| VAUGHN & VAUGHN | Donald A. Vaugh, Esq. (Bar No. 110070) Micah Myrmo, Esq. (Bar No. 249101) VAUGHN & VAUGHN 501 West Broadway, Suite 750 San Diego, CA 92101 Tel: (619) 237-1717 / Fax: (619) 237-0047 James D. Portman, Esq. (Bar No. 126196) THE PORTMAN LAW FIRM 23901 Calabasas Rd., Suite 2013 Calabasas, CA 91302 Tel: (818) 225-0096 / Fax: (818) 225-0069 Attorneys for Plaintiff THE RETIREMENT GROUP, a California general partnership SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN DIEGO, CENTRAL JUDICIAL DISTRICT
COMES NOW Plaintiff THE RETIREMENT GROUP, a California general partnership, and for causes of action against Defendants, and each of them, alleges as follows: I. VENUE 1. Venue is proper in this distric because some of the defendants reside in this district, all of the individual defendants entered into contracts in this district which were primarily | ||||
| VAUGHN & VAUGHN | or partiallyperformed in this district, the subject trade secrets are maintained in his district, some of the individual defendants entered into contracts which contain venue provisions identifying this district as the proper venue for a legal dispute, and the defendants have committed tortuous acts intended to cause damage to individuals and entities in this district. II. 2. Plantiff THE RETIREMENT GROUP ("TRG") is, and at all times herein mentioned was, a general partnership formed persuant to California Corporations Code section 16202(a) and existing under the laws of the State of California, with its domicile at 707 Broadway Street, within the City and County of San Diego, Preliminary Allegations   ("") is an individual residing at all relevant times within the County of San Diego, State of California and is, and all times was, a general partner of Plaintiff TRG. is not an individual herein suing any individual capacity.3. Defendant FRANK CUENCA ("CUENCA") is an individual residing at all relevant times within the Count of San Diego, State of California, and was a general partner of Plaintiff TRG. 4. Defendant JAMES GALANTE ("GALANTE") is an individual residing at all relevant times within the Count of San Diego, State of California, and was an independent contractor working for Plaintiff TRG. Galante entered into a Marketing and License Agreement with TRG which is attached as Exhibit "A." In September, 2008, GALANTE entered into an additional trade secret agreement with TRG LLC, a division of TRG, which is attached as Exhibit "B." 5. Defendant MICHAEL LAMBRIX ("LAMBRIX") is an individual residing at all relevant times within the County of San Diego, State of California, and was an independent contractor working for Plaintiff TRG. LAMBRIX entered into a Marketing and License Agreement with TRG which is attached as Exhibit "C." 6. Defendant TIMOTHY SULLIVAN ("SULLIVAN") is an individual residing at all relevant times within San Francisco County, State of California. SULLIVAN entered into a nullnullnulnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | Marketing and License Agreement with TRG which is attached as Exhibit "D." SULLIVAN entered into Exhibit "D" in San Diego County, and the agreement was performed, in part, in San Diego County. The contractual agreement provides that San Diego County is the agreed venue for any dispute between TRG and SULLIVAN. 7. Defendant SHAWN McELDERRY ("McELDERRY") is an individual residing at all relevant times within San Francisco County, State of California. McELDERRY entered into a Marketing and License Agreement with TRG which is attached as Exhibit "E." McELDERRY entered into Exhibit "E" in San Diego County, and the agreement was performed, in part, in San Diego County. The contractual agreement provides that San Diego County is the agreed venue for any dispute between TRG McELDERRY. 8. Defendant JEREMY LAUB ("LAUB") is an individual residing at all relevant times within San Francisco County, State of California. LAUB entered into a Marketing and License Agreement with TRG which is attached as Exhibit "F." LAUB entered into Exhibit "F" in San Diego County, and the agreement was performed, in part, in San Diego County. The contractual agreement provides that San Diego County is the agreed venue for any dispute between TRG and LAUB. 9. Defendant NATASHA RIDLEY ("RIDLEY") is an individual residing at all relevant times within San Diego County, State of California, and was an employee of TRG. RIDLEY entered into an Online Systems User Agreement with TRG, which is attached as Exhibit "G." RIDLEY entered into Exhibit "G" in San Diego County, and the agreement was performed, in part, in San Diego County. 