In process removing Abd comments.
This document is used to collate factual claims, based on responses by Rossi and the 3rd party defendants, allowing more efficient assessment, to distinguish evidenced fact from controversial conclusions.
While compiling this, Abd add comments; these have been removed here, the draft before removal is at RvD: Study of 207:IH SOMF supporting MSJ with Abd comments. There is a goal on CFC to distinguish factual pages from posts (which are generally opinion with no requirement for neutrality) and opinion and discussion pages. Discussion is presently in order for all pages, as comments below, but CFC may move to organize this more tightly.
This document is not complete, there is copied material at the end where links to evidence have not been added. The Motions for Summary Judgement were all denied (D.E. 302) without any examination of the evidence and arguments.
Rossi responses are from 0238.0_Rossi_Resp_to_203_207_IH_-MSJ.pdf
Third-party defendants’ responses are from 0243.0 _3pDef_Opposition_to_IH_MSJ 203 & 207 “STATEMENT OF MATERIAL FACTS IN OPPOSITION 
 The relevant excerpts of the deposition testimony cited herein have either been attached as an exhibit to the Third-Party Defendants Combined Motion for Partial Summary Judgment (ECF No. .242), Counter-Plaintiffs’ Statement of Material Facts (ECF No. 207) or to this Motion as a supplemental exhibit (Supp. Ex.) in the following manner: Rossi Depo. Tr. (ECF No. 207-2); Darden Depo. Tr. (ECF No. 207-9, Supp. Ex. A); Penon Depo. Tr. (ECF No. 207-10, Supp. Ex. H); Leonardo Depo. Tr. (ECF No. 207-17); IH Depo. Tr. (ECF No. 207-19, Supp. Ex. B); Vaughn Depo. Tr. (ECF No. 207-21, Supp. Ex. F); JM Products Depo. Tr. (ECF No. 207-36); Johnson Depo. Tr. (ECF No. 207-37); Bass Depo. Tr. (ECF No. 207-38 [sic, this is JMC incorporation papers], Supp. Ex. E [243-5]); Stokes Depo. Tr. (ECF No. 207-52); Murray Depo. Tr. (ECF No. 207-57, Supp. Ex. G); Dameron Depo. Tr. (ECF No. 207-60, Supp. Ex. I); West Depo. Tr. (ECF No. 207-61, Supp. Ex. D); Mazzarino Depo. Tr. (Supp. Ex. C).
IH Reply to the Oppositions has not been added yet.
DEFENDANTS’/COUNTERPLAINTIFFS’ STATEMENT OF MATERIAL FACTS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT
DEFENDANTS’/COUNTERPLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND MEMORANDUM OF LAW IN SUPPORT THEREOF
This copy is being annotated with links to cited documents. Comments not a part of the document will be in brackets if very brief (such as “[sic]”) or in indented italics. It is intended that this document be neutral, separate pages may be created and linked at the end for opinion and assessments. Please note any errors in Comments at the end of this page.
Each numbered paragraph in this document has an anchor numbered as the paragraph. For example, paragraph 107 may be linked by appending “#107” to the URL of this page. Using the present URL:
DEFENDANTS’ STATEMENT OF MATERIAL FACTS IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT
Defendants Thomas Darden (“Darden”), John T. Vaughn (“Vaughn”), and Cherokee
Investment Partners, LLC (“Cherokee”) (collectively, “Defendants”) and Defendant-CounterPlaintiffs
Industrial Heat, LLC (“Industrial Heat”) and IPH International, B.V. (“IPH”), in
accordance with Rule 56 of the Federal Rules of Civil Procedure and Local Rule 56.1, submit the
following statement of material facts as to which they contend there does not exist a genuine
issue to be tried:
1. On October 26, 2012, Industrial Heat, Leonardo Corporation, a New Hampshire Corporation “Leonardo NH”), Plaintiff Andrea Rossi (“Rossi”), and AmpEnergo, Inc. (“AEG”) executed and entered into a License Agreement. See Ex. 1, a true and correct copy of the License Agreement.
2. Plaintiff Leonardo Corporation, a Florida corporation (“Leonardo FL”) did not execute and was not a party to the License Agreement. See id.
 For the sake of simplicity, a reference to “Leonardo” means Leonardo FL and/or Leonardo NH.
2. Disputed. Plaintiff Leonardo Corporation, a Florida corporation, executed and is party to the License Agreement by virtue of its merger with the New Hampshire incarnation of Leonardo Corporation. See Supp. Ex. 43 (Rossi_00011827-44).
3. There are no provisions in the License Agreement requiring Industrial Heat to keep confidential the E-Cat IP (as that term is defined in the License Agreement). See id.
3. Disputed. Section 16.4 of the License Agreement requires IH and its assignee, IPH, by virtue of the Assignment and Assumption of License Agreement, to keep confidential the E-Cat IP as that term is defined in the License Agreement. See Ex. 4 (License Agreement).
4. On or about October 26, 2012, Industrial Heat made the initial payment of $1.5 million to Leonardo NH as specified in the Section 3.2(a) of the License Agreement. See Compl. ¶ 47; 4th Am. AACT at 8.
5. The 1 MW Plant was to involve at least 54 E-Cat reactors for the 24-hour Validation Test contemplated in Section 4 of the License Agreement. See Rossi Dep. (excerpts of which are attached hereto as Composite Ex. 2) 151:1-2.
5. Disputed. The License Agreement does not provide that at least 54 E-Cat reactors would be
used for the Validation Test, and Dr. Rossi did not testify that at least 54 reactors were required to be tested. See Ex. 4; Defs.’ Ex. 2 at 151:1-2.
On or about April 24, 2013, the parties mutually agreed in writing to test 30 reactors for purposes of the Validation Test. See Supp. Ex. 44 (IH-00098392-96). The First Amendment to the License Agreement provided for testing of 30 E-Cat reactors over a period of 24 hours. See Ex. 5 (First Amendment, Ex. A). Defendant Darden represented to Dr. Rossi that the amount of power produced, rather than the number of reactors tested, mattered. See Supp. Ex. 45 at 149:18-150:4. In fact, Defendants admitted that testing fewer units would make it more difficult for Plaintiffs to achieve the necessary results to entitle to Plaintiffs to receive payment under the License Agreement. See Supp. Ex. 69 (IH-00133919). The ERV certified the Validation Test results pursuant to amended section 4 of the License Agreement. See Ex. 12. Defendants did not object to the ERV’s report. See Ex. 3 at 152:21-154:25; Ex. 14, at 257:15-20; 340:4-12. On June 9, 2013, Defendants tendered the $10 million payment as contemplated by section 3.2(b) of the License Agreement. See, e.g., Countercl. ¶¶ 58, 94.
6. On April 23, 2013, Rossi represented to Industrial Heat that: (a) he had met with Health Office of the Province of Ferrara; (b) that the Health Office had to authorize the 24-hour Validation Test contemplated in Section 4 of the License Agreement; and (c) that, because of the requirements of Italian law, he planned to test only 25% of the number of reactors contemplated in the License Agreement. See Ex. 2 at 151:1-2; Ex. 3 (4th Am. Answer, Additional Defenses, Countercls., & Third-Party Claims (“4th Am. AACT”) Ex. 9).
6. Disputed. In April 2013, Dr. Rossi met with the Regional Agency for the Protection of the Environment of Ferrara to ensure that the Validation Test could take place without official interruption. See Supp. Ex. 45 at 145:19-150:12. The Agency informed Dr. Rossi that he was required to obtain authorization prior to conducting the test, but that if neighboring residents would agree to the test the Agency would not interfere. Id. at 148:20-149:11.
In an effort to minimize noise disturbance and ensure uninterrupted operation of the Validation Test, Dr. Rossi proposed to test 30 reactors. See id. at 145:19- 150:12; Supp. Ex. 44.
As noted in paragraph 5 supra, Defendants did not object to this arrangement. At no time did Dr. Rossi interpret, claim to have interpreted, or claim direct knowledge of Italian law; rather, Dr. Rossi communicated his understanding of what the Regional Agency told him. See Supp. Ex. 46 ¶¶ 7-8. Defendant IPH, the party bringing this claim, has no knowledge whatsoever about any representations that Dr. Rossi purportedly made on April 23, 2013 with respect to conversations with Italian agencies or Italian law. See Supp. Ex. 47 at 13:21-16:1. Defendant Vaughn testified that he had no evidence that Dr. Rossi did not meet with the Ferrara Health Office. See Supp. Ex. 48 at 261:21– 262:9.
7. On April 24, 2013, Rossi represented to Industrial Heat that Italian law would allow the Validation Test to be done using 30 reactors. See Ex. 4 ([IH-00098392-00098396]).
7. Disputed. At no time did Dr. Rossi interpret, claim to have interpreted, or claim direct knowledge of Italian law; rather, Dr. Rossi communicated his understanding of what the Regional Agency told him. See Supp. Ex. 46 ¶¶ 7-8. Dr. Rossi made no reference to Italian law in document IH- 00098392-96. See Defs.’ Ex. 4. Dr. Rossi proposed testing 30 reactors in an effort to minimize noise pollution to neighbors and ensure that the Validation Test would not be interrupted by Ferrara authorities. See Supp. Ex. 45 at 145:19-150:12; Defs.’ Ex. 4.
8. On or about April 29, 2013, Industrial Heat, Leonardo NH, Rossi, and AEG executed and entered into a First Amendment to the License Agreement (“First Amendment”). See Ex. 5, a true and correct copy of the First Amendment.
9. Leonardo FL was not a party to the First Amendment. See id.
9. Disputed. Leonardo Corporation Florida is a party to the First Amendment by virtue of the merger of the New Hampshire and Florida incarnations of the company. See Supp. Ex. 43.
10. Rossi is not the owner of Leonardo FL. See Ex. 2 at 38:21-39:17.
10. Disputed. Dr. Rossi is the beneficial owner of Leonardo Corporation Florida. See Supp. Ex. 45 at 50:15-23.
11. Neither Industrial Heat nor IPH ever consented to any assignment by Leonardo NH of Leonardo NH’s rights under the License Agreement or First Amendment to Leonardo FL. See Darden Decl. (attached hereto as Ex. 6) at ¶ 8.
11. Disputed. Leonardo Corporation of New Hampshire merged into Leonardo Corporation of
Florida such that as a matter of law there is no assignment. See Supp. Ex. 43.
12. On or about April 29, 2013, Industrial Heat and IPH entered an Assignment and Assumption of License Agreement (“Assignment and Agreement”). See Ex. 7, a true and correct copy of the Assignment and Assumption.
13. Rossi and Leonardo NH consented to the Assignment and Agreement. See Ex. 5 § 1;
13. Disputed. Plaintiffs Rossi and Leonardo Corporation executed the Assignment and Assumption of License Agreement entered into between IH and IPH based on IH’s representation that IPH was a wholly owned subsidiary of IH. See Supp. Ex. 49 (IH-00015708). In addition, Defendants assured Plaintiffs that IPH, like IH, was owned under the Cherokee umbrella and that IPH was Cherokee Fund. See Supp. Ex. 45 at 156:16-157:13.
14. On or about April 29, 2013, Leonardo NH and Rossi executed a Certificate certifying to IPH that the representations and warranties in the License Agreement, as amended by the First Amendment, remained true and correct. See Ex. 8, a true and correct copy of the Certificate.
15. Immediately prior to commencing the Validation Test, Rossi claimed that Italian law was even more restrictive, and only would permit using 18 E-Cat reactors for the test. See Ex. 6 at ¶ 9.
15. Disputed. At no time did Dr. Rossi interpret, claim to have interpreted, or claim direct knowledge of Italian law; rather, Dr. Rossi communicated his understanding of what the Regional Agency for the Protection of the Environment of Ferrara told him. See Supp. Ex. 46 ¶¶ 7-8. The Agency informed Dr. Rossi that: “in Italy we do not have authorizations for experiments. There is not something that is called an authorization for 36 hours. You are either authorized or you are not.” Defs.’ Ex. 2 at 148:12-25. A restriction on the number of reactors was necessary to obtaining agreement from neighboring residents, as the number of reactors affected the noise generated during the Validation Tests. See Supp. Ex. 46 ¶¶ 3-5. Based upon the Ferrara Agency’s representation, Dr. Rossi determined that an appropriate level would be the number of reactors actually tested. See Supp. Ex. 46 ¶ 6. Defendants consented to testing 18 reactors and paid the $10 million payment under the License Agreement. See Countercl. ¶¶ 58, 94. See facts in ¶ 6, supra.
16. In fact, the Ferrara Health Office told Rossi that he could proceed with the Validation Test without any restriction on the number of reactors to be tested. See Ex. 2 at 148:12-149:7, 149:19-23;
16. Disputed. In April 2013, the Regional Agency for the Protection of the Environment of Ferrara informed Dr. Rossi that he was required to obtain authorization prior to conducting the test, but that if neighboring residents would agree to the test the Agency would not interfere. See Supp. Ex. 45 at 148:20-149:11. A restriction on the number of reactors was necessary to obtaining agreement from neighboring residents, as the number of reactors affected the noise generated during the Validation Tests. See Supp. Ex. 46 ¶¶ 4-6. Defendant IPH, the party bringing this claim, has no knowledge whatsoever about any representations that Dr. Rossi purportedly made on April 23, 2013 with respect to conversations with Italian agencies or Italian law. See Supp. Ex. 47 at 13:21-16:1. Defendant Vaughn testified that he had no evidence that Dr. Rossi did not meet with the Ferrara Health Office. See Supp. Ex. 48 at 261:21-262:9.
17. Industrial Heat relied on Rossi’s false representations regarding Italian law in entering into the First Amendment. See Ex. 6 at ¶ 7; Darden Dep. (excerpts of which are attached hereto as Composite Ex. 9) 200:5-15.
17. Disputed. Dr. Rossi made no representations to Defendants regarding Italian law. See Supp. Ex. 46 ¶¶ 7-8. Rather, Rossi determined the number of units to be tested based upon his discussions with the Regional Agency for the Protection of the Environment of Ferrara, as indicated supra. See id. ¶¶ 2-6.
18. During the purported Validation Test that commenced on April 30, 2013, 18 ECat reactors were operated as “Unit A” (as “Unit A” is defined in the First Amendment). See Penon Dep. (excerpts of which are attached hereto as Composite Ex. 10) 149:25-151:12, 154:6-13; Ex. 11 (Penon Dep. Ex. 8).
19. The purported Validation Test that commenced on April 30, 2013 and concluded on May 1, 2013 was not performed for a duration of twenty-four consecutive hours (but rather for only 23.5 hours). See id.
19. Disputed. Defendants and their associates were present at all material times during the Validation Test, and made no objections to the actual test and presented no objections afterward. See Supp. Ex. 48 at 86:17-22; Supp. Ex. 68 at 151:13-16. After the ERV produced a final reporting clearly showing the test parameters and results, Defendants tendered the $10 million payment in accordance with the License Agreement. See Countercl. ¶¶ 56, 58; See also Ex. 9 at 97:14-22.
20. The purported Validation Test that commenced on April 30, 2013 did not “measure the flow of the heated fluid and the Delta T between the temperature of the fluid before and after the E-Cat reaction,” as specified in the First Amendment. See id.
20. Disputed. The mutually agreed to ERV, Fabio Penon, performed all measurements required by the mutually agreed to Validation Protocol. See Ex. 3 at 115:4-25, 121:7– 11; Exs. 11, 12. After the ERV produced a final reporting clearly showing the test parameters and results, Defendants tendered the $10 million payment in accordance with the License Agreement. See Countercl. ¶¶ 56, 58; See also Ex. 9 at 97:14-22.
21. Industrial Heat paid $10 million to Leonardo on or about May 2, 2013. See Compl. ¶ 58; 4th Am. AACT at 10. [this is pdf page 11, document numbered page 10.]
21. Disputed. On June 9, 2013, after Validation, IH released, through an escrow agent, the $10 million payment in satisfaction of section 3.2(b) of the License Agreement. See Countercl. ¶¶ 58, 94; Ex. 9 at 97:19-22; Ex. 3 at 142:12-16; Ex. 13 at 142:6-16; Ex. 17 at 102:24-103:22.
22. Industrial Heat also paid $3,219,950 to AEG on or about August 12, 2013. See AEG Dep. (excerpts of which are attached hereto as Composite Ex. 12) 190:23-191:8; Ex. 13 ([AE000255-000256]).
22. Disputed. Defendants’ citation reads that it is AEG’s “understanding that the validation testing in Italy with Penon that resulted in the $10 or $15 million payment was in April/May of 2013.” See Defs.’ Ex. 12 at 190:23-191:8. To the extent that Industrial Heat paid AEG any money, Plaintiffs are not in a position to confirm or deny such information.
23. In August 2013, the E-Cat Unit was delivered to Industrial Heat at its facility in North Carolina. See Compl. ¶ 59; 4th Am. AACT at 10. [¶ 59] ( The “E-Cat Unit” is defined in the License Agreement as the “Plant” and is sometimes referred to as the “1 MW E-Cat Unit” or the “1 MW Plant.”
24. Rossi and Leonardo did not commence a “Guaranteed Performance Test” in 2013 or 2014. In fact, they did [not] allegedly commence such a test until 2015. See Compl. ¶ 66; Pls.’ Resp. & Objections to Industrial Heat’s 1st Req. for Admissions (attached hereto as Ex. 14) at Resp. Nos. 36 & 37.
24. Disputed. Plaintiffs did not own or control the 1MW Plant after October 2012; rather, Defendant IH owned the Plant in 2013. See Countercl. ¶ 4; Ex. 3 at 105:9-15; Ex. 9 at 115:25-116:4; Ex. 4 at § 3.2(a). Defendants admitted that they could have started the 1MW Plant for testing at any time. See Supp. Ex. 50 at 116:5-17.
Defendants prevented Plaintiffs from commencing the Guaranteed Performance Test in 2013 and 2014 by representing to Plaintiffs on numerous occasions that the parties needed authorization from a North Carolina Health Department but were unable to obtain such authorization. See Supp. Ex. 45 at 192:25-197:11.
In June 2014, Defendants sought and obtained a report from Stephen Browne, a nuclear radiation compliance consultant, on whether the E-Cat technology would be subject to North Carolina State or federal licensing requirements or safety regulations to operate. See Supp. Ex. 51 (IH-00003735); see also Supp. Ex. 52 at 211:18-213:10.
In addition, in June 2014,when Plaintiffs brought to Defendants’ attention that Defendants had not – since 2013 – indicated where to install and operate the 1MW Plant since 2013, Defendant Darden responded that “ideally we would not make a decision about this new location for a while longer” and that the “decision [could] wait a while.” See Supp. Ex. 53 (IH-00117296-97). Moreover, Defendants felt that Plaintiffs’ attention to the Lugano test was more important than tests with Defendants. See Supp. Ex. 54 (IH-00020901-05); Supp. Ex. 52 at 133:6-18).
25. Rossi and Leonardo did not complete any “Guaranteed Performance Test” within the time period set forth in Section 5 of the License Agreement. See id.; Ex. 1 § 5. [link is to original filing, not the much larger file provided as Exhibit 1]
25. Disputed. The parties agreed in writing and through performance that the time for the GPT
would be extended. See Ex. 7.
Ex. 7 is the Second Amendment. Rossi refers to “parties,” but there were four parties to the Agreement: Leonardo (NH), Rossi, AEG, and IH. AEG deliberately did not agree, did not sign. The Leonardo signature was also missing — see the signature page –, and the Amendment was undated. Ex. 7 is not evidence of an agreement in writing. That document was a proposed agreement that failed, and a separate agreement, not requiring AEG, was not contemplated or mentioned (until recent filings in this case).
However, Plaintiffs completed the Guaranteed Performance Test within the time period set forth in Section 5 of the License Agreement as amended by the Second Amendment and subsequent agreements between the parties.
The License Agreement was not amended by that proposal. This is obvious. Other agreements may have arisen, and estoppel may be possible (though I doubt it), but claiming that the incomplete Second Amendment is in effect is mendacious. Rossi knew AEG had not signed. He has stated that he thought that this only meant that the Second Amendment did not apply to them, but it was one piece, and it also required that all parties agree in writing to the start of a GPT. If the desire was to replace that failed Second Amendment with some new side-agreement between IH and Rossi, this wasn’t done. The only new agreement was the Term Sheet.
See Ex. 7; Ex. 22; Ex. 3 at 189:1-18, 214:21-215:1, 215:20-216:5. As of September 2014, Defendants represented to potential competitors at Texas Instruments that Dr. Rossi would be taking the 1MW Plant to Florida to “begin operating it continuously (this is a requirement of our contract with him).” See Supp. Ex. 70 at IH-00107402. At no point in time prior to November 2015 did Defendants indicate that the time for performance had expired. See Ex. 1 ¶ 26; Ex. 3 at 202:17-203:4 [sic, duplicate reference ->], 186:9-17, 202:17-203:4, 203:22-204:9; Ex. 17 at 140:6– 15.
Again, the dispute is not with the fact in paragraph 25.
26. In October 2013, Industrial Heat and Rossi executed a proposed Second Amendment to the License Agreement (the “Proposed Second Amendment”), which is dated “October __, 2013.” See Ex. 15, a true and correct copy of the Proposed Second Amendment.
