSAC and its Preferred Holders authorized and/or approved of Mr. Larschan's action. At no point did anyone inform DigaComm that VIP was once again reneging on its promise to pay DigaConm.

55.

As far as DigaComm knew, the joint venture negotiations were proceeding

smoothly. On several occasions , Mr. Smith contacted Mr. Larschan to check in. At no time did Mr. Larschan inform Mr. Smith that there was any problem with either DigaComm 's contract or the GE deal as a whole.

56.

By mid-August, DigaComm was of the belief that the joint venture closing was

imminent. On August 21, 2007, Mr. Smith wrote Mr. Larschan and Mr . Bilbao to congratulate them on closing the GE deal.

57.

On August 27, 2007, Mr. Smith again wrote Mr. Larschan to congratulate him on

closing the GE deal.

58.

Mr. Smith received no response to his emails until September 6, 2007. On that

day, Mr. Larschan dropped a bombshell: VIP was refusing to pay DigaComm because "a majority of the VSAC Preferred Holders had not approved the deal." He offered to pay

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DigaComm $250,000 for its efforts in securing a $4 billion opportunity with one of the world's largest companies.

59.

An angered Mr. Smith informed Mr. Larschan that he would contact GE and his

litigation counsel about this unfortunate development.

60.

On September 7, 2007, VIP officially reneged on its obligations to DigaComm.

In a letter of that day, Mr. Larschan informed Mr. Smith that, [o]n August 10, 2007, a joint meeting of the Board of Directors of VSAC and VSAC's Preferred Interest Holders was held at VSAC's corporate offices in Memphis, Tennessee. At such meeting, the management of VIP recommended to VSAC's Preferred Interest Holders that they should approve the terms of the Letter Agreement including the distribution of Cash Waterfall Proceeds as set forth therein. Unfortunately, despite management's recommendation, a majority of VSAC's Preferred Interest Holders voted against the approval of the Letter Agreement including the distribution of Cash Waterfall Proceeds as set forth herein. Thus, as the Letter Agreement was contingent upon the approval of VSAC's Preferred Interest Holders, VIP's failure to obtain such approval renders the Letter Agreement null and void. (A copy of this letter is attached as Exhibit 7.) 61. At no time prior to September 6, 2007, did anyone from VIP, VSAC, Mr.

Seamons, Mr. Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, or any John Doe ever inform anyone from DigaComm that the VSAC Preferred Holders had not approved the DigaComm letter agreement. To the contrary, VIP, VSAC, Mr. Seamons, Mn Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does I - 10 took pains to give DigaComm the illusion that everything was on track-

62.

DigaComm brings this action to recover damages equal to 5% of the value of the

joint venture's patent portfolio.

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COUNT I (FRAUD) 63. DigaComm realleges and incorporates the allegations contained in paragraphs I

through 62 above as if fully set forth herein.

64.

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners , LP, Pittco

Capital Partners II, LP, and John Does I - 10 conspired with and aided and abetted VIP and Bradley Larschan to defraud DigaComm out its compensation for facilitating a $4 billion joint venture between VIP and GE.

65.

VIP and Mr. Larschan made material misrepresentations to DigaComm

concerning the status of its compensation in order to induce DigaComm to continue to facilitate the GE transaction. Upon information and belief, VSAC, Mr. Seamons, Mr. Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, and John Does I - 10 authorized and/or approved of VIP's and Mr. Larschan 's misrepresentations.

66.
them.

VIP and Mr. Larschan knew their statements were false at the time they made

67.

VIP and Mr. Larschan intended that DigaComm would rely on these

misrepresentations.

68.

DigaComm relied on those misrepresentations.

69.

Mr. Seamons participated in the fraud and acted in furtherance of the conspiracy

by indicating his approval of the DigaComm/VIP letter agreement and causing his approval to be communicated to DigaComm by VSAC' s General Counsel , J. Raymond Bilbao. Upon

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information and belief, VSAC, its Preferred Holders, and Mr. Hyde authorized and/or approved Mr. Searnons' action.

70.

In addition, VSAC, Mr. Seamons, Mr. Hyde, Pittco Capital Partners, LP, Pittco

Capital Partners Il, LP, and John Does I - 10 participated in the fraud and acted in furtherance of the conspiracy by rejecting DigaComm's compensation in the face of Mr. Seamons' prior approval.

71.

While complete details of the conspiracy are exclusively within the knowledge

and control of the conspirators, DigaComm is aware of the following facts giving rise to a strong inference of VSAC's, Mr. Seamons', Mr. Hyde's, Pittco Capital Partners, LP's, Pittco Capital Partners II, LP's and John Does I - I0's participation in a conspiracy to defraud DigaComm: (a) The provision purporting to condition DigaComm ' s compensation on the approval of VSAC's Preferred Holders was an eleventh-hour addition to the DigaConunlViP letter agreement. VIP's Mr. Larschan and VSAC's General Counsel, J. Raymond Bilbao, told DigaComm repeatedly that the approval condition "would not be a problem." DigaComm was told that Mr. Seamons, on behalf of the 30% preferred interest holding iii VSAC contra led by Mr. Hyde, approved of its fee and that the remaining VSAC Preferred Holders would follow. Mr. Seamons' lead. VSAC's Preferred Holders attended multiple meetings regarding the GE deal and at no time did they indicate that DigaComm 's compensation should be rejected. VIP claims that it recommended that VSAC's Preferred Holders approve DigaComm's compensation, demonstrating that DigaCornm complied with its obligations. VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does I - 10 rejected DigaComm's compensation only months after Mr. Seamons had communicated their approval and in the face of repeated assurances that approval "would not be a problem."

