Coffee Solutions, LLC v. Uni-Splendor Corp., 3:19-cv-01848, No. 4 (D.Or. Nov. 18, 2019) (2024)

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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 2 of 10
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`Defendant Uni-Splendor contends it is a manufacturing company incorporated
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`under the laws of the British Virgin Islands with its head office in Taiwan. Uni-Splendor
`engages in business in the United States through products made in China. Uni-Splendor
`possesses a judgment against Coffee Solutions in the amount of $20.7 million, plus interest, as
`described below. Uni-Splendor’s litigation counsel is located in Portland, Oregon, and the
`company has taken specific discovery and collection actions within the State of Oregon.
`SUBJECT-MATTER JURISDICTION AND VENUE
`This Court has diversity jurisdiction under 28 U.S.C. § 1332(a)(2) in that there is
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`complete diversity between Coffee Solutions and Uni-Splendor and the amount in controversy
`exceeds $75,000, exclusive of interest and costs. Venue is proper in the Portland Division under
`28 U.S.C. § 1391(b)(2) and LR 3-2 because Coffee Solutions maintains its principal place of
`business in Oregon and the assets that give rise to the claims asserted herein are located in
`unincorporated Washington County, Oregon.
`GENERAL ALLEGATIONS
`Remington Designs, LLC (“Remington”), a California limited liability company,
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`was an appliance company founded by inventor and entrepreneur Bruce Burrows (“Burrows”).
`Remington focused on the single-use coffee market, contracting with Uni-Splendor to
`manufacture single-cup coffee makers utilizing proprietary designs owned by Remington.
`From 2014 to 2017, Oregon resident Chris Maletis invested a total of
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`approximately $4.9 million in Remington in exchange for a 3.92 percent membership interest.
`Chris Maletis’ brother, Ed Maletis, individually and through a family trust, separately invested
`$5 million in Remington in exchange for a 4 percent membership interest.
`Chris Maletis served on Remington’s board of managers (the “Board of
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`Managers”) from October 2014 until he resigned July 15, 2017. Ed Maletis also served on the
`Board of Managers from 2015 until he resigned on July 15, 2017. Neither Chris Maletis nor Ed
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 3 of 10
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`Maletis had any meaningful role in the day-to-day management of the company. Burrows
`controlled the day-to-day management of Remington.
`In or around the spring of 2016, Remington experienced financial difficulties and
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`began to accrue a significant balance with Uni-Splendor. Remington asserted flaws in the
`manufacturing by Uni-Splendor caused the financial difficulties. Uni-Splendor denied such
`allegations.
`In late March or early April of 2016, Burrows raised the possibility of Chris and
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`Ed Maletis providing funding of $700,000 for a new coffee brewer prototype that could make
`espresso from a single-serve pod.
`Chris and Ed Maletis agreed to separately advance $350,000, but only as loans,
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`each secured by all of Remington’s intellectual property (the “Intellectual Property”). Burrows
`had contributed the Intellectual Property to Remington and represented its value to be $35
`million, although its precise value was unknown.
`On July 21, 2016, following unanimous approval by the Board of Managers,
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`Remington and Chris Maletis and Ed Maletis entered into a Junior Intellectual Property Security
`Agreement (the “2016 Loans”), which included a grant by Remington of a security interest in
`certain intellectual property (the “IP Collateral”). The parties to the 2016 Loans understood the
`IP Collateral and Intellectual Property to be the same. Pursuant to the 2016 Loans, Chris Maletis
`and Ed Maletis each separately advanced $350,000 to Remington and duly recorded and properly
`perfected security interests in the IP Collateral (the “IP Lien”).
`On December 16, 2016, Uni-Splendor sued Remington in the United States
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`District Court, Central District of California (the “Court”) (Case No. 2:16-cv-9316 PA (SSx)
`(the “Uni-Splendor Litigation”), alleging breach of contract and quantum meruit. Remington
`answered and asserted numerous counterclaims.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 4 of 10
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`On June 23, 2017, the Board of Managers and Burrows discussed the possibility
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`of Remington executing an assignment for the benefit of creditors, focusing primarily on the
`Intellectual Property, the company’s primary assets.
`The Board of Managers instructed Burrows to obtain two independent valuations
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`of the company. However, Burrows apparently only arranged for a single independent valuation
`of the Intellectual Property, which resulted in a valuation of $875,000 based on the income
`approach. Neither Ed Maletis nor Chris Maletis participated in the selection of the appraiser,
`communicated with the appraiser, or had any other involvement in the valuation of the
`Intellectual Property.
`On July 15, 2017, Ed Maletis and Chris Maletis resigned from Remington’s
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`Board of Managers.
`On July 27, 2017, the Court granted, in part, Uni-Splendor’s motion for summary
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`judgment, requiring further evidence on the appropriate level of damages. Finding that material
`issues of disputed fact remained, the Court declined to grant Uni-Splendor’s motion for summary
`judgment on Remington’s counterclaims.
`On August 30, 2017, Chris Maletis formed Coffee Solutions as an Oregon limited
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`liability company.
