SeedX v Kanye 2020 Nathan Sproul -

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CAUSE NO.____________________ SEEDX, INC.,and Jacqueline BASULTO § IN THE DIST. COURT/CCL and Justin RASHIDI, as managing partners § in their of cial capacity; § § Plaintiffs; § v. § __________COURT § KANYE 2020, the Presidential Campaign § as a public good non-pro t; and LINCOLN § STRATEGY GROUP, LLC, and § FORTIFIED CONSULTING, and § Nathan SPROUL, in his of cial and § personal capacity. § § Defendants § TRAVIS COUNTY, TEXAS PLAINTIFFS’ ORIGINAL PETITION COME NOW, Plaintiffs SEEDX INC. (hereinafter “SeedX”), a Texas domestic corporation, by and through its agents Jacqueline BASULTO (hereinafter “Ms. Basulto”) and Justin RASHIDI (hereinafter “Mr. Rashidi”), and le this Plaintiffs’ Original Petition by and through their Counsel of Record, and would hereby humbly show this Court as follows: Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 1 of 56 fi fi fi fi I. INTRODUCTION Now, the Plaintiffs come complaining of the Defendants and their breach, and various torts, and pray for relief from this Court. With this, Plaintiffs’ Original Petition, Plaintiffs allege breach of contract, promissory estoppel, quantum meruit, negligent misrepresentation, fraud in the inducement, fraud, conversion, unjust enrichment and disgorgement, civil conspiracy, and application for accounting. II. DISCOVERY CONTROL PLAN 1. Plaintiffs intend to conduct discovery under level 2 of the Texas Rules of Civil Procedure Rule 190.3. 2. Plaintiffs af rmatively plead that its suit is not governed by the expedited actions process in the Texas Rules of Civil Procedure under Rule 169 because Plaintiffs seek non-monetary relief, as well as monetary. III. PARTIES 3. SeedX Inc. is a Delaware for-pro t corporation,1 with the right to transact business in Texas.2 Its principal place of business located at 14400 Weldon Lane, Austin, Texas 78728. They may be served by and through their counsel 1 Pls. App. at 000012. 2 Pls. App. at 000021. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 2 of 56 fi fi of record, Guest & Gray, P.C. ℅ Elizabeth Alvarez or Scott Gray, 315 S. Bois D’Arc, Forney, Texas 75126. 4. Jacqueline Basulto is an of cer of SeedX Inc. and is its representative in this matter. She is not participating in her individual capacity. She is a Plaintiff in this matter and may be served by and through her counsel of record, Guest & Gray, P.C. ℅ Elizabeth Alvarez or Scott Gray, 315 S. Bois D’Arc, Forney, Texas 75126. 5. The Defendant Kanye 2020 is a mutual bene t non-pro t corporation incorporated in Wyoming.3 Its incorporator is Andre Bodiford.4 Its principal place of business is located at 3202 Big Horn Ave., Cody, Wyoming, 82414.5 It may be served with service of process through its registered Agent, Cogency Global Inc., 1920 Thomas Ave., Ste. 610, Cheyenne, Wyoming, 82001.6 6. Lincoln Strategy Group, LLC (hereinafter “Lincoln”) is an Arizona Corporation, with both its registered of ce and its principal place of business at 740 S. Mill Ave, #200, Tempe, Arizona 85281. Lincoln is a consulting rm that specializes in campaign management. It may be served with service of process 3 Pls. App. at 000028. 4 Id. 5 Id. 6 Id. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 3 of 56 fi fi fi fi fi through its registered Agent, Nathan Sproul, 740 S. Mill Ave, #200, Tempe, Arizona 85281.7 7. Forti ed Consulting (hereinafter “Forti ed”) is a Virginia Corporation, with its registered of ce at 4701 Cox Road, Suite 285, Glen Allen, Virginia 23060 and its principal place of business at 740 S. Mill Ave, #200, Tempe, Arizona 85281. Forti ed is a consulting group that specializes in independent campaigns. It may be served with service of process through its registered Agent, CT Corporation, 4701 Cox Road, Suite 285, Glen Allen, Virginia 23060.8 8. Defendant Nathan Sproul (hereinafter “Mr. Sproul”) is an individual who resides in Tempe, Arizona. He conducts business in Mariscopa County, Arizona, in his role as CEO of both Lincoln and Forti ed. He may be served with service of process at his work address, 740 S. Mill Ave, #200, Tempe, Arizona 85281. 7 Arizona Corporation Commission, Entity Search, https://ecorp.azcc.gov/BusinessSearch/ BusinessInfo?entityNumber=L14191676 (last accessed May 3, 2021). 8 Virginia State Corporation Commission, Clerk’s Information System, https:// cis.scc.virginia.gov/EntitySearch/BusinessInformation? businessId=11063321&source=FromEntityResult&isSeries=False (last accessed May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 4 of 56 fi fi fi fi fi IV. PETITION JURISDICTION & VENUE 9. This Court has jurisdiction over this lawsuit and is jurisdictionally competent to render judgment in this matter. 10. This Court likewise has jurisdiction because it has subject-matter jurisdiction over the declaratory relief sought, pursuant to Tex. Civ. Prac. and Rem. Code § 37.003. 11. This Court has speci c personal jurisdiction over the Defendants for their breach of contract and other related claims under Texas’ long arm statute,9 and an exercise of that jurisdiction would not violate the due process clause of the Constitution.10 And since “[t]he Texas long-arm statute extends to the limits of the Constitution,” only the second prong of the test is at issue.11 12. The Defendants have more than minimum contact with Texas as a forum state, and have purposefully directed their business activities toward Texas, and purposefully availed themselves of conducting their business activities here, including political consulting activities and campaign activities regarding the 9 Tex. Civ. Prac. & Rem. Code Ann. § 17.021. 10In re Chinese–Manufactured Drywall Prods. Liab. Litig., 753 F.3d 521, 535 (5th Cir. 2014) (noting that a Court has personal jurisdiction over a Defendant if “(1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution.”(quoting Ainsworth v. Moffett Eng’g, Ltd., 716 F.3d 174, 177 (5th Cir. 2013)). 11 Stroman Realty, Inc. v. Antt, 528 F.3d 382, 385 (5th Cir. 2008). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 5 of 56 fi Kanye West 2020 campaign, and Plaintiffs’ causes of action arise from these forum related contacts.12 13. Venue in Travis County is proper in this cause under § 15.002 of the Texas Civil Practice and Remedies Code as a substantial part of the events giving rise to the claim occurred in Travis County. V. FACTS A. SEEDX BEGAN AS A SMALL BUSINESS, AND HAS QUICKLY BECOME A THRIVING PR BRAND 14. SeedX is a marketing and web development company incorporated in the state of Delaware and authorized to do business in Texas.13 15. Started in 2016 as the brain child of Plaintiff Jacqueline Basulto and her partner, Justin Rashidi, SeedX exploded into the tech and PR world, and has already made a name for itself. 