stone family v. maffei - complaint.pdf

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK

STONE FAMILY, LLC,derivatively on behalf ofMAXVITA, LLC,a Delaware Limited Liability Company,

Plaintiff,

v.

JAQUELINE MAFFEI,

Defendant.

Index No.

Civil Action

SUMMONS

To: Jaqueline Maffei95 New Valley Road,New City, New York 10956

YOU ARE HEREBY SUMMONED to answer this complaint in this action and to serve a copyof your answer, or, if the complaint is not served with this summons, to serve a notice ofappearance, on the Plaintiff’s Attorney(s) within 20 days after the service of this summons,exclusive of the day of service (or within 30 days after the service is complete if this summons isnot personally delivered to you within the State of New York); and in case of your failure toappear or answer, judgment will be taken against you by default for the relief demanded in thecomplaint.

DATED: November 16, 2015New York, New York

SHERMAN WELLS SYLVESTER

& STAMELMAN LLP

By: ____________________________Jordan D. Weinreich

805 Third Avenue, 10th FloorNew York, New York 10022(212) [email protected]

4837-9140-9451, v. 1

FILED: NEW YORK COUNTY CLERK 11/16/2015 03:27 PM INDEX NO. 653781/2015

NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 11/16/2015

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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK

STONE FAMILY, LLC,derivatively on behalf ofMAXVITA, LLC,a Delaware Limited Liability Company,

Plaintiff,

v.

JAQUELINE MAFFEI,

Defendant.

Index No.

Civil Action

VERIFIED COMPLAINT

Plaintiff Stone Family, LLC (“Plaintiff”), derivatively on behalf of MAXVITA, LLC (the

“Company”), by way of Complaint against Defendant Jaqueline Maffei (“Defendant”), hereby

alleges and says:

NATURE OF THE ACTION

1. This is a derivative suit brought on behalf of the Company against Defendant, who

is the Company’s Chief Operating Officer and one of its Managers to, among other things:

(i) prevent her from inflicting further harm upon the Company by removing her as member of the

Company as permitted under the Company’s operating agreement, and (ii) recover damages caused

by Defendant’s actions in breaching her fiduciary duties, engaging in acts of self-dealing,

committing conversion, usurping corporate opportunities and/or otherwise failing to act in the best

interests of the Company and its other members.

2. The relief requested herein is warranted because Defendant has engaged, and

continues to engage, in numerous wrongful acts, including, but not limited to, the following:

(i) interfering with and inhibiting sales of the Company’s products, which have a limited shelf-

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life; (ii) commandeering the Company’s website and making unauthorized alterations that

intentionally misdirect customers away from the Company and to a retail store in New City, New

York owned by Defendant; (iii) unlawfully removing the Company’s inventory and selling it for

Defendant’s own personal gain and refusing to remit the proceeds from those sales to the

Company; (iv) unnecessarily exposing the Company to potential liability to various third-parties;

(v) refusing to agree to adequately fund the Company, resulting in one of its other members being

forced to make personal loans to the Company; and (vi) engaging in numerous acts of self-dealing

intended to benefit Defendant at the expense of the Company and its other members.

PARTIES

3. Nominal plaintiff MAXVITA LLC (the “Company”) is and was at all material

times a Delaware limited liability company. The Company is primarily located online, but leases

physical warehouse space located at 56 Fairmount Ave Haverstraw, NY 10927, New York.

4. Plaintiff Stone Family, LLC is a Delaware limited liability company with a

principal address at 350 East 72nd Street, Apt. 8A, New York, New York 10021. Plaintiff is a

member of the Company.

5. Defendant Jacqueline Maffei is an individual who, upon information and belief,

resides at 95 New Valley Road, New City, New York 10956. Defendant is a member of the

Company

6. Plaintiff has standing to bring this derivative action on behalf of the Company

because Plaintiff was and is a member of the Company at the time that Defendant committed the

acts complained of herein, as well as at the time that this suit was brought. Plaintiff will adequately

and fairly represent the interests of the Company and its members in enforcing and prosecuting

the Company’s rights in this suit.

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RELEVANT NON-PARTIES

7. Nelson N. Stone, M.D., an individual residing at 675 Lionshead Place, Unit 622,

Vail, Colorado 81657, is the managing member of Plaintiff Stone Family, LLC, a member of the

Company’s Board of Managers and the Company’s Chief Executive Officer.