10. Defendant JERRICA LEE ("LEE") is an individual residing at all relevant times within San Diego County, State of California, and was an employee of TRG. LEE entered into an Online Systems User Agreement with TRG, which is attached as Exhibit "H." LEE entered into Exchibit "H" in San Diego County, and the agreement was performed, in part, in San Diego County. 11. Defendant MONARCH RETIREMENT AND INVESTMENTS, LLC ("MONARCH") is a California limited liability company which has its primary place of business nullnullnulnullnullnull nullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | in San Francisco County, California, which conducts business in San Diego County, California and which has committed acts for which plaintiff seeks relief in San Diego County, California. 12. The true names and capacities of Defendants DOES 1 through 100 are presently unknown to Plaintiff, who sues said Defendants by such fictitious names. Plaintiff is informed and believes, and on that basis elleges, that each Defendant fictitiously designated as a DOE is legally responsible for Plaintiff's injuries and damages, or necessary to effective issuance of the equitable relief Plaintiff seeks, and is entitled to, herein. Plaintiff will amend the within Complaint to accurately set forth the true names, capacities, and involvement of such fictitiously named Defendants when the same have been ascertained. 13. Each and every paragraph, cause of action and allegation of the within pleading is set forth upon information and/or belief, under the doctrine of alternative pleading, and without prejudice to any current or subsequent inconsistent, contrary, or contradictory allegations or facts at or before time of trial. This is necessary because Defendants, and each of them, affirmatively concealed and conspired in secret to disadvantage and damage Plaintiff, and because the immediacy of the need for filing the within pleading was precipitated by Defendants' illegal, wrongful, and conspiratorial actions, the true scope of which has yet to be determined. 14. Plaintiff is informed and believes, and thereon alleges, that each Defendant herein was the principal, agen, master, servant, employer, employee, entrustor, entrustee, permittor, permitee, partner, affiliate, member, manager, parent, subsidiary, alter-ego and/or co-conspirator of each other Defendant herein acted independent of any such relationship, or outside the course and scope of such relationship. III. 15. and Defendant CUENCA associated to carry on as co-owners a business for-profit known as "The Retirement Group" (hereinafter, "TRG" or the "Partnership"). nullnullnulnullnullnull nullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | TRG was, and stilll is, located at 707 Broadway, in the City of San Diego, State of California. In connection with TRG, and CUENCA are sometimes hereinafter referred to as "The Partners" or, simply, "Partners."16. The Partnership business consisted of providing investment products, advice and services to individuals of retirement age, and involved the use of Registered Representatives, the use of a broker dealer to accomplish transactions in connection with the purchase, sale and holding of securities, the use of a Registered Investment Advisor with the same name as the Partnership to provide financial advisory and management services, and solicitors under the auspices of said Registered Investment Advisor to perform investment services in conjunction with investment advice on both a fee and commission basis. 17. TRG has developed extensive databases of confidential information on its clients and prospective clients. TRG developed these databases through thousands of man hours of its employees, agents and contractors contacting and interacting with TRG's clients and prospects through telephone marketing, seminars, and one on one meetings. TRG's database information generally includes: (1) the name, address, home phone number, work phone number, e-mail address, birth date and social security number (optional) of the client or prospect; (2) the client or prospect's spouses' name, company and/or occupation, birth date and retirement date; (3) The amount and type of the client or prospect's pension; (4) the amount and type of the client or prospect's savings plan; (5) the client or prospect's employment data, including his or her retirement date, hire date, average salary, and income needs after tax; (6) information on the client or prospect's other investments; and (7) and a log of the various contacts TRG personnel have had with the client or prospect, listed chronologically by date and time with a description of the contact and an identification of the TRG representative who made the contact either by initials or by name. 18. The information contained in TRG's prospective