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DLA PIPER LLP (US) SAN DI EGO

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-1-Case no: 3:14-bk-03142-CL11 AP No:14-90082-CL

DEFENDANTS’ ANSWER; AFFIRMATIVE DEFENSES; COUNTER-CLAIMS

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NOAH A. KATSELL (Bar No. 217090)FRANK T. PEPLER (Bar No. 100070) MATTHEW B. DART (Bar No. 216429) ASHLEIGH L. ANGELETTI (Bar No. 265392) DLA PIPER LLP (US) 401 B Street, Suite 1700 San Diego, CA 92101-4297 Tel: 619.699.2700 Fax: 619.699.2701

Attorneys for Defendants SUMMA CONSULTING, LLC, LORRAINE W. TODD, SANFORD R. CLIMAN, MATTHEW GARRETT, READY MADE PICTURES, LLC, SIV SORRENTO VALLEY INVESTMENTS, LLC, TGG MANAGEMENT COMPANY, INC.

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF CALIFORNIA

In re:

CHRISTOPHER JOHN HAMILTON and ELIZABETH LEIGH TESOLIN aka ELIZABETH TESOLIN HAMILTON Debtors.

CASE NO. 3:14-bk-03142-CL11 Chapter 11 Adv. Proc. No. 14-90082-CL

DEFENDANTS’ ANSWER; AFFIRMATIVE DEFENSES; COUNTER-CLAIMS FOR:

1. FRAUD 2. BREACH OF FIDUCIARY DUTIES 3. BREACH OF CONTRACT 4. BREACH OF CONTRACT 5. BREACH OF COVENANT OF

GOOD FAITH AND FAIR DEALING

6. CONVERSION 7. SECURITIES FRAUD 8. INTENTIONAL INTERFERENCE

WITH PROSPECTIVE ECONOMIC ADVANTAGE

9. INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS

10. INDUCING BREACH OF CONTRACT

CHRISTOPHER HAMILTON,

Plaintiff, v. SUMMA CONSULTING, LLC, a California limited liability company; LORI M. TODD, an individual; SANFORD R. CLIMAN, an individual; MATTHEW GARRETT, an individual; READY MADE PICTURES, a limited liability company, SIV SORRENTO VALLEY INVESTMENTS, LLC, a limited liability company; TGG MANAGEMENT COMPANY, INC., a California Corporation, Defendants.

CAPTION CONTINUED ON NEXT PAGE

Case 14-90082-CL Filed 05/16/14 Entered 05/16/14 21:03:35 Doc 3 Pg. 1 of 45


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SUMMA CONSULTING, LLC, a California limited liability company, READY MADE PICTURES, LLC, a California limited liability company, SIV SORRENTO VALLEY INVESTMENTS, LLC, a Delaware limited liability company,

Counter-Claimants,

v.

CHRISTOPHER HAMILTON, an individual, ELIZABETH TESOLIN HAMILTON

Counter-Defendants.

11. NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS

12. EQUITABLE INDEMNITY 13. IMPLIED CONTRACTUAL

INDEMNITY 14. EXCEPTION TO DISCHARGE

PURSUANT TO 11 U.S.C. § 523(A)(2)(A)

15. EXCEPTION TO DISCHARGE PURSUANT TO 11 U.S.C. § 523(A)(2)(B)

16. EXCEPTION TO DISCHARGE PURSUANT TO 11 U.S.C. § 523(A)(4)

17. EXCEPTION TO DISCHARGE PURSUANT TO 11 U.S.C. § 523(A)(6)

DEFENDANTS’ ANSWER

Defendants Summa Consulting, LLC (“Summa”), Lorraine W. Todd, Sanford R. Climan,

Matthew Garrett, Ready Made Pictures, LLC (“Ready Made”), SIV Sorrento Valley Investments,

LLC (“SIV”), and TGG Management Company, Inc. (“TGG”) (collectively, “Defendants”)

hereby answer Plaintiff’s Complaint. Paragraph numbers in this document correspond to the

paragraph numbers of the Complaint and respond to all allegations of the corresponding

Complaint paragraph, up to the Affirmative Defenses section of this document. Within each

paragraph, if an allegation is not explicitly admitted, it is denied.

1. In response to Paragraph 1, Defendants admit Mr. Hamilton’s employment with

Summa was terminated. Except as expressly admitted, Defendants deny the allegations in

Paragraph 1.

2. Defendants admit the allegations in Paragraph 2.


4. In response to Paragraph 4, Defendants admit that Ms. Todd is a resident of Los

Angeles County, California. Defendants also admit that Ms. Todd is an officer of Summa.

Except as expressly admitted, Defendants deny the allegations in Paragraph 4.



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5. In response to Paragraph 5, Defendants admit that Mr. Climan is a resident of Los

Angeles County, California. Except as expressly admitted, Defendants deny the allegations in

Paragraph 5.

6. In response to Paragraph 6, Defendants admit that Mr. Garrett is a resident of San

Diego County, California. Defendants also admit that Mr. Garrett is Chief Executive Officer of

TGG. Except as expressly admitted, Defendants deny the allegations in Paragraph 6.

7. In response to Paragraph 7, Defendants admit that Ready Made is a limited

liability company. Defendants also admit that Ready Made is a manager of Summa. Except as

expressly admitted, Defendants deny the allegations in Paragraph 7.

8. In response to Paragraph 8, Defendants admit that SIV is a limited liability

company. Defendants also admit that SIV is a manager of Summa. Except as expressly admitted,

Defendants deny the allegations in Paragraph 8.

9. In response to Paragraph 9, Defendants admit that TGG is a California

corporation. Defendants also admit that Mr. Garrett is Chief Executive Officer of TGG. Except

as expressly admitted, Defendants deny the allegations in Paragraph 9.

10. Defendants lack knowledge or information sufficient to form a belief about the

truth of the allegations in Paragraph 10, and, on that basis, deny them.

11. In response to Paragraph 11, Defendants admit that Mr. Hamilton founded Summa

in October 2011. Defendants also admit that he was employed by Summa as its President and

Chief Executive Officer until approximately February 28, 2014, at which time his employment

was terminated. Defendants admit that Mr. Hamilton owned 100% of the membership interests in

Summa prior to selling ownership interest to Ready Made and SIV. Except as expressly

admitted, Defendants deny the allegations in Paragraph 11.


13. Defendants deny the allegations in Paragraph 13.






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22. In response to Paragraph 22, Defendants admit that they presented Mr. Hamilton

with a written employment agreement, the contents of which speak for themselves. Except as


23. In response to Paragraph 23, Defendants admit that TGG was involved in the

accounting functions of Summa at the time referenced in this Paragraph. Except as expressly

admitted, Defendants deny the allegations in Paragraph 23.

24. In response to Paragraph 24, Defendants admit that Mr. Hamilton complained to

Defendants about TGG. Except as expressly admitted, Defendants deny the allegations in

Paragraph 24.



27. In response to Paragraph 27, Defendants admit that Ms. Todd and Mr. Climan met

with Mr. Hamilton. Defendants further admit that Mr. Hamilton made certain allegations.

Except as expressly admitted, Defendants deny the allegations in Paragraph 27.

28. In response to Paragraph 28, Defendants admit a meeting occurred with Mr.

Hamilton. Defendants also admit that Ms. Todd became Summa’s new Chief Operating Officer.

Defendants further admit that Summa opened a new bank account at Regents Bank. Except as



30. In response to Paragraph 30, Defendants admit that Ms. Todd requested that Mr.

Hamilton sign a check transferring funds from Summa’s Union Bank account to the Regents



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Bank account. Defendants also admit Mr. Hamilton refused to sign the check to transfer Summa

funds. Except as expressly admitted, Defendants deny the allegations in Paragraph 30.

