Preview
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
State 0f Minnesota District Court
County Judicial District: Fourth
Hennepin Court File Number: 27—CV—1 8—19659
Case Type: Civil
(The Honorable Joseph Klein)
Ryan Lazenby, and Temaca Irrigation LLC
Response t0 Plaintiff’s Request
Plaintiff
Temporary Injunction,
for
VS.
Answer t0 Plaintiff’s Verified
Guadalupe Gomez, James Gomez
Complaint and Defendant’s
Temaca Lawn Sprinklers, Inc. d.b.a. Mation for Temporary Relief
Temaca Lawn Sprinklers, and Defendant’s Verified
Defendant
Com plaint
Defendant, Guadalupe Gomez, for his Response to the Plaintiff’s Motion for
Temporary
Injunction, Answer to Plaintiff’s Verified Complaint and Defendant’s Verified
ComplaintComplaint and Motion for a Temporary Injunction alleges as follows:
RESPONSE TO PLAINTIFF’S MOTION AND AMENDED MOTION FOR
TEMPORARY INJUNCTION:
1.(a) Defendant DENIES that he has violated his employment agreement. The agreement is not
enforceable as Plaintiff is in default of his obligations under the purchase agreements for that
company. In addition, Defendant has no facts to support his allegations. Defendant is employed
full time by a golf course and has not been able to retire because of Plaintiff’s failure to pay the
installments required in the company purchase agreement. Defendant is 76 years old and suffers
from physical issues related to the many years he did work with irrigation systems, therefore
speculation that he is competing with Plaintiff is unfounded and unreasonable.
I(b) Defendant DENIES that he has induced customers t0 breach their contracts.
1(c) Defendant DENIES that he has operated Temaca Lawn Sprinklers in violation 0f the
purchase agreements and reassetts his answer to 1(a)
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
SUPPORT FOR DEFENDANT’S MOTION FOR TEMPORARY RELIEF:
2. As set forth in detail below, Plaintiff has not complied with his obligations in the purchase
of the company at issue in this case. Plaintiff has taken overt action to cause Defendant to be liable
for debts that he incurred 0n behalf of the company after the purchase by Plaintiff. Plaintiff is in
Violation of the agreements related to the purchase of the company and caused Defendant harm by
failure to meet those obligations including reimbursement for debts incurred
by Defendant upon
Plaintiff‘s written agreement to pay those debts.
3. Customers 0f the company at issue have been erroneously sending payments to Defendant
for services that were provided to them by Plaintiff’s use and wear and tear of the company’s
equipment and supplies, which he has not paid for . Defendant has substantive reason to believe
that Plaintiff will use the funds fiom those payments for his own needs while he defaults on the
purchase agreement for the company.
RESPONSE TO PLAINTIFF’S VERIFIED COMPLAINT AND
DEFENDANTS VERIFIED COMPLAINT
JURISDICTION AND PARTIES
Defendant reserves the right t0 amend these pleadings as more information
may be required in
the fiJture; and for his response to Plaintiff’s Verified Complaint and Defendant’s
Verified
Complaint, respectfully alleges, upon information and belief:
1. Defendant does not have any infonnation that disputes numbers 1 through 3 of Plaintiffs
Verified Complaint.
2. Defendant has n0 information to support or deny paragraph 4 of Plaintist Verified
Complaint.
3. Paragraph 5 of the Verified Complaint is true.
4. Paragraph 6 0f the Verified Complaint relates to Plaintiff’s son, James Gomez.
James
Gomez has n0 connection to this matter. He was not a party to the sale of the business,
Temaca Lawn Sprinklers. Plaintiff has alleged that Defendant’s son, James Gomez, is
competing against the business Plaintiff purchased from Defendant. That is not true.
Defendant’s son is employed full time at a job that does not provide services that compete
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27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
with Plaintiff’s company. A few 0f Defendant’s 01d clients have reached out to James
Gomez for help because they were not satisfied with Plaintiffs work. James Gomez has
tried to help them a few times. However he did not solicit them and he was not a party to
either of the agreements and does not have a business servicing clients seeking those types
of services.
Paragraph 7 of Plaintiff’s Verified Complaint is true. Plaintiff purchased Temaca Lawn
Sprinklers from Defendant and subsequently changed the name of the company t0 Temaca
Irrigation. Plaintiff has not changed the name of Temaca Lawn Sprinklers on the
Minnesota Secretary of State business filings or terminated that business. Plaintiff did not
ask Defendant to do so. Instead, Plaintiff filed a separate business registration with the
Minnesota Secretary 0f State for Temaca Irrigation. Plaintiff is doing business as Temaca
Irrigation and to Defendant’s knowledge, does not use the name, Temaca Lawn Sprinklers.
Defendant does not use the name Temaca Lawn Sprinklers and does not operate a similar
business. He took employment with a third party after Plaintiff terminated Defendant’s
employment in violation of the business sales agreements.
Paragraph 8 of the Verified Complaint is true.
Paragraph 9 0f the Verified Complaint is true.
Paragraph 10 ofthe Verified Complaint is not true. Plaintiff started his irrigation company
in 1979. Plaintiff changed the name to Temaca Lawn Sprinklers, Inc. in 1994.
Paragraph 11 of the Verified Complaint is true.
10. Paragraph 12 0f the Verified Complaint is not true. The alleged purchase agreement
attached as Exhibit A to Plaintiff‘s Complaint is not the purchase agreement that was
signed by Defendant. In fact, Plaintiff" s Exhibit A includes an attachment that was not part
of that specific document at any time. Defendant provided Plaintiff with a preliminary
Proposal 0f Intent to Sell (See attached Defendant’s Exhibit A). December 2016 through
May 6, 2017 there were ongoing negotiation on the sale of Temeca Lawn Sprinklers to
Plaintifi'. As part of the negotiations, Plaintiff gave Defendant a Proposal of Intent t0
Purchase. (Defendant’s Exhibit B) During the negotiations, Plaintiff requested
access t0
Defendant’s business records as pan of his due diligence on the company.
