New files with a $150 million tidbit

Several new files appeared on the Rossi v. Darden case docket in the last few days. This is mostly technical stuff, but there is a bombshell buried in it, or at least a loud firecracker! A piece of fireworks! It’s in red below if you are an Impatient Cow.

In sequence:

1/4/2017 0102.0_IH_notice_of_discovery_hearing  January 5, 2017, 2:00 p.m.

We get to see some requests from IH of Johnson, Bass, and Fabiani, and their objections. None of these responses from the 3rd p defendants disclose anything of interest, as far as I’ve noticed. They are all complaints that the request is overbroad, but that they will provide answers as relate to the specific claims by IH. I’m not surprised to see this taken to the Magistrate, who may cut back on the IH requests — which did seem, at first glance to me — a bit overbroad, but …. there would be many possible communications that would relate to the overall alleged conspiracy. Knowing just how involved Johnson was with Rossi could be of import. There are some technical problems: Johnson is an attorney, but was not acting as an attorney for Rossi; but rather for the putative owner of J.M. Products, perhaps, but there he was also a trustee and perhaps responsible for the actions of J.M. Products, he was not merely a legal advisor, he became an actor, because he had full immediate control.

1/5/2017 (no doc number) 3:29 PM Util Set/Reset Hearings

Discovery Hearing set for 1/10/2017 at 10:00 AM in Miami Division before Magistrate Judge John J. O’Sullivan. (tro) []

That was an awfully fast hearing notice, it was set, on the 4th, for the 5th.

1/5/2017 00103.0_Discovery_Order Magistrate order re 12/20 Discovery Hearing. (re Rossi requests for IH)

1/5/2017 0104.0 (no doc) minutes Discovery Hearing Thu 3:50 PM

PAPERLESS Minute Entry for proceedings held before Magistrate Judge John J. O’Sullivan: Discovery Hearing held on 1/5/2017. Total time in court: 43 minutes. Attorney Appearance(s): Francisco J Leon de la Barra, Christopher Rebel Jude Pace, Christopher Martin Lomax, Rodolfo Nunez, Brian W. Chaiken, Erika Handelson. (Digital 14:00:42)

Okay, the bombshell, from DE 103. In red:

WITH RESPECT to Defendant Industrial Heat’s Documents, Responses and Objections to Plaintiff Andrea Rossi’s Second Requests for Production: – IH’s Response to Request No. 8: IH represented to the Court that it has produced responsive documents relating to Fulvio Fabiani, Barry West, Joseph Murray, Thomas Darden, John Vaughn, Andrea Rossi, T. Barker Dameron, Joseph Pike, Daniel Pike, and Robert Godes. (Tr. 25:7-28:15). IH is ordered to produce the agreement referred to in IH’s response to Plaintiff’s Interrogatory No. 16 between Industrial Heat and Woodford Funds pertaining to $150 million in capital availability.

Reference: 0070-3_ih_response_to_2nd_rossi_prod_request (Request 8, page 9)

Interrogatory 16 would be a reference to a second set of Rossi questions of IH, we have not seen. I suspect that Rossi was asking about availability of funds to pay the $89 million, and IH may have told him that Woodford had agreed to provide the money, presumably if needed. Obviously, Woodford would look at the situation at that time. Rossi did not need only to convince the “ERV,” he most of all needed to convince IH and, then, Woodford, that this money should be paid.

IH had declined to provide Woodford information, apparently. It  is possible that this was overlooked in the prior hearing. This would be why Jones Day objected to the hearing, considering the matter adjudicated already. The Magistrate slapped their wrist for filing that objection: “The Court reminds the parties that objections may be brought before the Court but must not be filed.”

There are complex considerations here. IH did not want to provide confidential information about Woodford. Probably the best way to handle this, though, would have been to respond but put a Protective Order on it, maybe even Attorney Eyes Only. Instead, they objected formally, which then required that the Magistrate respond formally…. and then the Magistrate gave the specific order on the issue, which, given what has not been resolved or established as fact in the case:  the question about Woodford is relevant. However, by standing up against the request, they may have done enough to satisfy Woodford that they were attempting to protect Woodford privacy.

Even if it was not proper process.

I assume that we will not see that agreement. However, it is not a surprise, I had assumed that Woodford was ready to put in more money if needed (and they know the IHHI business plan, which predicts running out of money and needing more investment). If the Plant had actually demonstrated a megawatt, or even something less spectacular than that, $89 million would have been chicken feed, pocket change, compared to the value. 

IH was also ordered to provide their agreement with Ampenergo. This is another example of an IH objection that was not formally mentioned in the previous Order. Whether or not this was an attempt to “re-litigate” what had been decided before is, then, a bit obscure. However, the Magistrate drew a line:

Plaintiff may not raise any other challenges to IH’s responses and objections to Plaintiff’s requests for production or interrogatories to date, except to the extent that should IH provide supplemental responses, Plaintiff is not limited in raising issues solely related to said supplemental responses.

