Date: 10-31-2013

Case Style: Pendpac, Inc. v. Rickey Perry d/b/a Southwestern Equipment Company; Cimarron Central, LLC; Dan Hill and Associates, Inc.; Terry Hill; Vicky Hill; Kurtis C. Klosterman; and Cimarron Gas Processing Equipment Company, LLC

Case Number: CJ-2006-1654

Judge: Tom A. Lucas

Court: District Court, Cleveland County, Oklahoma

Plaintiff's Attorney: C.L. Elliott, James David Ezzell, James W. Shephard and Russell L. Mulinix for Pendpac, Inc.

Defendant's Attorney: Robert D. Baron and Michael J. Whitten fro Rickey Perry and Texas Pneudralic, Inc. d/b/a Southwestern Equipment Company

James Reid Webb, Tamara Schiffner Pullin, for Terry Hill, Vicky Hill and Dan Hill And Company And Associates Inc.

Terry W. Tippens and Casey T. Delaney for Cimarron Central, LLC


O. Joseph Williams and David Morse for Kurtis C. Klosterman

Description: Pendpac, Inc. sued Rickey Perry, Southwestern Equipment Company, Cimarron CEntral LLC, Cimarron Gas Processing Equipment Company, LLC, Dan Hill and Company & Associates, Inc., Terry Hill, Vicky Hill and Kurtis C. Klosterman on fraud theories claiming:

1. Pendpac is an Arizona Corporation with its principal place of business in Fairview, Major County, State of Oklahoma.

2. Defendant, Rickey Perry, (hereinafter “Perry”), is an individual and a resident of the State of Texas and at all relevant times hereto has done business as Southwestern Equipment Company and has maintained minimum contacts with the State of Oklahoma sufficient to submit himself to the personal jurisdiction of this Court.

3. Defendant, Cimarron Central, L.L.C. (hereinafter “Cimarron”), is an Oklahoma Limited Liability Company with its principal place of business in Guymon, Texas County, State of Oklahoma. Upon information and belief, Cimarron Central, L.L.C. was formed in or about October of 2005, when Cimarron Gas Processing Equipment Company (hereinafter “Cimarron Gas”) merged with Central Tank of Oklahoma, Inc. (hereinafter “Central”). Cimarron became successor by merger to Central and, as such, to the liabilities of Central.

4. Defendant, Dan Hill and Associates, Inc. (hereinafter “Dan Hill”), is an Oklahoma Corporation with its principal place of business in Norman, Cleveland County, State of Oklahoma.


5. Defendant, Terry Hill, is an individual and a resident of Norman, Cleveland County, State of Oklahoma. At all relevant times hereto, Terry Hill was a shareholder of Central and Dan Hill. At all relevant times hereto, Terry Hill was the husband of Defendant, Vicky Hill.

6. Defendant, Vicky Hill, is an individual and a resident of Norman, Cleveland County, State of Oklahoma. At all relevant times hereto, Vicky Hill was a shareholder of Central and Dan Hill. At all relevant times hereto, Vicky Hill was the wife of Defendant, Terry Hill.

7. Defendant, Kurtis C. Kiosterman, also known as K.C. Klosterman (hereinafter “Klosterman”), is an individual and a resident of the State of Oregon and at all times relevant hereto has maintained minimum contacts with the State of Oklahoma sufficient to submit himself to the personal jurisdiction of this Court.

8. Pursuant to Okla. Stat. tit. 12 § 134, venue is proper in Cleveland County.

STATEMENT OF FACTS

9. On or about October 10, 2002, Pendpac was formed, inter alia, for the purposes of entering into the business of manufacturing and distributing vehicle or truck bodies to be used in the garbage industry.

10. On or about January 15, 2003, Pendpac entered into negotiations with two entities, Dan Hill and Central for the purpose of purchasing certain assets and entering into the business of manufacturing and distributing waste hauling and refuse equipment, truck bed and platforms and associated parts thereto.

11. At or about the time negotiations began, Dan Hill was engaged in the business of manufacturing and distributing equipment, more particularly waste hauling and refuse equipment, truck bed and platforms, and other products.

12. At or about the time negotiations began, Central was engaged in the business of manufacturing and distributing waste hauling and refuse equipment parts.

13. At or about the time negotiations began, Dan Hill and Central were operated in conjunction with one another. Upon information and belief, Dan Hill and Central have similar, if not identical, officers, managers, and shareholders, including, but not limited to, Defendants, Terry Hill and Vicky Hill.

14. Upon information and belief, Vicky Hill was an employee of Dan Hill and Central, and operated, at all relevant times hereto, as the controller of Dan Hill and Central.

15. Upon information and belief, Terry Hill was a shareholder and employee of Dan Hill and Central.

16. During the course of its negotiations with Dan Hill and Central, Pendpac determined that it needed additional expertise in valuing the assets of Dan Hill and Central. Therefore, it retained the services of Klosterman and his company, HCS Group, L.L.C., to verify the assets of Dan Hill and Central, as part of Pendpac’s due diligence.

17. In or about February of 2003, Klostennan, on behalf of Pendpac met with Terry Hill and Vicky Hill, both employees and shareholders of Dan Hill and Central, as provided supra, whereby Terry Hill and Vicky Hill made representations to Pendpac, through its agent Klosterman, as to the value of the assets of Dan Hill and Central.

18. In or about February of 2003, Kiosterman reported to Pendpac that he concurred with the representations made by Terry Hill and Vicky Hill, employees and shareholders of Dan Hill and Central, as to the value of the assets of Dan Hill and Central.

19. In or about August of 2003, Pendpac, upon reliance of representations by Vicky Hill and Terry Hill, as employees and shareholders of Dan Hill and Central, as to values of Dan Hill’s and Central’s assets, which were purportedly confirmed by Klosterman, Pendpac entered into separate contracts with Dan Hill and Central whereby Pendpac agreed to purchase certain assets from Dan Hill for $1,740,819.25 and certain assets from Central for $600,000.00

20. Pursuant to the terms of Pendpac’s contracts with Dan Hill, and/or Central certain conditions precedent were to occur, including but not limited to, the following:

a. A Real Property Lease Agreement for the term of 10 years with a monthly lease payment of $8,000.00 for the property used by the Business shall have been executed between Pendpac and South Canadian Land Development, L.L.C.;

b. An Asset Purchase Agreement between Pendpac, as Buyer, and Central, as Seller, for certain intellectual property and the associated goodwill shall have been executed;

c. A Manufacturing Agreement between Pendpac and Central shall have been executed; and

d. A Real Property Purchase Agreement between Pacific Northwest Trust Properties, L.L.C., as Buyer, and South Canadian Land Development, L.L.C., as Seller, shall have been executed.

21. Upon information and belief, South Canadian Land Development, L.L.C. is an entity which is owned by Dan Hill, Central, Cimarron, and/or some or all of the shareholders thereof 22. Upon information and belief, Pacific Northwest Trust Properties, L.L.C. is owned by Kiosterman and/or members of his family.

23. As part of its contract with Dan Hill, Pendpac executed three promissory notes in the amounts of $90,819.25, $400,000.00, and $550,000.00. Pendpac has fully performed its obligations under said notes.