26. Disputed. In October 2013, Defendant IH, Rossi, and Leonardo executed the Second Amendment to the License Agreement, which extended the time for the commencement of the GPT. See Ex. 7; Defs.’ Ex. 15. Dr. Rossi signed the Second Amendment on behalf of himself and Leonardo Corporation. See Supp. Ex. 45 at 180:6-22.
Ex. 7 is just another copy of the amendment, Def’s exhibit 15 was already cited, and the signature for Leonardo is missing on all produced copies. There is no dispute with the stated fact. Rossi’s deposition (Ex. 45) simply confirms his confusion. Leonardo Corporation is a party, and all parties must agree in writing. While this could be a remediable defect, it remains as a defect, and a glaring one (this was noticed before IH had responded, it was apparent from the Complaint exhibits.) I assumed this was merely a characteristic of Rossi’s copy. No. The Leonardo lacuna was accidental, obviously but the Ampenergo lacuna was deliberate and fatal to that amendment. The missing Leonardo signature could have caused a problem later. Suppose Rossi decided he didn’t like the amendment, he could claim that he needed to consult with his corporate advisers, and they rejected it. What is actually shown by that missing signature is sloppiness, lack of concern for actual documentary fact.
27. AEG did not sign the Proposed Second Amendment. See id. AEG, which stood to earn money if a “Guaranteed Performance Test” was successful, understood that their considered refusal to sign the Proposed Second Amendment rendered the document invalid. See Ex. 12 at 79:2-18, 87:2-11; Ex. 16 ([IH-00089736-00089743]).
This is the doozy, a legal term that means something like “Wabbit.” We knew that the Amenergo signature was missing, but only the more extensive evidence revealed later showed that this was not some mere oversight. Ampenergo was certainly an interested party, with the right to approve or withhold approval of amendments (and then, later, if the Second Amendment were approved, to approve or withhold approval of the start of the GPT). From the likelihood that, if that written approval existed, it would have been asserted by Rossi ab initio, I assumed that Rossi never requested such written approval, a fatal defect. But it was worse. Ampenergo had deliberately refused to sign, and Rossi knew it. Watch him flop around on the deck:
27. Disputed. AEG’s corporate representative testified that he could not remember whether AEG executed the Second Amendment. See Supp. Ex. 55 at 78:22-79:18.
The Rossi lawyer takes advantage of a momentary confusion, because the next answer shows that Cassarino is fully aware of the missing signature, because it was discussed with Rossi.
AEG also testified that that they understood that by not signing the Second Amendment, the amendment would not be binding upon them. See Defs.’ Ex. 12 at 79:2-18, 87:2-11; Defs.’ Ex. 16 (IH-00089736-43).
Rossi omits that another reason was given at Defs’ Ex. 12 at 80-2:
… we felt that it wasn’t in his best interest or our best interest to sign this.
AEG testified that it did not favor the Second Amendment because AEG believed that the terms thereof would have a negative impact on their fee arrangement with Defendants. See Defs.’ Ex. 12 at 79:6-18.
Perhaps Rossi counsel believes that evidence looks stronger if cited five times from various copies. The reasons (there was more than one) are actually irrelevant. They did not sign the proposed amendment, so it was invalid. The parties could continue to cooperate toward the common purpose, and AEG trusted that. IH and Rossi could have drafted a different agreement, between the two of them. They were not prohibited from making separate agreements (such as the Term Sheet). But the amendment as drafted, including AEG, failed. End of question, and probably the end of the Rossi claims in the lawsuit.
A distinct agreement could have been made with Ampenergo, providing for payment to Ampenergo under mutually agreed conditions (otherwise the separate agreement between Rossi and Leonardo could harm AEG). These are all obvious routes to take. But Rossi, by this time desperate for a “test,” yet unwilling to do such a test under IH supervision, insisted on his fake customer, pretending it was Johnson Matthey, with his attorney (President of Leonardo Florida) creating a faux GPT entirely under his control, clear fraud, now proven, beyond anything Rossi had done before.
This is all so obvious, as a legal matter, that Summary Judgment is very likely. There was no GPT, and the rest is moot. It doesn’t matter if the reactors performed or not, except to the parties, who will do what they choose with the information they have. AEG is an investor in IH, and seems happy. Rossi will still be facing the counterclaims, and I will be examining those closely. Settlement becomes more likely, through Rossi might decide to hold out until the very bitter end.
Rossi’s core defense seems to be that “they didn’t tell me.” But it is not clear whether or not Rossi was told, or what he was told, because, in context, IH may have assumed he knew (the fact was obvious) and there were verbal exchanges where the details were not remembered. Rossi’s attorney fishes for a denial that there was a statement that the $89 million payment could no longer be earned, but that was not IH’s position, which was clearly that a verifiably independent test, showing significant performance, would allow them to raise the money, and to pay Rossi (and AEG), voluntarily, but in accordance with the substance of the Agreement. That would have been ordinary business.
Rossi tossed a monkey wrench into the heart of this possibility by creating a fraudulent test with a fake customer, and many other conditions that would not foster IH confidence, and that confidence was necessary. When Rossi refused access to Murray, the IH engineer, in July 2015, it was all over but the shouting. Rossi, instead, believed that the world ran on how he interpreted things, and that IH was obligated to pay if there was this or that condition resembling the GPT. He tried to force them to pay, and trying to force business partners to do anything is always a bad idea. They will often dig in their heels, even if you are right as rain.
28. Leonardo NH did not sign the Proposed Second Amendment. See Ex. 15
Yes. The proposed Amendment was explicity with the New Hampshire corporation as a party, same as the Agreement and 1st Amendment. Agreements with corporations would generally include the state of incorporation, because there can be corporations in various states with the same name. States will not allow this as to active corporations. This is all basic corporation law and practice, very simple. Clear and simple, though, is not Rossi’s Way.
28. Disputed. Dr. Rossi signed the Second Amendment on behalf of himself and Leonardo Corporation. See Supp. Ex. 45 at 180:6-22).
Ex. 45, a Rossi deposition, as cited, only shows Rossi confusion. He signed for himself and speculates that this counted for both himself and Leonardo, but he correctly signed the Agreement and First Amendment. This was an obvious oversight, and had the parties considered the Second Amendment important, it would have been pointed out to him and he would presumably have signed. However, that did not happen. This missing signature was an easily remediable defect, trivial, in fact. In a face-to-face meeting, the document would have been handed back to him with a request that he also sign for Leonardo. That correction never occurred, and it is obvious why: it was moot, because AEG deliberately refused to sign, and IH and Rossi did not then enter into a separate agreement, as would have been possible.
29. Leonardo FL did not sign the Proposed Second Amendment. See id.
LC FL existed from 2010 on. It was not a party to the Agreement or the Amendments. Rossi asserts his own identity with his corporations, without regard to legal details, but then attempts to assert that JMP was independent, even if entirely controlled by him, with only figureheads as owner and president, i.e., his friends, the beneficiary of a trust known only to Johnson, and Johnson. So Rossi uses corporations to hide. In spite of the buzz on Planet Rossi, IH was private, but hid nothing. IHHI was formed in 2015 to assume full ownership of IH, and that is all reasonably open and clear. There is no flim-flam, there is an openly declared and very risky investment possibility for shareholders, with all the normal restrictions to prevent people from tossing their life savings in.
29. Disputed. See disputed facts in ¶ 28, supra.
It is absolutely obvious that LC FL did not sign. Nothing in ¶ 28 negates that. Rossi is playing a game of “Yes, but.” (Or possibly, No, because,”) when the reasons given do not negate the asserted clear fact. LC FL did not sign. Period. What that means would be something else to discuss, but without accepting the clear facts, there is no accepted factual basis. Because the fact here is so clear, by arguing against it Rossi is setting up what I call “judicial inertia.” A judge will, properly, not reject a claim because the judge has just rejected dozens of claims, but, in actual practice. it can happen, because judges are human, not robots.
I am not familiar with actual practice in replies like this. Perhaps “disputed” is used if some clarifying additional fact is to be added. Were I an attorney here, I’d try to avoid that, i.e., instead of “No, because” I would write “Yes, but for context and significance, also see X,Y,Z.” I will be seeing how IH conducts itself with the Rossi MSJ.
30. IPH did not sign the Proposed Second Amendment. See id.
There was no space for IPH to sign. Whether or not this is relevant (it might be, but this is fuzzy to me), this would not be strong enough to negate an amendment signed by all the original parties. This would have been a defect to be noticed and addressed by Rossi counsel, in 2013, but the Amendment probably never got to that stage. IH and AEG didn’t care, because IH appears to have intended to pay Rossi if there was a clear, independent demonstration of major COP, regardless of technicalities.
Yay! Go Team Rossi!
31. On April 30, 2014, Rossi admitted that the Proposed Second Amendment was not effective because AEG did not sign it. See Leonardo Corp. Dep. (excerpts of which are attached hereto as Composite Ex. 17) 195:19-196:24; Composite Ex. 18 [IH 0091696-0091697] (AEG Dep. Ex. 15 [sic., Ex 17]; Leonardo Corp. Dep. Ex. 15).
31. Disputed. Dr. Rossi understood that the Second Amendment was not valid with respect to AEG. See Supp. Ex. 46 ¶ 9.
That is true. It was not valid with respect to AEG. However, AEG was a party to the Agreement, and if an amendment was “not valid with respect to” a party, the amendment was not valid with respect to any party, because the agreement explicitly required the agreement of all parties, to be amended. The signature of an agreeing party might be conditional upon the agreement of all parties, and the equitable reasons for this are obvious. If there is a situation like this, the refusal of a party to sign, it is possible that some side-agreement could be negotiated, but that was not done. The amendment failed, and, above, Rossi is effectively giving an unqualified legal opinion, as an implication. There is no dispute over the fact here. Rossi was quite aware that AEG had not signed, and that this refusal was deliberate. Therefore the Second Amendment had failed, as written.
There are further defects, including the lack of the Second Amendment requirement for a written agreement among all the parties to set the revised start date. That requirement was obvious and necessary. Otherwise IH could have started their own highly-controlled “GPT,” by engaging Penon directly, bypassing Rossi. Rossi’s participation was not a requirement for the GPT. If Rossi had fully transferred the IP, as required, IH could have excluded Rossi, in fact.
So there are a series of problems with the Rossi position: 1. No valid Second Amendment. 2. Second Amendment required a test with a “Six Cylinder Unit.” That could have been fixed with a written agreement signed by all parties. That doesn’t exist, unless Rossi defines “parties” differently from the Agreement. The legal term for this situation is “sloppy mess.”
And then, 3. There was no required written agreement to the Doral test start date. And there are even more problems beyond that. There is no factual dispute here, only a legal dispute, one that the Judge may resolve.
32. Industrial Heat also recognized that the Proposed Second Amendment was not effective absent the signatures of all relevant parties. See Industrial Heat Dep. (excerpts of which are attached hereto as Composite Ex. 19) at 202:11-16.
This is utterly obvious (whether or not later notice, as described, was circulated). This, then, explains the otherwise puzzling lack of IH objection to problems with the Penon protocol, and other defects in the Doral set-up. Were this a GPT, IH would have been extremely cautious, would have insisted on other expert participation, not just the already-known-to-be-sloppy Penon. But they knew it could not be, because they had not agreed to it in a valid amendment. It appears that Rossi, in all communications about Doral, did not call that a “GPT,” and generally avoided even calling it a “test.” All references were vague. Without such a claim, there was nothing for IH to object to. Lack of communication cuts both ways. Once it appeared to IH that Rossi was claiming GPT, they did object, and that became formal around the beginning of December, 2015.
Rossi has elsewhere lied about when IH objected, claiming that they only objected when “it was time to pay.” That was never true. They objected over four months before the payment allegedly became due.
32. Disputed. Dr. Rossi has no information with respect to what IH wrongfully or rightfully believed, but maintains that IH never circulated any written notice to Plaintiffs that the Second Amendment was not in effect. See Supp. Ex. 46 ¶ 10.
“Written notice” is not the factual claim here, though a vague claim is made in the deposition. Were the IH opinion a mere conclusion without clear basis, there would be a problem. But it was not. What was shown in evidence is that Rossi knew that AEG had not signed, and it is also shown that AEG considered the Second Amendment to be invalid, and that this was deliberate on their part, knowing that Rossi wanted them to sign.
IH depended on the obvious implications, and “not in effect” seems to have been unchallenged by Rossi, who proceeded to create a faux GPT without nailing this down. It is not as if he was some helpless naif, up against a billion-dollar corporation (which he has more or less claimed). He had the money to consult counsel, but seems to have failed to do so, many times, until he was furious with IH for not trusting him, and suspicious that they were trying to steal his IP without paying for it. The first action in the record that we can see, so far, appears to be the refusal to allow Murray (as a “spy,” he wrote in his Answer) to visit the Plant, as required by the Term Sheet. That would never have been permitted in a GPT, but was acceptable, even though a violation, in a sale of power with Rossi supervising the Plant and the ERV almost as an afterthought, not actually monitoring the plant, but depending on Rossi and Fabiani for data, it appears.
There is no factual dispute. The lack of complete communication does not establish estoppel, which is what I’m sure Rossi will be claiming. A GPT required clear conditions, not vague implications. The proposed Second Amendment maintained that, but Rossi wants it both ways: he wants to hold the amendment as valid, with respect to the obligations of IH and LC, but then as defective and moot as regards the device to be tested and the start date.
33. The Proposed Second Amendment addressed the testing of “a six cylinder Hot Cat unit reasonably acceptable to [Industrial Heat]” (the “Six Cylinder Unit”), not the E-Cat Unit that was the subject of the License Agreement and the First Amendment. See Ex. 15.
This was a point raised by IH in their MTD. The Judge was clearly inclined to dismiss the Complaint based on this, but, based on Rossi representations, decided to wait for Discovery. Rossi argued against it (I may come back and reference that), thus leading to massive legal expenses. She wanted to know if the 6 Cylinder Unit was distinct from the 1 MW E-cat, or merely another name for it.
34. The Six Cylinder Unit in the Proposed Second Amendment is separate and distinct from the 1 MW E-Cat Unit or 1 MW Plant as referenced in the License Agreement, the First Amendment, and the Complaint. The Six Cylinder Unit is a round, tub unit containing six hot cat reactor units and is used to heat oil rather than water. See Ex. 2 at 172:21-173:8, 174:5-8; Ex. 17 at 196:25-197:13; Ex. 20 (Rossi Dep. Ex. 12).
34. Disputed. The Six Cylinder Unit differs from the 1MW Plant, and can be used to heat
water as well as oil. See Supp. Ex. 46 ¶ 11.
There is no factual dispute here. The cited declaration merely says what is shown here, which is irrelevant. It differs, it is “separate and distinct,” as claimed, and the Rossi declaration merely states this in a different way, it “differs.” That implies, clearly, that it is separate and distinguishable. It appears that it seemed advisable at the time to run the test based on the 6 cylinder unit, which also explains the delay, and this is consistent with other evidence as to Rossi not being interested in testing the Plant when it was in North Carolina, but wanting to focus on improvements.
35. The Six Cylinder remains in North Carolina and was never sent to Florida. See Ex. 2 at 174:22-25; Ex. 6 at ¶ 15.
36. What Rossi and Leonardo used for their purported “Guaranteed Performance Test” in Florida was the 1 MW Plant, not the Six Cylinder Unit. See Ex. 14 at Resp. No. 1.
36. Disputed. Plaintiffs and Defendants agreed to substitute the 1MW Plant for the Six Cylinder Unit for purposes of the GPT and shipped the same to Florida. See Ex. 13 at 144:8-15; Ex. 24; Ex. 1 ¶¶ 16-17; Ex. 9 at 156:24-157:2; Ex. 3 at 214:21-215:1; 215:20-216:5; Ex. 1 ¶ 16. [duplicated reference]
This is additional alleged fact that does not negate ¶ 36. When the move to Florida was being negotiated, it was not termed by any party the “GPT.” Even “test” was not mentioned in the Term Sheet. I assume that IH would have agreed to whatever Rossi wanted for the plant to be installed there. There were, in fact, two plants shipped to Florida, the original 1 MW Plant composed of regular E-cats, and another 1 MW Plant composed of “Big Frankies,” the 250 KW units, four of them, which were actually used for the Penon report. This fuzziness would not have been allowed in a real GPT. Imagine this taken to an extreme, Rossi has an assembly of 1000 reactors, and can pick and choose which ones would be used at any time. This would defeat the reasonable purpose of a large-scale test, to show reliability. The entire GPT concept was flawed in this way, but IH agreed to it because they wanted to give Rossi every opportunity to demonstrate the technology, and to show them how to make working reactors. Rossi wanted something else, it is obvious. He wanted to sell his cake for $100 million and keep it, too.
Ex 13 at 144:8-13 does not show “GPT”, but actually distinguishes GPT from Doral. Rossi generated massive confusion by creating a distinct “350 day test,” so that references to such a test would not be seen as references to the GPT, thus avoiding the question until the test was already running.
Ex. 24 references preparation by Rossi in May-September, 2015, of the “1 MW Plant” for a continuous 350 day test “per the terms of the agreement.” This is the strongest implied acceptance of Doral as a GPT that I have seen. It was not a communication with Rossi, and it does not validate that Doral was the GPT, because IH was apparently prepared to pay for actual performance (i.e, resembling the contemplated GPT) regardless of the Second Amendment. That is, this shows that IH was aware of the resemblance of Doral to the GPT. At this point, IH had assurances from Rossi that there was an independent customer there, and a highly reputable “real customer,” who was prepared to pay for power, which would have constituted a form of independent validation. They also expected, per the Term Sheet that had been signed, to have full access to the Plant for the duration of the “test.” By this time, they may have become particularly suspicious, but if it was not the GPT, they were safe; if they were not satisfied, they would simply not accept those results. We can see in this communication, as in many others, that they were serious seeking confirmation of Rossi claims. If they were actually looking to not pay, as Rossi has claimed, they carried on the charade privately as well, including with investors and, here as an internal communication.
Ex. 1 ¶¶ 16-17, a Rossi affidavit, uses “guaranteed performance test,” which is conclusory. Rossi may well have believed that Doral was the GPT, but never explicitly communicated this to IH, nor did they to him. The evidence above shows that IH was aware of the resemblance, but their motivation at this time with Rossi was clearly to not rock the boat, and to give him ample opportunity to demonstrate the technology with independent validation (which, here, would not be Penon, but the “US representatives of JM” — Johnson Matthey, as he obviously called them or implied — deciding to pay for independently measured power production. So they would not be expected to confront Rossi on this, until Rossi clearly asserted “GPT.” We do not know when this first occurred, but it must have been before December, 2015.
Ex. 9 at 156:24-157:2 does not show any acceptance of Doral as a GPT, but as an opportunity for a demonstration. Yes, IH allowed the 1 MW plant to be used in Florida, and “6 Cylinder Unit” did not come up because the Second Amendment, which required that unit, was void. A new agreement would have been needed to re-activate the GPT as a fixed creation of a requirement to pay, because the original Agreement on it had failed due to lapse of time, and Ampenergo refused to approve the Amendment. The fact remains that had the Second Amendment been valid, a 6 Cylinder Unit would have been required. Easily fixed, just create a new amendment covering the actual devices used, a matter of no more than a few hours work, trivial. But not done.
Ex. 3 at 214:21-215:1; 215:20-216:5 covers IH reliance on the “Johnson Matthey” representations and how “6 cylinder unit” was not discussed. All this clearly supports the failure of the Second Amendment. The 6 cylinder unit issue was not brought up because the Second Amendment had failed, and they all knew that, so there was no insistence on the letter of it, i.e., 6 Cylinder unit. There is no mention of Doral as a GPT, but on page 271, Annesser says “I am going to call it a general performance test.” Yeah, right.
Annesser then conflates and confuses what IH was thinking in 2014 with the actual requirements of the originally contemplated GPT, which did not involve a “customer.” He is trying to make the point that “customer” was irrelevant to GPT, and this is correct. But Doral was not presented to IH as a GPT, but rather as a sale of power, with a reputable customer who would, according to Rossi, after a few months of success, openly reveal their identity, and “customer” was very important, then, to Doral. Annesser is talking out of both sides of his mouth, like Rossi. A perfect couple.
The IH paragraph is simply showing that Doral did not satisfy the GPT as described in the Second Amendment, even if the Second Amendment were valid. No evidence has been shown that IH was obligated to pay for performance outside the original GPT requirements. That IH allowed Rossi to run a similar test does not negate that, it would not create the fixed obligation contemplated. The only way to do that would have been to create the signed, written agreement of all the parties — or, if some party unreasonably refused, to have the dispute adjudicated before running the test. Meanwhile, if Rossi had a real technology, he would be free to continue developing it, and to sell it outside the licensed territory, such as in Sweden, where he had supporters. Instead, Rossi elected to pursue his own fantasies.
37. Rossi claims that, after performance of the “test,” he dismantled a heat exchanger and all associated piping that supposedly dissipated heat generated by the 1 MW Plant during the purported “Guaranteed Performance Test.” See Ex. 17 at 271:1-272:2.
