Jaburg & Wilk, Gary Jaburg Complaint

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I don't know that I have an opinion about this yet but there are other documents that I will upload that will need to be looked at as well to come to a conclusion.

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Jaburg & Wilk, Gary Jaburg Complaint

  1. 1. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 s j"l W. D [1 TC/1,f J ~C i.LG{ L: LtiC iJU._..I ILI LLJtII i~. i ~ i rsr rrr t DeputyByr~ _er ; Gr ccket•_ ~ I`e.~'u~_S ri: is f r1 ' !rfflZ S Trr, 1 .l,ts.')7 IJUL, VJ i'J) .U.LL LLIIL, Ur,atrlL i i 1 [7;~ I,]ii11 •. urIuLt. rc:v —' '..J ; f CMLHEWCOHPLAIHT 301.00 TITrM "Vt0! UT z (i ISt- RP.cc-,!r t 21225140 The Andrich Law Firm, P.C. Devin Andrich, (#023075) 4538 North Fortieth Street Phoenix, Arizona 85018 Telephone: (602) 774-3200 Facsimile• (602) 774-3205 '-- ____ Arthur and Colleen Reichsfeld, a married couple and State Electrical Contractors, Inc., an Arizona corporation Plaintiffs, V. Jaburg & Wilk, P.C. an Arizona professional corporation, GFAH Equity Lending, L.L.C., an Arizona limited liability company, Flash and the Boys, L.L.C., an unlicensed Arizona limited IiabiIity company, Gary Jaburg and Jane Doe Jaburg, a married couple, Roger Cohen and Jane Doe Cohen, a married couple, Lawrence Wilk and Jane Doe Wilk, a married couple, John Does and Jane Does I-X, John Does and Jane Does Attorneys I-X and XYZ, L.L.C., an unknown Arizona limited liability company; E-mail:dandrich@andrichlaw.com EO Attorneys for Plaintiffs NOA 4L IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOI'A CV2(1 1 -()05 277 Case No. CV-2011- VERIFIED COMPLAINT (Jury Demand) Defendants. COMPLAINT COMES NOW Plaintiffs Arthur and Colleen Reichsfeld a:id State Electrical Contractors, Inc., by and through undersigned counsel, and for their Verified Complaint against, Jaburg & Wilk, P.C. an Arizona professional corporation, GFAH Equity Lending, L.L.C., an
  2. 2. 1 Arizona limited Iiability company, Gary Jaburg and Jane Doe Jaburg, a married couple, Roger 2 Cohen and Jane Doe Cohen, a married couple, Lawrence Wilk and Jane Doe Wilk, a married 3 couple, John Does and Jane Does I-X and John Does and Jane Does Attorneys I-X allege as 4 follows: 5 6 7 JURISDICTION 8 1. Plaintiffs Arthur and Colleen Reichsfeld are residents of Maricopa County, 9 Arizona ("Reichsfeld"). U 10 k 2. Plaintiff State Electrical Contractors, Inc. is an Arizona, corporation with its E 11 12 principal place of business in Maricopa County, Arizona ("State Electric"). 13 3. Defendant Jaburg & Wilk, P.C. is an Arizona professional corporation with its V 14 principal place of business in Maricopa County, Arizona ("Jaburg & Wilk"). 15 a) 4. Defendant GFAH Equity Lending, L.L.C. is an Arizona limited liability company 16 17 with its principal place of business in Maricopa County, Arizona ("GFAH :Lending"). 18 5. Defendant Flash and the Boys, L.L.C. is an unknown limited liability company, 19 according to the Arizona Corporations Commission, illegally-operating, but otherwise doing 20 business in Arizona ("Flash and the Boys"). 21 22 6. Defendant Gary Jaburg is president, director and a majority shareholder of Jaburg 23 & Wilk, member of GFAH Lending and, on information and/or belief, member of Flash and the 24 Boys. 25 7. On information and belief, Gary Jaburg's actions as alleged in this Verified 26 Complaint were for the benefit of and in furtherance of the marital community. As such, the Gary 27 28 Jaburg/Jane Doe Jaburg marital community is liable for the actions described in this Verified -2-
