DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., MANILA
INDUSTRIES, INC., AND MUNISH
KRISHAN,
Plaintiffs,
§
§
§
§
§
§
vs. §
§
JEFFREY BARON and
ONDOVA LIMITED COMPANY,
Defendants,
§
§
§
§
CIVIL ACTION NO. 3-09-CV-0988-F
§
vs. §
§
CHARLA G. ALDOUS, ALDOUS
LAW FIRM, JEFFREY RASANSKY,
and RASANSKY LAW FIRM,
Intervenors.
§
§
§
§
§
§
DERIVATIVE PLAINTIFFS QUANTEC, LLC, IGUANA CONSULTING, LLC,
AND NOVO POINT, LLC NOTICE OF MOTION FOR LEAVE TO FILE
INTERVENTION AND TO AUTHORIZE DISCOVERY, AND
BRIEF IN SUPPORT ON PAGE TWO
USCA5 836
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 2
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
QUANTEC, LLC,
IGUANA CONSULTING, LLC,
and NOVO POINT, LLC,
Derivative Plaintiffs/Intervenors,
§
§
§
§
§
§
v. §
§
JEFF BARON, Individually, and as
Director of ONDOVA LIMITED
COMPANY, MUNISH KRISHAN,
Individually, and as Director
of MANILA INDUSTRIES, INC.,
ONDOVA LIMITED COMPANY,
MANILA INDUSTRIES, INC, et al.,
Defendants in Intervention,
§
§
§
§
§
§
§
§
§
CIVIL ACTION NO. 3-09-CV-0988-F
§
QUANTEC, INC., IGUANA
CONSULTING, INC., and
NOVO POINT, INC.
Derivative Corporations in
Intervention.
§
§
§
§
§
§
§
§
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC,
AND NOVO POINT, LLC NOTICE OF MOTION FOR LEAVE TO FILE
INTERVENTION AND TO AUTHORIZE DISCOVERY, AND
BRIEF IN SUPPORT
USCA5 837
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 3
TO THE HONORABLE JUDGE OF SAID COURT:
NOW COMES Quantec, LLC, Iguana Consulting, LLC, and Novo Point, LLC
(“Derivative Plaintiffs”) and files this Notice of Motion for Leave to File Intervention
and to Authorize Discovery, and Brief in Support (“Motion”) pursuant to Rule 24(a)(2) of
the Federal Rules of Civil Procedure and in support of this Motion would respectfully
show the Court the following:
I.
FACTUAL BACKGROUND
1.01 On or about July 9, 2009, Derivative Plaintiffs filed their Original Petition
in Intervention in the lawsuit styled Ondova Limited Company, et al. v. Manila
Industries, Inc., et al., bearing Cause No. 06-11717-C which is pending in the 68
th
District Court of Dallas County, Texas. Derivative Plaintiffs filed their Original Petition
in Intervention to prevent the enforcement of a Memorandum of Understanding which is
dated April 25, 2009.
1.02 The Honorable Martin Hoffman provided Derivative Plaintiffs with
knowledge that a similar lawsuit was pending in this Court. Derivative Plaintiffs did not
have this information prior to filing the Original Petition in Intervention in the state court
proceeding.
USCA5 838
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 4
II.
LEGAL JUSTIFICATION FOR ORIGINAL PETITION IN INTERVENTION
2.01 Derivative Plaintiffs claim that this Original Petition in Intervention,
which is attached hereto as Exhibit “A” and incorporated by reference as if fully set forth
at length, is mandatory pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure
because they have an ownership and economic interest in the domain names that are the
subject of this litigation. This Court’s disposing of all the ownership interest of the
domain names pursuant to the Preliminary Injunction, which has not been provided to
Derivative Plaintiffs since it is under seal, will impair and impede Derivative Plaintiffs
ability to protect their ownership interest in this matter.
2.02 In the alternative, Derivative Plaintiffs claim that this Original Petition in
Intervention is permissive pursuant to Rule 24(b)(1)(B) of the Federal Rules of Civil
Procedure because they have a claim that shares with the main action a common question
of law and fact. This Original Petition in Intervention will not unduly delay or prejudice
the adjudication of the original parties’ rights. If the Derivative Plaintiffs cannot
intervene in this pending action, they will be forced to litigate identical issues in other
forums which will create undue expense and delay and duplicity of parties.
2.03 This Motion is supported by this notice, Derivative Plaintiffs’ Original
Petition in Intervention which is attached as Exhibit “A,” the Verification of Mr. Adrian
Taylor which is attached as Exhibit “B,” and all the pleadings, papers, and records on file
in this action.
USCA5 839
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 5
III.
DISCOVERY
3.01 Derivative Plaintiffs request ninety (90) days to serve written discovery
(i.e. Request for Disclosure, Interrogatories, Request for Admissions, and Request for
Production of Documents) to the parties in this litigation.
3.02 Derivative Plaintiffs would also conduct oral depositions of various parties
during this ninety (90) day discovery time period.