37. Disputed. After the GPT concluded, Dr. Rossi re-purposed the piping that comprised the heat exchanger that dissipated heat generated by operation of the 1MW Plant. See Defs.’ Ex. 17 at 271:1- 272:2.
This is not a denial of ¶ 37. The same evidence is cited. It is an acceptance, with “dismantling” simply being replaced by “re-purposed.” That makes what difference? We will see how this was used in the arguments, but an alleged legitimate purpose of an action of spoliation does not convert spoliation into something harmless. We know that Rossi was threatening to sue IH by December, 2015, so Rossi — or his counsel — knew that the Doral plant — and the usage and dissipation of power — would be evidence. Any attorney would have explained to him that “repurposing” the installation, simply dismantling it, without adequate notice to the other party, could be spoliation. He allegedly built a major heat exchanger, which would, if it existed, radically shift how the heat dissipation issue would be seen, but when he was questioned, on his blog, about heat dissipation, he first claimed “endothermic reactions,” and when that was clearly seen as bogus, not possible under Doral conditions, then then added heat dissipation through ceiling vents. He did not mention “heat exchanger.” There would be no trade secrets involved with a heat exchanger. And then he dismantled the heat exhanger, apparently without every photographing it, not to mention allowing IH inspection, trivial to arrange.
38. Neither Industrial Heat nor IPH ever sub-licensed the E-Cat IP for profit. See Ex. 6 at ¶ 16; Ex. 19 at 40:25-41:10.
38. Disputed. Plaintiffs raised $50 million in investment capital based upon the E-Cat technology; as such, it is not undisputed that Defendants ever sub-licensed the E-Cat IP for profit. See Exs. 3, 34, 35.
Ex. 3 is a long Vaughn deposition, I’m not going to search through it looking for a negative. If Vaughn acknowledged license for profit, surely it would have at least one page reference. Ex. 34 is a 14 page memo from Darden to Lamacraft (Woodford), April 2015. Parts have been redacted, but Rossi does not allege any specifics here, not even vaguely. Ex. 35 is a Lamacraft reply to Darden, based on a Darden mail, March 3, informing him of the upcoming press release, and Lamacraft replies:
This is clearly very disappointing, given that Rossi’s technology was a core element of the original investment.
However, this does not negate the IH claim. Because IH was willing to invest about $20 million in the possibility of Rossi Reality, they had demonstrated a bold willingness to take risks, where many others had out-of-hand rejected Rossi based on his past and the lack of clear independent confirmation, in order to obtain that confirmation directly. It was always possible that this would fail, and if Woodford did not realize that, they had not done the due diligence that they claimed — and they likely did. But it was still disappointing! If Rossi had fulfilled his part of the Agreement, transferring a replicable technology, IH (and Woodford) would have been in line for very high profit.
This has been a classic Rossi confusion. Raising investment capital is not “profit.” The $50 million investment, by Woodford in IHHI, Ltd., was in May, 2015, and this was not invested in IH or IPH, and did not involve a license. IHHI also purchased IH, totally, becoming the sole owner. That money has partially been invested in other LENR research, which might be coordinated through IH, their subsidiary. Rossi was angry about this, apparently, because this meant that the Woodford money was not directly available to satisfy IH obligations; Woodford’s loss would be limited to a loss of value of IH stock, thus IHHI stock, while the only continued major asset of IH could be the license (assigned to IPH, wholly owned by IH).
The relevant fact here stands: IH has not sold sublicenses. It may have disclosed the IP under NDA for purposes of testing, which would not be “for profit,” but rather for confirmation and information. In theory, the Rossi patents are worthless if they depend on a secret ingredient or process.
One would expect more clarity from attorneys, but, obviously, it is not manifest.
It may be argued that the serious exploration of Rossi technology was partially a basis for the Woodford investment. I actually assume that, but Woodford’s vision was not limited to Rossi, they had studied the entire field.
39. Neither Industrial Heat nor IPH ever created a product or service that could be sold based on the E-Cat IP. See id.
39. Disputed. Plaintiffs raised $50 million in investment capital based upon the E-Cat technology; as such, it is not undisputed that Defendants ever created a product or service that could be sold based on the E-Cat IP. See Exs. 3, 34, 35. [see 38 for links]
Same confusion. See above, 38. IH and IPH have had no sales revenue. The investment goal of IH was to confirm the technology, and then sell licenses for production, but it could have been possible to create a company to manufacture devices. None of this was possible without independent confirmation, that should, if the Rossi devices were as represented, been easy to do. IH claims it never happened, and because this would have been worth billions of dollars, or even trillions, to them, the IH reports and claims are devastating to the idea that the Rossi technology is real.
40. Neither Industrial Heat nor IPH were ever able to replicate the results Rossi and Leonardo claimed using the E-Cat IP. See Ex. 6 at ¶ 16; Ex. 9 at 100:7-101:5; Ex. 12 at 210:6-10; Ex. 19 at 40:25-41:10, 148:13-149:17, 150:14-151:4, 182:6-8; Vaughn Dep. (excerpts of which are attached hereto as Composite Ex. 21) 106:14-107:1, 128:24-129:9, 249:7-14); Ex. 22 [orig. filed under seal, refiled 247] (AEG Dep. Ex. 20).
40. Disputed. Defendants have reported, on numerous occasions, their ability to replicate.
This dispute is based on confusion between replication and reliability of the same. It is possible to replicate an error. The history of LENR is replete with claims of excess heat that could not be confirmed except by repeating an error in measurement — or making a different, new error. (There are enough confirmed results to conclude that LENR is real, but there are still major problems with repeatability and reliability.) What Rossi will point to is examples where IH found some result that appeared to show excess heat. They continued to investigate, and found that these were either in error, based on incorrect measurements (often using Rossi methods), or were not repeatable, i.e., there may have been some error, but it was not identified. For a commercial technology, reliability is absolutely necessary, at least on a statistical basis.
See, e.g., Supp. Ex. 67 (IH-00000861) (COP 4.0); Ex. 3 at 163:23-164:25; Ex. 19. The term “replicate” does not appear, in any variation of the term, in the License Agreement or amendments thereto. See Ex. 4; Ex. 5; Ex. 7; Ex. 13 at 149:9-12. IH testified that Defendants did not explicitly include a replication requirement in the License Agreement. See Ex. 13 at 149:25-150:6. Defendant IPH, the only entity with contractual rights to the E-Cat IP, has no knowledge or evidence about its own claims regarding its purported inability to replicate. See Ex. 17 at 25:25-26:17, 41:11-42:7.
These are all vague. The IPH issue is a technical one, Rossi is claiming violations of deposition rules, but, in fact, IPH simply referred certain questions to IH knowledge, since IPH is wholly-owned by IH and IH was handling all technnical processes, IPH being merely an IP holding company. Rossi has not prevailed on the claim of rule violations, and another deposition is possible, there is, as this is written, a hearing on April 20.
41. Rossi and Leonardo did not enter into any confidentiality agreements with third parties regarding the E-Cat IP. See Pls.’ Resp. & Objections to Industrial Heat’s 2d Set of Interrog. (attached hereto as Ex. 24) at Resp. No. 18.
41. Disputed. Plaintiffs carefully crafted public communications to only disclose information that had previously been made public by virtue of patent filings, eliminating any need to enter into confidentiality agreements. See Defs.’ Ex. 24 at Resp. No. 18.
This does not dispute paragraph 41. It simply claims that such was not necessary.
42. Rossi and Leonardo have neither suffered nor alleged any cognizable damages as result of the fraud alleged in Count VI of the Complaint that are distinct from damages they claim to have been suffered as a result of alleged breaches of the License Agreement. See Compl. ¶ 117, Prayer for Relief ¶ H.
42. Disputed. Plaintiffs have incurred and continue to incur the costs of the present litigation to collect payment from companies that do not have the resources to pay. See Supp. Ex. 71 (Supplement to Defendant Industrial Heat, LLC’s Amended Responses and Objections to Plaintiff Andrea Rossi’s First Set of Interrogatories, No. 16).
Very funny. However, Supp. Ex. 71 shows the opposite (they had the resources to pay, in ordinary fashion for such a payment from a venture capital company). This is not some additional damage, it would be, if legitimate, damage from the breach itself. Rossi has increased his legal expenses by using lawyers to beat dead horses.
When IH promised to pay the $10 million, it did not have the funds. IH officers had an ability to raise them, and when the money was needed, they did so in a timely fashion. They were prepared for the possible $89 million expense per Ex. 71. They also knew, by the time that would become due, that they were not going to pay because of fraudulent representation, a bridge too far.
43. Rossi has made public disclosures on his website, Journal of Nuclear Physics (“JONP”), revealing specific terms of the License Agreement. Specifically, Rossi publicly disclosed that that the License Agreement required a test of the 1 MW Plant, a test to be conducted over 400 days, a test involving 350 days of operation of the 1 MW Plant, and a guaranteed performance or “guarantees of performance” test. See JONP (excerpts of which are attached hereto as Composite Ex. 25) at July 2, 2015 & Dec. 21, 2015; Industrial Heat’s Resp. & Objections to Rossi’s 2d Set of Interrog. (attached hereto as Ex. 26) at Resp. Nos. 1-4.
43. Disputed. Defendant IPH testified that it did not know what specific confidential information Plaintiffs disclosed, and further indicated that he did not know of any proof or facts that IPH has in support of this claim. See Ex. 17 at 62:24-63:23. Defendant IPH testified that IPH did not know of any evidence or proof that IPH had in support of its claim for breach of Section 16.4 of the License Agreement. See Ex. 17 at 48:24-49:19.
This is the bankrupt 30(b)6 claim. Rossi counsel knew that IPH was going to answer as they did, because of the deposition negotiations. It is above miscast as “did not know,” instead of what was actually said. It could be legally true, if IH had been unavailable for deposition. Rossi won a small victory here, IH liability for the costs of a single deposition, but failed to score the necessary touchdown. This was a Hail Mary pass, a sign of desperation if they have no other evidence to present. The facts were not disputed.
44. Rossi made these public disclosures without written advance approval from either Industrial Heat or IPH. See Ex. 6 at ¶ 11.
44. Disputed. Defendant IPH testified that IPH did not know what specific confidential information Plaintiffs disclosed in violation of section 16.4, and further indicated that he did not know of any proof or facts that IPH has in support of this claim. See Ex. 17 at 62:24-63:23. Defendant IPH testified that IPH did not know of any evidence or proof that IPH had in support of its claim for breach of Section 16.4 of the License Agreement. See Ex. 17 at 48:24-49:19.
45. Rossi and Leonardo filed the License Agreement in the public docket of this Court without written advance approval of Industrial Heat or IPH. See Compl. Ex. B.
45. Disputed. Plaintiffs were permitted by law to file with the Court documents necessary to support their claims, without advance approval from any party. See Ex. 4.
Ex. 4 is just another copy of Compl. Ex. B (as to what is relevant here.) Rossi is not disputing the fact, but arguing that it was necessary or justified, as with so many of these oppositions. On general principles, I find that offensive. If an agreement is confidential, and disclosure could harm a party, disclosing the agreement without permission would require, to not be a violation of the non-disclosure agreement, permission of the Court. The issue of necessity is a separate issue. Rossi did file the Agreement as claimed, he is simply confirming SOMF 45. In traffic court, I have heard this plea: “Guilty with an explanation.” Strictly speaking, that is “Guilty,” even though a magistrate might dismiss the charges if satisfied by the explanation, or may reduce or eliminate any fine.
46. By letter dated February 17, 2016, Jones Day on behalf of IPH requested Rossi and Leonardo to assign to IPH the Licensed Patents (as defined in the License Agreement) with respect to the Territory (as also defined in the License Agreement). Jones Day enclosed an assignment with the letter. A true and correct copy of the February 16, 2016 letter and the assignment enclosed therewith is attached hereto as Ex. 27.
[Abd note: I do not find the License agreement clear on the definition of “Licensed Patents.” The list of patents in the Agreement, styled Exhibit A, is vague. However, the Agreement preamble strongly implies that all related technology is included, and not just “E-Cat.” How this affects this IH claim, I am not yet sure.] However, IH should have, here, cited Section 10 of the Agreement. To be sure, it is cited in the letter, Ex. 27.
46. Disputed. The License Agreement itself grants to Defendants the purported “assignment” that Defendants sought in their February 2016 letter, thereby rendering the letter and its request redundant and unnecessary. See Ex. 4 § 1 (the License Agreement grants to Defendants “the exclusive right and license under the Patents and other E-Cat IP to develop, manufacture, make, have made, use, have used, offer to sell, have offered for sale, sell, have sold, import, and have imported all the products deriving from the E-Cat IP in the Territory.” In addition, as early as October 2013, Defendants had no intention of making the $89 million payment to Plaintiffs. See, e.g., Ex. 9 at 117-121. IPH and IH readily admit that they did not pay the $89 million sought by Plaintiffs. See Countercl. ¶¶ 74, 80; Ex. 17 at 108:23-25.
The Darden deposition (Ex. 9) was clear and showed that Darden did tell Rossi that the opportunity for the GPT had passed, that the Ampenergo refusal to sign voided the Second Amendment. (Thus contradicting oppositions above.) Later, Rossi self-servingly claimed that the Ampenergo refusal did not have that effect, but he knew otherwise — or reasonably would have known, per the evidence that Rossi here adduces, that deposition. However, Darden did not say “we have no intention of making the $89 million payment,” unless we narrow and restrict the meaning of that phrase to be the very specific payment for the very specific performance. If Darden had actually said that, at the time, Rossi’s effort to set up a Test in Doral would have made no sense at all. Rather, Darden asserted, to Rossi, a willingness to negotiate with him for a way to earn that. I had previously inferred that this would have been the IH position, from their behavior. Rossi had the opportunity to earn the $89 million, by actually satisfying IH, instead of by setting up a one-year test, real or fake. Even when IH realized that the “customer” was actually Rossi himself, wearing a different hat and hiring a “Director of Engineering” to do minor tasks under Rossi direction, if IH had been able to inspect, with their own engineer, the reactor in operation, and the application of power in the “customer area,” and if they found the operation satisfactory they would happily have paid the $89 million. As many have pointed out, for such a working reactor, $89 million was cheap, and, in fact, Rossi’s supporters have often claimed that Rossi deliberately withheld the technology from them, since they had promised to pay so little. This withholding would be consistent with the Rossi claim about why he excluded Murray. (“Spy.”) One excludes a spy if one has something to conceal.
Here, Rossi is admitting prior breach of the Agreement, with no adequate justification. The $89 million was not yet due, even if the Test were genuine. The breach indicated Rossi’s intention to disregard the underlying intentions of the Agreement, based on his conclusion that IH could not be trusted, which had been operative since his exclusion of Murray from the Doral facilities in July, 2015. The argument about assignment not being necessary is conclusory and contrary to the language of the Agreement, (Section 10), which Rossi does not deny.
A good attorney would have advised Rossi to drop the cudgel, and would have assisted in negotiations. But Rossi would have had to trust his attorney. Instead, Annesser replied pugnaciously and threateningly. Did Annesser encourage Rossi in his suicidal intentions? Or did Rossi firmly decide on the course, with Annesser then acting as his attorney to advance those intentions? This issue may come up after the trial, or summary judgment, if there is a motion for sanctions.
47. Rossi and Leonardo did not execute the assignment as requested by letter of February 16, 2016. See Pace Decl. (attached hereto as Ex. 28) at ¶ 6.
47. Disputed. As early as October 2013, Defendants had no intention of making the $89 million payment to Plaintiffs. See, e.g., Ex. 9 at 117-121. IPH and IH readily admit that they did not pay the $89 million sought by Plaintiffs. See Countercl. ¶¶ 74, 80; Ex. 17 at 108:23-25. In fact, Defendants represented to Plaintiffs that Defendants had the funds to pay the $89 million under the License Agreement when, in fact, they never had such funds. See Supp. Ex. 52 at 259:9-11. Finally, IPH’s corporate representative was unable to offer any proof or evidence that there had been a failure to assign any patents, and did not know when such a failure occurred. See Ex. 17 at 63:24-64:18, 73:7-16; Ex. 9 at 240:18-241:3
Rossi counsel is attempting to repeat the fraud claim hand over fist, but the left hand does not know what the right hand is doing. Above, Rossi admits, by citing it without correcting the implications, that he knew the Second Amendment was void, because the IH claim that the time for a GPT had passed was based on the Ampenergo refusal to sign the extension. So his claims that IH did not inform him, made elsewhere, are completely bogus. And then, here, he is attempting to justify a refusal to satisfy a no-skin-off-his-teeth assignment request, clearly required by the Agreement, based on an alleged anticipatory breach, thereby creating one more justification for a refusal to pay, prior breach by Rossi, though there were others before that.
The “never had such funds” argument is rooted in a completely erroneous concept that when promising to pay a sum, one must have the funds available. People routinely buy houses promising to pay, but typically don’t have the funds on hand. Rather, they believe they can obtain them (generally with a mortgage, and the mortgage negotiations follow the acceptance of the offer, though one might have pre-approval. In this case, IH has testified it had preapproval of additional investment if needed. That the argument is advanced with reference to a deposition that shows this demonstrates something between desperation and incompetence. For Annesser’s sake, I hope he has documentation of Rossi insisting on these arguments, and even then he could face a motion for sanctions. At least Rossi couldn’t sue him for legal malpractice. On the other hand, Rossi might sue anyway, if he loses. After all, if Rossi Loses, it must be someone else’s fault. The buck stops over there.
And then Rossi uses the bankrupt 30(b)6 argument. This was rejected by Court Order, with DE 246. Twice, actually, because, as 246 points out, the first motion was rejected as inappropriately filed with Altonaga instead of with the Magistrate.
48. Leonardo filed over one hundred patent applications relating to the Licensed Patents (as defined in the License Agreement) without informing IPH. See IPH’s Resp. & Objections to Rossi’s 1st Set of Interrogs. (attached hereto as Ex. 29) at Resp. No. 5 & Ex. A.
48. Disputed. Leonardo did not file any patent application relating to the Licensed Patents without informing IPH. See Ex. 1 ¶ 26. Moreover, IPH’s corporate representative was unable to offer any proof or evidence that Plaintiffs filed patent applications without informing IPH, and did not know which or how many applications were purportedly so filed. See Ex. 17 at 66:20-68:2, 73:17-74:5. Defendant Darden testified that he was not aware of such patents. See Ex. 9 at 138:5-17.
Exhibit A to the 1st Rossi Interrogatories, cited in 48, has a list of applications filed without informing IH, attested by Vaughn. Vaughn is the one who did the research and who knew. Rossi has shown that Fogelman did not know the specifics (referring to IH, i.e., Vaughn) and that Darden did not know the specifics. And then Rossi relies upon the non-knowledge by the corporate representative, following his bankrupt 30(b)6 argument (which is based on a defective reading of case law).
Rossi could negate the claim, if not true, easily, by adducing evidence of the provision of information. Instead he relies on cherry-picking the voluminous evidence for ignorance. The strongest of these would be the IPH 30(b)(6) issue, because, if the defect is not remedied, (in this case, by supplying Vaughn for an additional deposition for IPH), IPH could, indeed, be legally estopped from presenting evidence on this, and IPH is the counter-plaintiff here. Because the evidence was already available before both the IPH (Fogleman) and IH (Vaughn) depositions, it is quite shaky, though, that Rossi could succeed in that sanction being applied. This was all legal nitpicking, without substance. Rossi filed applications without notifying IH, which creates a breach, even if there were no actual damages, Rossi has already lost that argument (i.e., the defective claim if there are not actual damages, there is no breach).
If there is disagreement about patents being “Licensed Patents,” then Rossi could easily and explicitly deny that, but has not done so, instead electing to hide behind the 30(b)(6) screen.
49. Leonardo abandoned over one hundred patent applications relating to the Licensed Patents (as defined in the License Agreement) without prior written notice to IPH. See id. [Exhibit B]
49. Disputed. Leonardo did not abandon any patent application or Licensed Patent without the prior written consent of IPH. See Ex. 1 ¶ 25. Moreover, IPH’s corporate representative was unable to offer any proof or evidence that Plaintiffs abandoned patent applications without informing IPH, and did not know which or how many applications were purportedly so abandoned. See Ex. 17 at 66:20-68:2, 73:17-74:5.
The Rossi affidavit, Ex. 1, at 25, is conclusory. An absence is claimed, and Rossi testifies there is no absence, but does not actually testify, or show with evidence, at least as cited, any actual compliance with regard to the defects clearly asserted in the IPH interrogatory. Rossi relies on the apparent ignorance of Fogleman and Darden as to the facts, but ignores the Vaughn attested evidence. Did Rossi ask Vaughn? I don’t know at this point. But he has not yet claimed it.
50. Leonardo charged Industrial Heat and IPH for fees and expenses associated with Leonardo’s patent activities, and Industrial Heat and IPH paid those fees and expenses. See Composite Ex. 30 [originally filed under seal] ([IH-00131929]; [IH-00014673]; [IH-00003745-00003746]; [IH-00013195-00013196]; [IH-00092023-00092024]; [IH-00011989-0011990]; Leonardo Corp. Dep. Ex. 7).
