Case 2:03-cv-05139-WHW-CCC Document 49 Filed 10/30/2007 Page 1 of 15

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

AEQUUS TECHNOLOGIES, LLC,

AEQUUS TECHNOLOGIES CORP., CIVIL ACTION 03-cv-5139 (WHW)
RICHARD SCHATZBERG AND
LEMUEL TARSHIS

Plaintiffs,

v.

gh, LLC, DAVID SCHLEPPENBACH,

JOSEPH P. SAID, and ABC CORP.,
a fictitious entity

Defendants.

BRIEF IN OPPOSITION TO DEFENDANTS' MOTION

FOR PARTIAL SUMMARY JUDGMENT REGARDING AEQUUS'S $250,000
CONTRIBUTION

GREENBAUM, ROWE, SMITH & DAVIS LLP

75 Livingston Avenue, Suite 301
Roseland, New Jersey 07068
973/535-1600
Attorneys for Plaintiffs

Of Counsel:
Marc J. Gross

On the Brief:
Marc J. Gross
Jeffrey A. Sirot
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TABLE OF CONTENTS

PRELIMINARY STATEMENT 1

STATEMENT OF FACTS 3

The Instant Motion: 3

LEGAL ARGUMENT 5

POINT I 5

STANDARD OF REVIEW 5

POINT II 6

GH'S MOTION FOR PARTIAL SUMMARY JUDGMENT IS FATALLY

DEFECTIVE AND SHOULD BE DENIED , 6

POINT III .. , .. , 7

THE ORAL AGREEMENT AND THE PARTIES INTENTIONS REGARDING

THE $250,000 PAYMENT ARE MATERIAL FACTS IN DISPUTE,
PRECLUDING SUMMARY JUDGMENT , 7

CONCLUSION 12
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TABLE OF AUTHORITIES

Cases
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242 (1986) 4, 7 , 8 , 9

Celotex Corp. v. Catrett,

477 U.S. 317 (1986) _ 4

Hunt v. Cromartie,
526 U.S. 541 (1999) 4

statutes
N , J . S . A . 42: 1A-1 e t seq. , , 2

Rules
Fed. R. Civ. P. 56(c} , 4

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PRELIMINARY STATEMENT 1

gh's motion for partial summary judgment regarding a

$250,000 payment is based upon a false premise_ Indeed, gh

seeks partial summary judgment in respect to Aequus's "claim for

refund of the $250,000 deposit payment made under the Deposit

Agreement" between Aequus and third party, Technology Sellers,

LLC ("Technology Sellers"). [Dbll] . Incredibly, Aequus's

Amended Complaint makes no such claim.

Indeed, Aequus has never sought a refund under any deposit

agreement between itself and Technology Sellers. If it had,

Aequus would have filed a Third Party Complaint against

Technology Sellers for such relief. Instead, Aequus seeks the

fair value for Aequus' s partnership interest and compensatory

damages for gh's breach of the parties' agreements.

separately, there are many issues of facts concerning

Aequus's payment of $250,000. Towards this end, all parties

agree that the $250,000 payment was made on behalf of gh and was

the subject of and is governed by an oral agreement between

Aequus and gh. Unfortunately, Aequus and gh dispute the terms

of that oral agreement and the disposition of the $250,000

payment.

On one hand, Aequus asserts that monetary contributions

were made to the Partnership, when the Partnership needed funds.

1 All terms set forth herein are as defined in Aequus' s contemporaneously

filed Brief in Opposi tion to Defendants Motion for Partial Summary Judgment
(regarding the Partnership and Agreement to Merge)
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In contrast, gh alleges that Aequus's substantial contributions

were in furtherance of an oral agreement -- not to further the

partnership -- but for Aequus to buy Schleppenbach's interest in

gh. Either way, in light of the obvious disputed material facts

on this issue, summary judgment would be inappropriate and gh's

motion should be swiftly rejected.

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STATEMENT OF FACTS

On September 14, 2007, gh filed two motions for partial

summary judgment. The first motion seeks partial summary

judgment primarily in regard to the existence of a Partnership

between Aequus and gh, and the parties' subsequent Agreement to

Merge. The instant motion concerns Aequus' s undisputed

contribution of $250,000 to the Aequus/gh business relationship.

Rather than burden the Court with a duplicative Statement

of Facts and in that both motions inherently arise out of the

same set of facts and circumstances, Aequus respectfully refers

to and incorporates the Statement of Facts set forth in its

contemporaneously filed Opposition to Defendants Motion for

Partial Summary Judgment Regarding the Partnership, and in the

Declaration of Richard Schatzberg, filed therewith.

The Instant Motion:

gh's instant motion seeks, in error, partial summary

judgment on Aequus' s "claim for refund of the $250,000 deposit

payment made under the Deposit Agreement." [Dbll). The Amended

Complaint makes no such demand for a "refund" under the Deposit

Agreement (which was a separate agreement between Aequus and

Technology Sellers), and Aequus does not seek such relief.

