Brophy Counterclaim

Case 2:12-cv-02684-SRB Document 43 Filed 06/27/]4 Page 1 of 21
1 Steven C. Brophy
3120 W. Carefree Hwy. #1-301
2 Phoenix, AZ 85086
(623) 434-1838)
Defendant & Counter-claimant in pro per
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___ RI:OFIVfD __ c.,.y
JUN 2 7 2014
U S DISTRICT COUPIT
DISTRICT OF
BY
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
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SLEP-TONE ENTERTAINMENT
CORPORATION,
Plaintiff,
v.
STEVEN C. BROPHY and
ASSOCIATED PROTECTIVE
SERVICES, L.L.C. d/b/a APS AND
ASSOCIATES,
Defendants.
STEVEN C. BROPHY,
Counter-claimant
v.
SLEP-TONE ENTERTAINMENT
CORPORATION; KURT SLEP; and
JAMES M. HARRINGTON,
Counter-defendants.
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CASE NO.: 2:12-CV-02684-LOA
COUNTERCLAIM AGAINST SLEp
TONE CORPORATION, KURT
SLEP AND JAMES M.
HARRINGTON
JURY TRIAL DEMANDED
Case 2:12-cv-02684-SRB Document 43 Filed 06/27/14 Page 2 of 21
1
2 Counter-claimant Steven C. Brophy ("Brophy") hereby complains and alleges as
3 follows:
4 1. Brophy is an individual who resides and regularly conducts business in
5 Maricopa County, Arizona.
6 2. Upon information and belief, counter-defendant Slep-Tone Entertainment
7 Corporation ("Slep-Tone") is a North Carolina corporation having its principal
8 place of business in Charlotte, North Carolina.
9 3. Upon information and belief, counter-defendant Kurt Slep ("Slep") is an
10 individual who resides in North Carolina.
11 4. Upon information and belief, counter-defendant James Harrington ("Harrington")
12 is an individual who resides in North Carolina.
13 5. This Court has jurisdiction over the subject matter of this action under 28 U.S.C.
14 1332(a), since the amount in controversy in this action exceeds the sum or
15 value of $75,000, exclusive of interest and costs, and is between citizens of
16 different states.
17 6. This Court has general personal jurisdiction over all counter-defendants
18 because they regularly conduct business in this state and regularly avail
19 themselves of the protection of the courts of this state.
20 7. This Court has specific personal jurisdiction over all counter-defendants in this
21 action because the causes of action herein arise from events and occurrences
22 that took place in this state, particularly including that this State is the place in
23 which the contract which forms the basis of the at least one of the causes of
24 action herein.
25 8. Venue is proper in this State and District pursuant to 28 U.S.C. 1391 (a) in that
26 jurisdiction in this mater is founded solely upon diversity of citizenship, all
27 counter-claimants reside in this State and District, and a substantial part of the
28 events or omissions giving rise to the counterclaim occurred in this District.
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1 9. Slep-Tone is the manufacturer and distributor of karaoke accompaniment
2 tracks.
3 10. During April 201 0 Kurt Slep and James Harrington contacted Brophy to request
4 that Brophy conduct investigations of karaoke show operators ("KJs") whom
5 Slep-Tone contended were using illegal copies of Slep-Tone's karaoke
6 accompaniment tracks which infringed upon Slep-Tone's trademarks ("KJ
7 Infringers").
8 11. Brophy stated in April 2010 that he would be willing to conduct the
9 investigations and requested a retainer of $20,000. Slep stated that Slep-Tone
10 did not have the money to pay a retainer.
11 12. On or about April 21, 2010, Slep proposed to Brophy that Brophy conduct the
12 investigations for a percentage of the amounts recovered from KJs. Slep
13 offered to allow Brophy to manage Slep-Tone's investigative, negotiation and
14 litigation efforts (by acting as Slep-Tone's agent for purpose of hiring attorneys
15 and agreeing to settlement terms with KJ Infringers, subject to guidelines
16 established by Slep-Tone).
