Case 3:12-cv-01505-JAF Document 1

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO ROLANDO FERNANDEZ-AVILES, and MIGUEL FERNANDEZ-RIOS PLAINTIFFS V. ELMER O. MIRANDA-AVILES, DEFENDANT; and PUERTO RICO TECHNOLOGIES, INC., SURGICAL RE: TRADEMARK INFRINGEMENT, UNFAIR COMPETITION, TRADEMARK DILUTION, TEMPORARY RESTRAINING ORDER, PRELIMINARY AND PERMANENT INJUNCTION; DECLARATORY JUDGMENT; BREACH OF FIDUCIARY DUTY; DAMAGES. DEMAND FOR JURY TRIAL. NOMINAL DEFENDANT. CIVIL NO.

VERIFIED COMPLAINT TO THE HONORABLE COURT: COME NOW Plaintiffs, Rolando Fernandez Aviles (hereinafter referred to as “Fernandez”) to as and Miguel Fernandez through Rios the

(hereinafter

referred

“Fernandez-Rios”),

undersigned counsel, and respectfully state, allege, and pray as follows: I. 1. This Jurisdiction and Venue Court has jurisdiction because:

Honorable

(a) this is a civil action arising under the Lanham Act of the United States, 15 U.S.C. §§ 1051 et seq., subject matter

jurisdiction being conferred under 15 U.S.C. § 1121 and 1116(a),

Case 3:12-cv-01505-JAF Document 1

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and 28 U.S.C. §§ 1331 and 1338.

The state and common law claims

are joined pursuant to 28 U.S.C. §§ 1367 and 1338, in as much as those claims are related to the claims in the action within this Honorable Court’s original jurisdiction and form a part of the same case or controversy. 2. Venue is proper in this Court pursuant to 28 U.S.C.

§ 1391(b), since Defendants reside in the Commonwealth of Puerto Rico and a substantial amount of the events giving rise to the claims occurred in the Commonwealth of Puerto Rico. II. 3. Defendant, Puerto Parties Rico Surgical Technologies, Inc.

(hereinafter referred to as “Surgical”), is a close corporation organized and existing under the laws of the Commonwealth of Puerto Rico. Surgical was created with the purpose of importing branded medical equipment from the United States and foreign countries for their distribution and sale in the territory of Puerto Rico. 4. Surgical Plaintiff, since its Fernandez, has been He a stockholder serves of as

incorporation.

currently

President of Surgical and its Board of Directors. He currently holds thirty percent (30%) of Surgical stock.

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5.

Plaintiff, Fernandez-Rios, has been a stockholder of

Surgical since its inception. He currently holds forty percent (40%) of Surgical stock. 6. Defendant, Elmer O. Miranda-Aviles (hereinafter

referred to as “Miranda”), has been a stockholder of Surgical since its incorporation. He is the former Vice-President and Treasurer of Surgical. He currently holds thirty percent (30%) of Surgical stock. III. Nature of the Action 7. This is a civil action to recover for Miranda’s

willful acts of trademark infringement, trademark dilution, and unfair competition for misrepresentation in commercial promotion under 15 U.S.C. §§ 1114(1), 1125(a), and §1125(c) (Sections

32(1), 43(a), and 43(c) of the Lanham Act), violations of the Puerto Rico law unfair competition doctrines, Article 3 of Act No. 77 of June 25, 1964, as amended, 10 LPRA § 259(a), Article 3 of Act No. 169 of Dec. 16, 2009, 10 LPRA § 223a, Article 1802 of the Civil Code of Puerto Rico, 31 L.P.R.A. § 5141, and common law trademark infringement and unfair competition. 8. Surgical, Specifically, in defiance Miranda’s with the continuing consent operation to order of his

express

removal by a majority of Surgical stockholders, infringes the federally registered trademarks distributed by Surgical and

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Surgical’s

service

mark

because

of

his

unauthorized

representation of Surgical and the registered marks distributed by the corporation. 9. Surgical is the person authorized to import, market,

promote, distribute, and sell the federally trademarked products at issue. Miranda is no longer authorized to continue to act as manager or representative of Surgical. His continuing operation infringes the protections afforded by the law against the harms caused by misrepresentation in promotion, false designation of origin, and passing off. 10. Also, this is a direct claim for breach of fiduciary

duties perpetrated by Miranda, former manager of Surgical, that directly Surgical, rights, in harm for Fernandez violations of and of the Fernandez-Rios, their Puerto stockholders of

fundamental Rico

stockholder Act

violation

Corporations

(hereinafter referred to as “Corporations Act”). 11. Also, this is a derivative claim against Miranda (and

Surgical as a nominal defendant) arising out of Miranda’s gross negligence in managing the operations of Surgical, including

false representations and the payment of implicit dividends, in violation of the Corporations Act. 12. Fernandez order, and Fernandez-Rios also seek and a a temporary permanent

restraining

a preliminary

injunction,

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injunction, pursuant to Rule 65 of the Federal Rules of Civil Procedure and to 15 U.S.C. §1116(a), to enjoin Miranda from

illegally continuing to act as manager and agent of Surgical in order to prevent further violations of Fernandez’s franchises and and

Fernandez-Rios’

fundamental

stockholder

violations under 15 U.S.C. §1125(a) & (c). 13. Fernandez also seeks declaratory relief which may be

granted under the Declaratory Judgment Act, 28 U.S.C. §§ 22012202, and under Rule 57 of the Federal Rules of Civil Procedure, in order to declare that Miranda’s removal from the management of Surgical is valid and enforceable under the Corporations Act and, as such, Miranda has no legal right to continue in the management of Surgical. IV. A. 14. Relevant Facts

Creation and Growth of Surgical Surgical is a Puerto Rico corporation dedicated to the

importation of medical products and equipment from the United States and other countries for their distribution and sale in the Commonwealth of Puerto Rico. 15. Before the incorporation of Surgical, Miranda went to

Venezuela to work for Fernandez and the corporation Meditech Venezuela, C.A. (hereinafter referred to as “Meditech”).

