Preview
FILED: NEW YORK COUNTY CLERK 01/06/2022 05:40 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 293 RECEIVED NYSCEF: 01/06/2022
Exhibit G
Amended Answer To Counterclaims,
Dated July 16, 2019
Index No. 652343/2018 Motion Seq. No. 11
FILED:
FILED: NEW
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 07/16/2019
01/06/2022 01:26
05:40 PM
PM INDEX
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NO. 137
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
----------------------------------------------------------- X
CRESCO LABS NEW YORK, LLC, a New :
York limited liability company, and CRESCO : Index No. 652343/2018
LABS LLC, an Illinois limited liability :
company, : Hon. Andrew Borrok
:
Plaintiffs/Counterclaim Defendants, :
:
v. : PLAINTIFFS’ AMENDED
: ANSWER TO DEFENDANT’S
FIORELLO PHARMACEUTICALS, INC., a : COUNTERCLAIMS
New York corporation, :
:
Defendant/Counterclaimant, :
:
and :
:
ERIC SIROTA, an individual, SUSAN YOSS, :
an individual, and JOHN DOES 1–10, :
:
Defendants. :
----------------------------------------------------------- X
Plaintiffs-Counterclaim Defendants Cresco Labs New York LLC and Cresco Labs LLC
(together, “Cresco” or “Plaintiffs”), by and through their undersigned counsel, respectfully
submit this Amended Answer to the Counterclaims filed by Defendant-Counterclaimant Fiorello
1
Pharmaceuticals, Inc. (“Fiorello” or “Defendant-Counterclaimant”), pursuant to CPLR 3025(a),
as follows. The paragraph numbers below correspond to the paragraph numbers in Defendant’s
Counterclaims (Dkt. 125).
1
While the counterclaims appear to have been intended to be brought by only Fiorello,
counsel signed the Answer to Amended Complaint and Counterclaims as “Attorneys for
Defendants-Counterclaim Plaintiffs Fiorello Pharmaceuticals, Inc., and Eric Sirota and Susan
Yoss.”
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COUNTERCLAIMS
75. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
of the allegations of Paragraph 75.
76. Plaintiffs deny the allegation that Cresco Labs LLC is a “corporation” and
affirmatively state that Plaintiff Cresco Labs LLC is an Illinois limited liability company existing
under the laws of the State of Illinois. Plaintiffs admit that on or about February 14, 2018,
Cresco Labs LLC and Fiorello Pharmaceuticals, Inc. (“Fiorello”) entered into the Equity
Purchase Agreement Letter of Intent, attached as Exhibit A (Dkt. 126) to Fiorello’s
Counterclaims, and refer to that agreement for the truth of the contents thereof.
77. Plaintiffs deny the allegation that “CLNY is a New York corporation” and
affirmatively state that Plaintiff Cresco Labs New York, LLC is a limited liability company
existing under the laws of the State of New York, formed on or about March 14, 2018, and a
wholly owned subsidiary of Cresco Labs LLC. Except as so answered, Plaintiffs deny the
allegations of Paragraph 77.
78. Plaintiffs neither admit nor deny Paragraph 78, as it states a legal conclusion to
which no response is required.
79. Plaintiffs neither admit nor deny Paragraph 79, as it states a legal conclusion to
which no response is required.
ALLEGATIONS COMMON TO ALL CLAIMS FOR RELIEF
80. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello
entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s
Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents
thereof.
81. Plaintiffs deny the allegations of Paragraph 81.
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82. Plaintiffs neither admit nor deny Paragraph 82, as it states a legal conclusion to
which no response is required, and refer to the text of the Equity Purchase Agreement Letter of
Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents
thereof.
83. Plaintiffs deny the allegations of Paragraph 83 and refer to the text of the Equity
Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt.
126), for the truth of the contents thereof.
84. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
85. Plaintiffs deny the allegations of Paragraph 85.
86. Plaintiffs admit that Cresco executed the Equity Purchase Agreement Letter of
Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), on February 14, 2018.
Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 86, and
affirmatively state that Fiorello executed the Equity Purchase Agreement Letter of Intent on
February 15, 2018, that Fiorello contacted Cresco about the Good Faith Payment on February 20,
2018, and that Cresco made that Payment soon thereafter.