8. Ron Reid is an individual who, upon information and belief, resides at 16707 154th

Lane, Yelm, Washington 98597. Mr. Reid is a member of the Company.

9. Laura Stone is an individual who resides at 350 East 72nd Street, Apt. 8A, New

York, New York 10021. Ms. Stone is the Company’s Director of Operations and its sole employee.

STATEMENT OF FACTS

A. THE COMPANY

10. Effective March 30, 2012, Plaintiff, Defendant and Ron Reid entered into an

operating agreement (the “Operating Agreement”) with respect to the Company. Pursuant to its

terms, the construction and interpretation of the Operating Agreement is governed by Delaware

law. (A true and correct copy of the Operating Agreement is attached hereto as EXHIBIT A.)

11. The Company was formed to develop and market a line of nutritional supplements

under the Millennium Brands trademark.

12. The Operating Agreement provides, among other things, that Plaintiff would

initially own 45% of the membership interests in the Company, Defendant would initially own

45% of the membership interests and Ron Reid would initially own the remaining 10% of the

membership interests. See Ex. A at p. 45.

13. The Operating Agreement provides, among other things, that management of the

Company is to be vested in the Board of Managers. See Ex. A. at p. 18, § 5.1. The Operating

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Agreement further provides that both Dr. Stone and Defendant would be elected to the Company’s

Board of Managers. Id.

14. At all relevant times, Dr. Stone and Defendant were and are the only Managers of

the Company.

15. As the only two Managers, a disagreement amongst them, or the refusal of one

Manager to act, would result in a deadlock of the Board. See Ex. A at p. 18, § 5.1 and p. 26, § 7.8.

16. The Operating Agreement further provides that Dr. Stone is appointed Chief

Executive Officer of the Company and Defendant is appointed Chief Operating Officer. See Ex.

A at pp. 19-21, § 5.2(b)-(c).

17. As the Company’s Chief Executive Officer, Dr. Stone was and is “responsible for

conducting, in the name of, and on behalf of, the Company, the day-to-day business and affairs of

the Company.” See Ex. A at p. 20, §5.2(b).

18. As the Company’s Chief Operating Officer, Defendant was and is “responsible for

conducting the day-to-day business affairs of the Company, subject to the direction of the Board

and the Chief Executive Officer.” See Ex. A at pp. 20-21, §5.2(c) (emphasis added).

19. Unfortunately, Defendant has interfered, and continues to interfere, with the day-

to-day business affairs of the Company and has refused to take any direction from the Company’s

Chief Executive Officer, as required by the Operating Agreement.

B. DEFENDANT’S ADVERSE ACTS

20. The Operating Agreement defines an “Adverse Act” as, among other things, a

determination that a member has committed a breach of the Operating Agreement, which continues

for thirty (30) days following written notice thereof, and for which the breaching member does not

contest the determination within thirty (30) days following written notice thereof. See Ex. A at

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p. 3, § 1.10. The Operating Agreement further defines any such member determined to be

committing one or more Adverse Acts as an “Adverse Member.” See Ex. A at p. 4, § 1.10.

21. As set forth below, Defendant has committed, and continues to commit, numerous

and material breaches of the Operating Agreement, each of which constitutes an Adverse Act.

22. Defendant’s Adverse Acts have resulted in significant harm to the Company and

its other members.

1. Defendant Has Improperly Restricted Access to the Company’s Warehouse

23. A lockbox is affixed to the exterior of the Company’s warehouse, which contains a

key to the warehouse. This key was used by Laura Stone.

24. In or about July 2015, without notice to Laura Stone or to any of the Company’s

other members, and without any authorization, Defendant removed the key from the lockbox. This

removal had the effect of restricting Laura Stone’s access to the warehouse.

25. As Laura Stone was responsible for fulfilling the Company’s product orders,

Defendant’s conduct in this regard hindered the Company’s ability to fulfill certain orders due to

Laura Stone’s inability to access the warehouse.

26. Only after several email communications did Defendant finally provide an

explanation for the missing key. Defendant explained that she had lent the key to her daughter—

who is not an employee of the Company—and that her daughter temporarily misplaced it.