  3. 3. 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 L CZ - U Complaint. 8. Defendant Lawrence Wilk is treasurer, director and a majority shareholder of Jaburg & Wilk, and, on information and/or belief, member of Flash and the Boys. 9. On information and belief, Lawrence Wilk's actions as alleged in this Verified Complaint were for the benefit of and in furtherance of the marital community. As such, the Lawrence Wilk/Jane Doe Wilk marital community is liable for the act.ons described in this Verified Complaint 10. Defendant Roger Cohen is secretary, director and a majority shareholder of Jaburg & Wilk, and, on information and/or belief; member of Flash and the Boys ("Roger Cohen"). 11. On information and belief, Roger Cohen's actions as a1lged in this Verified Complaint were for the benefit of and in furtherance of the marital communily. As such, the Roger Cohen/Jane Doe Cohen marital community is liable for the actions described in this Verified Complaint 12. On information and belief, Defendants, John Does and Jane Does I-X are multiple individuals either domiciled in Arizona or elsewhere. 13. On information and belief, Defendants, John Doe Attorneys Jane Does I-X are one or more individuals licensed to practice law in Arizona and/are owners, directors, officers and/or shareholders of Jaburg & Wilk, GFHA and/or Flash and the Boys. 14. On information and belief, Defendant, XYZ, L.L.C. is one or more domestic or foreign Arizona limited liability companies, registered with the Arizona Corporations Commission. 15. At all times herein, Jaburg & Wilk, P.C., Gary Jaburg and Jane Doe Jaburg, Roger Cohen and Jane Doe Cohen, Lawrence Wilk and Jane Doe Wilk, a married couple, John Does and Jane Does T-X and John Doe Attorneys l-X are collectively referred to as "Jaburg
  4. 4. Defendants.'' 16. Defendants caused events to occur in Maricopa County, Ari<:ona, out of which the following causes of action arise. 17. The "Legal Services Agreement" and "Lending Agreement' as described herein, were intended for performance within Maricopa County, Arizona. 18. The Court has jurisdiction over the parties and the claims alln.ged herein, and venue is proper pursuant to A.R.S. § 12-401. 19. The damages claimed by Plaintiffs meet the jurisdictional requirements of this Court. GENERAL ALLEGATIONS 20. On or about January 1999, Plaintiffs entered into a legal services agreement with Jaburg & Wilk (the "Legal Services Agreement"). 21. The terms of the Legal Services Agreement stated that Jaburg & Wilk would provided competent legal advice for the best interests of Plaintiffs. 22. At all times herein, Jaburg Defendants were familiar with their contractual obligations and professional duties under the Legal Services Agreement. 23. In 2004, Defendants started the lending company, GHAF Lending. 24. Jaburg & Wilk, Gary Jaburg, Lawrence Wilk and Roger Cohen determined that GFAH Lending should be housed within the law firm, Jaburg & Wilk. 25. In May 2009, Plaintiffs retained and paid Jaburg & Wilk, Gary Jaburg and Jaburg Defendants to provide legal advice pertaining to Plaintiffs business dealings with Bart Shea. 26. During the course of the representation, Bart Shea informed Plaintiffs that he 1 2 31I' 4 5 6 7 8 9 v 10 11 w 12 rs 13 U 14 15 E-~ 16 17 18 19 20 21 22 23 24 25 26 27 28 A
  5. 5. required a loan to complete his dealings with Plaintiffs. 27. Plaintiffs consulted with Gary Jaburg and Jaburg Defendants, concerning the best course of action, concerning Plaintiffs dealings with Bart Shea. 28. Gary Jaburg and Jaburg Defendants informed Plaintiffs that the best thing to do was for GFAH Lending to loan the funds to Plaintiffs, and take security interests in Plaintiffs residence and State Electric. 29. Jaburg Defendants informed Plaintiffs that GFAH Lending would not loan money to Bart Shea. 30. Gary Jaburg and Jaburg Defendants knowingly and willfully ceclined to inform Plaintiffs that GFAH Lending was improperly licensed with the Arizona Department of Financial Institutions and Arizona Corporations Commission. 31. Gary Jaburg and Jaburg Defendants knowingly and willfully declined to inform Plaintiffs that if GFAH Lending loaned Plaintiffs funds, such an action presented a conflict of interest in Jaburg & Wilk's and Gary Jaburg's legal representation of PlaintifTh. 