Design Collection Inc v. Misyd Corporation et al

NOTICE OF MOTION AND MOTION for Relief from Order Docket No. 161 and for Leave to File Counterclaims re Order on Motion to Dismiss, 161

C.D. Cal.January 6, 2017

170106 Nt Mt re Relief Judgmt.docx STANTEX GROUP LTD.’S NOTICE OF MOTION AND MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] STANTEX GROUP LTD.’S NOTICE OF MOTION AND MOTION FOR RELIEF FROM JUDGMENT Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197 Filed 01/06/17 Page 1 of 3 Page ID #:1599 170106 Nt Mt re Relief Judgmt.docx 1 STANTEX GROUP LTD.’S NOTICE OF MOTION AND MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on February 13, 2017, at 10:00 a.m. or as soon thereafter as the matter may be heard before the Honorable Andre Birotte Jr., of the United States District Court of California, Third Party Defendant Stantex Group LTD. (“Stantex”) will move for motion for relief from the order at document no. 161 (the “Order”) as set forth below. This motion is made pursuant to the Court’s plenary authority to reverse an order prior to entry of final judgment, and on the grounds that the Order was the result of mistake and/or inadvertence. Stantex was advised by the Court, in Document No. 101, that its counterclaims against Misyd would be dismissed “without prejudice.” The Order, without explanation, dismisses the counterclaims with prejudice. Relief is thus warranted. This motion is based on this Notice of Motion, the Memorandum of Points and Authorities, and the Declarations of Nathan D. Meyer and Brett A. Nadler, the pleadings and records filed in this action, and such evidence as may be presented at or before the hearing of this Motion. This Motion was met following a meet and confer pursuant to Local Rule 7- 3 between the undersigned counsel and Jason Bendel, counsel for Misyd. DATED: January 6, 2017 RUSS, AUGUST & KABAT Larry C. Russ Nathan D. Meyer By: Nathan D. Meyer Nathan D. Meyer Attorneys for Third Party Defendant Stantex Group LTD. Case 2:14-cv-09735-AB-JC Document 197 Filed 01/06/17 Page 2 of 3 Page ID #:1600 170106 Nt Mt re Relief Judgmt.docx 2 STANTEX GROUP LTD.’S NOTICE OF MOTION AND MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T CERTIFICATE OF SERVICE I certify that counsel of record who are deemed to have consented to electronic service are being served on January 6, 2017, with a copy of this document via the Court’s CM/ECF systems per Local Rule CV-5(a)(3). Any other counsel will be served by electronic mail, facsimile, overnight delivery and/or First Class Mail on this date. /s/Nathan D. Meyer Case 2:14-cv-09735-AB-JC Document 197 Filed 01/06/17 Page 3 of 3 Page ID #:1601 170106 PsAs re Mt Relief Judgmt.docx POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 1 of 7 Page ID #:1602 170106 PsAs re Mt Relief Judgmt.docx 1 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T I. INTRODUCTION A court has plenary authority to grant relief from an order prior to the entry of final judgment. In this case, an order (Document No. 161, the “Order”) dismissing claims with prejudice (as opposed to without prejudice) was entered due to mistake and/or inadvertence on the part of Stantex, and potentially due misstatements of fact to the Court by Misyd, and as such, the Court should grant relief from the Order. The Order here concerns Stantex’s counterclaims against Misyd. When Stantex’s prior counsel withdrew, the Court ordered that Stantex’s counterclaims would be dismissed “without prejudice” if Stantex failed to retain counsel. Doc. 119. Had the counterclaims been dismissed as indicated in the Court’s order at Document No. 119 (the last order of which Stantex was notified), Stantex would have been able to assert its counterclaims against Misyd in this action now that default has been vacated. Nevertheless, after Stantex failed to retain counsel, Misyd sought, and obtained, dismissal of those counterclaims “with prejudice,” thus barring Stantex from re-filing now. Doc. 161. Misyd’s motion to dismiss failed to mention that the Court’s original order had provided that the dismissal would be without prejudice. Doc. 156. This is a mistake, and at the very least the Order was entered due to inadvertence on the part of Stantex, which had no reason to believe a dismissal with prejudice would be entered, due to the Court expressly ordering otherwise at Doc. 101. As such, the Court should exercise its plenary authority and grant relief from Document 161, and permit Stantex to file its amended counterclaims. II. RELEVANT PROCEDURAL HISTORY Design Collection, Inc., sued Misyd and several other defendants in December of 2014 for copyright infringement. The copyright side of the case proceeded, and ultimately settled. Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 2 of 7 Page ID #:1603 170106 PsAs re Mt Relief Judgmt.docx 2 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Misyd filed a third-party complaint for indemnity against Stantex. [Doc. 89]. Stantex answered and counterclaimed, basically stating that Misyd had provided the design to Stantex, and also asserting permissive counterclaims for other unpaid invoices. [Doc. 101]. Not long afterwards, Misyd initiated a meet and confer on Stantex’s counterclaims. At the same time, Stantex’s prior counsel, Ballon Stoll Bade & Nadler, moved to be relieved as counsel after Stantex terminated prior counsel’s services.1 In order to resolve the issues, the parties stipulated to (1) the withdrawal of prior counsel and (2) that if new counsel was not retained, Stantex’s counterclaims would be dismissed “without prejudice.” Per the stipulation that Misyd’s counsel signed, “should Stantex not retain replacement counsel . . . the Counterclaim can be dismissed without prejudice . . . .“ Doc. 117. The Court granted a proposed order pursuant to that stipulation (Doc. 119), and advised Stantex that if it did not retain new counsel, its counterclaims would be dismissed “without prejudice.” Stantex ultimately did not retain counsel until November of 2016. Doc. 119. After Stantex failed to retain counsel, Misyd moved to dismiss Stantex’s counterclaims, but with prejudice. Doc. 156. Misyd’s papers failed to make any mention of either the stipulation (Doc. 117) or order (Doc. 119) that provided that the dismissal would be without prejudice. Indeed, Misyd’s notice of motion did not state it would seek a dismissal “with prejudice” (Doc. 156), and the sole mention of the issue of dismissal with or without prejudice in the Memorandum is that the very last sentence of the memorandum (Doc. 156-1 at 6) asks that the counterclaims be dismissed “with prejudice.” The proposed order submitted with the motion, and signed by the Court (Doc. 156-2, 161) calls for dismissal “with prejudice,” but again, makes no mention of the prior stipulation or order. The 1 Undersigned counsel has examined the issues raised by Misyd in its meet and confer, and the Counterclaims have been amended accordingly. Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 3 of 7 Page ID #:1604 170106 PsAs re Mt Relief Judgmt.docx 3 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Court granted Misyd’s motion, and dismissed the Counterclaims with prejudice. Doc. 161. Stantex never received notice of the dismissal with prejudice. Doc. 186- 4. Misyd’s failure to note the stipulation or original order in its motion to dismiss is curious at best, a deceit upon the Court at worst. Stantex re-appeared in this action on December 16, 2016, when it answered Misyd’s first amended third party complaint. Doc. 193. It conducted a rule 7-3 meet and confer on this issue on December 20, 2016. Meyer Decl. Per agreement of the parties, all motions relating to the status of the pleadings were set for hearing on February 13, 2017. III. ARGUMENT In dealing with an order that does not terminate the litigation as to all parties and claims, a Court has plenary authority to grant relief as justice requires. 