3.03 Derivative Plaintiffs request the opportunity to serve discovery requests
and take oral depositions for the following reasons:
(a) The Village Trust and the MMSK Trust (“Trusts”) have not ever
received monthly financial statements or balance sheets from Quantec, Inc., Iguana
Consulting, Inc., or Novo Point, Inc.. The Trusts, as the majority stockholders in these
companies, were entitled to these financial documents. It is the Derivative Plaintiffs
position that these financial documents are being withheld to conceal important financial
information with an intention to defraud the Trusts;
(b) The Trusts have not ever received monthly financial statements or
balance sheets from Simple Solutions, LLC (USVI) f/k/a HCB, LLC, Blue Horizons
Limited Company (USVI) f/k/a Macadamia Management, LLC, or Search Guide, LLC
(USVI) f/k/a Realty Investment Management, LLC. The Trusts, as limited partner
owners through Four Points Management, LLLP, were entitled to these financial
documents. It is the Derivative Plaintiffs’ position that these financial documents are
being withheld to conceal important financial information with an intention to defraud the
Trusts; and
USCA5 840
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 6
(c) It is the Derivative Plaintiffs’ position that Four Points
Management, LLLP intentionally omitted income from the 2007 tax returns and Schedule
K-1’s with an intention to defraud the Trusts.
3.04 Derivative Plaintiffs need the discovery requested herein to support their
causes of action which are outlined in the Original Petition in Intervention.
3.05 In order to fully pursue this Motion in the most efficient manner possible
and in order to ensure that all of the necessary evidence and facts are available,
Derivative Plaintiffs move this Court for leave to authorize discovery. Because discovery
would assist in the orderly and timely resolution of Derivative Plaintiffs’ claims, they ask
that this Court grant their Motion.
IV.
PRAYER
Derivative Plaintiffs respectfully request that the parties take notice of their
Motion, move the Court for leave to intervene and to authorize discovery, and grant the
Original Petition in Intervention as a matter of right pursuant to Rule 24(a)(2) of the
Federal Rules of Civil Procedure
, or in the alternative by permission pursuant to Rule
24(b)(1)(B) of the Federal Rules of Civil Procedure.
Derivative Plaintiffs further move
that on final trial they have judgment against Defendants as outlined in Exhibit “A,”
recovery of reasonable attorneys’ fees, costs of suit, and for such other and further relief,
both general and special, at law or in equity, to which they may show themselves justly
entitled.
USCA5 841
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 7
Dated: July 22, 2009 Respectfully submitted,
CRAIG A. CAPUA
State Bar Card No. 03783950
ROYCE WEST
State Bar Card No. 21206800
_/s/Craig A. Capua
WEST & ASSOCIATES, LLP
P. O. Box 3960
Dallas, Texas 75208-1260
Ofc.: (214) 941-1881
Fax: (214) 941-1399
ATTORNEYS FOR QUANTEC, LLC,
IGUANA CONSULTING, LLC, AND
NOVO POINT, LLC
USCA5 842
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 8
CERTIFICATE OF CONFERENCE
A copy of the Motion at issue has been provided to Ms. Charla G. Aldous and
inquiry was made on the merits of this Motion and whether agreement could be reached.
Ms. Aldous neither agrees nor opposes the Motion. Therefore, the Motion is presented to
the Court for determination.
_/s/Craig A. Capua
Craig A. Capua
CERTIFICATE OF CONFERENCE
A copy of the Motion at issue has been provided to Mr. Jeffrey H. Rasansky and
inquiry was made on the merits of this Motion and whether agreement could be reached.
Mr. Rasansky neither agrees nor opposes the Motion. Therefore, the Motion is presented
to the Court for determination.
_/s/Craig A. Capua_________
Craig A. Capua
CERTIFICATE OF CONFERENCE
A copy of the Motion at issue has been provided to Mr. John W. MacPete and
inquiry was made on the merits of this Motion and whether agreement could be reached.
Mr. MacPete opposes this Motion.
/s/Craig A. Capua
Craig A. Capua
USCA5 843
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 9
CERTIFICATE OF CONFERENCE
A copy of the Motion at issue has been provided to Mr. James Krause and inquiry
was made on the merits of this Motion and whether agreement could be reached.
Mr. Krause neither agrees nor opposes the Motion. Therefore, the Motion is presented to
the Court for determination.
/s/Craig A. Capua
Craig A. Capua
USCA5 844
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC NOTICE OF
MOTION FOR LEAVE TO FILE INTERVENTION AND TO AUTHORIZE DISCOVERY, AND BRIEF IN SUPPORT
PAGE 10
EXHIBIT “A”
USCA5 845
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION
– PAGE 11
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., MANILA
INDUSTRIES, INC., AND MUNISH
KRISHAN,
Plaintiffs,
§
§
§
§
§
§
vs. §
§
JEFFREY BARON and
ONDOVA LIMITED COMPANY,
Defendants,
§
§
§
§
CIVIL ACTION NO. 3-09-CV-0988-F
§
vs. §
§
CHARLA G. ALDOUS, ALDOUS
LAW FIRM, JEFFREY RASANSKY,
and RASANSKY LAW FIRM,
Intervenors.
§
§
§
§
§
§
DERIVATIVE PLAINTIFFS QUANTEC, LLC, IGUANA CONSULTING, LLC,
AND NOVO POINT, LLC ORIGINAL PETITION IN INTERVENTION
ON PAGE TWELVE
USCA5 846
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION
– PAGE 12
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
QUANTEC, LLC,
IGUANA CONSULTING, LLC, and
NOVO POINT, LLC,
Derivative Plaintiffs/Intervenors,
§
§
§
§
§
§
v. §
§
JEFF BARON, Individually, and as
Director of ONDOVA LIMITED
COMPANY, MUNISH KRISHAN,
Individually, and as Director
of MANILA INDUSTRIES, INC.,
ONDOVA LIMITED COMPANY,
MANILA INDUSTRIES, INC, et al.,
Defendants in Intervention,
§
§
§
§
§
§
§
§
§
CIVIL ACTION NO. 3-09-CV-0988-F
§
QUANTEC, INC., IGUANA
CONSULTING, INC., and
NOVO POINT, INC.
