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1 PETER F.

PAUL
IN PRO PERSONA
2 1854A HENDERSONVILLE RD #10
ASHEVILLE, NC 28803
3 (828) 776 4434
peterfpaul@charter.net
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5
6 UNITED STATES DISTRICT COURT
7 CENTRAL DISTRICT OF CALIFORNIA
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QED PRODUCTIONS, LLC, a CASE NO. CV 07-00225 SVW (SSx)
10 Delaware limited liability company;
POW! ENTERTAINMENT, INC., a [Hon. Stephen v. Wilson]
11 Delaware corporation; STAN LEE, an
12 individual, suing individually and in a
derivative capacity on behalf of DEFENDANT PETER PAUL'S
13 shareholders of Stan Lee Media, Inc., ANSWER TO SECOND AMENDED
STAN LEE MEDIA, INC., a Colorado COMPLAINT; DEMAND FOR
14 Corporation; and STAN LEE MEDIA, JURY TRIAL
15 INC., a Delaware corporation

16 Plaintiffs,

17 v.

18 JAMES NESFIELD, an individual;


19 A.F. GALLOWAY, an individual;
DOUGLAS C. COGAN, an individual;
20 and DOES 1 through 10, inclusive,
21 Defendants.
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1 ANSWER TO SECOND AMENDED COMPLAINT
2 Defendant Peter Paul ( “Defendant”) answers the averments in the Second
3 Amended Complaint herein (the “SAC”) as follows:
4 1. Answering the averments in Paragraph one, Defendant denies that this Court
5 has federal questions jurisdiction over the claims alleged under federal law
6 because Plaintiffs do not have requisite standing in that they do not legally
7 own the intellectual property rights that give rise to the federal questions
8 raised.
9 2. Answering the averments in Paragraph two, Defendant admits that this
10 Court has personal jurisdiction over the Defendant. Except as expressly
11 admitted herein, Defendant denies the remaining averments in the
12 Paragraph.
13 3. Answering the averments in Paragraph three, Defendant admits that venue
14 may remain in this Court. Except as expressly admitted herein, Defendant
15 denies the averments in the Paragraph, including but not limited to the
16 averment that Plaintiffs’ claims arose within this district.
17 4. Defendant denies the averments in Paragraphs four, five, six and seven.
18 5. Defendant denies the averment in Paragraph eight.
19 6. Defendant admits the averments in Paragraph nine and ten.
20 7. Answering the averments in Paragraph eleven, Defendant admits that
21 Defendant James Nesfield is a resident of the State of North Carolina, and
22 has been so at all times material hereto. Except as expressly admitted
23 herein, Defendant denies the averments in the Paragraph.
24 8. Answering the averments in Paragraph twelve, Defendant admits that
25 Defendant A. F. Galloway is a resident of the State of North Carolina, and
26 has been so at all times material hereto. Except as expressly admitted
27 herein, Defendant denies the averments in the Paragraph.
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1 9. Answering the averments in Paragraph thirteen, Defendant admits that
2 Defendant Douglas Cogan is a resident of the State of California, and has
3 been so at all times material hereto. Except as expressly admitted herein,
4 Defendant denies the averments in the Paragraph.
5 10. Answering the averments in Paragraph fourteen, fifteen, sixteen, seventeen,
6 Defendant lacks sufficient knowledge or information to form a belief as to
7 the truthfulness of the averments, and on that basis deny the averments.
8 11. Answering the averments in Paragraph eighteen Defendant admits that
9 he resides in North Carolina,and has been so at all times material hereto.
10 Except as expressly admitted herein, Defendant denies the averments in the
11 Paragraph.
12. Answering the averments in Paragraph nineteen Defendant denies that
he is the mastermind of anything and otherwise does not deny the averments
in the Paragraph.
13. Defendant denies the averments in Paragraphs twenty and twenty-one.
12 14. Answering the averments in Paragraph twenty-two, Defendant admits that
13 Plaintiff Stan Lee has used his name to identify himself, his image and his
14 work for a number of years. Except as expressly admitted herein, Defendant
15 denies the averments in the Paragraph.
16 15. Answering the averments in Paragraph twenty-three, Defendant admits that
17 (a) Stan Lee has been a professional co-creator and co-developer of some
18 super-hero characters and entertainment-related projects for a number of
19 years; (b) Stan Lee has been a professional creator and developer of other
20 super-hero characters and entertainment-related projects for a number of
21 years; (c) Stan Lee is the co-creator of some and creator of other widely-
22 popular super-hero and entertainment projects, some of which were
23 developed as ideas by Stan Lee, developed into comic books and then in
24 motion pictures, television programs and other media; (d) among Stan Lee’s