31. Paragraph 31 is, at least in part, a legal conclusion and does not require an

admission or denial. In response to Paragraph 31, Defendants admit that Mr. Hamilton signed a

written employment agreement, the contents of which speak for themselves. Except as expressly

admitted, Defendants deny the allegations in Paragraph 31, including those portions that are legal

conclusions to the extent an admission or denial is required.

32. In response to Paragraph 32, Defendants admit Mr. Hamilton sent an e-mail

regarding hiring an independent forensic accountant. Defendants lack knowledge or information

sufficient to form a belief about the truth of the remaining allegations in Paragraph 31, and, on

that basis, deny the remaining allegations in Paragraph 32.


34. In response to Paragraph 34, Defendants admit that Mr. Hamilton’s employment

was terminated on or about February 28, 2014. Except as expressly admitted, Defendants deny

the allegations in Paragraph 34.



36. In response to Paragraph 36, Defendants admit a meeting was held on March 9,

2014. Except as expressly admitted, Defendants deny the allegations in Paragraph 36.


38. In response to Paragraph 38, Defendants admit Mr. Hamilton has intentionally

attempted to damage Summa’s goodwill. Except as expressly admitted, Defendants deny the

allegations in Paragraph 38.

PLAINTIFF’S FIRST CAUSE OF ACTION

39. The allegations in Paragraph 39 are legal conclusions and do not require an

admission or denial. To the extent an admission or denial is required, Defendants deny the




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PLAINTIFF’S SECOND CAUSE OF ACTION









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PLAINTIFF’S THIRD CAUSE OF ACTION


admission or denial. To the extent an admission or denial is required, Defendants Ready Made

and SIV deny the allegations in Paragraph 54.












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PLAINTIFF’S FOURTH CAUSE OF ACTION


admission or denial. To the extent an admission or denial is required, Defendant Summa denies




















PLAINTIFF’S FIFTH CAUSE OF ACTION






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PLAINTIFF’S SIXTH CAUSE OF ACTION


admission or denial. To the extent an admission or denial is required, Defendants Todd, Climan,

Garrett, Ready Made, SIV and TGG deny the allegations in Paragraph 71.












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PLAINTIFF’S SEVENTH CAUSE OF ACTION





















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PLAINTIFF’S EIGHTH CAUSE OF ACTION






























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PLAINTIFF’S NINTH CAUSE OF ACTION
























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PLAINTIFF’S TENTH CAUSE OF ACTION






























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PLAINTIFF’S ELEVENTH CAUSE OF ACTION


admission or denial. To the extent an admission or denial is required, Defendants Summa, Ready

Made and SIV deny the allegations in Paragraph 110.







PLAINTIFF’S TWELFTH CAUSE OF ACTION


















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PLAINTIFF’S PRAYER FOR RELIEF

1. The relief requested in Paragraph 1 of Plaintiff’s prayer for relief does not require

a response from Defendants. To the extent an admission or denial is required, Defendants deny

that Plaintiff is entitled to the requested relief.






















AFFIRMATIVE DEFENSES

Defendants plead the following affirmative defenses on information and belief. To the

extent any of these defenses express a denial of any element of a claim against Defendants, that



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expression does not indicate that Plaintiff is relieved of his burden to prove all elements of such

claim.

FIRST AFFIRMATIVE DEFENSE

Each cause of action fails to state a claim for which relief may be granted1.

SECOND AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred by, or the damages allegedly sustained by Plaintiff, are

reduced by contributory and/or comparative fault.

THIRD AFFIRMATIVE DEFENSE

Each cause of action is barred by the doctrine of laches, waiver, estoppel, relinquishment,

release and/or abandonment.

FOURTH AFFIRMATIVE DEFENSE

Plaintiff failed to exercise reasonable diligence and care to mitigate his alleged damages.

FIFTH AFFIRMATIVE DEFENSE

Defendant Summa’s termination of Plaintiff was based on fair and honest reasons,

regulated by good faith on part of the Defendants, that were not trivial, arbitrary or capricious,

unrelated to business needs or goals, or pretextual.

SIXTH AFFIRMATIVE DEFENSE

The written agreement between the parties was intended to be the full agreement between

the parties, and Plaintiff cannot present any evidence not in writing to establish any terms of the

contract not in the written agreement.

SEVENTH AFFIRMATIVE DEFENSE

Plaintiff failed to allege fraud with particularity as required by Fed. R. Bankr. P. 7009;

Fed. R. Civ. P. 9(b).

EIGHTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred to the extent Plaintiff failed to join necessary or indispensable

parties.

1 Defendants TGG, Climan, Todd and Garrett are not parties to the written agreement.



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NINTH AFFIRMATIVE DEFENSE

No relief may be obtained under the Complaint by reason of the Plaintiff’s failure to do

equity in the matters alleged in the Complaint.

TENTH AFFIRMATIVE DEFENSE

As a result of the acts and omissions in the matters relevant to this Complaint, Plaintiff has

unclean hands and is therefore barred from asserting claims against Defendants.

ELEVENTH AFFIRMATIVE DEFENSE

The statements or representations made by Defendants alleged in the Complaint were true

when made.

TWELFTH AFFIRMATIVE DEFENSE

Defendants’ conduct was at all times in good faith, reasonable, diligent, lawful, justified,

and/or privileged under the circumstances.

THIRTEENTH AFFIRMATIVE DEFENSE

Applicable Defendants performed all duties owed under the written agreement other than

duties which were prevented or excused, and therefore never breached the written agreement.

FOURTEENTH AFFIRMATIVE DEFENSE

Defendants assert that the Plaintiff failed to comply with the terms of the written

agreement and therefore breached the agreement.

FIFTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred by the statute of limitations.

SIXTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s claims as to oral contracts are barred by the Statute of Frauds.

SEVENTEENTH AFFIRMATIVE DEFENSE

Without conceding that any act or acts by Defendants caused damage to Plaintiff in any

respect, Defendants are entitled to an offset and recoup against any judgment that may be entered

for Plaintiff of all obligations of Plaintiff owing to Defendants.

EIGHTEENTH AFFIRMATIVE DEFENSE

The causes of action in the Complaint are barred because Plaintiff would be unjustly



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enriched if he were to prevail.

NINETEENTH AFFIRMATIVE DEFENSE

Plaintiff is not entitled to any relief on his claims because Plaintiff engaged in intentional

misrepresentation, concealment, false promise, or negligent misrepresentation leading to the

damages alleged in the Complaint.

TWENTIETH AFFIRMATIVE DEFENSE

Defendants reserve all rights to amend and supplement their answer and affirmative

defenses following the conclusion of discovery.

PRAYER FOR RELIEF ON PLAINTIFF’S COMPLAINT AND DEFENDANTS’

AFFIRMATIVE DEFENSES

WHEREFORE, Defendants respectfully request:

1. That the Complaint be dismissed in its entirety with prejudice and that all relief by

Plaintiff be denied with prejudice;

2. That the Court enter judgment in favor of Defendants;

3. That this Court award Defendants attorneys’ fees, costs and other fees to which

Defendants may be justly entitled and that the Court deems just and proper.



