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carbone William B. Crow, OSB # 61018 berow@schwabe.com Denise M. Graves, OSB # 98236 dgraves@schwabe.com Patchen M. Haggerty, OSB # 01054 schwabe.com SCHWABE, WILLIAMSON & WYATT, P-. Pacwest Center, Suites 1600-1900 1211 S.W. Fifth Avenue Portland, OR 97204-3795 Telephone (503) 222-9981 Fax (503) 796-2900 Of Attomeys for Plaintiffs esverves eaiair p.oa2 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON ROBERT AND EUGENIA CERBONE, Individuals; ACTION WASHINGTON, ‘C., a Washington corporation; and ACTION OREGON, INC, an Oregon corporation, Plaintiffs, vs, BRAD SUGARS ACTION INTERNATIONAL, INC., a Nevada corporation; ACTION INTERNATIONAL PTY LTD, an Australian ‘Company; VIC CIUFFETELLL, an Individual; and JOHN DOES 1-5, Defendants. Page 1- DECLARATION OF ROBERT CERBONE No. 04-CV-280-BR, DECLARATION OF ROBERT CERBONE IN SUPPORT OF PLAINTIFES’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS AND/OR STAY THIS ACTION carbone 599 590 8059 26/07/08 e2:81P P.038 1, Robert Cerbone, hereby declare under the penalty of perjury that the following is true and correct: 1. 1am President of plaintiff Action Oregon, Ine. (“Action Oregon”), plaintiff Action ‘Washington, Inc. (“Action Washington”) and am one of the named plaintiffs in this matter. This declaration is made on personal knowledge. 2, Attached hereto as Exhibit A is a true and correct copy of the Certification of Cheryl Peterson, the legal custodian of the Washington Securities Division’ s records (“Peterson”), sent tome by Ms. Peterson, 3. Attached hereto as Exhibit B is a true and correct copy of Action International’s Franchise Registration Permit No, 70012344, which lists Action International (doing business for Brad Sugars Action International) as the franchisor, and has an effective date of December 16, 2002. This Registration Permit was faxed to me by Peterson on March 15, 2004 4. Attached hereto as Exhibit C is a true and correct copy of pages 1, 3, 4 and 5 of Action Intemational’s December 2002 Uniform Franchise Offering Circular (“UFOC”), which contains statements regarding the business experience of Vie Ciuffetelli and Bradley J. Sugars, and pages 1-5 of Brad Sugars Action International's (“BSAI”) September 24, 2002 UFOC, which contains the same information. I received the September 24, 2002 UFOC from Defendants in October of 2002, and the December 2002 UFOC from Defendants on December 6, 2002. 5. believed that Vic Ciuffetelli was acting on bebalf of Action International Pty Ltd. (“Action Intemational”) during our negotiations regarding the Oregon and Washington Master License Agreements (“ML Agreements”). This belief was based on the representations and statements made in the September 24, 2002 UFOC and December 2002 UFOC that Ciuffeteli was an employee of Action International and was not an officer or director of BSAI. 6. Since the UFOC stated that Ciuffetelli “was not an officer of director of BSAI," I understood Ciuffetelii’s “management responsibility” to be on behalf of Action International, particularly given that Ciuffetelli was listed as an employee of Action International Pty. Ltd. Page2- DECLARATION OF ROBERT CERBONE SONNE meen Fee een aco perder 528 sso caso 25/07/08 e2:81P P.0a8 7. During my negotiations of the ML Agreements with Ciuffetell, I relied on the UFOC in forming my belief that Ciufftelli was acting in his management role of Action International (Pty. Lid.) in his negotiations with us, and that Brad Sugars, not Ciuffetelli, was the CEO, director, President, Secretary and Treasurer (ce., the only officer) of BSAL 8. Attached hereto as Exhibit D is a true and correct copy of an e-mail message sent to me by Ciuffetelli on August 8, 2003 that was signed, “Vic Ciuffetelli, CEO Action Intemational.” After April of 2003, Ciuffetelli signed all of his e-snail messages in this way. 9. During a majority of my communications with Ciuffeteli (including e-mail ‘exchanges and phone calls), Ciuffetelli was physically located at the Action Intemational headquarters in Brisbane, Australia. 10, I believed that Shane Burke was acting on behalf of Action International during our negotiations regarding the ML Agreements. This belief was based on the representations and statements made by Ciuffeteli that Burke was “our in house legal/accounting person,” and by Burke's signing his e-mails “Shane Burke, Legal & Accounts Manager, ACTION International Pty Ltd.” 11. During all of my communications with Burke (including e-mail exchanges and phone calls), Burke was physically located at the Action International headquarters in Brisbane, Australia 12. Attached hereto as Exhibit E are true and correct copies of e-mail messages sent to ‘me by Burke on August 14, 2003 and December 3, 2004, that were signed, “Shane Burke, Legal & Accounts Manager, ACTION Intemational Pty Ltd.” 13, Attached hereto as Exhibit F is a true and correct copy of the Washington ML Agreement and the Addendum to the Washington ML Agreement. 14. On or around March 6, 2003, | called Ian Johnson, former COO of Action Intemational, and told him that Ino longer wished to move forward with the purchase of the Oregon or Washington territories because Action International would not agree to key terms in the Addendum to the ML Agreements Page3- DECLARATION OF ROBERT CERBONE SAS ome ATE aece

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