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1 co-creations are well-known projects such as Fantastic Four, Incredible
2 Hulk, Spiderman and X-Men, which have been developed and marketed, at
3 times, by Marvel Entertainment, Inc. and by Stan Lee individually, and
4 some of Marvel Entertainment, Inc.’s predecessors in interest and affiliated
5 companies; and (e) Stan Lee performed work in association with certain
6 predecessors in interest of Marvel Entertainment, Inc. and continues to be
7 one of the highest paid employees, and a fiduciary, of Marvel Entertainment,
8 Inc. Except as expressly admitted herein, Defendants deny the averments in
9 the Paragraph.
10 16. Answering the averments in Paragraph twenty-four, Defendant admits the
11 chronology of events surrounding the founding and taking public of SLMI
but emphatically denies all averments that Stan Lee Media, Inc. has no
interest in any creation of Stan Lee, and Stan Lee'
s creations were always
deemed to be works for hire by Stan Lee and that Stan Lee Media has no
claims to all of Stan Lee'
s creations .
12 17. Defendant denies the characterizations of him and his role in Stan Lee
13 Media and averments in the last sentence of Paragraph twenty-five.
14 Defendant admits that he was co-founder of SLMI and served as a
15 consultant to the company and advisor to the Chairman Stan Lee along with
16 personal legal counsel to Stan Lee, in-house legal counsel from Skadden
17 Arps, outside legal counsel from pre-eminent corporate and entertainment
18 law firms including Ziffren, Brittenham and Branca, Skadden Arps, Arthur
19 Lieberman and Jeff Segal and , and global accounting firms.
20 18. Defendant denies the averment in Paragraph twenty-six because when Stan
21 Lee founded SLMI in October, 1998, he had no contractual limitations
22 whatsoever on his actions, employment or his ownership of any and all
23 property rights he ever created.
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1 19. Answering the averments in paragraph twenty-seven, Defendant admits that
2 Ex. A to the SAC speaks for itself. Except as specifically admitted herein,
3 Defendant denies the remaining averments in the Paragraph.
4 20. Answering the averments in paragraph twenty-eight, Defendant admits that
5 Stan Lee signed the November 17, 1998 Marvel Agreement a month after he
6 signed the October 15, 1998 SLE Agreement. Except as specifically
7 admitted herein, Defendant denies the remaining averments in the
8 Paragraph.
9 21. Defendant denies the averments in Paragraphs twenty-nine and believes that
10 Exhibits B and C, which have only been produced to this court in altered
11 photocopy form eliminating the “fax headers” appearing on the “original”
photocopies as presented to Defendant in a deposition in another action,
have been intentionally altered to reflect dates different from when they
were originally transmitted in an effort to mislead and deceive this court and
to be used for publicity purposes to hide frauds committed by Plaintiffs.
12 22. Defendant denies the averments in Paragraphs thirty, thirty-one, thirty-two,
13 thirty-three, thirty-six, thirty-nine .
14 23. Defendant admits the averments in Paragraph thirty-four, thirty-five, and
15 thirty-seven and thirty eight, but denies reference in thirty-eight that he
16 made any profit from the stock manipulation intended to assist SLMI.
17 24. Answering the averments in Paragraph forty, Defendant admits that he
18 spoke with Chris Belland various times during 2000, but denies any
19 nefarious intent.
20 25. Answering the averments in Paragraph forty-one, Defendant admits that he
21 sold two blocks of stock at a discount to pay margin calls and employee
22 salaries of SLMI and otherwise denies the averments.
23 26. Defendant denies the averments in Paragraphs forty-two, forty-three, forty-
24 four and forty-five.

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1 27. Answering the averments in Paragraph forty-six, Defendant admits that Stan
2 Lee while Chairman of SLMI, in concert with his attorney-business partner
3 Arthur Lieberman, violated his fiduciary duties to the company by
4 attempting to breach his own employment agreement and rights assignment
5 on the eve of filing for Chapter 11 bankruptcy protection in order to defraud
6 shareholders of SLMI and the Bankruptcy Court by creating artificial
7 grounds to argue that the Primary Asset of the Company, as described in the
8 10KSB filed with the SEC in March, 2000, the Employment-Rights
9 Assignment Agreement he made with SLMI on October 15, 1998, was
10 legally terminated by use of a demand letter unsupported by any other legal
11 actions. Defendant denies that the SLE Employment Agreement was ever
legally terminated, or that the Rights Assignment part of that agreement was
ever affected by any attempt to terminate the Employment part of the hybrid
Agreement.
28. Defendant denies the averments in Paragraphs forty-seven, forty-eight.
12 29. Defendant admits the averments in Paragraph forty-nine.
13 30. Answering the averments in Paragraph fifty, Defendant admits that (a) a
14 document entitled Asset Purchase Agreement appears to have been executed
15 on or about November 2001 by Stan Lee, in his capacity as agent of SLC,
16 LLC, a California Limited Liability Company, as “purchaser,” and the
17 Estate of Stan Lee Media, Inc. a Delaware corporation and Stan Lee Media,
18 a Colorado corporation, as “debtors”; (b) a document entitled Amendment to
19 Asset Purchase Agreement appears to have been executed on or about
20 January 2002 by Stan Lee, in his capacity as agent of SLC, LLC, a
21 California Limited Liability Company, as “purchaser”; (c) another document
22 also entitled Amendment to Asset Purchase Agreement appears to have been
23 executed on or about February 2002 by Stan Lee, in his capacity as
24 President of SLC, LLC, a California Limited Liability Company, as

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1 “purchaser”, and Wild Brain, Inc. as a creditor to SLMI during the
2 bankruptcy proceedings; (d) the documents contain provisions regarding the
3 proposed acquisition by SLC, LLC, as purchaser of certain intellectual
4 properties and produced entertainment projects of SLMI, including The
5 Accuser, The Drifter and Stan’s Evil Clone aka Evil Clone, which were
6 specified to be developed by SLC, LLC with very specific conditions for the
7 manner in which SLC, LLC was to be established and managed to solely
8 and exclusively benefit creditors, lenders and shareholders of SLMI NOT
9 any insiders of SLMI, and benchmarks provided for guaranteed minimum
10 payments for the assets with a right of reversion of all the assets in the event
11 that the benchmarks were not met; and (e) the totality of the “agreements” as
amended were approved by an Order of the Bankruptcy Court in the
Bankruptcy Case on or about April 11, 2002 based on sworn Declarations
that no SLMI insiders other than Stan Lee would in any way benefit from
the sale. Except as expressly admitted herein, Defendant denies the
12 remaining averments in the Paragraph.
13 31. Answering the averments in Paragraph fifty-one, Defendant admits that Stan
14 Lee, Gill Champion, as directed by their partner and lawyer Arthur
15 Lieberman, and/or the other principals of POW! Entertainment, Inc. and
16 QED Productions, LLC, decided to form POW! Entertainment, Inc. and
17 QED Productions, LLC, six months before concluding a Court approved
18 sale of assets to a phantom entity- SLC LLC, warranted to have been in
19 good standing and capable of contracting, with the intention of deceiving the
20 court and creditors regarding the establishment and use of a Special Purpose
21 Entity named SLC LLC that would be the purchaser of assets of SLMI
22 based on Stan Lee'
s good faith promise to exploit those assets exclusively
23 for the benefit of shareholders and creditors; and thereafter attempted
24 wrongfully, without the knowledge of the bankruptcy court or creditors and