17 13. On or about April 21, 2010, to persuade Brophy to agree to perform the
18 investigations for a percentage of the recovery Slep stated to Brophy that
19 approximately 80% of all KJ Infringers entered into a settlement with Slep-Tone
20 after being notified of the infringing conduct and without the necessity of any
21 litigation being filed, and that the average amount of the settlements was
22 $14,000. At the time Slep made these representations, he knew they were
23 false. Brophy did not know the representations were false, and had no reason
24 to doubt the truth of Slep's statements, particularly since Slep's representations
25 were confirmed by Harrington.
26 14. Harrington had been drafting the settlement agreements for Slep-Tone's
27 trademark infringement claims, and pursuant to his agreement with Slep-Tone
28 received a portion of every settlement. Accordingly, Harrington knew that Slep's
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1 representations regarding the percentage of settlements and the amount of the
2 settlements were false.
3 15. Harrington has a pattern and history of filing fraudulent claims and assisting
4 various clients in furthering fraudulent claims. Upon information and belief,
5 Harrington assisted Mario Guess ("Guess") in defrauding millions from
6 businesses and individuals seeking private financing from a private equity firm
7 that Guess operated a website for. Upon information and belief, Harrington
8 conspired with Guess to provide letters of intent to loan applicants (which
9 Guess had no intention of funding) which letters required a deposit by the
10 applicants of an origination fee to the equity firm prior to funding being
11 completed. The letters of intent contained a condition that applicant's pass an
12 investigation and that if they did not pass the investigation or any of the
13 information provided was determined to be false, the deposit for the origination
14 fee would be forfeited. Upon information and belief, Harrington conspired with
15 Guess to fabricate reasons for subsequently denying the loan and retaining the
16 loan origination fee without providing the funding. Upon information and belief,
17 Harrington conspired with Guess to defraud applicants of millions of dollars.
18 16. Another incident where Harrington used the courts for a wrongful purpose
19 resulted in discipline by the North Carolina Bar. Harrington and his law partner
20 Glenn Cipriani used confidential client information which Cipriani had acquired
21 in a prior representation to file a lawsuit listing Harrington and Cipriani as co-
22 plaintiffs in a claim for false marking. The North Carolina Bar found that Cipriani
23 had used the confidential client information to file a suit for Cipriani's and
24 Harrington's personal benefit and thus ordered discipline. A copy of the North
25 Carolina Bar's Findings and Order is attached as an exhibit.
26 17. Harrington has continued his pattern of using !:lis license as an attorney to
27 defraud others by causing lawsuits to be filed on Slep-Tone's behalf based
28 upon facts which Harrington knew to be false. Harrington has likewise coerced
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1 settlements from KJs based upon the false information. Upon information and
2 belief, Harrington is a partner with Slep and Slep-Tone, receiving from 25% to
3 40% of each settlement based upon facts which Harrington alleges to the court
4 and the defendants which Harrington knows to be false.
5 18. On or about April 21, 2010, and repeatedly until on or about November 2012,
6 Slep and Harrington repeatedly stated to Brophy that Slep-Tone had never
7 given permission for any KJs to make copies of Slep-Tone's karaoke
8 accompaniment tracks or to use those unauthorized copies to run karaoke
9 shows from their computers. Slep and Harrington also represented to Brophy
10 that Slep-Tone's trademark infringement claims against the KJ Infringers were
11 valid and enforceable, and that the small number of claims that had proceeded
12 to litigation to date had been successful, and that Slep-Tone had taken all steps
13 necessary to comply with applicable trademark law to establish and preserve
14 its trademark rights. Brophy did not know at the time these representations were
15 made that the representations were false nor did he have any reason to believe
16 that they were false.
17 19. On or about April 21, 2010, Slep represented to Brophy that Slep-Tone was
18 selling karaoke tracks and that its business remained viable and solvent.
19 Brophy did not know that these representations were false and did not have any
20 reason to believe they were false.
21 20. Based upon the representations of Slep and Harrington regarding Slep-Tone's
22 program for enforcing its claims of infringement, including representations
23 concerning the success to date of the settlements with KJ Infringers, and the
24 validity of Slep-Tone's claims for infringement and lack of defenses thereto by
25 the KJ Infringers, Brophy agreed to form an LLC, APS and Associates, LLC
26 ("APS"), which Brophy agreed to capitalize with his personal funds for the
27 purposes of paying investigators and investigative costs associated with
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1 identifying KJ Infringers, in exchange for a receiving a percentage of the
2 amounts recovered from the KJ Infringers.