Defendant
granted Plaintiff limited access t0 Defendant’s computer and paper files related
to the
business. Defendant has since discovered that Plaintiff expanded that access
beyond what
had been agreed upon and reviewed his personal files as well. The final terms of the sale
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27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
ofthe business incorporated portions ofDefendant’s
proposal (Defendant’s Exhibit B) into
the two agreements attached as Defendant’s Exhibits C and D (“the Agreements”).
11. Defendant was 74 years old at the time 0f the purchase negotiations and English is his
second language. Defendant has n0 formal education other than elementary
schooling.
Because of those limitations, Defendant’s accountant assisted him in finalizing the two
agreements for the sale of the business. Gene Shavlik, (“Shavlik”)
met with Plaintiff and
Defendant t0 discuss the terms proposed by Plaintiff. Mutually agreed upon changes were
made t0 the agreement drafted by Plaintiff’s attorney and proposed by Plaintiff. (See
Exhibit C). Shavlik drafted a tandem “working agreement”
(see Defendant’s Exhibit D)
that spelled out the terms of the transition. Exhibit D modified Plaintiff’s proposed
purchase agreement “t0 make it smooth” and to “anticipate problems that both of you will
need to resolve as they arise.” It filrther stated that “this will have priority over the legal
agreement as prepared by Plaintiff’s attorney, except for the issues of non-compete and the
section on remedies of default.” (See the first page of Defendant’s
Exhibit D). Plaintiff‘s
attorney was informed of that fact by Defendant’s attorney in a letter, dated October 10,
201 8.
12. Paragraph 13 of the Verified Complaint is true. Defendant has not violated that non-
compete. Defendant sold the irrigation business because it was becoming too hard for him
to d0 the work at 74 (now 76) years of age. Plaintiff works full time at a golf course and
can provide verification of that employment upon request.
While Plaintiffwould prefer to
retire, he cannot because of the failure of
Plaintiff to pay for the business as agreed upon
and a judgement for a debt in the amount of over
$1 1,000 including interest and that
Plaintiff had agreed to in the business purchase
agreements, but had since refused to pay.
13. Paragraph 14 ofthe Verified Complaint is true. Defendant complied with those obligations
including giving Plaintiff the titles of several vehicles plus equipment valued at $78,967 in
Defendant’s Exhibit C. Defendant gave Plaintiff the
Customer list. He also took Plaintiff
to vendors and introduced him as the purchaser ofthe
business. However, Plaintiff did not
comply with his obligations required under the Agreements, including but not limited to
payment obligations under the Agreements. The first payment
by Plaintiff to Defendant
was to be $30,000 to be paid November 15, 201 7. Plaintiff
made payments on that amount
as follows:
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
January 5, 2018 $9,000.
February 2, 2018. $1,080.44 (by giving Plaintiff a customer check that he said
Plaintiff should cash and apply to the
payment that was still owed fiom November 15,
2017)
February 2, 201 8 $3,000
May 12, 2018, $1,750
May 18, 2018 $2,400
June 15, 2018 $2,500.
June 27, 2018 $2,000
The total that he paid out of the $30,000.00 was $21,730.44. Defendant
has not received
any other payments. As a result a Cure Notice was given t0 Plaintiff for failure to pay the
full first installment payment due on November 15, 201 8. , leaving a balance of $3,602.56
and failure to pay the installment due on July 15, 2018, in the sum of $26,033.33. That
total of $29,033.33 has not been paid as of the date of this action. (Defendant’s Exhibit
F) In addition, Plaintiff owes Defendant the subsequent two payments of $26,033 each for
a total of $81,099.33.
14. Plaintiff is also in default ofthe Agreements because he did not pay the agreed upon amount
of $8,000 for the outstanding amount owed for equipment
and supplies. The equipment
and supplies had been purchased from Central Turf & Irrigation
Supply (“Central”) by
Defendant for use by the business prior t0 the purchase agreement
with Plaintiff. and which
was used by Plaintiff subsequent to the purchase of the business from Plaintiff.
(Defendant’s Exhibit D) That was written into the
Agreements. In addition to his failure
to pay the outstanding amount for those equipment and supplies, Plaintiff purchased more
equipment and supplies and incurred that debt in the name of
the company. (Defendant’s
Exhibit F) Plaintiff did not pay for those supplies, so
Central sued Defendant directly, as
Defendant had a personal guarantee with Central. Included in
those amounts claimed by
Central were purchases Plaintiff asked Defendant to
make after the sale of the
company t0 Plaintiff. According to the Agreements,
Defendant was t0 work for Plaintiff
subsequent to the sale, which he did for a short time. During Defendant’s employment,
Plaintiff would have Defendant g0 into Central and make purchases while Defendant
remained in the truck outside of the store. What Defendant did not realize at the time was
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27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
that the reason Plaintiff did not go into the store with him was that Plaintiff and Central
had prior issues between them related t0 Plaintiff” s prior purchases from them in another
state. Plaintiff has refused to reimburse Defendant for the amounts owed to Central under
the Concilliation Court Order. See Concilliation Court Order, attached as (Defendant’s
Exhibit G)
15. Paragraphs 15 and 16 of the Verified Complaint are true, paragraph 17 is not true.
Defendant was terminated related to Plaintiff’s attempts to avoid Plaintiffs obligations
under the Agreements.
l6. Paragraph 18 of the Verified Complaint not true. As
is described above, Defendant is
employed fulltime elsewhere and has not competed with Plaintiff
in any respect.