Derivative Corporations in
Intervention.
§
§
§
§
§
§
§
§
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC,
AND NOVO POINT, LLC ORIGINAL PETITION IN INTERVENTION
TO THE HONORABLE JUDGE OF SAID COURT:
NOW COMES Quantec, LLC, Iguana Consulting, LLC, and Novo Point, LLC
(“Derivative Plaintiffs”), and files this Derivative Plaintiffs’ Original Petition in
Intervention (“Derivative Intervention”) pursuant to Rule 24(a) & (b) of the Federal Rules of
USCA5 847
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 13
Civil Procedure, and brings this proceeding in the rights of Quantec, Inc., Iguana
Consulting, Inc., and Novo Point, Inc. (“Derivative Corporations”), as shareholders in the
Derivative Corporations and in behalf of all other shareholders similarly situated, and
files this Derivative Intervention complaining against the Derivative Corporations,
Ondova Limited Company, Jeffrey Baron, Manila Industries, Inc., Munish Krishan,
Simple Solutions, LLC (USVI) f/k/a HCB, LLC, Search Guide, LLC (USVI) f/k/a Realty
Investment Management, LLC, Blue Horizons Limited Company (USVI) f/k/a
Macadamia Management, LLC, Netsphere, Inc., Dennis Kleinfeld, Four Points
Management, LLLP, and Marshden, LLC (sometimes collectively referred to as
“Defendants”), and for cause of action would show the Court the following:
SECTION 1
CONTENTS
Contents 13
Jurisdiction and Venue 14
Parties 15
Shareholder Status and Adequate Representation 19
Irreparable Injury 20
Background Facts 21
Causes of Action 28
Request for Declarative Judgment 28
Rescission 28
Request for Permanent Injunctive Relief 28
Breach of Contract 29
USCA5 848
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 14
Breach of Fiduciary Duty 30
Civil Conspiracy to Commit Fraud 30
Accounting 31
Application for Receivership 31
Exemplary/Punitive Damages 32
Attorney’s Fees 32
Conditions Precedent 33
Jury Demand 33
Prayer 33
SECTION 2
JURISDICTION AND VENUE
2.01 This Court has subject matter jurisdiction pursuant to 28 U. S. C. §1332 as
complete diversity exists among Plaintiffs, Derivative Plaintiffs, Intervenors, and
Defendants, and the amount in controversy exceeds US$75,000.00.
2.02 This Court has personal jurisdiction over Defendants due to the fact that
some are citizens of Texas and continuously do business in this judicial district. Futher,
the Memorandum of Understanding at issue was entered into in this judicial district and a
substantial portion of the performance of the transaction at issue was to take place in this
jurisdiction.
2.03 Exercise of the jurisdiction in this suit comports with the due process
requirements of the U. S. Constitution.
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DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 15
2.04 Venue is proper in this Court under 28 U. S. C. § 1391(a) because a
substantial portion of the events, or omissions, giving rise to Derivative Plaintiffs’ claims
occurred in the State of Texas and in this judicial district.
SECTION 3
PARTIES
3.01 Derivative Plaintiff, Quantec, LLC is a limited liability company
organized and existing under the laws of the Cook Islands, with its principal office in
Rarotonga, the Cook Islands.
3.02 Derivative Plaintiff, Iguana Consulting, LLC is a limited liability company
organized and existing under the laws of the Cook Islands, with its principal office in
Rarotonga, the Cook Islands.
3.03 Derivative Plaintiff, Novo Point, LLC is a limited liability company
organized and existing under the laws of the Cook Islands, with its principal office in
Rarotonga, the Cook Islands.
3.04 Defendant, Ondova Limited Company ("Ondova") is a corporation
organized and existing under the laws of the State of Texas, with its principal office
located in Dallas County, Texas. Ondova has appeared in this action.
3.05 Defendant, Jeffrey Baron ("Baron") is an individual citizen of Carrollton,
Texas, who has appeared in this action.
3.06 Defendant, Munish Krishan ("Krishan") is an individual citizen of
California who has appeared in this action.
3.07 Defendant, Manila Industries, Inc. ("Manila") is a corporation organized
under the laws of the State of California, with its principal office in California, which has
USCA5 850
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 16
appeared in this action.
3.08 Defendant, Netsphere, Inc. ("Netsphere") is a corporation organized and
existing under the laws of the State of Michigan, with its principal office in California,
which has appeared in this action.
3.09 Defendant Simple Solutions, LLC ("Simple") is a U.S. Virgin Islands
limited liability company, with its principal place of business in the U.S. Virgin Islands.
The Texas Secretary of State is an agent for service of process upon Simple because
Simple engages in business in Texas but does not maintain a regular place of business in
this state or a designated agent for service of process, and this proceeding arises out of
the business done in Texas and to which Simple is a party. The Secretary of State may be
served on Simple’s behalf with instruction to mail a copy to Simple at its home office
address at Triangle Corporate Services, LLC, #8 Norre Gade, St. Thomas, U. S. Virgin
Islands 00802. Also, pursuant to Fed. R. Civ. P. 5, Simple may be served at the foregoing
address in any manner allowed by any disinterested person competent to make oath of the
fact.