3 21. On or about May 5, 2010, Brophy signed a contract with Slep-Tone
4 ("Agreement" which is attached as an exhibit to the First Amended Complaint)
5 which provided that APS would conduct investigations of karaoke jockeys (KJs)
6 who were using illegal, unauthorized copies of Slep-Tone's karaoke tracks; and
7 negotiate pre-suit settlements with the pirates.
8 22. Pursuant to the Agreement, APS retained 40% of the amounts collected, and
9 was responsible for paying certain expenses related to its duties.
10 23. The investigative, litigation and other expenses which APS was responsible for
11 paying pursuant to the Agreement were funded through capital contributions of
12 Brophy.
13 24. The Agreement also guaranteed APS nationwide exclusivity in its investigation
14 and settlement efforts, except for specified areas in which Harrington was
15 already engaged to provide service, and subject to APS reaching periodic
16 milestones which Brophy agreed to based upon the representations of Slep and
17 Harrington regarding the alleged success rate of settlements with KJ Infringers
18 to date.
19 25. The Agreement required APS to advance expenses related to its duties, i.e.,
20 "costs associated with research, investigation, mailing of letters, filing of suits,
21 lawsuit service, and prosecution of cases." Brophy provided capital contributions
22 to APS to pay these expenses on behalf of Slep-Tone, anticipating a significant
23 rate of return based upon the representations of Slep and Harrington regarding
24 the success of settlements to date.
25 26. After entering into the Agreement, Slep-Tone, Slep and Harrington repeatedly
26 interfered with the performance of the Agreement by APS and breached the
27 terms of the Agreement. Examples of the interference/breaches include, but
28 are not limited to: (1) refusing to provide information to the attorneys hired to
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1 prosecute cases by APS on Slep-Tone's behalf which they needed in order to
2 respond to discovery, or only agreeing to provide information after extended
3 delays; (2) Slep and Harrington (as general counsel for Slep-Tone) insisted that
4 the attorneys prosecuting the cases assert objections to all discovery and
5 refuse to provide information; (3) Harrington and Slep negotiated directly with
6 defendants in cases which APS was managing, often agreeing to dismiss KJ
7 defendants, despite solid evidence of infringement (thus depriving Brophy &
8 APS of the opportunity to recover expenses or to make any return on their
9 investment); (4) Harrington traveled to California (where he is not licensed and
10 was not admitted pro hac vice in the case pending at the time) and met with a
11 defendant in the case and negotiated with the defendant to dismiss the case
12 (without the knowledge of either Brophy or the attorney handling the case for
13 Slep-Tone), thereby illegally practicing law without a license in California and
14 interfering with the Agreement and depriving Brophy and APS of potential
15 income; (5) Slep discussed litigation and settlement strategies in internet chat
16 rooms, thereby interfering with the ability of attorneys engaged by APS on Slep-
17 Tone's behalf to effectively prosecute cases and/or negotiate settlements (and
18 thus preventing Brophy from being compensated for his services and the
19 expenses he advanced); (6) Slep and Harrington discussed and/or shared the
20 evidence against KJ defendants with the defendants prior to the time discovery
21 requests could be made to defendants, thereby allowing the defendants to
22 obtain or borrow legal copies of the Slep-Tone's karaoke tracks and
23 subsequently claim that they had the legal copies at the time of the investigation
24 which showed infringement; and (7) Slep and Harrington cut deals with friends
25 of KJ informants who had previously provided info to Slep, allowing them to be
26 dismissed or settle for very little money after APS and Brophy invested time and
27 money to conduct investigations establishing infringement.