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COUNTER-CLAIMANTS’ COUNTER-CLAIMS AGAINST COUNTER-DEFENDANTS

I. INTRODUCTION

1. Summa cum laude is a Latin phrase meaning “with highest honor.” Unlike the

business he named – Summa – Christopher Hamilton is not a man of highest honor. He is a man

given to fraud, deceit and betrayal. The story begins back in 2011. At that time, Mr. Hamilton

worked for Elite of Los Angeles, Inc., providing SAT preparation and tutoring services to

students in San Diego, California. He had worked for Elite for several years, gaining in-depth

access to and understanding of how Elite’s business operated. But Hamilton was ambitious and

felt that he was not getting the remuneration and the credit he deserved—he was a self-

proclaimed guru to his students. Certain that he could capitalize on his own greatness, Hamilton

left Elite with no notice whatsoever to start Summa. To all appearances, he had found success.

Then, in April 2013, his success story unwinds. After a three week trial, a jury of Mr. Hamilton’s

peers found that he breached his fiduciary duties to Elite and that he willfully misappropriated

Elite’s trade secrets to start Summa. The jury awarded more than $2 million in damages,

including punitive damages, against Mr. Hamilton—personally—and found that his wife,

Elizabeth Hamilton, aided and abetted him and was also liable to Elite.

2. After entry of a judgment against him, Hamilton was desperate. In the fall of

2013, to keep Summa afloat, he turned to potential outside sources to prop up Summa and to post

a very expensive bond to cover the judgment against Summa on appeal. In Defendants Ready

Made Pictures and SIV Sorrento Valley Investments he found new investors. These investors

were not private-equity businesses looking for an opportunity. The principals of Ready Made and

SIV, Sandy Climan, Lori Todd and Matthew Garrett, were Mr. Hamilton’s friends, supporters,

and some of their children had been tutored by Mr. Hamilton. They were trying to help their

friend in a time of need. But after they made the critical investments that saved Summa, they

were betrayed by Hamilton, and it was revealed he was not the man he appeared to be.

3. The new owners, based on the large investment in Summa, naturally were given

control over Summa, as was their contractual right under the amended operating agreement.

Hamilton remained the CEO and was given leeway to carry on the business. However, Mr.



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Hamilton acted as if he did not have a new ownership group in the Company and felt

threatened—he was convinced his fiefdom would be compromised by a group of outsiders

looking under the hood.

4. During the winter of 2013 and into early 2014, Hamilton’s web of lies unraveled.

Unlike the concocted story told in his complaint about the alleged fraud perpetrated against him,

it was Hamilton’s fraudulent activities that rose to the surface. It was discovered over the course

of several months that Hamilton had misled and betrayed the new investors about the status of the

Elite lawsuit, an additional pending motion for Elite’s recovery of attorneys’ fees totaling over

$1.8 million, Summa’s cash flow, the amount of Summa’s liabilities, and the overall financial

health of Summa. It even came out that Hamilton apparently offered his own mother and

possibly others an equity interest in Summa with full knowledge that there was no remaining

equity to offer. Feeling the pressure of exposure, Hamilton dug in his heels. He resisted and

concealed the accounting problems at the Company, he resisted and concealed his poor treatment

of Summa employees. He asked employees to lie for him and cover up his failings. When they

refused, he told the lies himself. He was backed into a corner and lashed out by failing to provide

business-critical information to the new investors. Summa had no choice but to terminate his

employment. Mr. Hamilton has since gone on a litigious and public campaign to blame the new

investors for his own folly, or failing that, to destroy the business of Summa, hurtling fantasy-

based accusations with indignation and enlisting unknowing, and trusting, parents into his

scheme. As is discussed in more detail below, Mr. Hamilton’s story is self-serving and false.

II. PARTIES

5. Defendant and Counter-Claimant Summa Consulting, LLC is a California Limited

Liability Company with its principal place of business in California.

6. Defendant and Counter-Claimant Ready Made Pictures, LLC is a California

Limited Liability Company with its principal place of business in California.

7. Defendant and Counter-Claimant SIV Sorrento Valley Investments, LLC is a

Delaware Limited Liability Company with its principal place of business in California.

8. Plaintiff and Counter-Defendant Chris Hamilton is a resident of San Diego



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County.

9. Counter-Defendant Elizabeth Tesolin Hamilton is the wife of Chris Hamilton, and

is also a resident of San Diego County.

III. ALLEGATIONS

A. Chris Hamilton is Found Liable for Misappropriation of Trade Secrets.

10. Chris Hamilton formerly worked for Elite of Los Angeles (“Elite”) providing SAT

tutoring services.

11. In 2011, while still employed by Elite, he formed Summa Consulting, LLC to

directly compete with Elite, and recruited key Elite employees to leave and join Summa. Until he

sold the business in November 2013, as set forth below, Chris Hamilton was the sole shareholder

of Summa.

12. On or around November 18, 2011, Chris Hamilton, his wife Elizabeth Hamilton,

Summa, and certain former Elite employees who had joined Summa at Chris’ urging, were sued

by Elite and its affiliate San Diego Testing Services for misappropriation of SAT preparation-

related trade secrets (the “Trade Secret Action”).

13. The case was tried to a jury verdict in April 2013, and Chris Hamilton was found

liable for breach of fiduciary duty, breach of duty of loyalty, intentional interference with

prospective economic advantage, and willful misappropriation of trade secrets. The jury returned

a $2 million verdict against Chris Hamilton individually, and his wife Elizabeth Hamilton was

found liable for aiding and abetting her husband’s illegal conduct.

14. Based on Chris Hamilton’s actions as the CEO and sole Member of Summa,

Summa was also found liable for misappropriation of trade secrets in the Trade Secret Action,

and a $1 million judgment was entered against it.

B. Chris Hamilton Fraudulently Induces the New Owners to Invest in Summa.

15. Following the verdict and judgment, Chris Hamilton was in desperate need of

investors to save Summa as an ongoing concern. The plaintiffs in the Trade Secret Action were

soon to begin collecting on their judgments against Summa and Chris Hamilton, and seizure of

Summa itself was an imminent possibility. Chris Hamilton approached and entered into



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discussions with SIV Sorrento Valley Investments LLC and Ready Made Pictures, LLC

(collectively, the “New Owners”) to invest in Summa in exchange for majority equity interest

(85%) and full operational, financial and managerial control of the company.

16. In order to induce the New Owners to invest in Summa, Chris Hamilton

fraudulently concealed and misrepresented material facts. Those fraudulent facts include, but are

not limited to, the following:

a. Falsely representing to the New Owners that Summa was not liable for

plaintiffs’ legal fees in the Trade Secret Action, totaling in excess of $1.8 million, because

“Elite’s lawyers missed their deadlines”;

b. Falsely representing to the New Owners that Summa had a robust cash

flow when in reality it was literally depleted of all operating funds and unable to even make

payroll until the New Owners’ investments were received;

c. Concealing and misrepresenting the amount of discounts provided by

Summa to customers thereby materially overstating company profits;

d. Concealing approximately $262,000 in accounts payable consisting of legal

fees owed by Summa to defendants’ trial counsel in the Trade Secret Action;

e. Falsely representing that the Summa website was an asset owned by the

company, when in reality Chris Hamilton’s wife Elizabeth Hamilton claimed to own it herself and

had sole control of the website;

f. Falsely promising that he would cooperate in turning over all company

accounting functions to TGG Accounting;

g. Concealing the wrongful and deceptive accounting practices he had

installed at Summa which deliberately obfuscated the source of revenues, payment of invoices,

and deposits of money, all of which prevented the proper balancing of Summa’s books;

h. Concealing the fact that certain aspects of Summa’s business operations

were in disarray and could lead to potential violations of various codes and laws;

i. Concealing that he had made promises to various employees that they

would receive raises and/or promotions thus resulting in understated overhead and in later claims



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made by certain employees against the company;

j. Concealing that he had taken large cash disbursements from Summa

company funds resulting in Chris Hamilton holding a significant negative capital account of

approximately $200,000.

