Moorhead et. al. v. Vapor Point LLC. et. al

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION VAPOR POINT, L.L.C.; KEITH NATHAN;§ And KENNETH MATHESON § § Plaintiffs, § § v. § Civil Action No. 4:11-cv-04639 § ELLIOTT MOORHEAD and § Judge Vanessa Gilmore NANOVAPOR FUELS GROUP, INC., § § Defendants. § Jury Demand

DEFENDANT ELLIOTT MOORHEAD’S AND NANOVAPOR FUEL GROUP, INC.S ORIGINAL ANSWER AND ORIGINAL COUNTERCLAIM

COMES NOW, Defendant Elliott Moorhead (“Moorhead”) and NanoVapor Fuel Group

Inc.’s (“NanoVapor”) (collectively referred to as “Defendants”) and files this their Original

Answer to Plaintiffs’ Original Complaint, denying all of Vapor Point, L.L.C.’s (“VaporPoint”),

Keith Nathan’s (“Nathan”) and Kenneth Matheson’s (“Matheson”) (collectively referred to as

“Plaintiffs”) claims1, and files this their Original Counterclaim and complaining of Plaintiffs and

others as follows:

I. ORIGINAL ANSWER

1. Defendants are without knowledge or information sufficient to form a belief as to the

truth of the allegations contained in paragraph 1 of Plaintiffs’ Complaint and, therefore,

deny the same.

1 Each paragraph of Defendant’s Original Answer refers to the paragraph of the same number in Plaintiffs’ Original Complaint.

Case 4:11-cv-04639 Document 9 Filed in TXSD on 03/05/12 Page 1 of 26



deny the same.



deny the same.

4. Denied. Defendant Moorhead is a resident of the State of Maine and cannot be served in

California.

5. Admitted.



deny the same.



deny the same.

8. Denied.

9. Denied.

10. Denied.

11. Denied.

12. Denied.

13. Denied.

14. Denied.

15. Denied.


16. Denied.

17. Admitted in as far as Gary Wilkinson (“Wilkinson”) of NanoVapor Fuels Group, Inc.

(“NanoVapor”) met Matheson in Dallas, Texas in July of 2007, but Wilkinson only

discussed using Matheson for further product development, as the absorption technology

developed by Defendant Moorhead was already commercially viable. In fact, Matheson

joined NanoVapor seven (7) months after Moorhead’s provisional patent application was

filed. Denied as to the reminder of the allegations.

18. Admitted in as far as Matheson was given a reciprocal confidentiality agreement

(“NDA”) with NanoVapor, which Matheson signed. Denied as to the remainder because

Wilkinson signed the NDA on July 11, 2007, and returned a copy to Matheson. (See

Exhibit 1, signed NDA).

19. Denied.

20. Denied.

21. Denied.

22. Denied.

23. Denied.

24. Denied. Barry Rabon’s baseless letter is dated January 17, 2008. (See Exhibit 8, letter

from Rabon to Moorhead). Edward’s Oliver’s baseless letter is dated April 7, 2008. (See

Exhibit 9, letter from Oliver to Wilkinson).

25. Denied. On December 21, 2007, Nathan sent an e-mail to Moorhead offering to license

Moorhead’s ‘416 Application and any patent that may issue therefrom. (See Exhibit 10,

December 21, 2007 e-mail from Nathan to Moorhead attaching a proposed license

agreement). However, after NanoVapor would not license its technology, Nathan,


Matheson, Alford and St. Amant began anew company named VaporPoint, utilizing

technology, equipment, trade secrets, and the like from NanoVapor.

26. Admitted.



deny the same. Nathan and Matheson had an obligation to assign all inventions to

NanoVapor during their respective employments with NanoVapor, which ended on or

about December 21, 2007.

28. No response is required.

29. Denied.

30. Denied.

31. Denied.

32. Denied.

33. Denied because Nathan and Matheson are not inventors of the claims of the ‘416

Application. Defendants’ counterclaim alleges that Matheson has acted with deceptive

intent with respect to US 7,740,816 (“the ‘816 patent,” attached as Exhibit 2) and US

7,803,337 (“the ‘337 patent,” attached as Exhibit 3) in not naming Moorhead as at least a

co-inventor, if not the sole inventor.