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1 27. Harrington drafted a sample complaint for trademark infringement which he and
2 Slep insisted be used by all attorneys engaged by APS to prosecute claims on
3 behalf of Slep-Tone. Harrington and Slep knew when Harrington drafted the
4 complaint and when he insisted that other attorneys representing Slep-Tone
5 adopt the allegations contained in the sample complaint drafted by Harrington
6 that it contained false allegations, including false allegations that: (1) neither
7 Slep-Tone or any of its associated companies has ever authorized media-
8 shifting or format-shifting of its karaoke tracks for any commercial purpose; (2)
9 Slep-Tone tolerates media-shifting and format-shifting subject to certain
10 specified conditions including that the KJ notify Slep-Tone in advance that slhe
11 intends to conduct a media-shift or format-shift and submits to a verification by
12 a representative of Slep-Tone that the KJ has complied with all conditions for
13 a media-shift or format-shift; (3) media-shifting or format-shifting which does
14 not comply with all of the stated conditions in Slep-Tone's policy including
15 notification by the KJ and verification by Slep-Tone is not permitted or
16 authorized and constitutes a counterfeit; (4) Slep-Tone did not license any of
17 the KJ or venue defendants to manufacture or acquire reproductions,
18 counterfeits, or copies, or to use Slep-Tones trademarks; (5) Slep-Tone's use
19 of the trademarks is "in commerce" within the meaning of the Trademark Act;
20 (6) each defendant used media-shifted, format-shifted or counterfeit tracks
21 which had never been authorized by Slep-Tone, and (7) Slep-Tone continued
22 to use its trademarks in commerce by selling goods with trademarks. Neither
23 Brophy nor the attorneys engaged by Brophy to file lawsuits on Slep-Tone's
24 behalf knew that the representations were false or had reason to believe that
25 they were false.
26 28. Slep and Harrington knew that for at least 7 years, Slep-Tone had no income
27 other than from settlements and was insisting that KJs accept discs as part of
28 their settlement agreements so that Slep-Tone could claim a "sale" of the discs
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1 given as part of the settlement. Brophy did not know that Slep-Tone's only
2 "sales" occurred when defendants were forced to accept discs in a settlement
3 which Slep-Tone recorded as a sale and Brophy had no reason to believe that
4 these representations were false when made.
5 29. Slep and Harrington notified Brophy on or about April 21 ,2010 and repeatedly
6 thereafter until on or about August 2012, that when Brophy or any investigator
7 hired by conducted investigations, they were to consider any media-shifted or
8 format-shifted files used in karaoke shows to be counterfeit if the KJ had not
9 previously notified Slep-Tone in writing of the media-shift or format-shift and
10 been verified as being in compliance with all terms of Slep-Tone's policy.
11 30. On or about August 8, 2012, Brophy learned for the first time that the
12 representations which Slep and Harrington had made to him regarding media-
13 shifting and format-shifting were untrue. Brophy received a copy of a Slep-Tone
14 letter dated September 25,2008 (which had been sent from counsel for one
15 of the KJ defendants) in which Slep-Tone authorized the use of media-shifted
16 and format-shifted karaoke tracks and did NOT require the prior notification to
17 Slep-Tone by the KJ and did NOT require any verification of compliance of a
18 one-to-one correspondence of original discs and media-shifted or format-shifted
19 tracks by Slep-Tone or any of its representatives.
20 31. From April 21, 2010 to August 2012, both Slep and Harrington insisted that
21 Slep-Tone had neverauthorized the blanket use of media-shifted and/or format-
22 shifted tracks and that unless a KJ had obtained prior authorization and
23 verification of compliance with Slep-Tone's policy in writing, then any use of
24 media-shifted or format-shifted tracks by KJs was unauthorized and illegal.
25 32. Brophy relied upon the representations of Slep and Harrington that media-
26 shifting and format-shifting was unauthorized and illegal unless prior written
27 authorization had been obtained and verification of compliance with the one-to-
28 one correspondence policy had been completed by Slep-Tone. Had Brophy
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1 been aware that Slep-Tone had previously given written authorization for the
2 blanket use of media-shifted and/or format-shifted tracks without prior written
3 authorization or verification of compliance by Slep-Tone, he would not have
4 agreed to capitalize APS, or to enter into an agreement with Slep-Tone or to
5 conduct investigations or advance any expenses on behalf of Slep-Tone since
6 it would not be possible for an investigator to determine non-compliance by
7 simply observing KJs conduct a karaoke show. Logistically it would be
8 extremely difficult as it would require a follow-up investigation to inspect the
9 computer and compare the tracks with the records of the tracks purchased by
10 the KJ.