16. SeedX provides marketing and digital consulting services to companies and organizations growing their online presences, ranging from small businesses to nonpro ts to campaigns. They pride themselves in providing omni-channel marketing which creates an easy and ef cient process for customers. 12 Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 433 (5th Cir. 2014). 13 Pls. App. at 000012, Pls. App. at 000021. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 6 of 56 fi fi 17. There are three shareholders, Ms. Basulto with 49%, Mr. Rashidi with 49%, and Heidi Riedeman with 2%. SeedX also has a team of 25-30 employees. 18. Ms. Basulto serves as its CEO and the majority of her day to to day activity is focused on business development, nding new clients, working on contracts, billing, and more. 19. Meanwhile, cofounder Mr. Rashidi focuses on strategy and operations of the company. 20. Under their leadership, the company has continued to grow and earned over $1,000,000 in revenue in 2020, and Ms. Basulto and Mr. Rashidi have obtained a spot on Forbes 30 Under 30 for their work in marketing and advertising for their rm.14 SeedX’s cutting edge approach has garnered them recognition and awards, including: being named the top women owned digital marketing company in 2021 by Clutch.co15, being ranked number 2 in Los Angeles for 14 Pls. App. at 000024 15 Top Women Owned Digital Marketing Agencies, Clutch.co, https://clutch.co/agencies/ digital-marketing/women-owned (last accessed on May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 7 of 56 fi fi marketing agencies in 2020 by Improvado16, and being ranked number 10 for digital marketing agencies in 2021 by The Manifest.17 21. Their clients include many prominent blue chip and large national corporations such as the AARP, and Kaiser Permanente. 22. Their innovative solutions and modern cutting-edge approach to marketing and PR constantly attracts large businesses and other new clients. B. M EANWHILE , L INCOLN S TRATEGY G ROUP WAS C REATED BY DEFENDANT NATHAN SPROUL AS ONE IN A LONG LINE OF CONSULTING FIRMS WITH TIES TO THE REPUBLICAN PARTY 23. Defendant Nathan Sproul has been a consultant in Republican politics since the early to mid-1990s. He also began his career as an intern for the Republican National Committee. He served as the eld director for the Arizona Christian Coalition in 1997, Executive Director for the Arizona Republican Party from 1999-2002 and founder of Sproul & Associates in 2003. However, his wife indicated in 2003 that Mr. Sproul’s main job at that time was “…for a company called Voyager Expanded Learning as Regional President in charge of sales for 16Hailey Friedman, The Best Marketing Agencies in Los Angeles: Top-53 LA Agencies, Improvado, (Feb. 26, 2020), https://improvado.io/blog/best-marketing-agencies-los-angeles (last accessed May 3, 2021). 17 Top 70 Digital Marketing Companies In Austin, The Manifest, https://themanifest.com/ digital-marketing/agencies/austin (last accessed May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 8 of 56 fi the Western territory.”18 He also worked for Grassroots Mobilization LLC in 2005. He renamed Sproul & Associates to Lincoln Strategy Group in 2008. In 2008, He created Grassroots Outreach LLC which was registered at 80 E. Salado Parkway, Tempe, Arizona which has 27 other companies registered to this address. In 2012, Mr. Sproul created Issue Advocacy Partners and Strategic Allied Consulting which shares an address with Karl Rove’s PAC, American Cross Roads and Holtzman Vogel Jose ak Torchinsky PLLC.19 24. He has been at the helm of a variety of different consulting companies: Sproul & Associates, Strategic Allied Consulting, Lincoln Strategy Group, and Forti ed Consulting. 25. Unbeknownst to Plaintiffs, Mr. Sproul has a history of fraud and campaign enforcement issues. He has been investigated in Arizona, Nevada, Florida, and Oregon regarding allegations that Democratic registration forms were 18Pillsbury Baptist Bible College Alumni Directory (June 23, 2007), https://web.archive.org/ web/20040619141215/http://pillsbury.edu/nav.php?link=direct/dir_pbbc.htm (last accessed April 30, 2021). 19 Brad Friedman, Rove’s American Crossroads Shares Address, Legal Firm with GOP Operative Sproul’s Firm, TRUTHOUT (October 18, 2012), https://truthout.org/articles/roves-american-crossroads- shares-address-legal- rm-with-shady-gop-operatives- rm/ (last accessed May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 9 of 56 fi fi fi fi destroyed or discarded,20 and by the Federal Election Commission.21 He was once a consultant for the Republican National Committee in 2004, but that relationship ended when Mr. Sproul and his rm were investigated by the Florida Department of Law Enforcement for election fraud.22 26. Mr. Sproul founded Lincoln Strategy Group in 2008 and Forti ed Consulting. 27. It has since grown into a consulting company with and international presence, but is still heavily involved in consulting for Republican politics. 28. Lincoln has an of ce in Arizona, but does work all over the continental United States. It has consulted on several high-pro le campaigns and won many awards. 29. In fact, in the 2020 Election, it did work for the Republican Party of Texas23 and for Chip Roy for Congress.24 20 Sara Murray and Scott Glover, Kanye West’s campaign has hired GOP operative with history of controversial work, KTBS (Sept. 22, 2020), https://www.ktbs.com/news/national_politics/kanye- w e s t s - c a m p a i g n - h a s - h i r e d - g o p - o p e r a t i ve - w i t h - h i s t o r y - o f - c o n t rove r s i a l - w o rk / article_25c9c939-8fee-59c2-ae36-0a19796d2350.html (last accessed May 3, 2021). 21 Id. 22 Id. 23 Vendor/Recipient Pro le: Lincoln Strategy Group, OpenSecrets: Center for Responsive P o l i t i c s , h t t p s : / / w w w. o p e n s e c r e t s . o r g / c a m p a i g n - e x p e n d i t u r e s / v e n d o r ? vendor=Lincoln+Strategy+Group&year=2014 (last accessed May 3, 2021). 24 Id. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 10 of 56 fi fi fi fi fi 30. Among other entities Lincoln has formed a relationship with, is the Preserve America’s Future PAC. 31. The most current statement of organization for this PAC was led with the Federal Election Commission on October 15, 2014. 32. The mailing address for the PAC is listed as P.O. Box 26141, Alexandria, Virginia 22313. The head of the PAC is Chris LaCivita. 