34. Admitted that Moorhead is the sole inventor of the claims of the 416 Application and the

claims of the ‘310 patent. Denied as to the remaining allegations.

35. Denied.

36. Denied.



38. Denied in as far Nathan and Matheson invented anything. Nathan and Matheson were

under a duty to assign to NanoVapor anything they invented while employed at

NanoVapor. Admitted in as far as Nathan’s employment agreement offered Nathan

$250,000 of restricted common stock subject to a 2.5 year vesting period beginning May

1, 2007. (See, Exhibit 4, Nathan Employment Agreement, ¶7). However, as further

explained herein, Nathan materially breached the terms of his Employment Agreement

and failed to continue employment with NanoVapor for the vesting period. Admitted in

as far as Matheson’s employment agreement offered Matheson $200,000 of restricted

common stock subject to a 2.5 year vesting period beginning August 1, 2007. (See,

Exhibit 5, Matheson Employment Agreement, ¶7). However, as further explained herein,

Matheson materially breached the terms of his Employment Agreement and failed to

continue employment with NanoVapor for the vesting period.

39. Denied that Nathan and Matheson disclosed the Invention to Defendants and denied

because compensation was paid to both Nathan and Matheson. Nathan was compensated

for testing work he performed for NanoVapor on Moorhead’s invention, later issued as

US 7,727,310 (“the ‘310 patent”). (See Exhibit 6, check stubs from NanoVapor to

Nathan for wages). Matheson was compensated by NanoVapor through payment for

Matheson’s air travel to and from Hawaii and reimbursement of expenses. (See Exhibit

29, Expense Report of Matheson to NanoVapor).

40. Denied.

41. Denied.

42. Denied.

43. Denied.



45. Admitted that Moorhead is the sole inventor of the claims of the ‘416 Application that

eventually issued as the ‘310 Patent. Denied that Nathan and Matheson were inventors of

any element of any claim of the ‘416 Application and the ‘310 Patent. Further denied

that Defendants Moorhead or NanoVapor concealed either of the ‘416 Application or the

assignment of the ‘310 Patent from Nathan and Matheson.

46. Denied.

47. Denied.

48. Denied. The filing of the ‘416 Application was discussed with Nathan on at least

December 22, 2006. (See Exhibit 7, December 22, 2006 e-mail from Moorhead to,

among others, Nathan).

49. Denied.

50. Denied.

51. Denied. Defendants disclosed all relevant information to both Nathan and Matheson.

Defendants are without knowledge or information sufficient to form a belief as to the

truth of the remaining allegations contained in paragraph 51 of Plaintiffs’ Complaint and,

therefore, deny the same.

52. Denied.


54. Denied that Plaintiffs have any rights in the ‘310 Patent, the Invention, or the proceeds

therefrom.

55. Denied.



57. Admitted that NanoVapor’s ‘310 Patent is very valuable. Denied as to the remainder of

the allegations.

58. Denied.

59. Denied.

60. Denied.

61. Denied.

62. Denied.


64. Denied.

65. Denied.

66. Denied.

67. Denied.


69. Denied.

70. Denied.

71. Denied.

72. Denied.

II. GENERAL DENIAL

73. Pursuant to Rule 8(b)(3), of the Federal Rules of Civil Procedure, Defendants generally

deny all of Plaintiffs’ allegations contained in each paragraph.

III. AFFIRMATIVE DEFENSES

74. Defendants hereby incorporate paragraphs 1-73, as if fully set forth herein.


75. While not admitting the validity of any of Plaintiffs’ claims, regardless of Plaintiffs’

pleadings, Plaintiffs cannot prevail because Plaintiffs are barred by the doctrines of

laches and estoppel.


pleadings, Plaintiffs cannot prevail because Defendants had a license through both

common law, the Shop Right Doctrine, and contract law, to practice any invention of

Plaintiffs, as Plaintiffs were employees of NanoVapor. Defendants do not admit that

Plaintiffs invented anything.


pleadings, Plaintiffs cannot prevail because Defendants paid Plaintiffs for any invention

of Plaintiffs. Defendants do not admit that Plaintiffs invented anything.


pleadings, Plaintiffs cannot prevail because the statute of limitations bars Plaintiffs’

claims, which claims would have accrued on or before December 22, 2006.


pleadings, Plaintiffs cannot prevail because Plaintiffs waived any cause of action against

Defendants due at least to the length of time between when the alleged causes of action

accrued and when Plaintiffs filed suit.


pleadings, Plaintiffs cannot prevail because of Plaintiffs’ fraud in alleging that Nathan

and/or Matheson are inventors of the ‘310 Patent.



pleadings, Plaintiffs cannot prevail because Plaintiffs’ actions were calculated to place

Wilkinson and/or Moorhead under duress.