Some general considerations.

This indicates that Woodford was willing to invest not just $50 million, but $200 million in LENR. That is starting to approach serious money! Notice, though: in LENR. Not in “Rossi.” If Woodford thought that IH was unfairly withholding payment, he would almost certain have a chat with his friend, Darden.

Then, as to Rossi’s motives and strategies, he seems to have believed that he could insist on the literal words of the Agreement in order to make IH pay $89 million, that he could ignore the intention, and the intention required cooperation in good faith.

If he could get an “ERV” to sign off on a “GPT,” that would be enough to force IH to cough up more money.

Trying to “make” someone pay such a sum is a poor idea, in general, unless there is no other alternative — including walking away as an alternative. (I.e, Rossi could have simply gone to Europe and done whatever he wanted. However, he became so invested in the Doral test, it may have been too late for him, he could not back down.)

I once had an agreement with a limited partnership to buy a piece of property. Our broker had found them to buy the property in order to sell it to us. It involved a lease for six months and then a payment and a mortgage with a balloon payment in fifteen years. After signing this, we discovered that these partners were … serious crooks. First thing they did was to remove all the furniture, immediately, the day before we took possession. Okay, the agreement had not been specific about that, though this was very non-standard (and possibly not legal), but we went ahead and moved in. Then, when the time arrived to convert, they refused to close. I consulted an attorney. We could sue for specific performance, we could walk away, and we had another option: stop paying the lease payments and just sit on it. That’s what we did, and we sat on it for long enough to recover all our investment, and then settled with them on the unlawful detainer suit that they filed, giving us plenty of time.

(They also borrowed money and declared the property as security without disclosing the obligation to us, to the lender. The contract of sale with us had not been recorded, which, looking back, I wonder if this was an error — i.e., poor advice from the broker.)

I somewhat regret not pushing for specific performance, because that property was worth far more than the agreement had us paying. That, of course, is why they refused to close. They wanted more money. The real estate agent that found them apologized to me, he had not realized who and what they were. On the other hand, lawsuits are expensive and results can be erratic. They had lots of money and we didn’t. However …. we had plenty of attorney friends who would help us. And I did read up about law at that point and that’s part of why I can understand this case, that and other later situations I researched.

They, suing us for unlawful detainer, were claiming that we had not paid the lease payments as we had agreed. Of course, we had … “affirmative defenses.” But we did not go there. We did not want to be stuck in a 15 year relationship with them.

Another reason for some regret: that was a fraternity house, located adjacent to the University of Arizona. They would rent rooms to students, I’m sure. They would demand a hefty deposit, to be returned, of course, when the students moved out. And then what crooks like this do is to routinely keep the deposits (I have seen this with another investor, renting apartments to poor families, who will almost never take legal action, so they get away with it.) The students will often be leaving town and unable to do anything about their lost deposit, which could be two month’s rent. So by not confronting these jerks, I allowed them to rip off others….

Discussion on lenr-forum

IH Fanboy wrote:

Doc 103 order should lead to some interesting IH disclosures. For those here who might naturally recoil by my comment, I also look forward to the disclosures by team Rossi.

Doc. 103 order. While there may be some interesting disclosures, as there have been coming out of previous Discovery tiffs, we only see what is revealed in the hearing requests, and then the Magistrate’s orders. For example, the Judge mentions the 3.2 TB hard drive provided by IH. We are unlikely to see anything on that, nor the hundred thousand pages of other documents IH has claimed they have provided. Nor will we see the Doral surveillance videos, which have probably been provided, nor any other documents or evidence disclosed in Discovery. Just what they take before the Magistrate.

We will see whatever is presented as evidence in a trial, or at least it does become public record.

There is a hearing coming up 1/10/2017 at 10:00 AM before the Magistrate on the other side, i.e., an IH-requested hearing about the 3rd Party defendants objections, the hearing having been requested by Industrial Heat (and apparently rescheduled for the 10th).

The meat and potatoes remaining to be revealed, probably not till the middle of February, will be the 3rd Party Defendant’s Answers, but those could be rote denials with little or no information. That’s more or less what Rossi did. Still, it can provide clues, and Rossi, in one of his answers, more or less gave away the farm. See paragraphs 80 and 81 in the Rossi Answer Merge.

(for those who want to study the case, the two Merge pages, the one linked above and the IH Answer Merge, I have found them invaluable. It took me a day to compile the Rossi Merge, and it was well worth it, and, now, remembering the “giveaway” and knowing a key word, I just opened the PDF and searched for “Murray,” and there it was, in seconds. Before, I’d spent far more time looking through the documents for what I remembered in order to write something and cite the source.)

Author: Abd ulRahman Lomax


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