CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 ~'t~~@'O) D50/CJJb

CASE TIPE: CONTRACt

STATE OF MINNESOTA DISTRICT COURT

COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT

OPPORTUNITY BRIDGE FUNDING, FileNo.:

LLC, a Delaware limited liability company,
and THE GERMAINE TOMLINSON
INSURANCE TRUST, a Delaware Trust;

Plaintiffs,
VS. SUMMONS

SJB INVESTMENTS, LLC, a Nevada

limited liability company and J.A.lVmS C.
BURCHARD, individually and as managing
partner ofsm Investments, LLC,

Defendants.

THE STATE OF MINNESOTA TO THE ABOVE-NAMED DEFENDANT:

YOU ARE HEREBY SUMMONED and required to serve upon Plaintiffs' attorney an

Answer to the Complaint, which is herewith served upon you, within twenty (20) days of the

date of service of this Summons upon you, exclusive of the day of service. If you fail to do so,

judgment by default will be taken against you for the relief demanded in the Complaint.

Please take notice that all civil cases are subject to alternative dispute resolution (ADR)

processes as provided in Rule 114 of the Minnesota General Rules of Practice.

SCANtJ(D
APR2az~og .
U.S. D/Sl'RJcr CO
!-S

EXHIBIT A
~------------------------------.-.-- - .

CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 2 of 20

CASE TYPE: CONTRACT

STATE OF MINNESOTA DISTRICT COURT

COUNlY OF HENNEPIN FOURTH JUDICIAL DISTRICT

OPPORTUNITY BRIDGE FUNDING, File No.:

LLC, a Delaware limited liability company,
and THE GERMAfNE TOMLINSON
INSURANCE TRUST, a Delaware Trust;

Plaintiffs,
vs, SUMMONS

SJB INVESTMENTS, LLC, a Nevada

limited liability company and JAMES C.
BURCHARD, individually and as managing
partner of SJB Investments, LLC,

Defendants.

THE STATE OF MINNESOTA TO THE ABOVE-NAMED DEFENDANT:

YOU ARE HEREBY SUMMONED and required to serve upon Plaintiffs' attorney an

Answer to the Complaint, which is herewith served upon you, within twenty (20) days of the

date of service of this Summons upon you, exclusive of the day of service. If you fail to do so,

judgment by default will be taken against you for the relief demanded in the Complaint.

Please take notice that all civil cases are subject to alternative dispute resolution (ADR)

processes as provided in Rule 114 of the Minnesota General Rules of Practice.

 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 3 of 20

Dated: March I!, 2009 WINTHROP & WEINSTINE, P.A.

~~-
Michael J. Rothman, #0195479
Aimee D. Dayhoff, #0319041

225 South Sixth Street

Suite 3500
Minneapolis, Minnesota 55402
Telephone: (612) 604-6400

Attorneys for Plaintiff

Opportunity Bridge Funding, LLC

Dated: March ~ 2009

MEA"?i PLLP
BY:~ ~
Charles E. Jones, # 0202708

33 South Sixth Street

Suite 4200
Minneapolis, MN 55402
Telephone: (612) 347-9140

Attorneys for Plaintiff

The Germaine Tomlinson Insurance Trust

Dated: March_, 2009 MC CROSSON & ASSOCIATES, P.C.

Dennis F. McCrosson
[Motion for pro hac vice to be filed]
6249 U.S. Highway 31 South, Suite A
Indianapolis, IN 46227
Telephone: (3 i7) 791-7800

Attorneys for Plaintiff

The Germaine Tomlinson Insurance Trust

4389183vl

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 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 4 of 20

CASE TYPE: CONTRACT

STATE OF MINNESOTA DISTRICT COURT

COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT

OPPORTUNITY BRIDGE FUNDING, FileNo.:

LLC, a Delaware limited liability company,
and THE GERMAINE TOMLINSON
INSURANCE TRUST, a Delaware Trust;

Plaintiffs,
VS. COMPLAINT

SJB INVESTMENTS, LLC, a Nevada

limited liability company and JAMES C.
BtJRCHARD, individually and as managing
partner ofSm Investments, LLC,

Defendants.