32. Gary Jaburg and Jaburg Defendants knowingly and willfully declined to inform Plaintiffs that Plaintiffs should consult with other lending institutions prior :o accepting any loan from GFAJ-I Lending and Jaburg Defendants. 33. Gary Jaburg and Jaburg & Wilk knowingly and willfully declined to inform Plaintiffs that before GFAH Lending loaned Plaintiffs funds, Plaintiffs should first consult with and receive independent legal advice from an Arizona attorney other that Jabt.ig & Wilk. 34. At all times herein. Jaburg & Wilk and GFAI-I Lending have the same physical Address, telephone number, secretary and other contact information (the "Law Firm"). 35. At all times herein, nowhere within the Law Firm was there any disclosures or signs 2 3 4 5 6 7 8 9 L 11 12 13 - c) 14 15 cJ) H 16 17 18 19 20 21 22 23 24 25 26 27 28
  6. 6. 1: indicating that a business called GFAH Lending existed or operated there. 2 36. At all times herein, nowhere within the Law Finn was there any disclosures j warning patrons or clients that Jaburg & Wilk and GFAH Lending were separate, distinct business 4 operating within the same offices. 5 6 37. In reliance on Jaburg Defendants' and Gary Jaburg's legal advice and/or 7 statements and/or material omissions, Plaintiffs entered into multiple promissory notes with GFAR 8 Lending. whereby Plaintiffs' obligation was secured by GFAH recorded interests in Plaintiffs' 9 residence and State Electric, L 10 38. Gary Jaburg and Jaburg Defendants prepared the loan documents for the loan E 11 12 between Plaintiffs and Bart Shea, 13 39. In preparation of the loan documents, Gary Jaburg and Jaburg Defendants U 14 discovered that Bart Shea was insolvent, but did not inform Plaintiffs. 15 40. Gary Jaburg and Jaburg Defendants knowingly and willfully declined to Bart 16 17 Shea's spouse as an additional guarantor to the loan documents between Plaintiffs and Bart Shea. 18 41. On the advice and instruction of Gary Jaburg and Jaburg Defendants, Plaintiffs 19 signed the loan documents with Bart Shea. 20 42. In December 2009, Bart Shea filed for bankruptcy protection. 21 43. On information and belief, Bart Shea transferred several of his assets to his spouse. 22 23 44. Gary Jaburg and Jaburg Defendants became aware of Bart Shea's insolvency, but 24 knowingly and willfully declined to advise Plaintiffs to promptly commence litigation against Bart 25 Shea. 26 45. Instead of advising or agreeing to represent their client at the Bart Shea bankruptcy 27 28 proceedings, Gary Jaburg and Jaburg Defendants advised Plaintiffs to restructure Plaintiffs' loan I
  7. 7. with GFAH Lending, whereby GFAH Lending would obtain additional security in Plaintiffs' residence and State Electric. 46. In reliance on Gary Jaburg's and Jaburg Defendants' advice, Plaintiffs entered into additional loan agreements, both providing Gary Jaburg, Jaburg Defendant; and GFAI-J Lending additional security in Plaintiffs' residence and State Electric under business terms uncommon in the lending community. 47. In October 2010, Plaintiffs consulted with Gary Jaburg and Jaburg Defendants regarding Plaintiffs' and State Electric's possible bankruptcy, due to the large payments and L unconscionable interest rate owed to GFAH Lending. 48. Gary Jaburg and Jaburg Defendants advised Plaintiffs not to immediately seek bankruptcy protection, but rather to enter into an additional loan agreements with GFAH Lending U and Gary Jaburg. 0) 49. A material terms of the new loan agreement required Plaintiffi. to add their revocable living trust (also drafted by Jaburg Defendants) as an additional guarantor to the loans between Plaintiffs, GFAH Lending, Jaburg Defendants and Gary Jaburg. 50. In reliance on the legal advice from Gary Jaburg and Jaburg Defendants, Plaintiffs did not file bankruptcy, but instead entered into an additional guarantor agreement whereby Plaintiffs' revocable living trust was an added guarantor to the loans between GFAH Lending, Jaburg Defendants and Plaintiffs. 51. In November 2010, Gary Jaburg and Jaburg Defendants infonned Plaintiffs that Jaburg & Wilk represented GFAH Lending, and that its client demanded that Plaintiffs pay amounts owed to GFAI-I Lending and Gary Jaburg or Jaburg Defendants would sue Plaintiffs and enforce GFAH Lending, Jaburg Defendants and Gary Jaburg's security interests against Plaintiffs' -7-
