RICHARD L. FAHRNEY II (Bar No. 76357)
CHRISTOPHER R. CLARK (Bar No. 124393)
FINGAL, FAHRNEY & CLARK, LLP
2301 Dupont Drive, Suite 350
Irvine, California 92612
(949) 723-8100
Attorneys for Plaintiff
USA BIOMASS CORPORATION, a
Delaware corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF RIVERSIDE, INDIO JUDICIAL DISTRICT
USA BIOMASS CORPORATION, a Delaware ) Case No.
corporation, )
)
Plaintiff, ) COMPLAINT FOR:
)
vs. ) 1. BREACH OF FIDUCIARY
) DUTY
) 2. LEGAL MALPRACTICE
RONALD S. TUCKER, an individual; R ) 3. FRAUD
TUCKER & ASSOCIATES, INC., a Colorado ) 4. CONSTRUCTIVE FRAUD
Corporation; ROBERT A. WRIGHT, an ) 5. CONSPIRACY TO DEFRAUD
individual; AMCOR FINANCIAL ) 6. BREACH OF WRITTEN
CORPORATION, a Colorado corporation; ) CONTRACT
TENSLEEP.COM, INC., a Colorado ) 7. BREACH OF THE IMPLIED
corporation; and DOES 1 through 100, inclusive, ) COVENANT OF GOOD FAITH
) AND FAIR DEALING
) 8. REFORMATION
Defendants. ) 9. RESCISSION
--------------------------------------- ) 10. ACCOUNTING
11. UNJUST ENRICHMENT
12. EQUITABLE ESTOPPEL
13. INJUNCTIVE RELIEF
14. DECLARATORY RELIEF
15. BREACH OF FIDUCIARY
DUTY
16. RESCISSION
Plaintiff USA Biomass Corporation, for causes of action against
Defendants, and each of them, complains and alleges as follows:
PARTIES TO THE ACTION
1. Plaintiff USA Biomass Corporation ("Plaintiff" or "Biomass") is now, and
at all times material hereto was, a Delaware corporation, organized and existing
under and by virtue of the laws of the
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State of Delaware with its principal place of business in the County of Los
Angeles, State of California.
2. Defendant Ronald S. Tucker ("Tucker") is now, and at all times material
hereto was, an individual residing in the County of Riverside, State of
California.
3. Defendant R Tucker & Associates, Inc. ("Tucker & Associates") is now,
and at all times material hereto was, a Colorado corporation, organized and
existing under and by virtue of the laws of the State of Colorado with its
principal place of business in the County of Riverside, State of California.
4. Defendant Robert A. Wright ("Wright") is now, and at all times material
hereto was, an individual residing in the County of Riverside, State of
California.
5. Defendant AMCOR Financial Corporation ("AFC") is now, and at all times
material hereto was, a Colorado corporation, organized and existing under and by
virtue of the laws of the State of Colorado with its principal place of business
in the County of Riverside, State of California.
6. Defendant Tensleep.com, Inc. ("Tensleep") is now, and at all times
material hereto was, a Colorado corporation, organized and existing under and by
virtue of the laws of the State of Colorado with its principal place of business
in the County of Riverside, State of California.
7. The true names and capacities, whether individual, corporate, associate
or otherwise, of Defendants Does 1 through 100, inclusive, are unknown to
Plaintiff. Plaintiff is informed and believes and thereon alleges that
Defendants Does 1 through 100, inclusive, are each responsible in some manner
for the events and happenings referred to in the Complaint and hereby
proximately caused damage to Plaintiff as herein alleged. Accordingly, Plaintiff
hereby sues said Defendants by said fictitious names. Plaintiff will seek leave
of court to amend the Complaint to set forth the true names and capacities of
said Defendants when the same have been ascertained.
8. Plaintiff is informed and believes and thereon alleges that at all times
material hereto, each Defendant, including those named fictitiously herein, in
addition to acting for himself, herself, or itself, on his, her or its own
behalf individually, is and was acting as the agent, servant, employee and
representative of, and with the knowledge and permission of, each of the other
of said Defendants and within the course, scope and authority of said agency,
service, employment and representation. Plaintiff is further informed and
believes and thereon alleges that the acts of each of the Defendants referred to
in this Complaint were fully ratified by all of the other Defendants herein.
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9. Plaintiff is informed and believes and thereon alleges that Defendants
Tucker, Wright, and Does 1 through 10, inclusive (collectively "Shareholders"),
are, and at all times material hereto were, shareholders and/or promoters of the
corporate Defendants named herein, and Doe corporate Defendants. There exists,
and at all times material hereto existed, a unity of interest between the
Shareholders and the corporate Defendants, such that any individuality and
separateness between the Shareholders and the corporate Defendants have ceased,
and the corporate Defendants are the alter egos of the Shareholders as follows:
(a) Plaintiff is informed and believes and thereon alleges that each of the
corporate Defendants is, and at all times material hereto was, a mere shell
and sham without capital, assets, stock or stockholders. Each corporate
Defendant was conceived, intended, and used by the Shareholders as a device
to avoid individual liability and for the purpose of substituting a
financially insolvent corporation or corporations in the place and stead of
the Shareholders. At no time after the corporate Defendants became
incorporated was any stock authorized to be issued or issued, nor has any
permit for or notice of issuance of stock been applied for with the
appropriate state securities commissioner or administrator.
(b) Plaintiff is informed and believes and thereon alleges that each of the
corporate Defendants is, and at all times material hereto was, so
inadequately capitalized that, compared with the business to be done by
such corporate Defendant and the risks of loss attendant thereto, its
capitalization was illusory or trifling.
(c) Plaintiff is informed and believes and thereon alleges that each of the
corporate Defendants is, and at all times material hereto was, the alter
ego of the Shareholders and there exists, and at all times material hereto
existed, a unity of interest in ownership between Defendants such that any
separateness has ceased to exist in that the Shareholders used assets of
such corporate Defendant for their personal uses, caused assets of such
corporate Defendant to be transferred to them without adequate
consideration, and withdrew funds from such corporate Defendant's bank
accounts for their personal use.
(d) Plaintiff is informed and believes and thereon alleges that each of the
corporate Defendants is, and at all times material hereto was, a mere
shell, instrumentality and
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conduit through which the Shareholders carried on their business in the
corporate name exactly as they conducted it previous to a corporation, and
exercised complete control and dominance of such business to such an extent
that any individuality or separateness of such corporate Defendant and the
Shareholders does not, and at all times material hereto did not, exist.