27. Defendant then told Laura Stone that the key could be retrieved from Defendant’s

retail store in New City. However, upon information and belief, when Laura Stone went to retrieve

the key, Defendant refused to return it unless and until Ms. Stone signed a document in which she

was forced to acknowledge that the key had been misplaced in the manner set forth by Defendant.

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28. Upon information and belief, Laura Stone signed the document under protest

because she needed the key. Plaintiff demanded that Defendant produce a copy of this document,

but Defendant has failed and refused to do so.

2. Defendant Has Commandeered the Company’s Website and Has MadeUnauthorized Alterations Thereto

29. Defendant, on behalf of and at the expense of the Company, purchased the domain

milleniumblend.com through GoDaddy.

30. The Company hired Boscia Trott LLC, a website developer, to design and manage

its website, but the website is hosted by GoDaddy.

31. Pursuant to the Company’s agreement with Boscia Trott, Boscia Trott owns the

copyright to the website’s content, and, therefore, the Company’s website may only be altered by,

or with the permission of, Boscia Trott.

32. Because Defendant purchased the Company’s domain name via GoDaddy,

Defendant was able to restrict access to the Company’s website and, without authorization from

the Company or from Boscia Trott, she was able to make several alterations to the website.

33. Without the authorization of (or event consulting with) Dr. Stone or the Company’s

members, Defendant changed the contact information for the Company to her own personal email

address, [email protected], as well as the physical address of the Company to the address of

her retail store in New City, New York. (A true and correct copy of the altered webpage, as of

October 28, 2015, is attached hereto as EXHIBIT B).

34. As a result of Defendant’s unauthorized alteration, all communications to the

Company have been funneled to Defendant, who selectively forwards some, but not all, of those

communications to the Company’s other members.

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35. At some point after October 28, 2015, Defendant made additional changes to the

contact information for the Company. While Defendant replaced her Reagan.com email address

with a Company email address, she added Dr. Stone’s personal cell phone number. The inclusion

of Dr. Stone’s personal phone number was in no way authorized by Dr. Stone. (A true and correct

copy of the altered webpage, as of November 11, 2015, is attached hereto as EXHIBIT C).

36. Defendant also unilaterally (and improperly) imposed excessive flat-rate shipping

charges that are vastly more expensive than the actual cost to the Company. Her decision to

attempt to make a profit on shipping was not authorized by the Company, and such misconduct,

among other things, has inhibited, and continues to inhibited, sales and has damaged, and continues

to damage, the Company.

37. Boscia Trott has made several demands upon Defendant to return control of the

website to it. On or about July 9, 2015, a law firm representing Boscia Trott served a cease and

desist letter upon Defendant regarding her continued failure to relinquish control of the Company’s

website and domain. (A copy of this letter is attached hereto as EXHIBIT D).

38. On or about November 3, 2015, the law firm representing Boscia Trott served a

second, and “final,” cease and desist letter upon Defendant. (A copy of this letter is attached hereto

as EXHIBIT E).

39. Accordingly, Defendant’s actions have hindered, and continue to hinder, sales and

have exposed the Company to potential liability.

40. Despite several demands, Defendant has failed and refused to return control of the

website to the Company and/or Boscia Trott.

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3. Defendant Has Converted, and Continues to Convert, the Company’sInventory for Her Own Personal Enrichment

41. Though the full extent of her misconduct is currently unknown, Defendant has

admittedly removed Company inventory from the warehouse and has sold, and continues to sell,

a portion of it at her own personal store, Zambetti’s, located in New City, New York.

42. Despite repeated demand, Defendant has failed and refused to account for the

quantity of inventory that she improperly removed from the Company. She has further failed and

refused to remit the proceeds from sales of the Company’s inventory though her store, and has,

upon information and belief, sequestered those proceeds into her personal bank account.

43. These funds belong to the Company, not to Defendant.

44. Not only does this constitute a conversion of the Company’s funds, but it has

interfered with the Company’s ability to meet its monthly expenses, including, but not limited to,

rent on its warehouse, insurance for the products, telephone bills and employee payroll.

45. Despite demand, Defendant has failed and refused to account for the inventory that

she improperly removed from the Company, and has failed and refused to account for the monies

she received, and continues to receive, from sales of the Company’s products at her store or to

remit any such proceeds to the Company.