IV. COUNTERCLAIM

COMES NOW Counter-plaintiffs NanoVapor Fuels Group, Inc. and Elliott Moorhead

and files this Counterclaim against Counter-defendants Vapor Point, L.L.C., Jeffrey St. Amant,

Don Alford, Keith Nathan, and Kenneth Matheson, seeking correction of inventorship for US

Patent Nos. 7,740,816 and 7,803,337 under 35 U.S.C. §256, and damages for patent

infringement, misappropriation of trade secrets, fraud, breach of a fiduciary duty, tortious

interference, tortious interference with prospective contractual relationship, breach of contract,

and unjust enrichment, showing this Court as follows:

A. Parties

82. Counter-plaintiff NanoVapor Fuels Group, Inc. (“NanoVapor”) is a corporation existing

under the laws of the State of Delaware and with a principal place of business at 18135

Delta Estates Court, Cypress, Texas 77429.

83. Counter-plaintiff Elliott Moorhead (“Moorhead”) is an individual and a resident of the

State of Maine.

84. Counter-defendant Vapor Point, L.L.C. (“VaporPoint”) is a limited liability company

organized under the laws of the State of Louisiana with its principal place of business at

1400 South 16th Street, LaPorte, Texas 77571. VaporPoint may be served with process

by serving its attorney Michael D. Pegues at Bracewell & Giuliani, LLP, 1445 Ross

Avenue, Suite 3800, Dallas, Texas 75202.


85. Counter-defendant Jefferey St. Amant (“Amant”) is an individual and a resident of the

State of Texas. Amant may be served with process at his place of business at 1400 South

16th Street, LaPorte, Texas 77571.

86. Counter-defendant Don Alford (“Alford”) is an individual and a resident of the State of

Texas. Alford may be served with process at his place of business at 1400 South 16th

Street, LaPorte, Texas 77571.

87. Counter-defendant Kenneth Matheson (“Matheson”) is an individual and a resident of the

Kingdom of Jordan. Matheson may be served with process by serving his attorney

Michael D. Pegues at Bracewell & Giuliani, LLP, 1445 Ross Avenue, Suite 3800, Dallas,

Texas 75202.

88. Counter-defendant Keith Nathan (“Nathan”) is an individual and a resident of the State of

Texas. Nathan may be served with process by serving his attorney Michael D. Pegues at

Bracewell & Giuliani, LLP, 1445 Ross Avenue, Suite 3800, Dallas, Texas 75202.

B. Jurisdiction and Venue

89. This Court has jurisdiction over this action pursuant at least to 28 U.S.C. §§ 1331, 1338,

and 1367.

90. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b) and (c) and 28

U.S.C. § 1400(b).

C. Relevant Factual Background

91. NanoVapor is an industry leader in the field of Volatile Organic Compound

Containment. In 2006, NanoVapor products and processes included technologies for the

suppression of combustible and toxic gases in fuel storage and transfer operations, using

a specially designed Vapor Suppression System (VSS) to effectively control or nearly


eliminate the creation of vapors during these processes. The VSS was solely developed

by Elliott Moorhead.

92. NanoVapor products and processes had wide degassing applicability in the fields of:

• Cleaning degassed tanks • Refilling of fuel tanks • Frac tanks & vacuum trucks • Oil field collection tanks • Floating roof storage tanks • Ship-to-shore terminals • Ship-to-ship transfer • Aviation • Military • Rail cars

93. Moorhead, in addition to being the Chief Executive Office of NanoVapor, is renowned in

his field as an expert with numerous publications and patents to his name.