24. As part of its contract with Central, Pendpac executed one promissory note in the amount of $600,000.00. Pendpac has fully performed its obligations under said notes.

25. Pursuant to the terms of the Manufacturing Agreement, referenced in paragraph 20 (c), supra, Pendpac contracted with Central to exclusively produce certain bodies, components, and other parts used in Pendpac’s waste equipment business. Pendpac fully performed its obligations pursuant to the Manufacturing Agreement.

26. M part of the Manufacturing Agreement with Central, Pendpac provided to Central certain trade secrets, including plans, schematics, blueprints, and/or drawings necessary for Central to perform its obligations under the Manufacturing Agreement.

27. After Pendpac executed the contracts with Dan Hill and Central, Vicky Hill became the controller for Pendpac and continued in this position until she ended her employment with Pendpac in May of 2005.

28. In or about July of 2003, Terry Hill became a shareholder of Pendpac. On or about January 10, 2005, Terry Hill, sold his shares in Pendpac.

29. In or about October of 2005, Perry, upon information and belief, began manufacturing equipment and parts identical to the equipment and parts previously manufactured for Pendpac by Central and Dan Hill.

30. In or about October of 2005, Central and Dan Hill, upon information and belief, began manufacturing equipment and parts identical to the equipment and parts they previously manufactured for Pendpac and selling said equipment and parts to Perry in order that said equipment and parts be used for the purposes of directly competing with Pendpac.

31. On or about November 14, 2005, Central terminated the Manufacturing Agreement.

CAUSES OF ACTION

I. BREACH OF CONTRACT - CIMARRON

32. Pendpac repeats and incorporates paragraphs 1-31 of this Petition by reference and allege the following claim for relief against Cimarron.

33. Upon information and belief, Cimarron is currently engaged in manufacturing andlor distributing waste hauling and reffise equipment, truck bed and platforms, and/or other products in direct competition with Pendpac.

34. The contract between Pendpac and Central, to which Cimarron, by virtue of the merger, more particularly described in paragraph 3, supra, is bound, specifically prohibits such conduct for a period of five (5) years, Cimarron, pursuant to its contract with Pendpac is specifically prohibited from competing with Pendpac until August 29, 2008.

35. As a result of Cimarron’s breach of contract, Pendpac has suffered damages in excess of$l0,000.00.

II. BREACH OF CONTRACT - DAN HILL

36. Pendpac repeats and incorporates paragraphs 1-39 of this Petition by reference and allege the following claim for relief against Dan Hill.

37. Upon information and belief, Dan Hill is currently engaged in manufacturing andlor distributing waste hauling and refuse equipment, truck bed and platforms, and/or other products in direct competition with Pendpac.

38. The contract between Pendpac and Dan Hill specifically prohibits such conduct for a period of five (5) years. Dan Hill, pursuant to its contract with Pendpac is specifically prohibited from competing with Pendpac until August 29, 2008.

39. As a result of Dan Hill’s breach of contract, Pendpac has suffered damages in excess of $10,000.00.

III. UNIFORM TRADE SECRETS - DAN HILL, CIMARRON AND PERRY

40. Pendpac repeats and incorporates paragraphs 1-39 of this Petition by reference and allege the following claim for relief against Dan Hill, Cimarron, and Perry.

41. Pursuant to the Manufacturing Agreement it was necessary for Pendpac to entrust to Defendants, Dan Hill, and Central certain trade secrets, namely plans, schematics and drawings for equipment and parts to be manufactured by Hill and Central, for Pendpac.

42. In or about October of 2005, Hill and Central, before its merger with Cimarron Gas, or Cimarron, after the merger between Cimarron Gas and Central, willfully and maliciously misappropriated these trade secrets by distributing said secrets to Perry.

43. Perry was fully aware, because of a previous business relationship with Pendpac, that the trade secrets were the property of Pendpac.

44. Perry willfully and maliciously utilized Pendpac’s trade secrets to build exact replicas of equipment and parts manufactured by Pendpac for the purposes of directly competing with Pendpac.

45. Upon information and belief, Cimarron and Dan Hill are currently manufacturing equipment and parts identical to the equipment and parts previously manufactured by Pendpac and selling said equipment and parts to Perry in order that said parts be used for the purposes of directly competing with Pendpac.

46. The actions of Perry, Dan Hill, and Cimarron violate the Unifonn Trade Secrets Act, Okla. Stat. tit. 78 § 85 et seq.

47. As a result of the Dan Hill’s, Cimarron’s and Perry’s violation of the Uniform Trade Secrets Act, Pendpac has suffered damages in excess of $10,000.00.

48. Pursuant to the Uniform Trade Secrets Act, Pendpac is entitled to a permanent restraining order from this Court enjoining Dan Hill, Cimarron, and Perry and/or from manufacturing and distributing equipment and parts based on Pendpac’s trade secrets.

49. Pursuant to the Uniform Trade Secrets Act, Pendpac is entitled to recover damages for the actual loss suffered by Pendpac and the unjust enrichment gained by Dan Hill, Cimarron, and Perry.

50. Given the willful and malicious nature of the misappropriation, Pendpac is entitled to recover an exemplary award of twice the total amount of actual damages suffered by Pendpac and unjust enrichment gained by Dan Hill, Cimarron and Perry.

51. Pursuant to the Uniform Trade Secrets Act, Pendpac, given the willful nature of the misappropriation, is entitled to recover its reasonable attorney’s fees.

IV. DECEPTIVE TRADE PRACTTCES - PERRY

52. Pendpac repeats and incorporates paragraphs 1-51 of this Petition by reference and allege the following claim for relief against Perry.

53. During the course of 2005 and 2006, Perry, and/or his agents, in the course of soliciting business from certain municipalities, did knowingly and willfully make false and misleading representations of fact regarding Pendpac’s financial condition, including, but not limited to, assertions that Pendpac would be filing for bankruptcy, in order to disparage the goods manufactured and distributed by Pendpac, with whom Perry was in direct competition, and the business of Pendpac in general.

54. One of the many instances in which Perry and/or his agents made such false and misleading statements of fact occurred in Weatherford, Oklahoma on or about January 23, 2006.

55. The actions of Perry violated the Oklahoma Deceptive Trade Practices Act, Okla. Stat. tit. 78 § 53 etseq.

56. As a result of the Perry’s violation of the Oklahoma Deceptive Trade Practices Act, Pendpac has suffered damages in excess of $10,000.00.

57. Pursuant to the Oklahoma Deceptive Trade Practices Act, Pendpac is entitled to a pennanent restraining order from this Court enjoining Perry and/or his agents fmm said deceptive trade practices.

58. Pursuant to the Oklahoma Deceptive Trade Practices Act, Pendpac, given the willful nature of the deceptive trade practice, is entitled to recover its reasonable attorney’s fees.

V. TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE - PERRY

59. Pendpac repeats and incorporates paragraphs 1-58 of this Petition by reference and allege the following claim for relief against Perry.

60. At the time of the deceptive trade practices, referenced in paragraphs 52-58, supra, Pendpac had a valid business relationship and/or expectancy of buisness with the City of Weatherford and/or other municipalities.