  8. 8. residence, State Electric and Plaintiffs' revocable living trust. 2 52. In response, Plaintiffs terminated Jaburg Defendants' legal reDresentation of 3 Plaintiffs, and retained undersigned counsel. 4 51 Undersigned counsel was informed by Roger Cohen and Jabtrg Defendants that if 5 6 Plaintiffs filed a civil complaint, disclosing the allegations herein and making the allegations 7 public, Roger Cohen and Jaburg Defendants would file a Rule 11 Motion against Plaintiffs and 8 undersigned counsel, seeking sanctions. 9 54. On March 4, 2011 GFAH Lending and Gary Jaburg filed a lawsuit against Plaintiffs L 10 in Maricopa County Superior Court (the "GFAH Lawsuit"). Ii 12 55. The GFAH Lawsuit withhold from the Court that at all times eferenced in the 13 GFAH Lawsuit, Gary Jaburg and Jaburg Defendants were Plaintiffs' attcmeys when Plaintiffs L) 14 entered into loan agreements with GFAH Lending and Jaburg Defendants. 15 16 FIRST CLAIM FOR RELIEF: FRAUD 17 (Against All Defendants) 18 56. Plaintiffs incorporate by reference the allegations of paragraphs 1 through 19 20 55 above. 21 57. Gary Jaburg and Jaburg Defendants entered into a Legal Services Agreement, 22 representing to Plaintiffs that the Jaburg Defendants would represent Plaintiffs to the best of their 23 ability and not engage in acts that presented a conflict of interest. 24 25 58. Jaburg Defendants created falsities by: a) concealing the circumstances establishing 26 that Jaburg & Wilk and GFAH Lending were essentially the same company; b) withholding from 27 Plaintiffs that if Defendants loan funds to Plaintiffs, a conflict of interest exists; c) refusing to 28 advise and instruct Plaintiffs to seek lending opportunity from legitimate financial institutions; d) -8-
  9. 9. refusing to advise and instruct Plaintiffs to seek a legal opinion from anArizona attorney not associated or otherwise employed with Jaburg & Wilk before entering into loan agreements with Gary Jaburg and/or GFAH Lending; and e) deliberately creating an environment at Jaburg & Wilk, whereby the average person could not discern that UFAH Lending was essentially Jaburg & Wilk, creating confusion and deception to existing and prospective clients. 59. Jaburg Defendants' representations to Plaintiffs in the Legal Services Agreement and continued legal advice regarding conflict were material to Plaintiffs' reliance in entering into loan agreements with Defendants. L 60. At all times herein, Jaburg Defendants had knowledge of the falsities that: a) Jaburg & Wilk is the same business as GFAH Lending; b) Jaburg & Wilk creates an environment where - its clients are placed in predatory loans with GFAH Lending and Gary Jaburg, whereby Jaburg & U Wilk drafts the loan documents and advises its clients to sign the loan dccuments without first seeking a legal opinion from independent counsel. 61. Jaburg Defendants intended to falsely tell Plaintiff to that Gary Jaburg and Jaburg & Wilk represent and advise Plaintiffs for Plaintiffs' best interests. 62. When Plaintiffs (and in reliance on Jaburg Defendants' multiple, written representations) signed loan agreements with Gary Jaburg, Jaburg Defendant:; and GFAH Lending, Plaintiffs were ignorant to the fact that Arizona attorneys are generally-barred from loaning money to clients, and Jaburg & Wilk's simultaneous representation of Plaintiffs, Gary Jaburg and (IFAH Lending created an ongoing conflict of interest, rendering Jaburg Defendants representations in the Legal Services Agreement false. 63. Plaintiffs relied on Jaburg Defendants' representations and on Jaburg Defendants' advice and entered into loan agreements with GFAH Lending, Jaburg Defendants and Gary Jaburg S