94. Seeking to locate itself in the Houston marketplace, Moorhead contacted an old

acquaintance of his, Keith Nathan. In 2006, Nathan operated a warehouse in League

City, Texas, where he rehabilitated used heat exchangers. In September of 2006,

NanoVapor, through Moorhead, began further development of its suppression technology

in Nathan’s warehouse.

95. Moorhead previously met Nathan at an industry conference in circa. 2005. Nathan

disclosed to Moorhead that he worked for the Continuum Chemical Corporation and that

he was involved in a lawsuit with Continuum concerning various contract and tort causes

of action, including the misappropriation of Continuum’s trade secrets by Nathan.2

96. Nathan called Moorhead repeatedly over the next several months as the lawsuit against

him proceeded, disclosing all facts related to the lawsuit to Moorhead.

2 The lawsuit was filed by Continuum on or about April 21, 2004.


97. To settle the lawsuit, in or about July of 2006, Nathan paid a monetary damage award to

Continuum and agreed that the technology in dispute was a trade secret of Continuum

and that he was prohibited from using the trade secret methods, processes and systems.

98. While the lawsuit was pending, Nathan opened the heat exchanger rehabilitation

warehouse in League City. While being somewhat wary of Nathan, given his legal

troubles, Moorhead sought the space at Nathan’s warehouse for NanoVapor in an effort

to expand the company.

99. However, even with the space in League City, Moorhead still needed testing assistance.

Therefore, reluctantly, Wilkinson engaged Nathan for the testing services. To protect

NanoVapor, Wilkinson had Nathan sign a Confidentiality Agreement, which was

executed by all parties on August 31, 2006. (See Exhibit 24, August 31, 2006 CDA

between Nathan and NanoVapor). In March of 2007, Wilkinson required Nathan to sign

the NanoVapor Prospective Hire Acknowledgement which affirmatively states that

Nathan will not use any property or trade secrets of his former employer while employed

at NanoVapor. (See Exhibit 25, Prospective New Hire Form with Nathan).

100. Over the next several months, NanoVapor provided significant funding to Nathan

to purchase equipment, such as tanks and supplies in October and December of 2006, for

the suppression technology. (See Exhibit 12, balance sheet for Nathan’s account).

101. In early December of 2006, Moorhead independently conceived of and reduced to

practice an absorption method for removing VOC’s from hydrocarbon tanks. Moorhead

memorialized his invention in provisional patent application 60/871,766, filed on

December 22, 2006, with the United States Patent and Trademark Office (“Moorhead’s

Provisional Patent Application”).


102. During the drafting of Moorhead’s Provisional Patent Application, Moorhead met

with Nathan and others regarding the confidentiality of his invention. As well, both

potential investors and employees of NanoVapor were kept apprised of the progress of

Moorhead’s Provisional Patent Application. (See Exhibit 7).

103. On December 21, 2006, NanoVapor began to purchase supplies for further

developing the new process memorialized in Moorhead’s Provisional Patent Application.

(See Exhibit 28, NanoVapor Financial). Moorhead used Nathan’s technical skills solely

for testing of the new and improved processes and systems disclosed in Moorhead’s

Provisional Patent Application was filed.

104. In April of 2007, NanoVapor memorialized its employment of Nathan as the chief

Operating Officer. (See Exhibit 26, Employment Agreement with Nathan). However,

Nathan never signed the Agreement. Moreover, as Nathan was underutilized as An

employee at NanoVapor, he was only paid 40% of his salary. (See Exhibit 27, note from

Wilkinson to Nathan).

105. To help with the sales and marketing, NanoVapor hired Don Alford in April of

2007 as Vice President of Business Development. (See Exhibit 13, e-mail from Alford to

Wilkinson and Moorhead accepting position with NanoVapor). In June of 2007,

Wilkinson required Alford to sign the NanoVapor Prospective Hire Acknowledgement

which affirmatively states that Alford will not use any property or trade secrets of his

former employer while employed at NanoVapor. (See Exhibit 14, Prospective New Hire

Form with Alford).


106. Alford’s employment began with NanoVapor on May 1, 2007. However, Alford

did not execute the Employment Agreement sent to him. (See Exhibit 15, Employment

Agreement with Alford).