50. Disputed. IPH testified that it was not aware of the damages associated with any purported breach of the License Agreement with respect to Leonardo’s patent activities. See Ex. 17 at 70:25-71:5. Defendant Darden testified that neither IH nor IPH had computed damages related to any purported violation of any such provision of the License Agreement. See Ex. 9 at 7-24.
Again the bankrupt 30(b)(6) claim that misrepresents what the IPH representative actually stated, he referred to IH, and, in context, this was a referral to Vaughn, and, as I recall, a Vaughn deposition was scheduled for the next day (if this is incorrect, someone correct me).
The non-computation of actual damages is not evidence against a claim of breach of contract. At this point, the evidence shows a breach of contract, and that evidence has not been impeached. There is an apparent conflict with the Rossi testimony, but that testimony is conclusory, not substantive. Rossi does not testify that he complied with the Agreement for any of the voluminous asserted defects. His testimony could simply be the result of his own ignorance.
The reference to Ex. 9, the Darden deposition, does not make sense. The page number appears to be missing. The substance is covered on page 240. For a number of breaches, damages would be speculative. However, it could arise in the future that there is actual damage, so breach is important to establish, if it exists. The breach of failure to assign could be, I’d think, easily remedied, but breach through abandonment of patents might not.
Rossi is making (repeatedly) moot arguments.
51. Rossi and Leonardo are engaged in designing and developing what are classified as “E-Cat Products” under the License Agreement with persons or entities other than Industrial Heat and IPH. See Ex. 25 at Feb. 9, 11, 13, 18 [multiple], 20, 21, & 22, March 25 [multiple] & 30, April 27, June 26, & July 23 [multiple], 2016; Ex. 29 at Resp No. 2.
51. Disputed. Plaintiffs are not engaged in designing and developing E-Cat Products as defined under the License Agreement within the Territory defined in the License Agreement. See Ex. 4. Plaintiffs have not engaged in prohibited competition in violation of the License Agreement. See Ex. 1 ¶ 26.
Ex. 1, Rossi’s testimony, is conclusory, probably hinging on the definition of “E-Cat products.” That will require a more detailed examination. The Territory is not relevant here. If Rossi is developing such products, it does not matter where this takes place, IH has a right under the agreement this development. Rossi is confusing licensing local production and sale with the IP.
Rossi’s denial in Ex. 1 is about sale of products. Paragraph 51 is about design and development.
Ex. 4 is just the Agreement. Neither IH nor Rossi, here, reference the specific relevant section of the Agreement. It would be, from the Preamble, much stronger than specific technology called “E-Cat.” It would appear to cover all energy production and related technology, thus the Quark-X. Because this could compete with the “E-Cat” technology, it would be covered. IH also has, from the Agreement, a right of first offer outside the territory. Section 13.4 also covers new developments.
Rossi does not offer specific denials, only a blanket conclusion. Let’s look at the specifics, here. I link to the original JONP posts.
February 9, 2016 at 4:31 PM
very premature, but I want to add that today the E-Cat X made a tremendous step forward a massive production. Today I am very happy. …
February 11, 2016 at 8:35 AM
… at 08.27 a.m. of Thursday Feb 11 2016:
1 MW E-Cat stable
E-Cat X operating and still very promising.
Surely we will work also in France. F9.
The E-Cat X is now developed in a new factory wherein Leonardo Corporation will dedicate its production.
We are already preparing the structure for a massive production, F9. I am working with a US engineer expert of the involved matter indirectly in contact with aerospace concerns. He is not involved in the 1MW issue. He is in the scientific commettee of Leonardo Corporation. …
February 13, 2016 at 3:55 PM
… Leonardo Corporation will manufacture in its own factories, outsourcing in part the production.
The production will be made in the uSA and in Europe.
The locations will be disclosed if F9 will be positive, in due time.
The first application has already been done, it is, as well known, in the USA in the factory of a Customer and it is a 1 MW E-Cat that produces thermal energy. …
February 18, 2016 at 3:09 PM …
1. If Leonardo Corporation is now “100% focused” on the E-Cat X, does that mean that a lot more people inside the company have now seen it and are working on it (no longer restricted access)?
2. You refer to a “presentation” of E-Cat X this year. Is this going to be a public presentation, perhaps livestreamed?
3. Will the location and the customer of the E-Cat X in operation in an industy be disclosed in 2016?
4. Will you provide us with a photograph of the E-Cat X in 2016? …
February 18, 2016 at 8:06 PM
… 1- The people working on the E-Cat X is different from the people that worked on the 1 MW E-Cat. I made a new Team specific for this, because the approach is different, even if treasures the experience made with the former E-Cats. I needed an epochè, a revolution of points of view. The Great Team that worked on the 1 MW E-Cat will continue the work on this kind of technology. F9 for both technologies
2- Premature, even if I dream it
4- Hopefully …
February 20, 2016 at 12:53 PM …
the new factory of Leonardo Corporation in which the E-Cat X will be manufactured is in Florida. I must repeat F9, but I can add that in these very days we are making exponential progress. We are very close to be ready to make 1 million pcs/year, technologically speaking. From the moment I will decide that we are ready to start to the moment in which we will start the production line, it will take not more than 3 months. All is already organized. Now that I can give to this concern my full time, we are advancing very fast. …
February 21, 2016 at 6:26 AM
[Q] I have some questions if I may, all assuming F9 = positive.
1- You said that IH is licensed to produce E-cats for the Americas and China. Does that also include E-cat X’s (in the future)?
2- Is it right to assume that the rest of the world will be supplied by the Leonardo Company?
3- I believe you mentioned that Sweden will have a production plant for Europe. Do you intend to produce E-cats at more locations in Europe and Asia?
4- You work strongly together with a jet specialist. Do you expect to test an E-cat jet this year?
February 21, 2016 at 9:42 AM
2- no, Industrial Heat has also other Territories in the license agreement
3- eventually yes if opportune
February 22, 2016 at 10:52 AM
Feb 22 at 10.50 a.m.:
The E-Cat X are operating well. Now I am focused exclusively on it, during this “period of grace” between the end of the 1 MW E-Cat test end and the dlivery of the report by the ERV.
March 25, 2016 at 9:21 AM
Leonardo Corporation is prepared and ready.
The deliveries of all the robotized lines will be fast, I already signed the MOU, the factory is already ready and I designed the E-Cat QuarkX in a way that will ease the manufacturing, because I have designed it together with the robot experts I am working with and the electronic engineers I am making with the prototypes.
Leonardo Corporation is ready, do not worry. We will be very fast with the distribution, because we want to burn out ALL our possible competitors, whose only strategy I can see is hope to be ready to copy our products, pretending they will have invented them. They will be beaten in two fronts: patent violation and price: Leonardo Corporation will start immediately with very low prices, due to the massive production they will not be ready to do. I have pretty good intelligence about all what is happening around, what really is behind the chatters and there is nobody ready with any structure necessary to compete with us, let alone a product. Leonardo Corporation will have warships, they will have paper ships, made of the same substance of my paper ships I used to make and test in the fountain of the zoo of Milan ( Milano, Italy ) when I was 4 years old, with the engineering assistance of my dad. This having been said, I must add that there is also some competitor that is working very seriously and upon technology really different from ours: but they don’t talk, as I did until 2011.
March 25, 2016 at 1:12 PM, answered at March 25, 2016 at 3:28 PM [adds little beyond confirming that production of the Quark-X is not just “rolling,” it is “rock and rolling.”]
March 30, 2016 at 12:13 AM
[Q] Congratulations for the good news, and good luck for tomorrow’s ABB meeting. You will need it, to convince the “Professor”: you know, the one who, according to the other robots, thinks cogito ergo sum.
March 30, 2016 at 10:55 AM
Sure: the meeting with ABB has been made this morning and has been the start up.
March 30, 2016 at 10:03 AM
[Q] How went the meeting with ABB?
March 30, 2016 at 10:58 AM
Very well, the job has been started.
April 27, 2016 at 7:01 AM
In June we will have a very important test with a very important Customer. We are increasing the worktime to be ready for that with a mature QuarkX.
June 26, 2016 at 2:08 AM
The QuarkX is very promising, the work is developing positively, the reaction of the Partner is positive.
July 23, 2016 at 1:04 PM
Can you give us an update on the status of your work on the different versions of the E-Cat.
a) How is work going with the 1MW E-Cat plants?
b) Do you have multiple customers with orders in for the 1MW E-Cat plants (low temperature)?
c) How is work going with the QuarkX?
d) Is the QuarkX mature enough to be incorporated into industrial plants?
e) Do you have any customers with orders in for QuarkX plants?
f) What is the status of having a factory or factories ready to produce your products?
July 23, 2016 at 3:27 PM
c) still very promising
d) not yet
e) pre orders
f) in the USA we are producing industrial; in Sweden we are preparing the factory
July 23, 2016 at 6:10 PM
That is great news about producing industrial E-Cats in the US factory.
Is this accomplished through manual labor or robotics?
July 23, 2016 at 7:29 PM
Manual labour, so far, but we are working very hard to complete our production capacity with the help of ABB.
I really hope we will have our robotized lines at least installed by the end of the year. I really hope, but there are problems to be resolved. A lot of work has still to be done
The context here is an IH claim that Rossi and Leonardo are engaged in designing and developing what are classified as “E-Cat Products” under the License Agreement with persons or entities other than Industrial Heat and IPH. The blog posts are not sworn testimony (though they are introduced with attestation as being true copies, I think), and perhaps Rossi was lying or exaggerating. However, those posts are a basis for IH to assert their claim, and in the absence of any specific attested denials, it is possible this could be considered established. Among other things, Rossi claims to be producing E-Cat devices in the United States, which would be a violation of the License if not with permission. Is it a breach of contract to falsely claim to be breaching the contract? I would expect that equity would declare that it is, i.e., that it could be considered as such, even if the breach did not actually occur. I’ll be watching with interest how this plays out before the Judge.
52. Rossi and Leonardo have engaged in design and development activities with ABB Group and Hydro Fusion, Ltd. See Ex. 17 at 234:21-235:3; Ex. 25 at June 4, June 14, July 16, July 23, July 24, Aug. 8, Oct. 2, Oct. 6, & Nov. 15, 2016; Ex. 29 at Resp. No. 3.
52. Disputed. Plaintiffs are not engaged in prohibited design and development activities
within the Territory defined in the License Agreement. See Ex. 4. Plaintiffs have not engaged in
prohibited competition in violation of the License Agreement. See Ex. 1 ¶ 26.
Again, Rossi does not deny IH ¶ 52, but claims it was not prohibited. IH Ex. 17 is remarkable, how Rossi evades questions. However, he admits enough to show that he was lying — being grossly misleading — in at least some of his blog posts. That’s a video deposition. Rossi evading questions could be shown to the jury. Ex. 4 is simply the Agreement, and the exact application of the Agreement to this situation is not specified, and Ex. 1, Rossi’s affidavit, is conclusory and nonspecific. From his video deposition (IH Ex. 17), a straighter admission would be that, on JONP, he was lying or exaggerating or presenting his ideas and plans as if they were actualized.
53. The IRS Form 1120 for the year 2012 filed by Leonardo FL, as produced by Plaintiffs in this action, is attached as Exhibit 31 [originally filed under seal, now here] ([Rossi_00011665-00011684]).
54. The IRS Form 1120X for the year 2013 filed by Leonardo FL, as produced by Plaintiffs in this action, is attached as Composite Exhibit 32 [originally filed under seal] ([Rossi_00011685-00011704]; [Rossi_00011715-00011734]; [Rossi_00011736-00011751]).
55. The IRS Form 1040NR for the year 2013 filed by Rossi, as produced by Plaintiffs in this action, is attached as Exhibit 33 [originally filed under seal] ([AE000358]).
55. Disputed. Non-Party AEG produced the document contained in Defs.’ Ex. 33. Plaintiffs produced amended tax returns for the year 2013 as bates-range Rossi_00011736-51.
No difference in the documents is claimed. This is perhaps a clarification of a moot detail, rather than an actual dispute.
56. Beginning in June 2014, Rossi, on behalf of Leonardo, repeatedly stated to Industrial Heat that he had “found” a “customer” with its own facility [in] Florida, and that this “customer” had a commercial need for, and was going to use in a chemical manufacturing process, steam that Rossi and Leonardo intended to produce from the 1 MW Plant. See Ex. 2 at 183:9-184:5, 199:9-16; Ex. 9 at 164:19-23; Ex. 19 at 215:3-10, 229:17-21, 232:15-23; Ex. 21 at 180:8-22, 181:7-17, 194:17-20, 198:16-20, 267:18-268:4, 268:23-269:4; Composite Ex. 34 (4th Am. AACT Ex. 16; Rossi Dep. Exs. 13 & 14; [IH-00011175-00011176]).
56. Disputed. Dr. Rossi reported to Defendants that Plaintiffs and Defendants had a potential customer who could use steam produced from the E-Cat. See Supp. Ex. 45 at 191:17-192:24).
Rossi attempts to recast the fact to allow “potential customer” — which may then exist only as a Rossi fantasy, to be conjured up as a corporation allegedly owned by a “U.K. entity,” — which did not exist — as distinct from already operating customer. The clearest evidence on this is the Rossi email proposing the arrangement, AACT Ex. 16.
The Rossi deposition cited is remarkable and close to the core of the case. Rossi calls what he wrote to IH “rhetoric.” He claims that in Italian, one may present a possibility as a fact. That may also be done in English, “rhetorically,” but with someone who wishes to avoid misleading others, the distinction will be made clear. If Rossi is not now lying about the issue, he was nevertheless negligent in distinguishing fact from fantasy. Consider: “I have a fantasy of a customer who ….” There would have been no problem in that as a declaration of possibility. And then IH might say, “Great! If you can find one, that would be super!” However, IH actually had a customer lined up, apparently, and Rossi was making out that this other customer was much, much better, and he gave reasons. Rhetoric? Sure. Rhetoric designed to make a choice against their interests, and pursuing Rossi’s own. Rossi clearly pretended that the customer already existed as an independent entity. This has become totally clear.
57. Rossi also represented, on behalf of Leonardo, that this “customer” was affiliated with Johnson Matthey, plc (“Johnson Matthey”), a British multinational specialty chemical company with over £10 billion in revenue. See Ex. 9 at 172:6-173:12, 185:18-186:2, 186:9-18; Ex. 19 at 213:25-214:9, 215:3-10, 229:21-230:5; 231:22-232:23; Ex. 21 at 180:13-181:25, 194:9-16; Composite Ex. 35 ([IH-00090895-00090896]).
[Besides the initial correspondence, see particularly this page.]
57. Disputed. Dr. Rossi did not represent to Defendants that J.M. Products was an affiliate of Johnson Matthey. See Supp. Ex. 46 ¶ 13. Dr. Rossi represented to Plaintiffs that J.M. Products was a newly formed company that Henry Johnson – Dr. Rossi’s attorney – would serve as the company’s CEO and that Dr. Rossi would run the operations for the first year of business. See Supp. Ex. 56 (IH- 00011867, IH-00012026). Henry Johnson never intended J.M. to stand for Johnson Matthey, and Dr. Rossi never told Henry Johnson that J.M. Products would be related in any way to Johnson Matthey. See Supp. Ex. 57 at 124:5-25, 171:13-19).
Rossi is making a specific denial here, whereas the fact asserted is different. The representation was obviously that Johnson Matthey was to be the real customer, and that JM would later openly acknowledge it. The Rossi affidavit (Supp. Ex. 46) appears close to perjury, over or beyond the boundary. Somebody brought in “Johnson Matthey.” Rossi clearly allowed that impression to live, and only gradually moved away from it, as shown by multiple emails. Someone told Bass about Johnson Matthey, and someone told Johnson about “Advanced Derivatives of Johnson Matthew Platinum Sponge.” Johnson would not have just made that up himself. And that is clearly “related” in some way. Johnson also represented that JMP was owned by a “U.K. entity,” this fitting in with the JM story. Where did that come from? If JMP was simply a local enterprise, why even bring up the “U.K.”? It makes no sense except as part of a plan to make it appear that the real customer was Johnson Matthey. Johnson knew that the owner of JM Chemical Products, as incorporated, was the Platinum America Trust, managed entirely by Johnson, on behalf of Rossi’s friend, who contributed nothing but his name, JMC/JMP was entirely operated and managed by Rossi, anything else was formal fluff.
Most of the facts asserted in this Rossi opposition are not relevant to the claim in the IH paragraph. As to the intention of the name, Rossi denies an intention, based on a fragment of deposition, that JM stood for Johnson Matthey, but does not assert any other origin of the name.
It is completely clear that IH believed that the customer was Johnson Matthey, and indicated that in numerous ways to Rossi, and Rossi, far from correcting them, essentially confirmed it, by asking them not to talk to the real Johnson Matthey, because it would upset them, and then asserting that he should not have mentioned them, because of a desire for secrecy.
58. This “customer” was Third-Party Defendant J.M. Products, Inc. (“J.M. Products”), who at the time was known as J.M. Chemical Products, Inc. See Ex. 2 at 183:9-184:11; J.M. Products Dep. (excerpts of which are attached hereto as Ex. 36) 66:22-67:2 [not highlighted]; Johnson Dep. (excerpts of which are attached hereto as Ex. 37) 88:8-21, 97:13-18; Composite Ex. 38 (Johnson Dep. Exs. 11 & 12).
58. Disputed. See disputed facts in ¶ 57, supra.
No fact from ¶ 58 is contradicted here.
59. Rossi asserted to Industrial Heat that having a “real customer” with a need for steam would be an independent check on how the 1 MW Plant would operate, in that the “customer’s” purchase of the Plant’s steam would confirm that such steam was being produced. See Ex. 17 at 242:21-243:2; Ex. 34 at [sic, “formerly presented as”] 4th Am. AACT Ex. 16.
59. Disputed. Dr. Rossi represented to Defendants that J.M. Products would use steam heat produced by the 1MW Plant to treat platinum sponge to create catalyzers for sale. See Supp. Ex. 58 (IH- 00012026); Supp. Ex. 45 at 185:23-186:20. IPH has no proof to contradict this representation. See Ex. 17 at 149:19-150:8 [no page 149]. In fact, J.M. Products did use steam generated by the 1MW Plant to create platinum-sponge and/or grapheme [sic] based catalyzers for sale to Leonardo. See Supp. Ex. 59 at 214:23-215:3, 220:16-19, 225:5-10. Regardless, Defendants did not care what J.M. Products was using steam for or what the company was producing. See Supp. Ex. 48 at 196:8-196:11. Finally, Defendants’ cited testimony and documents do not stand for the proposition for which Defendants cite them; Defendants misstate the cited testimony. See Defs.’ Ex. 17 at 79:1-80:14 [no page], 139:6-140:3 [sic, seems irrelevant], 174:1-15 [no page], 242:21-243:2.
The facts alleged here do not contradict IH ¶ 59. Three cited pages do not exist, and yet another exists but does not appear to be relevant. There is some error here.
It is not stated what specific testimony is misstated. So let’s look at all of it.
Ex. 17 at 242:21-243:2.
Q. Later you talk about how the — there will be confirmation. Will be able to find confirmation of the COP by what is invoiced to J.M. Products versus what — by Leonardo, versus what is invoiced to J.M. Products for the electrical bill from FPL, correct?
Ex. 34, Rossi emails (not “testimony”) is more about the general context of the proposal. ¶ 59 may have been written mostly from general understanding and personal memories, and then Ex. 17 was shown for specific evidence on this narrow issue, and Ex. 34 for background. I don’t see any clear misrepresentation here. In Ex. 34, the deliberate representation of JMP as independent, with production necessities, is clear. It is also clear that Rossi claims that IH failed to find a customer in North Carolina are false. They had a customer ready to go.
I don’t see any misrepresentation here. However, Rossi answered Yes to what may have been a leading question.
60. The original drafts of a proposed Term Sheet, by which Industrial Heat would agree to move the 1 MW Plant from its facility in North Carolina to the “customer’s” facility in Florida, were prepared by Rossi and named the “customer” as Johnson Matthey. See Composite Ex. 39 ([IH-00007120-00007123]; [IH-00007129-00007131]).
60. Disputed. Dr. Rossi represented to Defendants that J.M. Products was a newly formed company that Henry Johnson – Dr. Rossi’s attorney – would serve as the company’s CEO and that Dr. Rossi would run the operations for the first year of business. See Supp. Ex. 56. As such, Plaintiffs clarified to Defendants in drafts of the Term Sheet that there should be no reference to Johnson Matthey, and any such references were deleted. See Supp. Ex. 60 (Rossi_00001328). Furthermore, there is no evidence showing that Dr. Rossi drafted the term sheet. See Supp. Ex. 61 (IH-00007120).
Rossi surely knows who introduced “Johnson Matthey” to the conversation. There are many evidences, this is not a mere suspicion or unsupported claim. The claimed representation about Johnson, etc., supported by Ex. 56, was later. Ex. 56 does not represent that Rossi would run the operations of JMP. The Rossi email of June 10 does not assert that Rossi will run the operations of JMP for a year, but rather that he will run the “Plant” for that time, and in context, that is clearly the “1 MW Plant.”
The mails where Rossi asks for removal of “Johnson Matthey” do not explain it as an error, and do not treat it as any surprise. It is not plausible that this was introduced by IH without Rossi suggesting it, and there are other evidences, such as the Bass-Rossi emails.