Plaintiffs Opportunity Bridge Funding, LLC ("OBF') and The Germaine Tomlinson

Insurance Trust (the ''Trust'') (collectively referred to as "Plaintiffs"), as and for their Complaint

against 8JB Investments, LLC ("SJB") and James C. Burchard ("Burchard") (collectively

referred to as "Defendants"), state and allege as follows:

PARTIES

I. OBF is a Delaware limited liability company with its principal place of business

located at 220 South 6th Street, Suite 1200, Minneapolis, Minnesota 55402.

2. The Trust is a Delaware statutory trust created under a Trust Agreement dated

January 23, 2006, as amended, with its situs located at III Barksdale Professional Center

Newark, DE 19711.

3. SJB IS a Nevada limited liability company with its principal place of business at

7545 West Sahara, Suite 210, Las Vegas, Nevada 89117.

 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 5 of 20

4. On information and belief, James C. Burchard ("Burchard") is an individual

residing in Las Vegas, Nevada 89117, and is SJB's managing partner .

.JURISDICTION AND VENUE

5. Jurisdiction is proper in the State of Minnesota because Defendants have had

sufficient minimum contacts with Minnesota to the extent that subjecting them to personal

jurisdiction in this state does not violate the principles of fairness and substantial justice.

Defendants have purposefully availed themselves by initiating, soliciting and transacting

business within this state, which has caused substantial injury within this state.

6. Venue is proper because the causes of action or some part thereof arose in and

took place in Hennepin County.

FACTUAL BACKGROUND

THE OBF SENIOR LOAN

7. On or about October 3,2008, SJB, by its managing partner, Burchard, and acting

as a broker, presented an opportunity to, solicited, and induced OBF to make a short-term loan,

or bridge loan, to refinance a premium finance loan from LaSalle Bank, N.A. ("LaSalle Loan"),

which was secured by a first priority perfected security interest in an underlying $15 million

insurance policy. By then, the LaSalle Loan, with a maturity date of September 30, 2008, had

gone into default.

8. In reliance upon SJB's and Burchard's representations and statements, OBP

agreed to make a bridge loan to the Trust. During the bridge-loan transaction until its closing, all

communication between OBF and the Trust went through SIB and Burchard. On or about

October 8, 2008, OBF sent bridge-loan documentation to SJB and Burchard, for execution by the

Trust.

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9. On or about October 13, 2008, SJB and Burchard returned the bridge-loan

documents executed by the Trust's Co-Trustee to OBF, and thereafter, on October 14, 2008,

OBP sent by wire transfer $1,273,902.17 to pay-off the LaSalle Loan.

10. Pursuant to that certain Letter Agreement for Bridge Financing dated October 8,

2008 executed by and between the Trust (the "Borrower") and OBF ("Senior Lender") (the

"Senior Loan Agreement"), OBF documented a bridge loan to Borrower in the original principal

amount of One Million Two Hundred Seventy-Three Thousand Nine Hundred Two and

I7/100ths Dollars ($1,273,902.17) (the "Senior Loan").

11. The obligation of Borrower to repay amounts advanced under the Senior Loan is

evidenced by a Promissory Note dated October 8, 2008 executed by Borrower in favor of OBF in

the original principal amount of the Senior Loan (the "Senior Note" including any amendment,

modification, supplement, extension, renewal, replacement or restatement thereof). The maturity

date of the Senior Note was January 11, 2009. The Senior Note executed by the Trust grants to

OBF, among other things, a first priority perfected security interest in the Policy.

12. As set forth in the Senior Note, Borrower pledged and granted to OBF first

priority perfected security interest in, and a right of set-off against the underlying collateral, a life

insurance policy and all proceeds thereof (the "Borrower's Collateral") and the rights thereto as

collateral for the full and prompt payment, performance and discharge when due of all

indebtedness and responsibilities of Borrower arising under the Senior Note. (The Letter

Agreement and Senior Note, together with all other documents and instruments evidencing and

securing the OBF Loan, are hereinafter collectively referred to as the "Senior Loan Documents."

The Trust's Collateral and the Additional Collateral are hereinafter collectively referred to as the

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 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 7 of 20

"Senior Collateral.") A copy of the OBP Senior Loan Documents are attached hereto as

Exhibit A.

13. There presently exists certain Events of Default under the Senior Loan

Documents, including, without limitation, that Borrower failed to provide OBP a first priority

perfected security interest in the Policy and pay principal and interest due on January 11, 2009.

Accordingly, the Trust owes additional amounts for default under the Senior Loan Documents.