33. According to the nance reports on le with the Federal Election Commission, since 2014, both Lincoln and the law rm, Holtzman Vogel Jose ak Torchinsky PLLC, made small loans to the PAC. Later, the PAC hired Lincoln and Holtzman Vogel Jose ak Torchinsky to do consulting and compliance work and subsequently made expenditures to both. C. SEEDX HAD A PREVIOUS RELATIONSHIP WITH DEFENDANTS LINCOLN STRATEGY GROUP AND NATHAN SPROUL 34. Lincoln has worked on a variety of matters which occasioned them to be in need of the services SeedX provides. 35. On June 30, 2020, someone from Lincoln reached out to SeedX via SeedX’s contact form to discuss potential work opportunities. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 11 of 56 fi fi fi fi fi fi 36. In July 2020, Lincoln and SeedX entered into a Non-Disclosure Agreement that would purport to cover work done for Lincoln25 37. In August 2020, Lincoln and SeedX made an oral agreement for SeedX to provide consulting services in the marketing and web development areas for three months for Lincoln for work with a company for $34,000.26 38. This agreement was later put into writing that became effective August 1, 2020 and was signed by SeedX and a Lincoln employee on August 10, 2020 (Mr. Sproul signed on October 27, 2020). This agreement made SeedX a vendor/ service provider to Lincoln. At no time were either Ms. Basulto or Mr. Rashidi employees of Lincoln. 39. Both Ms. Basulto and Mr. Rashidi were added to the Lincoln website.27 They were added in July/August 2020 and were removed around January 15, 2021. 40. The course of the work was performed over a three month period. During this three month period, SeedX satis ed its duties per the agreement, which included: engaging a community for the company that spanned across the world, identifying trends and issues in the industry the company was in, communicating on all relevant channels and media, creating and manageing 25 Pls. App. at 001715. 26 Pls. App. at 001711. 27 Pls. App. at 001377-79. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 12 of 56 fi shareable content, developing target advertising campaigns, increasing engagement, etc… Additionally, SeedX provided extra consulting to Lincoln beyond the three month time period, but to date has not compensated for this work. The global contract continued month to month and the last of cial date of work was December 15, 2020. A website project was added in writing in December 2020 and nalized mid-January 2021. D. K ANYE 2020, L INCOLN S TRATEGY G ROUP , AND F ORTIFIED CONSULTING 41. On July 4, 2020, via Twitter, hip-hop artist and entrepreneur Kanye West announced he would campaign and run for U.S. President in the November 2020 Election as part of the Kanye West 2020 Presidential Campaign (hereinafter “Campaign”). 42. On July 15, 2020, Mr. West led a Statement of Organization with the Federal Election Commission.28 43. The Campaign listed 3202 Big Horn Ave, Cody, Wyoming 82414, as its address.29 44. The Statement of Organization lists an Andre Bodiford as its treasurer. 28 Pls. App. at 000033-36. 29 Pls. App. at 000033. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 13 of 56 fi fi fi 45. On July 23, 2020, the Campaign was incorporated as a mutual bene t nonpro t corporation in Wyoming.30 46. It listed Cogency Global Inc, a registered agent company, as its registered agent, with an address of 1920 Thomas Ave. Ste. 610, Cheyenne, Wyoming, 82001. 47. The principal of ce address and the mailing address for the campaign were both listed as 3202 Big Horn Avenue, Cody, Wyoming 82414. 48. The corporation has no members. 49. The Campaign was placed on the ballot in twelve states. 50. The only listed incorporator is Andre Bodiford. The Articles list a Wyoming phone numbers for Mr. Bodiford, and as his email, [email protected]. 51. The rst consultant the Campaign hired to assist it was Mercury Public Affairs, LLC, a public relations rm that it represents it consults for corporations, NGOs, governments, political parties, and politicians. 52. However, Mercury Public Affairs was dismissed from the campaign, ending its involvement. It does not appear anywhere on the campaign’s reports.31 53. The Campaign searched for an alternate consulting rm. 30 Pls. App. at 000032. 31 Pls. App. at 000073-120, Pls. App. at 000131-55, Pls. App. at 000165-67, Pls. App. at 768-85, Pls. App. at 001184-227, Pls. App. at 001229-55, Pls. App. at 001303-14, Pls. App. at 001357-76. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 14 of 56 fi fi fi fi fi fi 54. The Campaign approached Lincoln, well-known for working with Republicans in late summer 2020. 55. Lincoln agreed to work with the Campaign, and in meetings af rmatively shopped Ms. Basulto’s work. In fact, with Ms. Basulto and Mr. Rashidi’s names and images on their website, they were able to bill themselves as innovative and attract a campaign with a candidate whose personal brand would identify with SeedX’s approach. 56. Mr. Sproul created Forti ed speci cally to work on this campaign to not be on the report as Lincoln, presumably because of his history as a Republican campaign consultant,32 and Lincoln’s work for the Republican Party of Texas in the 2020 Election.33 57. Forti ed gives its address as 740 S. Mill Ave, #200, Tempe, Arizona 85281. However, that address is the same address as 740 S. Mill Ave, #200, Tempe, Arizona 85281, which is the address for Lincoln. 32 Sara Murray and Scott Glover, Kanye West’s campaign has hired GOP operative with history of controversial work, KTBS (Sept. 22, 2020), https://www.ktbs.com/news/national_politics/kanye- w e s t s - c a m p a i g n - h a s - h i r e d - g o p - o p e r a t i ve - w i t h - h i s t o r y - o f - c o n t rove r s i a l - w o rk / article_25c9c939-8fee-59c2-ae36-0a19796d2350.html (last accessed May 3, 2021). 33 Vendor/Recipient Pro le: Lincoln Strategy Group, OpenSecrets: Center for Responsive P o l i t i c s , h t t p s : / / w w w. o p e n s e c r e t s . o r g / c a m p a i g n - e x p e n d i t u r e s / v e n d o r ? vendor=Lincoln+Strategy+Group&year=2014 (last accessed May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 15 of 56 fi fi fi fi fi 58. In fact, if you go to the of ce address, there is not a separate location for Forti ed, just doors with the name “Lincoln Strategy Group” on them.34 E. LINCOLN STRATEGY GROUP INVITED SEEDX TO WORK WITH THEM ON THE KANYE 2020 CAMPAIGN 59. In August 2020, Mr. Sproul approached Ms. Basulto’s and indicated that he would like SeedX to provide consulting services in the marketing and web development areas for the Campaign for possible compensation ranging from $200,000 to $4,000,000 in proportion to the performance of the services provided. 