Unfortunately, this venture was not successful for Miranda and

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as a result Fernandez decided to start a new medical products distribution [Exhibit 1, operation Job in the sent Commonwealth by Miranda of to Puerto Rico. on

proposal

Fernandez

November 1, 2005] 16. Fernandez offered Miranda a participation in the

ownership of the new venture. Specifically, Miranda was offered thirty percent (30%) of the stock of the new corporation. 17. Miranda was also offered commissions on the basis of

his sales performance. 18. The stockholders of the corporation were:

(a) Fernandez, who owns thirty percent (30%) of Surgical stock; (b) Miranda, cousin of Fernandez, who owns thirty percent (30%) of Surgical stock; and (c) Fernandez-Rios, who owns forty

percent (40%) of the stock. They decided to organize Surgical as a close corporation, as it is stated in Surgical’s Certificate of Incorporation. In this manner, Surgical was created on August 21, 2006. [Exhibit 2, Surgical’s Certificate of Incorporation] 19. The ownership structure of Surgical has remained

unchanged since its incorporation and the holders of Surgical’s stock maintain the original distribution of ownership. 20. control Since then and to this date, the majority group or group of Surgical is composed of Fernandez and his

father, Fernandez-Rios, together owning seventy percent (70%) of

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Surgical common stock. [Exhibit 3, Summary of Surgical Board of Directors and stockholders of Surgical dated on September 6, 2006 and minutes of first meeting of the stockholders held on August 17, 2006] 21. The of capital one structure of Surgical shares of is composed stock

exclusively

thousand

(1,000)

common

without par value. These shares were distributed according to the previously referred proportion of ownership. [Exhibit 2,

Surgical’s Certificate of Incorporation] 22. The board of directors of Surgical is not classified

in groups or in staggered terms, neither has Surgical authorized cumulative voting as its method of voting. [Exhibit 4,

Surgical’s Bylaws] 23. Nothing of in the bylaws of Surgical the use or of in its

certificate

incorporation

proscribe

written

consents in lieu of meeting to order actions that would normally require a meeting of the stockholders. [Exhibits 4 & 2,

Surgical’s Bylaws & Surgical’s Certificate of Incorporation] 24. The initial investments were made by Fernandez and

Meditech by means of cash, equipment and product to be sold by Surgical in Puerto Rico. Meditech is a Venezuela corporation owned and operated by Fernandez out of Caracas, Venezuela.

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[Exhibit Surgical] 25.

5,

Summary

of

wire

transfers

between

Meditech

and

This for

investment the

was

used and

by

Surgical

to

develop from

a

client-base

products

services

imported

the

United States and other countries to be sold by Surgical in Puerto Rico. 26. Miranda was the person in charge of managing and

administering maintained a

Surgical’s supervisory

daily role

operation. with

However, and

Fernandez all major

Surgical,

decisions required Fernandez’s approval. 27. This is shown the by the he fact that Miranda His receives were

commissions

for

sales

completes.

profits

supposed to mainly be derived from such commissions. 28. two By the end of 2009, Surgical total revenues exceeded dollars it was ($2,000,000.00). during this same However, year as recently “personal

million

discovered,

when

withdrawals” started forming part of Surgical’s balance sheet. [Exhibit 6, Surgical’s Unaudited Financial Statements 2007-2011] 29. Fernandez and Fernandez-Rios have not received any

money attributable to a declaration of dividends. The only money received by Fernandez were payments to Meditech for its

investment in Surgical. [Exhibit 5, Summary of wire transfers between Meditech and Surgical]

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30. 2009.

The

illegal 6,

implicit

dividend Unaudited

payments Financial

started

on

[Exhibit

Surgical’s

Statements

2007-2011] 31. In this same year, Miranda admitted he paid himself

advanced commissions. Exhibit 7, Letter dated on June 28, 2012, sent by Miranda to Fernandez] 32. Since then, Surgical also started suffering

significant harm in its relationship with suppliers, which in turn adversely affected Fernandez’s and Surgical’s reputation

and goodwill created within this industry. 33. For instance, the supplier Applied Medical Resources (hereinafter Surgical as a referred Puerto to Rico as “Applied distributor Medical”), of their

Corporation terminated

products. [Exhibit 8, Communications between Surgical, Fernandez and Applied Medical] 34. This caused several problems for Fernandez;

specifically, it generated a desire in Applied Medical to stop doing business with Fernandez in Venezuela and Surgical could only make purchase through Meditech in Venezuela, both of which resulted in unexpected expenditures by Meditech and Fernandez. [Exhibit 8, Communications between Surgical, Fernandez and

Applied Medical]

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35.