4. Defendant Has Engaged in a Business that Produces a Competing Product

46. Upon information and belief, Defendant has engaged, and continues to engage, in

business with Isagenix, a business that directly competes with the Company.

47. As a member of the Company’s Board of Managers, Defendant is prohibited,

pursuant to Section 6.9 of the Operating Agreement, from participating in any business or activity

that is directly competitive with that of the Company. See Ex. A.

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48. Further, Section 8.2(a) of the Operating Agreement prohibits any of the Company’s

members, including Defendant, from “engag[ing] in any business that is similar to the business of

MaxVita LLC without the written consent of the disinterested members of the Board.” Id.

49. Defendant’s ongoing business relationship with Isagenix—without Dr. Stone’s

consent—constitutes a breach of her obligations under both Sections 6.9 and 8.2(a).

5. Defendant Has Failed and Refused to Authorize Payment of CompensationDue to the Company’s Director of Operations

50. On or about September 1, 2013, the Company hired Laura Stone as its Director of

Operations. The Company agreed to pay Ms. Stone an annualized salary of $48,000, with half of

the compensation to be paid in cash and the other half paid in membership interests in the

Company.

51. The Company has paid Ms. Stone the cash component of her compensation.

However, Defendant has failed and refused to authorize the issuance of membership interests to

Ms. Stone.

52. On or about October 15, 2015, the Company received a demand letter from an

attorney representing Ms. Stone, which demands that the Company pay $48,000 in past due

compensation. (A true and correct copy of this demand letter is attached hereto as EXHIBIT F.)

6. Defendant Has Caused the Company’s Inventory to Precipitously Decline inValue

53. As noted, the Company develops and markets a line of nutritional supplements

under the Millennium Blend trademark. The Company engaged a formulator to manufacture the

Company’s inventory and expended a significant sum of money in that regard.

54. The Company’s inventory is perishable and a limited shelf-life of only two years.

Accordingly, the value of that inventory declines with each passing day.

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55. The delay in sales of the Company’s inventory caused by Defendant’s interference

with the Company’s sales has resulted in a substantial diminution in the value of that inventory.

C. NOTICE OF ADVERSE ACTS, FAILURE TO CONTEST SAID NOTICE, ANDFAILURE TO CURE

56. The above-described conduct on the part of Defendant constitutes Adverse Acts

under the Operating Agreement. See Ex. A at p. 3.

57. Section 1.10 of the Operating Agreement provides that, upon the occurrence of a

purported Adverse Act, the breaching member be provided with notice thereof. Id. The same

section provides that, following receipt of notice, the breaching member then has thirty (30) days

to either: (i) cease and desist from the purported Adverse Act, or (ii) deliver to the Company written

notice that the member contests such a breach of the Operating Agreement (referred to as a

“Contest Notice”). Id.

58. If a timely Contest Notice is submitted, then the alleged breach of the Operating

Agreement is not to be deemed an Adverse Act until there is a “Final Determination” (either by

settlement agreement or final judicial determination, not subject to further appeal, by a court of

competent jurisdiction) that such member did, in fact, breach the Operating Agreement. Id. at

pp. 3 & 8.

59. Failure to submit a timely Contest Notice results in the waiver of the right to a

“Final Determination.” Id.

60. In accordance with the Operating Agreement, Plaintiff provided Defendant with

notice, by letter dated July 30, 2015, that her actions constituted Adverse Acts under the Operating

Agreement, and advised Defendant that she had thirty (30) days to cease and desist from the

perpetration of the Adverse Acts, and to remedy any harm she has caused resulting therefrom. (A

copy of the Adverse Acts Notice Letter is attached hereto as EXHIBIT G).

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61. Although Defendant has vaguely asserted that she disputes Plaintiff’s allegations,

she has not provided any detail or specifics, and she has not indicated that she was providing a

written “Contest Notice.” Accordingly, Defendant has failed to deliver to the Company a written

“Contest Notice” contesting the notice of her repeated breaches of the Operating Agreement within

thirty (30) days of receiving the July 30, 2015 cease and desist letter.

62. As a result of Defendant’s failure to submit a Contest Notice, Defendant has waived

her right to seek a judicial determination as to whether she did, in fact, commit Adverse Acts. See

Ex. A at pp. 3 & 8.