  10. 10. under terms that were unconscionable. 2, 64. Plaintiffs. relied on Jaburg Defendants' representations and on Jaburg Defendants' 3 advice and paid Jaburg Defendants approximately $250,000 in fees under the Legal Services 4! Agreement. S 6 65. Plaintiffs had a right to rely on Jaburg Defendants' representa:ions and the Legal 7 Services Agreement, because Jaburg Defendants are licensed Arizona attorneys. 8 66. As a direct and proximate result of Jaburg Defendants' representations, Plaintiffs 9 have been damaged in amounts of money paid in legal fees of $250,000 and other amounts to be 10 proven at trial. E 11 12 67. As a direct and proximate result of Defendants' conduct, Plaintiffs are entitled to 13 punitive damages in the amount of $25,000,000.00. U 14 68. As a direct and proximate result of Defendants', Plaintiffs are entitled to their costs 15 and attorneys' fees. Plaintiffs are also entitled to prejudgment and post-judgment interest as 16 17 provided by law. 18 19 SECOND CLAIM FOR RELIEF: BREACH OF CONT1ACT 20 (Against All Jaburg Defendants) 21 69. Plaintiffs incorporate by reference the allegations of paragraphs 1 through 22 68 above. 23 70. As described above the Legal Services Agreement executed by Jaburg Defendants 24 and Plaintiffs constitutes a valid contract. 25 26 71. Plaintiffs' monies paid to Jaburg Defendants constitute consideration. By making 27 those payments, Jaburg Defendants were obligated at all times to provide Plaintiffs with sound 28 legal advice for Plaintiffs' benefit and absent of any conflict of interest,. -10-
  11. 11. 2 3 4 Li 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 72. By failing to properly advise and represent Plaintiffs in the Bart Shea matter and the loan agreements with Gary Jaburg and GFAH Lending, Jaburg Defendanis breached the Legal Services Agreement. 73. Plaintiffs have suffered harm and are threatened with additional harm from Jaburg Defendants' breach. By receiving improper legal advice that benefitted Iaburg Defendants at Plaintiffs' expense, Plaintiffs lost those monies paid to .Jaburg Defendants and forewent opportunities to receive proper, objective legal advice. THIRD CLAIM FOR RELIEF: VIOLATION OF THE ARIZONA CONSUMER FRAUD ACT (A.R.S. §44-1521-1534) (Against All Defendants) 74. Plaintiffs incorporate by reference the allegations of paragraphs I through 73 above. 75. A.R.S. §44-1522(A) of the Consumer Fraud Act provides: The act use, or employment by any person of any deception, deceptive act or practice, fraud ,pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with the intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been mislead, deceived, or damaged thereby, is declared to be an unlawful practice. 76. As alleged herein, Defendants engaged in unlawful practice of the Consumer Fraud Act, A.R.S. §44-1521, et seq., in that they made false promises and used deception, deceptive practices, and/or misrepresentations in connection with the sale or advertisement of legal services and/or lending services. 77. Defendants further violated this Consumer Fraud Act by willfully disguising from clients and prospective clients that Jaburg & Wilk and GFAI-I Lending are separate distinct - 11 -