3.10 Defendant HCB, LLC ("HCB") is a Delaware limited liability company,
with its principal place of business in the U.S. Virgin Islands, which can be served at its
Registered Agent, Triangle Corporate Services, LLC, P. O. Box 490, #8 Norre Gade,
Charlotte Amalie, St. Thomas, U. S. Virgin Islands 00804. Also, pursuant to Fed. R. Civ.
P. 5, Blue HCB may be served at the foregoing address in any manner allowed by any
disinterested person competent to make oath of the fact.
3.11 Defendant Realty Investment Management, LLC ("RIM") is a Delaware
limited liability company, with its principal place of business in the U.S. Virgin Islands,
USCA5 851
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 17
which can be served at its Registered Agent, Triangle Corporate Services, LLC, P. O.
Box 490, #8 Norre Gade, Charlotte Amalie, St. Thomas, U. S. Virgin Islands 00804.
Also, pursuant to Fed. R. Civ. P. 5, RIM may be served at the foregoing address in any
manner allowed by any disinterested person competent to make oath of the fact.
3.12 Defendant Denis Kleinfeld ("Kleinfeld") is an individual residing in
Florida who can be served at One SE Third Avenue, Suite 1940, Miami, Florida 33131.
Also, pursuant to Fed. R. Civ. P. 5, Kleinfeld may be served at the foregoing address in
any manner allowed by any disinterested person competent to make oath of the fact.
3.13 Defendant Four Points Management, LLLP ("Four Points") is a U.S.
Virgin Islands limited liability limited partnership. It is subject to personal jurisdiction in
Texas because it has engaged in business here and/or committed a tort here. Thus, it may
be served with citation by serving the Texas Secretary of State, with instruction to mail a
notice copy to Four Points at: 2GA Ridge Road, Estate Nazareth, St. Thomas, U.S. Virgin
Islands 00802. Also, pursuant to Fed. R. Civ. P. 5, Four Points may be served at the
foregoing address in any manner allowed by any disinterested person competent to make
oath of the fact.
3.14 Defendant Marshden, LLC ("Marshden") is a U.S. Virgin Islands limited
liability company. Itt is subject to personal jurisdiction in Texas because it has engaged in
business here and/or committed a tort here. Thus, it may be served with citation by
serving the Texas Secretary of State, with instruction to mail a notice copy to Marshden
at: 2GA Ridge Road, Estate Nazareth, St. Thomas, U.S. Virgin Islands 00802. Also,
pursuant to Fed. R. Civ. P. 5, Marshden may be served at the foregoing address in any
manner allowed by any disinterested person competent to make oath of the fact.
USCA5 852
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 18
3.15 Defendant Search Guide, LLC ("Search Guide") is a U.S. Virgin Islands
limited liability company. It is subject to personal jurisdiction in Texas because it has
engaged in business here and/or committed a tort here. Thus, it may be served with
citation by serving the Texas Secretary of State, with instruction to mail a notice copy to
Search Guide at: 2GA Ridge Road, Estate Nazareth, St. Thomas, U.S. Virgin Islands
00802. Also, pursuant to Fed. R. Civ. P. 5, Search Guide may be served at the foregoing
address in any manner allowed by any disinterested person competent to make oath of the
fact.
3.16 Defendant Quantec, Inc. (“Quantec” and sometimes referred to as a
“Derivative Corporation”) is a U.S. Virgin Islands closely held corporation. It is subject
to personal jurisdiction in Texas because it has engaged in business here and/or
committed a tort here. Thus, it may be served with citation by serving the Texas
Secretary of State, with instruction to mail a notice copy to Quantec at: 2GA Ridge Road,
Estate Nazareth, St. Thomas, U.S. Virgin Islands 00802. Also, pursuant to Fed. R. Civ. P.
5, Quantec may be served at the foregoing address in any manner allowed by any
disinterested person competent to make oath of the fact.
3.17 Defendant Iguana Consulting, Inc. (“Iguana” and sometimes referred to as
a “Derivative Corporation”) is a U.S. Virgin Islands closely held corporation. It is subject
to personal jurisdiction in Texas because it has engaged in business here and/or
committed a tort here. Thus, it may be served with citation by serving the Texas
Secretary of State, with instruction to mail a notice copy to Iguana at: 2GA Ridge Road,
Estate Nazareth, St. Thomas, U.S. Virgin Islands 00802. Also, pursuant to Fed. R. Civ. P.
5, Iguana may be served at the foregoing address in any manner allowed by any
USCA5 853
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 19
disinterested person competent to make oath of the fact.
3.18 Defendant Novo Point, Inc. (“Novo Point” and sometimes referred to as a
“Derivative Corporation”) is a U.S. Virgin Islands closely held corporation. It is subject
to personal jurisdiction in Texas because it has engaged in business here and/or
committed a tort here. Thus, it may be served with citation by serving the Texas
Secretary of State, with instruction to mail a notice copy to Novo Point, Inc. at: 2GA
Ridge Road, Estate Nazareth, St. Thomas, U.S. Virgin Islands 00802. Also, pursuant to
Fed. R. Civ. P. 5, Novo Point may be served at the foregoing address in any manner
allowed by any disinterested person competent to make oath of the fact.
3.19 Defendant Blue Horizons Limited Company f/k/a Macadamia
Management, LLC (“Blue Horizons”) is a U.S. Virgin Islands limited liability company.