(e) Plaintiff is informed and believes and thereon alleges that each of the
corporate Defendants is, and at all times material hereto was, controlled,
dominated, and operated by the Shareholders as their individual businesses
and alter egos, in that the activities and business of such corporate
Defendant were carried out without the holding of directors' or
shareholders' meetings, no records or minutes of any corporate proceedings
were maintained, and the Shareholders entered into personal transactions
with such corporate Defendant without the approval of other directors or
shareholders.
(f) Plaintiff is informed and believes and thereon alleges that adherence
to the fiction of separate existence of each corporate Defendant as an
entity separate and distinct from the Shareholders would permit abuse of
the corporate privilege and would sanction fraud; in that, the Shareholders
caused funds to be withdrawn from such corporate Defendant and distributed
said funds without any consideration to such corporate Defendant, all for
the purpose of avoiding and preventing attachment and execution by
creditors, including Plaintiff.
As a result of the acts and omissions complained of hereinabove, the
Shareholders are jointly and severally liable for all relief sought herein
against each corporate Defendant by Plaintiff.
VENUE OF ACTION
10. The venue of this action is within the County of Riverside because (1)
the Defendants reside or have their principal place of business in the County of
Riverside, State of California, and (2) the acts which form the gravamen of
Plaintiff's Complaint, and the contracts relating to those acts, were entered
into or performed in the County of Riverside, State of California.
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FACTUAL ALLEGATIONS INCORPORATED INTO EACH AND
EVERY CAUSE OF ACTION
11. Biomass was incorporated in Delaware in or about March 1988. For most
of its history, Biomass was engaged primarily in agri-business and real estate
development. Beginning in November 1997, Biomass shifted its business focus from
agri-business and real estate development to organic and solid waste
transportation. Consequently, on or about December 23, 1998, Biomass adopted a
formal plan to discontinue its agri-business and real estate operations and to
sell the related assets in order to focus on its organic and solid waste
transportation operations.
12. In or about June 1999, Tucker, a member of the State Bar of California,
was hired as legal counsel to Biomass to render legal advice to Biomass, as its
outside house counsel, and also to provide Biomass with legal services regarding
certain corporate and securities matters. Prior to June 1999, Tucker had
pre-existing relationships with many of the officers and directors of Biomass
and had represented Biomass in various corporate and securities matters.
13. In or about September 1999, Biomass entered into a written letter of
intent with AFC, a company founded and controlled by Tucker, in order to
transfer certain real estate assets and related liabilities from Biomass to AFC
in exchange for the issuance of AFC's Common Stock to Biomass ("Letter of
Intent"). The Letter of Intent was devised and drafted by Tucker as legal
counsel for Biomass. A true and correct copy of the Letter of Intent is attached
hereto as Exhibit "A", and incorporated herein by this reference as through
fully set forth herein.
14. On or about September 20, 1999, Biomass entered into a written
subscription agreement with AFC, Tucker & Associates and Lake Valley Realty
Partners ("Lake Valley"), in order to carry out the terms of the Letter of
Intent between Biomass and AFC ("Subscription Agreement"). The Subscription
Agreement was devised and drafted by Tucker as legal counsel for Biomass. A true
and correct copy of the Subscription Agreement is attached hereto as Exhibit
"B", and incorporated herein by this reference as through fully set forth
herein.
15. On or about December 30, 1999 ("Record Date"), Biomass, on the advice
of Tucker, attempted to "spin-off" AFC as its wholly-owned subsidiary by
declaring a stock dividend to the shareholders of Biomass' Common Stock and
Series A Preferred Stock.
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16. As part of the attempted "spin-off" of AFC, the shareholders of
Biomass' Common Stock received one (1) share of AFC Common Stock for each ten
(10) shares of the Biomass Common Stock which they owned on the Record Date. The
shareholders of Biomass' Series A Preferred Stock received one (1) share of AFC
Common Stock for each share of the Biomass Series A Preferred Stock which they
owned on the Record Date.
17. Plaintiff is informed and believes and thereon alleges that this
attempted "spin-off" transaction was structured and effectuated by Tucker as an
owner, officer and/or director of AFC and as legal counsel for Biomass.
18. Plaintiff is informed and believes and thereon alleges that the
attempted "spin-off" of AFC was improper and an act of self-dealing by
Defendants Tucker and Tucker & Associates, and each of them, for the following,
among other, reasons:
(a) The "spin-off" of AFC was not on a pro-rata basis where Biomass'
shareholders received the same proportionate interest in Biomass and AFC
both before and after the "spin-off"; (b) Biomass' shareholders as well as
the trading markets should have been provided with adequate information
about the transaction by the Record Date; and (c) Biomass did not hold the
restricted securities in AFC for at least two (2) years since Biomass
acquired AFC from a third party (Tucker) in 1999.
19. Plaintiff is informed and believes and thereon alleges that the
"spin-off" of AFC, as structured and effectuated by Tucker, failed to meet the
conditions for a "spin-off" of securities specified by the Securities and
Exchange Commission's Division of Corporation Finance and should therefore be
rescinded.
20. Plaintiff is informed and believes and thereon alleges that Biomass'
agreement to transfer certain real estate assets and related liabilities to AFC
in or about October 1999, should also be reformed based on Tucker's self-dealing
in direct conflict with his fiduciary duty to Biomass as its legal counsel
regarding the nature and amount of the assets and particularly the liabilities
transferred to and assumed by AFC pursuant to the Subscription Agreement.
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21. The dispute between Biomass and AFC regarding the certain real estate
assets and related liabilities transferred to AFC created by Tucker's
self-dealing includes, but is not limited to, AFC's refusal to acknowledge
transfer to AFC of Biomass' obligations, among others, to Mid-City National
Bank, Surety Bank and GMAC Credit.
22. Plaintiff is informed and believes and thereon alleges that the
obligation to Mid-City National Bank is for a purported deficiency balance , if
one is determined by the Texas State District Court to be owed, for a mortgage
secured by the Las Palomas Golf Course located in Wilson County, Texas that was
transferred to AFC. Mid-City National Bank contends in its lawsuit that a
deficiency balance following the foreclosure of the golf course is owed in an
amount in excess of $2,400,000.00.
23. Plaintiff is informed and believes and thereon alleges that the
obligation to Surety Bank in an amount in excess of $1,100,000.00 is for a
mortgage secured by developed and undeveloped real estate that was transferred
to AFC.
24. Plaintiff is informed and believes and thereon alleges that the
obligation to GMAC Credit in an amount in excess of $600,000.00 is for a
mortgage on developed real estate that was transferred to AFC.