SJB'S FRAUDULENT CONDUCT

14. On or about January 6, 2009, SJB orally represented to OBP that SJB had

obtained a Collateral Assignment from the Trust and had submitted the Collateral Assignment to

the insurance carrier to secure a loan from SJB to the Trust in the amount of approximately $1.85

million. While SJB advised OBP in December 2008 that SJB had "money" into this matter, SJB

contended it had nothing to do with the OBP Senior Loan. SJB also had never previously

disclosed to OBP that it had obtained a Collateral Assignment to secure a loan from SJB to the

Trust.

15. On or about January 8, 2009, at OBF's request to gain further information about

SJB's loan, the Trust's attorney provided OBP a copy of certain SJB loan documents, which

revealed that SJB impermissibly and fraudulently attempted to gain senior-loan status over

OBF's Senior Loan Documents. Subsequently, on or about January 14, 2009, at OBF's request,

SJB's counsel at Lewis & Roca also sent certain SJB's loan documents, which confirmed to aBP

that SJB had attempted to gain senior loan status over OBF's Senior Loan.

16. Pursuant to a purported SJB Master Promissory Note (the "SJB Note") executed

by the Trust and several other Borrowers (collectively, the "Debtors") on October 10, 2008, and

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 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 8 of 20

back-dated by sm to October 7, 2008, Debtors agreed to pay to sm $1,850,000.00 (the "sm

Loan").

17. Payment of the sm Note and performance of the obligations of the Debtors is

purportedly secured in part by Assigrunent of Life Insurance Policy as Collateral and Security

dated October 10, 2008 (the "Policy Collateral Assignment") which purportedly assigns to SJB

all of Borrower's right, title and interest in and to the Policy and to any all net proceeds of the

Policy due to the death of the insured.

18. The purported assignment of the Policy and purported grant of a security interest

in the Policy to SJB is further evidenced by purported UCC-l Financing Statements naming each

of the Debtors as debtor and sm as the secured party which UCC Statements were filed on

October 10, 2008 in the offices of the Secretary of State of the State of Indiana and the Secretary

of State of the State of Delaware. (The SJB Note, together with all other documents and

instruments evidencing and securing the 8JB obligation, are hereinafter collectively referred to

as the "8JB Loan Documents.")

19. On information and belief, the sm Loan Documents were prepared by Lewis &

Roca for 8JB and at the direction of Burchard.

20. On information and belief, sm delivered its Policy Collateral Assignment to the

insurance carrier in order for sm to be recognized as the purported assignee of the insurance

policy.

21. Upon further investigation, 8JB and Burchard, as 8m's managing partner,

schemed against and defrauded OBP and the Trust by creating, substituting, and presenting

SJB's loan documents before and instead of OBF's Senior Loan Documents, and inducing

Trust's execution of the SJB Note in advance of the OBF Senior Loan Documents thereby

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 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 . Page 9 of 20

attempting to gain senior loan status over OBP's Senior Loan Documents, putting the trust in

immediate default in its agreement with OBF.

22. Subsequently, in order to obtain the Trust's execution of OBF's Senior Loan

Documents, sm and Burchard misrepresented to the Trust that the OBF Senior Loan Documents

constituted necessary additional documentation for the bridge loan financing.

23. SJB intentionally misrepresented and mischaracterized the nature of the SJB Loan

Documents and misrepresented, mischaracterized, withheld, and suppressed the OBF Senior

Loan Documents to the Trust in an effort to induce the Trust to execute the SJB Loan Documents

first so to achieve priority in the SJB loan over the OBF Senior Loan.

24. Contrary to OBF's and the Trust's true intention, SJB purportedly claims that the

SJB Loan Documents and security interest have priority over the OBF Senior Loan Documents

and security interest which priority status is the product of fraud.

COUNT I
FRA UDIRESCISSION
(SJB and Burchard)

25. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

26. sm and Burchard, acting as a broker, induced OBF to make a bridge loan to the

Trust to pay off the Lasalle Loan.

27. sm and Burchard, acting as a broker, intentionally misrepresented to OBP that

OBP would be granted a first priority perfected security interest in the Policy.

28. The OBP Note grants to OBF, among other things, a first priority perfected

security interest in the Policy.

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29. OBF agreed to make the bridge loan in reliance on receiving a first priority

perfected security interest in the Policy.

30. SJB and Burchard, acting as a broker, schemed and conspired so that OBF would

not obtain first priority perfected security interest in the Policy.