1946 Committee Notes; United States v. Jerry, 487 F.2d 600, 605 (3d Cir. 1973) (“so long as the district court has jurisdiction over the case, it possesses inherent power over interlocutory orders, and can reconsider them when it is consonant with justice to do so.”). Similarly, as to final orders, Federal Rule of Civil Procedure 60 provides that “on motion and just terms, the court may relieve a party or its legal representative form a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise or excusable neglect. . .” Since the Order is not a final order, relief from the Order is “left subject to the complete power of the court rendering them to afford such relief from them as justice requires.” That said, Rule 60 provides some guidance. Here, a showing of “mistake, inadvertence, surprise or excusable neglect” can easily be made, in light of the conflict between Documents 117, 119 and 161. Quite simply, based on the order actually served on Stantex and the stipulation it entered into with Misyd (Doc. 119), it had no reason to believe that its Counterclaims would be dismissed with prejudice; it was expressly told otherwise Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 4 of 7 Page ID #:1605 170106 PsAs re Mt Relief Judgmt.docx 4 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T by both Misyd and, more importantly, the Court. Doc. 119. Stantex was not advised differently until well after the order being challenged here was entered. This is textbook surprise or mistake. Stantex had no reason to believe its actions would lead to dismissal of its claims with prejudice. Similarly, under Rule 60(a), a Court “may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may do so on motion or on its own, with or without notice.” Separate from the Court’s plenary authority, relief is proper here under Rule 60(a), since the Order is the result of a mistake or oversight caused by omissions in Misyd’s motion to dismiss. As such, under Rule 60 and the Court’s plenary authority, Stantex should be granted relief from the Order, and permitted to re-file its counterclaims (amended to address the issues raised originally in Misyd’s meet and confer letter). IV. IF RELIEF IS GRANTED FROM THE ORDER, LEAVE TO FILE THE COUNTERCLAIMS SHOULD BE GRANTED Due to the existence of the Order, it was not possible to file counterclaims in response to Misyd’s Third Party Complaint, as such counterclaims are, at the moment, barred by the Order. By the time this motion is heard, the 21-day period to amend an answer as of right will have expired, so leave to file Counterclaims will be necessary. Federal Rule of Civil Procedure 15(a)(2) provides, "The court should freely give leave to amend a complaint] when justice so requires." Fed. R. Civ. P. 15(a)(2). Most motions to amend the pleadings are initially subject to this liberal standard for amendments. See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074,1079 (9th Cir. 1990). Courts may consider the following factors in analyzing a motion for leave to amend, the amendment would cause the opposing party undue prejudice, is sought in bad faith, constitutes an exercise in futility or creates undue delay. Foman v. Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 5 of 7 Page ID #:1606 170106 PsAs re Mt Relief Judgmt.docx 5 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Davis, 371 U.S. 178,182 (1962); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 (9th Cir. 1994). Not all of the Rule 15 factors carry the same weight, as "it is the consideration of prejudice to the opposing party that carries the greatest weight." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). None of the Rule 15 factors weigh against denying leave to amend. Defendants are not prejudiced because there has been no substantive action on the answer, and will not be any between this filing (which is within the time to amend as of right) and the hearing on the Motion. Misyd is contemporaneously moving to strike the answer and have a default judgment entered, so the pleadings will not be settled until after the hearing on this motion in any event. Discovery likewise will not open until early March, after the Rule 26 meeting of counsel (Doc. 194). Thus, for all practical purposes, there is no difference for Misyd between the counterclaims being filed after hearing on this motion, and them having been filed within the time to amend as of right (during which time the Counterclaims were barred by the Order). The counterclaims will likewise not cause any undue delay, as they would be on file, and responded to, before the scheduling conference in this case, and before the Court even sets a “date by which motions to amend the pleadings or add parties must be heard.” Doc. 194 at 1:25-26. There is thus no meaningful delay, let alone undue delay. Nor is there bad faith or futility; these are legitimate counterclaims, and the delay in filing is purely a result of the Order. Considering the liberal standards of Rule 15, assuming that relief from the Order is granted, leave to file counterclaims should be granted. A copy of the proposed First Amended Answer and Counterclaim, with redlines showing changes to address Misyd’s initial concerns with the Counterclaim back in 2016, are attached to the Declaration of Nathan D. Meyer. Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 6 of 7 Page ID #:1607 170106 PsAs re Mt Relief Judgmt.docx 6 POINTS AND AUTHORITIES IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM JUDGMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T V. CONCLUSION For the reasons set forth above, the Court should grant relief from Document No. 161 and permit Stantex to file its amended counterclaims. DATED: January 6, 2017 RUSS, AUGUST & KABAT Larry C. Russ Nathan D. Meyer By: /s/Nathan D. Meyer Nathan D. Meyer Attorneys for Third Party Defendant Stantex Group LTD. Case 2:14-cv-09735-AB-JC Document 197-1 Filed 01/06/17 Page 7 of 7 Page ID #:1608 170106 NDM Dec ISO Mt Relief Judgmt.docx DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-2 Filed 01/06/17 Page 1 of 2 Page ID #:1609 170106 NDM Dec ISO Mt Relief Judgmt.docx 1 DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Declaration of Nathan D. Meyer I, Nathan D. Meyer, declare as follows: 1. I am a member of the State Bar of California and am duly licensed to practice as a lawyer in the state of California. I am a member of the law firm of Russ, August & Kabat, counsel for Third Party Defendant Stantex Group LTD., in the above-captioned case. I have personal knowledge of the facts set forth in this declaration and if called to testify, I could and would testify competently to their truth and accuracy. 2. I met and conferred with Jason Bendel, counsel for Misyd, on this motion more than 10 days before filing, pursuant to Local Rule 7-3. We were unable to reach agreement. 3. Attached hereto as Exhibit A is a clean copy of Stantex’s proposed First Amended Answer and Counterclaims. 