Additionally,

the

corporation

Vascutek,

a

Terumo

Company (hereinafter referred to as “Vascutek”) also terminated Surgical absence as of their sales Puerto on Rico distributor part. due to 9, a complete

Miranda’s

[Exhibit

Vascutek’s

Termination E-mail sent to Fernandez on February 24, 2011] 36. This also created unexpected expenditures for

Fernandez and Meditech, which moved to restore the goodwill and reputation created through sales in the established Venezuela distribution. [Exhibit 9, Vascutek’s Termination E-mail sent to Fernandez on February 24, 2011] B. 37. Marks Distributed by Surgical In Puerto Rico Surgical and Fernandez have become household names

within the Puerto Rico medical products and equipment industry. 38. that Surgical represents presence are federally and a registered number from of trademarks products States

enjoy

nationwide by

the

distributed

Surgical

imported

the

United

across interstate lines. 39. allowed Fernandez Surgical involvement to begin and success with in the industry and a

operations

goodwill

reputation that other start-ups do not immediately enjoy. 40. The “Puerto Rico Surgical Technologies, Inc.” service

mark is inherently distinctive and unique. Surgical’s graphic logo design is made up by its wordmark, the corporation’s full

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name

(“Puerto

Rico

Surgical

Technologies,

Inc.”)

digitally

written in blue turquoise, a pictogram, composed of a square with a blue turquoise background and depicting a heart monitor with the capital letters “PRST” centered inside the square, and, lastly, Surgical’s tagline features at the bottom of the logo with the slogan: “focusing on surgical quality”. [Exhibit 10, Surgical’s service mark logo] 41. The federally registered trademarks promoted,

marketed, sold and serviced by Surgical are also distinctive and unique. [Exhibit 11, Federally registered trademarks represented by Surgical] 42. Considerable and substantial monetary resources have

been invested in developing the Surgical service mark and the federally registered trademarks distributed and represented by Surgical in Puerto Rico. 43. the The marks distributed by Surgical are registered with States as Patent and and Trademark to are 1998 this as and Office day, the (hereinafter represented (a) MAQUET,

United to

referred federally

“USPTO”),

registered on November

marks 3,

follows: with USPTO

registered

registration

number 2,201,054; (b) GETINGE, filed for registration on October 30, 2009 and with USPTO serial number 77861251; and (c)

SPACELABS and SPACELABS MEDICAL, registered on February 19, 1985

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and on August 13, 1996, with registration numbers 1320540 and 1993012, respectively. 44. the Surgical holds the right to distribute these marks in Rico market, pursuant to several distribution

Puerto

agreements with the owners of these registered marks. 45. A significant number of consumers of medical products

and equipment purchase from Surgical under the assumption that it is the authorized distributor of these brands and that its employees and representatives are authorized to promote, offer, advertise, sell, and service these goods. 46. The purpose of the “Puerto Rico Surgical Technologies,

Inc.” service brand is to identify the corporation as the source of these products, by virtue of its employees and representative who develop clients and provide services in connection with the authorized distribution. In essence, it is used to establish a symbol of quality and goodwill that consumers of medical

products and equipment can continue to trust. C. 47. Miranda’s Removal from the Management of Surgical As a result of discussions between Fernandez and

Fernandez-Rios regarding Miranda’s recent performance as manager of Surgical, they decided it was proper to complete his removal. 48. For example, Fernandez and Fernandez-Rios have become

upset of the fact that since 2009, Miranda has paid himself

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advanced commissions. [Exhibit 7, Letter dated on June 28, 2012, sent by Miranda to Fernandez] 49. signed a To achieve this, Fernandez and Fernandez-Rios, each, corporate resolution on May 1, 2012, which stated

Miranda’s removal effective within five (5) days of receipt of a majority of written consents at the principal offices of

Surgical. [Exhibit 12, Corporate Resolution by Written Consent received at Surgical on May 11, 2012] 50. Both Fernandez and Fernandez-Rios signed corporate

resolutions by written consent, which were sent by certified mail and were received on May 11, 2012. The removal became

effective on May 21, 2012. [Exhibit 13, Certified mail receipts for Corporate Resolutions by Written Consent sent on May 9,

2012] 51. A notification was sent to Miranda, as minority

stockholder, on May 14, 2012, with the determination held by the majority of stockholders in the corporate resolution by written consent received at Surgical on May 11, 2012. This notification was received at Miranda’s address on May 17, 2012. [Exhibit 14 & 15, Notification to Surgical minority stockholders dated on May 14, 2012, in relation to Corporate Resolution by Written Consent of May 11, 2012; Certified mail receipt for Notification of

Corporate Resolution]

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52.

But, on May 12, 2012, Miranda wrote Fernandez a letter

expressing his disapproval of the holding made by the majority of Surgical stockholders and expressing his intention to act in defiance of the removal. However, in such letter, Miranda

acknowledged receipt of enough consents to conform a majority of stockholders of Surgical, a statutory requirement to act by

written consent without a meeting. [Exhibit 16, Letter dated on May 12, 2012, sent by Miranda to Fernandez] 53. On the same token, dated on May 21, 2012, Miranda sent

Fernandez a letter to reiterate his dismissal of the corporate resolution of May 11, 2012 and the notification he received, as Surgical minority stockholder. However, the letter serves as

acknowledgement of the receipt of such notification, as required by the Corporations Act to act in lieu of meeting of the

stockholders. [Exhibit 17, Letter dated on May 21, 2012, sent by Miranda to Fernandez] 54. e-mail Moreover, on May 22, 2012, Miranda sent Fernandez an where he acknowledged he fraudulently conveyed to

Surgical employees that Fernandez had resigned as President of Surgical, a fact Miranda knew to be false. Miranda also

acknowledged that Surgical maintains a debt with Fernandez and Fernandez’s Venezuela corporation. [Exhibit 18, E-mail dated on May 22, 2012, sent by Miranda to Fernandez]

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55.