17. Paragraph 19 of the Verified Complaint is true as stated above.
18. Paragraph 20 of the Verified Complaint is true. Defendant’s attorney has notified
Plaintiff s attorney 0n several occasions that Plaintiff s clients had been sending checks t0
Defendant and asked if those funds could be applied to Plaintiff’s debt to Defendant.
He
did not respond to that request. Defendant would agree
t0 Plaintiffs attorney placing the
checks into a separate interest bearing account with
monthly accounting for those funds
and that they would not be released to either party without further agreement between the
parties 0r order of the coun.
19. Paragraphs 20, 2 land 22 of the Verified Complaint are
not true.
20. Paragraph 23 of the Verified Complaint is not true. Defendant has an ownership interest
in the company as long as Plaintiff is in default of the Agreements.
21. Paragraphs 24 through 34 of the Verified Compaint are not true.
22. Defendant has no knowledge 0f the message being sent in Paragraphs 35 and
36.
23. Defendant has no direct knowledge of the contents of Paragraph 37.
24. Paragraph 38 of the Verified Complaint is not based on fact and is not true.
COUNT I -BREACH OF CONTRACT AGAINST DEFENDANTS GUADALUP
E
GOMEZ AND TEMACA LAWN SPRINKLERS
25. Defendant denies the allegations and assuinptions contained in Count I.
26. Defendant hereby restates and incorporates all preceding paragraphs of this document.
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
In contrast, Plaintiff has not met his obligations under the Agreements and is attempting to use
this action to avoid his obligations and the damages that he has caused
to Defendant.
COUNT II - CONVERSION AGAINST DEFENDANTS GUADALUPE GOMEZ
AND TEMACA LAWN SPRINKLERS
27. Defendant denies the allegations and assumptions
contained in Count II.
28. Defendant denies the allegations and assumptions contained in Count II.
29. Defendant hereby restates and incorporates all preceding paragraphs of this document.
30. Based upon Plaintiff’s failure to comply with the Agreements, he is continuing to use the
assets of the company for his own means While not meeting his payment requirements under
the Agreements. He is seeking extraordinary and unsupported damages in filrtherance
0f that
goal.
1. Defendant has asked Plaintiff’ s attorney for a response regarding
the proposal to place the
checks that were mailed to Defendant rather than Plaintiff
into an escrow account, but
there has been no response to that request from Plaintiff s attorney.
2. Defendant has been damaged by Plaintiff’s refusal to comply with the terms of the
Agreements and his continued use, and wear and tear on the substantial equipment assets
of the Company as well as his default on a debt he agreed to
assume as part 0f the
Agreements, which is now a judgment against Defendant. It is unknown what the status
of the equipment is and if they are still in hjs possession and if so, if they are being
maintained.
3. If Plaintiff is given the checks, there is no avenue to recoup the losses fi'om Plaintiffs
default on the Agreements. If Plaintiff intended to comply with his payment obligations
under the Agreements, he would agree to apply those checks
t0 his outstanding contractual
obligations t0 Defendant. By refusing to apply those amounts to his obligations under the
Agreement, he is admitting that he has no intent to fulfil those obligations.
4. The checks are payment for services provided to customers
by a company and its
equipment and supplies, that has intentionally not been paid for.
5. Plaintiff complains that Defendant has deprived Plaintiff of its interests in the payment
checks, yet Plaintiff has converted the assets of Defendant
for his own benefit and claims
the benefit without paying the obligation. Plaintiff should not be allowed to profit from
his actions under the circumstances.
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
Just as Plaintiff has failed to pay his debt to Central, upon information and belief he has
done the same to other vendors as well.
Plaintiff has defaulted on the Agreements. Plaintiff is asking for an evidentiary healing
so that the court has the opportunity to hear testimony t0
support his request for relief.
COUNT HI — TORTIOUS INTERFERENCE WITH A CONTRACT
AGAINST ALL DEFENDANTS
37. Defendants hereby restate and incorporate all preceding paragraphs of their Answer and
Complaint.
. Defendant hereby restates and incorporates all preceding paragraphs of this document.
Defendant denies that he or his agents interfered with Plaintiff
s customers in any way. It
is not unusual for customers who have been loyal to a service provider for many years to
reach out and contact that former service provider to
ask questions about the sale of the
business or if they are unhappy with the new service provider. Defendant did not build a
service business from scratch to one with 750 clients without those clients being satisfied
customers.
As stated above, both Defendant and his son, James Gomez each have full time jobs. They
are not competitors of Plaintiff.
Plaintiff, has requested a temporary injunction. He has no foundation for an injunction.
Defendant has not violated either of the Agreements. In
fact, Plaintiff has not complied
with his contractual obligations under the Agreements.
. Plaintiff seeks relief from the court as a diversion from the fact that he is in default of the
Purchase Agreement.
. Plaintiff has been in default since July 15, 201 8. See the attached Cure Notice, dated July
18, 2018. The amount of the default was $29,635.00 at that time. The amount has
increased as additional obligations for payment were
not paid and he continued to use the
assets 0f the company for his own benefit.
Petitioner has not only defaulted 0n his agreement to pay what is owed to Plaintiff under the
agreements, but he has incurred debt in Plaintiff’s name and failed to pay on debt for equipment
and supplies that he used to provide services to his customers for which
Plaintiff is now liable
under court order for the vendor. Plaintiff” s attorney agreed that Plaintiff owed at least a portion
0f that amount in his attached letter to my attorney. (Defendant’s Exhibit I) In order for him to
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27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
agree to pay Defendant for his purchases made after the sale, he is requiring me to send him
documents that I do not have as they were given to Plaintiff when they were purchased on his
behalf. Plaintiff has refined t0 reimburse me for those amounts.
COUNT IV — TORTIOUS INTERFERENCE WITH A PROSPECTIVE BUSINESS
ADVANTAGE AGAINST ALL DEFENDANTS
Defendants hereby restate and incorporate all preceding paragraphs of their Answer and
Complaint.