4. Attached hereto as Exhibit B is a redline showing changes from Stantex’s original counterclaims to address the concerns raised by Misyd, without exhibits. For redline purposes, the original counterclaims (at Doc. 102) were added verbatim to the operative answer (Doc. 193), without redlining to show that addition. The redline shows changes against that document. I declare under penalty of perjury pursuant to the laws of the State of California that the foregoing is true and correct. Executed this 6th day of January, 2017 at Los Angeles, California. /s/ Nathan D. Meyer_______ Nathan D. Meyer Case 2:14-cv-09735-AB-JC Document 197-2 Filed 01/06/17 Page 2 of 2 Page ID #:1610 170106 NDM Dec ISO Mt Relief Judgmt.docx DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] EXHIBIT A TO THE DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 1 of 19 Page ID #:1611 EXHIBIT A Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 2 of 19 Page ID #:1612 170106 Amended Answer re FAC-3rdParty.docx THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, TREND TEXTILE, INC., ZHENYAN WEI, XINWEI XIE. Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr, Courtroom 4] THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S FIRST AMENDED ANSWER TO FIRST AMENDED THIRD PARTY COMPLAINT AND COUNTER- CLAIM JURY TRIAL DEMANDED Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 3 of 19 Page ID #:1613 170106 Amended Answer re FAC-3rdParty.docx 1 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Third-Party Defendant Stantex Group Ltd. (“Stantex”) answers the allegations made by Third-Party Plaintiff Misyd Corporation (“Misyd”), in its First Amended Third-Party Complaint, filed December 14, 2016 (the “FATPCL”), as follows: THE PARTIES 1. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 1 and, accordingly, denies the same. 2. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 2 that “Stantex is a corporation of unknown form” and, accordingly, denies the same, and admits the remainder of the allegations in paragraph 2. 3. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 3 and, accordingly, denies the same. 4. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 4 and, accordingly, denies the same. 5. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 5 and, accordingly, denies the same. 6. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 6 and, accordingly, denies the same. 7. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 7 and, accordingly, denies the same. 8. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 8 and, accordingly, denies the same. JURISDICTION 9. To the extent the allegations in paragraph 9 purport to state a legal conclusion, no response thereto is required. To the extent a response is deemed required, Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 3 and, accordingly, denies the same. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 4 of 19 Page ID #:1614 170106 Amended Answer re FAC-3rdParty.docx 2 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T 10. To the extent the allegations in paragraph 10 purport to state a legal conclusion, no response thereto is required. To the extent a response is deemed required. 11. Stantex denies allegations in paragraph 11. 12. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 12 and, accordingly, denies the same. 13. To the extent the allegations in paragraph 13 purport to state a legal conclusion, no response thereto is required, Stantex denies the allegations in paragraph 13. ALTER EGO ALLEGATIONS 14. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 14 and, accordingly, denies the same. 15. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 15 and, accordingly, denies the same. 16. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 16 and, accordingly, denies the same. FACTUAL BACKGROUND 17. Stantex denies the allegations in paragraph 17, except admits that Stantex is a manufacturer or supplier of fabrics. 18. Stantex denies the allegations in paragraph 18. 19. Stantex denies the allegations in paragraph 19. 20. Stantex denies the allegations in paragraph 20, except admits that Misyd placed several orders for fabric from Stantex. 21. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 21 and, accordingly, denies the same. 22. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 22 and, accordingly, denies the same. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 5 of 19 Page ID #:1615 170106 Amended Answer re FAC-3rdParty.docx 3 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T FIRST CLAIM FOR RELIEF: EXPRESS INDEMNITY 23. Stantex denies the allegations in paragraph 23, except lacks knowledge or information sufficient to form a belief as to the truth of the allegation that “the present action arises from fabric that Stantex sold to Misyd” and, accordingly, denies the same. 24. Stantex denies the allegations in paragraph 24. SECOND CLAIM FOR RELIEF: EQUITABLE INDEMNITY 25. Stantex denies the allegations in paragraph 25. 26. Stantex denies the allegations in paragraph 26. 27. Stantex denies the allegations in paragraph 27. THIRD CLAIM FOR RELIEF: CONTRIBUTION 28. Stantex denies the allegations in paragraph 28. 29. Stantex denies the allegations in paragraph 29. AFFIRMATIVE AND OTHER DEFENSES Stantex asserts the following affirmative and other defenses in response to Misyd’s allegations in the FATPCL, undertaking the burden of proof only as to those defenses deemed affirmative defenses by law regardless of how such defenses are denominated herein. In addition to the defenses and affirmative defenses described below, Stantex specifically reserves all rights to allege additional defenses and affirmative defenses that become known through the course of discovery. First Defense 30. The FATPCL is barred on the ground that the Court lacks personal jurisdiction over Stantex. Second Defense 31. The FATPCL, in whole or in part, fails to state a claim upon which relief can be granted. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 6 of 19 Page ID #:1616 170106 Amended Answer re FAC-3rdParty.docx 4 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Third Defense 32. Misyd 's claims agains Stantex arose out of Stantex’s compliance with specifications Misyd provided to Stantex. Therefore, the TPCL, as well as each and every claim for relief therein, is barred under U.C.C. §2-312 and Cal. Com. Code §2312. Fourth Defense 33. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because any such alleged contract lacked consideration. Fifth Defense 34. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because any such alleged contract was illusory and lacked consideration. Sixth Defense 35. The FATPCL, as well as each and every claim for relief therein, is barred or limited by Cal. Civ. Code § 2778(3). Seventh Defense 36. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because Stantex never explicitly or through its actions accepted the alleged contract or the terms thereof. Eighth Defense 37. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground that Misyd obtained Stantex’s consent to the alleged contract or transaction through fraud, deceit, or misrepresentation and, as a result, the alleged contract is invalid and unenforceable. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 7 of 19 Page ID #:1617 170106 Amended Answer re FAC-3rdParty.docx 5 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Ninth Defense 38. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground that the alleged contract is a contract of adhesion and, therefore, invalid and unenforceable. Tenth Defense 39. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the TPCL, as well as each and every claim for relief therein, is barred on the ground that the alleged contract, or relevant provision thereof, is unconscionable and, therefore, invalid and unenforceable. Eleventh Defense 40. Stantex denies that it consented to the terms of the alleged contract, but the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground and to the extent that the alleged contract, or relevant provision thereof, is illegal and, therefore, invalid and unenforceable. Twelfth Defense 41. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine or unclean hands. Thirteenth Defense 42. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of scienti et volenti nonfat injuria. Fourteenth Defense 43. Misyd is barred from recovering on some or all of the purported claims for relief on the ground that Misyd breached the implied covenant of good faith and fair dealing. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 8 of 19 Page ID #:1618 170106 Amended Answer re FAC-3rdParty.docx 6 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Fifteenth Defense 44. The FATPCL, as well as each and every claim for relief therein, is barred on the ground of the doctrine of reasonable expectations. Sixteenth Defense 45. Stantex could not have breached any alleged contract, agreement or warranty against infringement to Misyd on the ground that any products Stantex delivered to Misyd which are alleged to infringe any copyright allegedly owned by Design Collection Inc. were delivered prior to issuance of any such copyright. Seventeenth Defense 46. Stantex denies that the alleged contract was formed and is valid, but to the extent that it may be found to be formed and vaild, Misyd’s recovery is barred under the alleged contract on the ground that Misyd and/or its agents made performance impractical or impossible. Eighteenth Defense 47. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of waiver. Nineteenth Defense 48. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of estoppel. Twentieth Defense 49. The FATPCL, as well as each and every claim for relief therein, is barred on ground that Stantex did not breach any duties or obligations to Misyd arising from common law, statute, contract, tort or otherwise, and fulfilled all duties and obligations, if any, to Misyd. Twenty-First Defense 50. Misyd’s recovery against Stantex, if any, must be reduced by the proportion of damages attributable to Misyd’s own acts, omissions, errors, Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 9 of 19 Page ID #:1619 170106 Amended Answer re FAC-3rdParty.docx 7 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T courses of conduct and failure to exercise reasonable care and diligence on its own behalf. Twenty-Second Defense 51. Misyd failed to take reasonable or adequate steps to mitigate, alter, reduce or otherwise diminish its alleged damages. Twenty-Third Defense 52. The FATPCL, as well as each and every claim for relief therein, is barred, or Misyd’s recovery thereon must be limited, on the ground that Misyd failed to tender its defense and seek indemnity from Stantex prior to filing the FATPCL. Twenty-Fourth Defense 53. Stantex has suffered damages by Misyd’s conduct and, therefore, has the right to offset any purported amounts due and owing to Misyd. Twenty-Fifth Defense 54. Stantex reserves the right to assert additional affirmative defenses and claims, if any, and to amend this Answer accordingly, as Misyd’s claims are clarified during the course of this litigation and through investigation and discovery. COUNTERCLAIMS Third-Party Defendant Stantex Group Ltd. (“Stantex”), by and through its undersigned counsel, files these counterclaims against MISYD CORPORATION (“Misyd”) and JOSEPH HANNASAB (“Hannasab”), and alleges on personal knowledge as to its own acts, and on information and belief as to all other matters, as follows: JURISDICTION & VENUE 1. This Court has subject matter jurisdiction over Stantex’s counterclaims under 28 U.S.C. §§ 1332 and 1367(a). Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 10 of 19 Page ID #:1620 170106 Amended Answer re FAC-3rdParty.docx 8 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T 2. Upon information and belief, Misyd and Hannasab reside in this district and, therefore, venue is proper pursuant to 28 U.S.C. §1391. 3. Misyd and Hannasab have previously appeared in this lawsuit, are represented by counsel, and have previously submitted to the personal jurisdiction of this Court. THE PARTIES 4. Stantex is a corporation formed under the laws of the People’s Republic of China having a principal place of business in Shanghai, China. 5. Upon information and belief, Misyd is corporation formed under the laws of the State of California, with a principal place of business in Los Angeles, California. 6. Hannasab is an individual who, upon information and belief, resides and is doing business, in Los Angeles, California, and is a principal of Misyd. CAUSES OF ACTION COUNT I (Breach of U.C.C. 2-312/Cal. Comm. Code § 2312) 7. Misyd furnished specifications to Stantex for the production and delivery of a certain fabric internally identified by Misyd as “CODE 8828” (the “Allegedly Infringing Fabric”). 8. Design Collections Inc.’s copyright infringement and other associated claims, and Misyd’s third-party claims against Stantex, in this action arise out of the Allegedly Infringing Fabric that Stantex produced and delivered in compliance Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 11 of 19 Page ID #:1621 170106 Amended Answer re FAC-3rdParty.docx 9 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T with the specifications Misyd furnished to Stantex. 9. At the time Misyd furnished said specifications to Stantex, Misyd knew that Design Collection Inc. owned and/or claimed rights in the visual material which was incorporated into the Allegedly Infringing Fabric that Stantex produced for and delivered to Misyd or its designated agent in compliance with Misyd’s furnished specifications. 10. By reason of the foregoing, Misyd has breached its implied warranty of title and against infringement arising under U.C.C §2-312 and Cal. Comm. Code §2312. 11. As a direct and proximate result of Misyd’s aforesaid breach, Stantex has suffered, and will continue to suffer, actual damages, including, without limitation, substantial attorneys’ fees and costs defending against Misyd’s claims. COUNT II (Breach of Contract) 12. On or about June 20, 2011, Stantex issued to Misyd Commercial Invoice number ST-RR700317 in the agreed amount of $46,933.60 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 700317 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit A. 13. On or about June 30, 2011, Stantex issued to Misyd Commercial Invoice number ST-MI700260 in the agreed amount of $38,418.00 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 12 of 19 Page ID #:1622 170106 Amended Answer re FAC-3rdParty.docx 10 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T and in accordance with purchase order number 700260 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit A. 14. On or about February 17, 2014, Stantex issued to Misyd Commercial Invoice number ST-MI-262348 in the agreed amount of $3,285.79 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 262348 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit B. 15. On or about January 22, 2014, Stantex issued to Misyd Commercial Invoice number ST-MI-262347 in the agreed amount of $4,290.49 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 262348 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit C. 16. The goods Stantex manufactured for and delivered to Misyd conformed to Misyd’s purchase orders. 17. Stantex duly performed all conditions on its part to be performed under its agreements with Misyd. 18. Misyd accepted the goods manufactured and delivered by Stantex under and in accordance with the above-referenced purchase orders and other agreements. 19. Misyd agreed to pay the aforementioned invoiced amounts totaling, in aggregate, $92,927.88. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 13 of 19 Page ID #:1623 170106 Amended Answer re FAC-3rdParty.docx 11 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T 20. Misyd failed to pay Stantex the aforementioned invoiced amounts for the goods Misyd accepted and retained. 