Miranda

also

admitted

that

Fernandez

is

still

a

stockholder of Surgical and that the value of Surgical stock is still undetermined. However, Miranda still refuses to allow the inspection of Surgical corporate books and records in order to make a proper determination of Surgical’s value. [Exhibit 18, Email dated on May 22, 2012, sent by Miranda to Fernandez] 56. Miranda Notwithstanding the above, Fernandez sent a letter to on May 28, 2012, restating the validity of the

stockholder’s action that ordered his removal and that Miranda had opted to act in defiance of Surgical stockholders. Fernandez the holding of a majority of requested compliance from

Miranda in order to avoid judicial intervention. However, as a result from Miranda’s obstinacy, Fernandez is left with no other options but to seek equitable relief to enforce the removal. [Exhibit 19, Letter dated on May 28, 2012, sent by Fernandez to Miranda] 57. This noncompliance is causing Fernandez serious harm

and continues to threaten the well being of Surgical. Moreover, neglecting his right to vote causes Fernandez a direct and

individual harm, separate to any harm possibly conceived to be suffered by Surgical. 58. manager Since then, Miranda still maintains his position as of Surgical, still controls the real and personal

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property of Surgical, has access to bank accounts, is in charge of the daily administration of Surgical, all of this in direct contempt and neglect who of the prerogative their of a majority to vote, of in

stockholders

validly

exercised

right

accordance with the applicable law. 59. Also, Miranda has since continued the unauthorized

operation, representation, and management of Surgical. 60. After his removal, Miranda lost the authority to

operate or act on behalf of the business of Surgical, which is the distribution and sale of registered marks of medical

products and equipment. Miranda lost the authority to act as an agent or associate of Surgical and its authorized distribution of the previously mentioned registered marks. 61. express These acts of are performed by Miranda to against end the

intention

Surgical

stockholders

Miranda’s

authorization to represent these marks. 62. Since, Miranda has continued to represent himself as

manager and/or agent of Surgical albeit the removal, has made misrepresentations Surgical, regarding has his as to his tenure in the management and of

deceived

Surgical’s to act

clients in

suppliers of

authorization

representation

Surgical, has influenced the purchasing decisions of current and

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prospective

clients

without

authorization,

all

in

connection

with the continuous operation of Surgical product distribution. 63. equipment Miranda’s refusal to stop promoting the products and distributed by Surgical cause confusion within the

Puerto Rico medical products and equipment market. Clients and suppliers will continue to do unauthorized business with “Puerto Rico Surgical Technologies, Inc.” by virtue of Miranda’s

unauthorized involvement. 64. acting Also, Miranda has represented to suppliers that he is with authority from the corporation to purchase,

distribute, and represent their registered marks. These actions will likely injure, dilute, and tarnish Surgical and the “Puerto Rico Surgical Technologies, Inc.” service mark. D. 65. Fernandez’s Inquiry of Surgical’s Financial State Early in 2011, Fernandez held a meeting with Miranda

and Mr. Arnaldo Miranda (hereinafter referred to as “Arnaldo”) to request Surgical’s financial statements in order to develop a future plan for himself and for Surgical. 66. notify On April 7, 2011, Miranda sent Fernandez an e-mail to him about Miranda made the status of the the a requested requested from financial information the e-mail.

statements. would be

asserted

that

available

within

week

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[Exhibit 20, April, 7, 2011] 67. William

Miranda’s

e-mail

to

Fernandez

dated

on

On June 16, 2011, Fernandez held a meeting with Mr. Rodriguez, accountant for Surgical, to review the

requested and submitted financial information. Fernandez was not pleased with the report because he was only presented with

income tax returns and not with financial statements. At the end of this meeting, Fernandez was provided with additional

financial information. 68. Miranda On this same day, after the meeting, Fernandez sent an e-mail expressing his worries with the financial

state of Surgical. Fernandez requested an additional meeting to be held on the next day, June 17, 2011, to discuss his

appreciation of the entire state of affairs. [Exhibit 21, E-mail sent by Fernandez to Miranda dated on June 16, 2011] 69. hired After a hostile meeting on June 17, 2011, Fernandez services of an independent certified public

the

accountant, in order to perform a preliminary examination of Surgical’s financial state and with the limited documents

Miranda made available to Fernandez. [Exhibit 22, Preliminary examination report and invoice submitted by CPA Arnaldo Colon] E. Financial Examination of Surgical

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70.

The examination was preliminary and based solely upon

a comparison between Surgical’s corporate income tax returns and a set of unaudited financial statements. Colon was also able to meet and confer with Mr. William Rodriguez, accountant for

Surgical, and discuss the contents of these documents. [Exhibit 22, Preliminary examination report and invoice submitted by CPA Arnaldo Colon] 71. findings affairs. Although that preliminary, a grim Colon Colon of was able to report

showed

outlook found

Surgical’s

financial in

Specifically,

several

inconsistencies

revenue reporting, depletion of Surgical’s capital structure and continuous Preliminary withdrawals examination of report company and funds. [Exhibit by 22, CPA

invoice

submitted

Arnaldo Colon] 72. its These findings show damages both to Surgical and to The “personal [Exhibit withdrawals” 22, are nothing but

stockholders. in

dividends

disguise.