Instead, Aequus's Amended Complaint seeks relief under the

Partnership Act, N.J.S.A. 42:1A-l et seq., for its fair value in

the Partnership, damages arising out of gh's breach of the oral

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Partnership Agreement between Aequus and gh and gh's

breach of the parties' Agreement to Merge, among other causes of

action. NO cause of action relates to the Deposi t Agreement.

The 250,000 payment is obviously an element of damages in that

Aequus contributed hundreds of thousands of dollars to benefit

the Partnership, which gh unlawfully and without cause suddenly

terminated.

Clearly, Aequus made a $250,000 payment that benefited gh.

[Schatzberg Declo, ':ll24. Exh. "Gil]. Without question, even gh

admits that the payment was made pursuant to an oral agreement

between Aequus and gh, separate and apart from the Deposit

Agreement. [Schatzberg Decl., '3(63 Exh. "CC " ). Accordingly,

gh's motion for summary judgment under the Deposit Agreement.

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LEGAL ARGUMENT

POINT I

STANDARD OF REVIEW

Federal Rule of civil Procedure 56 provides that summary

judgment is appropriate only where the moving party establishes

that "there is no genuine issue as to any material fact and that

[it) is entitled to a judgment as a matter of law. II Fed. R.

Civ. P. 56(c)j ~ also Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986) (subsequent history omitted). The party seeking

sununary judgment bears the burden of showing the absence of a

genuine issue of a material fact and the propriety of swnmary

judgment. See Celotex Corp., 477 U.S. at 323.

In considering whether a genuine dispute of material fact

exists which would be sufficient to preclude summary judgment,

the Court must view the evidence in the light most favorable to

the non-moving party. See Hunt v. Cromartie, 526 U.S. 541, 550-

55 (1999). The role of the Court is not to weigh the evidence,

determine the truth of the matter, or decide issues of fact at

the sununary judgment stage. See Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 249 (1986) (subsequent history omitted).

Moreover, resolution of credibility issues is not appropriate at

summary judgment. See Anderson, 477 U.S. at 255. Furthermore,

summary judgment is inappropriate if there is a dispute over

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what inferences could reasonably be drawn from the facts. See

Hunt, 526 U.S. at 552.

wi thout ques tion, summary judgment is wholly inappropriate

in the instant matter, where Aequus has made no claim for relief

pursuant to the Deposit Agreement. [Schatzberg Decl., Exh.

"FF"] . Moreover, Aequus has set forth numerous material facts

demonstrating that its contribution of $250,000 was in

furtherance of the Partnership Agreement and subsequent

Agreement to Merge, entitling Aequus to relief from gh. Under

these circumstances, summary judgment should not be awarded to

Defendants.

POINT II

GH'S MOTION FOR PARTIAL SUMMARY JUDGMENT IS

FATALLY DEFECTIVE AND SHOULD BE DENIED.

gh's motion for partial summary judgment as to the $250,000

neither refers to the actual cause of action upon which it seeks

summary judgment nor references the Amended Complaint. Indeed,

a review of the Amended Complaint demonstrates that Aequus does

not seek a refund under the Deposi t Agreement. [Schatzberg

Decl., Exh. "FF"]. Instead, Aequus asserts ln the Schatzberg

Declaration that its $250,000 payment on gh's behalf was a

contribution by Aequus to the partnership between Aequus and gh.

[Schatzberg Decl., grgr17, 20-24. Exhs. "C", "E JJ

, "F", "G"] . Thus,

Aequus seeks a determination of fair value for its Partnership

interest under the Partnership Act and compensatory damages for

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gh's breach of the Partnership Agreement. Aequus makes no

demand in its Amended Complaint for relief lU1der the separate

Deposit Agreement, to which gh was not even a party.

Clearly, the Court should not grant partial summary

judgment on a claim that is not before the Court. Here, it is

beyond dispute that Aequus does not make any claim seeking a

"refund" of the $250, 000 payment or any other relief under the

Deposit Agreement. Accordingly, gh's motion for partial summary

judgment of Aequus' s "claim for refund of the $250 , 000 deposi t

payment made under the Deposit Agreement" should be denied

because no such claim exists.

POINT III

THE ORAL AGREEMENT AND THE PARTIES

INTENTIONS REGARDING THE $250,000 PAYMENT
ARE MATERIAL FACTS IN DISPUTE r PRECLUDING
SUMMARY JUDGMENT.

Even if Aequus was demanding a refund of the $250,000

payment under the Deposi t Agreement which it is not -- the

Court should still reject gh's motion for partial summary

judgment. Indeed. there is no dispute that gh obligated itself

to pay Technology Sellers, a company with an equity interest in

gh. [Schatzberg Decl., 9f9f2 0-2 4. Exhs. "E", "F" , "G"] . Moreover,

there is no dispute that Aequus contributed $250, 000 towards

that obligation. [Schatzberg Decl. , 1i9I17, 20-24. Exhs.