client database is not generally known and is extremely valuable because it gives TRG a competitive advantage when dealing with its prospects and clients. The database information on TRG's prospects is especially valuable because TRG's income is primarily determined by the number of prospects it ultimately nullnullnulnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | recruits. Each prospect represents a potential increase in the total assets TRG manages and a significant commision compared to commissions earned from existing clients with established investments. Many of the prospects will not be in a position to become TRG clients until they retire and have the ability to roll over their company retirement plans into privately managed plans. Through the development and use of its databases, TRG can target the most attractive prospects (i.e., those closest to retirement with the largest amount of assets to invest) and the needs, wants, likes and dislikes of these prospects, which allows TRG to foster relationships with the prospects that will hopefully lead to securing them as clients. TRG is in a highly competitive industry and the information TRG has developed concerning its prospects, if disclosed, would give a competitior a distinct advantage by allowing the competitor to target TRG's best prospects with the confidential information TRG has developed in hand. TRG's database and trade secrets form the very basis for the conduct of its business. 19. TRG makes every resonable effort to maintain the secrecy of its confidential databases. TRG's representatives, such as GALANTE, LAUB LAMBRIX and SULLIVAN, and McELDERRY, each have a Marketing and License Agreement with TRG which contains the following, or similar, provisions: 8.2 Title to TRG confidential Information. Licensee understands and agrees that pursuant to this Agreement, TRG shall disclose substantial amounts of TRG Confidential Information to Licensee. Licensee understands and agrees that the TRG Confidential Information is the sole and exclusive property of TRG. During the Term of this Agreement and at all times thereafter, Licensee shall hold the TRG Confidential information in the strictest confidence, and shall not disclose or use the TRG Confidential Information except as provided under this Agreement. | ||||
| VAUGHN & VAUGHN | indirectly competitive to any contract of TRG; and (iii) Licensee will not directly or indirectly solicit or in any manner encourage employees of TRG to leave its employ or independent contractors of Licensee to terminate their relationship with TRG. 8.6 Equitable Relief. Licensee understands and agrees that, because of the unique nature of the TRG Confidential Information, TRG Products, TRG Marks, TRG Clients, TRO Prospects and TRG's business protected under Section 8 of this Agreement, TRG will suffer immediate irreparable harm if Licensee fails to strictly comply with any of the obligations under Section 8 of this Agreement. Accordingly, Licensee agrees that the TRG shall, in addition to any other remedies available to it at law or in equity (including, without limitation, consequential and exemplary damages), be entitled to injunctive relief to enforce the terms of Section 8 of this Agreement, without the necessity of posting a bond or undertaking.20. The Marketing and License Agreements also provide that upon termination of the representatives are to return to TRG ALL equipment, notes, documents, memoranda, reports, files, books, correspondence, lists or other written or graphic records and the like relating to TRG's business which are or have been in Licensee's possession or control. TRG also requires representatives to sign Confidentiality Agreements that prohibit them from reproducing, distributing, disclosing or preparing derivative works from TRG's trade secret materials and required them to return all documents containing trade secrets to TRG upon terminating their relationship with TRG. Additionally, TRG requires representatives to sign Corporate Online System User Agreements, which contain an extensive confidentiality provision in Section 6 that prohibit Representatives from, among other things, transmitting client and prospect information on online systems other than TRG's in-house system. 21. TRG representatives gain daily access to TRG's on-line computer system through a security program called Citrix. Before a representative is allowed access to TRG's databases through the Citrix program, the representative must affirm and agree that he or she will keep TRG's proprietary information confidential, the representative cannot bypass this requirement. Every time TRG representative access TRG's databases, which was and is multiple times daily, they acknowledge and agree that they were required to maintain the confidentiality of the database information. | ||||