21. In addition, Misyd, without Stantex’s authorization or permission, took a chargeback against Stantex in the net amount of $23,253.00 on the goods Stantex delivered to Misyd under purchase order number 700260, and invoiced under Commercial Invoice number ST-MI700260. A true and correct copy of that invoice is attached hereto as Exhibit D. 22. The outstanding balance due and owing to Stantex from Misyd on the goods Misyd accepted and retained is $116,180.88, exclusive of interest and incidental expenses. 23. By reason of the foregoing, Misyd breached its agreements with Stantex. 24. As a result of Misyd’s breach, Stantex has suffered damages in the amount of $116,180.88, exclusive of interest and incidental expenses. WHEREFORE, Stantex respectfully requests this Court enter judgment on Stantex’s Counterclaims, against Misyd and in favor of Stantex, as follows: 1. On Count I, all damages suffered by Stantex as a result of Misyd’s breach of U.C.C. 2-312, Cal. Comm. Code §2312, including, without limitation, all past, present and future attorneys’ fees, costs of defense, and any damages that might be awarded in another party’s favor against Stantex; 2. On Count II, the sum of $116,180.88, plus incidental damages and interest; 3. Attorneys’ fees and costs of suit, as provided under applicable law; Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 14 of 19 Page ID #:1624 170106 Amended Answer re FAC-3rdParty.docx 12 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T 4. Interest, as provided under applicable law; and 5. Such other and further relief as this Court deems just and proper Stantex demands a jury trial on all issues so triable pursuant to Fed. R. Civ.P. 38 and the 7th Amendment to the United States Constitution. WHEREFORE, having fully answered Misyd’s Third Party Complaint, Stantex requests relief as follows: 1. Misyd takes nothing by this action; 2. Misyd’s Third Party Complaint be dismissed with prejudice; 3. Stantex be awarded its costs and attorney’s fees as provided under the law; and 4. Stantex recovers such other and further relief as this Court deems just and proper. DEMAND FOR JURY TRIAL Pursuant to Federal Rule of Civil Procedure 38(b), Stantex Group Ltd, hereby demands a jury trial on all issues so triable. DATED: December 16, 2016 RUSS, AUGUST & KABAT Larry C. Russ Nathan D. Meyer By: /s/ Nathan D. Meyer_____________ Nathan D. Meyer Attorneys for Third Party Defendant Stantex Group LTD. Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 15 of 19 Page ID #:1625 NO.: DATE: IN HOUSE DATE: TO: P.O. NO.: FROM : TO: Unit Price Amount BY AIR LDP LOS ANGELES USD USD 6.80/PC 46,933.60 46,933.60 上海东燊纺国际贸易有限公司 SHANGHAI STANTEX CO., LTD. 发票 COMMERCIAL INVOICE 700317 SHANGHAI LOS ANGELES Description of Goods Quantity ST-RR700317 Jun.20,2011 RUBY ROX 1411 WILSON SREET LOS ANGELES,CA 90021 UNITED STATES LADY'S 73%RAYON23%NYLON4%SPANDEX WOVEN DRESS PCS PO#:700317 6902 TEL: +86-21-51695966 FAX:+86-21-51336146 E-mail:office@stantex.com http://www.stantex.com Jun.25,2011 TOTAL 6902 SAY TOTAL US DOLLARS FORTY-SIX THOUSAND NINE HUNDRED AND THIRTY-THREE AND 60/100 ONLY 21ND FLOOR QIANJIANG TOWER NO.971 DONGFANG ROAD, PUDONG NEW DISTRICT SHANGHAI 200122, P.R.CHINA EXHIBIT A EXHIBIT A Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 16 of 19 Page ID #:1626 NO.: DATE: IN HOUSE DATE: TO: P.O. NO.: FROM : TO: Unit Price Amount BY SEA LDP LOS ANGELES USD USD 9.50/PC 38,418.00 38,418.00 上海东燊纺国际贸易有限公司 SHANGHAI STANTEX CO., LTD. 发票 COMMERCIAL INVOICE 700260 SHANGHAI LOS ANGELES Description of Goods Quantity ST-MI700260 Jun.30,2011 MISYD CORPORATION 1411 WILSON STREET LOC ANGELES, CA 90021 LADY'S 100%POLYESTER WOVE PCS PO#:700260 4044 TEL: +86-21-51695966 FAX:+86-21-51336146 E-mail:office@stantex.com http://www.stantex.com Jul.15,2011 TOTAL 4044 SAY TOTAL US DOLLARS THIRTY-EIGHT THOUSAND FOUR HUNDRED AND EIGHTEEN ONLY 21ND FLOOR QIANJIANG TOWER NO.971 DONGFANG ROAD, PUDONG NEW DISTRICT SHANGHAI 200122, P.R.CHINA EXHBIT B EXHIBIT B Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 17 of 19 Page ID #:1627 NO: DATE: GARMENT PO: B/L NO.: TO: Quantity YDS 402.90 1790.30 -339.00 1854.20 新标准集团有限公司 STANTEX GROUP LIMITED 发票 COMMERCIAL INVOICE 1411 WILSON STREET LOC ANGELES, CA 90021 P.O. NO.: 262347 ST-MI-262347 Jan.22,2014 TO: MISYD CORPORATION Shipping Marks & No. Description of Goods Unit Price Amount SHIPPING BY: SEA FROM : SHANGHAI HOCHIMINH ,VIETNAM STYLE: CTN LAWN SOLID HOCHIMINH ,VIETNAM USD P.O.#: PO#262347 CIF COLOR: BALE NO.: CORAL/AQUA USD 2.26/YD 910.55 LENGTH: 14033TEXAS DOUBLE BORDER LAWN LOT#: PO#262347 FREIGHT CHARGE 100.00 MADE IN CHINA CORAL/AQUA USD 2.26/YD 4046.08 CORAL/AQUA USD 2.26/YD -766.14 SAY TOTAL US DOLLARS FOUR THOUSAND AND TWO HUNDREDS AND NINETY AND 49/100 ONLY MSH 2014 RM 1007, 10/F HO KING CTR NO 2-16 FA YUEN ST, MONGKOK, KL E-mail:docu@stantex.cn http://www.stantex.cn TOTAL 4290.49 EXHIBIT C EXHBIT C Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 18 of 19 Page ID #:1628 1 CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T CERTIFICATE OF SERVICE I certify that counsel of record who are deemed to have consented to electronic service are being served on January 6, 2017, with a copy of this document via the Court’s CM/ECF systems per Local Rule CV-5(a)(3). Any other counsel will be served by electronic mail, facsimile, overnight delivery and/or First Class Mail on this date. /s/ Nathan D. Meyer Case 2:14-cv-09735-AB-JC Document 197-3 Filed 01/06/17 Page 19 of 19 Page ID #:1629 EXHIBIT B TO THE DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] EXHIBIT B TO THE DECLARATION OF NATHAN D. MEYER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 1 of 18 Page ID #:1630 EXHIBIT B Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 2 of 18 Page ID #:1631 Redline.docx THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, TREND TEXTILE, INC., ZHENYAN WEI, XINWEI XIE. Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr, Courtroom 4] THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S FIRST AMENDED ANSWER TO FIRST AMENDED THIRD PARTY COMPLAINT AND COUNTER- CLAIM JURY TRIAL DEMANDED Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 3 of 18 Page ID #:1632 Redline.docx 1 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table Third-Party Defendant Stantex Group Ltd. (“Stantex”) answers the allegations made by Third-Party Plaintiff Misyd Corporation (“Misyd”), in its First Amended Third-Party Complaint, filed December 14, 2016 (the “FATPCL”), as follows: THE PARTIES 1. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 1 and, accordingly, denies the same. 2. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 2 that “Stantex is a corporation of unknown form” and, accordingly, denies the same, and admits the remainder of the allegations in paragraph 2. 3. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 3 and, accordingly, denies the same. 4. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 4 and, accordingly, denies the same. 5. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 5 and, accordingly, denies the same. 6. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 6 and, accordingly, denies the same. 7. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 7 and, accordingly, denies the same. 8. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 8 and, accordingly, denies the same. JURISDICTION 9. To the extent the allegations in paragraph 9 purport to state a legal conclusion, no response thereto is required. To the extent a response is deemed required, Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 3 and, accordingly, denies the same. Deleted: 1 Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 4 of 18 Page ID #:1633 Redline.docx 2 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table 10. To the extent the allegations in paragraph 10 purport to state a legal conclusion, no response thereto is required. To the extent a response is deemed required. 