31. SJB and Burchard, acting as a broker, fraudulently and intentionally postponed

the execution ofOBF Senior Loan Documents in their effort to advance SJB's priority lien status

against the policy.

32. SJB and Burchard, acting as a broker, and in violation of their duty to the Trust,

induced the Trust to execute the SJB Loan Documents and the Policy Collateral Assignment

prior to the execution of the OBF Senior Loan Documents thereby causing the Trust to be in

default of the OBF Senior Loan Documents immediately upon their execution.

33. As a result ofSJB's and Burchard's fraudulent conduct, OBF has been damaged

in an amount in excess of $50,000, the exact amount to be proven at trial.

34. As a result of SJB's and Burchard's conduct, the Trust has been damaged in an

amount in excess of $50,000, the exact amount to be proven at trial.

35. Plaintiffs are each entitled to monetary and equitable relief, including, without

limitation, rescission of the SIB Loan Documents, based on Defendants' fraud and misconduct.

COUNT II
FRAUDULENT INDUCEMENT
(SJB and Burchard)

36. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

37. OBF entered into the OBF Senior Loan Documents dated October 8, 2008.

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38. The Trust entered into the sm Loan Documents on October 10, 2008, which

documents were back-dated to October 7, 2008 by SJB.

39. During the course of communications, discussions, negotiations, and course of

dealing between OBF and SJB as regards the OBP Senior Loan Documents, SJB made material

false and misleading representations, misrepresentations, and omissions to OBP and SJB

including, but not limited to, the following:

(a) OBF would be granted a valid first priority perfected security interest in
the Policy; and

(b) Failing to advise OBF of the existence of the SJB Loan Documents,
including SJB's Policy Collateral Assigmnent which pre-date the OBP
Senior Loan Documents.

40. During the course of communications, discussions, negotiations, and course of

dealing between the Trust and sm as regards the SJB Loan Documents, SJB made material false

and misleading representations, misrepresentations and omissions to the Trust including, but not

limited to, the following:

(a) Failing to advise the Trust that OBF was the lender funding the bridge
loan;

(b) That under the terms of the OBP Senior Loan Documents tendered to the
Trust by SJB for execution following execution of the 8JB Note, that the
bridge loan lender (OBF) was to be granted a valid first priority perfected
security interest in the Policy; and

(c) That the SJB loan proceeds were required to pay for preparation of
amendment of the Trust instrument; to cure alleged deficiencies in the
document; and for fees and charges to the Lender (OBF) for the loan to
pay the Lasalle Bank Note.

41. 8m knew and intended that OBF and the Trust would rely upon 8JB's

misrepresentations and omissions, and knew that these misrepresentations and omissions were

material to OBF's and the Trust's decisions to enter into the loan agreements.

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 CASE 0:09-cv..,00907-DSD-JJG Document 1-1 Filed 04/20109 Page 12 of 20

42. By its execution of the sm Note, the Trust materially changed its position

regarding the lending in reliance on the representations by SJB and Burchard in the lending.

43. SJB knew the falsity of its representations to OBF and the Trust and of the

incompleteness of its statements to OBP and the Trust at the time those statements and omissions

were made, or made those representations without knowledge of the truth of those

representations.

44. 8JB owed OBP and the Trust a duty to disclose all facts material to the subject

matter of the loan agreements.

45. OBP and the Trust reasonably and justifiably relied to their detriment on the

truthfulness of SJB's representations and on the completeness of SJB's disclosures of material

facts, and thus OBP and the Trust were induced to enter into the loan agreements.

46. In addition, sm had a special relationship of trust and confidence with both OBF

and the Trust, and SIB knew or should have known that OBF and the Trust would so rely on

SJB's statements.

47. But for SJB's misrepresentations, omissions, and concealment of facts material to

the participation agreements, neither OBF nor the Trust would have entered into the loan

agreements.

48. SJB's misrepresentations to the Trust precipitated Trust's unintentional but

material breach and default of the OBP Loan Agreements at their inception.

49. As a direct and proximate cause of SJB's misrepresentations, omissions and/or

concealment of the facts material to the subject matter of the loan agreements, Plaintiffs have

been injured and damaged in an amount to be determined at trial.

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 CASE 0:09-cv-00907 -DSD-JJG Document 1-1 Filed 04/20109 Page 14 of 20

things, overseeing the timely execution of the OBF Senior Loan Documents ensuring that OBF

received a first priority perfected security interest in the Policy.