The Darden email (Supp. Ex 61) loosely confirms that the first draft (“sketich”) was by Rossi. I would expect that the actual email with the first draft will be available. Darden modified it, following it, sending it to the lawyers July 10, 2014 and a copy back to Rossi. Supp. Ex 61, though, is not as complete as IH Ex. 39. IH Ex. 39 has the actual document in it. The version sent back to Rossi, allegedly following his sketch, names the customer as Johnson Matthey. Rossi does not immediately object to it. July 9, Rossi requested this and called the customer “JM.”
61. Every attempt made by Industrial Heat to investigate or contact the “customer,” a counter-party to the proposed Term Sheet, was rebuffed by Rossi, on the basis that Johnson Matthey did not want its name associated with the venture at the time. See Ex. 9 at 177:11-178:2; Ex. 19 at 228:4-11; Ex. 21 at 198:7-20, 199:20-200:3, 271:7-16; Composite Ex. 40 ([IH-00090826-00090827]; [IH-00007113-00007114]; [IH-00007117-00007118]);
61. Disputed. Defendants could have, but did not, make any attempts to “investigate” or
“contact” Johnson Matthey to confirm any purported arrangement with them or any related entity. See, e.g., Supp. Ex. 48 at 200:5-201:2. Defendants never called Johnson Matthey to speak with them about any agreements or arrangements. See id. at 195:25-196:11. Defendants never requested a letter from Johnson Matthey or any other written confirmation that would validate Dr. Rossi’s alleged representations. See id. at 201:3-6. Defendants did no due diligence into whether the customer had a facility in Florida. See Supp. Ex. 52 at 232:10-18. Defendants did not ask to see the customer’s facility where the 1MW Plant would operate. See Supp. Ex. 48 at 195:25-196:11. Defendants did not care what the customer would be doing. See id. at 196:8-196:11. The extent of Defendants’ due diligence with respect to the customer was to check Secretary of State filings to determine where J.M. Products was formed and to ask Dr. Rossi and Henry Johnson to sign an OFAC compliance document. See Supp. Ex. 52 at 229:3-10. The Compliance with OFAC statement was signed by Henry Johnson on behalf of J.M. Products, Inc. See Supp. Ex. 62 (OFAC Statement). None of the documents to which Defendants cite support their purported “undisputed fact” that Dr. Rossi ever rebuffed any of Defendants’ attempts to contact the actual customer – J.M. Products – or Johnson Matthey. See Defs.’ Ex. 40.
Rossi is recounting what they did not do, and citing irrelevancies (such as not caring what the customer would be doing, which in context must mean not caring about the specific processs, not a blank check as Rossi is implying. That there was a real chemical process, being run by a real chemical company, was, in fact, important, as is expressed in documents). What does it mean to “rebuff” an attempt to contact. In context, it could simply mean that Rossi claimed it would cause harm if they attempted to contact the customer. Does the evidence show that?
First of all, was that plausible. Johnson Matthey, called JM in the early correspondence, is a major chemical company, and it is plausible that they might want an involvement with a LENR test to be secret, until they were sure that it was working well, and that is what Rossi claimed.
Ex. 9 at 177:11-178:2 This is Darden recounting his recollection of conversations in 2014. It is a bit fuzzy — he may have conflated more than one conversation, or exactly where and when something was said — but he recalls wanting to contact JM and Rossi said he would bring the President. And then he was surprised, the President just didn’t seem to be a “Johnson Matthey kind of guy.” And it wasn’t, of course, it was Johnson, Rossi’s attorney. As part of this testimony, Darden says that “Rossi or Johnson” said that “they wanted it to be a separate subsidiary, they didn’t want their name on it.” All this, then supports the IH “Johnson Matthey” narrative, it would make no sense for an independent new company. So when Darden wanted to talk with “JM,” Rossi supplied Johnson for it. That was a kind of rebuff, a substitution, a switch. And then there are rationalizations for it.
Ex. 19 at 228:4-11; this is Vaughn confirming Darden’s story, with more detail.
we wanted to meet a representative and we were even willing to go to the UK to meet somebody at Johnson Matthey who could affirm what he was saying. He [Rossi] said, Well, actually, I will have their representative come up. He is in Miami. And we will meet in Raleigh. And that is the meeting at Red Robin
This was arguably an attempt to prevent IH from directly meeting with IH.
Ex. 21 at 198:7-20, Vaughn testified that Rossi argued strongly against a proposed meeting with Johnson Matthey, that the Miami project was “very confidential” and they “didn’t want anyone to know.” If Rossi was not lying, it could indeed have done harm to contact JM directly.
199:20-200:3, supports this.
271:7-16; is also explicit.
A. Correct. We did not contact Johnson Matthey. I did not. And that was because Andrea had said, you know, Henry Johnson is the representative of Johnson Matthey and, you know, you can’t contact them, they want this to be super confidential, you guys aren’t to — that will make them nervous if you guys contact them or, you know, mess things up
Composite Ex. 40, Page 3 is an email from Rossi confirming the IH narrative on JM. He represents the real company in London as preferring to act as the U.S. company (“JM corp”) because of their “terror” to get engaged, being a public company. The IH story here is so clear and so thoroughly evidenced that, indeed, it is not legitimately disputed except by distorting the record, as Rossi does in this opposition. If, indeed, that is legitimate. I don’t expect it to fly.
I am struck by the chutzpah of Rossi, having deceived them like this, arguing that they could have checked with JM, as if that was a big failure and might excuse his own behavior. Of course they could have, but they might as well have tossed Rossi in the street right then, the effect would have been similar. Rossi does not continue to do business with people who want to confirm what he claims and are clear about that.
62. On July 28, 2014, Industrial Heat, Rossi, and Third-Party Defendant Henry Johnson (“Johnson”) met in North Carolina to discuss moving the 1 MW Plant from Industrial Heat’s facility in North Carolina to J.M. Products’ facility in Florida. Ex. 9 at 173:21-174:2; Ex. 37 at 230:18-231:6. Prior to the meeting, Rossi had told Industrial Heat that the purpose of the meeting would be to meet a Johnson Matthey representative. See Ex. 9 at 171:14-172:3, 174:3-11; Ex. 19 at 226:1-6, 226:14-227:2; Ex. 21 at 205:8-9, 270:21-24. During the meeting, Rossi introduced Johnson as J.M. Products’ president, and further represented (with Johnson’s acquiescence and adoption) that J.M. Products was affiliated with Johnson Matthey. See Ex. 9 at 174:12-175:11; Ex. 19 at 226:6-13, 228:4-11; Ex. 21 at 203:6-9, 203:15-20, 204:11-21, 205:17-23, 269:8-270:6; Ex. 37 at 237:13-22. Both Rossi and Johnson further represented that J.M.
Products had its own facility in Florida, and was intending to use steam produced by the 1 MW Plant in a chemical manufacturing process. See Ex. 9 at 175:12-176:14, 180:7-12, 181:5-14; Ex. 37 at 237:13-22.
62. Disputed. On or about July 2014, Dr. Rossi and Henry Johnson met with Defendants Darden and Vaughn in North Carolina to discuss the proposal to relocate the 1MW Plant to Florida and how J.M. Products would utilize the Plant. See Defs.’ Ex. 37 at 230:18-231:6. At no time prior to that meeting did Dr. Rossi represent to Defendants that there would be a meeting with any Johnson Matthey representative. See Supp. Ex. 46 ¶ 14. During the July meeting, Dr. Rossi informed Defendant Darden that J.M. Products’ only “association or affiliation with Johnson Matthey” was that J.M. Products would “obtain materials from Johnson Matthey and process those materials.” See Defs.’ Ex. 37 at 237:13-22. In fact, J.M. Products did use steam generated by the 1MW Plant to create platinum-sponge and/or grapheme based catalyzers for sale to Leonardo. See Supp. Ex. 59 at 214:23-215:3, 220:16-19, 225:5-10. Subsequent to that meeting, Defendants sent Barry West to help set up the Doral facility. See Supp. Ex. 63 at 87:5-8.
There are some direct contradictions in testimony here. I can see I am going to need to create a timeline. What is being presented by Rossi is cherry-picked, where it is not entirely irrelevant. I.e., why is Bass mentioned? It has nothing to do with the issue here. Nor is what JMP actually used the alleged steam for. I am, at this point, stopping detailed analysis of each response. I may come back and complete that, or may make exceptions as I see them, but I prefer to move ahead with the basic presentation of this document. What I am finding, reading all this, is a very clear understanding of what happened, of the facts, as distinct from all the interpretations and what often amount to excuses or justifications.
3pD: 62. Disputed. On or about July 28, 2014, Johnson and Andrea Rossi (“Rossi”) met with IH in North Carolina to discuss the proposal to relocate the Plant to Florida and how JM Products would utilize the Plant. See Johnson Depo. Tr. at 230:18-231:6. None of the documents that IH cites to supports the purportedly undisputed fact that any representation as to any affiliation between Johnson Matthey and JM Products. In fact, IH was informed that the only “affiliation” with Johnson Matthey was that JM Products would obtain materials from Johnson Matthey and process those materials. See Johnson Depo. Tr. at 237:13-22. IH knew that JM Products was a newly formed company and not yet operating. See Darden Depo. Tr. at 177:1-3, 177:8-10. JM Products used steam produced by the Plant to create platinum sponge and/or graphene based catalyzers for sale to Leonardo. See Leonardo Depo. Tr. at 214:23-215:3, 220:16-19, 225:5-10.
“None of the documents that IH cites to support” is clearly false or misleading. There was clearly representation of affiliation, as a background to the meeting on July 28. Johnson acknowledges questions that, as presented, assumed he represented Johnson Matthey. There is no question that JMC/JMC were separate, and the only actual affiliation was as described. But there was a represented affiliation, shown in many documents and testimonies. None of this conflicts with JMP being a newly formed company. When Rossi changed the name on the Term Sheet to JMC from JM and “Johnson Matthey,” it was clearly indicated as the result of the desire of the “real customer” for secrecy, with representations that after a time, they would allow it to be open.
The real customer was Rossi himself, with a corporate shell formed, with Rossi in total control of it. He made all JMP decisions, and paid for all expenses, with a paper excuse, that this would be covered by the sale of products to Leonardo, so … Rossi would process some products, wearing the JMP hat, and then sell them to himself, wearing the Leonardo hat. None of this, if open and acknowledged, would have been allowed by IH. The argument presented for the move was that JM was a real customer, actually engaged in manufacture of chemical produces, a highly reputable chemical manufacturing company, independent, and Rossi reported conversations with the management of JM (i.e., by this time, JMP), that were preposterous, with what we know. Rossi was talking to himself?
63. Following the July 28, 2014 meeting, Rossi continued to make representations to cause Industrial Heat to believe that J.M. Products was affiliated with Johnson Matthey, and that publicly identifying Johnson Matthey would lose J.M. Products as a “customer.” See Composite Ex. 41 ([IH-00011864]; [IH-00011871-00011872]; [IH-00011867-00011870]);
63. Disputed. At all times subsequent to the July 2014 meeting, Dr. Rossi represented to Defendants that J.M. Products was a new company and that Defendants would be working with J.M. Products. See Defs.’ Ex. 41. The extent of Dr. Rossi’s representations regarding Johnson Matthey was that J.M. Products would use Johnson Matthey as a supplier. See Defs.’ Ex. 41. Dr. Rossi’s references to anonymity refer exclusively to J.M. Products, and not Johnson Matthey. See Supp. Ex. 46 ¶ 15.
This is appalling. It is recasting the obvious meaning of Rossi’s email, in context, and denying the obvious implications of that mail and previous ones. Rossi did not respond to suggestions that IH meet with Johnson Matthey in London with correction of the (now-alleged) error, he responded with warning that this could cause great harm. His reference to anonymity could indeed be taken as claimed here, but only as a later attempt to explain away the obvious. JMP was Rossi, start to finish, lock, stock, and barrel, all except for some pieces of paper being pushed around. Yet Rossi presents the concern about anonymity as being from an independent company. A public company, in the U.K., and then Johnson represented that the owner of JM Chemical Products was a “U.K. entity,” and then claims that this was a plan, later abandoned. A plan for what purpose? Why would one even dream of setting up a UK entity? It’s obvious: to be more able to pretend that the representation in the OFAC statement was true. Johnson certified what was not true.
3pD: (no response)
64. Also following the July 28, 2014 meeting, Rossi changed the “customer” in the proposed Term Sheet to J.M. Products, insisting that Johnson Matthey did not want its involvement in the venture to be known. See Ex. 9 at 185:18-186:8; Ex. 21 at 194:9-16, 274:14-20, 275:7-8, 275:15-20, 275:25-276:3; Ex. 42 ([IH-00089932-00089938]).
64. Disputed. Dr. Rossi represented to Defendants that J.M. Products was a newly formed company that Henry Johnson – Dr. Rossi’s attorney – would serve as the company’s CEO and that Dr. Rossi would run the operations for the first year of business. See Supp. Ex. 56. As such, Plaintiffs clarified to Defendants in drafts of the Term Sheet that there should be no reference to Johnson Matthey, and any such references were deleted. See Supp. Ex. 60. Furthermore, there is no evidence showing that Dr. Rossi drafted the term sheet. See Supp. Ex. 61.
Supp. Ex. 61 shows that Rossi sent a draft to IH, and that IH then used it to create the first draft that has been entered as evidence. This exhibit supports that Rossi drafted the agreement, and the full sequence supports that it originally named Johnson Matthey as customer, also called “JM” in the documents. Supp. Ex. 60 only shows that the agreement was amended as claimed by IH. By some point in the discussions, it was indeed revealed that JMP was a “newly formed company,” but it continued to be represented that JMP was owned by JM. What Rossi represented in removing the name was that JM did not want any formal involvement, but the JM was the actual company of interest, but that they were not to be contacted, it could cause harm. From testimony, IH made a choice to rely on these representations, and Rossi’s arguments to induce the agreement did rely on them, they make no sense if referred to a “new company,” and especially a new company that we now know had no existence other than as paper, with actual funding and all operations conducted by Rossi, with Johnson again supporting with paper and secretarial help.
65. Further, on August 6, 2014, Johnson, on behalf of J.M. Products, signed a representation that J.M. Products “[was] owned by an entity formed in the United Kingdom.” See Ex. 37 at 239:15-240:2, 247:16-249:25; Composite Ex. 43 (Johnson Dep. Exs. 50, 51, & 52).
65. Disputed. J.M. Products was intended to be established in the United Kingdom, but due
to high costs associated with incorporation the situs was changed. See Defs.’ Ex. 37 at 240:16-20.
This is nonsense, it neglects the sequence. By the time of the OFAC declaration, the owning entity (Platinum America Trust) existed as paper in Johnson’s office. JMP had been incorporated. The declaration used the present tense, implying an actually-existent owner, or, at the least, some “entity” in the U.K. — as an unincorporated association or at least an individual actually in the U.K. — when the fact was that the trust owning JMP was in Florida, and the beneficial owner was Italian, with no indication that he resided or worked in the U.K.
The OFAC declaration, on the face, appears to have been created to maintain the impression that the real owner of JMP was Johnson-Matthey, which is certainly a “U.K. entity,” and no other cause or reason for planning the creation of a U.K. entity has been asserted or imagined.
It would not have been necessary to incorporate in the U.K. “Entity” is quite general and not only corporations are entities. However, this was all part of the deception.
Johnson’s deposition (Def. Ex. 37) acknowledges evidence that the representations to IH were designed to create an impression while creating plausible deniability, i.e., that JMP was actually new and independent, with IH supposedly being informed of this, and they were, but in a manner that left the “Johnson Matthey” impression intact, and with this attorney certification, IH considered that the likelihood of false representation was low.
3pD: 65. JM Products was intended to be established in the United Kingdom, but due to high costs associated with incorporation it was formed elsewhere. See Johnson Depo. Tr. at 240:16-20.
This is obviously after-the-fact rationalization. If JMP was a U.S. company, not related to Johnson-Matthey, there was no reason at all for an “entity” in the U.K. It is clear why that was represented: to support the narrative that the real customer was as originally stated, a U.K. company, Johnson-Matthey, “JM” in documents, and that JMP, nee JMC, was just a U.S. company formed for the purpose, with Johnson as incorporator (not initially realized to be Rossi’s attorney, but thought to be the representative of Johnson-Matthey) . That is why Johnson was asked questions about Johnson-Matthey and about the intended process.
Johnson supported this by remaining silent as Rossi answered at that meeting, by signing the OFAC document, by creating the paper owner, Platinum America Trust, knowing that this was a sham designed to support Rossi by creating a fake independent customer, and with those invoice requests that were not independent measures, but entirely created on Rossi say-so. Johnson enabled Rossi’s fraudulent representations, and his status as an attorney, even when they discovered who he was, led them to continue to rely on the representations.
66. From the time Rossi first raised the “customer” with Industrial Heat to the time the Term Sheet was executed, J.M. Products did not have a chemical manufacturing process in place with a need for the steam to be produced by the 1 MW Plant. In fact, it did not have any operations at all. See Ex. 2 at 191:18-192:1; Ex. 36 at 34:9-14; Ex. 37 at 31:19-25, 35:13-15, 90:25-91:3, 219:19-221:15, 222:3-24, 235:19-236:2.
66. Disputed. At all relevant times prior to execution of the Term Sheet, Defendants knew that J.M. Products would be a newly formed company not yet operating business. See Supp. Ex. 56; See also Supp. Ex. 46 ¶ 12. At all relevant times, Defendants knew that the Doral Facility was not yet up and running. See Defs.’ Ex. 36 at 34:9-20.
“At all relevant times” is vague. “J.M. Products” would be a new company, yes, but JM was an existing company, and Rossi maintained the illusion that JM was the “real customer” for some time, having made sure that IH would not contact the real JM, because it could cause the deal to fall apart, so intent were they on secrecy.
3pD: 66. Disputed. At all relevant times prior to the execution of the Term Sheet, CounterPlaintiffs knew that JM Products would be a newly formed company and not yet operating. See Darden Depo. Tr. at 177:1-3, 177:8-10.
The cited deposition shows that Darden was following representations that JMP was a corporation formed to represent Johnson-Matthey (JM). There is no clear conflict between that fraudulent representation and “newly formed company.” A purely new company, however, would not have the reputation that was considered important in the earliest negotiations.
67. Also during this time period, J.M. Products was not in any way affiliated with Johnson Matthey; it was owned by a U.S. trust over which Johnson had control as trustee. See Ex. 2 at 202:8-203:11; Ex. 36 at 111:11-112:7, 204:21-205:19; Ex. 37 at 14:21-15:12, 171:13-173:3, 240:7-20, 243:20-244:1.
67. Disputed. Dr. Rossi made clear to Defendants that J.M. Products was a newly formed company. See Supp. Ex. 56. Dr. Rossi made clear to Defendants that J.M. Products would use Johnson Matthey as a supplier. See Defs.’ Ex. 41.
Ex. 41 is Rossi explaining that the “Customer” would not accept further disclosure — this was Rossi pretending there was some customer other than him and some paper set up by Johnson — but “after 3-4 months of good operation” they will make an official outing.” Of course, that never happened. There was no “Customer,” only Rossi puppet theater. Meanwhile, Rossi did not make clear what is claimed above. Rather Rossi wrote that IH would be “allowed to say to their investors that Johnson Matthey is the main supplier of JMC and that the same buys from JMC all the production not bought by other customers.” This was all nonsense. There was no chemical plant, beyond what amounted, at best, to some experimental processing, something that absolutely did not need a megawatt of power. This was all a ruse to create a context where Rossi could pretend that a customer was buying power for some actual application, to allow him to run a faux GPT entirely under his control. He was the customer. Johnson did whatever he said.
3pD: 67. IH knew that the only “affiliation” with Johnson Matthey was that JM Products would obtain materials from Johnson Matthey and process those materials. See Johnson Depo. Tr. at 237:13-22.
No, IH did not know that as the “only affiliation,” they were told that this is what they could say. Rossi created an impression that the true customer behind JMP was Johnson Matthey. As part of this story, they were told what is here represented. There was then a very small quantity of material actually purchased, on an occasion.
68. The only connections between J.M. Products and Johnson Matthey were that Rossi, on behalf of J.M. Products, once asked for a price quote from Johnson Matthey for the purchase of platinum sponge, and then later bought some filters from a Johnson Matthey subsidiary in the United States (to mine them for platinum sponge contained therein). See Ex. 2 at 201:14-203:11; Ex. 17 at 215:14-218:14, 221:8-223:16; Ex. 36 at 104:3-112:17; Ex. 37 at 125:8-127:25; Ex. 44 (Leonardo Corp. Dep. Ex. 17).
68. Disputed. Dr. Rossi made clear to Defendants that J.M. Products was a newly formed company. See Supp. Ex. 56. Dr. Rossi made clear to Defendants that J.M. Products would use Johnson Matthey as a supplier. See Defs.’ Ex. 41. In fact, J.M. Products purchased product from Johnson Matthey. See Supp. Ex. 64 at 108:1-16.
The reality was far from what Rossi had represented, with Johnson’s participation.
3pD: 68. See ¶67, supra.