87. Plaintiffs deny the allegations of Paragraph 87.
88. Plaintiffs admit that Fiorello’s counsel provided an escrow agreement and agreed
to act as escrow agent, and that Cresco/CLNY deposited the Good Faith Payment into the escrow
account on March 1, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of
Paragraph 88.
89. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
of the allegations of Paragraph 89.
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90. Plaintiffs admit that the Equity Purchase Agreement Letter of Intent, attached to
Fiorello’s Counterclaims as Exhibit A (Dkt. 126), was executed by Cresco on February 14, 2018,
and refer to the text of the Equity Purchase Agreement Letter of Intent for the truth of the
contents thereof. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph
90.
91. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
92. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
Except as so answered, Plaintiffs deny the remaining allegations of Paragraph 92.
93. Plaintiffs deny the allegations of Paragraph 93.
94. Plaintiffs deny the allegations of Paragraph 94.
95. Plaintiffs deny the allegations of Paragraph 95 and affirmatively state that any
documents Fiorello produced on March 1, 2018 were negligible, and that Fiorello did not provide
Cresco with access to the “diligence secure file” until March 9, 2018, despite Cresco’s repeated
requests for access to Fiorello’s diligence documents.
96. Plaintiffs deny the allegations of Paragraph 96.
97. Plaintiffs deny the allegations of Paragraph 97.
98. Plaintiffs admit that, because of Fiorello’s intentional delays in an effort to escape
its obligations under the Equity Purchase Agreement Letter of Intent and shop itself to other
potential purchasers for a higher price, Cresco could not complete its due diligence by March 14,
2018, or by March 29, 2018. Plaintiffs affirmatively state that Cresco was unable to complete its
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due diligence due to Fiorello’s refusal to timely provide reasonable diligence materials. Except
as so admitted, Plaintiffs deny the remaining allegations of Paragraph 98.
99. Plaintiffs deny the allegations of Paragraph 99.
100. Plaintiffs admit that, because of Fiorello’s intentional delays in an effort to escape
its obligations under the Equity Purchase Agreement Letter of Intent and shop itself to other
potential purchasers for a higher price, Cresco could not complete its due diligence. Plaintiffs
affirmatively state that Cresco was unable to complete its due diligence due to Fiorello’s refusal
to timely provide reasonable diligence materials. Except as so admitted, Plaintiffs deny the
remaining allegations of Paragraph 100.
101. Plaintiffs deny the allegations of Paragraph 101.
102. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
103. Plaintiffs deny the allegations of Paragraph 103.
104. Plaintiffs deny the allegations of Paragraph 104.
105. Plaintiffs deny the allegations of Paragraph 105.
106. Plaintiffs admit the allegations of Paragraph 106.
107. Plaintiffs admit that Cresco/CLNY provided a draft agreement to Fiorello on
March 1, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph
107.
108. Plaintiffs deny the allegations of Paragraph 108.
109. Plaintiffs deny the allegations of Paragraph 109.
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110. Plaintiffs admit that Cresco provided a draft guaranty on March 12, 2018 and that
Cresco provided a draft note on March 15, 2018. Except as so admitted, Plaintiffs deny the
remaining allegations of Paragraph 110.
111. Plaintiffs deny the allegations of Paragraph 111.
112. Plaintiffs deny the allegations of Paragraph 112.
113. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
114. Plaintiffs affirmatively state that Cresco circulated a draft of the LOI which
exempted “potential financiers” from the confidentiality provision. Except as so stated, Plaintiffs
deny the allegations of Paragraph 114.
115. Plaintiffs deny the allegations of Paragraph 115 and refer to the text of the Equity
Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt.
126), for the truth of the contents thereof.
116. Plaintiffs admit the allegation that Cresco/CLNY disclosed to prospective
investors a prospective transaction by which it could acquire the right to cultivate and sell
medical marijuana in New York. Plaintiffs affirmatively state that the disclosure to prospective
investors did not breach the confidentiality provision of the Equity Purchase Agreement Letter of
Intent and was reviewed and approved by Fiorello prior to disclosure to prospective investors.
Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 116.
117. Plaintiffs admit that on April 3, 2018, an article appeared in the publication
Cannabis Business Executive that reflected an interview with Cresco’s CEO, Charles Bachtell,
and refer to the text of the article for the truth of the contents thereof. Except as so admitted,
Plaintiffs deny the remaining allegations of Paragraph 117.
