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STEVEN RASH, § IN THE DISTRICIEQURE Py 5. 5
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ARTFEST INTERNATIONAL, INC, §
EDDIE VAKSER, and §
PBS HOLDING INC. 8
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Defendants § DALLAS COUNTY, TEXAS
PLAINTIFF’S FIRST AMENDED PETITION AND APPLICATION FOR
INJUNCTIVE RELIEF
Plaintiff Steven Rash (“Plaintiff” or “Mr. Rash”) files this First Amended Petition
and Application for Injunctive Relief against Artfest International, Inc., Eddie Vakser and
PBS Holding Inc. (“Defendants”) and would respectfully show the following:
1 Discovery Level
Discovery is intended to be conducted under Level 2 as set forth in Rule 190 of
the TEXAS RULES OF CIVIL PROCEDURE.
il. Parties and Service of Process
Plaintiff Steven Rash is an individual residing at 15610 Witt Place #2147,
Addison, Texas 75001.
Defendant Artfest International, Inc. is a Nevada corporation that maintains a
regular place of business in Dallas County, Texas, engages in business in Dallas County,
Texas and has committed torts in Dallas County, Texas. Defendant Artfest may be
served with process by serving its Chief Executive Officer, Eddie Vakser, at 13300
Branch View Road, Dallas, Texas 75234.
Plaintiff's First Amended Petition—Page 1 of 9Defendant Eddie Vakser is an individual residing in Collin County. Defendant
Vakser is the Chief Executive Officer of Artfest International, Inc., and may be served at
his office located at 13300 Branch View Road, Dallas, Texas 75234.
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Defendant PBS Holding Inc. is a Nevada corporation that maintains a regular place
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of business in Dallas County, Texas, engages in business in Dallas County, Texas and has
committed torts in Dallas County, Texas. Defendant PBS Holding Inc. may be served
with process by serving its registered agent Incorp Services, Inc., 2360 Corporate Circle,
Suite 400, Henderson, Nevada 89074-7722.
Il. Jurisdiction and Venue
Jurisdiction is proper because the damages sought by Plaintiff are within the
jurisdictional limits of the Court. Personal jurisdiction is proper over all of the
Defendants because each Defendant engaged in business in Dallas County, Texas and
committed torts, in whole or in part, in Dallas County, Texas. In addition, Defendant
Artfest’s principle place of business is Dallas County. Further, Defendant PBS Holding
Inc.’s principle place of business is Dallas County.
Venue is proper in this Court because all or a substantial part of the events or
omissions giving rise to this cause of action occurred in Dallas County, Texas. TEx. Civ.
PRrAC. & REM. CODE §15.002.
IV. Factual Background
On October 1, 2008, Plaintiff and Defendants Artfest and Vakser entered into a
written employment agreement. As consideration for serving as President and Chief
Operating Officer of Artfest and performing such duties as required, Plaintiff was to
receive numerous benefits including, but not limited to, a hefty salary, stock grants, stock
Plaintiff's First Amended Petition—Page 2 of 9options, and reimbursement for expenses incurred by Plaintiff in the performance of his -
duties.
Plaintiff abided by the terms of the the employment contract. However,
Defendants failed and refused to live up to its end of the agreement. In short, Defendants
never paid Plaintiff a salary, never provided the generous stock grants and options as
promised in the contract, and never reimbursed Plaintiff for his expenses. Defendants
currently owe Plaintiff over $800,000.00 pursuant to the terms of the executed
employment contract.
Upon information and belief, it appears that Defendants Artfest and Vakser have
begun the process of conveying their assets to Defendant PBS Holding Inc., a wholly
owned subsidiary of Defendant Artfest, in order to defraud creditors, and to avoid any
potential judgment against them. It appears that this process began sometime in May of
2011. Defendants are attempting to divest the assets of Defendant Artfest by offering an
exchange of stock in Defendant Artfest for stock in Defendant PBS Holding Inc. at a rate
of one thousand (1,000) shares of Defendant Artfest stock for one (1) share of stock in
Defendant PBS Holding Inc. Defendants have not made this offer to Plaintiff in spite of
press releases stating that al! shareholders would be offered this opportunity.