Defendant hereby restates and incorporates all preceding paragraphs of this document.
Defendant completely denies that he interfered with Plaintiffs
prospective business advantage. If
anything, Defendant had been supportive of that advantage
by introducing Plaintiff to vendors.
And prior clients. Several of the vendors told Defendant that they have not been
paid by Plaintiff
and are not happy that Defendant recommended Plaintiff to them.
Defendant is responsible for
promoting his own business and maintaining the goodwill 0f his customers.
COUNT V — DEFAMATION AGAINST DEFENDANTS GUADALUPE AND JAMES
GOMEZ
Defendants hereby restate and incorporate all preceding paragraphs of their Answer and
Complaint.
Defendant hereby restates and incorporates all preceding paragraphs of this document.
Defendant denies the allegations and believes that statements, if any made by Defendant were
taken out of context, misinterpreted or fabricated and
embellished by Plaintiff.
Date: December 12, 2018 HALPER & JOSEPH, PLLC
/s/ Barbara A. Halper
Barbara A. Halper, ID# 202290
barbara@halperjoseph.com
300 East Frontage Road, Suite A
Wacom'a, MN
55387
Telephone (952) 356-0825
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
VERIFICATION
STATE OF MINNESOTA )
COUNTY 0F CARVER )
l, Guadalupe Gomez, under
penalty of perjury, state that have reviewed and know the
l
contents of this Complaint, that the averments thereof are true of
my own knowledge, save as
to such as are therein stated on information and belief, and
that as to those averments,
|
believe them to be true.
Dated: @(Et
’
Z; [gW/$ u/Véugwéggz/
Guadalupe Gomez
2b
27-CV-18-19659
Filed in District Court
State of Minnesota
‘Temaca Lawn Sprinklers, Ific 3/20/2019 11:09 AM
Complete Automatic & Manual Lawn Sprinkler Service
3790 Highland Rd
St. Bonifacius, MN 55375
Phone: (952) 446—1 778 Fax: (952) 446—9588
Proposal 0f Intent to Sell
I propose to sell Temaca Lawn Sprinklers for the amount 0f $1 80,000.00, or $140,000.00 for a
one time lump sum payment.
This total includes the following:
3 work vans — 2004 ($10,000.00), 2007 ($14,000.00) and 1994 ($5,000.00)
3 air compressors ($21 ,000.00) l
— is a 2003 model, 2 are 2007 model
2 pipe plowing machines (2@ $4,500.00 = $9,000.00)
The inventory, including misc. tools (parts and supplies, in both the shop and the trucks)
$15,000.00
1 trailer (for hauling machines to job cites) $500.00
~ 700
Customer list and records estimated at @ $150.00 each
Office Desk
2 legal sized filing cabinets
1 copier
1 computer printer
1 blue print machine
With this agreement:
I(Lupe Gomez) will be employed with the company for a minimum of one year, with an hourly
wage of $25.00 per hour. Dates to be discussed.
It is up to the buyer’s discretion to offer employment to the current employees.
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27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
9:08 AM Temaca Lawn Sprinklers, Inc.
1 1/1 1/1 8
Profit & Loss
Accrual Basis January through December 2015
Jan {Dec 15
Ordinary IncomeIExpense
Income
Bad Debt Expense —5.894.65
Fees 596.69
Services 288,713.76
Sales
_ “.715995
Total Income 283,266.74
Cost of Goods Sold
Direct Labor
149,242.63 LOH: 39 600’30
Inventory Decrease (increase) 1,61 5.18
Materials Cosb 28.071 .50
Sub—Contractors 4.597.64
Supplies 4,256.26
Total COGS 187,783.21
Gross Profit 95,483.53
Expense
Charitable Contributions 20.00
Advertising and Promotion 606.49
Auto and Truck Expenses 15.921 .30
Bank Service Charges 763.44
Depreciation Expense 1,274.00
Equipment Rental 410.22
Insurance Expense
Work Comp
Group Health
Commercial Auto
7,202.72
1,501 .70
5,01 7.1 7
a Lupgb [gal
Insurance Expense - Other 5,51 8.35
Total Insurance Expense 19,239.94
InterestExpense 4,585.00
Meals and Entertainment 105.61
Miscellaneous 0.27
Office Supplies 1,780.58
Payroll Expenses
Federal UC 299.78
State UC 9,985.00
Medicare Company 2,164.00
Social Security Company 9,253.05
Payroll Expenses - Other 0.00
Total Payroll Expenses 21,701.83
Postage and Delivery 873.95
Professional Fees 3,460.76
Repairs and Maintenance 10,695.04
Rubbish Removal 564.88
Small Tools 300‘52
Telephone Expense 2,442.69
Utilities 5,21 0.57
Total Expense 89,957.09
Net Ordinary Income
5,526.44
Other lncomelExpense
Other Expense
Non-Deductable Penalties 127.40
Total Other Expense 127.40
A
Net Other Income
427.40
Net Income
5.399.04
Page 1
27-CV-18-19659
Filed in District Court
State of Minnesota
3/20/2019 11:09 AM
9:07 AM Temaca Lawn Sprinklers, Inc.