60. SeedX was intrigued and excited by the opportunity to work for the Campaign. Ms. Basulto indicated the terms were agreeable to her, and asked for a written contract to memorialize it. 61. Mr. Sproul told Ms. Basulto they could gure out details later and reduce the agreement to writing at a later time. The oral discussions ranged from revenue share being 50/50 split to a multi-million dollar project for the services. 62. No agreement was forthcoming. 34 Sara Murray and Scott Glover, Kanye West’s campaign has hired GOP operative with history of controversial work, KTBS (Sept. 22, 2020), https://www.ktbs.com/news/national_politics/kanye- w e s t s - c a m p a i g n - h a s - h i r e d - g o p - o p e r a t i ve - w i t h - h i s t o r y - o f - c o n t rove r s i a l - w o rk / article_25c9c939-8fee-59c2-ae36-0a19796d2350.html (last accessed May 3, 2021). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 16 of 56 fi fi fi 63. In October 2020, Mr. Sproul again approached SeedX about the Campaign, this time with more urgency. Mr. Sproul indicated that the Campaign was ready to go and had completed necessary paperwork and was getting on various state ballots. He indicated that a website was needed immediately due to the Campaign being ready to go. SeedX was able to create the website within ten days under the belief that payment would be made much like the prior arrangement Lincoln had made with SeedX which was paid out in monthly amounts. Ms. Basulto again asked for a written agreement. Mr. Sproul did not provide a written agreement. F. AFTER PROVIDING SERVICES AND DELIVERING ALL CONTRACTED FOR RECEIVABLES, SEEDX HAS YET TO BE COMPENSATED UNDER THE CONTRACT 64. SeedX’s rst and immediate job was to create a website for the Campaign with a deadline of two weeks from then ,and it was informed her that compensation would be worked out later. Mr. Sproul still never provided a written agreement for SeedX and its work on the Campaign through either Lincoln or Forti ed, even though SeedX believed it was working for Forti ed on the Campaign. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 17 of 56 fi fi fi 65. SeedX was in direct contact with the Campaign and Forti ed and was always available to the Campaign and Forti ed.35 66. Besides creating the website in ten days, SeedX made sure the website with compliant with the Federal Election Commission’s rules.36 SeedX also created an advertisement to go in the New York Times, as well as creating merchandise for the Campaign ranging from hats to sweatshirts.37 They also handled the sales of the merchandise and gathering the donor data.38 67. The Campaign paid out $13,210,013.12 in 2020 for services provided to it.39 Over 1/3 of that was paid to Forti ed ($4,769,529.86).40 68. SeedX also was told that no reimbursements would be provided for travel; however, Forti ed was paid $7,808.28 and $58,200.00 on August 26, 2020 for travel reimbursements.41 Other companies that provided services to the Campaign were also paid for travel reimbursements. 35 Pls. App. at 001381-706. 36 Pls. App. at 001391-1427. 37 Pls. App. at 001444-81. 38 Pls. App. at 001444-85. 39 Pls. App. at 000073-120, Pls. App. at 000131-55, Pls. App. at 000165-67, Pls. App. at 768-85, Pls. App. at 001184-227, Pls. App. at 001229-55, Pls. App. at 001303-14, Pls. App. at 001357-76. 40 Id. 41 Pls. App. at 000092, Pls. App. at 000093. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 18 of 56 fi fi fi fi 69. Millennial Strategies LLC began work on the website before SeedX and was paid $205,968.75 for its work on one page of the Campaign website. It was also reimbursed for travel. 70. Neither SeedX nor any of their work is to be found on any of the nance reports, despite being contacted by Jill Vogel from Holtzman Vogel Jose ak Torchinsky PLLC to get SeedX’s help in creating the nance reports.42 71. Holtzman Vogel Jose ak Torchinsky PLLC was not included on the nance reports by the Campaign. 72. Further, the Campaign reported paying $83,509.33 on the 2020 nance reports to Shopify and $918,130.00 too Los Angeles Apparel for work provided to the Campaign, but SeedX worked with those companies and created the website and was left off the reports.43 73. The Campaign also paid $270,000.00 to MVD, Inc. and $105,000.00 to We Think LLC for communications consulting which are similar to the services provided by SeedX.44 42 Pls. App. at 001531. 43 Pls. App. at 000771, Pls. App. at 001365. 44Pls. App. at 000155, Pls. App. at 001192, Pls. App at 001255, Pls. App. at 001314, Pls. App. at 001366, Pls. App. at 001376. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 19 of 56 fi fi fi fi fi fi G. REQUESTS TO BE PAID UNDER THE TERMS OF THE CONTRACT WITH FORTIFIED CONSULTING HAVE BEEN MET WITH STONEWALLING, CONFUSING REBUTTALS, ATTEMPTS AT EXTORTION, AND DOWNRIGHT REFUSAL 74. SeedX made multiple requests to be paid for the services provided to the Campaign. However, Lincoln, Forti ed, and Mr. Sproul often ignored these requests or refused to pay. They also asked that the website be transferred to Lincoln in order to be paid. 75. SeedX was able to develop and maintain a website for the Campaign. The website was not only compliant with the Federal Election Commission’s rules but also raised $2,500,000 for the Campaign in just one week. 76. Further, as part of SeedX’s consulting services, SeedX created an advertisement for the New York Times and engaged in other work to aid Forti ed in the Campaign. 77. However, SeedX and Ms. Basulto received no written agreements from Mr. Sproul, Forti ed, or Lincoln nor did SeedX receive any compensation for the work done for the Campaign. 78. For the next two months (December 2020 and January 2021), Ms. Basulto informed Mr. Sproul that SeedX still had not been compensated for its work Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 20 of 56 fi fi fi with Company X and Lincoln and that SeedX could not keep working with Lincoln on those services. 79. SeedX helped Lincoln nd a new company to do the services provided by SeedX for Company X. Mr. Sproul requested that the Campaign website be transferred to him; however, Ms. Basulto identi ed that Campaign was a project under Forti ed, not Lincoln, and that SeedX still needed to be compensated for its work on the Campaign. H. SEEDX HAS MADE A FORMAL DEMAND FOR PAYMENT THAT WENT UNANSWERED, WHICH NECESSITATED LEGAL ACTION 80. In early January 2021, Ms. Basulto asked Mr. Sproul and Forti ed to move forward with compensation for SeedX’s work on the Campaign. 81. Ms. Basulto and Mr. Rashidi found that SeedX’s work on the Campaign was valued over $10,000,000 but that SeedX was only seeking $2,000,000 for the services provided. 