| VAUGHN & VAUGHN | 22. The TRG Partnership exists today, but Defendant CUENCA has wrongfully disassociated from the Partnership, and breached his fiduciary duties of loyalty and due care enumerated in non-exclusive fashion in California Coporations Code section 16404, in numerous respects. 23. Each of the other currently-named individual Defendants (except RIDLEY and LEE), and likely many of the yet-to-be-identified DOE Defendants, was a Registered Representative and/or solicitor operating as an independent contractor of the Partnership or its components. 24. On a date unknown to Plaintiff, Defendant CUENCA conceived, participated in, and began to implement a strategy in breach of his fiduciary duties to Plaintiff by preparing to disassociate from the Partnership with little or no notice to , to raid the Partnership's assets, including misappropriating the Partnership's trade secrets, to set up a competing business, to entice the Partnership's Registered Representatives, solicitors, independent contractors, and employees to participate with CUENCA in this competing endeavor, and to cause the demise of the Partnership, with an intent and preconceived plan to disadvantage and destroy , and TRG.25. This strategy was revealed on September 2, 2008, when CUENCA left TRG for his new business Monarch Retirement and Investments, LLC, dba "Monarch Retirement Services" ("Monarch"), formed in concert and conspiracy with the other individual Defendants to compete with and steal Plaintiff's assets and clients. As one part of the scheme/conspiracy, CUENCA purported to release the individual defendants from their Marketing and License Agreements even though he had no authority to do so and purported to authorize himself and the other individual defendants to misappropriate the trade secrets and client/prospect base of TRG. 26. Even as of the date of CUENCA's wrongful disassociatoin from TRG, he and individual Defendant JAMES GALANTE ("GALANTE") did not reveal GALANTE's participation in this conspiracy. GALANTE, instead, ostensibly remained a loyal contractor of TRG and, indeed, even signed a further written agreement reaffirming his loyalty and allegiance to TRG at a time when TRG had already been disadvantaged by the wrongful departure of nullnullnulnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | CUENCA and the other individual Defendants (except GALANTE), so that GALANTE could gain additional information from TRG and through calculated exploitation of his 27-year relationship of trust and confidence with TRG and , which his co-conspirators could utilize to their advantage, and in a continuing campaign to destroy and the Partnership.27. Plaintiff is informed and believes that, prior to giving , notice of his departure from the partnership, CUENCA purported to sell all of the assets of plaintiff to the other individual defendants and to dispose of plaintiff's trade secrets. CUENCA did not have the authority, as a general partner, to dispose of all of the assets of the partnership or to deprive the partnership of critical contractual rights. Attached as Exhibit "I" is the purported agreement entered into between CUENCA and the other individual defendants. Of note, CUENCA has recognized in the past that TRG's trade secrets have value in excess of millions of dollars but purported to sell all of the assets of the partnership for only $50,000.28. Prior to the departure of CUENCA and other registered representatives from TRG, Said Defendants laid the ground work to not only raid Plaintiff's clients, but its employees as well. This strategy has been partially successful, as Defendants RIDLEY and LEE were induced to leave their employement with TRG after CUENCA and the other registered representatives departed. 29. Both RIDLEY and LEE have breached their Online Systems User Agreements with TRG by, inter alia, revealing TRG's confidential trade secrets in contravention of paragraphs 6.1 and 6.2 of said agreement, having joined the conspiracy conceived, perpetrated, and executed by their co-Defendants. With regard to Defendants RIDLEY and LEE, said individuals actually (like Galante) remained with TRG after CUENCA and the other registered representatives departed, so that they could gather information, including trade secrets, and attorney-client privileged communications between TRG and its counsel, and deliver same to their co-Defendants in furtherance and aid of the conspiracy to destroy TRG. 30. Since the time of the wrongful disassociation of CUENCA from TRG, and in an escalating fashion, the individual Defendants