61. Perry has fill knowledge of said relationship and/or expectancy.

62. Perry intentionally interfered with said relationship andlor expectancy by making material misrepresentations of fact which caused certain municipalities, including the City of Weatherford, to terminate their relationships and/or the expectancy of the their relationships with Pendpac.

63. As a result of Perry’s actions, Pendpac has suffered damages in excess of $10,000.00.

VI. FRAUD - CIMARRON, DAN HILL, TERRY HILL, VICKY HILL. AND KLOSTERMAN

64. Pendpac repeats and incorporates paragraphs 1-63 of this Petition by reference and allege the following claim for relief against Cimarron, Dan Hill, Terry Hill, Vicky Hill, and Klosterman.

65. Dan Hill and Central, as part of theft contracts with Pendpac, made certain representations to Pendpac regarding the accuracy of certain financial documents upon which Pendpac relied to determine the value of assets Pendpac purchased from Dan Hill and Central.

66. Upon information and belief, all or most of those documents were prepared by Vicky Hill, as controller for Dan Hill and Central.

67. Upon information and belief, Dan Hill, Central, Vicky Hill and Terry Hill knew that the documents upon which Pendpac was to rely were grossly inaccurate.

68. Dan Hill and Central were aware that Klostennan was hired to perform a due diligence review of Dan Hill’s and Central’s fmancial statements.

69. Upon information and belief, Dan Hill and Central entered into an agreement with Klosterman, whereby Klosterman would represent to Pendpac that Dan Hill’s and Central’s financial statements were accurate, despite knowing that the fmancial statements were, in fact, grossly inaccurate, in exchange for Dan Hill and Central requiring Pendpac, as part of its contracts with Dan Hill and Central, to execute a long term lease of property owned by South Canadian Land Development, L.L.C., an entity which is owned, upon information and belief, by Dan Hill, Central, Cimarron, and/or its shareholders which was to be conveyed to Pacific Northwest Trust Properties, L.L.C., an entity owed, upon information and belief, by Klosterman and/or other members of his family along with the lease executed by Pendpac.

70. The lease was for ten (10) years at $8,000.00 per month plus taxes, whereby Klosterman would be guaranteed income of $96,000.00 per year for ten (10) years.

71. Dan Hill, Central, Kiosterman, Vicky Hill, and Terry Hill knew at the time the financial statements were presented to Pendpac that the documents were falsified and inaccurate.

72. Dan Hill, Central, Kiosterman, Vicky Hill, and Terry Hill, made the material misrepresentations with the intention that Pendpac rely upon them.

73. Pendpac relied on the material misrepresentations of Dan Hill, Central, Klosterman, Vicky Hill and Terry Hill and executed the contracts with Dan Hill and Central in or about August of 2003.

74. In furtherance of the collective fraudulent conduct of Dan Hill, Central, Vicky Hill, Terry Hill, and Kiosterman, Vicky Hill and Terry Hill concealed the fraudulent conduct of during the course of their affiliations with Pendpac.

75. Pendpac became aware of the fraudulent actions of Dan Hill, Central, Kiosterman, Vicky Hill, and Terry Hill, after January 10, 2005 as a result of a thorough review of financial statements in response to certain shareholders of Pendpac selling their shares of Pendpac to certain current shareholders. of this action and other

76. By virtue of the merger, more particularly described in paragraph 3, supra, Cimarron is liable for the actions of Central prior to the merger.

77. As a result of the fraudulent actions of Dan Hill, Central, Kiosterman, Vicky Hill, and Terry Hill, Pendpac has suffered damages in excess of $10,000.00.

CONCLUSION 78. WHEREFORE, Pendpac, for the reasons stated herein, respectfully requests the Court enter judgment in favor of Pendpac against Defendants and prays for the following relief: (a) Pendpac requests that it recover from Defendants on each claim for relief in amounts in excess of $10,000.00; (b) Becadse the actions of Defendants were willful, malicious, and wanton and with total disregard for the rights of Pendpac, Pendpac is entitled to recover punitive damages in an amount to be determined at trial; and (c) Pendpac requests reasonable attorney’s fees and costs relief the Court deems just and equitable.


Defendant Cimarron Centerl LLC filed and motion to dismiss or alternatively summary judgment:

1. Cimarron Central, L.L.C. is a Delaware limited liability company and not an Oklahoma limited liability company.

2. Cimarron Central, L.L.C. has not merged with or acquired or assumed the liabilities of Central Tank of Oklahoma, Inc. as alleged in Paragraph 3 of the Petition.

3. Cimarron Central, L.L.C. has not become a successor by merger to Central Tank of Oklahoma, Inc.

4. Cimarron Central, L.L.C. has entered into no contracts with Pendpac. The Plaintiffs Petition fails to assert or allege any claim or cause for relief against Cimarron Central, L.L.C. because Cimarron Central, L.L.C., a Delaware corporation, has had no contractual, business or any dealings with the Plaintiff r7


Kurtis C. Klosterman appeared and answered as follows:

1. Kiosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 1 and therefore denies the same and demands strict woof.

2. Klosterman is without suTheient knowledge ofthe trüthfiulness of the allegations in paragraph 2 and therefore denies the same and demands strict proof.

3. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 3 and therefore denies the same and demands strict proof

4. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 4 and therefore denies the same and demands strict proof.

5. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 5 and therefore denies the same and demands strict proof.

6. Klosterma.n is without sufficient knowledge of the truthfiulness of the allegations in paragraph 6 and therefore denies the same and demands strict proof.

7. Klosterman admits that he is a resident of the State of Oregon, but denies the remaining allegations of paragraph 7.

8. Klosterman is without knowledge as to the truthfulness of the allegations in paragraph 8 and therefore denies the same and demands strict proof.

9. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 9 and therefore denies the same and demands strict proof.

10. Klosterman is without sufficient knowledge of the truthililness of the allegations in paragraph 10 and therefore denies the same and demands strict proof.

11. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 11 and therefore denies the same and demands strict proof

12. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 12 and therefore denies the same and demands strict proof.

13. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 13 and therefore denies the same and demands strict proof.

14. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 14 and therefore denies the same and demands strict woof.

15. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 15 and therefore denies the same and demands strict proof.

16. Kllosterman is without sufficient knowledge of the truthfulness of the allegations in the first sentence of paragraph 16 and therefore denies the same and demands strict proof. As to the remaining allegations of paragraph 16, Klosterman admits that Pendac retained the services of HCS Group, L.L.C. and denies the remaining allegations of paragraph 16 and demands strict proof.

17. Klosterman admits that as an employee of HCS Group he met with employees of Dan Hill, but is without current recollection as to the remaining allegations of paragraph 17 and therefore denies same and demands strict proof.

18. Klosterman denies the allegations of paragraph 18.

19. Kiosterman denies that he confirmed the values of assets of Dan Hill and Central Klosterman admits that Pendac agreed to buy certain assets from Dan Hill and Central. Klosterman is without sufficient intbrmation as to the truthfiulness of the remaining allegations in paragraph 19 and therefore denies same and demands strict proof.

20. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 20a. and therefore denies the same and demands strict proof. As to the allegations of paragraph 20b. Kiosterman admits that an asset purchasing agreement was to be executed, but is without sufficient knowledge as to the truthfiulness of the remaining allegations of paragraph 20 and therefore denies same and demands strict proof.

21. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 21 and therefore denies the same and demands strict proof.

22. Klosterman denies the allegations of paragraph 22.

23. Kiosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 23 and therefore denies the same and demands strict proof.

24. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 24 and therefore denies the same and demands strict proof.

25. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 25 and therefore denies the same and demands strict proof.

26. Kiosternian is without sufficient knowledge of the truthfulness of the allegations in paragraph 26 and therefore denies the sane and demands strict proof.

27. Klosterman is without sufficient knowledge of the truthililness of the allegations in paragraph 27 and therefore denies the same and demands strict proof.

28. Kiosterinan is without sufficient knowledge of the truthfulness of the allegations in paragraph 28 and therefore denies the same and demands strict proof.

29. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 29 and therefore denies the sane and demands strict proof

30. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 30 and therefore denies the same and demands strict proof

31. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 31 and thereibre denies the same and demands strict proof.

32. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 32 and thereibre denies the same and demands strict proof.

33. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 33 and therefore denies the same and demands strict proof.

34. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 34 and therefore denies the same and demands strict proof.

35. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 35 and therefure denies the same and demands strict proof

36. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 36 and therefore denies the same and demands strict proof

37. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 37 and therefore denies the same and demands strict proof

38. Klosternnn is without sufficient knowledge of the truthfiulness of the allegations in paragraph 38 and therefore denies the same and demands strict proof

39. Klosterman is without sufficient knowledge of the trutbfiulness of the allegations in paragraph 39 and therefore denies the same and demands strict proof

40. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 40 and therefore denies the same and demands strict proof

41. Klosterman is without sufficient knowledge of the trutbfiulness of the allegations in paragraph 41 and therefore denies the same and demands strict proof

42. Klosterman is without sufficient knowledge of the truthfidness of the allegations in paragraph 42 and therefore denies the same and demands strict proof

43. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 43 and therefore denies the same and demands strict proof

44. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 44 and therefore denies the same and demands strict proof

45. Klosternian is without sufficient knowledge of the truthililness of the allegations in paragraph 45 and therefore denies the same and demands strict proof.

46. Klosterman is without sufficient knowledge of the truthihiness of the allegations in paragraph 46 and therefore denies the same and demands strict proof.

47. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 47 and therefore denies the same and demands strict proof.

48. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 48 and thereibre denies the same and demands strict proof.

49. Klosterman is without sufficient knowledge ofthe truthfiulness of the allegations in paragraph 49 and therefore denies the same and demands strict proof.

50. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 50 and therefore denies the same and demands strict proof.

51. Klosterman is without sufficient knowledge of the truthihlness of the allegations in paragraph 51 and thereibre denies the same and demands strict proof.

52. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 52 and therefore denies the same and demands strict proof.

53. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 53 and thereibre denies the same and demands strict proof

54. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 54 and thereibre denies the same and demands strict proof.

55. Klosterman is without sufficient knowledge of the truththlness of the allegations in paragraph 55 and therefore denies the same and demands strict proof.

56. Klosterman is without sufficient knowledge of the truthñilness of the allegations in paragraph 56 and therefore denies the same and demands strict pmoi

57. Klosterman is without sufficient knowledge of the truthfiilness of the allegations in paragraph 57 and therefore denies the same and demands strict proof.

58. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 58 and therefore denies the same and demands strict proof.

59. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 59 and therefore denies the same and demands strict proof.

60. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 60 and therefore denies the same and demands strict proof.

61. Klosterman is without sufficient knowledge of the truthfulness of the allegations in paragraph 61 and therefore denies the same and demands strict proof.

62. Klosterman is without sufficient knowledge of the truththlness of the allegations in paragraph 62 and therefore denies the same and demands strict proof.

63. Klosterman is without sufficient knowledge of the truthfWness of the allegations in paragraph 63 and therefore denies the same and demands strict proof

64. Klosterman is without sufficient knowledge of the truthiWness of the allegations in paragraph 64 and therefore denies the same and demands strict proof.

65. Klosterman is without sufficient knowledge of the truthfidness of the allegations in paragraph 65 and therefore denies the same and demands strict proof

66. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 66 and therefore denies the same and demands strict proof.

67. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 67 and therefore denies the same and demands strict proof.

68. Klosterman is without sufficient knowledge of the truthfiulness of the allegations in paragraph 68 and therefore denies the same and demands strict proof

69. Klosterman denies the allegations of paragraph 69.

70. Klosterman denies the allegations of paragraph 70.

71. Kiostennan denies the allegations of paragraph 71. 72. Klosterman denies the allegations of paragraph 72.

73. Klosternian denies that he made any material misrepresentations and is without sufficient knowledge of the truthfiulness of the remaining allegations of paragraph 73 and therefore denies the same and demands strict proof.

74. Klostennan denies that he engaged in any fraudulent conduct and is without sufficient knowledge of the truthfulness of the remaining allegations of paragraph 74 and thereibre denies the same and demands strict proof.

75. Kiosterman denies that he engaged in any fraudulent actions and is without sufficient knowledge of the truthfiulness of the remaining allegations of paragraph 75 and therefore denies the same and demands strict proof.

76. Klosternian is without sufficient knowledge of the truthfulness of the allegations in paragraph 76 and therefore denies the same and demands strict proof.

77. Klosternian denies the allegations of paragraph 77.

78. Klosterman denies the allegations of paragraph 78.

AFFIRMATIVE DEFENSES

FIRST AFFIRMATIVE DEFENSE

Kiosterman specifically denies that plaintiff is entitled to recover punitive damages in any amount.

SECOND AFFIRMATIVE DEFENSE

Kiosterman affirmatively states that any and all actions taken by him were done in good faith and in compliance with the laws of the state of Oklahoma and of any other state.

THIRD AFFIRMATIVE DEFENSE

Punitive damages are in violation of the Constitution of the United States of America and these claims should therefore be dismissed.

FOURTH AFFIRMATWE DEFENSE

Attorney fees are not recoverable in this type of action, and these claims must be dismissed.

FIFTH AFFIRMAT1VE DEFENSE

Plaintiff’s own actions and/or inaction caused or contributed to any damages sustained by plaintiff.

SIXTH AFFIRMATIVE DEFENSE

Kiosterman never represented nor extended services to plaintiff in his individual capacity, and is not subject to any claims of plaintiff

SEVENTH AFFIRMATIVE DEFENSE

Klosterxnan acted in good faith.

EIGHTH AFFIRMATIVE DEFENSE

Plaintiff’s claims may be barred by the applicable statute of limitations.

NINTH AFFIRMATIVE DEFENSE

As discovery is beginning, Klosterman reserves the right to plead and prove additional Affirmative Defenses as warranted by the evidence in this case.

WHEREFORE, defendant Kurtis C. Kiosterman requests that plaintiff’s claims against him be dismissed and that he be awarded his costs expended herein, including attorney fees.

Defendants Dan Hill and Associates, Inc., Terry Hill and Vickie Hill appeared and answered as follows:

1. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 1 and, therefore, deny those allegations.

2. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 2 and, therefore, deny those allegations.

3. Admitted in part and denied in part. The Hill Defendants admit that the Cimarron Central L.L.C. ‘s corporate offices are located in Guyman, Oklahoma. The Hill Defendants deny the remaining allegations contained in paragraph 3.

4. Admitted.

5. Admitted.

6. Admitted.

7. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 7 and, therefore, deny those allegations.

8. No response. Paragraph 8 contains no factual allegations and, therefore, is neither admitted nor denied.

9. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 9 and, therefore, deny those allegations.

10. Admitted in part and denied in part. The Hill Defendants admit that on or about January 15, 2003, Pendpac entered into negotiations with Dan Hill and Central. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the remaining allegations contained in paragraph 10 and, therefore, deny those allegations.

11. Admitted.

12. Admitted.

13. Admitted in part and denied in part. The Hill Defendants admit that in January 2003, Dan Hill and Associates, Inc. and Central Tank of Oklahoma, Inc. had some common shareholders. The Hill Defendants deny the remaining allegations contained in paragraph 13.

14. Admitted in part and denied in part The Hill Defendants admit that Vickie Hill was an employee of Dan Hill and Associates, Inc. until 2004 and operated as controller of Dan Hill and Associates and Central Tank of Oklahoma, Inc. The Hill Defendants deny that Vickie Hill was an employee of Central Tank of Oklahoma, Inc.

15. Admitted in part and denied in part. The Hill Defendants admit that Terry Hill was a shareholder of Dan Hill and Associates, Inc. and of Central Tank of Oklahoma, Inc. at all relevant times. The Hill Defendants further admit that Terry Hill was an employee of Dan Hill and Associates, Inc. until December 2003. The Hill Defendants deny that Terry Hill was an employee of Dan Hill and Associates, Inc. at any time subsequent to December 2003. The Hill Defendants admit that Terry Hill became an employee of Central Tank of Oklahoma, Inc. in January 2004. The Hill Defendants deny that Terry Hill was an employee of Central Tank of Oklahoma, Inc. at any time prior to January 2004.

16. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 16 and, therefore, deny those allegations.

17. Admitted in part and denied in part. The Hill Defendants admit that in or about February 2003, Terry Hill and Vickie Hill, then shareholders of Dan Hill and Associates, Inc. and Central Tank of Oklahoma, Inc. and employees of Dan Hill and Associates, Inc., met with K.C. Kiosterman. The Hill Defendants deny the remaining allegations contained in paragraph 17.

18. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 18 and, therefore, deny those allegations.

19. Admitted in part and denied in part. The Hill Defendants admit that in or about August 2003, Pendpac, Inc. entered into separate contracts with Dan Hill and Associates, Inc. and Central Tank of Oklahoma, Inc. whereby Pendpac, Inc. agreed to purchase certain assets from Dan Hill and Associates, Inc. and from Central Tank of Oklahoma, Inc. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the remaining allegations contained in paragraph 19 and, therefore, deny those allegations.

20. The Hill Defendants state that the contracts executed between Pendpac, Inc. and Dan Hill and Associates, Inc., between Pendpac, Inc. and Central Tank of Oklahoma, Inc., and between Pendpac and South Canadian Land Development LLC speak for themselves and, therefore, neither admit nor deny the allegations contained in paragraph 20.

21. Admitted in part and denied in part. The Hill Defendants admit that South Canadian Land Development, L.L.C. is an entity owned by Dan Hill and Associates, Inc. and Central Tank of Oklahoma, Inc. The Hill Defendants deny that Cimarron Central, L.L.C. has any ownership interest in South Canadian Land Development, L.L.C.

22. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 22 and, therefore, deny those allegations.

23. Admitted in part and denied in part. The Hill Defendants admit that Pendpac, Inc. executed three promissory notes payable to Dan Hill and Associates, Inc. The Hill Defendants deny the remaining allegations contained in paragraph 23.

24. Admitted in part and denied in part. The Hill Defendants admit that Pendpac, Inc. executed one promissory note payable to Central Tank of Oklahoma, Inc. The Hill Defendants deny the remaining allegations contained in paragraph 24.

25. Denied. The Hill Defendants deny each and every allegation of paragraph 25.

26. Admitted in part and denied in part. The Hill Defendants admit that Pendpac, Inc. provided to Central Tank of Oklahoma, Inc. certain plans, schematics, blueprints, and/or drawings. The Hill Defendants neither admit nor deny the legal conclusion stated in paragraph 26 that such documents constituted trade secrets of Pendpac, Inc.

27. Admitted in part and denied in part. The Hill Defendants admit that after Pendpac, Inc. executed the contracts with Dan Hill and Associates, Inc. and with Central Tank of Oklahoma, Inc., Vickie Hill assisted Pendpac, Inc. on various accounting-type tasks on a twice- weekly arrangement. The Hill Defendants deny that Vickie Hill was ever an “employee” of Pendpac, Inc., as she never drew a salary from the company, and deny that Vickie Hill was ever given the title of “controller” of Pendpac, Inc.

28. The Hill Defendants admit that Terry Hill became a shareholder of Pendpac on or about October 1, 2003 and that Terry Hill sold his shares in Pendpac on or about January 12, 2005.

29. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 29 and, therefore, deny those allegations.

30. Denied. The Hill Defendants deny each and every allegation of paragraph 30.

31. Admitted in part and denied in part. The Hill Defendants admit that the Manufacturing Agreement was terminated, but deny that the termination was effective November 14, 2005.

32. The Hill Defendants neither admit nor deny paragraph 32 as it contains no factual allegations.

33. Denied. The Hill Defendants deny each and every allegation of paragraph 33.

34. The Hill Defendants state the agreement(s) between Pendpac, Inc. and Central Tank of Oklahoma, Inc. speak for themselves. The Hill Defendants deny each and every remaining allegation contained in paragraph 34.

35. Denied. The Hill Defendants deny each and every allegation of paragraph 35.

36. The Hill Defendants neither admit nor deny paragraph 36 as it contains no factual allegations.

37. Denied. The Hill Defendants deny each and every allegation of paragraph 37.

38. The Hill Defendants state that the agreement(s) between Pendpac, Inc. and Dan Hill and Associates, Inc. speak for themselves. The Hill Defendants deny the remaining allegations contained in paragraph 38.

39. Denied. The Hill Defendants deny each and every allegation of paragraph 39.

40. The Hill Defendants neither admit nor deny paragraph 40 as it contains no factual allegations.

41. The Hill Defendants state that the Manufacturing Agreement speaks for itself

42. Denied. The Hill Defendants deny each and every allegation of paragraph 42.

43. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 43 and, therefore, deny those allegations.

44. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 29 and, therefore, deny those allegations.

45. Denied. The Hill Defendants deny each and every allegation of paragraph 45.

46. Denied. The Hill Defendants deny each and every allegation of paragraph 46.

47. Denied. The Hill Defendants deny each and every allegation of paragraph 47.

48. Denied. The Hill Defendants deny each and every allegation of paragraph 48.

49. Denied. The Hill Defendants deny each and every allegation of paragraph 49.

50. Denied. The Hill Defendants deny each and every allegation of paragraph 50.

51. Denied. The Hill Defendants deny each and every allegation of paragraph 51.

52. The Hill Defendants neither admit nor deny paragraph 52 as it contains no factual allegations.

53. Denied, The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 53 and, therefore, deny those allegations.

54. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 54 and, therefore, deny those allegations.

55. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 55 and, therefore, deny those allegations.

56. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 56 and, therefore, deny those allegations.

57. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegacions of paragraph 57 and, therefore, deny those allegations.

58. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 58 and, therefore, deny those allegations.

59. The Hill Defendants neither admit nor deny paragraph 59 as it contains no factual allegations.

60. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 60 and, therefore, deny those allegations.

61. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 61 and, therefore, deny those allegations.

62. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 62 and, therefore, deny those allegations.

63. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 63 and, therefore, deny those allegations.

64. Denied. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 64 and, therefore, deny those allegations.

65. The Hill Defendants state that the contracts speak for themselves. The Hill Defendants admit that Pendpac, Inc. was provided with certain financial information concerning Dan Hill and Associates, Inc. and denies that Pendpac, Inc. received any financial information concerning Central Tank of Oklahoma, Inc. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations concerning Pendpac, Inc.’s reliance and, therefore, deny those allegations.

66. Admitted in part and denied in part. The Hill Defendants admit that Vickie Hill put together the packet of financial documents that were provided to Pendpac, Inc., but denies that Vickie Hill prepared all of the documents herself.

67. Denied. The Hill Defendants deny each and every allegation of paragraph 67.

68. Admitted in part and denied in part. The Hill Defendants admit that they were aware that Pendpac, Inc. hired HCS Group, L.L,C., for whom K.C. Klostennan worked, to perform a due diligence review of the financial statements of the Mabac division of Dan Hill and Associates, Inc. The Hill Defendants deny that HCS Group, L.L.C. performed a due diligence review of the financial statements of any other division of Dan Hill and Associates, Inc. or of Central Tank of Oklahoma, Inc. for Pendpac, Inc.

69. Denied. The Hill Defendants deny each and every allegation of paragraph 69.

70. Denied. The Hill Defendants deny each and every allegation of paragraph 70.

71. Denied. The Hill Defendants deny each and every allegation of paragraph 71.

72. Denied. The Hill Defendants deny each and every allegation of paragraph 72.

73. Admitted in part and denied in part. The Hill Defendants admit that Pendpac, Inc. executed contracts with Dan Hill and Associates, Inc. and with Central Tank of Oklahoma, Inc. in or about August 2003. The Hill Defendants deny that Dan Hill and Associates, Inc., Central Tank of Oklahoma, Inc., Vickie Hill or Terry Hill made any misrepresentations to Pendpac, Inc. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the remaining allegations contained in paragraph 73 and, therefore, deny those allegations.

74. Denied. The Hill Dtfendants deny each and every allegation of paragraph 74.

75. Denied. The Hill Defendants deny that the Hill Defendants engaged in any fraudulent actions. The Hill Defendants lack sufficient knowledge and information to form a belief as to the truth of the remaining allegations of paragraph 75 and, therefore, deny those allegations. 76. Denied. The Hill Defendants deny each and every allegation of paragraph 76. 77. Denied. The Hill Defendants deny each and every allegation of paragraph 77. 78. Denied. The Hill Defendants deny each and every allegation of paragraph 78. WHEREFORE, the Hill Defendants request that judgment be entered in their favor on Plaintiffs claims, that the Hill Defendants be awarded costs of suit, attorneys’ fees as appropriate and provided for by law, and that the Hill Defendants be granted any and all such farther relief as the Court may deem proper. DEFENSES 1. Plaintiffs claims are barred, in whole or in part, by the applicable statute of limitations, and/or the equitable doctrine of laches. 2. Plaintiff’s claims fail to state a claim for which relief may be granted. 3. Plaintiffs claims are barred, in whole or in part, by the equitable doctrine of unclean hands. 4. Plaintiff’s claims are barred, in whole or in part, by Plaintiffs prior breach of contract. 5. Plaintiffs claims are barred, in whole or in part, by the doctrine of ratification. 6. Plaintiffs claims are barred, in whole or in part, by Plaintiff’s own knowledge of any alleged fraud. 7. Plaintiffs claims are barred, in whole or in part, by merger clauses found in the relevant agreements. 8. Plaintiffs own actions and/or inaction caused and/or contributed to any damage sustained by Plaintiff.


Rickey Perry and Texas Pneudralic, Inc. d/b/a Southwestern Equipment Company appeared and answered as follows;

1. Denied. The SEC form a belief as to deny those allegations. Defendants lack sufficient knowledge and information to the truth of the allegations of paragraph 1 and, therefore, 2. Admitted in part and denied in part. Admitted that RICKEY PERRY is an individual resident of the State of Texas. Deny that RICKEY PERRY as an individual has ever done business in the State of Oklahoma or has maintained minimum contacts with the State of Oklahoma sufficient to submit himself, as an individual, to the personal jurisdiction of this Court. 3. Admitted. 4. Denied. The SEC form a belief as to deny those allegations. Defendants lack sufficient knowledge and information to the truth of the allegations of paragraph 4 and, therefore,

5. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 5 and, therefore, deny those allegations.

6. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 6 and, therefore, deny those allegations.

7. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 7 and, therefore, deny those allegations.

8. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 8 and, therefore, deny those allegations.

9. No response. Paragraph 9 contains no factual allegations and, therefore, is neither admitted nor denied.

10. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 10 and, therefore, deny those allegations.

11. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 11 and, therefore, deny those allegations.

12. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 12 and, therefore, deny those allegations.

13. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 13 and, therefore, deny those allegations.

14. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 14 and, therefore, deny those allegations. 15. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 15 and, therefore, deny those allegations.

16. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 16 and, therefore, deny those allegations.

17. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 17 and, therefore, deny those allegations.

18. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 18 and, therefore, deny those allegations.

19. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 19 and, therefore, deny those allegations.

20. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 20 and, therefore, deny those allegations.

21. Denied. The SEC Defendants lack sufficient knowledge and infonnation to form a belief as to the truth of the allegations of paragraph 21 and, therefore, deny those allegations.

22. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 22 and, therefore, deny those allegations.

23. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 23 and, therefore, deny those allegations.

24. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 24 and, therefore, deny those allegations.

25. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 25 and, therefore, deny those allegations.

26. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 26 and, therefore, deny those allegations.

27. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 27 and, therefore, deny those allegations.

28. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 28 and, therefore, deny those allegations.

29. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 29 and, therefore, deny those allegations.

30. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 30 and, therefore, deny those allegations.

31. Admitted in part and denied in part. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 31 and, therefore, deny those allegations. Admitted to the extent that SEC, not PERRY individually, purchased some garbage truck bodies from HILL which PENDPAC had failed or refused to pay for.

32. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 32 and, therefore, deny those allegations.

33. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 33 and, therefore, deny those allegations.

34. No response. The SEC Defendants neither admit nor deny paragraph 34 as it contains no factual allegations.

35. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 35 and, therefore, deny those allegations.

36. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 36 and, therefore, deny those allegations.

37. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 37 and, therefore, deny those allegations.

38. No response. The SEC Defendants neither admit nor deny paragraph 38 as it contains no factual allegations.

39. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 39 and, therefore, deny those allegations.

40. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 40 and, therefore, deny those allegations.

41. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 41 and, therefore, deny those allegations.

42. No response. The SEC Defendants neither admit nor deny paragraph 42 as it contains no factual allegations.

43. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 43 and, therefore, deny those allegations.

44. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 44 and, therefore, deny those allegations. Upon information and belief the SEC Defendants deny that PENDPAC gave trade secrets to the HILL Defendants or that the HILL Defendants misappropriated any trade secrets.

45. Denied. The SEC Defendants specifically deny that they knew of any trade secrets which were the property of PENDPAC.

46. Denied.

47. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 47 and, therefore, deny those allegations.

48. Denied. The SEC Defendants deny each and every allegation of paragraph 48.

49. Denied. The HILL Defendants deny each and every allegation of paragraph 49.

50. Denied. The SEC Defendants deny each and every allegation of paragraph 50.

51. Denied. The SEC Defendants deny each and every allegation of paragraph 51.

52. Denied. The SEC Defendants deny each and every allegation of paragraph 52.

53. Denied. The SEC Defendants deny each and every allegation of paragraph 53.

54. No response. The SEC Defendants neither admit nor deny paragraph 54 as it contains no factual allegations.

55. Admitted in part and Denied in part. Admit that PERRY is an officer of TEXAS PNEUDRALIC, INC. dfb/a SOUTHWESTERN EQUIPMENT COMPANY. Deny the other allegations of paragraph 55. The SEC Defendants specially except the allegations of paragraph 55 as the same are vague, overbroad and indefinite and do not provide sufficient information for the SEC Defendants to know what conduct Plaintiff complains of as there are no allegations as to time, place, or to whom the alleged disparaging comments were made.

56. Denied. The SEC Defendants specially except to the allegations of paragraph 56 in that the same are insufficiently precise to permit the SEC Defendants to know to whom such alleged false and misleading statements were made.

57. Denied. The SEC Defendants deny each and every allegation of paragraph 57.

58. Denied. . The SEC Defendants deny each and every allegation of paragraph 58.

59. Denied. . The SEC Defendants deny each and every allegation of paragraph 59.

60. Denied. The SEC Defendants deny each and every allegation of paragraph 60. 61. No response. The SEC Defendants neither admit nor deny paragraph 61 as it contains no factual allegations.

62. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 62 and, therefore, deny those allegations.

63. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 63 and, therefore, deny those allegations.

64. Denied. . The SEC Defendants deny each and every allegation of paragraph 64.

65. Denied. . The SEC Defendants deny each and every allegation of paragraph 65.

66. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 66 and, therefore, deny those allegations.

67. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 67 and, therefore, deny those allegations.

68. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 68 and, therefore, deny those allegations.

69. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 69 and, therefore, deny those allegations.

70. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 70 and, therefore, deny those allegations.

71. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 71 and, therefore, deny those allegations.

72. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 72 and, therefore, deny those allegations.

73. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 73 and, therefore, deny those allegations.

74. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 74 and, therefore, deny those allegations.

75. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 75 and, therefore, deny those allegations.

76. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 76 and, therefore, deny those allegations.

77. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 77 and, therefore, deny those allegations.

78. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 78 and, therefore, deny those allegations.

79. Denied. The SEC Defendants lack sufficient knowledge and information to form a belief as to the truth of the allegations of paragraph 79 and, therefore, deny those allegations.

80. Denied. The SEC Defendants for themselves, and on information and belief as to the other defendants, deny each and every allegation of paragraph 80.

AFFIRMATIVE DEFENSES

1. Plaintiffs claims are barred, in whole or in part, by the applicable statutes of limitations, and/or the equitable doctrine of laches.

2. Plaintiff fails to state claims for which relief may be granted.

3. Plaintiffs claims are barred, in whole or in part, by the equitable doctrine of unclean hands.

4. Plaintiffs claims are barred, in whole or in part, by Plaintiffs prior breaches of contracts.

5. Plaintiffs own actions and inactions caused and/or contributed to any damage sustained by Plaintiff on account of any conduct by the SEC Defendants.

6. No trade secret of PENDPAC has ever been possessed or used by the SEC Defendants. Anything that Plaintiff claims to be a trade secret does not qualify as a trade secret under Oklahoma law. The information for which Plaintiff seeks trade secret protection does not qualify under Oklahoma law because:

(1) the information is well known outside the business; (2) the information is well known by employees, former employees and others involved in the business; (3) the extent of the measures taken by PENDPAC to guard the secrets of its information is absolutely zero; (4) the information is so generic in the industry that its value is useless to competitors, in that all competitors already know the information; (5) the company PENDPAC did not expend great effort or money in developing the information in that it copied the truck bodies in question from another manufacturer, and (6) the information could be properly acquired or duplicated by others with great ease and little difficulty. WHEREFORE, the SEC Defendants request that Judgment be entered in their favor on Plaintiffs claims, that the SEC Defendants be awarded costs of suit, attorneys’ fees as appropriate and provided for by law, and that the SEC Defendants be granted any and all such further relief as the Court may deem proper.

Central Tank of Oklahoma, LLC appeared and answered as follows:

1. Central LLC is without sufficient knowledge to admit or deny.

2. Central LLC is without sufficient knowledge to admit or deny.

3. Central LLC is without sufficient knowledge to admit or deny.

4. Admitted.

5. Central LLC is without sufficient knowledge to admit or deny. 6 Admitted.

7 Admitted,

8. Central LLC is without sufficient knowledge to admit or deny.

9. Admitted.

10. Central LLC is without sufficient knowledge to admit or deny.

11. Admitted.

12. Admitted.

13. Admitted.

14. The allegations of Paragraph 14 are denied in that Dan Hill and Central Inc. were not operated “in conjunction with one another.” It is partially admitted that they had some common shareholders but not all common shareholders. They were operated as totally separate and independent companies, as separate profit centers dealing at arms length with each other.

15. Central LLC is without sufficient knowledge to admit or deny.

16. Admitted.

17. The first sentence of Paragraph 17 is neither admitted nor denied as Defendant Central LLC has insufficient information. The second sentence is denied for the reason that Klosterman and his company HCS Group, LLC did not attempt to verify the assets, income or financial records of Central LLC as only a purchase of certain patents from Central LLC was being considered.

18. Paragraph 18 is admitted in part in that some meetings may have taken place but the assets or operations of Central LLC were not in issue or even to be reviewed. At the most, Klosterman may have been provided financial statements, tax returns, depreciation schedules and other information on Dan Hill & Associates and on the “Mabar” division of Dan Hill. With regard to Central LLC, Kiosterman was only told the price at which Central LLC would sell its intellectual property rights.

19. Defendant Central LLC, has no way of knowing what Klosterman reported to Pendpac but denies that he would have reported as to the value of assets of Central LLC because such information was not requested or furnished to him and it was not an issue.

20. Defendant denies the allegations of Paragraph 20 as it relates to Central LLC. Defendant admits that it entered into a contract to sell certain intellectual property rights to Pendpac for $600,000.