11 33. Having to set up an appointment for inspection of the computer would alert the
12 KJ to the fact that s/he was being investigated for infringement, thereby allowing
13 the KJ to purchase and/or borrow legitimate original Sound Choice discs prior
14 to the inspection occurring. This was a legitimate concern as the audits which
15 Brophy's investigators conducted pursuant to the requirements alleged in the
16 complaint revealed that KJs were passing around original Sound Choice discs
17 among themselves when subjected to audits, attempting to claim that the
18 original discs they presented at the audit (which had previously been invisibly
19 marked during an audit of a different KJ) belonged to the KJ who was being
20 subjected to the audit. As an experienced investigator, Brophy was aware of the
21 potential for abuse and thus, prior to signing the Agreement, verified with Slep
22 and Harrington that Slep-Tone had never issued a blanket authorization for
23 media-shifted or format-shifted tracks and therefore any system which used
24 media-shifted or format-shifted tracks which had not been verified by Slep-Tone
25 and authorized in writing was unauthorized and illegal.
26 34. The misrepresentation that Slep-Tone had never authorized KJs to use media-
27 shifted and/or format-shifted tracks without written authorization and verification
28 was repeated by Slep and Harrington in conference calls with attorneys
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1 representing Slep-Tone during the period from May 4,2010 through the spring
2 of 2012 (calls which Brophy arranged in order to coordinate prosecution of
3 Slep-Tone's alleged trademark infringement claims, pursuant to the terms of the
4 Agreement).
5 35. Beginning on or about December 6, 2010, and continuing through on or about
6 June 2012, Brophy discussed with Slep that the program was not working and
7 that the first group of settlements were much less than anticipated and that it
8 was not working like Slep and Harrington said it WOUld. Brophy admonished
9 Slep not to share information on the internet with KJs and not to talk with KJ
10 Infringers who had been identified by Brophy (since doing so jeopardized the
11 potential for settlement) but instead to refer them back to Brophy to discuss
12 settlement. Although Slep promised to refrain from communicating directly with
13 KJ Infringers, he continued to communicate directly with KJs and on the internet
14 throughout the time that Brophy worked with Slep-Tone, thereby interfering with
15 Brophy's ability to negotiate settlements with KJ Infringers and thus obtain
16 money for his services.
17 36. Beginning or about May 2010 and continuing through on or about June 2012,
18 Slep requested that Brophy conduct investigations regarding persons who were
19 illegally duplicating tracks with Slep-Tone's trademarks and selling computers
20 and/or computer hard discs containing the illegal infringing tracks. Slep agreed
21 that Brophy would receive extra compensation (not to be included within APS's
22 40% share) for the investigative services and expenses incurred for these
23 investigations (referred to as the "Pirate Investigations") at the rate invoiced by
24 Brophy.
25 37. Brophy conducted the Pirate Investigations and invoiced Slep for amounts
26 totalling $87,900, which Slep has failed and refused to pay since February 10,
27 2012.
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1 38. In addition, beginning on or about May 4, 2010 through June 30, 3012, Slep
2 also requested that Brophy conduct extra investigations not covered by the
3 Agreement ("Extra Investigations") which Slep agreed to pay at the rate invoiced
4 by Brophy.
5 39. Brophy invoiced Slep for the Extra Investigations for amounts totalling $44,800
6 which Slep has failed and refused to pay since February 10, 2012.
7 40. Slep also requested that Brophy take on added responsibilities of making sure
8 that KJs signed licensing agreements, auditing the KJs systems, and collecting
9 money from KJs that had either defaulted on the agreed-to payments under a
10 settlement agreement, or against whom Slep-Tone had obtained default
11 judgments. Slep agreed that these extra duties were not included within the
12 40% due to APS pursuant to the Agreement and agreed to pay Brophy extra for
13 these additional duties ("Collection Duties").
14 41. Brophy invoiced Slep for the Collection Duties in amounts totalling $28,700
15 which Slep has failed and refused to pay since February 10, 2012.
16 42. Brophy also invoiced Slep for $12,300 for travel and miscellaneous expenses
17 related to the Pirate Investigations, Extra Investigations and Collection Duties.