82. Besides the lack of compensation, Ms. Basulto found herself frustrated when she identi ed issues in violation of the Federal Election Commission’s rules. She asked if those issues could be addressed; however, she could not do so without SeedX being compensated. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 21 of 56 fi fi fi fi fi 83. On January 19, 2021, Mr. Sproul offered to compensate SeedX $20,000 .00 through Lincoln for the services provided through the Campaign. Ms. Basulto and Mr. Rashidi had to reject this offer as it was substantially below the value of the services provided and the amount they were willing to accept for the services which were provided through Forti ed, not Lincoln. 84. Such has led the Plaintiffs to complain of the Defendants before this Court. VI. CAUSE OF ACTION 1: BREACH OF CONTRACT 85. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 86. Plaintiffs herein bring a cause of action against the Defendants for breach of contract. 87. In Texas, the elements for breach of contract are: a. that there is a valid, and enforceable agreement; b. that the plaintiff performed, tendered performance, or was excused from performing its contractual obligations; c. that the defendant breached the contract; and d. the defendant’s breach caused the plaintiff injury.45 45See, e.g., McLaughlin, Inc. v. Northstar Drilling Technologies, Inc., 138 S.W.3d 24, 27 (Tex. App. — San Antonio 2004); PennWell Corp v. Ken Associates, Inc., 123 S.W.3d 756 (Tex. App — Houston 14th Dist. 2003); Foster v. Centrex Capital Corp., 80 S.W.3d 140, 143-144 (Tex. App. Austin 2002); 14 Tex. Jur. 3d, Contracts § 355. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 22 of 56 fi 88. There is a four-year statute of limitations46 and the cause of action generally accrues on the date of the breach.47 89. Re ecting that information, Plaintiffs assert that the Defendants’ refusal to pay for services negotiated for, rendered, received, and accepted, is a breach of contract. 90. Plaintiffs also assert that this breach is the proximate cause of the damages that they suffer and complain of herein. 91. A verbal contract existed between the Plaintiffs and the Defendant Forti ed by and through its agent Defendant Mr. Sproul that satis es all elements to a breach of contract claim in Texas.48 92. The contract entered into between the Plaintiffs and the Defendants is the basis of their relationship. 46 Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a)(3) and § 16.051. 47Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002); Anderson v. Cocheu, 176 S.W. 3d 685, 689 (Tex. App. Dallas 2005); Tex. Jur. 3d. Contracts § 321. 48 Those elements are: (1) The existence of a valid, enforceable contract; (2) Plaintiff is a proper party to sue for breach of contract; (3) Plaintiff performed, tendered performance of, or was excused from performing its contractual obligations; (4) Defendant breached the contract; and (5) Defendant’s breach caused the plaintiff injury. See Winchek v. Am. Express Travel Related Servs., 232 S.W.3d 197, 202 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (discussing elements 1 and 3-5); Residential Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex. App.—Fort Worth 2006, no pet.) (same); Zuniga v. Wooster Ladder Co., 119 S.W.3d 856, 862 (Tex. App.—San Antonio 2003, no pet.) (discussing element 2). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 23 of 56 fl fi fi 93. The contract is not barred by the Statute of Frauds. The contract was verbal, for a service, under one year, and the Plaintiffs' work was given in consideration.49 94. The Plaintiffs had several obligations to perform for the Defendants Forti ed and the Campaign under the contract which, in furtherance of, and in reliance upon the contract, the Plaintiffs performed in good faith. 95. Plaintiffs believed the Defendants would use good faith, due diligence, and reasonable care to execute their obligations under the Agreement, as they pledged they would, and as the Plaintiffs have. 96. Plaintiffs’ expectations were reasonable as they had previously been engaged under a verbal contract by Defendants, had a written contract follow, and then, were paid. 97. The Plaintiffs allege the Defendants have, by indicating they will not compensate the Plaintiffs as agreed, repudiated that contract, which may be treated as an anticipatory breach. 98. “Repudiation consists in ‘such words or actions by a contracting party as indicate that he is not going to perform his contract in the future.’”50 49 Tex. Bus. & Com. Code § 26.01. 50 Continental Casualty Co. v. Boerger, 389 S.W.2d 566, 569 (Tex.Civ.App. Waco 1965, writ dism’d), (citing Samuel Williston ‘Repudiation of Contracts,’ Select Readings, Assoc. of American Law Schools 1090; 14 Harv.L.Rev. 317; Moore v. Jenkins, 109 Tex. 461, 211 S.W. 975, 976). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 24 of 56 fi 99. Any “conduct which shows a xed intention to abandon, renounce, and refuse to perform the contract” is repudiation.51 100. Repudiation can be established by fact testimony and there are clear facts here which manifest a renunciation or repudiation.52 101. The Defendants have been asked on more than one occasion to make good on their promise to compensate the Plaintiffs for their work. indicated they will not pay the agreed amount and offered on $20,000, which is less than the agreed amount by a substantial amount. In fact, they were sent a demand letter and asked the Plaintiffs to cease and desist contacting the Campaign for payment, even after having asked for payment multiple times. 102. The Defendants have made clear that they repudiate the contract, and the Plaintiffs are entitled to treat that as an anticipatory breach. 103. The above referenced acts or omissions, singularly or in combination with others, constitutes a breach of contract by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. The breach of the contract was either grossly negligent, or willful. 51Id. at 568, (citing Kilgore v. Northwest Texas Baptist Educational Soc., 90 Tex. 139, 37 S.W. 598, 600; Burks v. Neutzler, Tex.Com.App., 2 S.W.2d 416, 418; Moore v. Middletoni, Tex.Comm.App., 12 S.W.2d 995, 997; Lumbermen’s Mutual Casualty Co. v. Klotz, 5 Cir., 251 F.2d 499. 52 See Continental Casualty Co., 389 S.W.2d at 568. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 25 of 56 fi fi 104. Plaintiffs hereby make a demand for damages to make them whole under the contract, including but not limited to: 1. consequential and incidental damages; and 2. compensatory damages. 