"e", \lEU I "F", "G"]. Incredibly, gh would have this Court believe

that Aequus paid $250,000 to Technology Sellers without any

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agreement between Aequus and gh. Thus, gh intentionally

disregards the contrary testimony of Schleppenbach on the

$250,000 issue.

In fact, Contrary to gh's convenient position in its moving

brief, gh admi t ted through Schleppenbach' s testimony that the

$250,000 contribution was made by Aequus pursuant to an oral

agreemen t between Aequus and gh. [Schatzberg Decl., <[63 Em.

"CC"] . At his deposition Schleppenbach had no choice but to

concede he acknowledged the existence of an oral agreement

between Aequus governing the $250,000 payment and three

additional $5,000 contributions to gh from Aequus. [Id. J.

Specifically, Schleppenbach was asked about his receipt of the

three $5,000 checks contributed by Aequus on behalf of the

partnership, and he testified as follows:

Question: So Rich [Aequus] agreed to

start buying your interest in
the company?

Schleppenbach: Yes.

Question: Even though you and he didn't

agree upon the final terms?

Schleppenbach: Yes. In a similar -- almost

really exactly the same was
as in Schlepp. 3 [the
$250,000 check from Aequus at
issue in this motionJ.

Question: Except there f S nothing in

writing signed by anybody to
support what you're saying;
correct?

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Schleppenbach: That's correct.

[Id.] .

Clearly, gh acknowledged that the $250,000 contribution and

three $5,000 contributions were not governed by any written

agreement. [Id.]. As a result, the parties dispute the purpose

of the monetary contributions. gh alleges that Aequus's

substantial contributions were in furtherance of an oral

agreement -- not to further the partnership -- but for Aequus to

buy Schleppenbach's interest in gh. [Id] .

In contrast, Aequus asserts that monetary contributions

were made to the partnership, when the partnership needed funds.

[Schatzberg Decl. , <Jt64, Exh. "DD"]. Indeed, Schatzberg

testified under oath that the contributions of $250,000 and

three $5,000 contributions (and the additional hundreds of

thousands of dollars Aequus' paid to lobbyists, lawyers and

industry contacts) were for the Aequus/gh Partnership. [Id. ] .

Specifically, Schatzberg testified as follows:

Question: You testified that there was a

partnership that was for.med amongst a
handshake of four individuals; correct?

Schatzberg: That's correct

* * *
Question: What did Aequus contribute to the
partnership?

Schatzberg: various things.

Question: What?
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Schatzberg: Money.

* *
Question: What specific monies are you speaking
about?

Schatzberg; Urn, payment of $250,000 to Technology

SellerSi payment to Dave Schleppenbach,
1: believe, for three payments of
$5,OOOi and payments that any other
payments that enabled the company to
move forward.

(Id. ) .

without question, the parties do not dispute that there was

an oral agreement between Aequus and gh governing the $250,000

contribution and three $5,000 contributions made by Aequus.

[Schatzberg Decl., '3£'3[63-64, Exhs. "CC", "DD"] . The true na ture

of that oral agreement, however, is a glaring material fact in

dispute that precludes summary judgment.

Naturally, gh seeks to gloss over these disputed facts and

hopes to distract the Court with the Deposit Agreement. The

purpose of the Deposit Agreement was to ensure that Technology

Sellers understood that the $250,000 payment was made on gh's

behalf and must be credited towards the full amount owed to

Technology Sellers for its interest in gh. (Schatzberg Decl.,

'3£26] . Incredibly, gh now misrepresents that it made no promises

or agreements with Aequus in exchange for Aequus' s payment of

$250,000 towards gh's obligation to Technology Sellers. Such a

ludicrous position that Aequus would pay $250,000 to buy back

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gh's interests with no agreement -- is exceedingly untenable and

contrary to the record.

Without question, gh's attempt to sever itself from the

$250,000 payment made on its behalf is disingenuous and should

be rejected. Accordingly, gh's motion for partial summary

judgment, premised upon gh's assertion that it was not a party

to any agreement regarding Aequus' s payment of $250,000 behalf

is without merit and should be rejected.

At the very leas t, there are material facts in dispute

regarding the parties oral agreements and intentions regarding

the $250,000 payment, and whether gh was unjustly enriched,

thereby precluding summary judgment on any claim relating to the

$250,000 payment. [See Schatzberg Decl., Exh. \IFF" (Tenth

Count] .

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CONCLUSION

For the foregoing reasons, it is respectfully requested

that the Court deny defendants' motion for partial summary

judgment of Aequus's non-existent "claim for refund of the

$250,000 deposit payment made under the Deposit Agreement. H

Respectfully submitted,

By: ~~-(;L--------'-<''-------'-r~~_/­
JEFFREY A. SIROT
GREENBAUM, ROWE, SMITH & DAVIS LLP
Attorneys for Plaintiff
75 Livingston Ave
Roseland, New Jersey 07068
(973) 535-1600

Dated: October 30, 2007

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