`On August 31, 2017, Remington executed an Intellectual Property Assignment
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`and a General Assignment for the benefit of creditors (jointly, the “Assignment”), naming David
`Hagen (“Hagen”) as the assignee. On information and belief, all parties entitled to notice of the
`Assignment received notice from Hagen according to statutory rules governing assignments for
`the benefit of creditors in California pursuant to Cal. Code Civ. Pro § 1802(a). The Assignment
`states that it is a general assignment of all assets of Remington (the “Assets”), although the only
`assets transferred to Hagen pursuant to the Assignment were certain items of intellectual
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 5 of 10
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`property of Remington. Chris Maletis understood that the only assets that Remington possessed
`at the time of the transfer was the Intellectual Property.
`Subsequently, on August 31, 2017, Hagen, as seller, and Coffee Solutions, as
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`buyer, entered into an Asset Purchase Agreement (the “Coffee Solutions Purchase”), pursuant
`to which Coffee Solutions purchased the Assets, subject to the IP Lien. The purchase price was
`$875,000, consistent with an appraisal obtained by Burrows of the Intellectual Property.
`Specifically, the consideration from Coffee Solutions consisted of (a) credit for assuming the
`security interests that belong to Chris Maletis ($388,896 including principle and interest) and
`those that belong to Ed Maletis ($388,896 including principle and interest), plus (b)
`approximately $97,000 in cash.
`On September 18, 2017, Hagen informed the Court of the occurrence of the
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`Assignment and that he did not intend to further defend the Uni-Splendor Litigation or prosecute
`the counterclaims.
`On November 7, 2017, the Court entered judgment in favor of Uni-Splendor and
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`against Remington in the amount of $20,744,484.23 (the “Judgment”).
`On May 18, 2018, Uni-Splendor moved to amend the Judgment (the “Motion to
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`Amend”) to add Coffee Solutions, Burrows and Chris Maletis as debtors under the Judgment.
`Uni-Splendor’s allegations in support of the Motion to Amend included alter ego, successor
`liability, constructively fraudulent transfer, and the need to add parties to promote equity and
`prevent injustice.
`On October 23, 2018, the Court issued a Civil Minutes decision (the “Order”)
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`granting the Motion to Amend as to Coffee Solutions, but denying it as to Burrows and Chris
`Maletis, citing due process concerns. In the Order, the Court noted that certain of Remington’s
`assets, including inventory, accounts receivable, bank accounts and other assets had not been
`accounted for.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 6 of 10
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`On October 30, 2018, Uni-Splendor, through its Portland-based counsel, initiated
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`an action in the Circuit Court of the State of Oregon for the County of Multnomah, Case No.
`18CV49432, styled as an action “In the Matter of a Foreign General Judgment Rendered in the
`[Uni-Splendor Litigation]” (the “Multnomah County Action”), in which Uni-Splendor
`registered the Judgment and issued a notice of garnishment to the Portland, Oregon branch of a
`financial institution.
`On November 23, 2018, in the Multnomah County Action, Uni-Splendor sought
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`and obtained an order directing a representative of Coffee Solutions to appear for a judgment
`debtor examination to be conducted at the Multnomah County Circuit Courthouse in Portland,
`Oregon.
`On December 6, 2018, Portland-based counsel for Uni-Splendor administered the
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`judgment debtor examination at the Multnomah County Circuit Courthouse with Coffee
`Solutions appearing though its sole member, Chris Maletis.
`After becoming aware that there may exist additional assets that were not
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`transferred to Hagen pursuant to the General Assignment and, in turn, to Coffee Solutions
`pursuant to the Coffee Solutions Purchase, Coffee Solutions requested of Hagen an accounting of
`all of Remington’s assets at the time of the General Assignment. Coffee Solutions has also made
`repeated written requests of Hagen to execute and/or ascertain documents to effectuate transfer
`to Coffee Solutions of intellectual property that should have been conveyed to it pursuant to the
`Coffee Solutions Purchase. To date, Hagen has not provided such an accounting and has failed
`in large part or declined to execute and/or ascertain such documentation.
`Following entry of the Order adding Coffee Solutions to the Judgment, Uni-
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`Splendor and Coffee Solutions have engaged in ongoing settlement discussions, which are
`privileged.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`

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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 7 of 10
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`The sole asset in Coffee Solutions’ possession is intellectual property of unknown
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`value and marketability.
`The intellectual property is subject to competing claims, specifically the IP Lien
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`and the Judgment. Certain unsecured creditors have also asserted claims focused on the
`intellectual property. The resolution of these competing claims require adjudication.
`Coffee Solutions has been unable to effectively market, value or sell the
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`intellectual property. In part due to the competing claims, Coffee Solutions has been unable to
`determine an acceptable approach to sell the intellectual property or to distribute the proceeds
`should such a sale occur.
`It is in the best interests of all parties for this Court to appoint an independent
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`receiver under Oregon law to (a) take charge of the assets of Coffee Solutions, (b) determine the
`most beneficial disposition of those assets, and (c) with this Court’s assistance, determine the
`appropriate distribution of any net proceeds of such disposition.