25. Plaintiff is informed and believes and thereon alleges that in an
attempt to shield themselves from liability for their actions, Tucker, Tucker &
Associates and AFC entered into a purported agreement with Biomass entitled
Agreement to Exhibits dated April 5, 2000, containing a general release
provision for all present and future claims and demands between the parties
thereto arising out of the Subscription Agreement ("Release Agreement"). A true
and correct copy of the Release Agreement is attached hereto as Exhibit "C", and
incorporated herein by this reference as though fully set forth herein. Wright,
with full knowledge that Biomass was in a dispute with Tucker as specified
above, and in furtherance of the conspiracy between Wright and Tucker to convert
the assets of Biomass and its affiliated partnerships to their own uses, signed
the Release Agreement in his capacity as President of Biomass. Moreover, at the
time Wright signed the Release Agreement, both Tucker and Wright knew that
Wright was signing the Release Agreement without the knowledge, authorization,
permission, direction, agreement, adoption or ratification of Biomass. When
Biomass learned that Wright had signed the Release Agreement, Biomass
immediately informed Tucker, in writing, that Wright had not been authorized to
sign the Release
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Agreement, and that Biomass rescinded and repudiated the Release Agreement.
26. Plaintiff is informed and believes and thereon alleges that Wright not
only executed the purported Release Agreement without the knowledge, authority,
adoption or ratification of Biomass, but also that Wright is aligned with the
interests of Tucker thereby creating a conflict of interest for Wright,
purportedly on behalf of Biomass, to have attempted to release Tucker, Tucker &
Associates and AFC.
FIRST CAUSE OF ACTION
(BREACH OF FIDUCIARY DUTY AGAINST DEFENDANT TUCKER)
27. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 26, inclusive.
28. By virtue of Tucker's relationship as legal counsel for Biomass at all
times material hereto, Tucker owed Biomass a fiduciary duty to act in the best
interest of Biomass and its shareholders.
29. Plaintiff is informed and believes and thereon alleges that Tucker
breached his fiduciary duty to Biomass and its shareholders in the following,
among other, particulars:
(a) Plaintiff is informed and believes and thereon alleges that Tucker
structured the Subscription Agreement so as to give himself the control
over certain Biomass real estate assets by transferring those assets to
AFC, a company founded and controlled by Tucker;
(b) Plaintiff is informed and believes and thereon alleges that Tucker
structured and prepared the Subscription Agreement as legal counsel for
Biomass, but attempted to avoid his duty to Biomass through the subterfuge
of including the unrelated entity of Tucker & Associates as a party to the
Agreement and "disclosing" that he was only acting on behalf of Tucker &
Associates even though Tucker & Associates had no obligations under the
Subscription Agreement;
(c) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass prepared the Subscription Agreement to transfer
Biomass' certain real estate assets and related liabilities as identified
on Exhibit "C" to the Subscription Agreement including, but not limited to,
the liabilities to Mid-City National Bank, Surety Bank and GMAC Credit, but
never intended AFC to pay these liabilities;
(d) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel
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for Biomass structured and effectuated the attempted "spin-off" of AFC from
Biomass by an unequal distribution of AFC Common Stock between Biomass
Common Stockholders and Biomass Series A Preferred Stockholders in
violation of the conditions for a "spin-off" of securities specified by the
Securities and Exchange Commission's Division of Corporation Finance;
(e) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass and in a conflict of interest with Biomass,
structured and effectuated the attempted "spin-off" of AFC from Biomass so
that Tucker & Associates, a company owned and controlled by Tucker, would
receive 500,000 shares of AFC Common Stock and warrants to purchase 500,000
more shares of AFC Common Stock at $1.00 per share;
(f) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off "of AFC Common Stock without providing Biomass' shareholders as
well as the trading markets with adequate information about the transaction
by the Record Date;
(g) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off" of AFC within two (2) years of Biomass acquiring AFC as a wholly
owned subsidiary from Tucker in violation of the conditions for a
"spin-off" of security specified by the Securities and Exchange
Commission's Division on Corporation Finance;
(h) Plaintiff is informed and believes and thereon alleges that Tucker as
an owner, officer and/or director of AFC, had AFC replace Biomass as the
managing agent for the general partners for limited partnerships known as
Western Ag-Venture Associates, Agri- Venture Fund and Agri-Venture II
(collectively "Partnerships") in order to exchange the Partnerships'
collective holdings of 394,414 shares of Series B Preferred Stock in
Biomass for a total of 800,000 unrestricted and overvalued shares of AFC
Common Stock, and then had AFC convert the Biomass Series B Preferred Stock
for a total of 591,621 shares of Biomass Common Stock, with Tucker named as
the holder of the stock in trust for AFC, without the informed approval of
the general partners or the limited partners of the
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Partnerships;
(i) Plaintiff is informed and believes and thereon alleges that Tucker
holding the Biomass Common Stock in his name in trust for AFC then turned
around and sold most of the Biomass Common Stock in blocks for the
substantially discounted price of approximately $1.80 per share at the same
time Biomass' stock was trading on the NASDAQ for between approximately
$3.50 and $4.30 per share resulting in the below market sale proceeds to
AFC of approximately $1,000,000.00;
(j) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass and an owner, officer and/or director of AFC,
used approximately $450,000.00 of the proceeds from the sale of Biomass
Common Stock to purchase shares of stock in Tensleep, a company founded and
controlled by Tucker, in order to increase the trading volume of Tensleep
stock for Tucker's benefit; and
(k) Plaintiff is informed and believes and thereon alleges that Tucker also
transferred 120,000 shares of Biomass Common Stock to Tensleep without
consideration as part of Tucker's scheme to siphon off the assets of AFC to
Tensleep.
30. Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass at all times material hereto and in conspiracy with
the other Defendants, and each of them, acted to defraud Biomass, structured and
effectuated numerous transactions in complete conflict of interest with Biomass
for the purpose of siphoning off valuable assets from Biomass, liquidating them
through AFC, and leaving AFC and Biomass' affiliated Partnerships with worthless
assets and securities, all of which in violation of Tucker's fiduciary duty to
Biomass.
31. As a result of the breaches of fiduciary duty by Tucker, Plaintiff has
been proximately damaged in an amount presently unascertained. Plaintiff will
seek leave of Court to amend the Complaint to state the exact amount of said
damages when the same have been ascertained or on proof thereof.
32. The foregoing wrongful acts and omissions of Tucker were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Tucker, in addition to the damages according to proof, damages by way of example
and to punish Tucker.
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SECOND CAUSE OF ACTION
(LEGAL MALPRACTICE AGAINST TUCKER)
33. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 32, inclusive.