It is subject to personal jurisdiction in Texas because it has engaged in business here
and/or committed a tort here. Thus, it may be served with citation by serving the Texas
Secretary of State, with instruction to mail a notice copy to Blue Horizons at: 2GA Ridge
Road, Estate Nazareth, St. Thomas, U.S. Virgin Islands 00802. Also, pursuant to Fed. R.
Civ. P. 5, Blue Horizons may be served at the foregoing address in any manner allowed
by any disinterested person competent to make oath of the fact.
SECTION 4
SHAREHOLDER STATUS AND ADEQUATE REPRESENTATION
4.01 Derivative Plaintiff Iguana Consulting, LLC is the record owner, or
beneficial owner, of shares of Iguana. Derivative Plaintiff Iguana Consulting, LLC
became a shareholder of Iguana by operation of law from the Village Trust and the
MMSK Trust (“Trusts”) entities which were at the time of the acts or omissions made the
USCA5 854
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 20
basis of this proceeding, record owners of shares of Iguana. Derivative Plaintiff Iguana
Consulting, LLC fairly and adequately represents the interests of Iguana and the interests
of other shareholders similarly situated in enforcing the right of Iguana.
4.02 Derivative Plaintiff Quantec, LLC is the record owner, or beneficial
owner, of shares of Quantec. Derivative Plaintiff Quantec, LLC became a shareholder of
Quantec by operation of law from the Trusts which were at the time of the acts or
omissions made the basis of this proceeding, record owners of shares of Quantec.
Derivative Plaintiff Quantec, LLC fairly and adequately represents the interests of
Quantec and the interests of other shareholders similarly situated in enforcing the right of
Quantec.
4.03 Derivative Plaintiff Novo Point, LLC is the record owner, or beneficial
owner, of shares of Novo Point. Derivative Plaintiff Novo Point, LLC became a
shareholder of Novo Point by operation of law from the Village Trust, an entity which
was at the time of the acts or omissions made the basis of this proceeding, the record
owner of shares of Novo Point. Derivative Plaintiff Novo Point, LLC fairly and
adequately represents the interests of Novo Point and the interests of other shareholders
similarly situated in enforcing the right of Novo Point.
SECTION 5
IRREPARABLE INJURY
5.01 Derivative Plaintiffs issued notice to the Derivative Corporations dated
July 9, 2009. Irreparable injury to Quantec, Iguana, and Novo Point is being suffered and
additional injury will result by waiting for the expiration of ninety (90) days from the
date the written demand described in this paragraph was made on these Derivative
USCA5 855
DERIVATIVE PLAINITFFS QUANTEC, LLC, IGUANA CONSULTING, LLC, AND NOVO POINT, LLC ORIGINAL
PETITION IN INTERVENTION -
PAGE 21
Corporations, in that officers of these corporations and other named Defendants are
seeking to enforce a Memorandum of Understanding (“MOU”), that has not been
properly executed because it does not have the signatures of the necessary parties. In
addition, the MOU divides many of Quantec, Iguana, and Novo Points’ business assets
and lucrative streams of revenue between various other wholly-owned subsidiaries in a
way that is detrimental to these Derivative Corporations. The Derivative Corporations
will be unable to protect themselves if the assets are divided as agreed by the parties to
the MOU, which includes Quantec, Iguana, Novo Point, and these Derivative
Corporations will suffer irreparable loss of business opportunities, revenue streams, and
market shares in the industry.
SECTION 6
BACKGROUND FACTS
6.01 Mr. Jeffrey Baron (“Baron”) is an individual with a background and
experience in the domain name business. Ondova d/b/a Compana is in the business of
registering domain names to customers throughout the United States. Ondova performs
the services as a bulk domain name accredited registrar, for example, with the Internet
Corporation for Assigned Names and Numbers (“ICANN”). The purpose of registering
the domain names on a centralized database like ICANN allows information to be placed
on the internet so these names can be found by users all over the world. Ondova is hired
by domain name owners to register their names and paid a fee for its service. In return,
Ondova registers the domain names with Verisign, a company which effects the
registration with ICANN. Ondova is owned by Baron.
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6.02 Krishan is an individual with a background and experience in the domain
name business. Manila is in the domain name registration and monetization business.
Manila is owned by a number of individuals including Krishan.
6.03 Netsphere performs monetization functions for various domain names by
operating webpages associated with the domain names that contain advertising links. A
small fee is paid by advertisers every time a user “clicks” on an advertiser link. This
practice is referred to as “domain name parking.” The click fee paid by advertisers is
very small per individual domain; however, the domain name parking business can
generate substantial revenue if the number of names in the database is large enough. The
information gathered by Netsphere about search behavior of internet users during the
monetization process is intended to provide the basis for the construction of a new search
engine at some point in the future.
6.04 In approximately 2003, Baron and Krishan (sometimes collectively
referred to as “Partners”), began the process of establishing a joint venture in which they
would utilize their respective assets and aptitudes to build first a profitable domain name
parking business, and then later a valuable search engine. In the course of planning for
this partnership, the Partners sought advice on the identification and creation of an asset
protective and tax efficient structure for their business and personal assets to minimize
tax risk and liability. After meetings and much discussion with various attorneys and
accountants, it was decided in approximately November, 2005, that the United States
Virgin Islands Economic Development Program structure (“USVI structure”), which was
recommended by Kleinfeld, was the best program for the Partners. Specifically, Kleinfeld
recommended that the Partners participate in a limited partnership called Four Points,
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which is a United States Virgin Islands limited liability limited partnership managed by
Marshden, LLC, a company in which Kleinfeld had an ownership interest. Four Points
was qualified as an Economic Development Company; therefore, the process of entering
the Economic Development Program would be easier if the Partners joined this structure
rather than forming their own.