105. Pursuant to § 37.009 of the Texas Civil Practice and Remedies Code,53 request is made for all costs and reasonable and necessary attorney’s fees incurred by Plaintiffs herein, including all fees necessary in the event of an appeal of this cause to the Court of Appeals and the Supreme Court of Texas as the Court deems equitable and just. 106. Pursuant to § 551.142 of the Texas Government Code,54 request is made for all costs and reasonable and necessary attorney’s fees incurred by Plaintiffs herein, including all fees necessary in the event of an appeal of this cause to the Court of Appeals and the Supreme Court of Texas, as the Court deems equitable and just. VII. CAUSE OF ACTION 2: PROMISSORY ESTOPPEL 107. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 53 Tex. Civ. Prac. & Rem. Code §37.009. 54 Tex. Gov’t. Code §551.142 Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 26 of 56 108. Plaintiffs herein bring a cause of action against the Defendants for promissory estoppel. 109. The elements of promissory estoppel in Texas are: a) promise by the defendant; b) foreseeability of reliance thereon by the promisor; and c) substantial reliance by the promisee to his detriment.55 110. An employee such as a plaintiff can maintain an estoppel claim against a defendant when the defendant “foreseeably and intentionally induces the prospective employee to materially change his position to his expense and detriment, and then repudiates its obligations before the written contract begins to operate.”56 111. The Defendant Mr. Sproul, as an agent of both Lincoln and Forti ed, made a promise to the Plaintiff SeedX and its agents, that SeedX would be reasonably compensated between $200,000 and $4,000,000, depending on the work. 112. This promise was rati ed by the other Defendants. It was foreseeable reliance based on the past relationship. 55Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 379-380 (Tex.App. 2007) (citing English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983). 56Roberts v. Geosource Drilling Services, Inc., 757 S.W.2d 48, 49 (Tex.App. — Houston [1st Dist.] 1988, no writ). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 27 of 56 fi fi 113. The Plaintiffs relied on the promises of the Defendants to their obvious and demonstrable detriment as they performed many services and incurred expenses that they have not been paid and/or reimbursed for. 114. Notably, all professional services performed that bene ts a campaign must be compensated, or otherwise be listed as either an in-kind contribution or a loan. This relationship was not listed as a loan on the nance reports of the Campaign, nor has it been listed as an in-kind contribution. 115. It is clear that based on the above referenced acts or omissions, singularly or in combination with others, the Plaintiffs can meet the elements for promissory estoppel, and the Defendants Lincoln, Forti ed, and Mr. Sproul must be estopped from claiming no relationship existed that they must compensate the Plaintiffs fairly for. Moreover, via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. The promissory estoppel was either grossly negligent, or willful. VIII. CAUSE OF ACTION 3: QUANTUM MERUIT 116. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 117. Under the law of the State of Texas, Plaintiffs plead, in the alternative as is and if necessary, a cause of action against Defendants for quantum meruit. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 28 of 56 fi fi fi 118. Plaintiffs were asked to render and provide, and did render and provide, a variety of valuable services and objectively identi able deliverables to the Defendants in furtherance of the Campaign. 119. As a direct result of the rendition of services to the Defendants, a bene t was incurred by the Defendants, including but not limited to: over a million dollars in fundraised money; a working website compliant with the Federal Election Commission; swag for the Campaign; and a functioning campaign store. 120. The Defendants accepted the bene ts of the Plaintiffs’ services and in fact recognized the value provided to the Campaign by the Plaintiffs and their work.57 121. Defendants used, accepted, and enjoyed the services provided by Plaintiffs and had notice that Plaintiffs expected to be paid for those services. 122. Other organizations and entities which provided the same or similar services were compensated more for less work. 123. Defendants Lincoln and Forti ed have, in fact, used Plaintiffs’ services and paid for them in the past.58 It was this previous relationship that the Defendants relied upon in inviting the Plaintiffs to participate in the Campaign.59 57 Pls. App. at 001707-13. 58 Id. 59 Id. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 29 of 56 fi fi fi fi 124. Before the Plaintiffs’ work even began, Plaintiffs and Defendants all clearly understood the services Plaintiffs would provide to the Defendants were in exchange for monetary compensation. 125. The above referenced acts or omissions, singularly or in combination with others, constitutes a cause for quantum meruit by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. The quantum meruit was either grossly negligent, or willful. 126. As a direct and proximate cause of the Defendants’ nonpayment, the Plaintiffs have been damaged, and are entitled to recover the reasonable value of the services provided to the Defendants. IX. CAUSE OF ACTION 4: : NEGLIGENT MISREPRESENTATION 127. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 128. Plaintiffs herein bring a cause of action against the Defendants for negligent misrepresentation. 129. The elements for negligent misrepresentation in Texas: a) representation is made by a defendant in the cause of his business, or in a transaction in which he has a pecuniary interest; Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 30 of 56 fi b) the defendant supplies “false information” for the guidance of others in their business; c) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and d) the plaintiff suffers pecuniary loss by justi ably relying on the representation.60 130. In addition to these elements, a plaintiff must also prove that “the defendant misrepresented an existing fact rather than a promise of future conduct.”61 131. Defendant Mr. Sproul, as an agent of Lincoln and Forti ed, guaranteed Forti ed’s intention to pay. This induced SeedX and its agents to undertake the business enterprise for the Campaign they otherwise would not have, to their detriment. 132. The above referenced acts or omissions, singularly or in combination with others, constitutes negligent misrepresentation by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. 