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1 illegally to transfer assets of SLMI to POW! Entertainment, Inc. and QED
2 Productions, LLC, instead of obeying the Bankruptcy Court’s April 11, 2002
3 Order by conveying the assets to SLC, LLC, a California limited liability
4 company. Except as expressly admitted herein, Defendants deny the
5 remaining averments in the Paragraph.
6 32. Defendant denies the averments in Paragraph fifty-two and has personal
7 knowledge that as of October, 2006, neither the creditor'
s committee nor the
8 DIP Lender knew that Plaintiffs had transferred assets without Bankruptcy
9 Court approval to POW Entertainment, without notice or payment of any
10 kind to them or SLMI. The April 11, 2002 Order of the bankruptcy Court
11 specifically includes warranty clauses made by Stan Lee that the purchaser
approved by the court, intended to be a juridical entity existing under the
laws of California, was a duly established California LLC in good standing
in which Stan Lee warranted he was the President, capable of contracting
and performing all of the undertakings that were painstakingly crafted to
12 assure and secure his performance. Based on information recently obtained,
13 this was an elaborate hoax and fraud on the federal bankruptcy court, the
14 creditors, lenders and shareholders of SLMI and the new shareholders of
15 POW Entertainment which offered and sold its shares to the public.
16 33. Answering the averments in Paragraph fifty three, Defendant admits that
17 Plaintiffs succeeded in successfully hiding their illegal and nefarious actions
18 successfully from all involved until the US Trustee, after being notified by
19 Defendant and others, caused the five and one half year sham of a Chapter
20 11 Reorganization proceeding to be dismissed for cause by virtue of
21 malfeasance and misfeasance of Plaintiffs, including causing SLMI to be
22 dissolved administratively by the State of Colorado when they had a court
23 imposed and fiduciary duty to maintain the company in good standing.
24 There were huge operational differences between QED, a subsidiary of a

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1 public company POW, owned and controlled by SLMI insiders Lieberman,
2 Champion, Lee and Kobyashi, which never attempted to pay anything for
3 the assets they looted from SLMI to capitalize yet another public company
4 and a Special Purpose Entity intended to be created exclusively to exploit
5 assets of SLMI for the benefit of creditors, lenders and shareholders of
6 SLMI, NOT for the shareholders of POW Entertainment and malevolent
7 SLMI insiders. Defendant denies the remaining the averments in the
8 Paragraph.
9 34. Defendant denies the averments in Paragraph fifty-four.
10 35. Defendant admits the averments in Paragraph fifty-fifty and further admits
11 that the Court’s ruling should have been mooted with the election by a
unanimous vote of all participating shareholders in the court supervised
Annual Shareholder'
s Meeting and Director'
s election held in December,
2007, of Nesfield, Galloway and Blumen as Directors, incorporated into an
order of the Court in Colorado on May 12, 2008.
12 36. Defendant denies the averments in Paragraph fifty-six.
13 37. Defendant lacks sufficient knowledge or information to form a belief as to
14 the truthfulness of the averments in Paragraph fifty-seven, fifty-eight, and on
15 that basis deny the averments.
16 38. Defendant denies the averments in Paragraph fifty-nine and sixty.
17 39. Answering the averments in Paragraph sixty-one, Defendant admits that (a)
18 the registrant of the website at www.stanleemedia.net is Defendant James
19 Nesfield, who at the time he registered the website was acting solely in his
20 capacity as authorized agent of SLMI and not in his individual capacity; (b)
21 such registration was accomplished with the consent and authorization of the
22 then calculated majority of shareholders of SLMI that remained after the
23 settlement of the Sahreholders Class Action against Stan Lee and other
24 Directors of the company and after all other shares that should have been

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1 voided due to settlements were calculated; Except as expressly admitted
2 herein, Defendants deny the remaining averments in the Paragraph.
3 40. Answering the averments in Paragraph sixty-two, Defendant admits that (a)
4 in their capacity as equitable agents of SLMI, and not in any other capacity,
5 Defendants have used Stan Lee’s name, the signature of Stan Lee and
6 photographs of Stan Lee, as they are authorized to do pursuant to the
7 Assignment of Rights Agreement, which was executed by Stan Lee in favor
8 of SLMI on or about October 15, 1998; (b) at times, certain content
9 including artwork relating to The Accuser, a link to www.stanleereturns.org,
10 webisodes of The Accuser and Evil Clone, and artwork relating to The
11 Drifter, were available on the websites for the sole purpose of notifying the
world of Defendant'efforts to recover assets belonging to SLMI and
exposing the frauds of the Plaintiffs in illegally converting assets of SLMI
for their own benefits. Except as expressly admitted herein, Defendant
denies the remaining averments in the Paragraph.
12 41. Defendant denies the averments in the first sentence of Paragraph sixty-
13 three. Except as specifically denied herein, Defendant lacks sufficient
14 knowledge or information to form a belief as to the truthfulness of the
15 averments, and on that basis deny the averments.
16 42. Defendant lacks sufficient knowledge or information to form a belief as to
17 the truthfulness of the averments in Paragraph sixty-four, and on that basis
18 denies the averments.
19 43. Defendant denies the averments in Paragraph sixty-five. Defendant further
20 admits and alleges as follows: (a) Plaintiff Stan Lee executed in SLMI’s
21 favor an Assignment of Rights Agreement dated October 15, 1998
22 specifically authorizing SLMI to own, copy, distribute, license and exploit
23 the marks and properties described in the SAC; and (b) at all times material
24 hereto, all Defendants have acted in their capacity as agents of SLMI, and

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1 not in their individual capacities with regard to SLMI; and (c) Plaintiffs have
2 no legal authority to use or control the Properties.
3 44. Defendant denies the averments in Paragraph sixty-six and based on
4 Defendant'
s personal knowledge and video taped admissions made by Stan
5 Lee knows without a doubt that Stan Lee intended to assign everything in
6 the creative universe he owned as of October 15, 1998, to his new dot com
7 company SLMI, including all claims and rights to any intellectual property
8 he owned on that date, including his co-creator'
s rights to his creations for
9 Marvel.
10 45. Answering the averments in Paragraph sixty-seven, Defendant admits that
11 (a) in their capacities as agents of SLMI and its shareholders, and not in their
individual capacities, Defendants have asserted that SLMI is the owner and
controller of the properties identified in the SAC; and (b) Defendants, in
their capacity as agents of SLMI whose unanimous support by all
shareholders who participated in the last annual shareholder'
s meeting called
12 at the substantial expense of Christopher Belland, could have legally ratified
13 nunc pro tunc all their actions, and not in their individual capacities, have
14 asserted that SLMI is the owner of certain rights, income and profits in
15 various characters and properties co-created by Stan Lee in association with
16 Marvel Entertainment, Inc. and its affiliates and predecessors in interest,
17 including but not limited to Spider-Man, The Fantastic Four, The Incredible
18 Hulk, X-Men and various other valuable characters and properties.
19 Defendant further admits and alleges that the matter between SLMI and
20 Marvel has absolutely nothing to do with the properties or claims at issue in
21 the instant action, and it is not clear what relevance the Marvel/SLMI matter
22 has to do with anything in this case. It is Defendant'
s belief that allegations
23 by Plaintiffs (who are alter egos of Marvel regarding this issue) denying
24 claims that SLMI has legally asserted in Federal Court in New York against