(b)

(c)

(d)

(e)

(f)

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(g)

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, and John Does I - 10 had no basis upon which to deny DigaComm its compensation. VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does I - 10 stand to profit handsomely off of their rejection of DigaComm's compensation since DigaComm stood to receive as much as $200 million. Mr. Hyde is liable for Mr. Seamons' actions in furtherance of the conspiracy to

(h)

72.

defraud DigaComm under the theory of respondeat superior. Upon information and belief, Mr. Hyde is also liable as one of the partners of the Pittco entities.

73. Pittco entities.

Upon information and belief, Mr. Seamons is liable as one of the partners of the

74.

VIP and V SAC share a unity of interest such that their separate personalities no

longer exist and VIP is, in reality, a sham for VSAC.

75.

While the complete details of the relationship between VIP and VSAC are

exclusively within their possession and control and unavailable to outsiders like DigaComm, DigaCommn 2S a`.'iaTe Oft e following facts indicating that VIP is the mere alter ego of VSAC:

(a) ' (b)

VSAC owns 100% of the membership interests in VIP. There is considerable overlap between the officers and employees of VIP and VSAC. DigaComm is aware that J. Raymond Bilbao, VSAC's General Counsel, is also an employee of VIP. In addition, DigaComm is aware that Andrew Seamons is both the Chairman of VIP' s Board and a representative of VSAC Preferred Holders Pitted Capital Partners, LP and Pittco Capital Partners 11, LP. Upon information and belief, other officers and employees of VSAC are also officers and employees of VIP. VIP and VSAC currently share the office space at 5101 Wheelis Drive, Suite 100, Memphis, Tennessee, 38117 . Prior to September 2007, both VSAC and VIP maintained offices at 3150 Lenox Park Boulevard, Suite 108, Memphis, Tennessee, 38115 17

(c)

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(d)

VSAC dominates and controls VIP such that VIP lacks the authority to enter into agreements without approval from VSAC and VSAC's Preferred Holders. For example, VIP claims that it could not undertake the GE transaction without the approval of VSAC and VSAC's Preferred Holders. The GE/VIP joint venture was not finalized until after VSAC's Preferred Holders blessed the GE personnel involved. Adherence to the fiction that VIP and VSAC are separate entities would sanction

(e)

76.

a fraud and promote injustice.

77.

DigaComm believes that VSAC is liable for VIP 's and Mr. Larschan's

misrepresentations under the doctrine of alter ego because VSAC and VIP have ignored the formalities of separate corporate existence. But because the full details of VSAC's relationship with VIP are uniquely within the knowledge of VSAC and VIP, DigaComm also alleges that VSAC is liable for VIP's Mr. Larschan' s misrepresentations under the doctrine of direct participation.

78.

VIP' s failure to compensate DigaComm for its efforts in facilitating a $4 billion

transaction between VIP and GE can be traced directly to VSAC through the actions of VSAC's Preferred Holders in rejecting DigaComrn 's compensation without justification.

79.

VSAC has interfered with VIP's operations in a way that far surpasses the control

ordinarily exercised by a parent company as an incident of ownership. While the details of VSAC's interference in VIP's operations are within the exclusive knowledge and control of VSAC and VIP and are unavailable to an outsider like DigaCornm, DigaComm is aware of the following facts strongly suggestive of undue interference by VSAC in VIP's operations: (a) VSAC and its Preferred Holders rejected DigaComm's compensation in the face of VIP's recommendation that DigaComrn's compensation be approved.

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(b)

VSAC and its Preferred Holders exercised continuous and direct supervision over the VIP/GE joint venture, including by attending meetings with GE representatives. VSAC and its Preferred Holders had the ability to veto the GE joint venture at any time, regardless of VIP's desire to continue with the joint venture. The GE/VIP joint venture was not finalized until after VSAC's Preferred Holders blessed the GE personnel involved. DigaComm seeks compensatory and punitive damages.

(c)

(d)

80.

COUNT H
(TORTIOUS INTERFERENCE WITH THE MARCH 9, 2007 CONTRACT)
81. DigaComm realleges and incorporates the allegations contained in paragraphs I

through 62 above as if fully set forth herein.

82. contract.

DigaComm 's March 9, 2007 agreement with VIP is a valid and enforceable

83.

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco

Capital Partners II, LP, and John Does I - 10 were aware of the March 9, 2007 agreement and were aware that it was a valid and enforceable agreement.

84.

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco

Capital Partners II, LP, and John Does I - 10 purposefully interfered with VIP's performance of the March 9, 2007 agreement.

85.