17. Based on Chris Hamilton’s express representations, and unaware of Chris

Hamilton’s concealment of material facts, the New Owners, under intense time pressure, agreed

to invest in Summa.

18. The New Owners agreed in writing to make capital contributions in exchange for

equity ownership interests of 28.33% (SIV Sorrento Valley Investments, LLC) and 56.66%

(Ready Made Pictures, LLC) in Summa. Chris Hamilton retained 13% equity, and two other

employees of Summa – Karl Hagan and Andrew Chung – owned approximately 2% collectively.

No other person or entity acquired any equity interest in Summa.

19. To memorialize the terms of their investment and management of the company

going forward, in November 2013, the New Owners, Chris Hamilton, Karl Hagan and Andrew

Chung entered into an Amended and Restated Operating Agreement for Summa Consulting, LLC

(the “Amended Operating Agreement”). The Amended Operating Agreement is attached hereto

as Ex. 1. Exhibit A to the Amended Operating Agreement sets forth the Member’s Capital

Contribution and the corresponding Number of Units, which collectively total 100% of the

company.

20. The Amended Operating Agreement at Paragraph 6.2.1 provided that the New

Owners would constitute the Board of Managers for the company.

21. The Amended Operating Agreement specifically provides that the New Owners, in

their capacity as the Board of Managers, would be vested with full control:

6.1.1 Exclusive Management by Board of Managers. The business, property, and affairs

of the Company shall be managed exclusively by the Board of Managers acting in their sole and

absolute discretion.

22. The Amended Operating Agreement further provided that the New Owners were

to be the only voting Members of Summa. Chris Hamilton, Karl Hagan and Andrew Chung



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would be non-voting Members without any right to control or manage the company.

23. The foregoing, and the remaining terms set forth in the Amended Operating

Agreement, reflect the material terms of the negotiated agreement reached by Chris Hamilton to

sell majority interest and full control in Summa to the New Owners.

C. The New Owners and Diana Hamilton Invest Funds To Perfect Summa’s

Appeal.

24. As of October 2013, Summa was facing a $1 million judgment against it arising

from the Trade Secret Action. Summa intended to appeal the judgment against it but required a

$1.5 million appeal bond to perfect the appeal, stay the underlying case, and thus stay plaintiffs’

ability to collect on the judgment during the pendency of the appeal.

25. In order to obtain an appeal bond for Summa, Ready Made Pictures, LLC, SIV

Sorrento Valley Investments, LLC, and Diana Hamilton (collectively “the Appeal Bond

Investors”) each agreed to contribute $500,000. Diana Hamilton is Chris Hamilton’s mother.

26. Each of the Appeal Bond Investors made the same deal with Summa: provide

capital for the appeal bond in exchange for (1) a $50,000 initial payment, and (2) $50,000 on the

anniversary of their contribution if the appeal bond had been exonerated (or a pro rata portion

thereof if exonerated before the anniversary). None of the Appeal Bond Investors received equity

in Summa in exchange for their provision of funds for the bond, nor could they because, inter

alia, 100% of Summa equity was accounted for by the Amended Operating Agreement.

27. The contract between Diana Hamilton and Summa setting forth the above terms

related to the appeal bond, dated November 8, 2013, is attached hereto as Ex. 2. That written

contract sets forth all of the material terms of the agreement, including collateral amount, initial

fee rights, subsequent payment rights, Chris Hamilton’s commitment to personally guarantee

repayment of the collateral, and a fee provision in the event of litigation. The contract contains

no terms, whether express or implied, that would provide the investor with equity in Summa.

28. Pursuant to that contract, Summa tendered a $50,000 check to Diana Hamilton

representing the initial payment. Diana Hamilton did not immediately attempt to cash that check.

At the time her son, Chris Hamilton, was the sole intermediary between Diana Hamilton and



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Summa and any and all communication between Diana Hamilton and Summa was through Chris

Hamilton. Chris Hamilton informed the New Owners that his mother, Diana Hamilton, had

voluntarily decided to hold, and not cash, the $50,000 initial payment check to support Summa in

its cash needs.

29. Summa first received a request from Diana Hamilton to re-issue the $50,000 check

in April 2014. Summa promptly did so and Diana Hamilton has cashed that check. Diana

Hamilton is thus not owed any further funds from Summa until the anniversary of her cash

collateral agreement in November 2014, or upon the exoneration of the bond.

30. On or about May 6, 2014, Diana Hamilton and her husband John Hamilton sued

Summa in the Superior Court for the County of San Diego, Case No. 2014-14295, alleging, inter

alia, that the written contract for her provision of funds for the appeal bond also (silently)

provides her the right to a 28.33% equity share in Summa (the “Hamilton Appeal Bond Action”).

That claim is demonstrably false and Summa intends to vigorously defend that lawsuit. Chris

Hamilton was the only intermediary between Summa and his mother Diana with respect to her

potential investment in the appeal bond. In the event that Chris Hamilton secretly made that

promise to his mother, whether prior to the execution of the Amended Operating Agreement, or

after, Summa and the New Owners are entitled to equitable indemnity from Chris Hamilton for

any harm suffered by them as a result of that lawsuit.

D. Chris Hamilton’s Wrongful, Illegal and Deceitful Actions Result in His

Termination as CEO of Summa.

31. When the New Owners acquired the company they agreed that Chris Hamilton

would remain CEO of Summa, subject to the terms of an employment contract that provided he

would be an at-will employee, and was to have no operating or management authority without the

fully-informed consent of the New Owners. Chris Hamilton’s Executive Employment Agreement

is attached hereto as Ex. 3. In that regard, the New Owners worked cooperatively with Mr.

Hamilton and, like him, sought for Summa to succeed as a business. As explained above, the

New Owners had known Mr. Hamilton as a friend and as a counselor at Summa and had put their

faith in him. After all, the New Owners had made a large investment on short notice, believing



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that Mr. Hamilton would honor his agreements and that he had acted truthfully in his

representation to them about the investment.

32. The Executive Employment Agreement was heavily negotiated, with Chris

Hamilton and his personal attorney thoroughly reviewing and editing the document before

finalizing. Chris Hamilton agreed to sign the Executive Employment Agreement as part of the

sale of the majority interest in Summa to the New Owners.

33. From November 2013, until his termination in late February 2014, subject to the

terms and limitations of the Executive Employment Agreement and the Amended Operating

Agreement, Chris Hamilton held the title of CEO of Summa.

34. However, once the New Owners’ investments were in place and the Amended

Operating Agreement was signed, Chris Hamilton immediately began to breach the terms of the

agreement with respect to operational and managerial control. Chris Hamilton, acting as CEO,

failed to inform the New Owners (as Managers and Members of the company) of material

information regarding financial and legal matters. Chris Hamilton prevented the New Owners

from making informed decisions regarding the operations of Summa, strategy going forward,

employment decisions, repayment of obligations, lease issues, and other matters pertaining to the

operations and viability of Summa.

35. In short, Chris Hamilton acted as if he was still CEO and the sole member of

Summa at it existed prior to the New Owners—completely ignoring the fact that the New Owners

were now part of the business. His actions were specifically prohibited by the Amended

Operating Agreement and Chris Hamilton’s Executive Employment Agreement.