107. Seeking to grow NanoVapor’s staff, Wilkinson met with Kenneth Matheson in

July of 2007 in Dallas, Texas. Matheson ran a company named Sabre Services in

Hawaii. While Sabre Services was involved in the same general field of technology as

NanoVapor, neither Sabre Services nor Matheson was working on the absorption process

developed by Moorhead prior to Matheson’s employment with NanoVapor. (See Exhibit

17, Sabre Service information sheet). After being shown the technology, Matheson was

excited to join the NanoVapor team, even commenting that Moorhead’s technology was

amazing. (See Exhibit 16, e-mail from Matheson to NanoVapor, 1st ¶).

108. Moorhead and Wilkinson hired Kenneth Matheson in August of 2007, to help

further refine the commercial embodiment of Moorhead’s invention.

109. In August of 2007, NanoVapor was quickly developing a commercially viable

embodiment of Moorhead’s invention that included numerous NanoVapor trade secrets.

Several venture capital and private equity companies began to court NanoVapor for a

capital infusion.

110. Upon information and belief, Nathan, Alford and Matheson also began to see the

value of NanoVapor and Moorhead’s technology and began a plot to steal the technology

and wreck NanoVapor’s business, business plans and marketing plans. However,

Moorhead and Wilkinson were unaware of the nefarious intentions of Nathan, Alford,

and Matheson.


111. A final commercial embodiment was developed by Moorhead, Wilkinson,

Nathan, and Matheson in October of 2007. The product was finally ready to be sold in

the marketplace. (See Exhibit 18, pictures of commercial embodiment).

112. Discussions with the private equity firms were focused on a $5-10 million capital

investment resulting in a valuation of NanoVapor between $10 and $20 million. The

private equity firm’s due diligence included lengthy interviews with each of NanoVapor

executives, including Moorhead, Wilkinson, Nathan, Alford, and Matheson. During the

interviews, each of Nathan, Alford and Matheson held themselves out as employees of

NanoVapor.

113. Due to the sensitive nature of the negotiations and due diligence with the private

equity firm, it was decided that all communications, other than the personal interviews

would go through Wilkinson. Each of Wilkinson, Moorhead, Nathan, Matheson, and

Alford knew that it was vitally important that a cohesive management structure be

presented to the private equity firm.

114. One aspect of the due diligence by the private equity firm was process and system

testing. The private equity firm used Flint Hills for the testing. The results of the testing

showed that the processes and systems included in Moorhead’s Provisional Patent

Application produced efficiency ratings of 98%, exceeding everyone’s expectations.

(See Exhibit 1, Flint test results). Marvin Kirk of Flint Hills praised the results, clearly

voicing his opinion that the process worked. (See Exhibit 20, November 15, 2007, e-mail

from Kirk to Matheson).

115. On information and belief, Nathan, Alford and Matheson decided it was time to

act and steal the technology for their own purposes. Each of Matheson, Alford and


Nathan contacted the private equity firm raising doubts about the technology and raising

doubts about the cohesiveness of the management team at NanoVapor.

116. When Alford presented his market size forecast to NanoVapor, on information

and belief, each of Alford, Matheson and Nathan intended to steal NanoVapor’s

technology and trade secrets in an attempt to usurp business opportunities with at least

ExxonMobil, Flint Hills Resources, Chevron, Marathon Petroleum, ConocoPhillips,

Valero, Citgo, Valero, Lubrizol, Total, BP, and others. (See Exhibit 21, Houston, market

size forecast).

117. As a last effort to ruin NanoVapor’s business opportunities, at the December

2007, TCEQ meeting, each of Alford, Matheson and Nathan informed Wilkinson that

they wanted twenty (20) percent equity stake each in NanoVapor. (See Exhibit 22, PDF

from December 2007 TCEQ Meeting). Wilkinson declined to extend the twenty (20)

percent equity stake in NanoVapor to each of Nathan, Matheson and Alford. On

December 21, 2007, each of Alford, Matheson and Nathan resigned from NanoVapor.

118. Immediately upon leaving, Alford, Matheson and Nathan formed VaporPoint to

directly compete with NanoVapor, using NanoVapor’s technology, trade secrets, and

equipment, including the frac tank scrubber at Proco. (See Exhibit 23, e-mail from

Matheson to Wilkinson acknowledging that VaporPoint took NanoVapor equipment).