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1 Marvel to enforce rights assigned by Stan Lee to capitalize SLMI, is a new
2 effort by Marvel to delay litigating the issues raised against it in a Federal
3 civil action in New York. Except as expressly admitted and alleged herein,
4 Defendant denies the remaining allegations of the Paragraph.
5 46. Defendant denies the averments in Paragraphs sixty-eight and sixty-nine.
6 47. Answering the averments in Paragraph seventy, Defendant realleges his
7 answers to Paragraphs one through sixty-nine of the SAC.
8 48. Defendant denies the averments in Paragraphs seventy-one through eighty-
9 one, inclusive.
10 49. Answering the averments in Paragraph eighty-two, Defendant realleges his
11 answers to Paragraphs one through eighty-one of the SAC.
50. Defendant denies the averments in Paragraphs eighty-three through ninety.
51. Answering the averments in Paragraph ninety-one, Defendant realleges his
answers to Paragraphs one through ninety of the SAC.
52. Defendant denies the averments in Paragraphs ninety two through ninety-
12 eight.
13 53. Answering the averments in Paragraph ninety-nine, Defendant realleges his
14 answers to Paragraphs one through ninety-eight of the SAC.
15 54. Defendant denies the averments in Paragraphs one hundred through one
16 hundred four.
17 55. Answering the averments in Paragraph one hundred five, Defendant
18 realleges his answers to Paragraphs one through one hundred four of the
19 SAC.
20 56. Defendant denies the averments in Paragraphs one hundred six through one
21 hundred thirteen.
22 57. Answering the averments in Paragraph one hundred fourteen, Defendant
23 realleges his answers to Paragraphs one through one hundred thirteen.
24 58. Defendant denies the averments in Paragraph one hundred fifteen.

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1 59. Defendant admits the averments in the first three sentences of Paragraph one
2 hundred sixteen. Defendant denies the remaining averments in the
3 Paragraph.
4 60. Defendant denies the averments in Paragraphs one hundred seventeen
5 through one hundred twenty and maintains that the rights to Stan Lee'
s name
6 and likeness remain assets of SLMI as assigned “forever” by Stan Lee in his
7 Rights Assignment Agreement dated October 15, 1998, re-ratified as
8 modified on October 9, 1999 as filed by Stan Lee with the SEC in form
9 10KB on March 30, 2000, while Chairman of SLMI.
10 61. Answering the averments in Paragraph one hundred twenty-one, Defendant
11 realleges his answers to Paragraphs one through one hundred twenty of the
SAC.
62. Defendant denies the averments in Paragraphs one hundred twenty-two
through one hundred twenty-eight.
63. Answering the averments in Paragraph one hundred twenty-nine, Defendant
12 realleges his answers to Paragraphs one through one hundred twenty-eight.
13 64. Answering the averments in Paragraph one hundred thirty, Defendant lacks
14 sufficient knowledge or information to form a belief as to the truthfulness of
15 the averments regarding plaintiffs’ alleged conduct and motives, and on that
16 basis deny the averments. Defendant denies the remaining averments in the
17 Paragraph, and further denies that QED and POW lawfully acquired any
18 rights to SLMI properties and could not be damaged by efforts by SLMI and
19 its agents to hold Plaintiff'
s accountable for their thefts of SLMI property.
20 65. Defendant denies the averments in Paragraphs one hundred thirty-one and
21 one hundred thirty-two.
22 66. Answering the averments in Paragraphs one hundred thirty-three and one
23 hundred thirty-four, Defendant lacks sufficient knowledge or information to
24 form a belief as to the truthfulness of the averments, and on that basis deny

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1 the averments, however Defendant denies specifically that Plaintiffs could
2 enter into any valid contract with third parties regarding assets belonging to
3 SLMI.
4 67. Defendant denies the averments in Paragraph one hundred thirty five.
5 68. Answering the averments in Paragraph one hundred thirty-six, Defendant
6 realleges his answers to Paragraphs one through one hundred thirty-five.
7 69. Answering the averments in Paragraph one hundred thirty-seven, Defendant
8 lacks sufficient knowledge or information to form a belief as to the
9 truthfulness of the averments regarding plaintiffs’ alleged conduct and
10 motives, and on that basis deny the averments. Defendant denies the
11 remaining averments in the Paragraph, and further deny that QED lawfully
acquired any rights to SLMI properties.
70. Defendant lacks sufficient knowledge or information to form a belief as to
the truthfulness of the averments in Paragraphs one hundred thirty-eight, and
on that basis deny the averments.
12 71. Defendant denies the averments in Paragraphs one hundred thirty-nine
13 through one hundred forty-two and reiterates his position that all of his
14 actions have been intended to vex and hold accountable Plaintiffs for their
15 frauds and conversions of property and claims owned by SLMI.
16 72. Answering the averments in Paragraph one hundred forty-three, Defendant
17 realleges his answers to Paragraphs one through one hundred forty-two.
18 73. Answering the averments in Paragraphs one hundred forty-four and one
19 hundred forty-five, and one hundred forty-seven Defendant admits that any
20 filings with the Secretary of State are matters of public record and speak for
21 themselves. Except as specifically admitted herein, Defendant lacks
22 sufficient knowledge or information to form a belief as to the truthfulness of
23 the averments, and on that basis deny the averments.
24