69. Rossi, on behalf of Leonardo, and Johnson, on behalf of J.M. Products, each made these representations regarding the “customer” to induce Industrial Heat to sign a Term Sheet to allow Rossi and Leonardo to move the 1 MW Plant to Florida. See Ex. 2 at 192:21-25, 200:1-3; Ex. 9 at 177:11-178:2, 185:18-186:8; Ex. 19 at 191:13-16, 192:15-20, 215:6-10, 218:9-13, 226:1-228:11, 236:22-237:20; Ex. 34; Ex. 37 at 230:18-231:6, 232:9-19, 234:2-235:18, 237:13-22.
69. Disputed. Plaintiffs never intended to induce Defendants into signing a Term Sheet and made no false representations with respect to J.M. Products. See Supp. Ex. 46 ¶ 46. [sic. ¶ 22] In addition, Defendants mutually benefitted from the use of a customer in that they actually brought investors to the Doral Facility in order to solicit and obtain over $50 million in investment funds. See Ex. 3 at 170:9-14, 204:25-205:5; 206:6-207:6; Ex. 34. Finally, Defendants testified that with respect to a customer, they simply wanted to “accommodate” Dr. Rossi. See Supp. Ex. 48 at 184:7-15. Defendants’ “goal” was to determine whether the 1MW Plant produced a “real serious significant energy output.” See id. at 184:7– 15. Defendants did not care what the customer would be doing. See id. at 196:8-196:11.
3pD: 69. Disputed. Johnson and JM Products did not make any false representations with respect to JM Products. See Johnson Depo. Tr. at 237:13-22; Vaughn Depo. Tr. at 204:22-24, 270:18-20; IH Depo. Tr. at 227:21-228:3, 228:20-229:2. There is no evidence that established Johnson was present when any alleged representations regarding Johnson Matthey were made. See id. Furthermore, IH testified that it was “trying to be accommodative” and “trying to keep [Rossi] happy” when it allowed the Plant to move to Florida. See IH Depo. Tr. 214:15-19, 215:25-216:1; see also Vaughn Depo. Tr. at 272:9-10. [272 missing from 243-6 Ex. F, but present in IH 207.21.]
There is evidence that Johnson was present when representations were made, but it is in the form of summary memories, not specific language. The OFAC declaration is acknowledged as false, it was, on the face, a statement of fact, not intention, and that false “fact” supported the Johnson Matthey story.
70. In reliance on these representations, Industrial Heat entered into a Term Sheet on or about August 13, 2014 with Leonardo and J.M. Products. See Ex. 9 at 156:24-162:5, 164:19-167:14, 169:21-24, 180:15-181:3, 191:21-23; Ex. 19 at 191:21-24, 213:25-214:19, 215:20-216:12, 217:12-221:3, 231:24-232:20; Ex. 21 at 182:5-183:8, 184:7-15, 185:3-10, 197: 8-16, 198:7-201:2, 267:18-268:7, 272:5-12, 276:19-277:9. A true and correct copy of the final executed Term Sheet is attached hereto as Exhibit 45.
70. Disputed. Defendants entered into the Term Sheet because they simply wanted to “accommodate” Dr. Rossi. See id. at 184:7-15. Defendants’ “goal” was to determine whether the 1MW Plant produced a “real serious significant energy output.” See id. at 184:7-15. Defendants did not care what the customer would be doing. See id. at 196:8-196:11. In addition, they intended to, and did, solicit and obtain $50 million in investment funds. See Ex. 3 at 170:9-14, 204:25-205:5; 206:6-207:6; Ex. 34.
3pD: 70. Disputed. IH entered into the Term Sheet because it was trying to accommodate Rossi. See IH Depo. Tr. 214:15-19, 215:25-216:1; see also Vaughn Depo. Tr. at 272:9-10. IH did not care about what the customer would be doing. See Vaughn Depo. Tr. at 196:8-11. [p. 196 and 272 missing from Ex. F, IH 207-21 used here.] In addition, Counter-Plaintiffs solicited and obtained $50 million in investment funds after IH entered into the Term Sheet. See IH Depo. Tr. at 170:9-14, 204:25-205:5, 206:6-207:6. It is undisputed that JM Products, Leonardo, and IH entered into the Term Sheet on or about August 13, 2014. See ECF No. 132-17. [link is to original filing, 29-17]
71. Industrial Heat would not have entered into the Term Sheet or allowed Rossi to remove the 1 MW Plant to Florida if Industrial Heat had known that the “customer” had no affiliation with Johnson Matthey or any other publicly traded company, and no real manufacturing process or need for steam or heat. See Ex. 6 at ¶ 14; Ex. 19 at 218:2-221:3.
71. Disputed. See Disputed Facts in ¶ 70, supra.
3pD: 71. Disputed. See ¶70, supra.
72. Rossi rented the premises at 7861 N.W. 46th Street, Doral, FL 33166 (the “Doral Facility”) on behalf of Leonardo. See Ex. 2 at 200:9-17; Ex. 36 at 24:25-25:9, 72:7-20, 83:6-17; Ex. 37 at 40:25-41:6, 110:12-111:18, 123:10-17; Composite Ex. 46 (Johnson Dep. Ex. 15; J.M. Products Dep. Ex. 3).
3pD: 72. Undisputed.
73. After the 1 MW Plant moved to the Doral Location, Rossi, acting at times for Leonardo, and at other times for J.M. Products, took the following steps to create the intentionally false illusion that J.M. Products was a “real customer” of Leonardo using steam produced by the 1 MW Plant:
a. Distinguishing J.M. Products from Rossi and Leonardo in communications with Industrial Heat and with others, and instructing others to do the same. See Composite Ex. 47 (Leonardo Corp. Dep. Ex. 20; Johnson Dep. Exs. 17 & 23; AEG Dep. Ex. 28; Bass Dep. Ex. 20; Rossi_00004860).
b. Holding out Third-Party Defendant James Bass (“Bass”) as J.M. Products’ “Director of Engineering.” See Bass Dep. (excerpts of which are attached hereto as Composite Ex. 48) 157:2-15.
c. Representing J.M. Products as having its own operations and a use for the 1 MW Plant’s steam. See Ex. 19 at 285:6-23; Ex. 47 at Leonardo Corp. Dep. Ex. 20.
d. Representing J.M. Products as being satisfied with the power it was purportedly receiving from the 1 MW Plant. See Ex. 47 at Leonardo Corp. Dep. Ex. 20.
e. Representing J.M. Products as being affiliated with Johnson Matthey. See Ex. 9 at 179:16-180:12; Ex. 19 at 229:21-230:5; Ex. 49 ([IH-00011231]).
73. Disputed. J.M. Products was a real customer who used steam produced by the 1MW Plant to treat platinum sponge to create catalyzers for sale. See Supp. Exs. 58, 45 at 185:23-186:20. IPH has no proof to contradict this representation. See Ex. 17 at 149:19-150:8. [sic. no page 149.] In fact, J.M. Products did use steam generated by the 1MW Plant to create platinum-sponge and/or grapheme based catalyzers for sale to Leonardo. See Supp. Ex. 59 at 214:23-215:3, 220:16-19, 225:5-10. Regardless, Defendants did not care what J.M. Products was using steam for or what the company was producing. See Supp. Ex. 48 at 196:8– 196:11.
a. At all times, Dr. Rossi distinguished J.M. Products from Rossi and Leonardo: (a) to respect corporate formalities; and (b) because the entities and individuals were separate and distinct. See Supp. Ex. 46 ¶ 17.
b. James Bass actually served as Director of Engineering and independent contractor for J.M. Products. See Defs.’ Ex. 48 at 57:2-15 [sic. no page 52]
c. J.M. Products used steam produced by the 1MW Plant to treat platinum sponge to create
catalyzers for sale. See Supp. Exs. 58, 45 at 185:23-186:20. IPH has no proof to contradict this
representation. See Ex. 17 at 149:19-150:8 [sic. no page 149.]. In addition, J.M. Products had its own operations that
consisted of using steam heat to create catalyzers. See Supp. Ex. 59 at 214:23-215:3, 220:16-19, 225:5-10.
d. J.M. Products was in fact satisfied with the power that it was receiving from the 1MW Plant. See Defs.’ Ex. 47 at Leonardo Corp. Dep. Ex. 20.
e. Dr. Rossi made clear to Defendants that J.M. Products was a newly formed company. See Supp. Ex. 56. Dr. Rossi made clear to Defendants that J.M. Products would use Johnson Matthey as a supplier. See Defs.’ Ex. 41.
3pD: 73. Disputed. JM Products used steam produced by the Plant to create platinum
sponge and/or graphene based catalyzers for sale to Leonardo. See Leonardo Depo. Tr. at
214:23-215:3, 220:16-19, 225:5-10. Counter-Plaintiffs do not cite to any evidence that supports
the “undisputed fact” that Rossi was acting on behalf of JM Products “at other times.”
a. The entities and individuals are separate and distinct. In addition, Rossi
distinguished JM Products from Rossi and Leonardo to respect corporate formalities. See ECF
No. 238-4 (Plaintiffs’ Supp. Ex. 46 ¶17).
b. Bass is in fact an engineer and he was the Director of Engineering during his time
with JM Products. See Bass Depo. Tr. at 8:17-21, 157:2-15.
c. See ¶73, supra.
d. JM Products was in fact satisfied with the power that it was receiving from the
Plant. See ECF No. 207-47 at Leonardo Corp. Dep. Ex. 20. [introduced Dep page 240:23]
e. Counter-Plaintiffs knew that JM Products would be a newly formed company and
not yet operating. See Darden Depo. Tr. at 177:1-3, 177:8-10. In addition, Rossi made clear to
Defendants that JM Products would use Johnson Matthey as a supplier. See ECF No. 207-41.
This is mind-boggling. Really! Read the evidences! They show that appearances were created while substance (Johnson Matthey as the “real customer”) was maintained.
74. After the 1 MW Plant moved to the Doral Location, Johnson, acting for J.M. Products, took the following steps to create the intentionally false illusion that J.M. Products was a “real customer” of Leonardo using steam produced by the 1 MW Plant:
a. Sending letters to Industrial Heat on the amount of power J.M. Products was
receiving and offering to pay for such power. See Ex. 9 at 294:16-295:18; Ex. 19
at 288:16-18; Ex. 21 at 246:14-17; Ex. 37 at 120:15-121:1, 167:24-168:2,168:13–
169:3, 170:22-171:3; 172:23-173:12, 174:17-21, 178:23-179:3, 179:16-25;
Composite Ex. 50 (Johnson Dep. Exs. 18, 32, 34, 35, 36, 37, 38, & 39; Rossi Dep.
b. Sending letters to Industrial Heat representing J.M. Products to be an “Advanced
Derivatives of Johnson Matthew Platinum Sponges.” See Ex. 37 at 123:10-124:4,
171:13-173:3; Ex. 50 at Johnson Dep. Exs. 34 & 35.
74. Plaintiffs reserve the right to dispute these purported “facts” to the extent that Defendants
prospectively assert the “facts” against Plaintiffs.
3pD: 74. Disputed. JM Products used steam produced by the Plant to create platinum
sponge and/or graphene based catalyzers for sale to Leonardo. See Leonardo Depo. Tr. at
214:23-215:3, 220:16-19, 225:5-10.
a. Johnson was told that the steam from the Plant was being utilized. See Johnson Depo. Tr. at 50:16-23.
b. Johnson did not send letters to IH representing that JM Products was a derivative of Johnson Matthey. See Johnson Depo. Tr. at 124:5-19. Johnson believed that the caption on the letters (“Advanced Derivatives of Johnson Matthew Platinum Sponges”) meant “a product that is
produced using Johnson Matthey platinum sponge, a derivative of the sponge.” See id
It is clear that Johnson Matthey was represented to IH as the “real customer,” with JMC/JMP being a corporation admittedly (by Rossi) formed to conceal the true ownership. Johnson supported this deception, possibly with silence as Rossi spoke to IH in Raleigh in 2014. He supported it with the false “U.K. entity” certification, and he supported it with the cover story created that IH would be able to tell customers that JM was a principal supplier of JMP (and it was also represented that JM would buy product from JMP). In fact, there was no production taking place, other than what would be called experimental quantities, very small. Using a 1 MW Plant to provide 100 C steam to process a few grams of product would be business-crazy. An ordinary electric tea kettle, under a kilowatt, could have sufficed.
The original “customer” concept was that the customer would be reputable and would independently measure the steam, that it would be using for substantial production, saving money on power. That letter caption supported the idea that JMP was associated with Johnson Matthey. It is quite possible that Rossi deceived Johnson, as well as everyone else. However, Johnson was a lawyer and his status as a lawyer was used to convince IH that the customer was legitimate. Johnson was, at best, supporting a fraud by his participation, allowing Rossi to speak, using the name that Rossi chose (Johnson has no idea what JM in JM Products stands for — when it is obvious, including from that letterhead: JM stands for Johnson Matthey. Rossi would know the significance, would know that it would get the attention of IH. Johnson might not realize all that. He may think this was a harmless charade. This, however, makes him liable.
75. After the 1 MW Plant moved to the Doral Location, Bass took the following steps to create the intentionally false illusion that J.M. Products was a “real customer” of Leonardo using steam produced by the 1 MW Plant:
a. Holding out himself as J.M. Products’ “Director of Engineering.” See Ex. 9 at 227:21-228:6; Ex. 19 at 289:2-7, 291:23-292:1; Ex. 36 at 44:5-9; Ex. 48 at 158:7-159:17; Ex. 51 (Bass Dep. Ex. 28)
b. Representing J.M. Products as having its own operations and a use for the 1 MW Plant’s steam. See Ex. 9 at 228:7-24, 291:8-12; Ex. 19 at 285:6-23.
c. Representing J.M. Products as being satisfied with the power it was purportedly receiving from the 1 MW Plant. See Ex. 9 at 295:25-296:12; Ex. 36 at 56:4-15, 61:9-18.
75. See ¶ 74, supra.
3pD: 75. Disputed. JM Products used steam produced by the Plant to create platinum sponge and/or graphene based catalyzers for sale to Leonardo. See Leonardo Depo. Tr. at 214:23-215:3, 220:16-19, 225:5-10. a. Bass is in fact an engineer and he was the Director of Engineering during his time with JM Products. See Bass Depo. Tr. at 8:17-21, 157:2-15.
b. See ¶75, supra. In addition, Bass was told that JM Products was working with
platinum sponge and graphene. See Bass Depo. Tr. at 27:9-29:10.
c. JM Products was in fact satisfied with the power that it was receiving from the
Plant. See ECF No. 207-47 at Leonardo Corp. Dep. Ex. 20. [introduced Dep page 240:23]. In addition, Bass was told that JM Products was working with platinum sponge and graphene. See Bass Depo. Tr. at 27:9-29:10.
76. Each of Rossi, Leonardo, Johnson, J.M. Products, and Bass intended, by the actions enumerated above, to present J.M. Products to Industrial Heat as a check on, and confirmation of, claims by Rossi, Leonardo, and Fabio Penon (“Penon”) that the 1 MW Plant was operating effectively and producing a high volume of steam. See Ex. 17 at 242:21-243:2; Ex. 47 at Leonardo Corp. Dep. Ex. 20.
76. As indicated above, Plaintiffs engaged in no wrongful activity. See ¶¶ 1-75, supra. The 1MW Plant operated as indicated in the reports that the ERV, Fabio Penon, circulated to Plaintiffs and Defendants. See Ex. 32; Ex. 36.
3pD: 76. Disputed. As indicated above, JM Products, Johnson, and Bass did not engage in
any wrongful activity. See ¶¶62, 65-75, supra. In addition, they did not represent to CounterPlaintiffs the coefficient of performance (“COP”) of the Plant. See IH Depo. Tr. at 286:20-287:5, 287:9-16, 288:10-21; Darden Depo. Tr. at 302:8-10. Lastly, Fabio Penon was responsible for
measuring and reporting the operation and COP of the Plant to Counter-Plaintiffs. See ECF No.
214 at Ex. 3, 9, 10.
The Darden Depo directly contradicts the claim. The ECF 214 exhibits 3 and 9 are Darden and Vaughn depositions, with no page number. Ex. 10 is about the Validation Test in 2013 and is not related to the task of Penon at Doral. It is true that reporting a 750 KW or 1 MW, as Johnson did, was not a claim of COP, but would be a number that, together with power consumption, leads to a direct calculation of COP. Representing the level of power delivered as steam, given a limited input power (about 2o KW), as being a megawatt, would indicate a COP of 50. Johnson certainly did claim megawatt performance, and was, on the face, willing to pay for it at $1000 per day per megawatt. However, this was all based on information from Rossi, clearly, and Rossi paid the JMP bills. Rossi set up an elaborate scheme where he paid everything, with the idea that this would be paying JMP for production of “platinum sponge,” resulting in an astronomical processing cost; it is obvious why he was willing to do this; it was a scheme to claim $89 million, an attempt to force IH to pay instead of what was apparently being offered, voluntary payment for verified performance.
77. In reality, following the execution of the Term Sheet, J.M. Products had no manufacturing process to use the steam allegedly produced by the 1 MW Plant, made no products, and had no customers other than Leonardo itself. See Ex. 36 at 31:3-25, 32:14-17, 77:16-23, 233:14-16, 237:12-15, 248:23-249:3; Ex. 37 at 19:13-21:17, 22:24-23:8, 50:16-23, 53:7-11, 198:9-11, 224:20-226:10; Ex. 48 at 71:1-15, 133:23–135:12, 136:12-19; Stokes Dep. (excerpts of which are attached hereto as Composite Ex. 52) 92:6-21, 93:21-94:6, 165:1-21, 191:16-22, 199:18-200:5.
77. J.M. Products did use steam generated by the 1MW Plant to create platinum-sponge and/or graphene based catalyzers for sale to Leonardo. See Supp. Ex. 59 at 214:23-215:3, 220:16-19, 225:5-10; Supp. Ex. 58; Supp. Ex. 45 at 185:23-186:20. IPH has no proof to contradict this representation. See Ex. 17 at 149:19-150:8.
The “representation” is of a trivial amount of power used to create a trivial amount of platinum sponge or graphene “catalyzers,” for Leonardo. Rossi was the only actual customer, managing all three entities in Doral: JMP, Leonardo, and the power plant. The IPH reference is to the alleged 30(b)(6) violation, which is apparently a dead claim. (Because the megawatt is low-grade steam, allegedly at about 103 C as generated, only a small amount could be used to treat a few grams of product. An electric teakettle would handle it easily.
3pD: 77. Disputed. JM Products used steam produced by the Plant to create platinum sponge and/or graphene based catalyzers for sale to Leonardo. See Leonardo Depo. Tr. at 214:23-215:3, 220:16-19, 225:5-10; see also Rossi Depo. Tr. at 185:23-186:20 (relevant portion found in ECF No. 238-3); see also ECF No. 238-16.
238-16 is clear: Rossi is representing the “customer” as being distinct from him. If that email is filled in with what came to be known, it would be blatantly preposterous. Rossi does say that the power will be used to create “catalyzers” that “he” (the customer) sells. One would imagine that for $1000 per day for power, there would be a lot of catalyzers sold! This would be production. But there was no production beyond a few grams. This was an idea Rossi had for how to convince IH to move the Plant to Florida where he could control it. The Plant was not needed for the experiments with platinum sponge or graphene. Rossi claims that the “customer” will not have access to the plant. But Rossi is — defacto — the customer!
78. In addition, Rossi and Leonardo entirely controlled and funded J.M. Products and Bass. See Ex. 17 at 207:24-209:13, 227:11-15; Ex. 36 at 17:6-16, 18:4-20, 22:16-23:4, 24:13-25:9; Ex. 37 at 56:13-15, 116:9-18, 117:23-118:1, 142:6-16, 144:16-146:14, 153:14-155:25, 158:5-11, 160:1-162:7, 229:8-18, 241:23-25; Ex. 48 at 96:13-20, 97:5-17, 98:1-3; Composite Ex. 53 (Johnson Dep. Exs. 16, 27, 29, 30, & 31). Moreover:
a. Bass was hired as J.M. Products’ independent contractor (not employee) by Rossi, and worked under Rossi’s direction. Ex. 17 at 209:14-18; Ex. 36 at 26:4-13; Ex. 37 at 59:22-60:3, 119:8-120:4, 156:1-9, 158:5-11, 162:8-163:15, 165:22-167:3; Ex. 48 at 98:1-3.
b. Johnson and Bass had little to no knowledge of J.M. Products’ supposed business and operations. See Ex. 37 at 19:13-21:17, 22:24-23:8, 50:16-23, 53:7-11, 56:7-10, 198:9-21, 217:5-12; Ex. 48 at 27:15-28:16, 41:17-42:18, 71:1-15.
c. The monthly letters to Industrial Heat prepared on J.M. Products letterhead and signed by Johnson, which reported levels of power allegedly received from the 1 MW Plant, were drafted and the information contained therein provided by Rossi. See Ex. 2 at 271:11-272:2, 276:6-23; Ex. 37 at 121:2-12, 167:15-169:8, 170:9-171:3, 173:6-174:3, 179:23-179:25; Ex. 47 at Johnson Dep. Ex. 17; Ex. 50 at Johnson Dep. Exs. 34, 35, 36, 37, & 38; Ex. 54 (Johnson Dep. Exs. 18 & 33).