D. Causes of Action

a. Count I, Correction of Inventorship For US Patent Nos. 7,740,816 (“The ‘816

Patent”) Under 35 U.S.C. §256

119. Counter-plaintiffs hereby incorporate paragraphs 1-118, as if fully set forth

herein.


120. Moorhead made conceptual contributions to each of claims 1-8 of the ‘816 patent.

121. Upon information and belief, Moorhead was unintentionally left off of the ‘816

patent as an inventor of the claimed subject matter of claims 1-8.

122. Upon information and belief, Moorhead’s non-joinder was without deceptive

intent.

123. Moorhead is without knowledge or information sufficient to form a belief as to

whether St. Amant or Matheson are correctly named as inventors of the ‘816 patent.

124. As a result of being left off the inventorship of the ‘816 patent, Moorhead has

been damaged.

125. As a result of Moorhead being left off the inventorship of the ‘816 patent,

NanoVapor has been damaged and continues to suffer damages.

126. Pursuant to 35 U.S.C. §256, Moorhead seeks a Certificate of Correction naming

himself as an inventor of the ‘816 patent and providing for all other needed corrections of

inventorship.

b. Count II, Correction of Inventorship For US Patent Nos. 7,803,337 (“The

‘337 Patent”) Under 35 U.S.C. §256


herein.

128. Moorhead made conceptual contributions to each of claims 1-9 of the ‘337 patent.

129. Upon information and belief, Moorhead was unintentionally left off of the ‘337

patent as an inventor of the claimed subject matter of claims 1-9.

130. Upon information and belief, Moorhead non-joinder was without deceptive intent.


131. Moorhead is without knowledge or information sufficient to form a belief as to

whether St. Amant or Matheson are correctly named as inventors of the ‘337 patent.

132. As a result of being left off the inventorship of the ‘337 patent, Moorhead has

been damaged.

133. As a result of Moorhead being left off the inventorship of the ‘337 patent,

NanoVapor has been damaged and continues to suffer damages.

134. Pursuant to 35 U.S.C. §256, Moorhead seeks a Certificate of Correction naming

himself as an inventor of the ‘337 patent and providing for all other needed corrections of

inventorship.

c. Count III, Infringement of US 7,727,310


herein.

136. On June 1, 2010, United States Patent No. 7,727,310 B1 (the “‘310 Patent”),

entitled “System and Method for Removing Volatile Vapors from Containers,” was duly

and legally issued by the United States Patent and Trademark Office. A true and correct

copy of the ‘310 Patent is attached as Exhibit 30 to this Complaint.

137. Counter-plaintiff NanoVapor is the assignee and owner of the right, title, and

interest in and to the ‘310 Patent, including the right to assert all causes of action arising

under said patent and the right to any remedies for infringement of it.

138. Without license or authorization, Counter-defendant VaporPoint is and has been

infringing the ‘310 Patent, in the United States, including in this district, by making,

using, selling, offering for sale or license, advertising and/or importing in the United

States, including within this judicial district, its products and services and using systems,


methods and instrumentalities that embody the inventions claimed in the ‘310 Patent.

Such acts constitute infringement under at least 35 U.S.C. § 271(a). Among such

infringing products and services is the VaporPoint VaporLock process advertised at

www.vaporpoint.net.

139. NanoVapor has been damaged by VaporPoint’s infringing activities with respect

to the ‘310 patent and continues to suffer damages.

140. Counter-defendant’s infringement is willful and Counter-plaintiff is entitled to a

trebling of damages and attorneys’ fees.

d. Count IV, Misappropriation of Trade Secrets


herein.

142. NanoVapor has developed and owns numerous trade secrets related to Volatile

Organic Compound Containment, including, without limitation, system plans, customer

lists, process diagrams, process characteristics, pricing lists, and the like.

143. NanoVapor took appropriate steps to keep such trade secrets as confidential

including, at least, but not limited to, making all employees sign confidentiality

agreements and contractual relationships.

144. Counter-defendants Alford, Matheson and Nathan obtained NanoVapor’s trade

secrets in violation of certain employment agreements and confidentiality agreements.