18 Since February 10, 2012, Slep has failed and refused to pay the $12,300 to
19 Brophy.
20 43. Beginning on or about December 6, 2010, and continuing through on or about
21 June 2012, Slep agreed that due to the results which were considerably less
22 than represented (which of course Slep knew would likely be the case since
23 Slep had greatly exaggerated the percentage rate and amount of settlements
24 when he informed Brophy about the program's alleged success rate), Slep
25 agreed that Brophy could hold back funds from the amounts due Slep-Tone for
26 its portion of the settlements so that Brophy could conduct new investigations
27 and file new lawsuits. Throughout the term of the Agreement, Slep continued
28
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1 to acquiesce to a portion of the settlement funds due to Slep-Tone being
2 withheld until larger settlements could be obtained.
3 44. On or about January 28,2012, Slep-Tone wrongfully notified APS that APS was
4 allegedly in breach of the Agreement. Brophy responded by letter dated
5 February 10, 2012, denying Slep-Tone's allegations and proposing that the
6 Agreement be continued while existing cases were completed.
7 45. Beginning on or about February 2012, Slep and/or persons acting at his
8 direction, contacted defendants with existing settlement agreements which
9 Brophy had obtained (and thus was entitled to 40% of the proceeds) and
10 directed that all future payments be made directly to Slep-Tone. Brophy
11 subsequently demanded that Slep remit to APS 40% ofthe amounts which Slep
12 and/or Slep-Tone and/or Harrington had wrongfully collected but Slep refused.
13 46. Upon information and belief, the amounts representing 40% of the proceeds
14 which should have gone to APS have instead been paid to and wrongfully
15 retained by Harrington and/or Slep and/or Slep-Tone. The total amount which
16 has wrongfully retained is $120,000.
17 47. Subsequent to Slep-Tone's wrongful claim that APS was in breach of the
18 Agreement in January 2012, Slep has made repeated requests that Brophy turn
19 over the investigative files compiled by Brophy and APS, despite the fact that
20 Slep and/or Slep-Tone have failed and refused to pay for said files. All matters
21 in litigation which were pending at the time that Slep wrongfully declared APS
22 in breach of the Agreement have since been resolved and thus Slep-Tone will
23 not suffer any harm by not receiving files containing investigative information,
24 for which Slep-Tone has refused to compensate APS and Brophy.
25 48. Most of the investigative files which APS seeks are for investigations NOT
26 covered by the terms of the Agreement, investigations for which Brophy
27 incurred expenses and spent time gathering the information but which Slep-
28 Tone now seeks to obtain without ever paying for the services and expenses.
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1 Ordering that the files be turned over to Slep-Tone would result in unjust
2 enrichment to Slep-Tone and Slep and Harrington who would then use the
3 information to profit by filing further unjustified lawsuits based upon false
4 allegations.
5 49. Brophy is informed and believes, and thereon alleges that at all times herein,
6 each of the counter-defendants was the agent of every other counter-
7 defendant, and that counter-defendants, and each of them, conspired with the
8 others to defraud Brophy of compensation for services rendered and expenses
9 incurred, and to deprive him of contractual amounts due to him for services
10 rendered and expenses incurred pursuant to the Extras Agreement and the
11 Agreement.
12
13 Count One
14 BREACH OF CONTRACT
15
16 50. Slep and Slep-Tone agreed to pay Brophy for the provision of investigative and
17 collection services (Pirate Investigations, Extra Investigations, Collection Duties
18 and related travel and miscellaneous expenses) which were not covered by the
19 Agreement between Slep-Tone and APS. These services not included in the
20 Agreement but were the subject of a valid and enforceable additional
21 agreement between Slep/Slep-Tone and Brophy (referred to hereafter as
22 "Extras Agreement").
23 51. By failing to perform as agreed and to pay funds to Brophy as agreed, Slep and
24 Slep-Tone have breached the Extras Agreement.
25 52. As a direct result of Slep and Slep-Tone's breach of the Extras Agreement,
26 Brophy has suffered a pecuniary loss totalling $173,700.
27
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1 53. Slep and Slep-Tone have also breached the Agreement by diverting settlement
2 funds due pursuant to the Agreement in the amount of $120,000. Consequently,
3 Brophy has suffered an additional pecuniary loss of $120,000.
4 54. Brophy has also suffered personal and business reputational damage due to
5 the defamatory statements about Brophy which Slep and Harrington have
6 published to others and on the internet.