Preliminary

examination

report and invoice submitted by CPA Arnaldo Colon 73. Specifically, these “personal withdrawals" were

unknown to Fernandez and Fernandez-Rios and they did not receive payment [Exhibit as dividends for their participation report in and Surgical. invoice

22,

Preliminary

examination

submitted by CPA Arnaldo Colon]

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74. composed

Surgical’s exclusively

capital of one

structure

is

not of

complex. voting

It

is

classification

common

stock and all stockholders share the same rights, including the right to receive dividend payments, according to the previously mentioned proportion of ownership of Surgical. [Exhibits 2 & 3, Surgical’s Certificate of Incorporation and Summary of Surgical Board of Directors 6, 2006 and and stockholders minutes of of Surgical meeting dated of on the

September

first

stockholders held on August 17, 2006] 75. Surgical’s These “personal and withdrawals” base. caused It a depletion Surgical of by

funds

capital

injured

placing it in a precarious position in front of its suppliers and creditors, which has already caused harm in the past, as it was the case with suppliers Applied Medical and Vascutek.

[Exhibit 6, Surgical’s Unaudited Financial Statements 2007-2011] F. 76. Secretary corporate Surgical. Miranda’s Fraudulent Representations Before His Removal On of January 11, 2010, Board of Mr. Arnaldo Miranda-Aviles, signed as a sworn of

Surgical’s

Directors, Miranda

resolution [Exhibit

that

appointed

President

23,

Surgical’s

document

titled

“Corporate

Resolution” of January 11, 2010] 77. However, Fernandez was never removed as President of

Surgical prior to the appointment of Miranda to such position.

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78.

Fernandez

never

quit

his

position

of

President

of

Surgical and was never notified of the board meeting required to complete his removal as President, necessary step before a new appointment to the same position. 79. to inform After these acts, Miranda met with Surgical employees the staff about the change in management and the

removal of Fernandez as President of Surgical. 80. Miranda knew or should have known his appointment was

not valid since Fernandez was never removed and never resigned; therefore, Miranda knew or should have known that this

representation was false. 81. The purpose of these misrepresentations were to induce

its employees and third parties from providing Fernandez access to Surgical, as he has always been entitled to as President and President of the Board of Directors, and for Miranda to entrench himself in the management of Surgical. 82. These fraudulent and false representations constitute

gross negligence in Miranda’s behalf and breached the fiduciary duties owed by him to Surgical. G. 83. Gross negligence by Miranda The “personal withdrawals” made by Miranda, as seen in

Surgical’s financial statements, are nothing more than dividends paid out only to Miranda and not to Fernandez or to Fernandez-

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Rios.

[Exhibit

6,

Surgical’s

Unaudited

Financial

Statements

2007-2011] 84. Since they were not paid in accordance to applicable

law or to Surgical ownership structure, these dividends create a liability in detriment to Surgical and its creditors. 85. Moreover, these payments deplete Surgical’s funds to a

point where it may become impossible for Surgical to meet future payment terms of suppliers and other creditors. 86. depleting Miranda’s its self-dealing base 6, in caused detriment harm to to Surgical, and

capital [Exhibit

creditors

stockholders.

Surgical’s

Unaudited

Financial

Statements 2007-2011] H. 87. Request for Inspection of Surgical’s Books and Records On April 26, 2012, Fernandez and Fernandez-Rios sent

Surgical a sworn request for inspection of Surgical’s books and records. [Exhibit 24, Fernandez’s Request for Inspection of

Corporate Books and Records of April 26, 2012] 88. and to The request was made in accordance with applicable law inspect by documents reasonably in his related to the findings

reported

accountant

Colon

preliminary

examination.

Also, in order to determine the value of Fernandez’s stock. 89. Upon receipt, Miranda responded to the request

postponing any inspection of Surgical’s books and records until

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almost one month after the request. [Exhibit 25, Miranda’s reply to Fernandez’s inspection request, dated on May 3, 2012 and May 8, 2012] 90. This letter was replied by Miguel Fernandez asking for

immediate action to provide the necessary accommodations for the inspection. This letter was also disregarded and to this date Fernandez [Exhibit has 26, received Fernandez’s no further response response to from Miranda. reply to

Miranda’s

inspection request, letter dated on May 11, 2012] 91. Miranda’s refusal to afford the requested inspection

of Surgical books and records and the defiance to abide by the valid injure vote of a majority and of Surgical stockholders breaches directly Miranda’s

Fernandez

Fernandez-Rios

and

fiduciary duties owed directly to stockholders. 92. as Miranda’s acts of gross negligence and self-dealing, though his and fraudulent the representations of implicit Miranda’s regarding dividends fiduciary

depicted

Fernandez

resignation injure

payment

derivatively

Surgical

and

breaches

duties owed to Surgical and its stockholders. V. First Claim for Relief: Temporary Restraining Order; Preliminary and Permanent Injunction 93. reference. Paragraphs 1 to 92 are hereby incorporated by

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94. infringes Surgical

Miranda’s the and

unauthorized

representation trademarks

of

Surgical by

federally the

registered Rico

distributed

“Puerto

Surgical

Technologies,

Inc”

service mark. 95. and sale They of constitute protected unauthorized and acts of representation marks with the

trademarks

service

intent to profit and benefit from the goodwill and reputation of the marks at issue. 96. operate Unless the Miranda of is restrained these from continuing to

business

Surgical,

federally

registered

trademarks will be subject to irreparable harm because Miranda’s representation ceased to enjoy authorization from a majority of Surgical stockholders. 97. Also, these protected marks will likely suffer from dilution and tarnishment, since distinctive and

irreparable

famous marks are being promoted, marketed, sold, and serviced without the authorization of Surgical, authorized distributor of these federally registered trademarks and owner of the “Puerto Rico Surgical Technologies, Inc.” service mark, this diluting its goodwill and reputation. 98. majority As stated before, Fernandez and Fernandez-Rios are the stockholders of Surgical and have been since its

incorporation.

