Free Affidavit in Opposition to Motion - District Court of Arizona - Arizona

I Russell K. Ryan
MOTSCHIEDLER, MICHAELIDES & WISHON, LLP
2 1690 West Shaw Avenue, Suite 200
3 Fresno, California 93711
Telephone (559) 439-4000
4 Facsimile (559) 439-5654
5 Admitted Pro Hczc Vice
6 Attorneys for Plaintiff QC CONSTRUCTION
7 PRODUCTS, LLC, a Delaware Limited Liability Company
8 UNITED STATES DISTRICT COURT
9 FOR THE DISTRICT OF ARIZONA
I0
11 QC CONSTRUCTION PRODUCTS, Case No. CV ’03 1997 PHX ROS
12 LLC, a Delaware Limited Liability
Company, AFFIDAVIT OF MATTHEW
13 STEGEMILLER IN
Plaintiff, OPPOSITION TO MOTION TO
I4 JOIN BOMANITE
15 v. CORPORATION AS A
COUNTERDEFENDANT
I6 COHlLL’S BUILDING PURSUANT TO RULE 25(C)
17 SPECIALTIES, INC. and MICHAEL
COHILL,
I 8
Defendants.
19
AND RELATED COUNTERCLAIMS.
20
21 I, Matthew Stegerniller, declare:
22 I. I am Chairman of the Board of Directors of QC Construction
23 Products, LLC and am also Chairman of the Board of Directors of Bomanite Corporation.
24 I make the following declaration of my own personal knowledge, and if called upon to
25 testify, could and would competently testify thereto.
26 2. A decision was made by the Board of Directors of QC at or around the
27 end of December 2004 to transfer its assets to Bomanite Corporation in consideration for
MOTSWEDLERY 28 forgiveness of the debt owing to Bomanite Corporation and an assumption of liabilities
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03767/0003//Io9o44.wPD Motion to Join Bomanite Corporation

1 existing as of that date. This assumption of liabilities was not intended to assume either
2 contingent liabilities or any liabilities that occurred after December 31, 2004. The reason
3 for this decision was that as of December 31, 2004, the financial position of QC was such
4 that its assets, excluding tangibles that are included in the financial statements as booked
5 items but had no real value, amounted to $2,508,405.00 while its liabilities amounted to
6 $3,2l7,683.00, demonstrating a negative net worth of $708,278.00.
7 3. As of December 31, 2004, QC owed Bomanite Corporation a trade
8 account receivable in the amount of $748,678.00, an amount significantly in excess of the
9 value ofthe company at that time. lt made sense at the time to agree to the asset transfer
10 since: (a) QC had no management, sales force, employees or office of its own, obtaining
each of these services from Bomanite Corporation; (b) QC obtained all of its product and
11 materials from Bomanite Corporation; and (c) all of its assets were encumbered pursuant
12 to the Loan and Security Agreement executed by and between QC Construction Products,
13 LLC and Alliance Financial Capital dated September 26, 2003, a copy of which is
14 attached hereto as Exhibit A.
15 4. As set forth in the Loan and Security Agreement attached hereto as
16 Exhibit A, the collateral used to secure the loan is defined in Section 1.2.14 which
17 describes all assets of QC Construction Products, LLC. Section 4 of the Agreement
18 provided for a grant of a security interest in all of QC’s assets to secure the payment and
19 performance in full of QC ’s obligations under the Agreement. The attached Loan and
20 Security Agreement is an unsigned copy because the signed copies are in possession of
21 the lender, but Exhibit A is the actual agreement signed by QC Construction Products,
22 LLC. This Agreement continued until February 2005 when it was replaced by a similar
23 agreement in favor of Business Alliance Capital Corporation which likewise encumbers
24 all of the assets of Bomanite Corporation and QC.
25 5. When the transfer of QC’s assets and certain of its liabilities was
26 accomplished effective December 31, 2004, QC did not make this transfer with an intent
27 to hinder, delay or defraud any creditor. In fact, QC paid all of its debts owing as of
December 31, 2004 through payment by Bomanite Corporation. At no time prior to the
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Oct 10 06 04:21p Matthew Stegemiller 9258558826 p_Q
l opinion and order granting summary judgment in favor ot` Cohill’s on its action for breach
2 of contract did anyone at QC reasonably believe that there was any realistic possibility
3 that C0hill’s would prevail on its claim for breach of contract. All the alleged sales at
4 issue which Cohill’s claims in this action were sales that were expressly consented to by
5 Cohill’s and on the contrary, QC believed it had a substantial probability of prevailing on
6 its claims.
7 6. QC received reasonably equivalent value in return for the transfer of
S its assets to Bornanite Corporation since it was forgiven the debt it owed to Bomanite in
9 the amount of $748,678.00 and Bomanite assumed the actual (but not contingent)
IO liabilities owed by QC as of December 31, 2004. QC believed it was in its best interest to
transfer the assets based on its financial condition, its ability to repay the existing
1 1 creditors for actual liabilities owing as of December 31, 2004 and the forgiveness of the
12 debt from Bomanite. Consequently, QC executed the Membership Resolution and
13 Assignment Agreement attached to Cohills’ moving papers.
M 7. Bomanite has not consented to the jurisdiction ofthe District Court
15 in Arizona nor has it agreed to have any litigation relating in any way to its acquisition of
16 QC’s assets and liabilities to be venued or heard in the District of Arizona. Bcmanite will
lr? continue to insist that such claims be adjudicated in the State of California in a competent
lg court ot` general jurisdiction such as Madera County Superior Court, the County of which
19 Bomanite maintains its principal place of business.
20 I declare under penalty of perjury under the laws of the United States of
2l America that the foregoing is true and correct. Executed this l0'}‘ day of October 2006 at
gg Alamo, California.
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26 2i§l5l‘3E$lr€§`il$“¤l%‘Qi?i%l§`i¤·r
27 day of October 2006 with:
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iam District ot" Arizona V 3 -
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1 Copy ofthe foregoing
served this 10th day of
2 October 2006 via
Federal Express on:
3 William G. Klain, Esq.
LANG & BAKER, PLC
4 8767 Via De Commercio, Suite 102
Scottsdale, Arizona 85258
5 Attorneys for Defendants/
Counterclaimants
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7 By:
C sta Cercone
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NIICHAELIDES
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03767/O003i’/l696444WPl) Motion to Join Bomanite Corporation

Case 2:03-cv-01997-ROS

Document 151

Filed 10/10/2006

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Case 2:03-cv-01997-ROS

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Case 2:03-cv-01997-ROS

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Case 2:03-cv-01997-ROS

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