D. ADDITIONAL ADVERSE ACTS AND FURTHER HARM INFLICTED UPON THECOMPANY

63. With the exception of returning the warehouse key, Defendant has failed and

refused to cease and desist from her perpetration of the Adverse Acts and has failed to cure the

harm she has inflicted upon the Company therefrom.

64. Not only has Defendant failed and refused to cease and desist from the noticed

Adverse Acts, but she has committed, and continues to commit, additional malfeasance that has

inflicted, and continues to inflict, additional harm upon the Company and its other members.

65. By way of example only, a reconciliation performed by Dr. Stone and Laura Stone

of the Company’s inventory per its books and records with a site count at the warehouse indicates

that Defendant has removed a substantial amount of the Company’s inventory from the Company’s

warehouse.

66. By way of further example, the Company is in dire straits financially due to

Defendant’s refusal to remit the proceeds from the Company’s sales. In order to continue funding

the operations of the Company, Dr. Stone called for additional capital contributions from each of

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the Company’s members, but Defendant has refused to make her share of contributions,

jeopardizing the Company’s ability to function.

67. As a result, Plaintiff was forced to make several personal loans to the Company,

which, to date, total $9,000. But for Plaintiff’s largesse, the Company would be insolvent.

FUTILITY OF DEMANDING DEFENDANT’S CONSENT TO THIS LAWSUIT

68. As set forth above, the management of the Company is vested in the Board of

Managers. The Operating Agreement provides that the Board has certain powers in this regard,

including, but not limited to, the right to bring a lawsuit on behalf of the Company for activities

arising out of, connected with, or incidental to the Operating Agreement. See Ex. A at p. 20,

§5.2(a)(xii).

69. Because Dr. Stone and Defendant constitute the entirety of the Board of Managers,

Defendant may allege that her consent is required in order for the Company to directly bring the

claims set forth herein, all of which are against Defendant.

70. Even if Defendant’s consent were required, Plaintiff is excused from making

demand upon Defendant to consent to the Company’s filing of a lawsuit against her personally

because such demand would be futile. As set forth in detail above, the crux of this derivative

complaint is that Defendant has unilaterally usurped the authority to make decisions on behalf of

the Company contrary to the terms of the Operating Agreement, and has used that authority to

convert the Company’s property to enrich herself to the detriment of the Company and its other

members.

71. Even if Defendant alleges that she has the authority to consent to legal action taken

on behalf of the Company, it would be futile for Plaintiff to make demand on Defendant in these

circumstances given that Defendant is the wrongdoer whose conduct gave rise to the instant

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derivative suit. Defendant could not reasonably be expected to evaluate in a disinterested manner

whether to pursue the Company’s claims against herself.

72. Moreover, at least since July 2015, if not earlier, Defendant has been fully aware

of her harmful conduct and has, nevertheless, failed and refused to cease and desist from those acts

and conduct. On the contrary, Defendant has sought to inflict further harm upon the Company to

enrich herself to the Company’s detriment.

73. Accordingly, demand upon Defendant to consent to bring an action to redress the

wrongs caused by her own conduct would, in effect, have required Defendant to institute suit

against herself and would have been futile.

COUNT I(Declaratory Judgment pursuant to CPLR § 3001)

74. Plaintiff, derivatively on behalf of the Company, repeats and re-alleges each of the

foregoing allegations set forth above as if set forth fully herein.

75. The actions taken by Defendant described herein constitute Adverse Acts under the

Company’s Operating Agreement.

76. Defendant failed and refused to cure those Adverse Acts and remedy the harm

caused therefrom following timely notice thereof.

77. Defendant has failed to submit a timely Contest Notice contesting that her actions

constituted Adverse Acts under the Operating Agreement. As a result, Defendant has waived her

right to a judicial determination as to whether her actions constitute Adverse Acts.

78. Accordingly, Defendant is an Adverse Member as that term is defined in the

Operating Agreement.

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79. Section 12.1(a)(i) of the Operating Agreement provides that:

If an Adverse Act has occurred or is continuing with respect to anymember, the Board may elect: To cause the Company to commencethe procedures specified in Section 12.2 [of the OperatingAgreement] for the purchase of the Adverse Member’s MembershipInterest . . .

80. By letter, dated October 7, 2015, Plaintiff notified Defendant that it intended to

proceed with the procedures set forth in Section 12.2 and force the sale of Defendant’s interest in

the Company. (A true and correct copy of this letter is attached hereto as EXHIBIT H.)