Vv. Causes of Action
A. Breach of Contract
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would show that the Defendant Artfest materially breached its contractual
obligations to Plaintiff. As described above, although Plaintiff upheld his end of the
bargain, Defendant Artfest failed and refused to pay and/or reimburse Plaintiff.
Plaintiff's First Amended Petition—Page 3 of 9Plaintiff provided Defendant Artfest valuable consideration and fully performed
all duties required of Plaintiff under the contract. As a wholly owned subsidiary of
Defendant Artfest, Defendant PBS Holding Inc. received the benefit of Plaintiff's
performance of the employment agreement Defendant Artfest breached the contract by
refusing to follow the express and implied terms of said contract. In particular,
Defendant Artfest breached this contract by refusing to perform its duties under the
contract. As a direct and proximate consequence of said breach, Plaintiff suffered (and
continues to suffer) damages in an amount in excess of the minimum jurisdictional limits
of this court.
B. Fraud
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that the Defendants are liable to Plaintiff for fraud. In
particular, Defendants made numerous material misrepresentations in an effort to
persuade Plaintiff to join the company. Defendants made the misrepresentations with
knowledge of their falsity and without any knowledge of the truth. Unfortunately,
Plaintiff relied upon Defendants’ misrepresentations in signing the employment contract
and accepting the job as President and Chief Operating Officer of Artfest.
Defendant PBS Holding is now engaging in fraud to dilute Plaintiff’s interests and
to avoid a judgment debt of Defendant Anfest.
Plaintiff has in the past and continues to suffer reasonably foreseeable damages as
a direct and proximate result of Defendants’ fraud.
Plaintiff's First Amended Petition—Page 4 of 9 4Cc Fraudulent Inducement
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that Defendants are liable to Plaintiff for their fraudulent
inducement. Defendants fraudulently induced Plaintiff into the contract at issue based on
false promises and representations that Defendants had no intention of honoring.
Specifically, and without limitation, Defendants had no intention of every paying any
Plaintiff any salary or providing any benefit to Plaintiff. Regrettably, Plaintiff reasonably
relied on Defendants’ false representations and was fraudulently induced into the
employment contract. Plaintiff has in the past and continues to suffer reasonably
foreseeable damages as a direct and proximate result of Defendants’ fraudulent
inducement.
D. Fraud by Misrepresentation
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that the Defendants are liable to Plaintiff for their
fraudulent misrepresentations. Among other things, and without limitation, Defendants
fraudulently misrepresented that they would pay Plaintiff a certain salary, provide stock
grants and stock options, and reimburse Plaintiff for expenses incurred by him in the
performance of his duties. After getting what they wanted from Plaintiff, Defendants
failed and refused to abide by their promises.
Plaintiff has in the past and continues to suffer reasonably foreseeable damages as
a direct and proximate result of his reasonable reliance on Defendants’ fraudulent
misrepresentations.
Plaintiff's First Amended Petition—Page 5 of 9E. Unjust Enrichment
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that the Defendants are liable to Plaintiff for unjust
enrichment. Defendants have been unjustly enriched because its value has been
enhanced by Plaintiff's work, for which Plaintiff has not been paid. Plaintiff has been
harmed in direct proportion to the unjust benefits the Defendants have reaped by failing
to pay Plaintiff.
F. Breach of Fiduciary Duty
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that Defendant Eddie Vakser is liable to Plaintiff for
breach of fiduciary duty. As the Chief Executive Officer of Defendant Artfest
International, Inc. and of Defendant PBS Holding Inc., Defendant Vakser owed a
fiduciary duty to Plaintiff, who served as President and Chief Operating Officer.
Defendant Vakser had a duty not to usurp corporate opportunities for personal
gain. Defendant Vakser breached his fiduciary duty to Plaintiff and is liable for
numerous instances of self-dealing and usurping corporate opportunities, such as (and
without limitation) converting Plaintiff's accrued salary into preferred company shares in
Defendant Vakser’s name.
Plaintiff has been damaged by Defendant Vakser’s breach of fiduciary duty, and
Defendant Vakser gained personally from the breach. ,
VI. Pre-Judgment/Post-Judgment Interest
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that many of his damages may be determined by known
Plaintiff's First Amended Petition—Page 6 of 9standards of value and accepted rules of interest as damages during the period beginning
on the 180th day after the date Defendants received notice of the claim or on the day suit
was filed, whichever occurred first, and ending on the day preceding the date judgment is
rendered, or as the Court otherwise directs, calculated at the legal rate, or as otherwise set
by the TEXAS FINANCE CODE, any statute or the common law.
