PLAINTIFF'S ANSWER TO DEFENDANT, ONTECO CORPORATION’S MOTION TO DISMISS THE COMPLAINT

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

CASE NO.: 13-20190-CIV-GRAHAM/GOODMAN

 

AMIR A. KAMMONA,

Plaintiff,

v.

ONTECO CORPORATION, DROR

SVORI, HAIM MAYAN, JORGE

SCHCOLNIK AND ACTION STOCK

TRANSFER CORPORATION,

Defendants.

PLAINTIFF'S ANSWER TO DEFENDANT, ONTECO CORPORATION’S MOTION TO DISMISS THE COMPLAINT.

Background

The Plaintiff,Amir A Kammona,filed the lawsuit described above on the Defendants on 1/17/2013 for the fraud and/or tort actions that were the cause and/or the proximate cause for the injury to the Plaintiff's ownership, value and rights in the public corporation(Defendant Onteco Corporation).

Memorandum of Law

Summery of Defendant's arguments

Defendant Onteco Corporation ("Onteco") argument for the dismissal of the Plaintiffs complaint against the Defendant was based on the following:

A-"the Complaint seeks relief that is essentially on behalf of the corporation or all similarly situated shareholders, rather than the Plaintiff as an individual; however Plaintiff has made no attempt to bring this as a derivative action and it must therefore be dismissed."

B-"the Complaint should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) and (9)(b) for failure to state a claim and lack of specificity."

C-The complaint should be dismissed for failure to serve the complaint within the 21 days time limit set by a court order issued on 4/9/2013.

 

 

Plaintiff's Answer

A-The derivative standing only argument

First,it is not clear why Defendant Onteco referred to Florida's law citations in this matter instead of the Federal law or the law of the state of incorporation which is Nevada.

Second,defendant Onteco's assertion that the complaint can stand only as a derivative complaint is wrong for the following reasons:

1-The dilution relief demands,in the Plaintiff's complaint, enables the Plaintiff to bring a direct lawsuit because dilution by issuing shares has a path for direct injury to shareholders that is separate from the injury path to shareholders that comes through the injury to the diluted company.A company may sell shares at the best prices possible and increase its assets significantly.Nevertheless shareholders may have a just direct cause of action on that company if the selling of those shares was not for their best interest and was mainly done to make them share ownership with the buyers of those shares.For the company itself things are better.Original shareholders,on the other hand,may see that they are not better because their ownership in the company was diluted.

Now,in the Plaintiff's case here,in addition to the direct injury to shareholders there is also an injury to the corporation that may give a derivative standing for the lawsuit but it certinly does not take away the direct standing to file a lawsuit.

 

2-Having a legitimate representation is a right that belongs to shareholder directly. Therefore, there is also a direct standing to bring this complaint starting with contesting that the board of directors were not chosen according to the Bylaws of Defendant Onteco Corporation which requires that

"The annual meeting of stockholders for the election of directors shall be held on a day during the first six months of each fiscal year, at a time, and at a place all as set by the Board of Directors. At said meeting the stockholders shall elect by plurality vote, a Board of Directors, and may transact such other business as may come before the meeting."

Electing the board of directors based on votes from the dilution fraud doesnt satisfy the requirement of the article of incorporation.Furthermore,to the best recollection of the Plaintiff ,who is the shareholder with the most legitimately owned shares,he doesn't remember receiving proxy voting materials or any voting opportunity given to him.

If the board of directors of the corporation did not reach their position according to the rules of the article of incorporation then they were illegitimate representation for shareholders and therefore shareholders can file lawsuits directly even for matters that affect them through the corporation only.

3-Even if we assume that the representation for shareholders was based on valid grounds,the level and amount of clear fraud and/or careless recklessness and disregard for shareholder interest that was described in the complaint gives a direct standing to bring this lawsuit demanding cancellation of the representation of the board of directors to shareholders. After cancelling this representation a direct standing would be correct to bring whatever demands currently can be brought only through a derivative standing.In other words,at the start,the standing comes from a claim seeking to cancel the representation to shareholders by the board because of all the bad things they did to the company rather than a claim seeking a relief from all those bad things.While those bad actions individually directly affected the corporation itself,altogether they also directly affected shareholders because through their frequency and intensity in careless disregard for shareholder interest those actions shows a completely severed representation connection of board directors to the shareholders and abolished that the board of directors should be accepted as a representation for shareholders.