6.05 Three (3) closely held corporations, which are called Quantec, Iguana f/k/a
Octavia Consulting, Inc., and Novo Point f/k/a Loop Corporate Services, Inc. were
formed in the United States Virgin Islands by Four Points for the purpose of facilitating
the Partners’ investment in Four Points.
6.06 It was also recommended by the legal and tax professionals, and concurred
by the Partners, that two (2) trusts be created to own a majority stock interest in Quantec,
Iguana, and Novo Point. Therefore, on December 30, 2005, the Trusts were established.
Both of the Trusts are Cook Islands Trusts. The named trustee of both Trusts is Asiatrust
Limited. The beneficiaries of the Trusts include Baron, Krishan, and family members of
Krishan.
6.07 The Village Trust owned one hundred percent (100%) of the common
stock of Novo Point, fifty percent (50%) of the common stock of Iguana, and fifty
percent (50%) of the common stock of Quantec. The MMSK Trust owned twenty-nine
and three hundred twenty-fifths percent (29.325%) of the common stock of Iguana and
twenty-nine and three hundred twenty-fifths percent (29.325%) of the common stock of
Quantec.
6.08 Quantec, Iguana., and Novo Point purchased limited partnership interests
in Four Points on December 30, 2005. Kleinfeld executed the Four Points Subscription
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Agreement on behalf of the entities referenced in this paragraph. As part of the purchase,
Quantec, Iguana, and Novo Point, respectively, agreed to make an initial capital
contribution of Ten Thousand Dollars ($10,000) to Four Points, and also agreed to pay a
subscription fee of Thirteen Thousand Three Hundred Fifty Dollars ($13,350) to Four
Points. They also agreed to pay Marshden, as the general partner of Four Points, an
ongoing management fee equal to a percentage of the net taxable income generated by
the Partners’ business on a sliding scale from one percent (1%) to three percent (3%).
6.09 On December 30, 2005, Manila sold to HCB, LLC (USVI) n/k/a Simple
Solutions, which is wholly-owned by Four Points, approximately 529,000 domain names
in exchange for a promissory note secured by the domain names.
6.10 On December 30, 2005, Ondova sold to Macadamia Management, LLC
(USVI) n/k/a Blue Horizons, which is wholly-owned by Four Points, all of its
approximately 2,500 domain names and all referral fee agreements in existence at the
time, in exchange for a promissory note secured by the domain names and the referral fee
agreements.
6.11 On December 30, 2005, Netsphere sold to RIM n/k/a Search Guide, which
is wholly-owned by Four Points, all of its interest in its search engine intellectual
property in exchange for a promissory note secured by the search engine intellectual
property.
6.12 Four Points owns one hundred percent (100%) of Simple Solutions, Blue
Horizons, and Search Guide. This fact is important for two reasons. First, Ondova,
Manila, and Netsphere sold their assets to these three companies. Second, the Trusts own
limited partnership interests in Four Points through their ownership of Quantec, Iguana,
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and Novo Point, which are companies managed and controlled by individuals related to
Four Points. Consequently, the Trusts have ownership interests in Simple Solutions,
Blue Horizons, and Search Guide.
6.13 On information and belief, Krishan, Manila, and Netsphere take the
position that a sale of assets to Simple Solutions and to Search Guide did not occur. This
argument is completely untenable because Simple Solutions and Search Guide assumed
ownership and management of the assets sold to them, monetized the domain names,
entered into contracts, and made payments on the promissory notes.
6.14 On information and belief, Four Points and its related individuals and
controlled parties, takes the untenable position that the Trusts are not entitled to company
and financial information about Quantec, Iguana, Novo Point, Four Points, Simple
Solutions, Blue Horizons, and Search Guide.
6.15 The Trusts have not ever received monthly financial statements or balance
sheets from Quantec, Iguana, or Novo Point. The Trusts, as the majority stockholders in
these companies, are entitled to these financial documents. It is the Trusts’ position that
these financial documents are being withheld to conceal important financial information
with an intention to defraud the Trusts.
6.16 The Trusts have not ever received monthly financial statements or balance
sheets from Simple Solutions, Blue Horizons, or Search Guide. The Trusts, as limited
partner owners through Four Points, are entitled to these financial documents. It is the
Trusts’ position that these financial documents are being withheld to conceal important
financial information with an intention to defraud the Trusts.
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6.17 The Trusts did receive tax returns and IRS Schedule K-1’s from Four
Points in year 2006 that reported revenue associated with the assets sold to Simple
Solutions, Blue Horizons, and Search Guide from Manila, Ondova, and Netsphere,
respectively, at the end of 2005. In year 2007, however, the Trusts received tax returns
and Schedule K-1’s from Four Points that properly reflected the ownership of the assets
and related capital accounts, but improperly omitted the revenue that was actually
received by Simple Solutions, Blue Horizons, and Search Guide. It is the Trusts’ position
that Four Points intentionally omitted such income from the 2007 tax returns and
Schedule K-1’s with an intention to defraud the Trusts and to further the arguments being
made by Krishan, Manila, and Netsphere that the sale of assets to Simple Solutions and
Blue Horizons at the end of 2005 did not occur.