VII. Conditions Precedent
Piaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that all conditions precedent necessary to maintaining
this action have been performed or have occurred. Alternatively, Defendants have
wholly waived and are estopped to assert rights to any conditions precedent.
VIII. Damages
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that he seeks any and all damages whatsoever and
including, but not limited to, actual, punitive, exemplary, attorneys’ fees, and statutory
damages, available and recoverable under statute and common law resulting from the
actions of Defendants supporting Plaintiff's damages.
IX. Agency
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that Defendant Artfest and Defendant PBS Holding Inc.
acted by and through its officers, employees, agents and representatives and is therefore
responsible for the acts of its officers, employees, agents and representatives.
Plaintiff's First Amended Petition—Page 7 of 9Xx. Alternative Pleading
Plaintiff incorporates by reference and re-alleges all preceding sections of this
Petition and would further show that all pleadings herein, if deemed inconsistent, are made
and should be construed in accordance with Rule 48 of the TEXAS RULES OF CIVIL
PROCEDURE.
XI. = Application for Injunctive Relief
Upon information and belief, the Defendants have engaged in a deliberate process
of liquidating the assets of Defendant Artfest in order to avoid any potential adverse
judgment in the case at hand. In order to affect this scheme, Defendants have been
converting shares of stock in Defendant Artfest into shares of stock in Defendant PBS
Holding Inc. This process appears to have begun in May of 2011. It has been and
continues to be a source of irreparable injury to Plaintiff. So, Plaintiff requests that this
Court grant an immediate temporary restraining order enjoining Defendants, and their
agents, servants and employees, and those persons in active concert or participation with
them, from directly or indirectly engaging in, or aiding and abetting, the following: 1)
Continuing with the planned exchange of stock as outlined above and 2) Trading shares
of Defendant PBS Holding Inc. until such time as this action is concluded. Furthermore,
Plaintiff asks the Court to direct Defendant Vakser to place all shares of stock he
currently owns of Defendant PBS Holding Inc. into the registry of the Court.
XI. Demand for Jury Trial
Plaintiff demands a trial by jury and has tendered the appropriate jury
contemporaneously with the filing of this Petition.
Plaintiff's First Amended Petition—Page 8 of 9WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully requests that
the Defendants be duly cited to appear and answer herein and that, after trial, Plaintiff
recover judgment against the Defendants for (1) actual damages; (2) reasonable and
necessary attorneys’ fees; (3) statutory, punitive and/or exemplary damages; (4) pre- and
post-judgment interest at the maximum legal rate; (5) costs of Court; and (6) such other
and further relief to which Plaintiff may be entitled.
Respectfully submitted,
LAW OFFICE OF L. SEAN MATHIS, P.C.
L. SEAN MATHIS
Texas Bar No. 24011688
13155 Noel Road
Suite 900
Dallas, Texas 75240
(214) 368-9000
FAX NO. (214) 692-5806
ATTORNEY FOR PLAINTIFF
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the above and foregoing document
was forwarded as indicated below to the following individual on this the 28° day of July
2011.
Edward Vakser via CMRRR
Artfest International, Inc.
13300 Branch View Road
Dallas, Texas 75234
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Plaintiff's First Amended Petition—Page 9 of 9“tay
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THE LAW OFFICE OF L. SEAN MATHIS,P.c/L En
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Telephone: (214) 368-9000 Facsintile: (866) Ares $511
Email: sean@mathis-law.com Ury
July 28, 2011
VIA HAND DELIVERY
Clerk
192"4 District Court
George L. Allen, Sr. Courts Building
600 Commerce Street
7% Floor
Dallas, Texas 75202
Re: Cause No. DC-10-09236-P; Steven Rash v. Artfest International,
Inc., et al
Dear Clerk:
Enclosed please find the original and one copy of Plaintiffs First
Amended Petition. Please file the original among the papers of the Court.
Thank you for your attention to this matter. Should you have any
questions, please do not hesitate to contact me at the above number.
LSM/ccm
Cc: Edward Vakser