  12. 12. businesses, and that clients should not enter into transactions with GFAITI Lending without first 2 seeking independent legal advice from attorneys other than Jaburg Defendani:s. 3 78. In all mattes alleged herein, Plaintiffs have been harmed by Defendants violations 4 and Defendants acted willfully in violation of A.R.S. §44-1531(A). 5 6 7 FOURTH CLAIM FOR RELIEF: BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING 8 (Against Jaburg Defendants) 9 79. Plaintiffs incorporates by reference the allegations of paragraphs 1 through L 10 78 above. 11 12 80. Jaburg Defendants have a duty of good faith and fair dealing implied in every 13 contract to represent Plaintiffs properly in rendering legal services without a conflict of interest or s-I 14 acts that would otherwise destroy or injure the rights of the other party to receive the benefit of the 15 contract. 16 17 81. In the Legal Services Agreement, Jaburg Defendants misled Plaintiffs into 18 believing that Jaburg Defendants would represent and legally advise Plaintiffs without conflict of 19 interest. 20 82. Jaburg Defendants' misrepresentations in the Legal Services Agreement, constitute 21 a breach of this duty. 22 23 83. Jaburg Defendants' are required by the Legal Services Agreement to inform 24 Plaintiffs when a conflict of interest exists in Jaburg Defendants' representation of Plaintiffs. 25 Jaburg Defendants' breached its duty by failing to do so. 26 84. iaburg Defendants' further breached this duty by drafting the loan documents 27 28 between Plaintiffs, Gary Jaburg and GFAH Lending. - 12-
  13. 13. L U 85. Jaburg Defendants' further breached this duty by refusing to instruct Plaintiffs to seek an independent legal opinion before signing loan documents with Gsry Jaburg and GFAH Lending. 86. Jaburg Defendants' breach of their duty of good faith md fair dealing was intentional, deliberate, reckless and/or negligent. 87. Plaintiffs were damaged as a proximate result of Jaburg Defendants' breach of their duty of good faith and fair dealing, losing legal fees paid to Jaburg Defendants' of $250.000. FIFTH CLAIM FOR RELIEF: NEGLIGENCE (Against Jaburg Defendants) 88. Plaintiffs incorporate by reference the allegations of paragraphs I through 87 above. 89. Jaburg Defendants have a duty to represent clients under the standards that an Arizona attorney of similar ability and experience would in the legal community. 90. Jaburg Defendants breached its duty to Plaintiffs by failing to properly represent and advise Plaintiffs during the Bart Shea matter. 91. Jaburg Defendants further breached this duty to Plaintiff by failing represent Plaintiffs in the Bart Shea bankruptcy, but instead advising Plaintiffs' to borrower monies from GFAH Lending and Gary Jaburg. 92. Jaburg Defendants further breached this duty to Plaintiffs by withholding from Plaintiffs that GFA}{ Lending and Jaburg & Wilk were the same business. 93. Jaburg Defendants' breaches of duty caused Plaintiff to suffer serious and ongoing damages, including lost legal for of $250,000 financial harm to credit and extensive anxiety and emotional distress. - 13 -
  14. 14. SIXTH CLAIM FOR RELIEF: INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS (Against All Defendants) 94. Plaintiffs incorporate by reference the allegations of paragrapIs 1 through 93 above. 95. Defendants interacted with and represented Plaintiffs' in a manner that caused emotional distress by, intera alia and as more fully set Out above by: 1) engaging in a scheme where Plaintiffs were legally advised to borrower money from Defendants; 2) when Plaintiffs incurred additional fmancial stress, Defendants advised Plaintiffs to bind themselves to unconscionable loan terms favorable to Defendants; 3) Defendants refused 10 instruct Plaintiffs to seek independent legal advice or a neutral lender; 4) when Plaintiffs discovered what Defendants had done, Defendants threaten Plaintiffs with civil litigation and sanctions, if Plaintiffs publically - raised their concerns; and 5) filed the GFAH Lawsuit, withholding from the Court that Jaburg Defendants were the attorneys for Plaintiffs and legally-advised them to enter into the loan agreements with GFAH Lending and drafted the loan documents that Plain:iffs entered into with GFAH Lending. 