IN THE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIO. Plaintiffs, ) CASE NO. 08 CVH vs- ) JUDGE LYNCH
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1 IN THE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIO C. PAUL TIPPS, et al., ) Plaintiffs, ) CASE NO. 08 CVH vs- ) JUDGE LYNCH NEIL S. CLARK, et al., ) Defendants. ) ANSWER OF DEFENDANTS NEIL S. CLARK, NSC, INC. (ACTUALLY NSC CONSULTING CORP.), AND STATE STREET CONSULTING, LLC AND COUNTERCLAIMS OF NEIL S. CLARK, NSC CONSULTING CORP. AND STATE STREET CONSULTING, LLC Now come Defendants Neil S. Clark, NSC, Inc., and State Street Consultants, LLC and for their Answer to the Plaintiffs Complaint state as follows: FIRST DEFENSE: 1. Defendants admit the allegations contained in paragraphs 1, 6, 7, 10, 27, 28, 29, 30, 42, 55, 56, 57, 100 and Defendants deny each and every allegations contained in paragraphs 16, 18, 19, 20, 22, 25, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,43, 44, 45, 46, 48, 49, 50, 51, 52, 53, 61, 62, 63, 64, 65, 68, 69, 75, 76, 77, 78, 81, 82, 85, 86, 87, 88, 89, 90, 93, 94, 98, 99, 102 and Defendants are without knowledge sufficient to form a belief in the truth of the allegations contained in paragraph 105, and therefore deny the allegation for want of knowledge. 1
2 4. With respect to the allegations contained in paragraphs 59, 60, 66, 67, 70, 71, 79, 80, 83, 84, 91, 92, 95, 96, 103 and 104, Defendants incorporate their admissions, denials and other responses as if fully rewritten herein. 5. With respect to the allegations contained in paragraph 2, Defendants admit that Neil S. Clark is an individual, however, deny that he is a resident of Franklin County, Ohio. 6. With respect to the allegations contained in paragraph 3, Defendants deny that from 1986 through 2005 Mr. Tipps and Mr. Clark were in business together as lobbyists; admit that in 1999 Mr. Tipps and Mr. Clark formed State Street Consultants, LLC and that Mr. Tipps retired in August of 2005; deny that Mr. Tipps remains a member of State Street Consultants, LLC. 7. With respect to the allegations contained in paragraph 4, Defendants admit that State Street Consultants, LLC is an Ohio limited liability company and that it engages in lobbying activities; deny that Mr. Tipps owns fifty percent (50%) of the membership interest in State Street Consultants, LLC, as well as the remaining allegations of paragraph With respect to the allegations contained in paragraph 5, Defendants deny that Mr. Tipps has any authority to participate in the management of State Street Consultants, LLC; admit that since Mr. Tipps retirement in August of 2005, Mr. Tipps has not participated in the day-to-day management of State Street Consultants, LLC; deny the remainder of the allegations of paragraph With respect to the allegations contained in paragraph 8, Defendants admit that Mr. Tipps is designated as the managing partner of State Street Partners in the Partnership 2
3 Agreement; admit that at the time of Mr. Tipps retirement he abandoned his management obligations; admit that in 2008 Mr. Tipps became actively involved in management of the Property; deny that Mr. Clark s behavior was at any time erratic or that Mr. Clark refused to meet with Fifth Third Bank to discuss the maturity date of the Loan; deny the remaining allegations of paragraph With respect to the allegations contained in paragraph 9, Defendants deny that Mr. Tipps has any ownership interest in State Street Consultants, LLC, admit that both Mr. Tipps and Mr. Clark own other businesses and that Mr. Tipps owns Public Policy Consultants, Inc.; deny the remaining allegations of paragraph With respect to the allegations contained in paragraph 11, Defendants are without knowledge sufficient to form a belief as to why Mr. Tipps has brought this action; admit that Mr. Clark was compensated for his services in 2006 and 2007; admit that certain business decisions were made that resulted in a delinquency in the payroll tax liability; deny that any employee 401(K) contributions were misdirected or that State Street Consultants has significant financial problems and deny the remaining allegations of paragraph With respect to the allegations contained in paragraphs 12, 13, 14 and 15, Defendants deny that Mr. Tipps is a member of State Street Consultants, LLC and, further state that the Operating Agreement speaks for itself, but is not relevant to the relationship between Mr. Tipps and Mr. Clark. 13. With respect to the allegations contained in paragraph 17, all reported employees of State Street Consultants, LLC, are actual persons (and not phantoms) that are employed and serve at the discretion of Mr. Clark. 3