1 1/1 1/1 6
Accrual Basis
Profit & Loss
January 1 through November 11, 2016
Jan 1 -Noy 11, 15
Ordinary lncomelExpense
Income
Bad Debt Expense -227.24 .957? V6 er 2‘3 1"
Fees
412.50
Services
256,141.80
Sales
19.74
Total Income
’
NC +A LC
I
256,337.30
Cost of Goods Sold
\
3 35 7? 93
139,598.00 ”7 L UP§9
Direct Labor
Materiais Costs
6,302.17
Supplies
24,3326
Total COGS 176,256.43
Gross Profit
86.081 .37
Expense
Uncategorized Expenses
0.50
Charitable ContributiOns
50.00
Advertising and Promotion
88.83
Auto and Truck Expenses
10,633.48
Bank Service Charges
55.88
insurance Expense
Work Comp 4,41 0.76
Group Health 1,229.40
Commercial Auto 3,508.80
Insurance Expense - Other
4.789127
Total Insurance
Expense
Interest
Misceuaneous
Loan Liability
Expense
2.0
Preview
27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM State 0f Minnesota District Court County Judicial District: Fourth Hennepin Court File Number: 27—CV—1 8—19659 Case Type: Civil (The Honorable Joseph Klein) Ryan Lazenby, and Temaca Irrigation LLC Response t0 Plaintiff’s Request Plaintiff Temporary Injunction, for VS. Answer t0 Plaintiff’s Verified Guadalupe Gomez, James Gomez Complaint and Defendant’s Temaca Lawn Sprinklers, Inc. d.b.a. Mation for Temporary Relief Temaca Lawn Sprinklers, and Defendant’s Verified Defendant Com plaint Defendant, Guadalupe Gomez, for his Response to the Plaintiff’s Motion for Temporary Injunction, Answer to Plaintiff’s Verified Complaint and Defendant’s Verified ComplaintComplaint and Motion for a Temporary Injunction alleges as follows: RESPONSE TO PLAINTIFF’S MOTION AND AMENDED MOTION FOR TEMPORARY INJUNCTION: 1.(a) Defendant DENIES that he has violated his employment agreement. The agreement is not enforceable as Plaintiff is in default of his obligations under the purchase agreements for that company. In addition, Defendant has no facts to support his allegations. Defendant is employed full time by a golf course and has not been able to retire because of Plaintiff’s failure to pay the installments required in the company purchase agreement. Defendant is 76 years old and suffers from physical issues related to the many years he did work with irrigation systems, therefore speculation that he is competing with Plaintiff is unfounded and unreasonable. I(b) Defendant DENIES that he has induced customers t0 breach their contracts. 1(c) Defendant DENIES that he has operated Temaca Lawn Sprinklers in violation 0f the purchase agreements and reassetts his answer to 1(a) 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM SUPPORT FOR DEFENDANT’S MOTION FOR TEMPORARY RELIEF: 2. As set forth in detail below, Plaintiff has not complied with his obligations in the purchase of the company at issue in this case. Plaintiff has taken overt action to cause Defendant to be liable for debts that he incurred 0n behalf of the company after the purchase by Plaintiff. Plaintiff is in Violation of the agreements related to the purchase of the company and caused Defendant harm by failure to meet those obligations including reimbursement for debts incurred by Defendant upon Plaintiff‘s written agreement to pay those debts. 3. Customers 0f the company at issue have been erroneously sending payments to Defendant for services that were provided to them by Plaintiff’s use and wear and tear of the company’s equipment and supplies, which he has not paid for . Defendant has substantive reason to believe that Plaintiff will use the funds fiom those payments for his own needs while he defaults on the purchase agreement for the company. RESPONSE TO PLAINTIFF’S VERIFIED COMPLAINT AND DEFENDANTS VERIFIED COMPLAINT JURISDICTION AND PARTIES Defendant reserves the right t0 amend these pleadings as more information may be required in the fiJture; and for his response to Plaintiff’s Verified Complaint and Defendant’s Verified Complaint, respectfully alleges, upon information and belief: 1. Defendant does not have any infonnation that disputes numbers 1 through 3 of Plaintiffs Verified Complaint. 2. Defendant has n0 information to support or deny paragraph 4 of Plaintist Verified Complaint. 3. Paragraph 5 of the Verified Complaint is true. 4. Paragraph 6 0f the Verified Complaint relates to Plaintiff’s son, James Gomez. James Gomez has n0 connection to this matter. He was not a party to the sale of the business, Temaca Lawn Sprinklers. Plaintiff has alleged that Defendant’s son, James Gomez, is competing against the business Plaintiff purchased from Defendant. That is not true. Defendant’s son is employed full time at a job that does not provide services that compete 2 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM with Plaintiff’s company. A few 0f Defendant’s 01d clients have reached out to James Gomez for help because they were not satisfied with Plaintiffs work. James Gomez has tried to help them a few times. However he did not solicit them and he was not a party to either of the agreements and does not have a business servicing clients seeking those types of services. Paragraph 7 of Plaintiff’s Verified Complaint is true. Plaintiff purchased Temaca Lawn Sprinklers from Defendant and subsequently changed the name of the company t0 Temaca Irrigation. Plaintiff has not changed the name of Temaca Lawn Sprinklers on the Minnesota Secretary of State business filings or terminated that business. Plaintiff did not ask Defendant to do so. Instead, Plaintiff filed a separate business registration with the Minnesota Secretary 0f State for Temaca Irrigation. Plaintiff is doing business as Temaca Irrigation and to Defendant’s knowledge, does not use the name, Temaca Lawn Sprinklers. Defendant does not use the name Temaca Lawn Sprinklers and does not operate a similar business. He took employment with a third party after Plaintiff terminated Defendant’s employment in violation of the business sales agreements. Paragraph 8 of the Verified Complaint is true. Paragraph 9 0f the Verified Complaint is true. Paragraph 10 ofthe Verified Complaint is not true. Plaintiff started his irrigation company in 1979. Plaintiff changed the name to Temaca Lawn Sprinklers, Inc. in 1994. Paragraph 11 of the Verified Complaint is true. 10. Paragraph 12 0f the Verified