81. Such a remedy is sanctioned under §18-306 and §18-502(c) of the Delaware

Limited Liability Company Act, which permits an LLC’s operating agreement to provide for the

forced sale of a member’s interest as a consequence for breaching the operating agreement.

WHEREFORE, Plaintiff, derivatively on behalf of the Company, respectfully

requests that this Court enter judgment in the Company’s favor and against Defendant granting the

following relief:

(a) Declaring that Defendant has breached her obligations under the OperatingAgreement, has failed to cure such breaches following notice by Plaintiff andhas, therefore, committed Adverse Acts under the Operating Agreement;

(b) Declaring that, pursuant to Sections 1.10 and 12.1 of the OperatingAgreement, Defendant waived her right to seek a Final Determination by acourt of competent jurisdiction as to whether her actions constituted AdverseActs under the Operating Agreement due to her failure to submit a timelyContest Notice;

(c) Declaring that Defendant is an Adverse Member as that term is defined in theOperating Agreement;

(d) Declaring that Plaintiff, on behalf of the Company, may commence theprocedures set forth in Section 12.2 of the Operating Agreement to purchasethe entirety of Defendant’s interest in the Company;

(e) Declaring and effectuating any other appropriate rights of Plaintiff under NewYork’s declaratory judgment statute, CPLR § 3001;

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(f) Awarding Plaintiff, on behalf of the Company, attorneys’ fees, costs andexpenses incurred in this action pursuant to Section 12.1(a) of the OperatingAgreement; and

(g) Awarding such other and further relief as the Court deems just and equitable.

COUNT II(Breach of Contract)



83. The Operating Agreement constitutes a binding contract between Plaintiff,

Defendant, Ron Reid and the Company, whereby the parties owe each other duties and obligations.

84. Defendant is in breach of the Operating Agreement by, among other things:

(a) Acting outside the scope of her authority as a member of the Board of

Managers pursuant to Section 5.2(a) of the Operating Agreement;

(b) Failing to act at the direction of the Company’s Chief Executive Officer, as

required by Section 5.2(c) of the Operating Agreement;

(c) Unlawfully removing the Company’s inventory and selling it from her

personal retail store without remitting the proceeds thereof to the Company, thereby depriving the

Company of the benefit of those funds, all in abrogation of her obligations under, among other

sections, Section 5.3(a)(i) of the Operating Agreement;

(d) Restricting access to the Company’s warehouse and inhibiting fulfillment

of sales as a result, all in abrogation of her obligations under, among other sections, Section

5.3(b)(ii) of the Operating Agreement;

(e) Commandeering the Company website and making unauthorized alterations

thereto, including, but not limited to, replacing the Company’s contact information with her

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personal contact information and contact information for her personal retail store, all in abrogation

of her obligations under, among other sections, Section 5.3(b)(ii) of the Operating Agreement;

(f) Refusing to agree to issue calls for additional capital contributions

necessary for continued funding of the Company’s operations, all in abrogation of her obligations

under, among other sections, Section 5.3(b)(ii) of the Operating Agreement; and

(g) Engaging in a business that competes with the Company without the

Company’s authorization, in violation of Sections 6.9 and 8.2(a) of the Operating Agreement.

85. As a direct and proximate result of the aforementioned breaches, the Company has

incurred substantial damages, as set forth above.



following relief:

(a) Compensatory damages in an amount to be determined at trial or inquest;

(b) Pre-judgment and post-judgment interest;

(c) Costs of suit, including attorneys’ fees, as provided for in the OperatingAgreement; and

(d) Such other and further relief as the Court deems just and equitable.

COUNT III(Conversion)



87. Defendant has wrongfully and intentionally asserted dominion and control over the

property of the Company, inconsistent with the Company’s ownership thereof, and has

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permanently deprived the Company of its property and right to possession, dominion, use, and

control thereof.

88. Defendant has admittedly removed inventory from the Company’s warehouse, the

full extent of which is in dispute, and sold that product at her personal retail store, retaining the

proceeds and refusing to remit them to the Company, thereby depriving the Company of the benefit

of those funds.