34. In or about June, 1999, Tucker became legal counsel for Biomass.
Tucker's duties as legal counsel for Biomass continued during all times material
to this action on a continuous basis through in or about February, 2000.
35. Plaintiff is informed and believes and thereon alleges that Tucker's
legal representation of Biomass fell below the applicable standard of care for a
lawyer in the State of California in the following, among other, particulars:
(a) Plaintiff is informed and believes and thereon alleges that Tucker
structured the Subscription Agreement so as to give himself the control
over certain Biomass real estate assets by transferring those assets to
AFC, a company founded and controlled by Tucker;
(b) Plaintiff is informed and believes and thereon alleges that Tucker
structured and prepared the Subscription Agreement as legal counsel for
Biomass, but attempted to avoid his duty to Biomass through the subterfuge
of including the unrelated entity of Tucker & Associates as a party to the
Agreement and "disclosing" that he was only acting on behalf of Tucker &
Associates even though Tucker & Associates had no obligations under the
Subscription Agreement;
(c) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass prepared the Subscription Agreement to transfer
Biomass' certain real estate assets and related liabilities as identified
on Exhibit "C" to the Subscription Agreement including, but not limited to,
the liabilities to Mid-City National Bank, Surety Bank and GMAC Credit, but
never intended AFC to pay these liabilities;
(d) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off" of AFC from Biomass by an unequal distribution of AFC Common
Stock between Biomass Common Stockholders and Biomass Series A Preferred
Stockholders in violation of the conditions for a "spin-off"
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of securities specified by the Securities and Exchange Commission's
Division of Corporation Finance;
(e) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass and in a conflict of interest with Biomass,
structured and effectuated the attempted "spin-off" of AFC from Biomass so
that Tucker & Associates, a company owned and controlled by Tucker, would
receive 500,000 shares of AFC Common Stock and warrants to purchase 500,000
more shares of AFC Common Stock at $1.00 per share;
(f) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off "of AFC Common Stock without providing Biomass' shareholders as
well as the trading markets with adequate information about the transaction
by the Record Date;
(g) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off" of AFC within two (2) years of Biomass acquiring AFC as a wholly
owned subsidiary from Tucker in violation of the conditions for a
"spin-off" of security specified by the Securities and Exchange
Commission's Division on Corporation Finance;
(h) Plaintiff is informed and believes and thereon alleges that Tucker as
an owner, officer and/or director of AFC, had AFC replace Biomass as the
managing agent for the general partners of the Partnerships in order to
exchange the Partnerships' collective holdings of 394,414 shares of Series
B Preferred Stock in Biomass for a total of 800,000 unrestricted and
overvalued shares of AFC Common Stock, and then had AFC convert the Biomass
Series B Preferred Stock for a total of 591,621 shares of Biomass Common
Stock, with Tucker named as the holder of the stock in trust for AFC,
without the informed approval of the general partners or the limited
partners of the Partnerships;
(i) Plaintiff is informed and believes and thereon alleges that Tucker
holding the Biomass Common Stock in his name in trust for AFC then turned
around and sold most of the Biomass Common Stock in blocks for the
substantially discounted price of approximately $1.80 per share at the same
time Biomass' stock was trading on the
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NASDAQ for between approximately $3.50 and $4.30 per share resulting in the
below market sale proceeds to AFC of approximately $1,000,000.00;
(j) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass and an owner, officer and/or director of AFC,
used approximately $450,000.00 of the proceeds from the sale of Biomass
Common Stock to purchase shares of stock in Tensleep, a company founded and
controlled by Tucker, in order to increase the trading volume of Tensleep
stock for Tucker's benefit; and
(k) Plaintiff is informed and believes and thereon alleges that Tucker also
transferred 120,000 shares of Biomass Common Stock to Tensleep without
consideration as part of Tucker's scheme to siphon off the assets of AFC to
Tensleep.
36. Plaintiff is informed and believes and thereon alleges that all of the
transactions specified in Paragraphs 35(a) through 35(j) were entered into by
Biomass without sufficient consideration and under undue influence. All of the
transactions specified above were entered into during the existence of a
fiduciary relationship between Tucker and Biomass, and while Tucker maintained
significant influence over Biomass and its officers, agents and representatives.
By reason of his position as Biomass' legal counsel, Tucker obtained unfair and
unjust advantage over Biomass and used that advantage to intentionally convert
the assets of Biomass to his own uses.
37. As a result of the legal malpractice and self-dealing committed by
Tucker, Plaintiff has been proximately damaged in an amount presently
unascertained. Plaintiff will seek leave of Court to amend the Complaint to
state the exact amount of said damages when the same have been ascertained or on
proof thereof.
THIRD CAUSE OF ACTION
(FRAUD AGAINST ALL DEFENDANTS)
38. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 37, inclusive.
39. Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the Subscription Agreement
providing for the transfer of certain real estate assets and related liabilities
of Biomass to AFC, a company founded and controlled by Tucker, and
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never intended AFC to pay the liabilities secured by the real estate assets
being transferred to AFC thereby leaving the liabilities on Biomass' books and
allowing Tucker to liquidate the assets of AFC for its own benefit.
40. At the time Tucker structured and recommended the Subscription
Agreement to Biomass as a means of transferring Biomass' real estate assets and
related liabilities to a separate entity, Plaintiff did not know that Tucker was
acting in his own interest instead of that of Biomass and that Tucker never
intended to have AFC pay the liabilities related to the real estate assets being
transferred to AFC including, but not limited to, the obligations to Mid-City
National Bank, Surety Bank and GMAC Credit.
41. In justifiable reliance on Tucker's advice and representations on
behalf of himself and AFC, Plaintiff (a) entered into the Subscription
Agreement; (b) transferred certain real estate assets and related liabilities to
AFC; (c) allowed AFC to take over from Biomass as the managing agent for the
general partners of the Partnerships; and (d) "spun-off" AFC from Biomass by
issuing a dividend of AFC Common Stock to Biomass' Common Stock and Series A
Preferred Stock shareholders on an unequal basis as advised, encouraged,
structured and effectuated by Tucker pursuant to Tucker's conspiracy with the
other Defendants, and each of them, to defraud Biomass and its affiliated
Partnerships.
42. As a direct and proximate result of Plaintiff's justifiable reliance on
Defendants' advice and representations, Plaintiff has been damaged in an amount
presently unascertained. Plaintiff will seek leave of Court to amend its
Complaint to state the exact amount of said damages when the same have been
ascertained or on proof thereof.
43. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
FOURTH CAUSE OF ACTION
(CONSTRUCTIVE FRAUD AGAINST ALL DEFENDANTS)
44. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 43, inclusive.