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118. Plaintiffs affirmatively state that in April 2018, Cresco’s Chief Operating Officer,
David Ellis, contacted an individual who owns a small percentage of a limited liability company
that owns shares in Fiorello and sent to that individual a copy of both the Equity Purchase
Agreement Letter of Intent and a letter from Cresco’s counsel to Fiorello’s counsel dated April
14, 2018. Except as so stated, Plaintiffs deny the allegations of Paragraph 118.
119. Plaintiffs deny the allegations of Paragraph 119.
120. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
of the allegations of Paragraph 120.
121. Plaintiffs deny the allegations of Paragraph 121.
122. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
of the allegations of Paragraph 122.
123. Plaintiffs deny the allegations of Paragraph 123.
124. Plaintiffs deny the allegations of Paragraph 124.
FIRST CLAIM AGAINST CRESCO AND CLNY
FOR DECLARATORY RELIEF
125. Plaintiffs repeat and reallege each and every answer to the allegations contained
in the paragraphs above as if fully set forth herein below.
126. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello
entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s
Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents
thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary
agreement, as it states a legal conclusion to which no response is required.
127. Plaintiffs deny the allegation of Paragraph 127.
128. Plaintiffs deny the allegations of Paragraph 128.
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129. Plaintiffs deny the allegations of Paragraph 129.
130. Plaintiffs deny the allegations of Paragraph 130.
131. Plaintiffs neither admit nor deny Paragraph 131, as it states a legal conclusion to
which no response is required.
SECOND CLAIM AGAINST CRESCO/CLNY
FOR BREACH OF CONTRACT
132. Plaintiffs repeat and reallege each and every answer to the allegations contained
in the paragraphs above as if fully set forth herein below.
133. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello
entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s
Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents
thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary
agreement, as it states a legal conclusion to which no response is required.
134. Plaintiffs deny the allegation of Paragraph 134.
135. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent,
attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof.
136. Plaintiffs deny the allegations of Paragraph 136.
137. Plaintiffs deny the allegations of Paragraph 137.
138. Plaintiffs deny the allegations of Paragraph 138.
139. Plaintiffs deny the allegation that there was a “breach by Cresco/CLNY to
perform their obligations of good faith and best efforts.” Except as so denied, Plaintiffs deny
knowledge or information sufficient to form a belief as to the truth of the remaining allegations
of Paragraph 139.
140. Plaintiffs deny the allegations of Paragraph 140.
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141. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
of the allegations of Paragraph 141.
142. Plaintiffs deny the allegation that Cresco/CLNY “refused and breached its
obligation to Fiorello to provide funding.” Except as so denied, Plaintiffs deny knowledge or
information sufficient to form a belief as to the truth of the remaining allegations of Paragraph
142.
143. Plaintiffs deny the allegations of Paragraph 143.
THIRD CLAIM AGAINST CRESCO/CLNY
FOR BREACH OF CONTRACT / CONFIDENTIALITY PROVISION
144. Plaintiffs repeat and reallege each and every answer to the allegations contained
in the paragraphs above as if fully set forth herein below.
145. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello
entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s
Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents
thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary
agreement, as it states a legal conclusion to which no response is required.
146. Plaintiffs deny the allegation of Paragraph 146.
147. Plaintiffs deny the allegation of Paragraph 147.
148. Plaintiffs affirmatively state that Charles Bachtell is the Chief Executive Officer
of Cresco Labs LLC and that David Ellis is the Chief Operating Officer of Cresco Labs LLC.
Except as so answered, Plaintiffs deny the allegations of Paragraph 148.
149. Plaintiffs admit that Bachtell executed the Equity Purchase Agreement Letter of
Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126). Except as so admitted,
Plaintiffs deny the remaining allegations of Paragraph 149.
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150. Plaintiffs deny the allegations of Paragraph 150.
151. Plaintiffs deny the allegations of Paragraph 151.
152. Plaintiffs deny the allegations of Paragraph 152.
153. Plaintiffs deny the allegations of Paragraph 153.
FOURTH CLAIM FOR RELIEF AGAINST CRESCO/CLNY
FOR INJUNCTIVE RELIEF
154. Plaintiffs repeat and reallege each and every answer to the allegations contained
in the paragraphs above as if fully set forth herein below.
155. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello
entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s
Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents
thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary
agreement, as it states a legal conclusion to which no response is required.
156. Plaintiffs deny the allegation of Paragraph 156.
157. Plaintiffs deny the allegations of Paragraph 157.
158. Plaintiffs neither admit nor deny Paragraph 158, as it states a legal conclusion to
which no response is required.
AFFIRMATIVE DEFENSES
FIRST DEFENSE
75. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because they fail to state a claim upon which relief can be granted.
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SECOND DEFENSE
76. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because the allegations of Defendant-Counterclaimant allege a breach of unenforceable aspects
of the Equity Purchase Agreement Letter of Intent.
THIRD DEFENSE
77. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because of Defendant-Counterclaimant’s antecedent breach of the Equity Purchase Agreement
Letter of Intent.
FOURTH DEFENSE
78. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because Defendant-Counterclaimant waived enforcement of the provisions of the Equity
Purchase Agreement Letter of Intent it is now claiming were breached, including through its
course of performance under the contract.
FIFTH DEFENSE
79. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because Defendant-Counterclaimant failed to perform one or more conditions precedent.
SIXTH DEFENSE
80. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because Defendant-Counterclaimant has suffered no damages or injury.
SEVENTH DEFENSE
81. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part,
because Defendant-Counterclaimant failed to mitigate its damages.
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EIGHTH DEFENSE
82. Defendant-Counterclaimant’s counterclaim for injunctive relief is barred, in
whole or in part, because Defendant-Counterclaimant has an adequate remedy at law.
NINTH DEFENSE
83. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, by the
doctrine of equitable estoppel or unclean hands because of Defendant-Counterclaimant’s actions
and bad faith conduct.
TENTH DEFENSE
84. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, by the
doctrine of laches.
ELEVENTH DEFENSE
85. Defendant-Counterclaimant’s counterclaim for declaratory relief is barred, in
whole or in part, because it seeks relief beyond the scope of a declaratory judgment.
RESERVATION OF RIGHTS
86. By asserting these affirmative defenses, Plaintiffs do not agree or admit that
Defendant-Counterclaimant has properly alleged any claim for which relief can be granted, nor
do Plaintiffs assume or undertake any burden of proof with respect to such defenses that
otherwise would rest with Defendant-Counterclaimant. Further, Plaintiffs do not intend to waive
any other defense that is now or may become available or appear during or as a result of
proceedings in this action. Plaintiffs reserve the right to amend and/or supplement their Answer
and Affirmative Defenses, including, without limitation, to assert additional defenses.
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Preview
FILED: NEW YORK COUNTY CLERK 01/06/2022 05:40 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 293 RECEIVED NYSCEF: 01/06/2022 Exhibit G Amended Answer To Counterclaims, Dated July 16, 2019 Index No. 652343/2018 Motion Seq. No. 11 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ----------------------------------------------------------- X CRESCO LABS NEW YORK, LLC, a New : York limited liability company, and CRESCO : Index No. 652343/2018 LABS LLC, an Illinois limited liability : company, : Hon. Andrew Borrok : Plaintiffs/Counterclaim Defendants, : : v. : PLAINTIFFS’ AMENDED : ANSWER TO DEFENDANT’S FIORELLO PHARMACEUTICALS, INC., a : COUNTERCLAIMS New York corporation, : : Defendant/Counterclaimant, : : and : : ERIC SIROTA, an individual, SUSAN YOSS, : an individual, and JOHN DOES 1–10, : : Defendants. : ----------------------------------------------------------- X Plaintiffs-Counterclaim Defendants Cresco Labs New York LLC and Cresco Labs LLC (together, “Cresco” or “Plaintiffs”), by and through their undersigned counsel, respectfully submit this Amended Answer to the Counterclaims filed by Defendant-Counterclaimant Fiorello 1 Pharmaceuticals, Inc. (“Fiorello” or “Defendant-Counterclaimant”), pursuant to CPLR 3025(a), as follows. The paragraph numbers below correspond to the paragraph numbers in Defendant’s Counterclaims (Dkt. 125). 1 While the counterclaims appear to have been intended to be brought by only Fiorello, counsel signed the Answer to Amended Complaint and Counterclaims as “Attorneys for Defendants-Counterclaim Plaintiffs Fiorello Pharmaceuticals, Inc., and Eric Sirota and Susan Yoss.” 1 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 COUNTERCLAIMS 75. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 75. 76. Plaintiffs deny the allegation that Cresco Labs LLC is a “corporation” and affirmatively state that Plaintiff Cresco Labs LLC is an Illinois limited liability company existing under the laws of the State of Illinois. Plaintiffs admit that on or about February 14, 2018, Cresco Labs LLC and Fiorello Pharmaceuticals, Inc. (“Fiorello”) entered into the Equity Purchase Agreement Letter of Intent, attached as Exhibit A (Dkt. 126) to Fiorello’s Counterclaims, and refer to that agreement for the truth of the contents thereof. 77. Plaintiffs deny the allegation that “CLNY is a New York corporation” and affirmatively state that Plaintiff Cresco Labs New York, LLC is a limited liability company existing under the laws of the State of New York, formed on or about March 14, 2018, and a wholly owned subsidiary of Cresco Labs LLC. Except as so answered, Plaintiffs deny the allegations of Paragraph 77. 78. Plaintiffs neither admit nor deny Paragraph 78, as it states a legal conclusion to which no response is required. 79. Plaintiffs neither admit nor deny Paragraph 79, as it states a legal conclusion to which no response is required. ALLEGATIONS COMMON TO ALL CLAIMS FOR RELIEF 80. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents thereof. 81. Plaintiffs deny the allegations of Paragraph 81. 2 2 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 82. Plaintiffs neither admit nor deny Paragraph 82, as it states a legal conclusion to which no response is required, and refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 83. Plaintiffs deny the allegations of Paragraph 83 and refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 84. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 85. Plaintiffs deny the allegations of Paragraph 85. 86. Plaintiffs admit that Cresco executed the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), on February 14, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 86, and affirmatively state that Fiorello executed the Equity Purchase Agreement Letter of Intent on February 15, 2018, that Fiorello contacted Cresco about the Good Faith Payment on February 20, 2018, and that Cresco made that Payment soon thereafter. 87. Plaintiffs deny the allegations of Paragraph 87. 88. Plaintiffs admit that Fiorello’s counsel provided an escrow agreement and agreed to act as escrow agent, and that Cresco/CLNY deposited the Good Faith Payment into the escrow account on March 1, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 88. 89. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 89. 3 3 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 90. Plaintiffs admit that the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), was executed by Cresco on February 14, 2018, and refer to the text of the Equity Purchase Agreement Letter of Intent for the truth of the contents thereof. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 90. 91. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 92. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. Except as so answered, Plaintiffs deny the remaining allegations of Paragraph 92. 93. Plaintiffs deny the allegations of Paragraph 93. 94. Plaintiffs deny the allegations of Paragraph 94. 95. Plaintiffs deny the allegations of Paragraph 95 and affirmatively state that any documents Fiorello produced on March 1, 2018 were negligible, and that Fiorello did not provide Cresco with access to the “diligence secure file” until March 9, 2018, despite Cresco’s repeated requests for access to Fiorello’s diligence documents. 96. Plaintiffs deny the allegations of Paragraph 96. 97. Plaintiffs deny the allegations of Paragraph 97. 98. Plaintiffs admit that, because of Fiorello’s intentional delays in an effort to escape its obligations under the Equity Purchase Agreement Letter of Intent and shop itself to other potential purchasers for a higher price, Cresco could not complete its due diligence by March 14, 2018, or by March 29, 2018. Plaintiffs affirmatively state that Cresco was unable to complete its 4 4 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 due diligence due to Fiorello’s refusal to timely provide reasonable diligence materials. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 98. 99. Plaintiffs deny the allegations of Paragraph 99. 100. Plaintiffs admit that, because of Fiorello’s intentional delays in an effort to escape its obligations under the Equity Purchase Agreement Letter of Intent and shop itself to other potential purchasers for a higher price, Cresco could not complete its due diligence. Plaintiffs affirmatively state that Cresco was unable to complete its due diligence due to Fiorello’s refusal to timely provide reasonable diligence materials. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 100. 101. Plaintiffs deny the allegations of Paragraph 101. 102. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 103. Plaintiffs deny the allegations of Paragraph 103. 