60Miller v Raytheon, 229 S.W.3d 358, 379-380 (Tex.App. 2007) (citing Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n.24 (Tex. 2002); McCamish, Martin, Brown Loef er v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 1999); Fed. Land Bank Ass’n v. Shane, 825 S.W.2d 439, 442 (Tex. 1991). 61Id. (citing Sloane, 825 S.W.2d at 442; Dallas Fire ghter Ass’n v. Booth Research Group, Inc., 156 S.W.3d 188, 194 (Tex.App.-Dallas 2005, pet. denied); Swank v. Sverdlin, 121 S.W.3d 785, 802 (Tex.App.— Houston [1st Dist.] 2003, pet denied); Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex.App.— Houston [14th Dist.] 1999, pet. denied)). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 31 of 56 fi fi fi fl fi fi X. CAUSE OF ACTION 5: FRAUD IN THE INDUCEMENT 133. Plaintiffs incorporate and re-allege the allegations set forth above in paragraphs 14-84. 134. And in doing so, Plaintiffs now plead and assert a claim against Defendants for fraud in the inducement. 135. Fraud in the inducement, or fraudulent inducement is “is a particular species of fraud that arises only in the context of a contract and requires the existence of a contract as part of its proof. That is, with a fraudulent inducement claim, the elements of fraud must be established as they relate to an agreement between the parties.’”62 136. Though tort claims are in general, subject to the economic loss rule when alleged along with a breach of contract, the Texas Supreme Court has held that fraudulent inducement claims are not.63 137. “[T]he law long ago abandoned the position that a contract must be held sacred regardless of the fraud of one of the parties in procuring it.”64 62Bohnsack v. Varco, LP, 668 F.3d 262, 277 (5th Cir. 2012) (quoting Haase v. Glazner, 62 S.W.3d 795, 798-99 (Tex. 2001)). 63 See Formosa Plastics Corp. USA v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 47 (Tex.1998). 64 Dallas Farm Mach. Co. v. Reaves, 307 S.W.2d 233, 239 (Tex. 1957). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 32 of 56 138. “As an overarching policy matter, contracts should not enable parties to engage in fraudulent practices by automatically shielding them from liability based on artfully-worded provisions.”65 139. In fact, any plaintiff who is party to a contract in Texas may bring a cause of action for fraudulent inducement, or fraud in the inducement, so long as they can prove that they justi ably relied on extra contractual misrepresentations.66 140. Because the law in Texas generally requires that to have a contract, beyond offer and acceptance, there must be a meeting of the minds, and there must be an intent on behalf of both parties the the contract be mutual and binding.67 141. “To be actionable as fraudulent inducement, a breach must be coupled with a showing that the promisor never intended to perform under the contract.”68 142. Defendants negotiated terms for a verbal contract with the Plaintiffs for their performance of services. 65Juan Antonio Solis, CLOSING THE DOOR ON FRAUD PLAINTIFFS: CARDUCO’S EFFECT ON CLAIMS FOR FRAUDULENT INDUCEMENT IN TEXAS, 71:2 Baylor L. Rev. 491, 494 (2019) (citing Dallas Farm Mach. Co. v. Reaves, 307 S.W.2d 233, 239 (Tex. 1957). 66Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990). See also Formosa Plastics Corp. USA v. Presidio Eng’rs and Contractors, Inc., 960 S.W.2d 41, 54 (Tex. 1998) (Baker, J. dissenting). 67 Searcy v. DDA, Inc., 201 S.W.3d 319, 322 (Tex.App. - Dallas [5th Dist] 2006, no pet.) (“The elements of a valid and enforceable contract are: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party’s consent to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and binding.”). 68 Kevin M. Ehringer Enters, Inc. v. McData Servs. Corp., 646 F.3d 321, 326 (5th Cir. 2011). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 33 of 56 fi 143. This contract was not barred by the Statute of Frauds, and was valid.69 144. It has become clear that Defendants never had any intention of performance under the Agreement. This is endorsed by the conspiracy with the Campaign to attempt to coerce Plaintiffs into accepting $20,000.00 or face enforcement measures from the Federal Elections Commission and the Defendant Lincoln sending Plaintiff a demand letter asking SeedX to cease and desist requesting payment. 145. Plaintiffs made several demands for performance, which fell on deaf ears. 146. Defendants’ actions have harmed and continue to harm Plaintiffs, threatened and continue to threaten Plaintiffs’ ongoing viability, and leave Plaintiffs at risk of immediate, irreparable injury. 147. There is more than one remedy for fraudulent inducement in Texas law. 148. When a party is fraudulently induced into a contract, the party who is injured may, in bringing a cause of action, elect for damages on the contract or for rescission.70 149. So, under normal circumstances, the Plaintiffs could treat the repudiation as a breach, or they could continue the contract. 69 Tex. Bus. & Com. Code § 26.01. 70 See Smith v. National Resort Cmtys., Inc., 585 S.W.2d 655, 658 (Tex. 1979); Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 331 (Tex. 2011). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 34 of 56 150. Repudiation before the time when a party must perform amounts to a “tender of a breach,” and if such is accepted by the other party, it would constitute anticipatory breach.71 151. In other words, the Defendants made a false representation to induce the Plaintiffs into entering a contract with them, by a. making a material false promise to do an act; b. with the intention of not ful lling it; c. for the purpose of inducing the Plaintiffs to enter into the contract; d. and the Plaintiffs relied on these promises. 72 152. The Defendants then knowingly and recklessly, without regard for the truth as a positive assertion, indicated that they would be bound by it, and that a contract for speci c performance represented a meeting of the minds 153. The Defendants made these representations with the intent that the Plaintiffs should act on them. 154. The Plaintiffs have spent millions in reliance on these representations, and then suffered injury, and the Defendants which to compound that injury now. 71 Continental Casualty Co., 389 S.W.2d at 569 (citing Pollack v. Pollack, Tex.Comm.App. 46 S.W.2d 292, 293 (1932)). 72 Hawkins v Walker, 233 S.W.3d 380, 390-91 (Tex. App. Forth Worth 2007), reh’g overruled, (July 26, 2007) and reh’g overruled, (Aug. 23, 2007) and rule 53.7(f) motion granted, Nov. 6, 2007); see also Pierre v. Tilley, 2007 WL 2067757, *3 (Tex. App. Fort Worth 2007), reh’g overruled (Oct. 25, 2007) rev. den. (Feb. 8, 2008). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 35 of 56 fi fi 155. The Defendants cannot have it both way, either they entered into a contract which is binding, and they agreed to enter into it, OR the Defendants committed fraud in connection with a business transaction. 156. Under Texas law, if a party elects to rescind the contract, “generally requires notice and tender; that is, a plaintiff seeking to rescind a contract must give timely notice to the defendant that the contract is being rescinded and either return or offer to return the property he has received and the value of any bene t he may have derived from its possession.”73 157. The above referenced acts or omissions, singularly or in combination with others, constitutes fraud in the inducement by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. XI. CAUSE OF ACTION 6: FRAUD 158. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 159. Plaintiffs herein bring a cause of action against the Defendants for common law fraud. 160. The elements of fraud in Texas are: 73 Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 824 (Tex. 2012). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 36 of 56 fi fi a) defendant makes a material representation that was false; b) the defendant knew the representation was false or they made it recklessly as a positive assertion without any regard for the truth of it; c) defendant intended to induce plaintiff to act upon the misrepresentation; and d) the plaintiff actually and justi ably relied upon the representation and thereby suffered an injury.74 161. In the negotiation of the contract, the Plaintiffs negotiated with the Defendants in good faith, and the Defendants did not reciprocate in good faith 162. The Defendant Mr. Sproul, as an agent of Lincoln and Forti ed, knowingly misrepresented to the Plaintiffs that they were entering into an agreement where both parties understood the Plaintiffs would be exchanging services for compensation. He knowingly misrepresented that the Plaintiffs would be compensated. 163. This act singularly or in combination with others, constitutes fraud by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. 74Ernst Young v. Paci c Mutual Life Insurance, 51 S.W.3d 573, 577 (Tex. 2001); Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex. 1983) (citing Wilson v. Jones, 45 S.W. 2d 572 (Tex.Comm.App. 1932, holding app’d). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 37 of 56 fi fi fi fi 164. The Plaintiffs reasonably and foreseeably relied on this misstatement and believed, in good faith, that the Defendants would pay for the services that were contracted for, and which they provided. 165. Moreover, their expectation was reasonable and foreseeable given the nature of the business relationship between the Plaintiffs and the Defendants. Namely, that the Plaintiff SeedX and her agents had contracted with the Defendants Mr. Sproul and Lincoln before, and been fully compensated for that work, in reliance on what was, originally, a verbal contract. Defendants Mr. Sproul, Lincoln, and Forti ed were aware of this relationship and the reasonable basis for the Plaintiffs’ reliance on Mr. Sproul’s statements. 166. The Plaintiffs believed in good faith, that the payment would be made. XII. CAUSE OF ACTION 7: CONVERSION 167. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 168. Plaintiffs herein bring a cause of action against the Defendants for conversion. 169. The elements of conversion in Texas are: a) plaintiff owned, had legal possession of, or was entitled to possession of the property; Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 38 of 56 fi b) defendant assumed and exercised dominion and control over the property in an unlawful and unauthorized manner, to the exclusion of and inconsistent with the plaintiff ’s rights; c) plaintiff made demand for the property; and d) defendant refused to return the property.75 170. Plaintiff SeedX and its agents possessed, and had immediate right to possession of the Kanye 2020 website, and had the right to a proportionate right of the funds raised funds raised on behalf of the campaign. 171. Defendants wrongfully exercised dominion or control over this properly. 172. A proximate result of such conversion, Plaintiffs sustained the damages described more fully herein below. 173. The above referenced acts or omissions, singularly or in combination with others, constitutes conversion by Defendants Lincoln, Forti ed, Mr. Sproul, and via the various theories of vicarious liability below (singularly, together, or in the alternative as may be necessary), the Campaign. XIII. CAUSE OF ACTION 7: UNJUST ENRICHMENT & DISGORGEMENT 174. Plaintiffs re-allege and incorporate by reference paragraphs 14-84. 75Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 888-89 (Tex. App. 2009) (citing Ojeda v. Wal-Mart Stores, Inc., 956 S.W.2d 70, 707 (Tex. App.—San Antonio 1997, pet. denied)). Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 39 of 56 fi 175. Plaintiffs herein bring a cause of action against the Defendants for unjust enrichment and ask for the equitable remedy of disgorgement. 176. “Money had and received is a category of general assumpsit to restore money where equity and good conscience require refund.”76 It is a claim which is equitable in nature.77 177. In fact, a cause of action for money had and received is not premised on whether the defendant committed any wrongdoing, but rather upon the equities: did the defendant receive money that rightfully belongs to another?78 178. It exists to prevent the unjust enrichment of the defendant, and requires the plaintiff to prove the defendant clearly holds money which in good conscience belongs to them.79 179. As a part of the doctrine of unjust enrichment, it is meant to address and resolve disputes which may not be governed by contract between the parties 76 Berryman’s S. Fork, Inc. v. J. Baxter Brinkmann Int'l Corp. 418 S.W.3d 172, 189 (Tex. App. - Dallas [5th Dist.] 2013) (citing MGA Ins. Co. v. Charles R. Chesnutt, P.C., 358 S.W.3d 808, 813 (Tex.App. - Dallas [5th Dist.] 2012, no pet.); accord Edwards v. Mid-Continent Of ce Distribs., L.P., 252 S.W.3d 833, 837 (Tex.App.-Dallas 2008, pet. denied)). 77 Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 203 n.1 (Tex. 2007). 78 Id. (citing MGA Ins.Co., 358 S.W.3d2d 162, 164 (Tex.App. - El Paso 199, no writ)). See also Doss v. Homecoming Fin. Net., 210 S.W.3d 706, 710-11 (Tex.App. - Corpus Christi - Edinburg [13th Dist.] 2007) (citing Orgain v. Butler, 478 S.W.2d 610, 613 (Tex.Civ.App. - Austin 1972, no writ) (citing Staats v. Miller, 150 Tex. 581, 243 S.W.2d 686, 687 (1951))). 79 Id. Cause No. SeedX, et al v. Kanye 2020, et al Plaintiffs’ Original Petition and Application for Injunctive Relief Page 40 of 56 fi