$1,120,942
Facts
On March 22, 2021, Plaintiff Kylae Jordan filed a securities fraud action against Landon Long, his mother Linda Long, ICON Holdings, Inc. and Infusion Factory, LLC among other family members. In May 2018, Plaintiff invested $500,000 in Defendants’ manufacturing business in exchange for three million shares of preferred stock. Plaintiff alleged that Defendants made written and oral misrepresentations to induce him to make his investment. Plaintiff asserted claims for securities fraud under Corporations Code Sections 25501 and 25504 in addition to claims for Breach of Fiduciary Duty, and Breach of Contract.
Plaintiff sought the return of his $500,000 investment, punitive damages, attorneys fees, costs and interest since his 2018 investment. Defendants denied liability and damages.
Plaintiff’s Contentions
Plaintiff contended that Defendants made false and misleading statements orally, in the investment prospective regarding the businesses past, current and future sales, and the Stock Purchase Agreement. Plaintiff asserted that Defendants failed to inform him that the businesses past sales were based on illicit activities and Defendants misrepresented that the businesses had not filed or paid any tax returns.
Plaintiff asserted that Defendants Landon Long and Linda Long breached their fiduciary duties as a result of gross negligence in the management of the business, committed acts of self-dealing and mis-led their shareholder.
Plaintiff contended that Defendants failed to retain any tax professionals for the first twenty months of business, failed to comply with their contractual obligations to provide any financial statements to Plaintiff as required under the investment agreements, and later refused to follow the advice of all three accounting professionals they later retained. All three accounting professionals testified that Defendants failed to provide them necessary information to perform their work. Plaintiff alleged that Landon Long diverted company funds to purchase a McLaren sports car.
Lastly, Plaintiff alleged that Defendants Landon and Linda Long were never, at any time, properly appointed as officers of either ICON Holdings, Inc. or Infusion Factory, LLC and therefore there was no authority for any actions taken by the businesses. Plaintiff further alleged that Landon and Linda Long were the alter egos of ICON Holdings, Inc. and Infusion Factory, LLC having commingled funds, failed to observe corporate formalities, failed to pay state or federal taxes, and committed malfeasance.
Defendant’s Contentions
Defendants contended they did not make any misrepresentations to Plaintiff and that he did not rely on the representations made in the prospectus and Stock Purchase Agreement. Defendants furthercontended they substantially complied with their contractual obligations under the business agreements and that no company funds were diverted. Finally, Defendants contended that Plaintiff’s claims were barred by the statute of limitations.
Result
On November 19, 2024, the Arbitrator awarded Plaintiff $1,120,942.73 including punitive damages, attorney’s fees, interest and costs.
The Arbitrator found Defendants ICON Holdings, Inc. and Landon Long liable for securities fraud under California Corporations Code Section 25401 and 25501 having concluded that “Landon Long made numerous false and misleading statements under Corp. Code Section 25401.” The Arbitrator found Landon Long liable for intentional and negligent misrepresentation and breach of fiduciary duty; Linda Long liable for breach of fiduciary duty, and ICON Holdings, Inc. liable for breach of contract and the implied covenant of good faith and fair dealing.
The arbitrator found that: Landon and Linda Long were the alter egos of ICON Holdings, Inc. and Infusion Factory, LLC; that Landon and Linda Long were never properly appointed as corporate officers of ICON Holdings, Inc. and any actions taken on its behalf were ultra vires and a legal nullity. The arbitrator found that Landon and Linda Long had no authority for any actions taken in the name of ICON Holdings, Inc. including entering into the Stock Purchase Agreement with Plaintiff. The Arbitrator found Landon Long and ICON Holdings, Inc. liable for punitive damages.
Landon Long, Linda Long, ICON Holdings, Inc., and Infusion Factory, LLC were held jointly and severally responsible for all damages award to Claimant less the punitive damages awarded against only Landon Long and icon Holdings, Inc.
Arbitrator
Hon. David I. Brown (Ret.)
Court
JAMS Arbitration
JAMS Case No.
1130009693
Attorneys
Plaintiff’s counsel:
Scott Radcliffe of the law firm Alves Radcliffe LLP located in Walnut Creek.
Defendants’ counsel:
Thomas Landers, Matthew Arvizu, and Owen Praskievicvz of the law firm Solomon Ward Seidenwurm &
Smith LLP located in San Diego.
Experts:
Plaintiff
Joleen Tanner, CPA (Accounting)
Defendants
None
Duration:
5 days
First Amended Complaint
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Award: Phase 1 finding of liability and damages
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Award Phase 2 punitive damages, fees, interest and costs
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