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1 74. Answering the averments in Paragraph one hundred forty-six, Defendants
2 admit that their public statement speak for themselves. Except as
3 specifically admitted herein, Defendant lacks sufficient knowledge or
4 information to form a belief as to the truthfulness of the averments, and on
5 that basis deny the averments.
6 75. Defendant denies the averments in Paragraphs one hundred forty-eight and
7 one hundred forty-nine.
8 76. Answering the averments in Paragraph one hundred fifty, Defendant lacks
9 sufficient knowledge or information of Colorado law to form a belief as to
10 the truthfulness of the averments – which are not accompanied by a citation
11 to any authority – and on that basis deny the averments.
77. Defendant denies the averments in Paragraphs one hundred fifty-one
through one hundred fifty-four and vehemently objects to any claims for
equitable relief in connection with Plaintiff'
s racketeering in looting,
destroying and attempting to annihilate SLMI through egregious and illegal
12 violations of fiduciary duties as directors, officers of SLMI and then as
13 Debtors in Possession and Trustees of SLMI when they looted assets, made
14 and aided and abetted false SEC filings and bank loans, filed claims
15 rightfully belonging to SLMI that were settled for in excess of $10 million
16 personally benefitting Plaintiffs at the expense of SLMI as part of a
17 collusive effort between Plaintiffs and the management and chief
18 shareholder of Marvel entertainment to hide claims against Marvel legally
19 owned by SLMI that are valued in the tens of millions of dollars.
20 78. Defendant denies the averments in Paragraphs one hundred fifty-five
21 through on hundred sixty nine, which averments are known by Plaintiffs and
22 their counsel to be patently false and are now supported by newly
23 discovered (after 10 years), patently fabricated, evidence originating from
24 Arthur Lieberman, the former IP lawyer for SLMI and Stan Lee'
s personal

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1 lawyer turned Svengali and partner in the fraudulently capitalized POW
2 Entertainment who is the mastermind behind Plaintiff'
s efforts to loot the
3 valuable assets and claims of SLMI while abusing the judicial process to
4 prejudice those who are making every effort to expose their frauds and hold
5 them accountable.
6 79. Answering the averments in Paragraph one hundred seventy, Defendant
7 realleges their answers to Paragraphs one through one hundred sixty-nine.
8 80. Answering the averments in Paragraphs one hundred seventy-one through
9 one hundred seventy-six, Defendant lack sufficient knowledge or
10 information to form a belief as to the truthfulness of the averments regarding
11 the conduct of other individual defendants, and on that basis deny the
averments. Defendant denies the remaining averments in the Paragraphs.
81. Answering the averments in Paragraph one hundred seventy-seven,
Defendant realleges his answers to Paragraphs one through one hundred
seventy-six.
12 82. Defendant denies the averments in Paragraphs one hundred seventy-eight
13 through one hundred seventy-nine.
14 83. Answering the averments in Paragraph one hundred eighty, Defendant
15 admits that a controversy exists with Plaintiffs. Defendant denies the
16 remaining averments.
17 84. Answering the averments in Paragraph one hundred eighty-one, Defendant
18 lacks sufficient knowledge or information of Plaintiffs’ state of mind, and on
19 that basis deny the averments. Defendant denies the remaining averments.
20 85. Answering the averments in Paragraph one hundred eighty-two, Defendant
21 realleges his answers to Paragraphs one through one hundred eighty-one.
22 86. Answering the averments in Paragraph one hundred eighty-three, Defendant
23 denies that the representations set forth are false. Defendant lacks sufficient
24

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1 knowledge or information to form a belief as to the truthfulness of the
2 remaining averments, and on that basis denies the averments
3 87. Answering the averments in Paragraph one hundred eighty-four, Defendant
4 admits that a controversy exists between them and Plaintiffs, but denies that
5 Plaintiffs are entitled to any equitable relief whatsoever due to failing to do
6 equity and having the uncleanest of hands along with all of their other
7 appendages. Defendant denies the remaining averments.
8 88. Answering the averments in Paragraph one hundred eighty-five, Defendant
9 lacks sufficient knowledge or information of Plaintiffs’ state of mind, and on
10 that basis denies the averments. Defendant denies the remaining averments.
11 Defendant has no recollection of posting the blog entry described in
Paragraphs 186- 193. In the event that defendant did post that entry, which is
the kind of entry Plaintiff has posted and similar to one he did post on his
blog site at www.peterfpaul.com, then Defendant would maintain that Stan
Lee'
s video taped deposition from February, 2005, speaks for itself in
12 capturing Stan Lee admitting to being illegally reimbursed a $100,000
13 federal campaign contribution made by him, in his name.
14
15 AFFIRMATIVE DEFENSES
16 Facts Common To All Affirmative Defenses
17 The following averments are common to all of the following affirmative
18 defenses asserted by the Defendants:
19 1. Defendant has exercised his first amendment rights to petition the
20 courts and speak freely about malfeasance, fraud, theft and related
21 administrative illegalities that he witnessed or discovered committed
22 by Plaintiffs and those who colluded and conspired with them.
23
24

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1 2. Contrary to the allegations of the SAC, the Defendant has done
2 nothing wrong, improper or illegal, and in SACt, Defendant is the
3 primary reason SLMI has not been entirely annihilated by Plaintiffs to
4 hide and obstruct their accountability for their misconduct and their
5 fraudulent ownership and conversion of assets rightfully owned by
6 Stan Lee Media Inc..
7
8 3. But for the Defendant, SLMI shareholders would not know of the
9 assets that were hidden from them and wrongfully converted by the
10 Founder of SLMI, Stan Lee as directed by his “Mastermind” partner
11 and lawyer, Arthur Lieberman, who also directed the former COO and
Controller of SLMI in a perfect orchestration of blatant corruption
that has taken the true property of the company during and after it was
dismissed from bankruptcy for cause due to malfeasance of Plaintiffs.