57. As set forth above, sm and Burchard breached the duty of care they owed to

Plaintiffs and otherwise failed to exercise reasonable care as a broker by, among other things,

negligently and carelessly failing to timely execute the OBF Senior Loan Documents and

instead, unbeknownst to the Trust, had the Trust execute the SJB Loan Documents first.

58. As.a direct and proximate result of SJB's and Burchard's breach of the duty of

care they owed to Plaintiffs, and their negligence, Plaintiffs have incurred monetary damages

which are directly attributable to SJB's and Burchard's negligence.

59. As a result ofSJB's and Burchard's negligence, Plaintiffs have been damaged in

an amount in excess of$50,OOO, the exact amount to be proven at trial.

COUNTY
INDEMNIFICATION
(8JB and Burchard)

60. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

61. As a result of SJB's and Burchard's fraudulent and negligent conduct, and

Plaintiffs' reliance thereon to their detriment, Plaintiffs are entitled to be indemnified for

damages.

COUNTYI
EQUITABLE 8UBORDINATIONIPRIORITY
(8JB)

62. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

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 CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 16 of 20

72. Accordingly, Plaintiffs seek a determination from the Court that OBF, pursuant to

the OBP Senior Loan Documents, has a first priority perfected security interest in the Policy.

COUNT IX
CONSTRUCTIVE TRUST
(SJB)

73. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

74. Due to SJB's and Burchard's fraudulent conduct, Plaintiffs are entitled to and

request that a constructive trust be placed over any of the Policy's proceeds paid or payable to

SJB.

COUNT X
DISGORGEMENT
(8JB)

75. Plaintiffs restate and reallege the preceding paragraphs as though fully set forth

herein.

76. Due to SJB's and Burchard's fraudulent conduct, Plaintiffs are entitled to

disgorgement of any payment of the Policy's proceeds to SJB.

COUNT XI
FRAUDULENT INDUCEMENT
(8JB)

77. Plaintiffs restate and reallege the preceding rhetorical paragraphs as though fully

set forth herein.

78. Due to SJB and Burchard's fraud in the inducement regarding the execution of the

SJB Loan Documents, and the consequences thereof, the SJB Loan Agreement with the Trust is

void or voidable at the election of the Trust.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor and against

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CASE 0:09-cv-00907-DSD-JJG Document 1-1 Filed 04/20109 Page 18 of 20

10. As to Count IX, adjudging and decreeing that a constructive trust shall be put in

place over any of the Policy's proceeds paid to SJB.

11. As to Count X, adjudging and decreeing that SJB disgorge any proceeds it

receives from the Policy.

12. As to Count XI, adjudging and decreeing that the SJB Loan Agreement with the

Trust is void.

13. As to all Counts, awarding Plaintiffs all costs, disbursements and attorneys' fees

relating to the Defendants' unlawful conduct in this action.

14. For such other relief as the Court may deem just and equitable.

Dated: March ~ 2009 WINTHROP & WEINSTINE, P .A.

B~
Michael J. Rothman, #0195479
Aimee D. Dayhoff, #0319041

225 South Sixth Street

Suite 3500
Minneapolis, Minnesota 55402
Telephone: (612) 604-6400

Attorneys for Plaintiff

Opportunity Bridge Funding, LLC

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ACKNOWLEDGMENT
The undersigned hereby acknowledges that pursuant to Minn. Stat. § 549.211, Subd. 2,

costs, disbursements and reasonable attorney and witness fees may be awarded to the opposing

party or parties in this litigation if the Court should find that the undersigned acted in bad faith,

asserted a claim or defense that is frivolous and that is costly to the other party, asserted an

unfounded position solely to delay the ordinary course of the proceedings or to harass; or

committed a fraud upon the Court.

Dated: March;t, 2009

W~'P'A.
. .,'

By:
V~95479
'. '. =-
Aimee D. Dayhoff, #0319041

225 South Sixth Street

Suite 3500
Minneapolis, Minnesota 55402
Telephone: (612) 604-6400

Attorneys for Plaintiff

Opportunity Bridge Funding, LLC

Dated: March If, 2009

:A~~L.P

Charles E. Jones, # 0202708

33 South Sixth Street

Suite 4200
Minneapolis, MN 55402
Telephone: (612) 347-9140

Attorneys for Plaintiff

The Germaine Tomlinson Insurance Trust

438S490vl

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