45. By virtue of Tucker's relationship as legal counsel for Biomass, Tucker
owed Biomass a
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fiduciary duty to act in the best interest of Biomass. By virtue of Biomass
having placed its confidence in Tucker's integrity by entrusting Tucker to
advise Biomass within the standard of care for a securities attorney in the
State of California and to avoid conflicts of interest and self-dealing, a
confidential relationship existed at all times material herein between Biomass
and Tucker.
46. Plaintiff is informed and believes and thereon alleges that Defendants
breached their fiduciary duty to Biomass and its shareholders and violated the
relationship of trust and confidence in the following, among other, particulars:
(a) Plaintiff is informed and believes and thereon alleges that Tucker
structured the Subscription Agreement so as to give himself the control
over certain Biomass real estate assets by transferring those assets to
AFC, a company founded and controlled by Tucker;
(b) Plaintiff is informed and believes and thereon alleges that Tucker
structured and prepared the Subscription Agreement as legal counsel for
Biomass, but attempted to avoid his duty to Biomass through the subterfuge
of including the unrelated entity of Tucker & Associates as a party to the
Agreement and "disclosing" that he was only acting on behalf of Tucker &
Associates even though Tucker & Associates had no obligations under the
Subscription Agreement;
(c) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass prepared the Subscription Agreement to transfer
Biomass' certain real estate assets and related liabilities as identified
on Exhibit "C" to the Subscription Agreement including, but not limited to,
the liabilities to Mid-City National Bank, Surety Bank and GMAC Credit, but
never intended AFC to pay these liabilities;
(d) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off" of AFC from Biomass by an unequal distribution of AFC Common
Stock between Biomass Common Stockholders and Biomass Series A Preferred
Stockholders in violation of the conditions for a "spin-off" of securities
specified by the Securities and Exchange Commission's Division of
Corporation Finance;
(e) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel
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<PAGE>
for Biomass and in a conflict of interest with Biomass, structured and
effectuated the attempted "spin-off" of AFC from Biomass so that Tucker &
Associates, a company owned and controlled by Tucker, would receive 500,000
shares of AFC Common Stock and warrants to purchase 500,000 more shares of
AFC Common Stock at $1.00 per share;
(f) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off "of AFC Common Stock without providing Biomass' shareholders as
well as the trading markets with adequate information about the transaction
by the Record Date;
(g) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel for Biomass structured and effectuated the attempted
"spin-off" of AFC within two (2) years of Biomass acquiring AFC as a wholly
owned subsidiary from Tucker in violation of the conditions for a
"spin-off" of security specified by the Securities and Exchange
Commission's Division on Corporation Finance;
(h) Plaintiff is informed and believes and thereon alleges that Tucker as
an owner, officer and/or director of AFC, had AFC replace Biomass as the
managing agent for the general partners of the Partnerships in order to
exchange the Partnerships' collective holdings of 394,414 shares of Series
B Preferred Stock in Biomass for a total of 800,000 unrestricted and
overvalued shares of AFC Common Stock, and then had AFC convert the Biomass
Series B Preferred Stock for a total of 591,621 shares of Biomass Common
Stock, with Tucker named as the holder of the stock in trust for AFC,
without the informed approval of the general partners or the limited
partners of the Partnerships;
(i) Plaintiff is informed and believes and thereon alleges that Tucker
holding the Biomass Common Stock in his name in trust for AFC then turned
around and sold most of the Biomass Common Stock in blocks for the
substantially discounted price of approximately $1.80 per share at the same
time Biomass' stock was trading on the NASDAQ for between approximately
$3.50 and $4.30 per share resulting in the below market sale proceeds to
AFC of approximately $1,000,000.00;
(j) Plaintiff is informed and believes and thereon alleges that Tucker as
legal counsel
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<PAGE>
for Biomass and an owner, officer and/or director of AFC, used
approximately $450,000.00 of the proceeds from the sale of Biomass Common
Stock to purchase shares of stock in Tensleep, a company founded and
controlled by Tucker, in order to increase the trading volume of Tensleep
stock for Tucker's benefit; and (k) Plaintiff is informed and believes and
thereon alleges that Tucker also transferred 120,000 shares of Biomass
Common Stock to Tensleep without consideration as part of Tucker's scheme
to siphon off the assets of AFC to Tensleep. 47. Plaintiff placed its
confidence in and relied on Defendants until Biomass discovered
Defendants' self-dealing acts committed in breach of their fiduciary duty. Until
such time, Biomass reasonably relied on Defendants in view of their relationship
as legal counsel for Biomass.
48. As a result of Defendants' wrongful conduct, Plaintiff has been damaged
in an amount presently unascertained. Plaintiff will seek leave of Court to
amend the Complaint to state the exact amount of said damages when the same have
been ascertained or on proof thereof.
49. The foregoing wrongful acts and omissions of Defendants' were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
FIFTH CAUSE OF ACTION
(CONSPIRACY TO DEFRAUD AGAINST ALL DEFENDANTS)
50. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 49, inclusive.
51. Plaintiff is informed and believes and thereon alleges that beginning
in or about mid-1999 and continuing until the present, Defendants, and each of
them, knowingly and willfully conspired to defraud Biomass and its shareholders.
Pursuant to this conspiracy, Defendants induced Biomass to take the following,
among other, actions:
(a) Hire Tucker as legal counsel for Biomass;
(b) Consent to a plan for Wright to join AFC as an officer and director
because of Wright's interest in the Biomass real estate assets and
operations located in Texas to be
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transferred to AFC;
(c) Consent to Wright relocating his office to a commercial building known
as the Avenue 52 building located in the City of Coachella, County of
Riverside, California, which was one of the real estate assets transferred
from Biomass to AFC;
(d) Consent to a plan whereby Biomass would purchase AFC, a company founded
and controlled by Tucker, by transferring certain Biomass real estate
assets and related liabilities to AFC in exchange for AFC's issuance of
common stock to Biomass as well as Tucker & Associates, a company owned and
controlled by Tucker, resulting in AFC, unbeknownst to Biomass, refusing to
pay the liabilities including, but not limited to, those to Mid-City
National Bank, Surety Bank and GMAC Credit; and
(e) Consent to have AFC assume the role as managing agent of the
Partnerships resulting in AFC transferring and liquidating the
Partnerships' holdings of Biomass securities at below market prices and
siphoning off the funds and securities to Tensleep, a company founded and
controlled by Tucker.