104. Plaintiffs deny the allegations of Paragraph 104. 105. Plaintiffs deny the allegations of Paragraph 105. 106. Plaintiffs admit the allegations of Paragraph 106. 107. Plaintiffs admit that Cresco/CLNY provided a draft agreement to Fiorello on March 1, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 107. 108. Plaintiffs deny the allegations of Paragraph 108. 109. Plaintiffs deny the allegations of Paragraph 109. 5 5 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 110. Plaintiffs admit that Cresco provided a draft guaranty on March 12, 2018 and that Cresco provided a draft note on March 15, 2018. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 110. 111. Plaintiffs deny the allegations of Paragraph 111. 112. Plaintiffs deny the allegations of Paragraph 112. 113. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 114. Plaintiffs affirmatively state that Cresco circulated a draft of the LOI which exempted “potential financiers” from the confidentiality provision. Except as so stated, Plaintiffs deny the allegations of Paragraph 114. 115. Plaintiffs deny the allegations of Paragraph 115 and refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 116. Plaintiffs admit the allegation that Cresco/CLNY disclosed to prospective investors a prospective transaction by which it could acquire the right to cultivate and sell medical marijuana in New York. Plaintiffs affirmatively state that the disclosure to prospective investors did not breach the confidentiality provision of the Equity Purchase Agreement Letter of Intent and was reviewed and approved by Fiorello prior to disclosure to prospective investors. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 116. 117. Plaintiffs admit that on April 3, 2018, an article appeared in the publication Cannabis Business Executive that reflected an interview with Cresco’s CEO, Charles Bachtell, and refer to the text of the article for the truth of the contents thereof. Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 117. 6 6 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 118. Plaintiffs affirmatively state that in April 2018, Cresco’s Chief Operating Officer, David Ellis, contacted an individual who owns a small percentage of a limited liability company that owns shares in Fiorello and sent to that individual a copy of both the Equity Purchase Agreement Letter of Intent and a letter from Cresco’s counsel to Fiorello’s counsel dated April 14, 2018. Except as so stated, Plaintiffs deny the allegations of Paragraph 118. 119. Plaintiffs deny the allegations of Paragraph 119. 120. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 120. 121. Plaintiffs deny the allegations of Paragraph 121. 122. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 122. 123. Plaintiffs deny the allegations of Paragraph 123. 124. Plaintiffs deny the allegations of Paragraph 124. FIRST CLAIM AGAINST CRESCO AND CLNY FOR DECLARATORY RELIEF 125. Plaintiffs repeat and reallege each and every answer to the allegations contained in the paragraphs above as if fully set forth herein below. 126. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary agreement, as it states a legal conclusion to which no response is required. 127. Plaintiffs deny the allegation of Paragraph 127. 128. Plaintiffs deny the allegations of Paragraph 128. 7 7 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 129. Plaintiffs deny the allegations of Paragraph 129. 130. Plaintiffs deny the allegations of Paragraph 130. 131. Plaintiffs neither admit nor deny Paragraph 131, as it states a legal conclusion to which no response is required. SECOND CLAIM AGAINST CRESCO/CLNY FOR BREACH OF CONTRACT 132. Plaintiffs repeat and reallege each and every answer to the allegations contained in the paragraphs above as if fully set forth herein below. 133. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary agreement, as it states a legal conclusion to which no response is required. 134. Plaintiffs deny the allegation of Paragraph 134. 135. Plaintiffs refer to the text of the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), for the truth of the contents thereof. 136. Plaintiffs deny the allegations of Paragraph 136. 137. Plaintiffs deny the allegations of Paragraph 137. 138. Plaintiffs deny the allegations of Paragraph 138. 139. Plaintiffs deny the allegation that there was a “breach by Cresco/CLNY to perform their obligations of good faith and best efforts.” Except as so denied, Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 139. 140. Plaintiffs deny the allegations of Paragraph 140. 8 8 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 141. Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 141. 142. Plaintiffs deny the allegation that Cresco/CLNY “refused and breached its obligation to Fiorello to provide funding.” Except as so denied, Plaintiffs deny knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 142. 