7
8 Count Two
9 FRAUD
10
11 55. As set forth above, Harrington and Slep made false representations to Brophy
12 about the validity of Slep-Tone's trademark infringement claims, the purported
13 lack of defenses to the trademark claims by KJ Infringers, and the alleged
14 percentage and amount of settlements with KJ Infringers which Harrington and
15 Slep had negotiated with KJ Infringers prior to Brophy deciding to sign the
16 Agreement with Slep-Tone.
17 56. The misrepresentations by Harrington and Slep were represented matters
18 material to the agreement being contemplated by the parties.
19 57. Harrington and Slep knew of the falsity of the representations at the time they
20 made the false representations to Brophy, intending that Brophy would rely
21 upon the false representations and agree to provide services and advance
22 expenses on what was effectively a contingent basis rather than the up-front
23 retainer which Brophy had requested as customary in his business.
24 58. Brophy was unaware that the false representations were false when they were
25 made to him by Slep and Harrington.
26 59. Brophy justifiably relied upon the truth of the misrepresentations which
27 Harrington and Slep made to him. Both Slep and Harrington were in a position
28 to know about the truth or falsity of the representations they made to Brophy
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1 and there was no way for Brophy to independently verify the truthfulness of the
2 representations made by Slep and Harrington.
3 60. Had Brophy known that the statements were false at the time that Slep and
4 Harrington made them to him, he would not have entered into either the
5 Agreement or the Extras Agreement, and therefore would not have suffered
6 losses totalling $293,700 or the subsequent damage to his reputation and
7 business reputation resulting from the defamatory statements made to others
8 and published on the internet by Slep and Harrington.
9 61. As a direct and proximate result of Harrington, Slep and Slep-Tone's fraud and
10 breach of contract, Brophy suffered economic loss of at least $293,700, lost
11 income, discomfort, annoyance, worry, anxiety, emotional distress, loss of
12 earning capacity, damage to his business and personal reputation, and general
13 damage in an amount according to proof.
14 62. Harrington's, Slep's and Slep-Tone's fraudulent conduct and breach of contract
15 was knowing, intentional, willful, malicious and oppressive and in conscious
16 disregard of Brophy's rights, thereby entitling Brophy to recover, in addition to
17 actual damages, damages to make an example of and to punish cross-
18 defendants.
19
20
21
PRAYER FOR RELIEF
22 WHEREFORE, Counter-claimant Brophy prays judgment against cross-defendants
23 Slep-Tone, Harrington and Slep as follows:
24 I. For compensatory damages including, but not limited to, loss of income in
25 the amount of $293,700, or such other amount as may be proven at trial, loss of earning
26 capacity, mental and emotional distress, damages for personal and business
27 defamation, and other special and general damages according to proof at trial;
28 II. For punitive damages according to proof at trial;
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1 III. For interest, including prejudgment interest, at the prevailing legal rate;
2 IV. For a permanent injunction enjoining cross-defendants, their agents,
3 successors and employees and those acting in concert with them from engaging in each
4 of the unlawful practices, policies, usages and customs set forth herein;
5 V. For costs of suit;
6 VI. For such other and further relief as the Court may deem proper.
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Dated: June 26, 2014 S ~
Steven C. Brophy
-17-
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CERTIFICATE OF SERVICE
4 I hereby certify that on June 27, 2014, I served the foregoing
5 COUNTERCLAIM AGAINST SLEP-TONE CORPORATION, KURT SLEP AND JAMES
6 M. HARRINGTON by first class, United States mail upon the following counsel of record:
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James M. Harrington, Esq.
Counsel for Plaintiff Slep-Tone Entertainment Corporation
Harrington Law, P.C.
12245 Nations Ford Rd., Ste. 506
Pineville, NC 28134-8444
I S ~ C ~ ~
Craig Stevens
-18-
1'\11 'H24c"5,-r
. ...4.
/, .. ::. 4t"
BEFORE THE
1Jt:ILr::: 0 _ CIPLINARY HEARING
fl;D. Du 4;;'0 _ COMMISSION
WAKE COUNTY Q7C '\) OF THE
".(<7/ NQlflI-I CAROLINA STATE BAR
.'/(J/ gS7--- 10DHCLS
THE NORTH CAROLINA STATE BAR,
Plaintiff
COMPLAINT
v.