52. Plaintiff is informed and believes and thereon alleges that in an
attempt to shield themselves from liability for their actions, Wright, without
the knowledge, authorization, adoption or ratification by the Board of Directors
of Biomass, entered into the purported Release Agreement with Tucker, Tucker &
Associates and AFC containing a general release provision for all present and
future claims and demands between the parties thereto arising out of the
Subscription Agreement.
53. Plaintiff is informed and believes and thereon alleges that as a result
of the relationship of trust and authority which Wright held in Biomass, and
also as a result of the attorney-client relationship that existed between Tucker
and Biomass, Plaintiff justifiably trusted in and relied upon the honesty and
integrity of both Wright and Tucker and, further, believed and justifiably
relied upon the misrepresentations of Wright and Tucker in regard to the
transactions specified at length herein.
54. Plaintiff is informed and believes and thereon alleges that Defendants,
and each of them, did the acts and omissions alleged herein with the intent to
enrich Tucker, Wright and the Doe Defendants through the foregoing acts of
self-dealing and in conflict of interest with their duties to Biomass, all at
the expense of Biomass and its shareholders.
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<PAGE>
55. As a result of the conspiracy, Plaintiff has been proximately damaged
in an amount presently unascertained. Plaintiff will seek leave of Court to
amend the Complaint to state the exact amount of said damages when the same have
been ascertained or on proof thereof.
56. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
SIXTH CAUSE OF ACTION
(BREACH OF WRITTEN CONTRACT AGAINST
DEFENDANTS AFC AND TUCKER)
57. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 56, inclusive.
58. On or about September 20, 1999, Biomass entered into a Subscription
Agreement with AFC, Tucker & Associates and Lake Valley. The Subscription
Agreement provided for the transfer of certain real estate assets and related
liabilities from Biomass to AFC in exchange for the issuance of AFC's Common
Stock to Biomass.
59. Plaintiff has performed all covenants, conditions and promises required
to be performed by it in accordance with the terms of the Subscription Agreement
except for those covenants, conditions and promises Biomass was prevented or
excused from performing.
60. Plaintiff is informed and believes and thereon alleges that AFC has
breached the Subscription Agreement by refusing to acknowledge its obligation to
pay the liabilities related to the certain real estate assets transferred by
Biomass to AFC including, but not limited to, the obligations owed to Mid-City
National Bank, Surety Bank and GMAC Credit, among others.
61. As a result of the breaches of the Subscription Agreement by AFC,
Biomass has been proximately damaged in an amount presently unascertained.
Biomass will seek leave of Court to amend the Complaint to state the exact
amount of said damages when the same have been ascertained or on proof thereof.
///
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<PAGE>
SEVENTH CAUSE OF ACTION
(BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
AGAINST DEFENDANTS AFC AND TUCKER)
62. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 61, inclusive.
63. At all relevant times herein, there existed between Biomass and AFC a
covenant of good faith and fair dealing implied in fact and in law whereby AFC,
for the direct and intended benefit of Biomass, agreed to act in good faith and
deal fairly with Biomass with respect to the Subscription Agreement.
64. In acting and failing to act as alleged herein, AFC has breached, and
continues to breach such implied covenant of good faith and fair dealing, and as
a direct and proximate result of which, Biomass has incurred damages and will
continue to incur damages as alleged herein. Biomass will seek leave of Court to
amend the Complaint to state the exact amount of said damages when the same have
been ascertained or on proof thereof.
EIGHTH CAUSE OF ACTION
(REFORMATION AGAINST DEFENDANTS AFC AND TUCKER & ASSOCIATES)
65. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 64, inclusive.
66. On or about September 20, 1999, Biomass entered into the Subscription
Agreement with AFC, Tucker & Associates and Lake Valley.
67. Plaintiff is informed and believes and thereon alleges that Tucker, as
legal counsel for Biomass, structured and prepared the Subscription Agreement
whereby Biomass was to transfer certain real estate assets and related
liabilities to AFC in exchange for the issuance of AFC's Common Stock to
Biomass.
68. Plaintiff is informed and believes and thereon alleges that the
Subscription Agreement as structured and prepared by Tucker as legal counsel for
Biomass and in a direct conflict of interest and self- dealing by Tucker,
drafted the Subscription Agreement so that the real estate related liabilities
identified in Exhibit "C" to the Subscription Agreement were purportedly not
being transferred to AFC but rather
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AFC was accepting the transfer of Biomass' real estate assets subject to the
related real estate liabilities in order for Tucker and AFC to later contend
that they were not responsible for paying a number of the real estate related
liabilities including, but not limited to, the liabilities to Mid-City National
Bank, Surety Bank and GMAC Credit.
69. Plaintiff is informed and believes and thereon alleges that the true
intent of the affected parties to the Subscription Agreement was that the real
estate related liabilities identified in Exhibit "C" to the Subscription
Agreement and as carried on the books of Biomass were being transferred to AFC
along with Biomass' certain real estate assets in exchange for issuance of AFC's
Common Stock to Biomass.
70. Plaintiff is informed and believes and thereon alleges that the
purported failure of the Subscription Agreement to reflect the true intent of
the parties resulted from the self-dealing of Tucker in an actual conflict of
interest between his fiduciary duty to Biomass and his secret intent to benefit
AFC of which he is an owner, officer and/or director, and for the greater goal
of defrauding Biomass by siphoning off valuable assets from Biomass and its
related partnerships, liquidating them through AFC to Tensleep, a company
founded and controlled by Tucker, and leaving Biomass, Biomass' affiliated
partnerships and AFC with worthless assets and securities, all of which in
violation of Tucker's fiduciary duty to Biomass.
71. Plaintiff is informed and believes and thereon alleges that unless the
Subscription Agreement is reformed as reflected herein, Biomass will continue to
be obligated to pay the real estate liabilities including, but not limited to,
the liabilities to Mid-City National Bank, Surety Bank and GMAC Credit without
having the benefit of the real estate assets on Biomass' books that were
transferred to AFC. This will substantially reduce the net value of Biomass
significantly impacting Biomass' ability to do business.
72. As a result of Defendants' wrongful acts and omissions, Plaintiff has
been proximately damaged in an amount presently unascertained. Plaintiff will
seek leave of Court to amend the Complaint to state the exact amount of said
damages when the same have been ascertained or on proof thereof.
73. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff
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<PAGE>
is entitled to recover from Defendants, in addition to the damages according to
proof, damages by way of example and to punish Defendants.
NINTH CAUSE OF ACTION
(RESCISSION AGAINST DEFENDANT AFC)
74. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 73, inclusive.