Complaint is not true. The alleged purchase agreement attached as Exhibit A to Plaintiff‘s Complaint is not the purchase agreement that was signed by Defendant. In fact, Plaintiff" s Exhibit A includes an attachment that was not part of that specific document at any time. Defendant provided Plaintiff with a preliminary Proposal 0f Intent to Sell (See attached Defendant’s Exhibit A). December 2016 through May 6, 2017 there were ongoing negotiation on the sale of Temeca Lawn Sprinklers to Plaintifi'. As part of the negotiations, Plaintiff gave Defendant a Proposal of Intent t0 Purchase. (Defendant’s Exhibit B) During the negotiations, Plaintiff requested access t0 Defendant’s business records as pan of his due diligence on the company. Defendant granted Plaintiff limited access t0 Defendant’s computer and paper files related to the business. Defendant has since discovered that Plaintiff expanded that access beyond what had been agreed upon and reviewed his personal files as well. The final terms of the sale 3 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM ofthe business incorporated portions ofDefendant’s proposal (Defendant’s Exhibit B) into the two agreements attached as Defendant’s Exhibits C and D (“the Agreements”). 11. Defendant was 74 years old at the time 0f the purchase negotiations and English is his second language. Defendant has n0 formal education other than elementary schooling. Because of those limitations, Defendant’s accountant assisted him in finalizing the two agreements for the sale of the business. Gene Shavlik, (“Shavlik”) met with Plaintiff and Defendant t0 discuss the terms proposed by Plaintiff. Mutually agreed upon changes were made t0 the agreement drafted by Plaintiff’s attorney and proposed by Plaintiff. (See Exhibit C). Shavlik drafted a tandem “working agreement” (see Defendant’s Exhibit D) that spelled out the terms of the transition. Exhibit D modified Plaintiff’s proposed purchase agreement “t0 make it smooth” and to “anticipate problems that both of you will need to resolve as they arise.” It filrther stated that “this will have priority over the legal agreement as prepared by Plaintiff’s attorney, except for the issues of non-compete and the section on remedies of default.” (See the first page of Defendant’s Exhibit D). Plaintiff‘s attorney was informed of that fact by Defendant’s attorney in a letter, dated October 10, 201 8. 12. Paragraph 13 of the Verified Complaint is true. Defendant has not violated that non- compete. Defendant sold the irrigation business because it was becoming too hard for him to d0 the work at 74 (now 76) years of age. Plaintiff works full time at a golf course and can provide verification of that employment upon request. While Plaintiffwould prefer to retire, he cannot because of the failure of Plaintiff to pay for the business as agreed upon and a judgement for a debt in the amount of over $1 1,000 including interest and that Plaintiff had agreed to in the business purchase agreements, but had since refused to pay. 13. Paragraph 14 ofthe Verified Complaint is true. Defendant complied with those obligations including giving Plaintiff the titles of several vehicles plus equipment valued at $78,967 in Defendant’s Exhibit C. Defendant gave Plaintiff the Customer list. He also took Plaintiff to vendors and introduced him as the purchaser ofthe business. However, Plaintiff did not comply with his obligations required under the Agreements, including but not limited to payment obligations under the Agreements. The first payment by Plaintiff to Defendant was to be $30,000 to be paid November 15, 201 7. Plaintiff made payments on that amount as follows: 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM January 5, 2018 $9,000. February 2, 2018. $1,080.44 (by giving Plaintiff a customer check that he said Plaintiff should cash and apply to the payment that was still owed fiom November 15, 2017) February 2, 201 8 $3,000 May 12, 2018, $1,750 May 18, 2018 $2,400 June 15, 2018 $2,500. June 27, 2018 $2,000 The total that he paid out of the $30,000.00 was $21,730.44. Defendant has not received any other payments. As a result a Cure Notice was given t0 Plaintiff for failure to pay the full first installment payment due on November 15, 201 8. , leaving a balance of $3,602.56 and failure to pay the installment due on July 15, 2018, in the sum of $26,033.33. That total of $29,033.33 has not been paid as of the date of this action. (Defendant’s Exhibit F) In addition, Plaintiff owes Defendant the subsequent two payments of $26,033 each for a total of $81,099.33. 14. Plaintiff is also in default ofthe Agreements because he did not pay the agreed upon amount of $8,000 for the outstanding amount owed for equipment and supplies. The equipment and supplies had been purchased from Central Turf & Irrigation Supply (“Central”) by Defendant for use by the business prior t0 the purchase agreement with Plaintiff. and which was used by Plaintiff subsequent to the purchase of the business from Plaintiff. (Defendant’s Exhibit D) That was written into the Agreements. In addition to his failure to pay the outstanding amount for those equipment and supplies, Plaintiff purchased more equipment and supplies and incurred that debt in the name of the company. (Defendant’s Exhibit F) Plaintiff did not pay for those supplies, so Central sued Defendant directly, as Defendant had a personal guarantee with Central. Included in those amounts claimed by Central were purchases Plaintiff asked Defendant to make after the sale of the company t0 Plaintiff. According to the Agreements, Defendant was t0 work for Plaintiff subsequent to the sale, which he did for a short time. During Defendant’s employment, Plaintiff would have Defendant g0 into Central and make purchases while Defendant remained in the truck outside of the store. What Defendant did not realize at the time was 5 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM that the reason Plaintiff did not go into the store with him was that Plaintiff and Central had prior issues between them related t0 Plaintiff” s prior purchases from them in another state. Plaintiff has refused to reimburse Defendant for the amounts owed to Central under the Concilliation Court Order. See Concilliation Court Order, attached as (Defendant’s Exhibit G) 15. Paragraphs 15 and 16 of the Verified Complaint are true, paragraph 17 is not true. Defendant was terminated related to Plaintiff’s attempts to avoid Plaintiffs obligations under the Agreements. l6. Paragraph 18 of the Verified Complaint not true. As is described above, Defendant is employed fulltime elsewhere and has not competed with Plaintiff in any respect. 