4 14. With respect to the allegations contained in paragraph 21, Defendants admit that payroll taxes for December 2006 through December 2007 are delinquent, otherwise Defendants deny all other allegations contained therein. 15. With respect to the allegations contained in paragraph 23, Defendants admit that State Street Consultants, LLC, will move its offices to 495 South Grant Street; deny the remaining allegations of paragraph With respect to the allegations contained in paragraph 24, Defendants admit that Mr. Clark confirmed with The Dispatch the public record regarding the tax liability and liens; deny that confirmation of public information damaged the reputation of State Street Consultants, LLC. 17. With respect to the allegations contained in paragraph 26, Defendants admit that a Lease was entered into in 2001 and expired by its terms, and that State Street Consultants currently operates out of the Building owned by State Street Partners, LLP. 18. With respect to the allegations contained in paragraph 47, Defendants admit that the SERP contains a non-compete clause; however, the SERP does not become effective until February 1, With respect to the allegations contained in paragraph 54, Defendants admit that a Pledge Agreement was entered into, however, deny that the Pledge Agreement applies to the SERP. 20. With respect to the allegations contained in paragraph 58, Defendants admit that Mr. Clark has ceased paying the premiums on the life insurance policy owned by Mr. Tipps. 4
5 21. With respect to the allegations contained in 73 and 74, Defendants admit that Mr. Tipps and Mr. Clark owe reciprocal fiduciary duties to each other as partners in State Street Partners, LLP and deny that Mr. Clark is derelict with regard to any such duties. 22. With respect to the allegations contained in paragraph 97 and 106, Defendants admit that Mr. Tipps and Public Policy Consultants have certain rights, pursuant to the Pledge Agreement, to the assets of State Street Consultants, LLC, however, deny that the Pledge Agreement is applicable to the SERP. 23. Defendants specifically deny each and every allegation not expressly admitted to be true. SECOND DEFENSE: 24. Plaintiffs have failed to state a claim upon which relief can be granted. THIRD DEFENSE: 25. Plaintiffs have failed to join necessary and indispensable parties. FOURTH DEFENSE: 26. Plaintiffs own actions constitute breach of the agreements herein, relieving Defendants duties to perform thereunder. FIFTH DEFENSE: 27. Plaintiffs own actions have caused or contributed to Plaintiffs alleged damages. SIXTH DEFENSE: 28. Plaintiffs are not entitled to invoke the equity of the Court as they do not have clean hands. 5
6 SEVENTH DEFENSE: 29. Plaintiffs have an adequate remedy at law and are not entitled to extraordinary relief. EIGHTH DEFENSE: 30. Defendants reserve the right to add additional affirmative defenses after a reasonable opportunity to discover the full nature of Plaintiffs claims. COUNTERCLAIM OF DEFENDANTS / COUNTERCLAIMANTS NEIL CLARK, NSC CONSULTING CORP., and STATE STREET CONSULTANTS LLC Now come Defendants Neil S. Clark ( Clark ), NSC Consulting Corp. ( NSCCC ) and State Street Consultants, LLC ( SSC ) for their Counterclaims against Plaintiffs and state the following: PRELIMINARY STATEMENTS 1. State Street Consultants, LLC is an Ohio Limited Liability Company, the only active member and the sole Member Manager of which is Defendant-Counterclaimant Clark.Clark, NSCCC and SSC are defendants in the underlying civil actions set forth in the Complaint herein, brought by Plaintiffs C. Paul Tipps and Public Policy Consultants, Inc.. State Street Partners PLL (SSP) is an Ohio partnership with limited liability in which Tipps and Clark are partners and which owns the office building and land at 137 E. State St., in Columbus, Ohio. 2. For background purposes only, Clark incorporates the Plaintiffs Complaint and his Answer thereto as if fully re-written herein. 3. Jurisdiction and venue are appropriate in the Franklin County Court of Common Pleas. 6
7 FIRST COUNT - DEFAMATION 4. Plaintiff Tipps has made statements to various prominent individuals that were untrue and done in an effort to damage the reputation and defame Defendants- Counterclaimants Clark, NSCCC and SSC. 5. Plaintiff Tipp s false and defamatory statements have caused others to question the integrity and the financial stability of the Counterclaimants without basis, directly and proximately causing damages to the Counterclaimants. 6. Counterclaimants have suffered and will continue to suffer irreparable injury and damages for which there is no adequate remedy at law and are therefore entitled to preliminary and permanent injunctions preventing Plaintiff Tipps from making false and defamatory statements about the Counterclaimants. 7. Plaintiff Tipps defamatory statements were made with intent to harm Counterclaimants and were willful and wanton in nature, entitling Counterclaimants to punitive damages. SECOND COUNT - BREACH OF OPERATING AGREEMENT 8. On or about August 1, 1999, Defendants-Counterclaimants SSC, Clark and Plaintiff C. Paul Tipps entered into an Operating Agreement regarding the operation of SSC. 9. At all timers relevant herein, Plaintiff Tipps, as an alleged member of SSC, and pursuant to the Operating Agreement had a fiduciary duty to SSC and its other member, Clark. 10. Plaintiff Tipps has engaged in conduct in 2007 and 2008, that was in breach of said Operating Agreement, to wit: he voted as a member of the State Ballot Board when he should have abstained due to conflicts and potential conflicts of interests with SSC 7