12 4. In fact, the only reason Plaintiffs have asserted a derivative action in


13 the instant case is to attempt to maintain control of the entity that they
14 attempted to destroy in bankruptcy and then thwarted shareholder'
s
15 efforts to reinstate the company they illegally caused to be
16 administratively dissolved by the State of Colorado because of their
17 unlawful refusal to maintain the company in good standing while
18 Debtors in Possession. However, based solely upon the extraordinary
19 efforts of Defendant, SLMI and its records reportedly remain intact.
20 5. The Defendant has done all things necessary and proper to save SLMI
21 from the abuse and neglect it had suffered at the hands of the
22 Plaintiffs, expose the malfeasance of Plaintiffs and help those who are
23 spending millions in legal costs and fees to recover for the
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1 shareholders of SLMI millions in assets that have been hidden and
2 looted by Plaintiffs.
3
4 6. In order to provide both a legal and factual basis for the current
5 management and state of affairs of SLMI, it is necessary to provide
6 the Court with the following information and evidence regarding
7 SLMI.
8 7. Stan Lee Entertainment, Inc., a Delaware Corporation and
9 predecessor in interest to SLMI, was incorporated on October 13,
10 1998.
11 8. On October 15, 1998, Stan Lee, assigned everything he owned in the
creative universe to SLMI and granted to SLMI the exclusive rights to
his name and likeness in a hybrid Employment and Rights
Assignment Agreement signed by Lee on both October 20 and 21 of
1998 one month before executing a new similar agreement with
12 Marvel..
13 9. On April 14, 1999, Stan Lee Entertainment, Inc. merged into Stan Lee
14 Media, Inc., a Delaware Corporation, another predecessor in interest
15 to SLMI. On or about August 12, 1999, by reverse merger with a
16 company by the name of Boulder Capital Opportunities, Inc., a
17 Colorado corporation, Stan Lee Media, Inc., a Delaware corporation,
18 became a Colorado corporation and thereafter was publicly traded for
19 a time on the New York Stock Exchange.
20 10. On October 9, 1999, Stan Lee, acting under advice of his personal
21 counsel, modified his October 15, 1998 Rights Assignment and
22 Employment Agreement to forgive a 10% profit participation grant to
23 him in order to help enhance the share value of the company'
s stock in
24 which he was the largest shareholder. On that date Lee ratified the

18
1 October 15 1998 Agreement in all other respects and never challenged
2 the date of its execution
3 11. On or about February 16, 2001, SLMI filed for bankruptcy protection
4 pursuant to Chapter 11 in the Central District of California.
5 12. The SLMI bankruptcy was pending between February 16, 2001 and
6 November 14, 2006, a period of almost five (5) years and nine (9)
7 months. During the entirety of the bankruptcy proceedings, Stan Lee
8 and Ms. Junko Kobayashi were the purported “representatives” and
9 “fiduciaries” of SLMI. In SACt, in the SAC Plaintiffs allege that
10 Junko Kobayashi was appointed by SLMI’s board of directors to
11 serve as “the authorized representative of SLMI during the
Bankruptcy Case.” Thus Stan Lee, who has stated he remained as the
sole remaining Director of SLMI throughout the bankruptcy and
Junko Kobayashi were positioned at the gates of SLMI’s assets.
13. On or about November 7, 2006, counsel of record for SLMI filed a
12 “Notice of Non-Opposition to Dismissal of Chapter 11 Bankruptcy
13 Cases,” which included an allegation that there were “no
14 unencumbered assets over and above the post-petition secured debt,
15 which may be monetized for the benefit of creditors” and requested
16 permission to destroy all property, files and records of SLMI.
17 14. On or about November 14, 2006, SLMI’s bankruptcy petition was
18 dismissed by verbal order of the bankruptcy judge.
19 15. On or about November 15, 2006, and in an emergent attempt to save
20 the property, files and records of SLMI from imminent destruction,
21 Defendant James Nesfield, after acquiring the proxies of a majority of
22 the then known, eligible voting shareholders of SLMI and after
23 obtaining the authority of said majority of shareholders of SLMI,
24 wrote a letter to SLMI’s bankruptcy counsel on behalf of the

19
1 concerned shareholders he represented asking for said counsel to turn
2 over and not destroy SLMI’s property, records and files.
3
4 16. On or about November 16, 2006, bankruptcy counsel for SLMI wrote
5 back to James Nesfield confirming that the bankruptcy cases had been
6 dismissed by verbal order of the bankruptcy judge on November 14,
7 2006, and assuring James Nesfield that steps were being taken to
8 preserve SLMI’s records.
9 17. On November 27, 2006, proper notice of a Special Meeting of
10 Shareholders of Stan Lee Media, Inc. of Colorado was sent to all
11 interested parties, with more than 75% of the shareholders being
notified by direct mailing and the remaining shareholders being
notified by publication of the meeting on Media-Newswire.com.
18. On December 7, 2006, a special meeting of the shareholders of SLMI
was held and a majority of the known, eligible shareholders appeared
12 at the meeting. None of the Plaintiffs who received notice of the
13 meetings made appearance or objected.
14 19. The proposed resolutions at the meetings were passed by unanimous
15 vote of those present.
16 20. Those present at the meetings also ratified all previous actions of the
17 Defendants, and officers and directors were properly appointed and
18 SLMI has been conducting business ever since.
19 21. Contrary to the false statements in the SAC, Defendants have been
20 acting with the best of intentions, have published and noticed all of
21 their actions to all interested parties, including publishing their efforts
22 and intentions on the internet corporate site of SLMI, and have
23 conducted themselves with the best interests of the shareholders of
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1 SLMI under the circumstances that the company had been rendered
2 insolvent and dissolved by the actions of Plaintiffs.
3 22. As of this date, SLMI remains a global branded content creation,
4 production and marketing company founded by pop culture icon Stan
5 Lee. SLMI continues to attempt to conduct business and intends to
6 continue with its revised business plan of conceiving, creating, co-
7 creating, producing, marketing and licensing branded characters and
8 story franchises for entertainment, merchandising and promotional
9 exploitation worldwide.
10 23. In the SLMI bankruptcy proceedings, what Judge Lax ordered and
11 what actually happened are two very different things. Specifically,
during the SLMI bankruptcy, the Honorable Judge Kathleen T. Lax,
United States Bankruptcy Court Judge, Central District of California,
San Fernando Valley Division, presided over the SLMI bankruptcies,
Case No. SV 01-11329 KT, jointly administered with Case No. SV
12 01-11331 KT, entered an Order dated April 11, 2002, that authorized
13 the sale of certain assets of SLMI to a company by the name of SLC,
14 LLC. The assets authorized to be sold by Order are the same assets at
15 issue in the SAC.
16 24. The April 11, 2002 Order was entered as a result of a motion
17 supported by a sworn declaration, a supplement to the motion, and a
18 notice of hearing. As is clear from these documents, all interested
19 parties, as well as Judge Lax, were considering and ultimately
20 approved the sale of the assets to SLC, LLC, a purported California
21 limited liability company, based on warranties provided by Stan Lee.
22 Although the April 11, 2002 Order speaks for itself, the Order
23 specifically: (1) authorized the agreement between Stan Lee, on
24 behalf of “SLC, LLC”, and SLMI, debtor-in-possession (attached to