96. Defendants acted intentionally, recklessly, knowingly and/or negligently in causing Plaintiffs emotional distress, or Defendants knew or should have known that their actions would result in Plaintiffs suffering serious emotional distress. 97. Defendants' conduct was extreme and outrageous. 98. As a direct and proximate result of Defendants' intentional, reckless and/or negligent infliction of emotional distress, Plaintiffs have suffered severe humiliation, distress, depression and anxiety. The loss of their financial well-being, further harm to their professional reputations and the threatened loss of the Property are the sources of serious emotional distress. 1 2 3 4 5 6 7 8 9 L 10 11 12 13 U 14 15 16 17 18 19, 20 21 22, 23 24 25 26 27 28 - 14 -
  15. 15. 99. As a result, Defendants are liable to Plaintiffs for actual and punitive damages. 2 SEVENTH CLAIM FOR RELIEF: 3 BREACH OF FIDUCIARY DUTY 4 (Against Jaburg Defendants) 5 100. Plaintiffs incorporate by reference the allegations of paragraphs 1 through 6 101 above. 7 101. Jaburg Defendants are all licensed attorneys, practicing law in Arizona. 8 9 102. Jaburg Defendants were under a continuing duty to Plaintiffs to advise Plaintiffs L 10 properly and avoid giving advice to Plaintiffs that presented a potential conflict with Jaburg ii Defendants. L 12 103. Jaburg Defendants were aware that advising Plaintiffs to borrower money from - 13 0 14 GFAH Lending to finance a transaction with Bart Shea, presented a conflict of interest, benefitting 15 GFAH Lending at Plaintiffs' expense. a) 16 104. Plaintiffs paid Jaburg Defendants for Jaburg Defendants' legal. advice that Plaintiffs 17 should borrower money with GFAH Lending. 18 105. Jaburg Defendants further breached this duty by charging Plaintiffs legal fees to 19 20 draft the loan documents between GFAH Lending and Plaintiffs. 21 106. Jaburg Defendants further breached this duty by declining to send Plaintiffs to 22 independent legal counsel, prior to Plaintiffs entering into loan agreements with GFAH Lending. 23 107. As a result of Jaburg Defendants' breaches, Plaintiffs have suffered damages in the 24 25 amount of $250,000, equally legal fees paid to be improperly-advised and legally advised to enter 26 into a business transaction that benefitted Jaburg Defendants and GFAI-1 Lending. 27 28 - 15 -
  16. 16. EIGHTH CLAIM FOR RELIEF: BREACH OF NEGLIGENT MISREPRESENTATION (Against Jaburg Defendants) 108. Plaintiffs incorporate by reference the allegations of paragraphs I through 107 above. 109. Jaburg Defendants provided Plaintiffs with false or incorrect information, or omitted or failed to disclose material information to Plaintiffs, stating: 1) Jaburg Defendants and GEAR Lending are separate business entities; 2) GFAT-I Lending should nDt be operating within Jaburg Defendants' office; 3) GFAH Lending should not have the same contact information as Jaburg Defendants; 4) Plaintiffs should not borrowers monies from entities owned and controlled by Defendants; 5) Plaintiffs must first seek independent legal advice from Arizona attorneys other than Jaburg Defendants, prior into entering into loan agreements with Jabrg Defendants and/or GFAI-I Lending; 6) GFAH is not properly licensed and registered with the Arizona Corporations Commission and/or the Arizona Department of Financial Institutions; and 7) Jaburg Defendants owning and operating GFAH Lending is generally disfavored is that Ari2.ona legal community; and 8) failing to warning Plaintiffs not to lend money to a party Jaburg Defendants knew or had reason to know was insolvent. 110. Jaburg Defendants intended Plaintiffs to rely on Jaburg Defendants legal advice, rely on information provided or withheld and Jaburg Defendants provided/withheld the information for that purpose. 111. Jaburg Defendants failed to exercise reasonable care or competence in obtaining or communicating the information. 112. Plaintiffs relied on all information/omissions. 113. Plaintiffs reliance on the information was justified, because Jaburg Defendants were I 2 3 4 5 6 7 8 9 L 10 11 12 13 U 14 - 15 4) 16 18 19 20 21 22 23 24 25 26 27 28 -16-