78. In exchange and consideration for J.M. Products’ sale to Leonardo Corporation of the catalysts that J.M. Products produced using the 1MW Plant steam, Leonardo Corporation paid J.M. Products’ expenses and employee/contractor income. See Defs.’ Ex. 17 at 208:3-209:21. Dr. Rossi controlled J.M. Products’ technical and product development activities, as well as the company’s day-today
activities. See Defs.’ Ex. 36 at 17:11-16, 22:23-23:1. At all relevant times, Defendants knew that Dr.
Rossi would direct the operations of the J.M. Products. See Defs.’ Ex. 36 at 34:15-20.
a. Dr. Rossi hired Mr. Bass on behalf of J.M. Products and on an independent contractor
basis, and gave him the title “Director of Engineering.” See Defs.’ Ex. 17 at 209:17-18; Defs.’ Ex. 36 at 26:11-13. Defendant IPH has no knowledge about whether Mr. Bass was J.M. Products’ Director of Engineering. See Supp. Ex. 47 at 161:7-162:8. Defendant Vaughn testified that he had no reason to believe that Mr. Bass was not J.M. Products’ Director of Engineering. See Supp. Ex. 52 at 294:20–
b. See ¶ 74, supra.
3pD: 78. Disputed. At all material times, Counter-Plaintiffs knew that Rossi would direct the operations of JM Products’ facility. See JM Products Depo. Tr. at 34:15-20. In addition, Leonardo paid JM Products’ expenses pursuant to an agreement whereby JM Products would provide to Leonardo the catalysts that JM Products produced using the steam from the Plant. See Leonardo Depo. Tr. 208:3-209:21.
Rossi, in that JMP Deposition, has this:
4 Q. All right. When did you inform Industrial Heat that you had complete control over the activities of J.M. Products?
7 A. From the beginning.
8 Q. From the beginning?
9 A. From the beginning. In June there is — I am aware of an e-mail that I sent to Tom Darden and J.T. Vaughn in June 2014, so — when did not yet exist the factory of Doral because the factory of Doral has been rented, if I will recall, in September for 2014. So in June 2014 I sent an e-mail where I clearly stated to J.T. Vaughn and Tom Darden that I was going to direct the plant of J.M. I informed them perfectly that it was an experimental plant. I informed them — they knew perfectly everything from the beginning.
We have that email:
From: Andrea Rossi <firstname.lastname@example.org>
Sent: Tuesday, June 10, 2014 9:44AM
To: Tom Darden; JT Vaughn; Joe Pike; email@example.com
Subject: Andrea Rossi
I have completed the organization of my plan to put the 1 MW in operation. I confirm all I already said: we have a Customer who pays 1,000 $/day to rent the 1 MW plant, put it in his factory in Miami, produce catalyzers that he sells; I will direct the operation of the plant for the first year, the contract will be for 3 years, renewable. The Customer will not have access to the reactors, that will remain under our full control for maintainance and recharge. […]
Rossi claims in the deposition that “plant” in that email refers to the customer’s plant. However, he has just referred to the “1 MW plant” and then the customer has a “factory.” That direction of the operation of the “plant” is for a year, which is what is in the Term Sheet. This did not represent that he would be directing the customer’s factory, and it is highly likely that Rossi is here lying about the intention of that mail, which was, no matter how it is sliced, deceptive, strongly implying — as did many other mails around that time — that this was an independent customer, referring to them in the third person. As we now know, Rossi was indeed entirely responsible for JMP, it existed as a separate entity only on paper (and with a separate bank account, but spending and payment were by Rossi). The “customer” reports of power usage were drafted by Rossi for Johnson to send. Like the fabled turtles, it’s Rossi all the way down. But that was not disclosed, and that mail certainly did not inform IH of “perfectly everything.”
a. Bass is in fact an engineer and he was the Director of Engineering during his time
with JM Products. See Bass Depo. Tr. at 8:17-21, 157:2-15. Vaughn testified that he had no
reason to believe that Bass was not JM Products’ Director of Engineering. See Vaughn Depo. Tr.
b. Johnson’s and Bass’ roles at JM Products did not entail the operation of the Plant.
See Johnson Depo. Tr. 234:3-15, 237:23-238:1; Bass Depo. Tr. 113:13-17. Johnson and Bass
were told what the operation of JM Products entailed. See Johnson Depo. Tr. at 50:16-23; Bass
Depo. Tr. at 8:17-21, 157:2-15.
79. In addition, J.M. Products was not an affiliate of Johnson Matthey and was not controlled by a trust formed in the United Kingdom. Rather, it was owned by a United States trust over which Johnson had control as a trustee. See Ex. 2 at 202:8-203:11; Ex. 36 at 111:11-112:7, 204:21-205:19; Ex. 37 at 14:21-15:12, 171:13-173:3, 240:7-20, 243:20-244:1.
79. Dr. Rossi made clear to Defendants that J.M. Products was a newly formed company. See Supp. Ex. 56. Dr. Rossi made clear to Defendants that J.M. Products would use Johnson Matthey as a supplier. See Defs.’ Ex. 41. J.M. Products was intended to be established in the United Kingdom, but due to high costs associated with incorporation the situs was changed. See Defs.’ Ex. 37 at 240:16-20.
Rossi is taking advantage of the confusion he created. There is a “customer,” originally represented as JM. They want to use his technology, it’s represented. Then there is a company formed locally, because they allegedly want their identity to be secret. Rossi says “I shouldn’t have mentioned them” (as I recall). JMP is newly formed and that was totally obvious. But the representation was that the “real customer” was not new, and was Johnson Matthey. The “U.K. entity” was clearly intended to support that idea. Further, the owner, on paper in Johnson’s files, Platinum America Trust, was formed in Florida July 14, 2014. JMC’s corporate filing was Jun 27, though Johnson’s signature is dated July 24, 2014. Probably a simple error. However, the OFAC declaration draft was provided to IH by email August 7, 2014. The final executed agreement was sent August 13, 2014.
The owner was in Florida when the declaration was filed. If the customer was in fact new, with no ownership connection with Johnson-Matthey, there was no reason to create a “U.K. Entity” at any cost, so why would that be claimed? It’s obvious: to maintain and support the fiction that the real customer was Johnson Matthey.
3pD: 79. IH was informed that the only “affiliation” with Johnson Matthey was that JM Products would obtain materials from Johnson Matthey and process those materials. See Johnson Depo. Tr. at 237:13-22. IH knew that JM Products was a newly formed company and not yet operating. See Darden Depo. Tr. at 177:1-3, 177:8-10. Counter-Plaintiffs were informed that “the operation of [JM Products] was going to be handled by Andrea Rossi.” See Johnson Depo. Tr. 245:1-2. JM Products was intended to be established in the United Kingdom, but due to high costs associated with incorporation it was formed elsewhere. See Johnson Depo. Tr. at 240:16- 20.
80. Rossi and Third-Party Defendant Fulvio Fabiani (“Fabiani”), acting on behalf of Third-Party Defendant United States Quantum Leap, LLC (“USQL”), provided measurement data to Fabio Penon , who in turn provided that information to Industrial Heat and IPH. Fabiani also provided his own separate measurement data to Industrial Heat and IPH. See Ex. 10 at 101:12-102:3, 105:6-21, 107:4-10, 115:17-116:6, 117:20-118:8, 137:6-13, 169:19-171:20, 190:2-191:3; Ex. 17 at 16:15-17:1, 29:6-16, 37:16-38:5, 156:12-19, 178:25-180:10; Ex. 21 at 256:7-22; Composite Ex. 55 (Fabiani Dep. Ex. 3; Penon Dep. Exs. 16, 19, 21, & 26); Fabiani Dep. (excerpts of which are attached hereto as Composite Ex. 56) 38:3-18, 39:11– 40:12, 44:14-48:9, 87:16-88:23, 99:5-8, 100:8-22, 142:5-10;
80. When necessary, Mr. Fabiani transmitted to Fabio Penon data that was stored on equipment used to measure the 1MW Plant output. See Supp. Ex. 65 at 105:6-106:4. None of the data could be manipulated without the equipment recording such manipulation. See id. at 105:6-106:4, 171:2– 10. The only data that Dr. Rossi transmitted to Fabio Penon was a logbook containing performance data. See Supp. Ex. 59 at 37:16-38:5. At all times, Dr. Rossi rigorously logged information relevant to the logbook, including “water flow, the water temperature, the steam temperature, the bars, etcetera.” See id. at 132:16-19.
3pD: 80. It is undisputed that Fabiani and USQL provided data to the Third-Party Plaintiffs and to Fabio Penon. The arguments made by the Third-Party Plaintiffs that the data was somehow fabricated, manipulated, incomplete or misleading is denied. Third-Party Plaintiffs fail to cite any record evidence whatsoever to substantiate their allegations and assertions that the data was somehow fabricated, manipulated, incomplete or misleading. Quite the contrary, there is no record evidence that Fabiani manipulated the E-Cat data provided to Industrial Heat. See Third-Party Defendants Statement of Undisputed Material Facts No. 29 (ECF No. 242).
There is no claim yet that Fabiani fabricated data. Arguing against that claim obscures the actual claims. The claim against Fabiani is for breach of contract, compounded by destruction of evidence.
81. Fabiani and Penon’s measurement data regarding the 1 MW Plant’s power absorption were nearly identical. See Ex. 55 at Fabiani Dep. Ex. 3 & Penon Dep. Ex. 21; Ex. 56 at 99:5-8, 100:8-22; Murray Dep. (excerpts of which are attached hereto as Composite Ex. 57) 118:16-119:5, 147:2-13, 251:18-252:7; Composite Ex. 58 (Murray Dep. Exs. 8 & 11).
81. See ¶ 74, supra.
3pD: 81. Fabiani and USQL assert that the 1 MW Plant’s power absorption measurement data speaks for itself. The arguments made by the Third-Party Plaintiffs that the data was somehow fabricated, manipulated, incomplete or misleading is denied. Third-Party Plaintiffs fail to cite any record evidence whatsoever to substantiate their allegations and assertions that the data was somehow fabricated, manipulated, incomplete or misleading. Quite the contrary, there is no record evidence that Fabiani manipulated the E-Cat data provided to Industrial Heat. See Third-Party Defendants Statement of Undisputed Material Facts Nos. 15, 16 & 29 (ECF No. 242).
Again, that has not been claimed. Rather, there are some anomalies that become difficult to explain if the Penon, Rossi, and Fabiani data collection was independent, and the FP&L power data could indicate some error. Or, as is obvious, there could have been some FPL error. Again, arguing against a claim that has not been made can be a smokescreen covering up the real claims.
82. The power absorption data that Fabiani and Penon provided Industrial Heat and IPH reflected that during certain time periods, the 1 MW Plant was [sic, strike “was”] used more power than Florida Power and Light (“FPL”) was providing to the entire warehouse facility where the 1 MW Plant was located. Ex. 55 at Fabiani Dep. Ex. 3 & Penon Dep. Ex. 21; Ex. 56 at 99:5-8, 100:8-22; Ex. 57 at 254:13-260:14, 279:14-283:6, 367:8-368:7; Ex. 58; Composite Ex. 59 (Murray Dep. Exs. 12 & 13).
82. See ¶ 74, supra.
3pD: 82. Fabiani and USQL assert that the discrepancies between the 1 MW Plant’s power absorption measurement data provided by Fabiani and the FPL readings are not probative of the claim that Fabiani’s data was somehow fabricated, manipulated, incomplete or misleading. Fabiani and USQL deny that any data was somehow fabricated, manipulated, incomplete or misleading. Mr. Joseph Murray, a former Vice President of Industrial Heat and expert witness tendered by the Third-Party Plaintiffs, testified that he had “no evidence whatsoever” that the discrepancy between Fabiani’s power absorption data and the FPL readings were the result of manipulation. (Murray Depo. Tr. 257:8-20; 368:8-14).
83. When providing measurement data to Penon, Rossi withheld information regarding (a) discrepancies between measurements taken from Leonardo’s portion of the Doral Facility and measurements taken from JMP’s portion of the Doral Facility; and (b) instances when the Plant had operational problems or had to be shut down. Ex. 17 at 131:9-13, 132:16-24, 250:14-251:4.
83. The testimony to which Defendants cite does not support the proposition that Plaintiffs were required to provide such data to Penon or that they did not provide such data to Penon. Dr. Rossi transmitted to Fabio Penon a logbook containing performance data. See Supp. Ex. 59 at 37:16-38:5. At all times, Dr. Rossi rigorously logged information relevant to the logbook, including “water flow, the water temperature, the steam temperature, the bars, etcetera.” See id. at 132:16-19. Dr. Rossi never withheld purported “discrepancies between measurements taken from Leonardo’s portion of the Doral Facility and measurements taken from JMP’s portion of the Doral Facility.” See Supp. Ex. 46 ¶ 20.
3pD: no response.
84. When the 1 MW Plant was sent to and then reassembled in Florida, Rossi, on behalf of Leonardo, redesigned its configuration in a manner that made evaluating its performance more difficult. For example, the 1 MW Plant was designed to produce steam, yet Rossi removed the steam trap and condensate line placed on the pipe intended to carry the steam out of the 1 MW Plant. Dameron Dep. (excerpts of which are attached hereto as Composite Ex. 60) 181:8-21, 184:23-185:15, 192:12-197:14, 198:24-201:13, 203:15-22; West Dep. (excerpts of which are attached hereto as Composite Ex. 61) 88:3-16, 89:16-19, 91:3-25, 110:20-24, 139:5-11.
84. The 1MW Plant was sent to Florida in a container whose construction was not yet complete. See Supp. Ex. 45 at 248:6-10). When the container arrived in Florida, Plaintiffs completed the construction. See id. Plaintiffs made no substantial changes to the container or 1MW Plant, including any changes that would make evaluating the 1MW Plant’s performance more difficult. See id. at 249:17– 250:16; Supp. Ex. 46 ¶ 19. Plaintiffs did not remove any steam trap. See Supp. Ex. 45 at 248:11-19.
In his deposition (Supp. Ex. 45) Rossi actually says he doesn’t know what a steam trap is. But that may have been poor English, he then says there are different kinds of steam traps. Of course, he could have made that up on the spot (though it’s true). (Rossi has never been known to use steam traps or other devices to insure dry steam, only the easily-defective assumption of dry steam from low pressure and temperature about 100 C.) However, the actual claim was not that Rossi physically “removed” steam traps. What Dameron deposes is that the design was changed. Dameron testifies that he had prepared a design to be implemented by Barry West. A steam header was not used, and likewise steam traps. A lack of steam traps would have made “evaluating performance more difficult.”
3pD: no response.
85. Rossi, on behalf of Leonardo, walled off a portion of the Doral Facility for the ostensible purpose of creating a space within which J.M. Products would “operate.” Rossi, with Johnson and J.M. Products’ concurrence, thereafter prohibited Industrial Heat personnel from entering the J.M. Products side of the Doral Facility or learning about J.M. Products’ supposed operations. See Ex. 21 at 238:7-239:8; Ex. 36 at 38:3-6; Ex. 57 at 216:9-11, 314:10-13; Ex. 61 at 81:6-11, 82:14-17, 100:22-101:7, 157:23-158:2, 159:4-15, 178:16-19, 180:11-23, 181:7-9, 206:12-21, 210:23-212:3, 226:3-12; Composite Ex. 62 (Bass Dep. Exs. 25, 26, & 27).
85. Plaintiffs did not have the authority to grant Defendants access to the J.M. Products side of the Doral Facility. See Supp. Ex. 46 ¶ 18.
Rossi had full control, this has become completely obvious. There was nobody telling him what he could and could not do. On the other hand, Rossi has many times claimed that the Term Sheet prohibited IH from access to the customer area. It does not. That was in a draft, and it was removed. it was actually about the personnel of IH and Leonardo. Read literally, Rossi would not be able to access the “customer plant.” That was consistent with the idea that this was a truly independent customer, but with Rossi in full control of JMP, as he acknowledges, this argument makes no sense.
3pD: 85. Disputed. None of the documents cited by Counter-Plaintiffs support their “undisputed fact” that Johnson and JM Products prohibited IH personnel from entering the JM Products side of the facility or learning about JM Products’ operations. Furthermore, it was understood that, pursuant to the Term Sheet, IH would not have access to JM Products’ facility. See JM Depo. Tr. 38:17-25, 40:24-41:2
Johnson was hardly ever there; the ban on entering was created and enforced by Rossi, but Rossi was acting for JM Products. So JMP did prohibit access, that is indeed clear from many evidences and is not actually denied; indeed, by claiming that this was “pursuant to the Term Sheet,” JMP counsel is confirming the denial of access. However, that was not part of the Term Sheet, see above.
This is remarkable: the JM deposition (by Rossi), loc. cit., lays it out clearly.
3 Q. Dr. Rossi, did you ever take them to the other side of the Doral warehouse where J.M. Products operated; yes or no?
6 A. No, because —
7 Q. Did you tell them — did you ever tell them that they could not access the other side of the Doral warehouse where J.M. Products was located; yes or no?
11 A. In pursuit of —
12 Q. I’m sorry?
13 A. Yes or no does not exist. I have to explain. If you — I am sure that you know perfectly the term sheet between Industrial Heat and J.M.
16 Q. You drafted that.
17 A. In the term sheet was written very clearly that Leonardo — pardon. Industrial Heat guys had not to enter in the area of J.M. and J.M. guys had not the right to enter in Leonardo area. Pardon, Industrial Heat area. So it had been stated, signed and accepted by both parties that are J.M. from one party and Industrial Heat from the other that none of them had to invade the area of the other.
1 Q. And you —
2 A. The only guy that could go in both areas was me because I was at the same time as Industrial Heat knew perfectly, as I said before, I was the consultant and technical director of J.M., as well as the director of the plant of one megawatt.
7 Q. Again, so my question, let’s ask again. Let’s see if you can answer it this time. Did you tell them — did you tell people from Industrial Heat that they could not go to the J.M. Products side of the warehouse? Why is that not a yes or no answer?
13 MR. ARAN: Objection to form.
14 BY MR. PACE:
15 Q. Dr. Rossi —
16 A. I did not tell. The contract told it.
17 Q. So you are saying you never did. So your testimony is — your testimony is — your sworn
19 testimony is you never told anyone —
20 A. No, my testimony is that I don’t recall that it has been necessary to tell to the guys of Industrial Heat that they could not invade the area of J.M., for the very simple fact that they were perfectly aware of the agreement that they had signed with J.M., where was written that J.M. guys could not invade the area of Industrial Heat and Industrial Heat guys were not allowed to enter in the J.M. area.
4 Q. So let’s —
5 A. It was forbidden by contract. Excuse me. If they have asked to me to allow them there, that would mean that they asked to me to breach a contract that they had signed. This would mean that they tried to breach a contract that they had with J.M..
11 Q. Right. We’re going to be here all day, Dr. Rossi, so we’re going to have seven hours.
13 A. I am here for all the time you want. Also more than seven hours if you want.
15 Q. That’s great. Then we will take more than seven hours.
17 MR. ARAN: No, you won’t.
18 THE WITNESS: No problem.
19 BY MR. PACE:
20 Q. Let me ask the question again because it’s a simple question, you can keep trying to dance
22 around it, but I’m asking for a simple answer. Maybe it never occurred, so let me ask again. Did you, Andrea Rossi, ever tell anyone from Industrial Heat that they could not enter the J.M. Products side of the Doral warehouse; yes or no?
2 A. Not that I can recall.
3 Q. Was that hard?
4 A. Sorry?
5 Q. Was that hard, to answer that question?
6 MR. CHAIKEN: Object to form.
7 THE WITNESS: No, it’s not hard. I don’t recall.
9 BY MR. PACE:
10 Q. That’s all I’m asking though.
11 A. Is this the answer?
12 Q. That was the question I asked. Now you’re answering the question I asked.
14 A. Okay.
15 Q. Okay. You can hold onto your speeches for later on.
17 A. Perfect. But I just wanted —
18 MR. ARAN: Object.
19 THE WITNESS: I just wanted to clear if should they have asked to enter —
21 BY MR. PACE:
22 Q. But you’re saying they didn’t.
23 A. — in the J.M. contract, I say I don’t recall.
25 Q. Okay.
1 A. I don’t say they didn’t. I say I don’t recall.
3 Q. That’s all I am asking for. I am asking for what you know, what you recall and your
5 recollection —
6 A. I don’t recall.
7 Q. — is that it never happened?
8 A. Should they have made it they would have asked to me to breach a contract that they had
11 Q. I understand. I understand what you think the law is but I am just asking you for your
14 A. You’re asking me —
15 Q. Dr. Rossi —
16 A. You are asking me if —
17 Q. Dr. Rossi, let’s go on to our next question.
19 A. Okay.
20 Q. There is a question, I get an answer from you, all right? And your answer is to the best of your
23 recollection you don’t believe you ever told anyone from Industrial Heat that they could not access the Doral — the J.M. Products side of the Doral
1 A. Okay.
This business is cited by JMP and Johnson’s attorney as evidence that it was understood that, pursuant to the Term Sheet, IH would not have access to JM Products’ facility. How was that “understood”? This provision is not in the Term Sheet. It was in a draft, removed. It’s obvious: it was understood because Rossi said so, and there are multiple testimonies that Rossi prohibited that access. IH did not push it, and that only makes sense if IH did not believe that Doral was the GPT. Otherwise this mysterious place where heat goes to die — against all physics — would make it impossible to trust test results.