6.18 For the 2008 tax year, Four Points issued an “Income Schedule” to Baron
and Krishan showing the revenue received by Four Points, but taking the position that
such revenue would not be reported on the tax returns for Four Points or on the Schedule
K-1’s issued by Four Points. It is the Trusts’ position that Four Points intentionally
omitted such income from the 2008 tax returns and Schedule K-1’s with an intention to
defraud the Trusts and to further the arguments being made by Krishan, Manila, and
Netsphere that the sale of assets to Simple Solutions and Blue Horizons at the end of
2005 did not occur.
6.19 The Trusts had no knowledge of the pending state district court lawsuit
styled Ondova Limited Company, et al. v. Manila Industries, Inc., et al.
, bearing Cause
No. 06-11717-C in the 68
th
Judicial District Court, Dallas County, Texas, and this federal
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district court lawsuit until approximately March, 2009. The Trusts had no knowledge that
some of the Defendants referenced herein attended a mediation conference on
April 26, 2009, in an attempt to resolve pending disputes. The trustee for the Trusts was
a necessary party at the mediation for all the reasons stated in this Intervention. The
failure of Defendants who attended the mediation to not only request the presence of the
trustee, but also obtain the trustee’s agreement to the proposed settlement terms causes
the MOU to be VOID, rescinded, and set aside with no force and effect as a matter of
law.
6.20 The MOU fails to be a binding agreement among the parties for additional
reasons. The MOU lists Quantec, Iguana, and Novo Point as parties to the agreement.
However, the Trusts, which own one hundred percent (100%) of Novo Point and seventy-
nine and three hundred twenty-fifths percent (79.325%) of Quantec and Iguana,
respectively, never authorized any person and/or entity to execute the MOU on its behalf.
No documents exist which establish that the Trusts approved and/or consented to the
terms of the MOU. Additionally, the MOU does not identify the persons and their titles
who purportedly executed the agreement on behalf of the “Manila Parties, Ondova, USVI
parties, and USVI entities” as these terms are defined in the MOU. The MOU is not an
enforceable agreement.
6.21 On or about July 6, 2009, Asiatrust Limited, who is the trustee for the
Trusts, executed a series of Assignments whereby all of the Trusts’ stock ownership
interest in Quantec, Iguana, and Novo Point as well as all rights, title, and interest in and
to all underlying companies as well as claims and causes of action it had or would later
acquire in the future as trustee for the Trusts arising from its ownership of Quantec,
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Iguana, and Novo Point or its involvement in the particular USVI business structure
centered around Four Points was conveyed to Derivative Plaintiffs Iguana Consulting,
LLC, Quantec, LLC, and Novo Point, LLC, respectively.
SECTION 7
CAUSES OF ACTION
COUNT ONE: REQUEST FOR DECLARATIVE JUDGMENT
7.01 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.02 Derivative Plaintiffs request that the Court make a declaration concerning
the rights of the parties under the MOU. Derivative Plaintiffs specifically request the
Court to determine whether the MOU is a legally binding document, in light of the fact
that the signature of one or more necessary parties in interest were not obtained, and the
document is executed without the authority of all the necessary parties.
COUNT TWO: RESCISSION
7.03 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.04 Derivative Plaintiffs plead for rescission of the MOU that was executed
without authority of the necessary parties, and in violation of the contractual obligations
(See Count 4) and/or fiduciary duties (See Count 5) of Defendants named herein to the
Derivative Plaintiffs.
COUNT THREE: REQUEST FOR PERMANENT INJUNCTIVE RELIEF
7.05 Derivative Plaintiffs incorporate by reference all the paragraphs above as
if set forth verbatim herein.
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7.06 In view of the position taken by Defendants in executing the MOU
without proper authorization, and because they hold the apparent power, but not actual
authority, to distribute the assets of the Derivative Corporations, which Derivative
Plaintiffs reasonably fear they will do, the Derivative Corporations stand to lose valuable
assets and revenue streams, as well as business opportunities and market shares in the
industry. As a direct result, Defendants’ actions will cause Derivative Plaintiffs’ shares to
be greatly depreciated in value or rendered totally valueless. The conduct of Defendants,
unless enjoined, will destroy the growth prospects of the Derivative Corporations,
causing irreparable injury to Derivative Plaintiffs, the Derivative Corporations, and all of
their shareholders, for which there is no adequate remedy at law.
COUNT FOUR: BREACH OF CONTRACT
7.07 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.08 The actions of Defendants as set forth hereinabove have resulted in these
Defendants breaching their contractual obligations to Derivative Plaintiffs. Derivative
Plaintiffs assert that these Defendants have a contractual obligation to manage the corporate
assets using sound business judgment, in a manner that is in the best interest of the
shareholders, and in a manner that ensures the future success of the Derivative Corporations.
Defendants herein have breached contractual provisions of their management and/or
employment relationship with Derivative Corporations by attempting to divide assets and
streams of revenue as indicated in the MOU.
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COUNT FIVE: BREACH OF FIDUCIARY DUTY
7.09 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.10 Defendants, the management for the above-named Defendants, the named
Derivative Corporations, and the management for the named Derivative Corporations all
owed fiduciary duties to Derivative Plaintiffs with respect to their positions as employees,
directors, or officers in the corporations, and by virtue of their business relationship with
the corporations, which created the expectation of fiduciary duties in its internet domain
name business and its development. These fiduciary duties include, among others, duties
of loyalty, disclosure, and fairness. These duties extended to the businesses wholly-
owned and controlled by these Defendants. It also extends to all the other named
corporations, their officers, directors and employees.