145. Counter-defendants Alford, Matheson and Nathan used NanoVapor’s trade

secrets, in at least, but not limited to, the formation and marketing of VaporPoint.

146. As a result of Counter-defendants Alford’s, Matheson’s and Nathan’s actions,

NanoVapor has been damaged and continues to suffer damage.


147. NanoVapor is entitled to recover exemplary damages and court costs.

148. NanoVapor is entitled to injunctive relief based upon Counter-defendants

misappropriation of trade secrets.

e. Count V, Texas Theft Liability Act


herein.

150. Counter-defendants Alford’s, Matheson’s, St. Amant’s and Nathan’s conduct

constitutes a violation of the Texas Theft Liability Act, TEX. CIV. P. & REM. CODE

§§134.001-134.005, as Counter-defendants Alford’s, Matheson’s, St. Amant’s and

Nathan’s conduct constitutes a theft and communication of trade secrets.

151. Counter-plaintiff NanoVapor has certain possessory rights to property,

specifically the above referenced trade secrets, stolen by Counter-defendants. With full

knowledge of Counter-plaintiffs’ superior possessory rights, Counter-defendants

unlawfully appropriated, secured, and stole the subject property.

152. By using NanoVapor’s technology, trade secrets, and equipment, including the

frac tank scrubber from Proco. Counter-defendants unlawfully appropriated Counter-

plaintiff NanoVapor’s property. Counter-defendants’ unlawful taking was accomplished

with the intent to deprive NanoVapor of its right in and to the property, and caused

NanoVapor to suffer damages as a result of the theft.

153. NanoVapor is entitled to its attorneys’ fees when it prevails on these claims.

f. Count VI, Fraud


herein.


155. Counter-defendants Alford, Nathan and Matheson made material representations

to NanoVapor concerning at least, but not limited to, their employment with NanoVapor

in that Counter-defendants intended to steal NanoVapor’s trade secrets, technology and

equipment. In fact, Nathan has a history of misappropriation of trade secrets.

156. The material representations made by Counter-defendants were known by

Counter-defendants to be false.

157. Counter-defendants intended for NanoVapor to rely upon and act upon the

misrepresentations by hiring Counter-defendants.

158. NanoVapor did in fact act upon and rely upon the misrepresentations and hired

Counter-defendants.

159. NanoVapor was injured by the misrepresentations both directly and

consequentially, including at least the lost private equity firm capital infusion.

160. In addition to actual and compensatory damages, NanoVapor is further entitled to

collect exemplary damages.

g. Count VII, Breach of Fiduciary Duty


herein.

162. As Executives and corporate officers of NanoVapor, Matheson, Nathan and

Alford had a fiduciary duty to NanoVapor that included at least a duty not to compete

with NanoVapor, duty to act with candor toward NanoVapor, duty to refrain from self-

dealing, duty not to usurp NanoVapor’s business opportunities, duty not to steal

NanoVapor’s trade secrets, duty to act with fair and honest dealing, duty to act with

integrity, duty to fully disclose, duty of loyalty, and the like.


163. Counter-defendants Matheson, Nathan and Alford breached one or more fiduciary

duties as disclosed herein.

164. NanoVapor is entitled to its actual damages, exemplary damages and for a

constructive trust on the assets of VaporPoint.

h. Count VIII, Tortious Interference With Business Relationships


herein.

166. Counter-plaintiff NanoVapor had a valid contract with at least Otto Ewer of

Proco, and others.

167. Counter-defendants Alford, Nathan, St. Amant, and Matheson willfully and

intentionally interfered with the contract such that Otto Ewer will no longer do business

with NanoVapor and to such an extent that NanoVapor was deprived of their equipment.

168. Counter-defendants Alford’s, Nathan’s, St. Amant’s, and Matheson’s conduct

proximately caused Counter-plaintiff NanoVapor’s injuries.

169. NanoVapor incurred actual injury at least to the measure of the lost capital

infusion from the private equity firm.

170. NanoVapor is entitled to recover actual damages and exemplary damages.

i. Count IX, Tortious Interference With Prospective Business Relationships


herein.

172. There was a reasonable probability that NanoVapor would have entered into a

business relationship with at least ExxonMobil, Flint Hills Resources, Chevron,


Marathon Petroleum, ConocoPhillips, Valero, Citgo, Valero, Lubrizol, Total, BP, and

others.