143. Plaintiffs deny the allegations of Paragraph 143. THIRD CLAIM AGAINST CRESCO/CLNY FOR BREACH OF CONTRACT / CONFIDENTIALITY PROVISION 144. Plaintiffs repeat and reallege each and every answer to the allegations contained in the paragraphs above as if fully set forth herein below. 145. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary agreement, as it states a legal conclusion to which no response is required. 146. Plaintiffs deny the allegation of Paragraph 146. 147. Plaintiffs deny the allegation of Paragraph 147. 148. Plaintiffs affirmatively state that Charles Bachtell is the Chief Executive Officer of Cresco Labs LLC and that David Ellis is the Chief Operating Officer of Cresco Labs LLC. Except as so answered, Plaintiffs deny the allegations of Paragraph 148. 149. Plaintiffs admit that Bachtell executed the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126). Except as so admitted, Plaintiffs deny the remaining allegations of Paragraph 149. 9 9 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 150. Plaintiffs deny the allegations of Paragraph 150. 151. Plaintiffs deny the allegations of Paragraph 151. 152. Plaintiffs deny the allegations of Paragraph 152. 153. Plaintiffs deny the allegations of Paragraph 153. FOURTH CLAIM FOR RELIEF AGAINST CRESCO/CLNY FOR INJUNCTIVE RELIEF 154. Plaintiffs repeat and reallege each and every answer to the allegations contained in the paragraphs above as if fully set forth herein below. 155. Plaintiffs admit that on or about February 14, 2018, Cresco, CLNY, and Fiorello entered into the Equity Purchase Agreement Letter of Intent, attached to Fiorello’s Counterclaims as Exhibit A (Dkt. 126), and refer to that agreement for the truth of the contents thereof. Plaintiffs neither admit nor deny the allegation that the LOI was a preliminary agreement, as it states a legal conclusion to which no response is required. 156. Plaintiffs deny the allegation of Paragraph 156. 157. Plaintiffs deny the allegations of Paragraph 157. 158. Plaintiffs neither admit nor deny Paragraph 158, as it states a legal conclusion to which no response is required. AFFIRMATIVE DEFENSES FIRST DEFENSE 75. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because they fail to state a claim upon which relief can be granted. 10 10 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 SECOND DEFENSE 76. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because the allegations of Defendant-Counterclaimant allege a breach of unenforceable aspects of the Equity Purchase Agreement Letter of Intent. THIRD DEFENSE 77. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because of Defendant-Counterclaimant’s antecedent breach of the Equity Purchase Agreement Letter of Intent. FOURTH DEFENSE 78. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because Defendant-Counterclaimant waived enforcement of the provisions of the Equity Purchase Agreement Letter of Intent it is now claiming were breached, including through its course of performance under the contract. FIFTH DEFENSE 79. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because Defendant-Counterclaimant failed to perform one or more conditions precedent. SIXTH DEFENSE 80. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because Defendant-Counterclaimant has suffered no damages or injury. SEVENTH DEFENSE 81. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, because Defendant-Counterclaimant failed to mitigate its damages. 11 11 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26 05:40 PM PM INDEX INDEX NO. NO. 652343/2018 652343/2018 NYSCEF NYSCEF DOC. DOC. NO. NO. 137 293 RECEIVED RECEIVED NYSCEF: NYSCEF: 07/16/2019 01/06/2022 EIGHTH DEFENSE 82. Defendant-Counterclaimant’s counterclaim for injunctive relief is barred, in whole or in part, because Defendant-Counterclaimant has an adequate remedy at law. NINTH DEFENSE 83. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, by the doctrine of equitable estoppel or unclean hands because of Defendant-Counterclaimant’s actions and bad faith conduct. TENTH DEFENSE 84. Defendant-Counterclaimant’s counterclaims are barred, in whole or in part, by the doctrine of laches. ELEVENTH DEFENSE 85. Defendant-Counterclaimant’s counterclaim for declaratory relief is barred, in whole or in part, because it seeks relief beyond the scope of a declaratory judgment. RESERVATION OF RIGHTS 86. By asserting these affirmative defenses, Plaintiffs do not agree or admit that Defendant-Counterclaimant has properly alleged any claim for which relief can be granted, nor do Plaintiffs assume or undertake any burden of proof with respect to such defenses that otherwise would rest with Defendant-Counterclaimant. Further, Plaintiffs do not intend to waive any other defense that is now or may become available or appear during or as a result of proceedings in this action. Plaintiffs reserve the right to amend and/or supplement their Answer and Affirmative Defenses, including, without limitation, to assert additional defenses. 12 12 of 13 FILED: FILED: NEW NEW YORK YORK COUNTY COUNTY CLERK CLERK 07/16/2019 01/06/2022 01:26