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99.

Fernandez and Fernandez-Rios, each, signed corporate

resolutions by written consent that were sent to Surgical in order remove Miranda as administrator of Surgical. These

consents add up to a majority (70%) of the total stockholders of Surgical and were received by the corporation on May 11, 2012. Additionally, a notification was sent to the remaining minority stockholders. 100. However, Miranda has consistently and vehemently

refused to comply with the desire of the stockholders to remove him as director. Still, to this day, Miranda has failed to

surrender control of Surgical over to Fernandez, as ordered by a majority of stockholders. 101. Miranda’s refusal to comply with the held removal, as well as his refusal to surrender control of Surgical, is causing Fernandez their and Fernandez-Rios rights. Also, great and irreparable continuous injury refusal to to

voting

Miranda’s

surrender control is causing irreparable harm to Surgical, which is currently under control by a person without legal authority to manage Surgical. 102. Because a monetary award cannot fully and adequately compensate Surgical or its stockholders, Fernandez and

Fernandez-Rios come to this Court without an adequate remedy at law.

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103. A temporary restraining order, as well as preliminary and permanent injunction should be issued immediately, enjoining Miranda from continuing to sell and distribute the federally registered “Puerto trademarks Surgical distributed by Surgical, Inc.” dilute the mark,

Rico

Technologies,

service

interfere with the rights of Surgical stockholder, specifically, with the holding decided by the majority stockholders of

Surgical to remove Miranda as administrator of the corporation and to surrender control of Surgical over to Fernandez. VI. Second Claim for Relief: Trademark Infringement and Unfair Competition 104. Paragraphs reference. 105. Miranda continues to sell and distribute the federally registered trademarks distributed by Surgical; continues to 1 to 103 are hereby incorporated by

represent himself to be a Surgical representative and manager; and continues to promote and advertise the federally registered trademarks distributed by Surgical without authorization. 106. Miranda’s that he represents aforesaid and acts tend to represent the and falsely Rico

manages

Surgical, mark

“Puerto the

Surgical

Technologies, trademarks of

Inc.”

service by the

federally a

registered violation § 1125(a).

distributed of

Surgical Lanham

constitute

Section 43(a)

Act,

15 U.S.C.

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107. The

aforesaid

acts

of

Miranda

are

greatly

and

irreparably damaging to Fernandez, Fernandez-Rios, Surgical, and the federally registered trademarks it distributes, and will

continue to be greatly and irreparably damaging unless enjoined by this Court since Fernandez and Fernandez-Rios are without an adequate remedy at law. VII. Third Claim for Relief: Trademark Dilution and Tarnishment 108. Paragraphs reference. 109. Miranda is using the “Puerto Rico Surgical 1 to 107 are hereby incorporated by

Technologies, Inc.” service mark; is representing himself to be a Surgical representative Surgical’s and manager; and the and is promoting and

advertising

business

federally

registered

trademarks it distributes without authorization. 110. The promotion and marketing of the “Puerto Rico

Surgical Technologies, Inc.” service mark and color patterns is causing confusion or mistake and is deceiving consumers of

medical products and equipment as to the origin, the licensing, and the endorsing by Surgical of Miranda’s misrepresentations, which at this time is out of the control of Fernandez,

Surgical’s legitimate manager.

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111. Miranda’s

aforesaid

acts

constitute

trademark

infringement in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1). 112. Miranda’s aforesaid acts have caused Fernandez,

Fernandez-Rios, and Surgical to suffer injury and damages of such a nature that monetary damages alone cannot adequately

compensate Surgical for the loss suffered. 113. The aforesaid acts of Miranda are greatly and

irreparably damaging to Surgical and will continue to be greatly and irreparably damaging to Surgical unless enjoined by this Court since Fernandez and Fernandez-Rios are without control of the corporation and without an adequate remedy at law. VIII. Fourth Claim for Relief: Declaratory Judgment 114. Paragraphs reference. 115. In the present case, a majority of stockholders of Surgical, adding up a total of seventy percent (70%) of the total amount of outstanding common stock, have decided, through a valid corporate resolution by written consent, that Miranda was thereby removed as manager of Surgical. Since then, Miranda has expressly refused to step down as manager of Surgical and has refused to surrender Surgical to Fernandez, its President. 1 to 113 are hereby incorporated by

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116. Considering the above, Miranda’s removal and order to surrender the corporation over to Fernandez should be declared valid, legal, and enforceable under Rule 57 of the Federal Rules of Civil Procedure. 117. Subsequently, Miranda’s current control of Surgical

and refusal to surrender Surgical to its stockholders should be declared invalid, illegal, null void, and unenforceable under Rule 57 of the Federal Rules of Civil Procedure. IX. Fifth Claim for Relief: Direct Claim for Breach of Fiduciary Duty of Protecting Fernandez’s Right to Vote 118. Paragraphs reference. 119. Fernandez exercised his right to vote, as stockholder of Surgical, with a corporate resolution by written consent in lieu of meeting that approved, by a majority of its 1 to 119 are hereby incorporated by

stockholders, the removal of Miranda as manager of Surgical. It also ordered Miranda to surrender control of Surgical over to Fernandez. 120. Subsequently, shares of Surgical a majority received of on consents May 11, of outstanding at the

was

2012,

principal place of business of Surgical, where the book in which proceedings of this nature are recorded and by means of

certified mail with return receipt.