75. Plaintiff hereby gives notice to Defendants pursuant to California
Civil Code, Section 1691, that the attempted "spin-off" of AFC from Biomass by
an unequal distribution of AFC Common Stock between Biomass Common Stockholders
and Biomass Series A Preferred Stockholders in violation of the conditions for a
"spin-off" of securities specified by the Securities and Exchange Commission's
Division of Corporation Finance is hereby rescinded. Should any consideration
have been paid by Defendants, restoration of said consideration will be made by
Biomass.
76. Plaintiff is informed and believes and thereon alleges that Biomass'
consent to the attempted "spin-off" of AFC from Biomass was obtained through
duress, menace, fraud, self-dealing, and undue influence in that Tucker had a
conflict of interest in representing Biomass in that Tucker was engaged in
self-dealing conduct in breach of his fiduciary duty to Biomass.
77. As a result of Defendants' wrongful acts and omissions, Plaintiff has
been proximately damaged in an amount presently unascertained. Plaintiff will
seek leave of Court to amend the Complaint to state the exact amount of said
damages when the same have been ascertained or on proof thereof.
78. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
TENTH CAUSE OF ACTION
(ACCOUNTING AGAINST ALL DEFENDANTS)
79. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 78, inclusive.
80. Plaintiff is informed and believes and thereon alleges that pursuant to
the acts and
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<PAGE>
omissions of Defendants as alleged herein, AFC and Tucker have received or will
receive substantial monies pursuant to the liquidation of real estate assets and
securities without the payment of the real estate liabilities related thereto as
provided for in the Subscription Agreement.
81. Plaintiff is informed and believes and thereon alleges that AFC and
Tucker have full and complete knowledge of the monies they have received and
will receive as a result of their liquidation of real estate assets and the
liabilities related thereto that AFC has failed and refused to pay, which are
unknown to Biomass. The determination and computation of the amounts received
and unpaid by AFC is complicated and an accounting is necessary to discover the
true amounts thereof.
ELEVENTH CAUSE OF ACTION
(UNJUST ENRICHMENT AGAINST ALL DEFENDANTS)
82. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 81, inclusive.
83. Plaintiff is informed and believes and thereon alleges that AFC and
Tucker have been unjustly enriched by their conduct as alleged herein in that
they have engaged in a course of conduct designed to liquidate the real estate
assets transferred to them by Biomass and siphon off the funds received
therefrom without paying the real estate liabilities related thereto as agreed
in the Subscription Agreement, all to the detriment of Biomass and its
shareholders.
84. Plaintiff is informed and believes and thereon alleges that Defendants'
wrongful conduct will result in Defendants being unjustly enriched in an amount
presently unascertained. Plaintiff will seek leave of Court to amend the
Complaint to state the exact amount of said damages when the same have been
ascertained or on proof thereof.
85. Plaintiff has no adequate remedy at law in that Defendants dispute that
they are obligated to pay the real estate liabilities transferred by Biomass to
AFC pursuant to the Subscription Agreement which contention Biomass denies.
86. Defendants, and each of them, are required to disgorge the benefits
unjustly received by them and the imposition of a constructive trust is
necessary to avoid the unjust enrichment of Defendants, and each of them.
87. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently,
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<PAGE>
oppressively, maliciously, despicably, and with the intent to injure Plaintiff,
as a result of which, Plaintiff is entitled to recover from Defendants, in
addition to the damages according to proof, damages by way of example and to
punish Defendants.
TWELFTH CAUSE OF ACTION
(EQUITABLE ESTOPPEL AGAINST ALL DEFENDANTS)
88. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 87, inclusive.
89. By the wrongful conduct of Defendants, and each of them, as described
above, Biomass was induced to enter into the Subscription Agreement and transfer
certain real estate assets and related liabilities to AFC, which would not have
occurred if Biomass had known of Defendants' conspiracy to defraud Biomass by
refusing to pay the related liabilities including, but not limited to, the
Mid-City National Bank, Surety Bank and GMAC Credit liens transferred to AFC
pursuant to the Subscription Agreement. Defendants AFC and Tucker are,
therefore, estopped from enforcing the Subscription Agreement or asserting that
Plaintiff is required to pay the liabilities transferred to, and assumed by, AFC
pursuant to the Subscription Agreement including, but not limited to, the
Mid-City National Bank, Surety Bank and GMAC Credit liens.
90. As a result of Defendants' wrongful conduct, Plaintiff has been
proximately damaged in an amount presently unascertained. Plaintiff will seek
leave of Court to amend the Complaint to state the exact amount of said damages
when the same have been ascertained or on proof thereof.
91. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
THIRTEENTH CAUSE OF ACTION
(INJUNCTIVE RELIEF AGAINST ALL DEFENDANTS)
92. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 91, inclusive.
93. In light of the wrongful conduct of Defendants, and each of them, by
engaging in a course
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of conduct designed to obtain the transfer of certain real estate assets from
Biomass, then liquidating the assets in order to siphon off the profits without
paying the related liabilities, Plaintiff is entitled to an injunction requiring
Defendants to place all proceeds from the sale or disposition of the real estate
assets transferred by Biomass to AFC in a Court supervised trust account pending
the determination by the Court of the respective rights of the parties with
respect to the payment of the subject liabilities pursuant to the Subscription
Agreement.
94. Plaintiff has demanded that Defendants assume the responsibility for
paying the liabilities related to the real estate assets transferred to AFC, but
Defendants have refused.
95. Plaintiff is therefore entitled to injunctive relief to prevent
Defendants from absconding with the proceeds of the sale or other disposition of
the real estate assets prior to the Court's determination of the respective
rights and obligations of the parties pursuant to the Subscription Agreement.
FOURTEENTH CAUSE OF ACTION
(DECLARATORY RELIEF AGAINST ALL DEFENDANTS )
96. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 95, inclusive.
97. Plaintiff is informed and believes and thereon alleges that an actual
controversy has arisen and continues to exist between Biomass and Defendants in
that Defendants AFC and Tucker have failed and refused to pay the real estate
liabilities related to the real estate assets transferred by Biomass to AFC.
Biomass is informed and believes and thereon alleges that Defendants deny
Biomass' contentions.
98. A judicial determination is necessary and appropriate at this time in
order that Biomass and Defendants may ascertain their rights and obligations
under the Subscription Agreement.
FIFTEENTH CAUSE OF ACTION
(BREACH OF FIDUCIARY DUTY AGAINST DEFENDANT WRIGHT)
99. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 98, inclusive.
100. Plaintiff is informed and believes and thereon alleges that during all
times material hereto, Wright was an officer and director of Biomass and by
virtue of said relationship with Biomass, Wright owed a fiduciary duty to act in
the best interest of Biomass.