173. Counter-defendants Alford, St. Amant, Matheson and Nathan intentionally

interfered with NanoVapor’s relationship with the prospective parties.

174. Counter-defendants Alford’s, St. Amant’s, Matheson’s and Nathan’s conduct was

independently tortious.






j. Count X, Breach of Contract


herein.

179. NanoVapor entered into valid and binding contracts, namely confidentiality

agreements with Alford, Nathan and Matheson.

180. NanoVapor substantially performed its obligations under the contracts.

181. Counter-defendants Alford, Nathan and Matheson breached their terms of the

contracts by at least opening VaporPoint.

182. Counter-plaintiff is entitled to actual damages and its attorneys’ fee.

k. Count XI, Unjust Enrichment


herein.


184. Counter-defendants have retained, or are in the process of retaining, for their own

use and benefit, NanoVapor’s rights in and to the technology, trade secrets, and

equipment, including the frac tank scrubber at Proco, and any proceeds therefrom.

185. As a direct and proximate result of Defendants’ acts, Plaintiffs have been

damaged and Defendants have been unjustly enriched. If Defendants are allowed to

continue to retain rights in and to and/or practice the technology, trade secrets, and

equipment, including the frac tank scrubber at Proco, they will continue to be unjustly

enriched to the further detriment of NanoVapor.






V. PRAYER FOR RELIEF AND JURY DEMAND

WHEREFORE, PREMISES CONSIDERED, Moorhead and NanoVapor respectfully

pray that the Court render judgment that the Plaintiffs claims be denied, that a take-nothing

judgment be entered in favor of Defendant, Defendants recover their reasonable and necessary

attorneys' fees and court costs from Plaintiffs for defending these baseless allegations, and that

Defendants be awarded such other and further relief to which he may be justly entitled.

As Counter-plaintiffs, Moorhead and NanoVapor respectfully pray that the Court enter an

Order and Final Judgment, as follows:

a. An Order and Certificate correcting the inventorship of both the ‘816 patent and

the ‘337 patent by adding Elliott Moorhead as an inventor;


b. Actual damages for VaporPoint’s infringing activities with respect to the ‘310

patent;

c. Trebling of damages and attorneys’ fees for VaporPoint’s willful infringement of

the ‘310 Patent;

d. Actual and exemplary damages for Counter-defendants misappropriation of trade

secrets;

e. injunctive relief based upon Counter-defendants misappropriation of trade secrets;

f. actual damages to compensate for Counter-defendants liability under the Texas

theft liability act and attorneys’ fees;

g. actual and exemplary damages to compensate for Counter-defendants liability for

fraud;

h. actual and exemplary damages to compensate for Counter-defendants liability for

breach of a fiduciary duty;

i. actual and exemplary damages to compensate for Counter-defendants liability for

tortious interference;

j. actual and exemplary damages to compensate for Counter-defendants liability for

tortious interference with prospective business relationships;

k. actual and attorneys’ fee to compensate for Counter-defendants breach of

contract;

l. actual and exemplary damages to compensate for Counter-defendants liability for

unjust enrichment; and,

m. Court costs; and,

n. All other relief in the law and equity for which Defendants/Counter-plaintiffs


show themselves to be justly entitled.

Respectfully submitted, /s/ William P. Ramey, III William P. Ramey, III

Texas State Bar No. 24027643 Federal Bar No. 27206 [email protected] Ramey & Browning, PLLC 2200 North Loop West, Suite 106 Houston, Texas 77018 713-426-3923 (Telephone) 832-900-4941 (Facsimile)

Attorney for Defendants Elliott Moorhead and NanoVapor Fuels Group, Inc.

CERTIFICATE OF SERVICE

I hereby certify that on the 5th day March, 2012, a true and correct copy of the foregoing

has been served on all counsel of record listed below:

Michael D. Pegues Bracewell & Giuliani, LLP 1445 Ross Avenue, Suite 3800 Dallas, Texas 75202 Via ECF system Attorney for Plaintiffs

/s/ William P. Ramey, III


Documents

Moorhead et. al. v. Vapor Point LLC. et. al