` Appointment of a receiver under these circ*mstances is reasonably necessary to
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`secure justice to the parties, to protect the assets of Coffee Solutions and to protect the interests
`of the various interested parties.
`FIRST CLAIM FOR RELIEF
`(Declaratory Judgment - 28 U.S.C. § 2201(a))
`Coffee Solutions incorporates by reference each of foregoing allegations.
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`Coffee Solutions maintains its principal place of business in unincorporated
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`Washington County, Oregon.
`The intellectual property of Coffee Solutions is located in unincorporated
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`Washington County, Oregon.
`Chris Maletis, the sole member of Coffee Solutions, resides in unincorporated
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`Washington County, Oregon.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 8 of 10
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`Chris and Ed Maletis are the holders of the IP Lien on the intellectual property,
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`which they assert is the senior lien on the assets of Coffee Solutions.
`Uni-Splendor is a British Virgin Islands company with its head office in Taiwan
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`and its lead litigation counsel located in Portland, Oregon.
`Uni-Splendor is the holder of the Judgment, which, on information and belief, it
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`contends has priority over the IP Lien on the assets of Coffee Solutions.
`A judicial determination is necessary to resolve the competing claims to the assets
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`of Coffee Solutions or the proceeds thereof.
`A judicial determination will resolve all aspects of the controversy concerning the
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`claims of priority pertaining to the assets of Coffee Solutions, including its intellectual property,
`and will serve a useful purpose in clarifying the legal relations at issue.
`Coffee Solutions has no effective remedy other than judicial determination.
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`A judicial determination by this Court provides the greatest convenience to the
`parties.
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`SECOND CLAIM FOR RELIEF
`(Appointment of Receiver - Fed. R. Civ. Pro. 66)
`Coffee Solutions incorporates by reference each of foregoing allegations.
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`The assets of Coffee Solutions, primarily the intellectual property, are subject to
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`competing claims of priority.
`Legal remedies that leave Plaintiff in possession and control of its assets and
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`subject to the competing claims are inadequate.
` The competing claims present a valid basis for a claim under the Declaratory
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`Judgment Act, 28 U.S.C. § 2201(a)), as set forth in Plaintiff’s First Claim For Relief.
`Plaintiff’s probability of success on its First Claim For Relief outweighs the
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`likelihood of injury to Defendant resulting from the appointment of a receiver.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`

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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 9 of 10
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`Coffee Solutions has been unable to effectively market, value or sell the
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`intellectual property, in part due to the competing claims of priority.
`Due to the competing claims, Coffee Solutions has been unable to determine an
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`acceptable approach to sell its intellectual property assets or to develop a plan for distributing the
`proceeds should such a sale occur.
`The harm to Plaintiff of being hindered in its ability to liquidate its assets to
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`satisfy its creditors outweighs any injury Defendant may sustain by the Court’s appointment of a
`receiver.
`Defendant will sustain no injury by the Court’s appointment of a receiver.
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`Plaintiff, the subject of the proposed receivership, consents.
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`Pursuant to Federal Rule of Civil Procedure 66, the Court has broad discretion to
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`appoint a receiver, including consideration of the appropriateness of the appointment under
`Oregon law, including pursuant to the Oregon Receivership Code (Oregon Revised Statutes
`37.010-37.410).
`The Court possesses broad equitable authority to appoint a receiver, including to
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`(a) take charge of the assets of Coffee Solutions, (b) determine the value and most beneficial
`disposition of those assets, and (c) with this Court’s assistance, determine the appropriate
`distribution of any net proceeds of such disposition.
`Appointment of a receiver under these circ*mstances is reasonably necessary to
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`secure justice to the parties, to protect the assets of Coffee Solutions and to protect the interests
`of the various interested parties. Such interests will be well-served by the appointment of a
`receiver.
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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`Case 3:19-cv-01848-YY Document 4 Filed 11/18/19 Page 10 of 10
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`PRAYER FOR RELIEF
`WHEREFORE, Plaintiff prays for the following relief:
`For a judgment declaring the relative priority of the claims against the assets of
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`Coffee Solutions, including its intellectual property;
`For appointment of a receiver under Federal Rule of Civil Procedures 66 to take
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`possession and control of the assets of Coffee Solutions and to administer such assets under the
`supervision of this Court; and
`For such other relief as the Court deems just and proper.
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`DATED: November 18, 2019
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`PERKINS COIE LLP
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`By: /s/ Douglas R. Pahl
`Douglas R. Pahl, OSB No. 950476
`DPahl@perkinscoie.com
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Telephone: 503.727.2000
`Facsimile: 503.727.2222
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`Attorneys for Plaintiff
`Coffee Solutions, LLC
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`FIRST AMENDED COMPLAINT
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`146190430.4
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`Perkins Coie LLP
`1120 N.W. Couch Street, 10th Floor
`Portland, OR 97209-4128
`Phone: 503.727.2000
`Fax: 503.727.2222
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