8 and clients of SSC; he attempted to send or steer lobbying business to other enterprises than SSC; he engaged in various activities competitive with and damaging to SSC. 11. Said breaches have directly and proximately caused damages to Defendant- Counterclaimant SSC and require injunctive relief preventing Plaintiff Tipps from engaging in actions harmful to SSC and its operations and clients. THIRD COUNT - BREACH OF ASSET PURCHASE AGREEMENT 12. Plaintiffs Tipps and Public Policy Consultants, Inc. ( PPC ) entered into an Asset Purchase Agreement ( APA ) with SSC, effective January 1, 2006, in which SSC agreed to purchase the assets of PPC, and Tipps and PPC agreed to certain concessions in favor of SSC. A copy of the APA is attached to Plaintiffs Complaint as Exhibit D. 13. Upon information and belief, Plaintiff Tipps has engaged in conduct which has breached the terms of the APA, including specifically its non-competition clause and non-solicitation clause. 14. SSC has provided to Plaintiff Tipps through October 31, 2008, the following: a) chauffer large and exorbitant payments pursuant to the terms of the APA; b) the services of a, bookkeeper and secretary which have never been reimbursed to SSC by Plaintiff Tipps; c) sums paid to and on behalf of SSP over and above SSC s lease obligation which have directly benefited Plaintiff Tipps and PPC and which Plaintiffs have failed to reimburse SSC; all of which have combined to result in overpayments to Plaintiffs which have not been reimbursed to SSC in breach of the APA. 8
9 15. Said breaches have directly and proximately caused damages to Defendant- Counterclaimant SSC. FOURTH COUNT DISSOLUTION OF STATE STREET CONSULTANTS LLC 16. The preceding paragraphs are incorporated as if fully rewritten herein. 17. Plaintiff Tipps has caused the Complaint to be filed herein which contains allegations and requests for relief pursuant to which the enterprise cannot be operated in a practicable fashion by the Plaintiff Tipps and this Applicant/Counterclaimant. 18. Plaintiffs lawsuit and, upon information and belief, public statements unnecessarily disclose confidential information, private agreements and contracts to the detriment of Counterclaimants State Street Consultants, LLC and Clark, which are in violation of such agreements. 19. Plaintiff Tipps has engaged in conduct attempting to divert business away from SSC LLC, has competed with SSC LLC, and had engaged in conduct detrimental to the best interests of Defendant/Counterclaimant Clark and SSC. 20. All of the statements contained in this Count leads to the conclusion that it is no longer reasonably practicable to carry on the business of State Street Consultants, LLC, in conformity with its operating agreement, and, therefore, pursuant to Ohio Revised Code , Counterclaimant Clark hereby applies to this Court to judicially decree the dissolution of the State Street Consultants LLC. WHEREFORE, Defendant-Counterclaimants Clark, SSC and NSCCC demand judgment on its claims as follows: 9
10 On Count I, against Plaintiff Tipps in an amount yet undetermined but in excess of $25,000 in compensatory damages, injunctive relief as set forth herein and an amount in excess of $25,000 in punitive damages; On Count II, against Plaintiff Tipps in an amount yet undetermined but in excess of $25,000; on Count III, against Plaintiffs Tipps and PPC, jointly and severally, in an amount in excess of $25,000; and On Count IV, a judicially granted dissolution of State Street Consultants, LLC; and, Any and all further relief which this court deems fair and just. Respectfully submitted, ROBERT J. BEHAL LAW OFFICES, LLC Robert J. Behal ( ) John M. Gonzales, of Counsel ( ) 501 South High Street Columbus, Ohio Telephone No. (614) Facsimile No. (614) bbehal@behallaw.com jgonzales@behallaw.com Attorneys for Defendants 10
11 CERTIFICATE OF SERVICE I certify that a copy of the foregoing Answer and Counterclaim was served via regular United States mail this day of, 2009, as follows: Dan L. Cvetanovich Yvette A. Cox Sabrina Haurin BAILEY CAVALIERI LLC One Columbus 10 West Broad Street, 21 st Floor Columbus, Ohio Attorneys for Plaintiffs Robert J. Behal ( ) John M. Gonzales ( ) 11
: : : : : : : : Plaintiffs, HOLLY SCHEPISI, NEIL McPHERSON, KEVIN DRAGAN, and
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