21
1 the April 11, 2002 Order), to be consummated; (2) authorized the sale
2 of certain of SLMI’s assets to an entity by the name of “SLC, LLC,”
3 which entity was specifically represented by Stan Lee to be a
4 California limited liability company; (3) involved not only Stan Lee,
5 on behalf of SLC, LLC, but also a secured creditor by the name of
6 Wild Brain, Inc. and the Official Committee of Unsecured Creditors;
7 (4) not only limited the type of assets authorized to be sold, but also
8 specifically designated the entity to purchase the assets as SLC, LLC,
9 a California limited liability company; (5) required that the articles of
10 organization reflect that SLC, LLC be a special purpose entity,
11 thereby expressly restricting the business of SLC, LLC to only the
exploitation of the specific assets being sold and specifically
prohibiting SLC, LLC from conducting any other business; (6)
prohibited SLC, LLC from assigning, conveying, encumbering, or
otherwise transferring the assets to anyone without the express written
12 consent of SLMI; and (7) required that any purported assignment or
13 transfer of the assets at issue be approved by the Bankruptcy Court.
14 Thus, the specific instructions in the Order to Stan Lee, on behalf of
15 “SLC, LLC,” were not optional, and that Stan Lee did not have any
16 authority whatsoever unilaterally to change the Order and substitute
17 his own judgment based upon what he believed to be more convenient
18 to him and his cohorts.
19 25. The purpose for obtaining approval and authorization to sell assets
20 during any bankruptcy is to ensure that no insider or equity holder of
21 the debtor-in-possession wrongfully benefits from a particular
22 transaction to the detriment of the creditors and the shareholders of
23 the debtor-in-possession. In SACt, Judge Lax’s Order specifically
24 makes findings required in any such situation, such as (1) “the terms

22
1 and conditions of the Sale Agreement is in the best interest of the
2 Debtors and their estates”; (2) “the terms of the sale of the Assets to
3 Buyer [SLC, LLC] are the result of good faith and arm’s length
4 negotiations between the Debtors, the Official Committee of
5 Unsecured Creditors (the “Committee”), Wild Brain and Buyer, and
6 the Debtors have determined . . . that the Assets should be sold to
7 Buyer [SLC, LLC]. . . and that the consideration to be realized by the
8 Debtors is fair and reasonable”; and (3) that “Buyer [SLC, LLC] has
9 acted, and is acting, in good faith, and is therefore entitled to the
10 provisions afforded to a good faith purchaser under 11 U.S.C. §
11 363(m).” Furthermore, it is clear that Judge Lax’s Order and the
agreement incorporated therein were crafted with the intent of
maintaining control over the manner in which these very valuable
assets were being managed.
26. Even though Judge Lax and all of the interested parties expended
12 great efforts to negotiate and finalize the terms and conditions of the
13 April 11, 2002 Order, Stan Lee, by his own admission in the SAC,
14 unilaterally and without any authority, decided not to close on the sale
15 of the assets to SLC, LLC.
16 27. In fact, Stan Lee admits that he never even set up SLC, LLC, even
17 though for the approximately six months from November of 2001
18 through April 11, 2002, he allowed the Bankruptcy Judge, Trustee,
19 creditors and all interested parties to believe that he was doing so.
20 Furthermore, Stan Lee went so far as to sign a document that was
21 filed with the Court in support of the proposed sale of assets,
22 warranting and representing that SLC, LLC was, at the time of that
23 filing, an existing limited liability company pursuant to the laws of the
24 State of California.

23
1 28. In short, there was never any closing and never any transfer or sale of
2 assets to SLC, LLC, as ordered. Instead, Plaintiffs now admit in the
3 SAC that Stan Lee caused the assets to be transferred to QED.
4 Interestingly, Plaintiffs fail to provide any date or dates upon which
5 the purported transfers from SLMI to QED took place. Defendants
6 are aware of only one documented transfer by SLMI to QED, that
7 being the fraudulent assignment of copyrights by Junko Kobayashi as
8 “authorized representative” of SLMI to Gill Champion, as agent of
9 QED, August 7, 2006.
10 FIRST AFFIRMATIVE DEFENSE
11 (Failure to State a Cause of Action Upon Which Relief May be Granted)
As his first affirmative defense, Defendant avers that Plaintiffs have failed to
state any cause of action upon which relief may be granted. Moreover, at all times
material hereto. For this additional reason, Plaintiffs have failed to state any cause
of action upon which relief may be granted as against the defendant.
12 SECOND AFFIRMATIVE DEFENSE
13 (Lack of Standing)
14 As his second affirmative defense, Defendant avers that none of the
15 Plaintiffs (except SLMI if SLMI were properly a plaintiff) have any legal
16 enforceable rights of any kind to any of the assets at issue in this action and,
17 therefore, have no standing of any kind to bring the instant action against
18 Defendant. All of Plaintiffs’ purported claims allegedly arise out of and originate
19 with the sale of assets agreement, as amended, and as incorporated into the
20 Bankruptcy Court’s April 11, 2002 Order. Because the sale of assets agreement,
21 as amended, and the April 11, 2002 Order clearly and unambiguously state that
22 none of the Plaintiffs are entitled to the ownership or rights to the assets at issue,
23 and that none of Plaintiffs could be the assignee of ownership rights without
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1 further order of the court and written approval of SLMI, Plaintiffs lack standing to
2 bring their claims against these individual Defendants.
3 THIRD AFFIRMATIVE DEFENSE
4 (Unclean Hands)
5 As his third affirmative defense, Defendants aver that, to the extent the
6 Plaintiffs (except SLMI if SLMI were properly a plaintiff) assert any equitable
7 claims, said Plaintiffs’ claims are barred because they come to this court with
8 unclean hands and are not entitled to any form of equitable relief.
9 FOURTH AFFIRMATIVE DEFENSE
10 (Fraud)
11 As his fourth affirmative defense, Defendant avers that Plaintiff, Stan Lee
and Gill Champion acting in concert with their partner and lawyer, Arthur
Liebreman, and other principals of both POW! and QED, based upon the above-
mentioned SACts have committed certain frauds upon the Bankruptcy Court, the
Bankruptcy Judge, the Bankruptcy Trustee, the Debtor in Possession, SLMI, the
12 creditors of SLMI and the shareholders of SLMI, the shareholders of Marvel
13 Entertainment, the lenders to Marvel Studios, among others, by procuring the sale
14 of assets agreement, as amended, and the April 11, 2002 Order authorizing said
15 sale of assets, and by thereafter, intentionally disregarding said agreement and
16 order for their own personal financial gain, and to the financial detriment of SLMI
17 and its shareholders and creditors, and thereafter ignoring all other provisions of
18 said agreement and Order, and filing personal claims against Marvel Entertainment
19 based on assets legally owned by SLMI. As a result of such frauds, Plaintiffs
20 should be denied all relief sought in the SAC. In addition, Plaintiffs paid no
21 consideration for the assets looted from SLMI and failed to enforce the
22 Reconveyance right retained by SLMI under the Sale of Assets Agreement
23 providing that all assets sold thereunder would be reconveyed within 30 days of
24