17. Paragraph 19 of the Verified Complaint is true as stated above. 18. Paragraph 20 of the Verified Complaint is true. Defendant’s attorney has notified Plaintiff s attorney 0n several occasions that Plaintiff s clients had been sending checks t0 Defendant and asked if those funds could be applied to Plaintiff’s debt to Defendant. He did not respond to that request. Defendant would agree t0 Plaintiffs attorney placing the checks into a separate interest bearing account with monthly accounting for those funds and that they would not be released to either party without further agreement between the parties 0r order of the coun. 19. Paragraphs 20, 2 land 22 of the Verified Complaint are not true. 20. Paragraph 23 of the Verified Complaint is not true. Defendant has an ownership interest in the company as long as Plaintiff is in default of the Agreements. 21. Paragraphs 24 through 34 of the Verified Compaint are not true. 22. Defendant has no knowledge 0f the message being sent in Paragraphs 35 and 36. 23. Defendant has no direct knowledge of the contents of Paragraph 37. 24. Paragraph 38 of the Verified Complaint is not based on fact and is not true. COUNT I -BREACH OF CONTRACT AGAINST DEFENDANTS GUADALUP E GOMEZ AND TEMACA LAWN SPRINKLERS 25. Defendant denies the allegations and assuinptions contained in Count I. 26. Defendant hereby restates and incorporates all preceding paragraphs of this document. 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM In contrast, Plaintiff has not met his obligations under the Agreements and is attempting to use this action to avoid his obligations and the damages that he has caused to Defendant. COUNT II - CONVERSION AGAINST DEFENDANTS GUADALUPE GOMEZ AND TEMACA LAWN SPRINKLERS 27. Defendant denies the allegations and assumptions contained in Count II. 28. Defendant denies the allegations and assumptions contained in Count II. 29. Defendant hereby restates and incorporates all preceding paragraphs of this document. 30. Based upon Plaintiff’s failure to comply with the Agreements, he is continuing to use the assets of the company for his own means While not meeting his payment requirements under the Agreements. He is seeking extraordinary and unsupported damages in filrtherance 0f that goal. 1. Defendant has asked Plaintiff’ s attorney for a response regarding the proposal to place the checks that were mailed to Defendant rather than Plaintiff into an escrow account, but there has been no response to that request from Plaintiff s attorney. 2. Defendant has been damaged by Plaintiff’s refusal to comply with the terms of the Agreements and his continued use, and wear and tear on the substantial equipment assets of the Company as well as his default on a debt he agreed to assume as part 0f the Agreements, which is now a judgment against Defendant. It is unknown what the status of the equipment is and if they are still in hjs possession and if so, if they are being maintained. 3. If Plaintiff is given the checks, there is no avenue to recoup the losses fi'om Plaintiffs default on the Agreements. If Plaintiff intended to comply with his payment obligations under the Agreements, he would agree to apply those checks t0 his outstanding contractual obligations t0 Defendant. By refusing to apply those amounts to his obligations under the Agreement, he is admitting that he has no intent to fulfil those obligations. 4. The checks are payment for services provided to customers by a company and its equipment and supplies, that has intentionally not been paid for. 5. Plaintiff complains that Defendant has deprived Plaintiff of its interests in the payment checks, yet Plaintiff has converted the assets of Defendant for his own benefit and claims the benefit without paying the obligation. Plaintiff should not be allowed to profit from his actions under the circumstances. 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM Just as Plaintiff has failed to pay his debt to Central, upon information and belief he has done the same to other vendors as well. Plaintiff has defaulted on the Agreements. Plaintiff is asking for an evidentiary healing so that the court has the opportunity to hear testimony t0 support his request for relief. COUNT HI — TORTIOUS INTERFERENCE WITH A CONTRACT AGAINST ALL DEFENDANTS 37. Defendants hereby restate and incorporate all preceding paragraphs of their Answer and Complaint. . Defendant hereby restates and incorporates all preceding paragraphs of this document. Defendant denies that he or his agents interfered with Plaintiff s customers in any way. It is not unusual for customers who have been loyal to a service provider for many years to reach out and contact that former service provider to ask questions about the sale of the business or if they are unhappy with the new service provider. Defendant did not build a service business from scratch to one with 750 clients without those clients being satisfied customers. As stated above, both Defendant and his son, James Gomez each have full time jobs. They are not competitors of Plaintiff. Plaintiff, has requested a temporary injunction. He has no foundation for an injunction. Defendant has not violated either of the Agreements. In fact, Plaintiff has not complied with his contractual obligations under the Agreements. . Plaintiff seeks relief from the court as a diversion from the fact that he is in default of the Purchase Agreement. . Plaintiff has been in default since July 15, 201 8. See the attached Cure Notice, dated July 18, 2018. The amount of the default was $29,635.00 at that time. The amount has increased as additional obligations for payment were not paid and he continued to use the assets 0f the company for his own