7.11 Defendants herein breached their fiduciary duties to Derivative Plaintiffs.
7.12 As a result of the Defendants’ breaches of fiduciary duties, Derivative
Plaintiffs have suffered damages.
COUNT SIX: CIVIL CONSPIRACY TO COMMIT FRAUD
7.13 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.14 The actions of Defendants as set forth hereinabove have resulted in those
Defendants conspiring to unlawfully dispossess the Derivative Corporations of valuable
assets, as well as deprive the Derivative Corporations of market shares in the industry, by
virtue of misrepresentations about the capacity of persons signing the MOU to bind these
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companies, failure to disclose financial and company documents, and failure to properly
account and distribute revenue of the Derivative Corporations.
7.15 Derivative Plaintiffs would request that the Court enter a judgment against
Defendants in the amount of damages for said conspiracy.
COUNT SEVEN: ACCOUNTING
7.16 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.17 Due to the breaches of fiduciary duties by Defendants herein, an
accounting must be performed for the benefit of all shareholders and owners, beneficial
or otherwise, of the assets or other things of value that were purported to be exchanged,
by virtue of the MOU, among Defendants and other directors and officers of Defendants
whereby Derivative Plaintiffs are entitled to receive financial and other related documents.
COUNT EIGHT: APPLICATION FOR RECEIVERSHIP
7.18 Derivative Plaintiffs incorporate by reference all the paragraphs above as if
set forth verbatim herein.
7.19 Derivative Plaintiffs hereby request the appointment of a receiver over the
specific property (various domain names, intellectual property, and referral fee contracts)
made the subject of this lawsuit. The property in question is in danger of being
transferred to other corporations as indicated in the MOU and as alleged herein, without
the necessary parties consenting to the agreement. The property in question is such that
certain registration fees must be paid in a timely manner to specific companies that have
the exclusive rights to control the property and receive proceeds from users of the
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property. If the registration fees are not paid, the property may become lost to the current
owners and can be used by anybody in the public domain, without any benefit going to
the current owners.
7.20 A receiver is required to protect and preserve the property in question
during the pendency of this suit, and to protect the interest of Derivative Plaintiffs and
Derivative Corporations in the property.
SECTION 8
EXEMPLARY/PUNITIVE DAMAGES
8.01 Derivative Plaintiffs seek exemplary/punitive damages against Defendants as
allowed by Texas law. Derivative Plaintiffs request an award of punitive damages, without
limitation, based upon the conduct by Defendants.
SECTION 9
ATTORNEY’S FEES
9.01 It has been necessary for Derivative Plaintiffs to employ the undersigned
attorneys to represent them in the prosecution of these causes of action and Derivative
Plaintiffs request, as allowed by law, that the Court award them costs, expenses, and such
reasonable and necessary attorney's fees as are equitable and just.
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SECTION 10
CONDITIONS PRECEDENT
10.01 Derivative Plaintiffs have successfully performed or otherwise satisfied all
conditions precedent to performance or, alternatively, such conditions precedent have been
excused or waived.
SECTION 11
JURY DEMAND
11.01 Derivative Plaintiffs request a trial by jury of all the issues.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Derivative Plaintiffs respectfully
request that, on final trial, that Derivative Plaintiffs have judgment against Defendants for
the following:
a. Judgment for damages as requested herein;
b. Declaratory Relief;
c. Rescission;
d. An Accounting;
e. Appointment of a Receiver;
f. Costs of Suit;
g. Injunctive relief;
h. Punitive/Exemplary Damages;
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i. Pre-judgment and post-judgment interest at the maximum legal rate;
j. Attorney’s Fees; and
k. All other relief, both at law and in equity, to which Derivative
Plaintiffs may show themselves to be justly entitled.
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Dated: July 22, 2009 Respectfully submitted,
CRAIG A. CAPUA
State Bar Card No. 03783950
ROYCE WEST
State Bar Card No. 21206800
/s/Craig A. Capua
WEST & ASSOCIATES, LLP
P. O. Box 3960
Dallas, Texas 75208-1260
Ofc.: (214) 941-1881
Fax: (214) 941-1399
ATTORNEYS FOR QUANTEC, LLC,
IGUANA CONSULTING, LLC, AND
NOVO POINT, LLC
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CERTIFICATE OF SERVICE
This is to certify that on the 22
nd
day of July, 2009, a true and correct copy of the
foregoing Derivative Plaintiffs Quantec, LLC, Iguana Consulting, LLC, and Novo
Point, LLC Notice of Motion for Leave to File Intervention and to Authorize
Discovery, and Brief in Support was sent to the following counsels of record:
Via Facsimile (214) 526-5525
Charla G. Aldous
Aldous Law Firm
2305 Cedar Springs, Suite 200
Dallas, Texas 75201
Pro Se
Via Facsimile (214) 651-6150
Jeffrey H. Rasansky
Rasansky Law Firm
2525 McKinnon, Suite 625
Dallas, Texas 75201
Pro Se
Via Facsimile (214) 756-8662
John W. MacPete
Locke, Lord, Bissell & Liddell, LLP
2200 Ross , Suite 2200
Dallas, Texas 75202
Attorneys for Manila Industries, Inc.,
Netsphere, Inc., and Munish Krishan
Via Facsimile (972) 788-2667
James Krause
Friedman & Feiger
5301 Spring Valley Road
Suite 200
Dallas, Texas 75254
Attorney for Jeffrey Baron
/s/Craig A. Capua
Craig A. Capua
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