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1 written notice by SLMI to reconvey said assets if the benchmark development
2 deals and payments were not made- which have never been made.
3 FIFTH AFFIRMATIVE DEFENSE
4 (Forfeiture of Contract Rights, If Any)
5 As his fifth affirmative defense, Defendant avers that, to the extent Plaintiffs
6 had any contractual rights of any kind, Plaintiffs forfeited any such rights pursuant
7 to the sale of assets agreement, as amended, and the Bankruptcy Court Order dated
8 April 11, 2002, by engaging in conduct that contradicted the terms of said
9 agreement and Order and, in the case of Stan Lee, was in direct contempt of the
10 April 11, 2002 Order. Additionally, said contract rights were forfeited by the
11 complete failure on the part of any of the Plaintiffs (except SLMI if SLMI were
properly a plaintiff) to pay any amounts due and owing SLMI and its creditors
pursuant to said agreement and order.
SIXTH AFFIRMATIVE DEFENSE
(Violation of 11 U.S.C. § 362)
12 As their sixth affirmative defense, Defendant avers that Plaintiffs, Stan Lee,
13 Gill Champion, POW!, by and through its agents, and QED, by and through its
14 agents, committed certain wrongful and contemptuous acts in direct violation of
15 the Bankruptcy Court’s April 11, 2002 Order, and thereby wrongfully and illegally
16 acquired possession and thereafter used certain assets rightfully belonging to
17 SLMI, then a Debtor in Possession before a United States Bankruptcy Court. The
18 purported transfer of the intellectual properties at issue from a debtor-in-
19 possession, while the Bankruptcy Case was still pending, without any authority to
20 do so, is an involuntary and unauthorized transfer. Involuntary transfers of assets,
21 particularly those which are effected by persons having full knowledge of a
22 Bankruptcy Court Order to the contrary, are governed by 11 U.S.C. § 362, which
23 specifically states that the filing of a bankruptcy petition, as in the case of SLMI,
24 “operates as a stay, . . . , of—any act to obtain possession of property of the estate

26
1 or of property from the estate or to exercise control over property of the estate.”
2 Involuntary transfers of assets in violation of 11 U.S.C. § 362 are void ab initio.
3 Therefore, as a matter of law, any purported assignment of assets by Plaintiffs was
4 void from its inception and had no legal effect whatsoever. As a result, SLMI
5 continues to own and hold all rights, interest and copyrights in and to the
6 intellectual properties at issue, and the Plaintiffs have absolutely no basis to be
7 suing the Defendants.
8 SEVENTH AFFIRMATIVE DEFENSE
9 (Statute of Limitations)
10 As his seventh affirmative defense, the Defendant avers that the Plaintiffs’
11 claims are barred by the applicable statute of limitations with regard to each and
every legal cause of action alleged.
EIGHTH AFFIRMATIVE DEFENSE
(Doctrine of Laches)
As his eighth affirmative defense, the Defendant avers that the Plaintiffs’
12 claims are barred by the doctrine of laches with regard to each and every equitable
13 cause of action asserted.
14 NINTH AFFIRMATIVE DEFENSE
15 (Doctrine of Acquiescence)
16 As his ninth affirmative defense, the Defendant avers that the Plaintiffs'
17 claims are barred by the doctrine of acquiescence with regard to each and every
18 equitable cause of action, and in connection with any action taken by Defendant
19 while he worked for SLMI from 1999-2000.
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1 TENTH AFFIRMATIVE DEFENSE
2 (Failure to State Cause of Action for Punitive and/or Exemplary Damages)
3 As his ninth affirmative defense, the Defendant avers that the Plaintiffs have
4 failed to state any cause of action upon which relief may be granted in the form of
5 punitive and/or exemplary damages of any kind.
6
7 PRAYER FOR RELIEF
8 WHEREFORE, Defendants pray as follows:
9 1. That Plaintiffs take nothing by reason of the Second Amended
10 Complaint, and that judgment be rendered in favor of Defendant;
11 2. For a judicial declaration that Plaintiffs have no rights to any of the
assets at issue in this action;
3. That Defendant be awarded his costs of suit incurred in defense of this
action;
4. That Defendant be awarded their reasonable attorneys fees incurred in
12 this action should he retain attorneys; and
13 5. For such other relief as the Court deems proper.
14
15 DATED: October 3, 2008 PETER F PAUL, Pro Per
16
17 By:
Peter F Paul
18 1854A Hendersonville Rd #10
Asheville, NC 28803
19 (828) 776 4434
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1 DEMAND FOR JURY TRIAL
2 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Defendants
3 hereby demand a trial by jury.
4
5 DATED: October 3, 2008 PETER F PAUL, Pro Per
6
7 By:
Peter F Paul
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