21. Defendant admits that these documents were executed. The documents speak for themselves.

22. Defendant denies that South Canadian Land Development, LLC is an entity related to it in any way.

23. Defendant is without sufficient knowledge to admit or deny.

24. Defendant neither admits nor denies these allegations as they do not pertain to Defendant Central LLC.

25. Admitted.

26. Defendant admits that a Manufacturing Agreement was executed but denies that Pendpac fully performed its obligations. In particular, Pendpac breached Paragraph 2.1 as no forecast was ever delivered; Paragraph 2.2, purchase orders were not issued by Pendpac on every order manufactured by Central LLC; Paragraph 2.3 Central LLC was not given any request to price and/or bill additional products; Paragraph 3, upon termination of the agreement, Pendpac did not take delivery or purchase inventory that was built for it. In addition, Pendpac was consistently late in its payments and purchase orders, no responses were received from Pendpac by letter or verbally, and three purchase orders were completed and ready to ship but no payment was made. Numerous requests were made to pick up and pay for said custom manufactured equipment and no response was ever received from Pendpac. Pendpac breached Paragraph 4.4 as it did not pay within thirty (30) days.

27. This Paragraph is denied in general and admitted in part in that some information pertaining to the ‘Alley Gator” and “Sprinter” was furnished on a disk but it is denied that it is a trade secret or that it is being used after termination of the agreement.

28. Defendant Central LLC is without sufficient knowledge or information to admit or deny but admits in general that Vickie Hill continued on with Pendpac in some capacity for a while.

29. Admitted.

30. Denied.

31. Denied.

32. Admitted as to change in nature of legal entity but denied that any notice was required.

33. Denied for the reason that the letter giving notice that Central LLC was exercising the termination agreement was sent on October 20, 2005 but it gave a 180-day notice which ended on May 1,2006.

34. No answer is required.

35. This Paragraph is denied as Central LLC is completely out of the manufacturing of waste hauling and refuse equipment, truck bed and platform business. It is only attempting to sell its excessive inventory of parts which Pendpac refused to purchase in breach of the Manufacturing Agreement.

36. The allegations of Paragraph 36 are denied although Central LLC admits the contract speaks for itself. Defendant Central LLC denies that it is competing with Pendpac.

37. Denied.

38. -41. No answer is required of Defendant Central LLC.

42. No answer required.

43. Denied.

44. Denied.

45. Denied.

46. Denied.

47. Denied.

48. Denied.

49. Denied.

50. Denied.

51. Denied.

52. Denied.

53. Denied.

54. No answer required.

55. - 65. No answer is required of Defendant Central LLC but in general it denies all allegations.

66. No answer required.

67. Denied.

68. Denied, for the reason that no documents on Central LLC prepared by Vicki Hill or anyone else was furnished to Plaintiff

69. Denied in general and for the specific reason that Central LLC did not submit financial documents to Pendpac.

70. Denied.

71. Denied.

72. Defendant Central LLC has no information with which to admit or deny.

73. Denied.

74. Denied.

75. Denied.

76. Denied.

77. Denied.

78. Admitted.

79. Admitted.

AFFIRMATIVE DEFENSES

For its affirmative defenses, Defendant Central LLC alleges that Plaintiff’s claims are barred due to:

1. Failure to state a claim upon which relief may be granted.

2. Lathes and statutes of limitation.

3. Estoppel, waiver, accord and satisfaction.

4. Ratification of contract and acceptance of benefits.

5. Absence of any damage.

6. Plaintiff’s breaches of the Manufacturing Agreement excused any and all obligations of Defendant.

6. Punitive damages are unconstitutional and inappropriate in this case.

7. Statute of frauds and merger doctrine.

WHEREFORE, having hilly answered Defendant Central lank of Oklahoma, L.L.C. requests that Plaintiff’s claims asserted against said Defendant be dismissed and that Plaintiff recover nothing and that Defendant recover its attorney fees, costs and such other relief as may be just and equitable.

COUNTERCLAIM

COMES NOW Defendant Central Tank of Oklahoma, L.L.C. (“Central LLC” or “Defendant”), and for its cause of action against the Plaintiff, Pendpac, Inc. (“Pendpac” or “Plaintiff”) alleges and states as follows:

1. Central LLC and Pendpac entered into a Manufacturing Agreement whereby Central LLC agreed to manufacture the Impac body upon receipt of purchase orders from Pendpac.

2. Pendpac submitted its purchase orders #2314, 2316 and 2497 for the construction of said bodies.

3. Central LLC manufactured said bodies pursuant to said purchase order and submitted its invoice #001 1087-IN in the amount of $15,000 which remains unpaid. Central LLC sent written dem.ands on April 4, 2006 demanding payment and had its counsel send a written demand on October 9, 2006 demanding payment but Pendpac has failed and refused to pay same.

4. Central LLC is entitled to recover $15,000 plus interest thereon from February 27, 2006, attorney fees and court costs.

WHEREFORE, Cross-complainant, Central Tank of Oklahoma, L.L.C. prays that it have and recover judgment against Pendpac, Inc. in the amount of $15,000 plus interest, attorney fees, court costs and such other relief as may be just and equitab .


Plaintiff replied to the Counterclaim of Central Tank of Oklahoma, LLC as follows:

1. Plaintiff admits the allegations as asserted in paragraph 1 of Defendant’s, Central Tank of Oklahoma, L.L.C., Counterclaim.

2. Plaintiff denies the allegations as asserted in paragraph 2 of Defendant’s, Central Tank of Oklahoma, L.L.C., Counterclaim.

3. Plaintiff denies the allegations as asserted in paragraph 3 of Defendant’s, Central Tank of Oklahoma, L.L.C., Counterclaim.

4. Plaintiff denies the allegations as asserted in paragraph 4 of Defendant’s, Central Tank of Oklahoma, L.L.C., Counterclaim.

AFFIRMATIVE DEFENSES

1. Failure to state a claim upon which relief can be granted..

2. Statute of Limitations.

3. Ladies.

4. Accord and satisfaction.

5. Statute of frauds.

6. Offset.

7. Plaintiff reserves the right to further plead.

WHEREFORE, Plaintiff requests the Defendant, Central Tank of Oklahoma, L.L.C., take nothing and Plaintiff recover its attorney fees, costs, and other just and equitable relief as the Court deems proper.

Outcome: Comes now the Plaintiff, PENDPAC, INC., and the Defendant, RICKEY PERRY, RICKEY PERRY, INDIVIDUALLY AND D/B/A TEXAS PNEUDRALIC, INC. D/B/A SOUTHWESTERN EQUIPMENT COMPANY and moves to dismiss the above entitled and numbered cause with prejudice and in connection therewith would show the Court that all matters in controversy between these parties have been compromised and settled. Wherefore, the Movants pray that the above entitled and numbered cause be dismissed with prejudice as to RICKEY PERRY, INDIVIDUALLY AND D/B/A TEXAS PNEUDRALIC, INC. D/8/A SOUTHWESTERN EQUIPMENT COMPANY with all costs to be taxed against the party incurring same.

Plaintiff's Experts:

Defendant's Experts:

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