Rossi’s attorneys have their hands full. His manner was one which juries love to hate. He didn’t want to answer a simple yes or no question. (Or with “I don’t recall.”) Instead, he explained why excluding IH and others was required by an agreement, which was simply false. His explanation, with the other testimony leads to a ready conclusion: very likely he excluded IH. Whether he recalls it or not.
Here, IH merely asserted the exclusion, and a simple answer would have been “undisputed.” What comes next, though, is much more serious.
86. Rossi, on behalf of Leonardo, refused to grant Joseph Murray (“Murray”), an Industrial Heat employee, access to the Doral Facility in July 2015. Johnson, on behalf of J.M. Products, complied with and enforced this refusal. Ex. 19 at 247:13-16, 258:7-9; Ex. 21 at 62:19-20, 239:23-25, 240:7-241:12; Ex. 57 at 66:14-18, 130:3-14; Ex. 63 (4th Am. AACT Ex. 19).
86. See ¶ 74, supra.
Rossi has already admitted the refusal. I do not see here a clear “compliance” or “enforcement” by Johnson, as to the July proposed visit.
3PD: 86. Disputed. Again, Counter-Plaintiffs attempt to lump Johnson and JM Products into a purported “undisputed fact” without any evidence to support such statement of fact. None of the documents cited by Counter-Plaintiffs support their statement with respect to Johnson and JM Products. Furthermore, it was understood that, pursuant to the Term Sheet, IH would not have access to JM Products’ facility. See JM Depo. Tr. 38:17-25, 40:24-41:2
Rossi was defacto manager of JMP, so JMP is responsible for what he did (and this lack of access clearly violated the Term Sheet).. I agree here that Johnson is not necessarily implicated in that refusal, unless there is evidence we have not seen. However, this changes in December.
87. Rossi, on behalf of Leonardo, again refused to grant Industrial Heat access to the Doral Facility in December 2015. Again, Johnson, on behalf of J.M. Products, complied with and enforced this refusal. Ex. 37 at 182:11-183:6, 184:23-185:19, 187:1-14, 228:11-229:6; Composite Ex. 64 (Johnson Dep. Exs. 40 & 41).
87. See ¶ 74, supra.
3PD: 87. Disputed. Counter-Plaintiffs mischaracterize the testimony to which they cite. The
letter Johnson sent to IH clearly states that JM Products “will be happy to comply with any
agreement between [IH] and [Leonardo] regarding access to the [facility] to inspect the [Plant].”
See ECF No. 207-64 [Johnson Depo. Ex. 41]. Furthermore, the letter states that it is not the intent
of JM Products to interfere with any dispute between IH and Leonardo as to the Plant and the
related intellectual property. See id.
Johnson, now writing for JMP, violated the Term Sheet which clearly allowed access. Instead of intervening as the agreement would require, he protected Rossi’s control of the facility, based on Annesser’s claim of breach of contract, practically guaranteeing failure, facilitating Rossi’s continued management of the Doral “test.” Johnson did not actually represent any other investors. The only investor and “customer” was Rossi (or Leonardo). (A GPT without IH access and full Rossi control would have been totally inconceivable.)
Johnson was, in fact, acting for Rossi and Leonardo Corporation, of which he is President. There was no independent JMP, and Johnson continued maintaining the fiction.
88. Once Murray gained access to the Plant in February 2016, he was promptly able to determine that Rossi’s claims about the Plant were false. See Ex. 57 at 145:5-8; Ex. 65 (4th Am. AACT Ex. 5).
88. None of Dr. Rossi’s claims about the 1MW Plant were false. See Supp. Ex. 46 ¶ 21.
Murray is not a qualified [sic] to assess Dr. Rossi’s claims about the 1MW Plant. See Supp. Ex. 66 (Expert Report of Dr. K. Wong).
Wong does not claim that Murray is not qualified. He merely disagrees on certain points. Now, is Rossi a qualified expert? He has stated that he made no false claims; however, a claim may be false without any intention to lie, or knowledge of error. What is clear is that Murray raised some questions, questions which have also been raised by many others. There is no eyewitness testimony to the existence of a heat exchanger on the second floor at Doral (and it would have been visible). Wong simply relies on Rossi’s claim, a new claim, conspicuously missing from earlier Rossi attempts to explain how the heat was dissipated. And then some who have analyzed what such a heat exchanger could do have questioned Wong’s math. Those are not issues easy to resolve without trial. We will see if it can be done.
3PD: No response.
89. The scheme orchestrated by Rossi, Leonardo, Johnson, J.M. Products, Bass, Fabiani, and USQL, including Rossi, Leonardo, Johnson, and J.M. Products’ inducement of Industrial Heat to enter the Term Sheet, caused Industrial Heat and IPH to pay for (1) the Plant’s transportation to Florida; (2) the procurement and delivery of equipment for the Plant’s reassembly in Florida; (3) the procurement and transportation of personnel to assemble the Plant in Florida; (4) repairs and maintenance of the 1 MW Plant; (5) new equipment for the Doral Facility; and (6) personnel to work at the Doral Facility, including Barry West (an independent contractor), T. Barker Dameron (an Industrial Heat employee), Murray, and Fabiani. See Ex. 9 at 249:14-20, 305:21-306:5 [no 305-306 in doc]; Ex. 10 at 119:10-15; Ex. 17 at 134:24-135:4, 137:16-138:18, 141:16-142:17, 143:14-144:16, 145:11-148:24, 295:11-18; Ex. 19 at 241:19-242:8, 292:7-20; Ex. 21 at 247:1-6; Ex. 30 [originally filed under seal]; Ex. 57 at 82:21-83:8; Ex. 66 ([IH-00131928])
89. Plaintiffs never orchestrated any fraudulent scheme to induce Defendants into any action whatsoever, and Defendants had full knowledge regarding J.M. Products, its new facility, and its officer (Henry Johnson). See Supp. Ex. 46 ¶ 22; See also facts outlined in paragraphs 1-88 supra.
Rossi is claiming that IH had “full knowledge,” but Rossi is testifying, in Ex. 45, to a matter where he is not likely to have direct knowledge, and the documentary record shows that he did fraudulently represent the nature of the “customer,” and the testimony of Darden and Vaughn states clearly that they did not know. See a blog post on this for detailed examination.
3PD: 89. Fabiani and USQL deny that they were involved in any scheme or caused ThirdParty
Plaintiffs to pay for anything. There is no evidence that the power absorption data provided by Fabiani was manipulated. Id. Fabiani and USQL also deny the causal connection
alleged by the Third-Party Plaintiffs. Fabiani provided the complained of data after Industrial
Heat incurred the expenses set forth in paragraph 89. Mr. Murray testified that the complained
of discrepancies between Fabiani’s power absorption data and the FPL readings occurred
between mid-November 2015 and early December 2015, almost a year after the E-cat was
transported to Florida. (Murray Depo. Tr. 273:13-19). [the cited page is not in the partial transcript asserted in initial note about exhibits, but it is in the full transcript here.)
This is the USQL opposition. below is the JMP/Bass opposition. It is difficult to see how Fabiani could be held responsible for IH expenses with the “early scheme.” There is no clear evidence I have seen that Fabiani was “involved in a scheme,” but Fabiani destroyed evidence that might bear on this (and it seems that Rossi and possibly Penon did the same). Fabiani did provide some data, but not the raw data as requested, and apparently he promised to provide that, then destroyed it. There are actually two problems: occasional discrepancies between Fabiani and Penon (and larger discrepancies with what Johnson effectively asserted by sending the invoice requests), and then substantial identity of data between Fabiani and Penon implies a common source, not independent measurement. And even if the “same source” were a particular instrument, if the data is not recorded at the same time, small variations would be expected. Something is off, something is apparently not trustworthy. By destroying the data, Fabiani made it far more difficult to check this, and was in violation of his agreement with IH. Fabiani invoiced IH for his services, and violated the agreement on which those invoices were based. There is a prima facie case for breach of contract here.
Then there is the more difficult to show element of fraudulent representation. Fabiani’s behavior may have supported the overall Rossi scheme (whether he was aware of that or not). I have not seen enough to support that claim for a finding of fraud, except for the spoliation claim. It is possible at this point that the spoliation issue will then lead to a ruling adverse to Fabiani. If Fabiani consulted counsel before destroying the raw data, he got some very poor advice. Or maybe he just asked his friend, Rossi.
Disputed. Third-Party Defendants did not orchestrate or participate in any scheme to
induce Counter-Plaintiffs to do anything. See ¶¶ 62, 65-82, 85-87, supra. Counter-Plaintiffs new [sic] that JM Products was a newly formed company, would operate a new facility, and was not
affiliated with Johnson Matthey. See Johnson Depo. Tr. at 237:13-22; Darden Depo. Tr. at
177:1-3, 177:8-10. Counter-Plaintiffs involvement with Rossi and Leonardo began long before
Third-Party Defendants met Counter-Plaintiffs and any alleged damages are not the result of any
wrongdoing by Third-Party Defendants. See ECF No. 207 ¶1 [simple reference to the License Agreement]; see also ¶¶ 62, 65-82, 85-87, supra.
90. On or about September 1, 2013, Industrial Heat entered into a Technical Consulting Agreement with USQL, through its sole member, Fabiani (“USQL Agreement”). A true and correct copy of the USQL Agreement is attached as Exhibit 67.
90. – 104. See ¶ 74, supra.
3PD: 90. It is undisputed that USQL and Fabiani executed the Technical Consulting Agreement.
91. On September 9, 2013, Fabiani executed a joinder to the USQL Agreement, agreeing to be bound by certain provisions contained therein, including Section 6 relating to “Rights to Materials.” See id.
90. – 104. See ¶ 74, supra.
3PD: 91. It is undisputed that USQL and Fabiani executed the Technical Consulting Agreement.
92. On or around August 1, 2014, the USQL Agreement was renewed and extended. See Ex. 6 at ¶ 12. Composite Ex. 68 ([IH-00012657-00012658]; [IH-00012659-00012666]).
90. – 104. See ¶ 74, supra.
3PD: 92. It is undisputed that the Technical Consulting Agreement was renewed and extended by the respective parties
93. Also on August 1, 2014, Fabiani executed a joinder to the August 2014 extension of the USQL Agreement, again agreeing to be bound by certain provisions contained therein, including Section 6 relating to “Rights to Materials.” See id.
90. – 104. See ¶ 74, supra.
3PD: 93. It is undisputed that the Technical Consulting Agreement was renewed and extended by the respective parties
94. The USQL Agreement was renewed and extended again in or about July 2015. The renewal extended the USQL Agreement from September 2015 to March 31, 2016. See Ex. 6 at ¶ 12; Composite Ex. 69 (4th Am. AACT Exs. 28 & 29; [IH-00017713]; [IH-00017714-00017721]).
90. – 104. See ¶ 74, supra.
3PD: 94. It is undisputed that the Technical Consulting Agreement was again renewed and extended by USQL and Fabiani.
By the way, USQL originally succeeded in a Motion to Dismiss based on apparent failure of IH to show the renewal. IH then remedied that.
95. Fabiani also executed a joinder to the 2015 extension of the USQL Agreement again agreeing to be bound by certain provisions contained therein, including Section 6 relating to “Rights to Materials.” See id.
90. – 104. See ¶ 74, supra.
3PD: 95. It is undisputed that the Technical Consulting Agreement was again renewed and extended by USQL and Fabiani.
96. On February 23, 2016, Fabiani acknowledged that Fabiani, on behalf of USQL, would provide Industrial Heat with “all electrical and thermal data of the system throughout the period of the test” and an “official report to bring to light all the flaws and functional deficiencies of the system,” which would also mention all “plant stop periods (total or partial)” and the reasons therefor. See Ex. 70 (4th Am. AACT Ex. 21).
90. – 104. See ¶ 74, supra.
3PD: 96. Fabiani and USQL assert that the February 23, 2016 email [Ex. 70] speaks for itself. Fabiani and USQl [sic] assert that this paragraph is disputed because the promised data and report were provided to Third-Party Plaintiffs (Murray Depo. Tr. 363:25-367:7). Fabiani and USQL further assert that the Third-Party Plaintiffs committed a precedent breach of the USQL Agreement by virtue of their failure to make full payment for the work conducted by Fabiani and USQL. (Fabiani Affirmative Defense No. 4).
97. Beginning in March 2016, Industrial Heat repeatedly requested from Fabiani, on behalf of USQL, copies of the promised raw thermal and electrical data as well as the final report relating to the testing in Doral. Industrial Heat also requested flow meter records that Fabiani had represented he had. See Ex. 71 ([IH-00011081-00011802]).
90. – 104. See ¶ 74, supra.
3PD: 97. Fabiani and USQl assert that this paragraph is disputed because a portion of the promised data and report were provided to Third-Party Plaintiffs (Murray Depo. Tr. 363:25- 367:7). Fabiani and USQL further assert that the Third-Party Plaintiffs committed a precedent breach of the USQL Agreement by virtue of their failure to make full payment for the work conducted by Fabiani and USQL. (Fabiani Affirmative Defense No. 4).
Again, this is not a dispute of the material fact, but because dispute was asserted, issues that are not actually controversial are listed as matters to be resolved, thus complicating the trial. There are many examples of this, now shown in the Joint Pretrial stipulation. (The link is to the page where instances around ¶ 97 are shown.) This is item 299.
98. In April and May 2016, Industrial Heat requested these documents and data again. See Composite Ex. 72 (Fabiani Dep. Ex. 11; [IH-00011074]).
90. – 104. See ¶ 74, supra.
3PD: 98. Fabiani and USQl assert that this paragraph is disputed because a portion of the promised data and report were provided to Third-Party Plaintiffs (Murray Depo. Tr. 363:25- 367:7). Fabiani and USQL further assert that the Third-Party Plaintiffs committed a precedent breach of the USQL Agreement by virtue of their failure to make full payment for the work conducted by Fabiani and USQL. (Fabiani Affirmative Defense No. 4).
99. Fabiani refused to provide Industrial Heat with the requested documents and data. See Ex. 19 at 270:7-22; Ex. 56 at 142:11-19; Ex. 57 at 116:18-117:3, 193:8-194:8, 352:11-353:9, 366:25-367:7; Ex. 73 (Murray Dep. Ex. 4).
90. – 104. See ¶ 74, supra.
3PD: 99. Fabiani and USQL assert that this paragraph is disputed because a portion of the promised data and report were provided to Third-Party Plaintiffs (Murray Depo. Tr. 363:25- 367:7). Fabiani and USQL further assert that the Third-Party Plaintiffs committed a precedent breach of the USQL Agreement by virtue of their failure to make full payment for the work conducted by Fabiani and USQL. (Fabiani Affirmative Defense No. 4).
100. The termination date of the USQL Agreement was March 31, 2016. See Ex. 56 at 82:6-19; Ex. 69 at 4th Am. AACT Ex. 29 [see at 124.30_Fabiani_email_re_contract]; 4th Am. AACT at 66; [D.E. 149] ¶ 152.
90. – 104. See ¶ 74, supra.
3PD: 100. It is undisputed that the Technical Consulting Agreement was extended through March 31, 2016
101. On March 30, 2016, USQL, through Fabiani, issued its final invoice to Industrial Heat. Industrial Heat received this invoice on April 6, 2016. See Composite Ex. 74 ([IH-00015792]; [IH-00015793-IH-00015801]; [IH-00015802]).
90. – 104. See ¶ 74, supra.
3PD: 101. It is undisputed that a final invoice was issued by USQL/Fabiani to Industrial Heat. Counter-Plaintiffs have failed to refute the allegation by Fabiani that this final payment was never made by Industrial Heat. (Fabiani Affirmative Defense No. 4)
102. Industrial Heat paid Fabiani/USQL $10,500 per month for services under the USQL Agreement from February 2015 to February 2016. See Ex. 66.
90. – 104. See ¶ 74, supra.
3PD: 102. It is undisputed that Industrial Heat made the payment for services through February 2016. Counter-Plaintiffs have failed to refute the allegation by Fabiani that this final payment was never made by Industrial Heat. (Fabiani Affirmative Defense No. 4).
103. Industrial Heat also paid Fabiani’s rent in the amount of $1,370 per month during the same period. See id.
90. – 104. See ¶ 74, supra.
3PD: 103. It is undisputed that Industrial Heat made payment to Fabiani for his rental expenses in Miami. Counter-Plaintiffs have failed to refute the allegation by Fabiani that his final expense payment was never made by Industrial Heat. (Fabiani Affirmative Defense No. 4)
104. Following the termination of the 1 MW Plant testing in the Doral Facility, Fabiani, on behalf of USQL, destroyed certain data and communications regarding the 1 MW Plant’s operations. See Ex. 56 at 33:10-37:12, 38:3-40:16, 46:3-8, 93:8-15 [not included in composite], 138:6-13.
90. – 104. See ¶ 74, supra.
3PD: 104. It is undisputed that certain email communications were deleted by Fabiani following the termination of the USQL Agreement and the turnover of the final data and report to Industrial Heat. The USQL Agreement does not impose a requirement that Fabiani retain and turn over all communications dealing in any respect with the his work for Rossi or on the E-Cat. Fabiani denies that any data was destroyed or erased and the citations provided by CounterPlaintiffs do not support this asserted undisputed fact.
105. Also following termination of the 1 MW Plant testing in the Doral Facility, Rossi, on behalf of both Leonardo and J.M. Products, dismantled a heat exchanger on the J.M. Products side of the facility, as well as the pipes encompassing the exchanger, that supposedly dissipated heat for 1 MW Plant. See Ex. 2 at 236:10-237:18; Ex. 17 at 271:25-274:10, 277:14-17; Ex. 36 at 81:21-82:14, 84:14-85:22, 92:19-95:6, 151:5-152:20, 251:19-252:6.
3PD: 105. It is undisputed that Rossi, on behalf of Leonardo, dismantled a heat exchanger on the JM Products side of the facility. See Rossi Depo. Tr. at 236:10-237:18; Leonardo Depo. Tr. 271:14-16, 271:25-272:10; JM Depo. Tr. at 82:7-14, 152:12-20. However, Rossi did not do so on behalf of JM Products as it was after the business of JM Products closed and the materials were repurposed for a project that did not involve JM Products. See id.
106. Leonardo NH still exists in good standing as a New Hampshire corporation. See Ex. 75.
106. Leonardo Corporation New Hampshire merged with Leonardo Corporation of Florida. See Supp. Ex. 43.
Supp. Ex. 43 does not evidence a merger. It is merely the Florida incorporation, before the Agreement with IH was executed in 2012. The IH Agreement was explicitly with the New Hampshire corporation, and the First Amendment and the proposed Second Amendment in 2013 were also explicitly with LC NH. There is no document that has been shown regarding the alleged merger. No merger date has been alleged.
3PD: no response.
107. A declaration by John T. Vaughn (Vice President of Industrial Heat) authenticating certain exhibits to this statement of material facts is attached hereto as Exhibit 23. [this exhibit is blank] A declaration by Christopher R. J. Pace, counsel for Defendants, authenticating other exhibits to this statement of material facts is attached hereto as Exhibit 28.
3PD: no response.
Additional facts alleged by 3PD:
3PD: 108. IH and its attorneys participated in the negotiation of the terms of the Term Sheet. See Vaughn Depo. Tr. at 274:5-9; IH Depo. Tr. at 241:6-10; ECF No. 207-39.
3PD: 109. IH did not contact Johnson Matthey or otherwise conduct any due diligence as to
its affiliation with JM Products, if any. See Vaughn Depo. Tr. at 271:7-10.
3PD: 110. Bass was not involved in any discussion with IH related to moving the Plant to
Florida. See Rossi Affidavit ¶9.
3PD: 111. Bass was not involved in any discussion with IH related to the Term Sheet. See
Rossi Affidavit ¶10.
3PD: 112. Bass first became in involved with JM Products around October of 2014 and did
not begin working with JM Products until after the Plant had already been delivered to the Doral
facility. See JB000039; Bass Depo. Tr. at 2:1-7, 23:5-9; Darden Depo. Tr. at 298:18-25.
3PD: 113. IH never sought to collect any payments from JM Products in relation to the Term
Sheet. See Darden Depo. Tr. at 187:23-25.
3PD: 114. Joseph Murray did not meet or speak with Johnson or Bass. See Murray Depo. Tr.
3PD: 115. Joseph Murray testified that there was no evidence the data he reviewed was
manipulated. See Murray Depo. Tr. 257:15-17.
3PD: 116. Anything purportedly hidden from Barry West did not matter to him and he
further recalled an agreement between the parties hereby JM Products operation was to stay apart
from IH. See West Depo. Tr. 158:9-17, 159:4-20.
Additional editor notes:
Exhibits 31-33, Leonardo and Rossi tax returns were not cited. Presumably they were cited or referenced in the redacted sections of the IH Motion for Summary Judgment, Section E.