89. As a direct and proximate result of the aforementioned conversion of the

Company’s property, the Company has suffered monetary damages.



following relief:





COUNT IV(Breach of Fiduciary Duties)



91. As a member of the Company’s Board of Managers and its Chief Operating

Officer, Defendant had and has a fiduciary obligation to act in the best interests of the Company

and its members, and to not act in a manner to inhibit sales of the Company’s products, enrich

herself at the Company’s expense or to expose the Company to undue liability.

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92. Defendant materially breach her fiduciary duties and obligations by engaging in

misconduct, including, without limitation, the following:

(a) Restricting access to the Company’s warehouse and inhibiting fulfillment

of sales as a result;

(b) Commandeering the Company website and making unauthorized alterations

thereto, including, but not limited to, replacing the Company’s contact information with her

personal contact information and contact information for her personal retail store, exposing the

Company to liability to Boscia Trott in the process;

(c) Unlawfully removing the Company’s inventory and selling it from her

personal retail store without remitting the proceeds thereof to the Company, thereby depriving the

Company of the benefit of those funds;

(d) Engaging in a business that produces a competing product;

(e) Refusing to agree to the issuance of agreed-upon compensation to Laura

Stone, thereby exposing the Company to liability therefrom; and

(f) Refusing to agree to issue calls for additional capital contributions

necessary for continued funding of the Company’s operations.

93. As a direct and proximate result of the aforementioned breaches, the Company has

incurred substantial damages, as set forth above.



following relief:



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(c) Costs of suit, including attorneys’ fees, as provided for in the OperatingAgreement;

(d) Punitive damages; and

(e) Such other and further relief as the Court deems just and equitable.

COUNT V(Unjust Enrichment)



95. As set forth above, Defendant unlawfully, and without any authorization from the

Company or any of its other members, removed certain of the Company’s inventory and sold a

portion of that inventory from her personal retail store without remitting the proceeds thereof to

the Company, thereby depriving the Company of the benefit of those funds and the remaining

unsold inventory, the extent of which is currently unknown.

96. As a result of Defendant’s conduct, she has enriched herself at the expense of the

Company

97. Allowing Defendant to personally retain the proceeds from the sale of the

Company’s products and/or allowing Defendant to retain the remainder of the Company’s

inventory in her possession would be unjust.



following relief:




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COUNT VI(Theft of Business Opportunities)



99. As set forth above, Defendant unlawfully commandeered the Company’s website

and made unauthorized alterations thereto that intentionally misdirect customers away from the

Company and to Defendant’s retail store in New City, New York. Upon information and belief,

Defendant has used, and continued to use, the diversion of the Company’s customers as an

opportunity to sell other, and possibly competing, products from her store.

100. As further set forth above, Defendant unlawfully removed the Company’s

inventory and sold it, and continues to sell it, for her own personal gain and refuses to remit the

proceeds from those sales to the Company.

101. The Company’s website and its registered domain name, milleniumblend.com,

belong to the Company.

102. The Company’s inventory, and any proceeds resulting from sales therefrom, belong

to the Company.

103. Defendant has knowingly, intentionally, and without justification misused, and

continues to misuse, property belonging to the Company, for Defendant’s own personal benefit

and to the detriment of the Company and its non-complicit members.

104. By engaging in the conduct described above, Defendant has engaged in a theft of

the Company’s corporate and business opportunities.

105. Defendant’s conduct was intentional, wanton, willful, malicious, and in gross and

reckless disregard of the Company’s rights.

106. As a direct and proximate result of Defendants'theft of the Company's corporate

and business opportunities, the Company has incurred substantial damages, as set forth above.

WHEREFORE, PlaintifT, derivatively on behalf of the Company, respectfully

requests that this Court enter judgment in the Company's favor and against Defendant granting the

following relief:

(e) Compensatory damages in an amount to be determined at trial or inquest;

(Ð Pre-judgment and post-judgment interest;

(g) Costs of suit, including attorneys' fees, as provided for in the Operating

Agreement;

(h) Punitive damages; and

(i) Such other and further relief as the Court deems just and equitable.

DATED: November 16,2015SHpRvraN Wells Svt vpsreR& SrnveIMAN LLP

By:

Third Avenue, 10tl' Floor

J

8

New York, New York 10022212-763-6464

At t or ney s for P I ai n t iff

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stone family v. maffei - complaint.pdf

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