36. For example, Chris Hamilton wrongfully refused to add any of the New Owners,

or key personnel from Summa’s accounting firm, TGG Accounting, to the existing sole bank

account for Summa at Union Bank. As the sole signatory on the Summa bank account, he refused

to have checks issued for outstanding Summa obligations including legal fees and costs. He also

refused to transfer any company funds to the new company account at Regents Bank set up and

managed by the New Owners. In this manner, and in many other ways, Chris Hamilton

wrongfully prevented the New Owners and the company’s authorized professional accounting



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representatives from exerting control over Summa’s financial affairs as authorized by the

Amended Operating Agreement. Based on his behavior, the New Owners trust in Mr. Hamilton

deteriorated quickly.

37. Not only did Chris Hamilton refuse to cooperate in transitioning the legal and

accounting functions to the New Owners and their consultants, as expressly agreed to in the

Amended Operating Agreement, but he was actively hostile to the process. For example, Chris

Hamilton has a $2 million judgment against him from the Trade Secret Action, and the judgment

creditor had obtained a wage garnishment order. Summa was required by Court Order to issue a

garnishment check by a date certain. When presented with the garnishment check for his

signature (as the sole signatory), he not only refused to sign and took possession of the unsigned

check, but in response extensively and maliciously terrorized the very junior accounting

employee who had simply requested he sign the check. As a result the New Owners were forced

to re-direct their minimal company funds, re-issue a garnishment check from the new Regents

Bank account, and have it personally messengered to the Sheriff of San Diego County to avoid

violating the Court order garnishing Chris Hamilton’s wages.

38. In addition to Chris Hamilton’s increasingly uncooperative and disruptive

behavior, soon after entering into the Amended Operating Agreement, the New Owners began to

discover irregularities in Summa’s accounting books. On information and belief, it emerged that

significant amounts of cash were missing on a monthly basis, and that Chris Hamilton had been

“skimming” and pocketing Summa funds for his own benefit, both before the New Owners’

investment in Summa, and afterward.

39. It also emerged that Chris Hamilton had installed improper accounting practices at

Summa to deliberately obfuscate the source of revenues, payment of invoices, deposits of money,

and to prevent the proper balancing of Summa’s books. Among other practices, he employed

unqualified persons, without any accounting training, to manage the accounts. Those persons

were directly managed and instructed by Chris Hamilton himself, ensuring that missing funds,

discrepancies, irregularities, and wrongful activities were missed, overlooked or covered up.

40. On information and belief, in one variation of Chris Hamilton’s “skimming”



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scheme, he would offer a discount to a Summa client conditioned on their payment of the fee in

cash. He would then personally accept the full cash payment, but only deposit a portion of it in

Summa’s bank account. He would then report to Summa a significantly larger discount than he

had actually provided the client, while pocketing the difference in cash. He then instructed

Summa staff not to collect overdue invoices from clients with whom he had a close relationship,

same of whom had their accounts already written down or written off entirely by him without

explanation.

41. On information and belief, in another variation, Chris Hamilton would simply

remove cash from the company cash box where daily receipts were stored, and from the bank

pouch in which client payments were to be deposited in the bank. Only the Hamiltons made

regular cash deposits; Chris and Elizabeth Hamilton would not allow any employees of Summa to

do so other than in a few isolated instances. On occasion when Summa personnel advised Chris

that he should not remove cash without making appropriate accounting notations, he flatly

refused. The New Owners learned of these wrongful practices after investing in Summa and

eventually taking control of the company and its books. During their investigation, Summa’s

accountants discovered that pages on which the original deposit receipts were attached had been

removed from the ledger books; specifically, the only removed pages were those where there was

a discrepancy between the tally of the Summa front desk showing cash on hand, and the amount

noted by the bank in the actual deposit.

42. The accounting investigation revealed that Chris Hamilton had accrued the

accounts receivables for approximately 300 clients which had to be written off after the New

Owners’ investment in Summa.

43. Not surprisingly, Chris Hamilton loathed the exposure of his illegal and wrongful

accounting schemes. Faced with the findings of the investigation, he predictably attempted to

misdirect attention and, incredibly, blamed TGG Accounting for any discrepancies that TGG

Accounting uncovered and insisted TGG had to be removed as Summa’s accounting firm. Those

accusations were and are entirely without merit, and were yet another indication to the New

Owners that Chris Hamilton was unfit to serve as CEO of Summa.



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44. As of February 2014, Chris Hamilton continued to refuse to turn over full control

of the accounting functions as promised to the New Owners. That month, he phoned Lori Todd,

the new Chief Operating Officer of Summa and one of the principals of the New Owners, and

announced that he and his wife were immediately leaving to a remote cabin in Michigan for a

week and would not have any phone or computer access. Not coincidentally payroll was due that

week, and Hamilton still refused to add the New Owners or TGG as signatories to Summa’s

account at Union Bank, and refused to transfer company funds to the new Regents Bank account

set up by the New Owners. As a result, the company would be unable to timely meet payroll.

And that was precisely Hamilton’s intent – to turn the Summa employees against the New

Owners and its accountants. The New Owners were forced to re-direct all Summa revenues to the

Regents Bank account and, through great effort and expense, were able to make payroll that

Friday while Chris and Elizabeth were intentionally unavailable. Unaware that they had achieved

a work-around to the payroll predicament, Hamilton later called Ms. Todd and falsely reported to

her that many Summa employees were calling him furious to complain that they had not been

paid. When informed that everyone had, in fact, been paid despite his absence, and when pressed

to provide an example, Hamilton was silent.

45. In the same time period Chris Hamilton attempted to seek out more investors for

Summa that would, in his words, “take [you] out” of the company structure by making additional

investors’ shares senior to those of the New Owners. The New Owners firmly informed Chris

Hamilton that he had no authority to initiate, negotiate, or agree to any change in Summa’s equity

ownership structure.

46. Based upon the results of the accounting investigation, and the litany of wrongful

and deceitful actions taken by Mr. Hamilton, only some of which are alleged here, it became clear

to the New Owners that Chris Hamilton was intent on interfering in any way possible with the

New Owners’ efforts to appropriately and competently operate and manage Summa and its

finances. The New Owners also learned from a number of key Summa employees that they were

fed up, and were going to quit Summa because they could no longer tolerate working with Chris

Hamilton. One key employee – Jenifer Suh – had already quit for this very reason, and only



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agreed to come back to Summa after Chris Hamilton had been terminated.

47. Accordingly, with the unanimous consent of the Board of Managers and all voting

Members, Summa terminated Chris Hamilton’s employment on February 28, 2014. Chris

Hamilton was personally informed of the decision, was given a termination notice, and provided

with his final paycheck. The New Owners were expressly authorized by the Amended Operating

Agreement and Chris Hamilton’s employment agreement to take such action.

48. Summa requested the return of Chris Hamilton’s laptop, and with it, the return of

Summa’s confidential and protected trade secrets. He refused to return the laptop or any of the

Summa trade secret and confidential information on it.

E. Elizabeth Hamilton Claims to Own the Summa Website and Shuts it Down

When the New Owners Refuse Her Extortionate Payment Demands.

49. Elizabeth Hamilton is Chris Hamilton’s wife. She neither had nor has any

ownership interest in Summa whatsoever, nor has she ever held any formal role or employment

with Summa.

50. Just weeks after her husband was appropriately terminated by Summa, on April

15, 2014, Ms. Hamilton e-mailed Summa and, for the first time, claimed that she was the sole

owner of Summa’s website, www.summaeducation.com (the “Summa Website”). In the same e-

mail, she wrote that the Summa Website “has a financial value to me and I presume, [Summa],

which I am open to discussing,” in a blatant attempt to extort Summa into paying for rights to the

domain name – rights that already belonged to Summa.