Upon information and belief; Mr. Hyde also used Pittco Capital Partners, LP and

Pittco Capital Partners II, LP to interfere with DigaComm's contractual relationship with VIPC

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86.

Mr. Hyde is liable for Mr. Seamons' interference under the theory of respondeat

superior. Upon information and belief, Mr. Hyde is also liable as one of the partners of the Pittco entities.

87. Pittco entities.

Upon information and belief, Mr. Seamons is liable as one of the partners of the

88.

VSAC's, Andrew Searnons', J.R. "Pitt" Hyde's, Pittco Capital Partners, LP's,

Pittco Capital Partners II, LP's, and John Does I - 10's interference was done with actual malice. While the complete details surrounding the defendants' state of mind when they interfered with the March 9, 2007 agreement are peculiarly known to them and not to outsiders like DigaComm, DigaComm is aware of the following indicia of actual malice: (a) V SAC, Andrew Seamans, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners U, LP, and John Does I - 10 interfered with the March 9, 2007 agreement even though that interference was opposed to their economic interests. All were aware that reneging on the March 9, 2007 agreement could cause GE to back out of the joint venture, thus upsetting a $4 billion opportunity.
VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, and John Does I - 10 interfered with DigaComm's compensation. leeks after authorizing and./ or approving of their agent Mr. Larschan' s agreement to pay DigaComm 5%.

(b)

(c)

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does 1 - 10 had no basis upon which to assert that DigaComm was not entitled to its agreed -upon compensation. VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners II, LP, and John Does I - 10 stand to profit handsomely off of their rejection of DigaComm's compensation since DigaComm stood to receive as much as $200 million.

(d)

20

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89.

DigaComm has suffered damages as a result of V SAC' s, Andrew Seamons', J.R.

"Pitt" Hyde's, Pittco Capital Partners, LP's, Pittco Capital Partners II, LP 's, and John Does I 10's interference.

90.

DigaComm seeks damages in the amount of $200 million.

COUNT III (TORTIOUS INTERFERENCE WITH THE MARCH 30, 2007 CONTRACT) 91DigaComm realleges and incorporates the allegations contained in paragraphs I

through 62 above as if fully set forth herein.

92.

DigaComm's March 30, 2007 letter agreement with VIP is a valid and

enforceable contract.

93.

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners , LP, Pittco

Capital Partners II, LP, and John Does 1 - 10 were aware of the March 30 , 2007 letter agreement and were aware that it was a valid and enforceable agreement.

94.

VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco

Capital Partners II, LP, and John Does I - 10 purposefully interfered with VIP's performance of the March 30, 2007 letter agreement.

95.

Upon information and belief, Mr. Hyde also used Pittco Capital Partners, LP and

Pittco Capital Partners 11, LP to interfere with DigaComm's contractual relationship with VIP.

96.

Mr. Hyde is liable for Mr. Seamons' interference under the theory of respondent

superior. Upon information and belief, Mr. Hyde is also liable as one of the partners of the Pittco entities.

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97. Pittco entities.

Upon information and belief, Mr . Seamons is liable as one of the partners of the

98.

VSAC's, Andrew Seamons', J.R. "Pitt" Hyde's, Pittco Capital Partners, LP's,

Pittco Capital Partners II, LP's, and John Does I - 10's interference was done with actual malice. While the complete details surrounding the defendants' state of mind when they interfered with the March 30, 2007 letter agreement are peculiarly known to them and not to outsiders like DigaComm, DigaComm is aware of the following indicia of actual malice: (a) The provision purporting to condition DigaComm 's compensation on the approval of VSAC's Preferred Holders was an eleventh -hour addition to the DigaComm/VIP letter agreement. VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco. Capital Partners II, LP, and John Does I - 10 interfered with the March 30, 2007 letter agreement even though that interference was opposed to their economic interests. All were aware that reneging on the March 30, 2007 letter agreement could cause GE to back out of the joint venture, thus upsetting a $4 billion opportunity. VSAC, Andrew Seamans, JR. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners It, LP, and John Does 1 - 10 attended meetings relating to the GENIP joint venture and at no point indicated that they felt that DigaComm's compensation should be rejected. VIP claims that it recommended that VSAC' s Preferred Holders approve DigaComm's compensation, demonstrating that DigaCorm complied with its obligations. VSAC, Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does I - 10 rejected DigaComm' s compensation only months after Mr. Seamons had communicated their approval and in the face of repeated assurances by their agent Mr. Larschan that approval "would not be a problem." VSAC , Andrew Seamons, J.R. "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners H, LP, and John Does 1 - 10 had no basis upon which to deny DigaComm its compensationVSAC, Andrew Seamons, J_R_ "Pitt" Hyde, Pittco Capital Partners, LP, Pittco Capital Partners 11, LP, and John Does I - 10 stand to profit handsomely off of 22

(b)

(c)

(d)

(e)

(f)

(g)

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their rejection of DigaComm 's compensation since DigaComm stood to receive as much as $76 million. 99. DigaComm has suffered damages as a result of VSAC' s, Andrew Seamons', J.R.

"Pitt" Hyde's, Pittco Capital Partners, LP's, Pittco Capital Partners 11 , LP's,