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121. On right in the of

the

other

hand,

Miranda of

does

not

hold The

a

vested of in

office

of

director is not has

Surgical. in

Board or

Directors staggered

Surgical

classified Surgical

groups

terms,

neither

authorized

cumulative

voting as its method of voting. Moreover, nothing in the bylaws of Surgical or in its certificate of incorporation proscribe the use of written consents in lieu of meeting to order actions that would normally require a meeting of the stockholders. 122. Therefore, Miranda’s refusal to step down as director of Surgical and express defiance of the holding of a majority of Surgical stockholders blatantly violates his stockholder

fundamental franchise to vote, to remove directors and to act by written consent, as provided by the Corporations Act. 123. It is an independent and separate harm than those

inflicted by Miranda upon the corporation, since the holder of the right is Fernandez and he will be the person entitled to relief. 124. The damages suffered by Fernandez for this breach are great and irreparable. right to No monetary in damage could the restore ordered

Fernandez’s

vote

connection

with

removal. However, a damages award of no less than $100,000.00 is hereby requested to compensate for the lack of control that

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Fernandez

is

suffering

and

will

continue

to

suffer

until

otherwise enjoined by this Court. X. Sixth Claim for Relief: Direct Claim for Breach of Fiduciary Duty of Protecting Fernandez’s Right to Inspect Corporate Books and Records

125. Paragraphs reference. 126. Stockholders corporate because a books and

1

to

124

are

hereby

incorporated

by

enjoy records is

a as

personal a matter to know

right of

to

inspect

self-protection, directors are

stockholder

entitled

how

conducting the affairs of the corporation of which he or she is a part owner. 127. This right is exercised upon written demand, under

oath, stating a purpose that is reasonable related to a person’s interest as stockholder. Once this is established, the

corporation may not defeat the request alleging hidden agendas or secondary purposes. Not even that the books and records to be inspected are in possession of a third party. The corporation, generally, must comply. 128. In this case, a sworn request was sent by Fernandez and Fernandez-Rios to Miranda, as director and manager of

Surgical. The request stated the purpose of the inspection and

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identified inspection.

with

specificity

the

documents

required

for

the

129. However, Miranda completely disregarded the rights of Surgical stockholders to inspect Surgical’s corporate books and records, thus, infringing Fernandez’s and Fernadez-Rios’ right to inspect corporate books and records, entitling them to relief on an amount not less than $100,000.00.

XII. Seventh Claim for Relief: Derivative Claim for Breach of Fiduciary Duties for the payment of illegal implicit dividends in detriment to similarly situated stockholders 130. Paragraphs reference. 131. As previously stated, a preliminary examination of 1 to 129 are hereby incorporated by

Surgical’s income tax returns and unaudited financial statements showed substantial “personal withdrawals”. These disbursements are nothing else but implicit dividends paid out by Surgical to Miranda, in neglect of statutory requirements. 132. These dividend payments were not made in accordance to statutory requirements or in accordance with Surgical’s

ownership and capital structure. 133. This breach of fiduciary duties constitutes an act of self-dealing, which must be reviewed under the entire fairness standard and the applicable law.

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134. fiduciary

Since these implicit dividends constitute a breach of duties, the full amount must be returned to the

Surgical, with the applicable payment of interests, as provided by the Corporations Act, in an amount not less than $327,522.48, plus interests. XIII. Eighth Claim for Relief: Derivative Claim for Breach of Fiduciary Duties for fraudulent misrepresentations 135. Paragraphs reference. 136. As previously stated, Miranda fraudulently represented himself as the sole proprietor of Surgical to its employees and third parties. 137. To stockholder’s this right day, to his vote, refusal to comply exercised with to the order 1 to 134 are hereby incorporated by

specifically

Miranda’s removal as director, constitutes further evidence of this fraudulent behavior. 138. Miranda knew that he was not the sole owner of

Surgical, in fact, he was the minority stockholder of Surgical. Therefore, communications on Miranda’s behalf to try to induce employees and third parties to act as if Fernandez is not

involved in Surgical’s affairs is a fraudulent misrepresentation that harms Fernandez and Surgical.

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139. This

constitutes

a

violation

of

Miranda’s

fiduciary

duties with Surgical and a violation of the Corporations Act, which makes him liable to Surgical. Fernandez is hereby seeking relief to Surgical in the form of a derivative claim for his gross negligence arising out these fraudulent misrepresentations in an amount not less than $100,000.00 dollars. XIV. Ninth Claim for Relief: Treble damages, attorneys’ fees, and expenses 140. Paragraphs reference. 141. As a result of Miranda’s willful and malicious 1 to 139 are hereby incorporated by

conduct, Fernandez and Fernandez-Rios are entitled to recover from Miranda actual damages, treble damages and the attorneys' fees and the expenses it has incurred in bringing this action, pursuant to 15 U.S.C. §§ 1114(1) and 1117(a) and the Puerto Rico Civil Code. 142. Since Miranda has breached its contractual duties in an intentional and willful manner, Fernandez and Fernandez-Rios are entitled to recover any and all damages resulting from said breach and which include all attorneys fees incurred to

prosecute this case and which are estimated in an amount not less than $100,000.00. WHEREFORE, Plaintiff respectfully requests that this