GLENN ANDREW CIPRIANI, Attorney,
Defendant
Plaintiff, complaining of Defendant, alleges and says:
1. Plaintiff, the North Carolina State Bar ("State Bar"), is a body duly
organized under the laws of North Carolina and is the proper party to bring this
proceeding under the authority granted it in Chapter 84 of the North Carolina General
Statutes, and the Rules and Regulations of the North Carolina State Bar promulgated
thereunder.
2. Defendant, Glenn Andrew Cipriani ("Cipriani" or "Defendant"), was
admitted to the North Carolina State Bar 011 August 24, 2007, and is, and was at all times
referred to herein, an attorney at law licensed to practice in North Carolina, subject to the
laws of the State of North Carolina, the Rules and Regulations of the North Carolina
State Bar and the Rules of Professional Conduct.
Upon information and belief, plaintiff alleges:
3. During the relevant periods referred to herein, Cipriani was engaged in the
practice of Jaw in the State of North Carolina and maintained a law office in Charlotte,
Mecklenburg County, North Carolina.
4. On or about August 20, 2007 through on or about January 29, 2008,
Cipriani was employed by the law firm Moore & VanAllen PLLC ("Moore & Van
Allen") in the intellectual property group.
5. While employed by Moore & Van Allen, Cipriani represented Lowe's
Companies ("Lowe's") in a patent infringement lawsuit filed by Stringliner Company
(""Stringliner").
6. As part of his representation of Lowe's, Cipriani researched a possible
claim against Stringliner for a violation of35 U.S.C. 292 on Lowe's behalf.
7. 35 U.S.C. 292 involves the use of a name or patent number on a product
to deceive the public into believing the product is covered by a patent when it is not.
8. Lowe's chose to reserve the research and the infonnation obtained by
Cipriani for a possible future claim against Stringliner.
9. On or about January 29, 2008, Cipriani left Moore & Van Allen to join
Attorney James Harrington's fiml, Harrington Practice.
10. On or about May l3, 2008, Cipriani and James Harrington filed a lawsuit
as co-plaintiffs against Stringliner, Home Depot U.S.A., Inc. ("Home Depot") and the
Lehigh Group, LTD. ("Lehigh") in the Western District of North Carolina for the United
States District Court bearing case number 3:08-cv-00225 ("lawsuit").
11. The lawsuit alleged the same 35 U.S.C. 292 violation Cipriani researched
for Lowe's.
12. Cipriani based the lawsuit on research and confidential information
learned through his representation of Lowes, not generally known to the public.
13. Lowe's did not give Cipriani permission to use Lowe's confidential
information to pursue the lawsuit.
14. Cipriani used Lowe's confidential information for his own use and
potential financial gain.
THEREFORE, Plaintiff alleges that Cipriani's foregoing actions constitute
grounds for discipline pursuant to N.C. Gen. Stat. 84-28(b)(2) in that Cipriani violated
the Rules of Professional Conduct in effect at the time of the conduct as follows:
(a) By using confidential information obtained while representing Lowe's to
file the lawsuit against Stringliner, Home Depot, and Lehigh, Cipriani
revealed information acquired through his previous representation of
Lowe's without pernlission in violation of Rule 1.6 (a); and
(b) By using confidential infornlation obtained while representing Lowe's to
file the lawsuit against Stringliner, Home Depot, and Lehigh, Cipriani
revealed infomlation relating to his previous representation of Lowe's to
Lowe's disadvantage in violation of Rule 1.9 (b) and (c).
WHEREFORE, Plaintiff prays that:
(1) Disciplinary action be taken against Defendant in accordance with N.C.
Gen. Stat. 84-28(a) and .0114 of the Discipline and Disability Rules of the
North Carolina State Bar (27 N.C.A.C. IB .0114), as the evidence on hearing
may warrant;
(2) Defendant be taxed with the costs pennitted by law in connection with this
proceeding; and
(3) For such other and filrther relief as is appropriate.
The 25
th
day of March 2010.
Ronald G. Baker, Chair
Grievance Committee
William N. Farrell
Deputy Counsel
State Bar No. 5596
Attorney for Plaintiff
,
The North Carolina State Bar
P.O. Box 25908
Raleigh, NC 27611
919-828-4620

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Case 2:12-cv-02684-SRB Document 43 Filed 06/27/]4 Page 1 of 21

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