51. Upon information and belief, the Summa Website was, at all times, a Summa

corporate asset. The website had no independent value to Ms. Hamilton. Its value was derived

entirely from its use and association with Summa, and it had been used solely by Summa

throughout Summa’s existence. Notably, when he was recruiting the New Owners to Summa,

Chris Hamilton never disclosed that such a critical corporate asset was claimed to be owned by,

and controlled by, a third-party, namely his wife. Upon information and belief, to the extent Ms.

Hamilton controlled or funded the Summa website, it was in her capacity as an agent of Summa

and/or her husband when Summa was still a single-member LLC owned solely by Chris



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Hamilton.

52. Summa refused Ms. Hamilton’s extortionate demands.

53. The following day, Ms. Hamilton made good on her implicit threat and abruptly

shut down the Summa Website, through which all Summa company email also flows. As of the

date of this Counter-Claim, there is no content on the Summa Website, belying Ms. Hamilton’s

claim that it has any independent value to her apart from its association with Summa. (Screen

Shot attached hereto as Ex. 4.)

54. Upon information and belief, Chris Hamilton directed his wife Elizabeth Hamilton

to shut down the Summa Website in an effort to interfere with Summa’s relationship with its

existing and prospective clients, and in retaliation for Chris Hamilton’s termination.

55. Upon information and belief, Chris and Elizabeth Hamilton are attempting to

destroy Summa’s business in an effort to drive the company out of business or force the New

Owners to tender back their ownership interests in the LLC at a greatly reduced value.

56. As a result of the abrupt shutdown, Summa suffered loss of goodwill, lost profits,

disruption of its business, economic damages incurred in migrating all content and systems to

another website, lost management time, and other damages in an amount to be proven at trial.

F. Chris Hamilton Violates His Non-Compete By Operating a Competing

Business.

57. On or about November 11, 2013, Chris Hamilton sold majority ownership and full

control of Summa to the New Owners, as memorialized by the Amended Operating Agreement.

He retained, however, a 13% interest in Summa, and remained a Member of the LLC pursuant to

the Amended Operating Agreement.

58. The Amended Operating Agreement provides, at Paragraph 5.4, that no Member

may engage in business activities that are

“in direct competition with the Company, which for the purposes of this Agreement, will

mean providing tutoring or other supplemental education services related to standardized test

preparation, college counseling or assistance with college applications.”

59. Although Chris Hamilton was terminated from his employment position with



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Summa, the terms of the Amended Operating Agreement continue to apply to him as a Member.

60. Summa and the New Owners are informed and believe that Chris Hamilton has

violated, and continues to violate, the Amended Operating Agreement by directly competing with

Summa in the tutoring and supplemental education services business.

G. The Hamiltons Begin a Public Campaign to Destroy Summa and Disparage

its New Owners

61. Mr. Hamilton has since gone on a litigious and public campaign to blame the new

investors for his own folly, or failing that, to attempt to destroy the business of Summa, hurtling

fantasy-based accusations with indignation.

62. On information and belief, the Hamiltons have caused Facebook pages to be

created that falsely claim Chris Hamilton was wrongfully terminated. In addition, postings on the

Facebook page falsely accuse the New Owners and the individual defendants of immoral

behavior, and further attempt to falsely defame and denigrate their character.

63. In addition, on information and belief, the Hamiltons organized protests at Summa

and encouraged parents to attend a town hall meeting to attack Summa’s new management and

raise questions about Hamilton’s termination.

FIRST COUNTER-CLAIM

(Fraud Against Chris Hamilton)

64. Counter-Claimants incorporate by reference all preceding paragraphs of this

Counter-Claim.

65. Chris Hamilton intentionally and fraudulently misrepresented, made false

promises, concealed, and/or failed to reveal material facts that caused Counter-Claimants to enter

into the Amended Operating Agreement and invest in Summa.

66. Those misrepresentations, false promises, and concealments are alleged with

particularity herein.

67. Chris Hamilton knew these misrepresentations, false promises, and concealments

were not true.

68. Chris Hamilton intended that Counter-Claimants rely on these misrepresentations,



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false promises, and concealments.

69. Counter-Claimants reasonably relied on Chris Hamilton’s misrepresentations, false

promises, and concealments.

70. Chris Hamilton did not perform the false promises he made.

71. As a proximate result thereof, Counter-Claimants have been damaged in an

amount to be proven at trial, but not less than the jurisdictional limit of this Court.

72. Chris Hamilton’s conduct was fraudulent, malicious, and oppressive and

constitutes despicable conduct in conscious disregard of Counter-Claimants’ rights. By reason

thereof, Counter-Claimants seek exemplary and punitive damages under Civil Code Section 3294.

SECOND COUNTER-CLAIM

(Breach of Fiduciary Duties Against Chris Hamilton)


Counter-Claim.

74. Chris Hamilton owed fiduciary duties to Counter-Claimants as an officer and

Member of Summa, including but not limited to duties of loyalty, reasonable care, and

confidentiality.

75. Chris Hamilton knowingly acted against Counter-Claimants’ interests.

76. Chris Hamilton failed to act as a reasonably careful fiduciary would have acted

under the same or similar circumstances.

77. Chris Hamilton breached his fiduciary duties to Counter-Claimants by engaging in

the conduct alleged herein.

78. As a proximate result of Chris Hamilton’s conduct, Counter-Claimants have

suffered harm and will continue to suffer damages in an amount to be proven at trial.

79. Chris Hamilton’s conduct was fraudulent, malicious, and oppressive and





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THIRD COUNTER-CLAIM

(Breach of Contract - Operating Agreement - Against Chris Hamilton)


Counter-Claim.

81. Counter-Claimants and Chris Hamilton entered into the written Amended

Operating Agreement.

82. The Amended Operating Agreement provides, at Paragraph 5.4.1 that no Member

may engage in business activities that are

“in direct competition with the Company, which for the purposes of this Agreement, will

mean providing tutoring or other supplemental education services related to standardized test

preparation, college counseling or assistance with college applications.”

83. The Amended Operating Agreement provides at Paragraph 5.4.2 that each

Member shall be obligated to present any Company Opportunities to the Company.

84. The Amended Operating Agreement at Paragraph 6.1.1 provides that the business,

property and affairs of the Company shall be managed exclusively by the Board of Managers.

85. The Amended Operating Agreement at Paragraph 6.9.5 provides for the powers

and duties of the chief executive officer that may be appointed by the Board of Managers, and

subjects those powers and duties to the supervisory powers of the Board of Managers.

86. Although Chris Hamilton was terminated from his employment position with

Summa, the terms of the Amended Operating Agreement applied to him as an officer while he

was employed, and continue to apply to him as a Member.

87. Counter-Claimants are informed and believe that Chris Hamilton has violated,

and/or continues to violate, the Amended Operating Agreement by, inter alia, directly competing

with Summa in the tutoring and supplemental education services business, failing to present

Company Opportunities to the Company, violating the express authority given to the Board of

Managers, failing to carry out his duties as an officer, and violating the limited authorities

conferred on him by the Board of Managers.

88. Counter-Claimants did all, or substantially all, of the significant things that the



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contract required them to do, or they were excused from doing those things.

89. All conditions required by the contract for Chris Hamilton’s performance had

occurred or were excused.

90. As a direct and proximate result of Chris Hamilton’s breaches, Counter-Claimants

have suffered and continue to suffer damages in an amount to be proven at trial.

91. Counter-Claimants have no adequate remedy at law with respect to Chris

Hamilton’s direct competition with Summa in the tutoring and supplemental education services

business, and accordingly seek preliminary and permanent injunctive relief to enjoin such

conduct.