benefit. Petitioner has not only defaulted 0n his agreement to pay what is owed to Plaintiff under the agreements, but he has incurred debt in Plaintiff’s name and failed to pay on debt for equipment and supplies that he used to provide services to his customers for which Plaintiff is now liable under court order for the vendor. Plaintiff” s attorney agreed that Plaintiff owed at least a portion 0f that amount in his attached letter to my attorney. (Defendant’s Exhibit I) In order for him to 8 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM agree to pay Defendant for his purchases made after the sale, he is requiring me to send him documents that I do not have as they were given to Plaintiff when they were purchased on his behalf. Plaintiff has refined t0 reimburse me for those amounts. COUNT IV — TORTIOUS INTERFERENCE WITH A PROSPECTIVE BUSINESS ADVANTAGE AGAINST ALL DEFENDANTS Defendants hereby restate and incorporate all preceding paragraphs of their Answer and Complaint. Defendant hereby restates and incorporates all preceding paragraphs of this document. Defendant completely denies that he interfered with Plaintiffs prospective business advantage. If anything, Defendant had been supportive of that advantage by introducing Plaintiff to vendors. And prior clients. Several of the vendors told Defendant that they have not been paid by Plaintiff and are not happy that Defendant recommended Plaintiff to them. Defendant is responsible for promoting his own business and maintaining the goodwill 0f his customers. COUNT V — DEFAMATION AGAINST DEFENDANTS GUADALUPE AND JAMES GOMEZ Defendants hereby restate and incorporate all preceding paragraphs of their Answer and Complaint. Defendant hereby restates and incorporates all preceding paragraphs of this document. Defendant denies the allegations and believes that statements, if any made by Defendant were taken out of context, misinterpreted or fabricated and embellished by Plaintiff. Date: December 12, 2018 HALPER & JOSEPH, PLLC /s/ Barbara A. Halper Barbara A. Halper, ID# 202290 barbara@halperjoseph.com 300 East Frontage Road, Suite A Wacom'a, MN 55387 Telephone (952) 356-0825 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM VERIFICATION STATE OF MINNESOTA ) COUNTY 0F CARVER ) l, Guadalupe Gomez, under penalty of perjury, state that have reviewed and know the l contents of this Complaint, that the averments thereof are true of my own knowledge, save as to such as are therein stated on information and belief, and that as to those averments, | believe them to be true. Dated: @(Et ’ Z; [gW/$ u/Véugwéggz/ Guadalupe Gomez 2b 27-CV-18-19659 Filed in District Court State of Minnesota ‘Temaca Lawn Sprinklers, Ific 3/20/2019 11:09 AM Complete Automatic & Manual Lawn Sprinkler Service 3790 Highland Rd St. Bonifacius, MN 55375 Phone: (952) 446—1 778 Fax: (952) 446—9588 Proposal 0f Intent to Sell I propose to sell Temaca Lawn Sprinklers for the amount 0f $1 80,000.00, or $140,000.00 for a one time lump sum payment. This total includes the following: 3 work vans — 2004 ($10,000.00), 2007 ($14,000.00) and 1994 ($5,000.00) 3 air compressors ($21 ,000.00) l — is a 2003 model, 2 are 2007 model 2 pipe plowing machines (2@ $4,500.00 = $9,000.00) The inventory, including misc. tools (parts and supplies, in both the shop and the trucks) $15,000.00 1 trailer (for hauling machines to job cites) $500.00 ~ 700 Customer list and records estimated at @ $150.00 each Office Desk 2 legal sized filing cabinets 1 copier 1 computer printer 1 blue print machine With this agreement: I(Lupe Gomez) will be employed with the company for a minimum of one year, with an hourly wage of $25.00 per hour. Dates to be discussed. It is up to the buyer’s discretion to offer employment to the current employees. V C § \ \j \ ‘ x .L “ ' :2“ Emlw A 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM 9:08 AM Temaca Lawn Sprinklers, Inc. 1 1/1 1/1 8 Profit & Loss Accrual Basis January through December 2015 Jan {Dec 15 Ordinary IncomeIExpense Income Bad Debt Expense —5.894.65 Fees 596.69 Services 288,713.76 Sales _ “.715995 Total Income 283,266.74 Cost of Goods Sold Direct Labor 149,242.63 LOH: 39 600’30 Inventory Decrease (increase) 1,61 5.18 Materials Cosb 28.071 .50 Sub—Contractors 4.597.64 Supplies 4,256.26 Total COGS 187,783.21 Gross Profit 95,483.53 Expense Charitable Contributions 20.00 Advertising and Promotion 606.49 Auto and Truck Expenses 15.921 .30 Bank Service Charges 763.44 Depreciation Expense 1,274.00 Equipment Rental 410.22 Insurance Expense Work Comp Group Health Commercial Auto 7,202.72 1,501 .70 5,01 7.1 7 a Lupgb [gal Insurance Expense - Other 5,51 8.35 Total Insurance Expense 19,239.94 InterestExpense 4,585.00 Meals and Entertainment 105.61 Miscellaneous 0.27 Office Supplies 1,780.58 Payroll Expenses Federal UC 299.78 State UC 9,985.00 Medicare Company 2,164.00 Social Security Company 9,253.05 Payroll Expenses - Other 0.00 Total Payroll Expenses 21,701.83 Postage and Delivery 873.95 Professional Fees 3,460.76 Repairs and Maintenance 10,695.04 Rubbish Removal 564.88 Small Tools 300‘52 Telephone Expense 2,442.69 Utilities 5,21 0.57 Total Expense 89,957.09 Net Ordinary Income 5,526.44 Other lncomelExpense Other Expense Non-Deductable Penalties 127.40 Total Other Expense 127.40 A Net Other Income 427.40 Net Income 5.399.04 Page 1 27-CV-18-19659 Filed in District Court State of Minnesota 3/20/2019 11:09 AM 9:07 AM Temaca Lawn Sprinklers, Inc. 1 1/1 1/1 6 Accrual Basis Profit & Loss January 1 through November 11, 2016 Jan 1 -Noy 11, 15 Ordinary lncomelExpense Income Bad Debt Expense -227.24 .957? V6 er 2‘3 1" Fees 412.50 Services 256,141.80 Sales 19.74 Total Income ’ NC +A LC I 256,337.30 Cost of Goods Sold \ 3 35 7? 93 139,598.00 ”7 L UP§9 Direct Labor Materiais Costs 6,302.17 Supplies 24,3326 Total COGS 176,256.43 Gross Profit 86.081 .37 Expense Uncategorized Expenses 0.50 Charitable ContributiOns 50.00 Advertising and Promotion 88.83 Auto and Truck Expenses 10,633.48 Bank Service Charges 55.88 insurance Expense Work Comp 4,41 0.76 Group Health 1,229.40 Commercial Auto 3,508.80 Insurance Expense - Other 4.789127 Total Insurance Expense Interest Misceuaneous Loan Liability Expense 2.0