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Young v. ECTG Ltd

United States District Court, District of Minnesota

March 19, 2015

Leparis D. Young, Maureen O’Shaughnessy Young, as Trustees of the Leparis D. Young Revocable Trust; Maureen O’Shaughnessy Young, Leparis D. Young, as Trustees of the Maureen O’Shaughnessy Young Revocable Trust; John F. O’Shaughnessy, Jr.; and MTerra Ventures, LLC, Plaintiffs,
v.
ECTG Limited, Defendant.

John Rock, Esq., Bruce L. Gisi, Esq. and Rock Law LLC, 120 South Sixth Street, Suite 2050, Minneapolis, MN 55402, counsel for plaintiffs.

Peter D. Gray, Esq., Stanley E. Siegel, Jr., Esq. and Nilan, Johnson, Lewis PA, 120 South Sixth Street, Suite 400, Minneapolis, MN 55402, counsel for defendant.

ORDER

DAVID S. DOTY, JUDGE UNITED STATES DISTRICT COURT.

This matter is before the court upon the motion for summary judgment by plaintiffs Leparis D. Young and Maureen O’Shaughnessy Young, as trustees of the Leparis D. Young Revocable Trust and the Maureen O’Shaughnessy Young Revocable Trust, John F. O’Shaughnessy, Jr., and mTerra Ventures, LLC (collectively, plaintiffs). Based on a review of the file, record, and proceedings herein, and for the following reasons, the motion is granted.

BACKGROUND

This loan dispute arises out of the commercial relationship between plaintiffs and defendant ECTG Limited. ECTG is a holding company that does business as Trustwater Ltd. and Trustwater USA, Inc. On June 26, 2009, plaintiffs and ECTG entered into a Bridge Loan Agreement (Agreement) providing for the sale and purchase of convertible promissory notes from ECTG to plaintiffs. John O’Shaughnessy, Jr. Decl., Ex. 2. Among other things, the Agreement provides that the parties will enter into separate convertible promissory notes through which individual plaintiffs agreed to loan money to ECTG. See id. ¶¶ 1-2. Consistent with the Agreement, the parties executed the following six promissory notes (collectively, Notes):

(1) June 26, 2009, note between ECTG and Leparis D. Young Revocable Trust for $50, 000, Maureen O’Shaughnessy Young Decl. Ex. 1;
(2) June 26, 2009, note between ECTG and Maureen O’Shaughnessy Young Revocable Trust for $100, 000, id. Ex. 3;
(3) June 26, 2009, note between ECTG and John O’Shaughnessy, Jr. For $306, 122.44, John O’Shaughnessy, Jr. Decl., Ex. 1;
(4) June 26, 2009, note between ECTG and mTerra Ventures for $500, 000, Mars Decl. Ex. 1;
(5) July 10, 2009, note between ECTG and the Leparis D. Young Revocable Trust for $100, 000, Maureen O’Shaughnessy Young Decl. Ex. 2; and
(6) July 10, 2009, note between ECTG and the Maureen O’Shaughnessy Young Revocable Trust for $400, 000, Maureen O’Shaughnessy Young Decl. Ex. 4.

It is undisputed that the Notes contain identical terms and conditions, save the amount of each loan. All Notes matured on December 27, 2010, at which time ECTG was obligated to repay each Note’s principal with interest. See id. at 1. In the event of long-term financing, the Notes would convert into equity shares and ECTG’s obligation under the Notes would be extinguished. Id. § 2.1. It is undisputed that ECTG did not secure long-term financing. ECTG admits that it defaulted on the Notes by failing to make payments when due. See id. § 3(b).

ECTG alleges that plaintiffs and others - including former ECTG executives, shareholders, board members, and employees -conspired to form a competing business using ECTG’s patented technology. The alleged conspiracy is the subject of a separate lawsuit pending before this court. See ECTG Limited, et al. v. O’Shaughnessy, et al., Case No. 14-960 (DSD/BRT). For purposes of this case, ECTG relies heavily on a post-default document identifying a list of “[o]pportunities” including “PUT TW[1] OUT OF BUSINESS THROUGH DEFAULT/LIQUIDATION BY O’S.” O’Reilly Aff. Ex. 15, at 2. According to ECTG, this language evinces plaintiffs’ intent to financially ruin ECTG so their competing business ...


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