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<PAGE>
101. Plaintiff is informed and believes and thereon alleges that Wright
breached his fiduciary duty to Biomass and its shareholders in the following,
among other, particulars:
(a) Plaintiff is informed and believes and thereon alleges that Wright,
with the full knowledge that Biomass was in a dispute with Tucker regarding
the Biomass real estate assets and related liabilities transferred to AFC
pursuant to Tucker's advice as well as the purported "spin-off" of AFC
among other disputes with Tucker as alleged herein, signed a document
entitled Agreement to Exhibits dated April 5, 2000, containing a general
release provision for all present and future claims and demands between the
parties thereto including Tucker, Tucker & Associates and AFC arising out
of the Subscription Agreement without the knowledge, authorization,
adoption or ratification by the Board of Directors of Biomass;
(b) Plaintiff is informed and believes and thereon alleges that Wright not
only executed the purported Release Agreement without the knowledge,
authority, adoption or ratification of Biomass, but also that Wright is
aligned with the interests of Tucker in benefitting from Biomass' transfer
of the real estate assets to AFC thereby creating a conflict of interest
for Wright to have attempted to release Tucker, Tucker & Associates and AFC
from any liability to Biomass for their wrongful acts and omissions arising
out of the Subscription Agreement; and
(c) Plaintiff is informed and believes and thereon alleges that Wright
executed the purported Release Agreement as an overt act in furtherance of
the conspiracy between Wright and Tucker to convert the assets of Biomass
and its affiliated partnerships to their own uses. At Wright's request and
direction, Tucker represented to third parties that he was counsel to
Biomass and provided those third parties with one or more legal opinions to
facilitate Wright's conversion of certain property owned by limited
partnerships affiliated with Biomass. In return, Wright executed documents
facilitating Tucker's defective "spin-off" of AFC and also executed the
purported Release Agreement so that Tucker could breach the Subscription
Agreement with impunity. These actions constituted a breach of Wright's
fiduciary duty to Biomass and its shareholders.
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102. As a result of the breaches of fiduciary duty by Wright, Plaintiff has
been proximately damaged in an amount presently unascertained. Plaintiff will
seek leave of Court to amend the Complaint to state the exact amount of said
damages when the same have been ascertained or on proof thereof.
103. The foregoing wrongful acts and omissions of Defendant were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendant, in addition to the damages according to proof, damages by way of
example and to punish Defendant.
SIXTEENTH CAUSE OF ACTION
(RESCISSION AGAINST DEFENDANTS TUCKER, TUCKER & ASSOCIATES AND AFC)
104. Plaintiff incorporates herein by reference, as though fully set forth
herein, the allegations contained in paragraphs 1 through 103, inclusive.
105. Plaintiff hereby gives notice to Defendants pursuant to California
Civil Code, Section 1691, that the Release Agreement is hereby rescinded. Should
any consideration have been paid by Defendants, restoration of said
consideration will be made by Biomass.
106. Plaintiff is informed and believes and thereon alleges that the
Release Agreement was obtained without the knowledge, authorization, adoption or
ratification of the Board of Directors of Biomass, but rather through the
duress, menace, fraud, self-dealing, and undue influence exerted by and upon
Wright to improperly sign the Release Agreement.
107. On or about April 6, 2000, Plaintiff specifically rescinded, revoked,
terminated, cancelled and otherwise nullified the Release Agreement. A true and
correct copy of Thomas E. Stepp, Jr.'s letter to Tucker dated April 6, 2000, is
attached hereto as Exhibit "D", and incorporated herein by this reference as
though fully set forth herein.
108. On or about April 10, 2000, Tucker responded to attorney Stepp's
letter dated April 6, 2000, stating that it appeared to "repudiate the
Subscription Agreement of September 20, 1999." A true and correct copy of
Tucker's letter dated April 10, 2000, is attached hereto as Exhibit "E", and
incorporated herein by this reference as though fully set forth herein.
109. Plaintiff is informed and believes and thereon alleges that the
conduct of Tucker in attempting to shield himself, Tucker & Associates and AFC
from liability for Tucker's self dealing in
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direct conflict with the interests of Biomass and in violation of his fiduciary
duty to Biomass and its Shareholders is also a breach of the California Rules of
Professional Conduct.
110. As a result of Defendants' wrongful acts and omissions, Plaintiff has
been proximately damaged in an amount presently unascertained. Plaintiff will
seek leave of Court to amend the Complaint to state the exact amount of said
damages when the same have been ascertained or on proof thereof.
111. The foregoing wrongful acts and omissions of Defendants were committed
fraudulently, oppressively, maliciously, despicably, and with the intent to
injure Plaintiff, as a result of which, Plaintiff is entitled to recover from
Defendants, in addition to the damages according to proof, damages by way of
example and to punish Defendants.
WHEREFORE, Plaintiff prays for relief as follows:
On the First, Third, Fourth, and Fifth Causes of Action:
1. For actual damages according to proof;
2. For punitive damages according to proof;
On the Second, Sixth and Seventh Causes of Action:
3. For actual damages according to proof;
On the Eighth Cause of Action:
4. For reformation of the Subscription Agreement;
5. For actual damages according to proof;
6. For punitive damages according to proof;
On the Ninth Cause of Action:
7. For rescission of the attempted "spin-off" of AFC securities;
8. For actual damages according to proof;
9. For punitive damages according to proof;
On the Tenth Cause of Action:
10. For an accounting of all income, expenses and profits from the
operation of AFC;
On the Eleventh and Twelfth Causes of Action:
11. For actual damages according to proof;
12. For punitive damages according to proof;
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13. For the imposition of a constructive trust to prevent the unjust
enrichment of Defendants;
On the Thirteenth Cause of Action:
14. For an injunction to prevent Defendants from absconding with the
proceeds of the sale or other disposition of the real estate assets
prior to the Court's determination of the respective rights and
obligations of the parties pursuant to the Subscription Agreement;
On the Fourteenth Cause of Action:
15. For a declaration of the rights and obligations of the parties under
the Subscription Agreement;
On the Fifteenth Cause of Action:
16. For actual damages according to proof;
17. For punitive damages according to proof;
On the Sixteenth Cause of Action:
18. For rescission of the Release Agreement;
19. For actual damages according to proof;
20. For punitive damages according to proof;
On all Causes of Action:
21. For costs of suit incurred herein; and
22. For reasonable attorney's fees where applicable; and
23. For such other and further relief as the Court deems just and proper.
DATED: September 29, 2000 FINGAL, FAHRNEY & CLARK, LLP
By:_____________________________
RICHARD L. FAHRNEY II
Attorneys for Plaintiff USA Biomass Corporation
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