Honorable Court enters an order granting the Verified Complaint,

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entering permanent

a

temporary

restraining and a

order,

a

preliminary as

and

injunction,

declaratory

judgment

herein

detailed and other available remedies: 1. Enjoining Miranda from continuing to represent himself

as manager or representative of Surgical and using the “Puerto Rico Surgical Technologies, inc.” service mark to promote,

market, sale, and service the federally registered trademarks imported and distributed by Surgical; instructing Miranda to

surrender all operating manuals, training manuals, sales manuals and aids, advertising and promotional materials and all trade secret and confidential and proprietary material delivered to Miranda; instructing Miranda to stop infringing, diluting and tarnishing Surgical service the and mark, federally the as “Puerto well to of registered Rico as trademarks distributed by

Surgical

Technologies, and all

Inc.”

its

reputation surrender including and to

goodwill; real and to

instructing personal

Miranda property

immediately Surgical, information

access the

electronically

stored

website

“www.puertoricosurgical.com”. 2. Enjoining rights holding Miranda as from continuing of to interfere with

Fernandez’s with the

stockholder by the

Surgical,

specifically, of

decided

majority

stockholders

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Case 3:12-cv-01505-JAF Document 1

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Surgical to remove Miranda as manager of the corporation and to surrender control of Surgical over to Fernandez. 3. Enjoining Miranda from fulfilling or perfecting

transactions on behalf of Surgical; accessing or retiring funds from Surgical bank accounts; performing any acts reasonably

related to the finances of Surgical, such as making payments in cash, and/or meetings checks, any of money orders, negotiable Board as of an credit cards, promissory notes in and the

other the

instruments; of

participating using of

Directors

Surgical;

representing

himself

authorized

representative

federally registered trademarks distributed by Surgical and the “Puerto Rico Surgical Technologies, Inc.” service mark; and any other acts reasonably related to the control or management of Surgical. 4. Fernandez also requests that this Court orders a

speedy hearing of this action and advance it on the calendar in accordance with Rule 57 of the Federal Rules of Civil Procedure, in as much as it involves only issues of law on undisputed or relatively undisputed facts that warrant the courts swift action and grants the temporary restraining order requested herein. 5. judgment Fernandez hereby requests an entry of a declaratory declaring that the corporate resolution by written

consent in lieu of meeting of the stockholders, signed, dated

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and sent via certified mail to Surgical’s principal offices, and thereupon enforceable received under on the May 11, 2012, is Act valid, and legal, and

Corporations

Surgical’s

Certificate of Incorporation and by-laws. 6. Fernandez requests the entry of an order whereby

Miranda is required to indemnify, reimburse and/or compensate Fernandez, duties directly, held for the breach of Miranda’s fiduciary such

directly

against

Fernandez,

specifically,

duties in connection with Fernandez’s right to vote, right to elect and remove corporate directors, and right to act by

written consent in lieu of meeting in an amount not less than $100,000.00. 7. Fernandez requests the entry of an order whereby

Miranda is required to indemnify, reimburse and/or compensate Fernandez, duties directly, held for the breach of Miranda’s fiduciary such

directly

against

Fernandez,

specifically,

duties in connection with Fernandez’s right to inspect corporate books and records in an amount not less than $200,000.00. 8. Fernandez requests the entry of an order whereby

Miranda is required to indemnify, reimburse and/or compensate Surgical, derivatively, for the breach of Miranda’s fiduciary duties held against Surgical, specifically, such duties in

connection with the illegal payment of implicit dividends in

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violation

of

Surgical’s

proportion

of

ownership

and

the

statutory provisions related to the declaration of dividends in an amount not less than $327,522.48, plus interests. 9. Fernandez requests the entry of an order whereby

Miranda is required to indemnify, reimburse and/or compensate Surgical, derivatively, for the breach of Miranda’s fiduciary duties held against Surgical, specifically, such duties in

connection with the Miranda’s fraudulent misrepresentations as sole proprietor of Surgical and, currently, as incumbent

director of Surgical in an amount not less than $100,000.00. 10. Fernandez, directly and derivatively, requests the

award of such other and further relief as is just and equitable, and the payment of costs, interest, and attorney fees. 11. Fernandez makes a demand of trial by jury.

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UNSWORN STATEMENT UNDER PENALTY OF PERJURY I, Rolando of Fernandez-Aviles, Puerto Rico Surgical of legal age, married, Inc., and

stockholder

Technologies,

resident of Caracas, Venezuela, hereby state under penalty of perjury, pursuant to the Laws of the United States of America, 28 U.S.C. § 1746, that I have read the foregoing Verified

Complaint and its supporting exhibits and that, to the best of my knowledge and belief and/or pursuant to the information and documents in my possession, all allegations herein contained are true and correct. Executed in San Juan, Puerto Rico, on June 25, 2012.

________________________ Rolando Fernandez-Aviles

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CERTIFICATE OF SERVICE It is hereby certified in compliance with Fed.R.Civ.P.

65(b)(1)(B) that a copy of this Motion for Temporary Restraining Order and Preliminary Injunction, will be served by hand upon Defendant through an authorized person to receive legal

documents, as well as, all other initial pleading filed with the Court at HC 72 Box 3766-213, Naranjito, PR 00719, and to

Defendant’s legal counsel, Mr. Ramón Walker Merino, Esq., by electronic mail at walker-merino@msn.com. SEPULVADO & MALDONADO, PSC ATTORNEYS for Plaintiff Citibank Towers, Suite 1900 252 Ponce de Leon Avenue San Juan, PR 00918 Phone (787)765-5656 Fax (787)294-0073 /s/Lee Sepulvado-Ramos USDC-PR 211912 lee_sepulvado@yahoo.com lsepulvado@smlawpr.com

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