FOURTH COUNTER-CLAIM

(Breach of Contract – Employment Agreement - Against Chris Hamilton)


Counter-Claim.

93. Summa and Chris Hamilton entered into a written Executive Employment

Agreement. Chris Hamilton and his personal attorney thoroughly reviewed and had extensive

input into the final contract that he executed.

94. The contract required Chris Hamilton to report to Summa’s Board of Managers as

to the business and affairs of the Company, and to perform his duties and responsibilities in a

diligent and professional manner.

95. Chris Hamilton expressly acknowledged in the written contract that his

employment was “at-will” and may be terminated at any time, with or without cause.

96. The contract prohibits Chris Hamilton’s disclosure or use of any of Summa’s

Confidential Information, as that term is defined in the contract, and required him to return to the

Company, upon his termination, all such Confidential Information. The contract further prohibits

Chris Hamilton’s use of that Confidential Information and trade secrets to induce any customer to

cease doing business with the Company, or to compete with the Company within a reasonable

and necessary scope and duration.

97. The contract prohibits Chris Hamilton from disparaging Summa or its officers,



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managers and related affiliates, in any manner likely to be harmful to the Company or its business

or its business reputation.

98. Chris Hamilton breached the foregoing terms of the contract by engaging in the

conduct described herein.

99. Summa did all, or substantially all, of the significant things that the contract

required it to do, or it was excused from doing those things.

100. All conditions required by the contract for Chris Hamilton’s performance had

occurred or were excused.

101. The Executive Employment Agreement provides at Paragraph 9 that money

damages would be inadequate, and that Chris Hamilton is required to

“account and pay over to the Company all compensation, profits, moneys, accruals,

increments or other benefits derived from or received as a result of any transactions constituting a

breach of the covenants contained herein in this Agreement.


have suffered and continue to suffer damages in an amount, consistent with Paragraph 9 of the

contract, to be proven at trial.

103. Counter-Claimants have no adequate remedy at law with respect to Chris

Hamilton’s use and disclosure of Summa’s Confidential Information, and his refusal to return

Summa’s Confidential Information upon his termination. Accordingly Summa seeks preliminary

and permanent injunctive relief to enjoin such conduct.

FIFTH COUNTER-CLAIM

(Breach of Covenant of Good Faith and Fair Dealing Against Chris Hamilton)


Counter-Claim.

105. Both the Amended Operating Agreement and the Executive Employment

Agreement contain an implied covenant of good faith and fair dealing.

106. Counter-Claimants did all, or substantially all, of the significant things that those

contracts required them to do, or they were excused from having to do those things.



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107. The conditions required for Chris Hamilton’s performance had occurred or were

excused.

108. Chris Hamilton unfairly interfered with Counter-Claimants’ rights to receive the

benefits of each contract.


have suffered and continue to suffer damages in an amount to be proven at trial.

SIXTH COUNTER-CLAIM

(Conversion Against all Counter-Defendants)


Counter-Claim.

111. As set forth above, Chris Hamilton and Elizabeth Hamilton converted Summa

company assets in the form of cash and revenue to their own personal use and benefit.

112. Upon information and belief the Summa Website was at all times a Summa

corporate asset and was Summa’s exclusive property.

113. Elizabeth Hamilton wrongfully took possession and control of the Summa Website

and converted it to her own use. Specifically, she used her wrongful possession and control of the

website in an effort to extort Summa into purchasing the website back from her at above-market

prices. When that failed, she shut down the website in retaliation for her husband’s termination.

114. On information and belief, Elizabeth Hamilton acted with the consent and/or at the

direction of Chris Hamilton.

115. Chris Hamilton has also failed and refused to return company assets in the form of,

and contained on, the company laptop he was using when he was terminated, including Summa

teaching materials. Chris Hamilton has wrongfully converted these assets for his own personal

use.

116. As a direct and proximate result of the Counter-Defendants’ wrongful conversion

of Summa company property, Counter-Claimants have suffered and continue to suffer damages in

an amount to be proven at trial, including lost goodwill, lost profits, disruption to the business,

and economic costs in obtaining a replacement website and migrating all Summa content to that



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replacement website.

117. Counter-Claimants have no adequate remedy at law with respect to the Counter-

Defendants’ possession and control of the Summa Website and Chris Hamilton’s possession and

control of a company laptop containing Summa’s Confidential Information and proprietary

documents. Accordingly Counter-Claimants seek preliminary and permanent injunctive relief to

enjoin such conduct.

118. Counter-Defendants’ conduct was fraudulent, malicious, and oppressive and



SEVENTH COUNTER-CLAIM

(State Securities Fraud Pursuant to Corp. Code Section 25401 Against Chris Hamilton)


Counter-Claim.

120. Chris Hamilton offered securities for sale to Counter-Claimants in California.

121. Counter-Claimants purchased securities from Chris Hamilton in California.

122. In connection with the offer and sale of those securities, as detailed herein, Chris

Hamilton

a. employed a devise, scheme, or artifice to defraud;

b. made fraudulent and untrue statements and omitted material facts

that would by omission make the statements misleading;

c. engaged in an act, practice, or course of business that operated as a

fraud or deceit upon Counter-Claimants.

123. As a result of Chris Hamilton’s violations of the statute, Counter-Claimants have

been damaged in an amount to be proven at trial.

EIGHTH COUNTER-CLAIM

(Intentional Interference with Prospective Economic Advantage Against All Counter-

Defendants)




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Counter-Claim.

125. Summa had an economic relationship with its clients and prospective clients, with

the probability that such relationships would bring future economic benefits to Summa.

126. Counter-Defendants had knowledge of such relationships.

127. Counter-Defendants intentionally and actually disrupted those relationships by,

inter alia, abruptly shutting down the Summa Website. The Summa Website provided critical

information and was one of the key points of contact between Summa and its existing and

prospective clients, as well as the public at large.

128. Counter-Defendants’ conduct was independently wrongful because, upon

information and belief, the Summa Website was at all times a Summa corporate asset and the

Counter-Defendants wrongfully took exclusive possession and control of it.

129. Counter-Defendants also intentionally and actually disrupted those relationships

by directly contacting those clients and prospective clients, disparaging Summa and its business,

and inducing said persons to engage Counter-Defendants for services.

130. As a direct and proximate cause of Counter-Defendants’ wrongful conduct,

Counter-Claimants have suffered and continue to suffer damages in an amount to be proven at

trial.




NINTH COUNTER-CLAIM

(Intentional Interference with Contractual Relations Against All Counter-Defendants)


Counter-Claim.

133. Summa had valid contractual relationships with its existing clients.

134. Counter-Defendants had knowledge of those contractual relationships.

135. Counter-Defendants intentionally and actually disrupted those relationships by,

inter alia, abruptly shutting down the Summa Website. The Summa Website provided critical



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information and was one of the key points of contact between Summa and its existing and

prospective clients.

136. Counter-Defendants also intentionally and actually disrupted those relationships

by directly contacting those clients and prospective clients, disparaging Summa and its business,

and inducing said persons to engage Counter-Defendants for services.

137. As a direct and proximate of Counter-Defendants’ wrongful conduct, Counter-

Claimants have suffered and continue to suffer damages in an amount to be proven at trial.




TENTH COUNTER-CLAIM

(Inducing Breach of Contract Against All Counter-Defendants)


Counter-Claim.

140. Summa had valid contractual relationships with its existing clients.

141. Counter-Defendants had knowledge of those contractual relationships.

142. Counter-Defendants intended to cause existing clients to breach their contracts

with Summa.