11. Stantex denies allegations in paragraph 11. 12. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 12 and, accordingly, denies the same. 13. To the extent the allegations in paragraph 13 purport to state a legal conclusion, no response thereto is required, Stantex denies the allegations in paragraph 13. ALTER EGO ALLEGATIONS 14. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 14 and, accordingly, denies the same. 15. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 15 and, accordingly, denies the same. 16. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 16 and, accordingly, denies the same. FACTUAL BACKGROUND 17. Stantex denies the allegations in paragraph 17, except admits that Stantex is a manufacturer or supplier of fabrics. 18. Stantex denies the allegations in paragraph 18. 19. Stantex denies the allegations in paragraph 19. 20. Stantex denies the allegations in paragraph 20, except admits that Misyd placed several orders for fabric from Stantex. 21. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 21 and, accordingly, denies the same. 22. Stantex lacks knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 22 and, accordingly, denies the same. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 5 of 18 Page ID #:1634 Redline.docx 3 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table FIRST CLAIM FOR RELIEF: EXPRESS INDEMNITY 23. Stantex denies the allegations in paragraph 23, except lacks knowledge or information sufficient to form a belief as to the truth of the allegation that “the present action arises from fabric that Stantex sold to Misyd” and, accordingly, denies the same. 24. Stantex denies the allegations in paragraph 24. SECOND CLAIM FOR RELIEF: EQUITABLE INDEMNITY 25. Stantex denies the allegations in paragraph 25. 26. Stantex denies the allegations in paragraph 26. 27. Stantex denies the allegations in paragraph 27. THIRD CLAIM FOR RELIEF: CONTRIBUTION 28. Stantex denies the allegations in paragraph 28. 29. Stantex denies the allegations in paragraph 29. AFFIRMATIVE AND OTHER DEFENSES Stantex asserts the following affirmative and other defenses in response to Misyd’s allegations in the FATPCL, undertaking the burden of proof only as to those defenses deemed affirmative defenses by law regardless of how such defenses are denominated herein. In addition to the defenses and affirmative defenses described below, Stantex specifically reserves all rights to allege additional defenses and affirmative defenses that become known through the course of discovery. First Defense 30. The FATPCL is barred on the ground that the Court lacks personal jurisdiction over Stantex. Second Defense 31. The FATPCL, in whole or in part, fails to state a claim upon which relief can be granted. Deleted: 2 Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 6 of 18 Page ID #:1635 Redline.docx 4 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table Third Defense 32. Misyd 's claims agains Stantex arose out of Stantex’s compliance with specifications Misyd provided to Stantex. Therefore, the TPCL, as well as each and every claim for relief therein, is barred under U.C.C. §2-312 and Cal. Com. Code §2312. Fourth Defense 33. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because any such alleged contract lacked consideration. Fifth Defense 34. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because any such alleged contract was illusory and lacked consideration. Sixth Defense 35. The FATPCL, as well as each and every claim for relief therein, is barred or limited by Cal. Civ. Code § 2778(3). Seventh Defense 36. The FATPCL, as well as each and every claim for relief therein, is barred on the ground that no contract was formed because Stantex never explicitly or through its actions accepted the alleged contract or the terms thereof. Eighth Defense 37. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground that Misyd obtained Stantex’s consent to the alleged contract or transaction through fraud, deceit, or misrepresentation and, as a result, the alleged contract is invalid and unenforceable. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 7 of 18 Page ID #:1636 Redline.docx 5 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table Ninth Defense 38. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground that the alleged contract is a contract of adhesion and, therefore, invalid and unenforceable. Tenth Defense 39. Stantex denies that it consented to the terms of the alleged contract, but to the extent that it may be found that Stantex did consent to the terms of the alleged contract, the TPCL, as well as each and every claim for relief therein, is barred on the ground that the alleged contract, or relevant provision thereof, is unconscionable and, therefore, invalid and unenforceable. Eleventh Defense 40. Stantex denies that it consented to the terms of the alleged contract, but the extent that it may be found that Stantex did consent to the terms of the alleged contract, the FATPCL, as well as each and every claim for relief therein, is barred on the ground and to the extent that the alleged contract, or relevant provision thereof, is illegal and, therefore, invalid and unenforceable. Twelfth Defense 41. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine or unclean hands. Thirteenth Defense 42. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of scienti et volenti nonfat injuria. Fourteenth Defense 43. Misyd is barred from recovering on some or all of the purported claims for relief on the ground that Misyd breached the implied covenant of good faith and fair dealing. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 8 of 18 Page ID #:1637 Redline.docx 6 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table Fifteenth Defense 44. The FATPCL, as well as each and every claim for relief therein, is barred on the ground of the doctrine of reasonable expectations. Sixteenth Defense 45. Stantex could not have breached any alleged contract, agreement or warranty against infringement to Misyd on the ground that any products Stantex delivered to Misyd which are alleged to infringe any copyright allegedly owned by Design Collection Inc. were delivered prior to issuance of any such copyright. Seventeenth Defense 46. Stantex denies that the alleged contract was formed and is valid, but to the extent that it may be found to be formed and vaild, Misyd’s recovery is barred under the alleged contract on the ground that Misyd and/or its agents made performance impractical or impossible. Eighteenth Defense 47. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of waiver. Nineteenth Defense 48. The FATPCL, as well as each and every claim for relief therein, is barred by the doctrine of estoppel. Twentieth Defense 49. The FATPCL, as well as each and every claim for relief therein, is barred on ground that Stantex did not breach any duties or obligations to Misyd arising from common law, statute, contract, tort or otherwise, and fulfilled all duties and obligations, if any, to Misyd. Twenty-First Defense 50. Misyd’s recovery against Stantex, if any, must be reduced by the proportion of damages attributable to Misyd’s own acts, omissions, errors, Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 9 of 18 Page ID #:1638 Redline.docx 7 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table courses of conduct and failure to exercise reasonable care and diligence on its own behalf. Twenty-Second Defense 51. Misyd failed to take reasonable or adequate steps to mitigate, alter, reduce or otherwise diminish its alleged damages. Twenty-Third Defense 52. The FATPCL, as well as each and every claim for relief therein, is barred, or Misyd’s recovery thereon must be limited, on the ground that Misyd failed to tender its defense and seek indemnity from Stantex prior to filing the FATPCL. Twenty-Fourth Defense 53. Stantex has suffered damages by Misyd’s conduct and, therefore, has the right to offset any purported amounts due and owing to Misyd. Twenty-Fifth Defense 54. Stantex reserves the right to assert additional affirmative defenses and claims, if any, and to amend this Answer accordingly, as Misyd’s claims are clarified during the course of this litigation and through investigation and discovery. COUNTERCLAIMS Third-Party Defendant Stantex Group Ltd. (“Stantex”), by and through its undersigned counsel, files these counterclaims against MISYD CORPORATION (“Misyd”) and JOSEPH HANNASAB (“Hannasab”), and alleges on personal knowledge as to its own acts, and on information and belief as to all other matters, as follows: JURISDICTION & VENUE 1. This Court has subject matter jurisdiction over Stantex’s counterclaims under 28 U.S.C. §§ 1332 and 1367(a). Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 10 of 18 Page ID #:1639 Redline.docx 8 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table 2. Upon information and belief, Misyd and Hannasab reside in this district and, therefore, venue is proper pursuant to 28 U.S.C. §1391. 3. Misyd and Hannasab have previously appeared in this lawsuit, are represented by counsel, and have previously submitted to the personal jurisdiction of this Court. THE PARTIES 4. Stantex is a corporation formed under the laws of the People’s Republic of China having a principal place of business in Shanghai, China. 5. Upon information and belief, Misyd is corporation formed under the laws of the State of California, with a principal place of business in Los Angeles, California. 6. Hannasab is an individual who, upon information and belief, resides and is doing business, in Los Angeles, California, and is a principal of Misyd. CAUSES OF ACTION COUNT I (Breach of U.C.C. 2-312/Cal. Comm. Code § 2312) 7. Misyd furnished specifications to Stantex for the production and delivery of a certain fabric internally identified by Misyd as “CODE 8828” (the “Allegedly Infringing Fabric”). 8. Design Collections Inc.’s copyright infringement and other associated claims, and Misyd’s third-party claims against Stantex, in this action arise out of the Allegedly Infringing Fabric that Stantex produced and delivered in compliance with Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 11 of 18 Page ID #:1640 Redline.docx 9 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table the specifications Misyd furnished to Stantex. 9. At the time Misyd furnished said specifications to Stantex, Misyd knew that Design Collection Inc. owned and/or claimed rights in the visual material which was incorporated into the Allegedly Infringing Fabric that Stantex produced for and delivered to Misyd or its designated agent in compliance with Misyd’s furnished specifications. 10. By reason of the foregoing, Misyd has breached its implied warranty of title and against infringement arising under U.C.C §2-312 and Cal. Comm. Code §2312. 11. As a direct and proximate result of Misyd’s aforesaid breach, Stantex has suffered, and will continue to suffer, actual damages, including, without limitation, substantial attorneys’ fees and costs defending against Misyd’s claims. COUNT II (Breach of Contract) 12. On or about June 20, 2011, Stantex issued to Misyd Commercial Invoice number ST-RR700317 in the agreed amount of $46,933.60 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 700317 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit A. 13. On or about June 30, 2011, Stantex issued to Misyd Commercial Invoice number ST-MI700260 in the agreed amount of $38,418.00 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in Deleted: (Fraudulent Inducement) ... [1] Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 12 of 18 Page ID #:1641 Redline.docx 10 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table accordance with purchase order number 700260 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit A. 14. On or about February 17, 2014, Stantex issued to Misyd Commercial Invoice number ST-MI-262348 in the agreed amount of $3,285.79 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 262348 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit B. 15. On or about January 22, 2014, Stantex issued to Misyd Commercial Invoice number ST-MI-262347 in the agreed amount of $4,290.49 for goods Stantex manufactured for, and delivered to, Misyd or its designated agent under and in accordance with purchase order number 262348 issued by Misyd to Stantex. A true and correct copy of that invoice is attached hereto as Exhibit C. 16. The goods Stantex manufactured for and delivered to Misyd conformed to Misyd’s purchase orders. 17. Stantex duly performed all conditions on its part to be performed under its agreements with Misyd. 18. Misyd accepted the goods manufactured and delivered by Stantex under and in accordance with the above-referenced purchase orders and other agreements. 19. Misyd agreed to pay the aforementioned invoiced amounts totaling, in aggregate, $92,927.88. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 13 of 18 Page ID #:1642 Redline.docx 11 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table 20. Misyd failed to pay Stantex the aforementioned invoiced amounts for the goods Misyd accepted and retained. 21. In addition, Misyd, without Stantex’s authorization or permission, took a chargeback against Stantex in the net amount of $23,253.00 on the goods Stantex delivered to Misyd under purchase order number 700260, and invoiced under Commercial Invoice number ST-MI700260. A true and correct copy of that invoice is attached hereto as Exhibit A. 22. The outstanding balance due and owing to Stantex from Misyd on the goods Misyd accepted and retained is $116,180.88, exclusive of interest and incidental expenses. 23. By reason of the foregoing, Misyd breached its agreements with Stantex. 24. As a result of Misyd’s breach, Stantex has suffered damages in the amount of $116,180.88, exclusive of interest and incidental expenses. WHEREFORE, Stantex respectfully requests this Court enter judgment on Stantex’s Counterclaims, against Misyd and in favor of Stantex, as follows: 1. On Count I, all damages suffered by Stantex as a result of Misyd’s breach of U.C.C. 2-312, Cal. Comm. Code §2312, including, without limitation, all past, present and future attorneys’ fees, costs of defense, and any damages that might be awarded in another party’s favor against Stantex; 2. On Count II, the sum of $116,180.88, plus incidental damages and interest; 3. Attorneys’ fees and costs of suit, as provided under applicable law; Deleted: <#>On Count II, all damages suffered by Stantex as a result of Misyd’s fraudulent inducement, including, without limitation, all past, present and future attorneys’ fees and costs of defense incurred by Stantex, and any damages that might be awarded in another party’s favor against Stantex; ... [2] Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 14 of 18 Page ID #:1643 Redline.docx 12 THIRD-PARTY DEFENDANT STANTEX GROUP LTD.’S ANSWER AND AFFRIMATIVE DEFENSES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table 4. Interest, as provided under applicable law; and 5. Such other and further relief as this Court deems just and proper Stantex demands a jury trial on all issues so triable pursuant to Fed. R. Civ.P. 38 and the 7th Amendment to the United States Constitution. WHEREFORE, having fully answered Misyd’s Third Party Complaint, Stantex requests relief as follows: 1. Misyd takes nothing by this action; 2. Misyd’s Third Party Complaint be dismissed with prejudice; 3. Stantex be awarded its costs and attorney’s fees as provided under the law; and 4. Stantex recovers such other and further relief as this Court deems just and proper. DEMAND FOR JURY TRIAL Pursuant to Federal Rule of Civil Procedure 38(b), Stantex Group Ltd, hereby demands a jury trial on all issues so triable. DATED: December 16, 2016 RUSS, AUGUST & KABAT Larry C. Russ Nathan D. Meyer By: /s/ Nathan D. Meyer_____________ Nathan D. Meyer Attorneys for Third Party Defendant Stantex Group LTD. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 15 of 18 Page ID #:1644 1 CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U SS , A U G U ST & K A B A T Formatted Table CERTIFICATE OF SERVICE I certify that counsel of record who are deemed to have consented to electronic service are being served on January 6, 2017, with a copy of this document via the Court’s CM/ECF systems per Local Rule CV-5(a)(3). Any other counsel will be served by electronic mail, facsimile, overnight delivery and/or First Class Mail on this date. /s/ Nathan D. Meyer Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 16 of 18 Page ID #:1645 Page 9: [1] Deleted KeiAna Sanderlin 1/6/17 10:07:00 AM (Fraudulent Inducement) Stantex repeats, realleges and incorporates by reference each and every allegation set forth in paragraphs 1 through 11 of this Counterclaim, supra, as if fully set forth herein. Upon information and belief, Misyd and Hannasab made a knowingly false representation to Stantex when they failed to disclose that the swatch of fabric Misyd sent to Stantex for pricing (and upon which the Allegedly Infringing Fabric subsequently was produced in compliance with Misyd’s specifications) was comprised of, or was a substantially similar copy of, fabric Misyd had previously obtained from Design Collection Inc. Upon information and belief, Misyd and Hannasab made a knowingly false representation to Stantex when they failed to disclose that Design Collection Inc. was the owner of and/or claimed rights in the original visual material appearing on the swatch of fabric Misyd sent to Stantex for pricing, which visual material was incorporated into the Allegedly Infringing Fabric Stantex subsequently manufactured for, and delivered to, Misyd or its designated agent, in compliance with the specifications Misyd furnished to Stantex. Misyd and Hannasab made the aforesaid false representations, upon information and belief, with the intent to deceive Stantex and/or induce Stantex’s reliance. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 17 of 18 Page ID #:1646 Stantex justifiably relied on Misyd’s knowingly false representations. As a result of the foregoing, Stantex has suffered, and will continue to suffer, actual damages, including, without limitation, substantial attorneys’ fees and costs defending against Misyd’s claims. COUNT III Page 11: [2] Deleted KeiAna Sanderlin 1/6/17 10:07:00 AM On Count II, all damages suffered by Stantex as a result of Misyd’s fraudulent inducement, including, without limitation, all past, present and future attorneys’ fees and costs of defense incurred by Stantex, and any damages that might be awarded in another party’s favor against Stantex; On Count III 1. Case 2:14-cv-09735-AB-JC Document 197-4 Filed 01/06/17 Page 18 of 18 Page ID #:1647 DECLARATION OF BRETT A. NADLER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U S S , A U G U S T & K A B A T RUSS, AUGUST & KABAT Larry C. Russ, State Bar No. 082760 Nathan D. Meyer, State Bar No. 239850 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Telephone: (310) 826-7474 Facsimile: (310) 826-6991 Attorneys for Third Party Defendant Stantex Group LTD. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA DESIGN COLLECTION, INC., Plaintiff, vs. MISYD CORPORATION, et al., Defendants. MISYD CORPORATION, Third Party Plaintiff, v. STANTEX GROUP LTD, Third Party Defendant. Case No. 2:14-cv-09735 AB (JCx) [Assigned to The Honorable Andre Birotte Jr., Courtroom 4] DECLARATION OF BRETT A. NADLER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS Hearing Date: February 13, 2017 Time: 10:00 a.m. Place: 312 N. Spring St., Crtrm 4, 2nd Fl. Los Angeles, CA 90012 Original Complaint Filed: December 19, 2014 Case 2:14-cv-09735-AB-JC Document 197-5 Filed 01/06/17 Page 1 of 3 Page ID #:1648 1 DECLARATION OF BRETT A. NADLER IN SUPPORT OF STANTEX GROUP LTD.’S MOTION FOR RELIEF FROM ORDER NO. 161 AND FOR LEAVE TO FILE COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U S S , A U G U S T & K A B A T Declaration of Brett A. Nadler I, Brett A. Nadler, declare as follows: 1. I have personal knowledge of the facts set forth in this declaration and if called to testify, I could and would testify competently to their truth and accuracy. I am a member of Ballon Stoll Bader & Nadler, P.C. (“BSBN”), former counsel to Stantex Group Ltd. (“Stantex”). 2. I was counsel for Stantex when it filed its initial counterclaim against Misyd Corporation (“Misyd”) (Doc. 102). Shortly after filing, counsel for Misyd initiated a L.R. 7-3 meet-and-confer to discuss a contemplated motion to dismiss the counterclaim due to alleged pleading deficiencies. 3. Although there was no letter laying out the alleged deficiencies, during a meet-and-confer held on January 22, 2016, Misyd’s attorney orally raised two purported deficiencies, namely: (1) a copy of the written contracts supporting Stantex’s breach of contract claim were not attached to the counterclaim; and (2) Stantex’s counterclaim for fraudulent inducement was pled with insufficient particularity to satisfy Rule 9. 4. Shortly after the meet-and-confer, BSBN filed a motion to withdraw as counsel (Doc. 114). In order to address certain timing and other issues created by Misyd’s meet-and-confer and the filing of BSBN’s motion to be relieved as counsel, the parties entered into a stipulation (Doc. 117) (the “Stipulation”) “to ensure that Stantex had an adequate opportunity to retain substitute counsel and either file an amended Counterclaim or oppose a motion to dismiss.” 5. As memorialized in the Stipulation, the parties negotiated that Misyd’s time within which to answer or otherwise respond to Stantex’s counterclaim would be stayed pending Stantex’s retention of new counsel, and if Stantex did not get new counsel within the specified 30-day period, Stantex’s counterclaim could “be dismissed without prejudice.” Stipulation (Doc. 117) at ¶ 2 (emphasis added). A Case 2:14-cv-09735-AB-JC Document 197-5 Filed 01/06/17 Page 2 of 3 Page ID #:1649 2 OPPOSITION TO THE APPLICATION FOR DEFAULT JUDGMENT BY COURT BY MISYD CORPORATION AGAINST STANTEX GROUP LTD. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 R U S S , A U G U S T & K A B A T dismissal “without prejudice,” as opposed to “with prejudice,” was a negotiated term. 6. Further evidencing this was the parties’ understanding, agreement and intent, the Stipulation provides: “Nothing in this Stipulation shall prejudice, waive or impair any right, remedy, argument or defense that Stantex, Misyd or Mr. Hanasab may have in this or any other or future legal proceedings.” See Stipulation (Doc. 117) at ¶ 4. I declare under penalty of perjury pursuant to the laws of the State of California that the foregoing is true and correct. Executed this 6th day of January, 2017 at New York, New York. __________________ Brett A. Nadler Case 2:14-cv-09735-AB-JC Document 197-5 Filed 01/06/17 Page 3 of 3 Page ID #:1650