It is also important to point out that although the complaint was filed as a direct standing complaint,it is ready to fit all the requirements of rule 23.1

 

B

1-The Federal Rules Of Civil Procedures ("FRCP") 12b(6) argument

It is very hard to see any merits for this allegation.The Plaintiff's complaint clearly contains claims "upon which relief can be granted".FRCP Rule 12b(6) is related to the entire complaint and not just the relief section.The actions of the Defendant Onteco Corporation described throughout the complaint are sufficient to make seeing granting a relief for all the dilution and other tort claims related to the complaint plausible.

2-The Federal Rules Of Civil Procedures ("FRCP") 9(b) argument

The Plaintiff's complaint satisfy the specificity requirement of rule 9(b).It is possible to make an argument for fraud at various levels from the claims in the lawsuit.

The Defendant said

"It is well-established that "[i]n order to state a claim under §10(b) and Rule 10b-5, a plaintiff must show the following: ‘(1) a misstatement or omission, (2) of material fact, (3) made with scienter, (4) on which plaintiff relied, (5) that proximately caused his injury."

Below we apply the five factors mentioned above to the fraud claim at the basic level in order to

show that all of those five factors are obvious and implied from the claims the Plaintiff made in his complaint.

 

1) a misstatement or omission

It is not hard to see the misstatement or omission in the tortuous actions of Defendant Onteco through its board of directors.The dilution and other tortuous actions makes the duty they had to work for the best interest of shareholders a misstatement or omission.

2)of material fact

It is clear that the board of directors work for the best interest of shareholders is a very important material fact to shareholders.

3) made with scienter

The embarrassment of bad intention is clear because of how clear the potential consequences of those tortuous actions were.

4) on which plaintiff relied

Any reasonable investor would relay on that the board of directors should work for the best interest of shareholders.

5) that proximately caused his injury

The dilution and other tortuous actions by the board of directors of defendant Onteco clearly were a proximate cause for the Plaintiff's injury.

In addition,even if the Plaintiff had failed to satisfy the specificity requirement of FRCP Rule 9(b) the complaint doesnt need to be dismissed because it contain clear claims of tortuous actions done by Defendant Onteco.As for the jurisdiction, there is also diversity jurisdiction for the court here based on the fact that the Plaintiff reside in different state from all the defendants and the value of the requested relief or the cost of $220233.57 the Plaintiff incurred to obtain his shares (this cost was not mentioned in the Plaintiff's complaint).

 

C-The complaint should be dismissed for failure to serve the complaint within the 21 days time limit set by a court order issued on 4/9/2013.

The Plaintiff filed his lawsuit on 1/17/2013 and Defendant Onteco was served within the 120 days allowed by FRCP Rule 4(m).As for the order of 4/9/21,which took away more than two weeks from the 120 days allowed by FRCP Rule 4(m),for the court to do what it believe to be just has much more priority than adjudicating based on that order.Nevertheless,although the Plaintiff did not see any justification for that order and was taken by surprise by it,he tried to comply with it from the first time he received it.Here are some of what the Plaintiff did to comply with that order:

On 4/15/2013 the next business day after the Plaintiff found that order in his mail box,4/15/2013,the Plaintiff started contacting process servers to perform service of process(email documented fact).The next day The Plaintiff continued to search for process server to serve the complaint and made contacts some of them are documented in email.On 5/17/2013 the Plaintiff hired a process serving company called Front Range Legal Process and paid $485 for the fastest type of service available,rush service (fact documented in credit card account).After the failure of this process server to serve on all Defendants the plaintiff went on to hire other process servers including multiple process servers at the same time.The plaintiff paid a total of $950.50 to various process servers.

Included with this answer to the Defendant's motion are the following exhibits to show some of the efforts and expense the Plaintiff took trying to serve the complaint:

EXHIBIT 1 Shows service of process charge of 4/17/2013 on the Plaintiff's Discover credit card account.

EXHIBIT 2 Shows various service of process charge on the Plaintiff's Chase credit card account

EXHIBIT 3 shows service of process charge on the Plaintiff's Capital One credit card account.

EXHIBIT 4 shows checks paid for service of process.

EXHIBIT 5 PAGES 1-5 shows service of process emails sent from the Plaintiff's email accounts.

 

 

WHEREFORE, Plaintiff,Amir A Kammona , respectfully requests that the court deny the Defendant's motion.