143. Counter-Defendants’ conduct caused existing clients to breach their contracts.






ELEVENTH COUNTER-CLAIM

(Negligent Interference With Prospective Economic Relations Against All Counter-

Defendants)




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Counter-Claim.

147. Counter-Claimants and its clients and prospective clients were in an economic

relationship that probably would have resulted in a future economic benefit to Counter-Claimants.

148. Counter-Defendants knew or should have known of these relationships.

149. Counter-Defendants knew or should have known that these relationships would be

disrupted if they failed to act with reasonable care.

150. Counter-Defendants failed to act with reasonable care.

151. Counter-Defendants engaged in wrongful conduct through breach of contract,

misrepresentation, fraud, and/or violation of statute.

152. The relationships were disrupted.



TWELFTH COUNTER-CLAIM

(Equitable Indemnity Against Chris Hamilton)


Counter-Claim.

155. Summa has been sued in the Hamilton Appeal Bond Action. The allegations are

predicated on wrongful conduct by Chris Hamilton.

156. Chris Hamilton’s actions underpinning the Hamilton Appeal Bond Action were

fraudulent, tortious and wrongful. Those actions have caused harm, and continue to cause harm,

to Summa.

157. Accordingly Chris Hamilton is obligated to indemnify Summa from any and all

damages, costs and harm to Summa related to or arising out of the Hamilton Appeal Bond Action.

THIRTEENTH COUNTER-CLAIM

(Implied Contractual Indemnity Against Chris Hamilton)


Counter-Claim.

159. Summa has been sued in the Hamilton Appeal Bond Action. The allegations are



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predicated on wrongful conduct by Chris Hamilton.

160. Chris Hamilton’s actions underpinning the Hamilton Appeal Bond Action were

fraudulent, tortious and wrongful. Those actions have caused harm, and continue to cause harm,

to Summa.

161. Chris Hamilton failed to use reasonable care in the performance of his duties

pursuant to the Executive Employment Agreement.

162. Chris Hamilton’s conduct was a substantial factor in causing harm to Counter-

Claimants.

163. Accordingly, Chris Hamilton is obligated to indemnify Summa from any and all

damages, costs and harm to them related to or arising out of the Hamilton Appeal Bond Action.

FOURTEENTH COUNTER-CLAIM

(Exception to Discharge Under 11 U.S.C. § 523(a)(2)(A) Against Counter-Defendants)


Counter-Claim.

165. Chris Hamilton intentionally and fraudulently misrepresented, made false

promises, concealed, and/or failed to reveal material facts that caused Counter-Claimants to enter

into the Amended Operating Agreement and invest in Summa, other than statements made in

writing.

166. Those misrepresentations, false promises, and concealments are alleged with

particularity herein.

167. Chris Hamilton knew these misrepresentations, false promises, and concealments

were not true.

168. Chris Hamilton intended that Counter-Claimants rely on these misrepresentations,

false promises, and concealments in providing money, property, services, and the investment

made by Counter-Claimants.

169. By reason of Chris Hamilton’s false pretenses, false representations and actual

fraud, any judgment obtained by Counter-Claimants in this action should be excepted from the

discharge that would otherwise be available to Counter-Defendants under Title 11, United States



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Code, pursuant to 11 U.S.C. § 523(a)(2)(A).

FIFTEENTH COUNTER-CLAIM

(Exception to Discharge Under 11 U.S.C. § 523(a)(2)(B) Against Counter-Defendants)


Counter-Claim.

171. Chris Hamilton intentionally and fraudulently used statements regarding his,

Counter-Defendants’ and Summa’s financial condition that were materially false, including but

not limited to Counter-Defendants’ ability to respond to capital calls made under the Amended

Operating Agreement.

172. Chris Hamilton made such foregoing intentional and fraudulent statements of

financial condition, in writing, with the intent that Counter-Claimants rely thereon.

173. Counter-Claimants reasonably relied on the intentional and fraudulent statements

of financial condition, made by Chris Hamilton, in writing, in making the investments in Summa

described above.

174. By reason of Chris Hamilton’s intentional and fraudulent false pretenses, false

representations and actual fraud, any judgment obtained by Counter-Claimants in this action

should be excepted from the discharge that would otherwise be available to Counter-Defendants

under Title 11, United States Code, pursuant to 11 U.S.C. § 523(a)(2)(B).

SIXTEENTH COUNTER-CLAIM

(Exception to Discharge Under 11 U.S.C. § 523(a)(4) Against Counter-Defendants)


Counter-Claim.

176. At all times after inducing Counter-Claimants to make the investment in Summa

subject to the Amended Operating Agreement, Chris Hamilton served in a fiduciary capacity in

respect of Counter-Claimants.

177. Chris Hamilton’s intentional, fraudulent and willful conduct as set forth more fully

above, constituted fraud and defalcation in respect of Counter-Claimants.

178. By reason of Chris Hamilton’s fraud and defalcation in respect of Counter-



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Claimants while serving in a fiduciary capacity in respect of Counter-Claimants, any judgment

obtained by Counter-Claimants in this action should be excepted from the discharge that would

otherwise be available to Counter-Defendants under Title 11, United States Code, pursuant to 11

U.S.C. § 523(a)(4).

SEVENTEENTH COUNTER-CLAIM

(Exception to Discharge Under 11 U.S.C. § 523(a)(6) Against Counter-Defendants)


Counter-Claim.

180. The conduct of Chris Hamilton both before and after Counter-Claimants’

investment in Summa was willful and malicious and caused injury to Counter-Claimants’ and

property rights of Counter-Claimants.

181. By reason of Chris Hamilton’s fraud and defalcation in respect of Counter-

Claimants while serving in a fiduciary capacity in respect of Counter-Claimants, any judgment

obtained by Counter-Claimants in this action should be excepted from the discharge that would

otherwise be available to Counter-Defendants under Title 11, United States Code, pursuant to 11

U.S.C. § 523(a)(6).

PRAYER FOR RELIEF

WHEREFORE, Counter-Claimants pray for judgment as follows:

1. An award of money damages according to proof;

2. An award of costs of suit;

3. An award of attorneys’ fees and costs against Chris Hamilton pursuant to

Paragraph 13.18 of the Amended Operating Agreement;

4. An award of attorneys’ fees and costs against Chris Hamilton pursuant to

Paragraph 13 of the Executive Employment Agreement;

5. Preliminary and permanent injunctions enjoining the Counter-Defendants:

a. from direct competition with Summa in the tutoring and supplemental

education services business;

b. from use and disclosure of Summa’s Confidential Information;



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c. to return Summa’s Confidential Information;

d. to return possession and control of the Summa Website; and

e. to return the laptop taken by Chris Hamilton;

6. Pre-judgment and post-judgment interest at the maximum rate allowed by law;

7. An award of exemplary and punitive damages; and

8. to except from discharge under Title 11, any judgment rendered in favor of

Counter-Claimants for the reasons set forth in 11 U.S.C. §§ 523(a)(2)(A), and/or 523(a)(2)(B),

and/or 523(a)(4), and/or 523(a)(6).

9. For such other and further relief as the Court may deem proper Dated: May 16, 2014 DLA PIPER LLP (US)

By /s/ Frank T. Pepler NOAH A. KATSELL FRANK T. PEPLER MATTHEW B. DART ASHLEIGH L. ANGELETTI Attorneys for Defendants SUMMA CONSULTING, LLC, LORRAINE W. TODD, SANFORD R. CLIMAN, MATTHEW GARRETT, READY MADE PICTURES, LLC, SIV SORRENTO VALLEY INVESTMENTS, LLC, TGG MANAGEMENT COMPANY, INC.


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