have conducted a concerted campaign to nullnullnulnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | missappropriate TRG's assets, clients, and to compete with, disadvantage, and destroy TRG. Such conspiracy has been perpetrated by the following conduct, which is a non-exclusive list of those activities currently known or appreciated, although it is expected that discovery will reveal the true measure and scope of Defendants' actions is far more pervasive and extreme: a. Competing with the Partnership in the conduct of the Partnership business in violation of California Corporations Code section 16404(b). b. Sending purported "cease and desist" letters to the Partnership's employees, independent contractors, vendors, and TRG's broker dealer in an attempt to threaten and intimidate them from continuing and carrying on with the Partnership's business. c. Sending letters to the Partnership's employees, independent contractors, and TRG's broker dealer containing false, fraudulent, and defamatory representations of and concerning the Partnership and .d. Soliciting clients of the partnership to move their assets from TRG to Defendants' new, competing, venture, Monarch. e. Both orally and in writing publishing false, misleading and/org defamatory statements concerning and TRG to clients of TRG, in a desire and intent to cause said clients to move from TRG to Defendants' new competing venture, Monarch.f. Causing their counsel to create falsified declarations in a case which has never been filed. Specifically, in early September 2008, defendants and/or their counsel prepared purported pleadings relating to a lawsuit which had never been filed, and which indentified TRG, LLC, and certain of its key employees as defendants. Defendants and/or their counsel then circulated these pleadings from the fake lawsuit to TRG clients and to TRG's broker-dealer, SSN. These pleadings were circulated to false information about TRG and its employees and to give clients and TRG's broker-dealer the impression that TRG had been sued - as well as its key employees. Defendants and/or their counsel engaged in this course of conduct to cause substantial damage to TRG's business and its good will among its clients, prospective clients, broker-dealer, employees and others. g. In other respects not yet known or appreciated. nullnullnulnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull | ||||
| VAUGHN & VAUGHN | 31. Defendants' campaign of false publication, competition with the Partnership, and attempts to destroy Plaintiff are not only continuing, but escalating. Plaintiff lacks any adequate remedy at law to compensate for the damage caused by such conduct, because defendants (if successful) will have destroyed the partnership, missappropriated the primary asset of the Partnership (its trade secret information), and destroyed the "good will" and reputation of the Partnership in the market. Defendants' conduct may cause clients, whose assets are the lifeblood of TRG, not just to leave TRG for Monarch, but to become so disenchanted with the vile and scurrilous nature of Defendants' conduct that they simply decide to take their business elsewhere. Such harm would likely become irretrievable. Certain clients of the Partnership have, indeed, already left TRG as a result of Defendants' illegal, tortious, and disreputable conspiratorial behavior and this, coupled with the likelihood of further departures either for Monarch or other uninvolved entities, not only has caused, but threatens to further cause, irreparable harm unless such conduct is immediately enjoined, prevented, and prohibited, such that the assets of the Partnership can maintained in the status quo, pendente lite. FIRST CAUSE OF ACTION PLAINTIFF AGAINST DEFENDANT CUENCA (Breach of Fiduciary Duty and Constructive Fraud) 32. Plaintiff realleges and incorporates by reference herein, Paragraphs 1 through 31, above, as if fully set forth against at this place. 33. Defendant CUENCA owes TRG a fiduciary duty of the utmost care, loyalty, fidelity, and disclosure, and a strict obligation not to engage in misrepresentation, misappropriation, intentional interference with existing contractual relationships and prospectivebusiness advantage, defamation, trade libel, or unfair business practices of any sort. Said penultimate fiduciary duty, described as Uberrima Fides, is analogous to the obligations owed by a trustee to beneficiaries of that trust, and imposes the highest and most stringent standards of honesty and disclosure, and avoidance of deception, towards Plaintiff. /// nullnullnulnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnullnull |
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