  17. 17. 2 3 4 5 6 7 8 9 c_ 10 0 . 11 1.i 12 . 14 L 16 17 19 20 21 22 23 24 25 26 27 28 Plaintiffs' attorneys. 114. As a result, Plaintiffs were damaged in amount of at least $250000 in legal fees paid the Jaburg Defendants, and other amount to be proven at trial. PRAYER FOR RELIEF WHEREFORE, Plaintiffs prays for judgment against Defendants as follows: A. Award Plaintiff his actual of $250,000 and punitive damages against Defendants in the amount of not less than $25,000..000.00, as to be determined at trial on each of Plaintiffs' claims for fraud, breach of contract, violation of the Arizona Consumer Fraud Act, breach of the covenant of good faith and fair dealing, negligence, intentional infliction of emotional distress, breach of fiduciay duty and negligent misrepresentation; B. Direct Defendants to pay the costs of this proceeding, including Plaintiffs' attorneys' fees pursuant to A.R.S. § 12-341; C. Direct Defendants to pay the costs of this proceeding, including Plaintiffs' attorneys' fees pursuant to A.R.S. § 12-341.01 and the parties' agreements. D. For pre-judgment and post-judgment interest at the rate established by the parties agreements and/or the statutory rule; E. For such other and further relief as the Court deems equitable, just and proper. - 17 -
  18. 18. I 2 3 4 .5 6 I- a) 7 8 9 10 11 12 13 14 15 16 17 RESPECTFULLY SUBMITTED thils day of March, 2011 THE ANDRICH LAW FIRM, P.C. By:_____ Devin Andrich, Esq. The Andrich Law Firm, P.C. 4538 North Fortieth Street Phoenix, Arizona 8501 Attorneys for Plaintiffs - 18 - 18 19 20 21 22 23 24 25 26 27 28
  19. 19. VERIFICATION STATE OF ARIZONA ) )Ss- County of Maricopa ) Arthur Reichsfeld, sworn upon his oath, deposes and declares as follows: 1. lam an adult, over the age of2l years old. 2. I am the Plaintiff named in the Complaint to which this Verification is attached. 4. I have read the Complaint, and the contents thereof and exhibits thereto are true, correct, and accurate to the best of my knowledge, except for those matters stated therein based upon information and belief, and as to those matters, I believe them to be true. 5. Each of the foregoing statements is based upon by my personal knowledge, including knowledge derived from the business records maintained by me. If called to testify, I will testify as stated in this Verification. DATED the /cday of March, 2011. Arthur Reichsfeli The foregoing Verification was acknowledged before me this 5day of March, 2011, by Arthur Reichsfeld. Notary Public 2 3 4 5 6 7 8 9 L 10 11 12 13 U 14 15! 43) E- 16 17 18 19 20 21 22 23 24 25 26 27 28 My commission expires:
  20. 20. VERIFICATION STATE OF ARIZONA ) )ss. County of Maricopa ) Colleen Reichsfeld, sworn upon his oath, deposes and declarts as follows: 1. I am an adult, over the age of 21 years old. 2. I am the Plaintiff named in the Complaint to which this Verification is attached. 4. I have read the Complaint, and the contents thereof and exhibits thereto are true, correct, and accurate to the best of my knowledge, except for those matters stated therein based upon information and belief, and as to those matters, I believe them to be true. 5. Each of the foregoing statements is based upon by my personal knowledge, including knowledge derived from the business records maintained by me. If called to testify, I will testify as stated in this Verification. DATED the day of March, 2011. Colleen Reichsftld The foregoing Verification was acknowledged before me this /S'" -day of March, 2011, by Colleen Reichsfeld. Notary Public My commission expires: flL1LJ -, 10 11 12 . 14 16 17 18 19 20 21 22 23 24 25 2 2 2

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