UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
BAJA DEVELOPMENTS LLC, a New
York limited liability company,
Plaintiff,
vs.
TSD LORETO PARTNERS, S EN C. POR
A. DE C.V., a Mexican entity,
Defendant.
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No.
COMPLAINT
Plaintiff BAJA DEVELOPMENTS LLC, a New York limited liability company, hereby alleges as follows for its Complaint against TSD LORETO PARTNERS, S EN
C.POR A. DE C.V., a Mexican entity.
PARTIES, JURISDICTION AND VENUE
1. BAJA DEVELOPMENTS LLC (hereafter “BAJA New York”) is a New York limited liability company that had and currently still has substantial operations
in Maricopa County, Arizona. BAJA New York is registered as a foreign limited liability company with the Arizona Corporation Commission. All members
of BAJA New York are citizens of states of the United States or corporations organized under the laws of states of the United States. At certain times
relevant to the Complaint, BAJA New York employed as many as 40 individuals in Maricopa County, Arizona, to provide services to the defendant on the
matters forming the basis of this Complaint. BAJA New York provided management and marketing services for a real estate development owned by defendant
and located in Baja, Mexico, hereafter referred to as the “Loreto Bay Development.” The Loreto Bay Development is an ecologically sound development,
on the edge of the famous Loreto Bay of Baja California Sur. Loreto Bay Development was developed, engineered and constructed so as to be
“sustainable,” and to follow the precepts of “New Urbanism.” In addition, BAJA New York provided financial and accounting services in Arizona, such as
maintaining a general ledger, accounts receivable, accounts payable and fixed asset records; provision of billing and collection services; preparation
of various types of income tax returns; preparation of financial statements; provision of tax and payroll records; provision of employee benefits;
provision of legal services; provision of information technology services, infrastructure and personnel; provision of construction management and
architectural design planning services; and other services – all on behalf of the defendant, as alleged below.
2. TSD LORETO PARTNERS, S EN C. POR A. DE C.V. (hereafter “Loreto Partners”) is an entity formed under Mexican law known as a sociedad en comandita
por acciones and carrying on business here in Arizona. A sociedad en comandita por acciones is a juridical person under Mexican law. Loreto Partners
owns certain real and other property that comprise the Loreto Bay Development. Loreto Partners’ office for the management of the Loreto Bay
Development is located at Mision San Ignacio S/N, Esquina Cabot, Fraccionamiento Nopolo, 23880, Loreto Bay, Baja California Sur, Mexico. Loreto
Partners marketed and sold real property that was a part of the Loreto Bay Development in Arizona, and the Loreto Bay Development and Loreto Partners
are registered with the Arizona Department of Real Estate.
3. This court has subject matter jurisdiction over this dispute pursuant to 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000.00
and because alienage jurisdiction exists: plaintiff is a New York limited liability company, all members of which are citizens of states of the United
States or corporations organized under the laws of states of the United States and defendant is a foreign entity established under the laws of Mexico
and recognized as a juridical person under Mexican law.
4. Loreto Partners is subject to the jurisdiction of this Court through its entering into a long term services contract negotiated by it in Maricopa
County; executed by it in Maricopa, County, and which was and is being performed in Maricopa County, Arizona. The contract provides that its terms are
governed by the laws of the State of Arizona. Loreto Partners marketed and sold Loreto Bay Development real property in Arizona. The long term
services contract, which is the specific subject of this suit, governed the provision of an estimated $100,000,000 of services performed for Loreto
Partners in Maricopa County, and that required the employment of more than 40 people in Maricopa County, for the benefit of Loreto Partners, as the
party owed duties on the contract by plaintiff.
GENERAL ALLEGATIONS
5. Loreto Partners and BAJA New York entered into a contract titled the Intercompany Services Agreement (hereafter the “ISA”), as of May 10, 2004. The
ISA was negotiated and executed in Maricopa County, Arizona by all three of the parties. A copy of the ISA is attached as Exhibit 1.
6. Under the terms of the ISA, BAJA New York was to provide certain sales, marketing, administrative and other services related to the Loreto Bay
Development to Loreto Partners on a cost plus basis. These included financial and accounting services such as maintaining Loreto Partners’ general
ledger, accounts receivable, accounts payable and fixed asset records; provision of billing and collection services; preparation of various types of
income tax returns; preparation of financial statements; provision of tax and payroll records; provision of employee benefits; provision of legal
services Loreto Partners needed to run its business; provision of information technology services, infrastructure and personnel; provision of
construction management and architectural design planning services; and other services – all on behalf of defendant Loreto Partners.
7. BAJA New York, over the last several years, has provided such services to Loreto Partners, under the ISA, in these and other areas in amounts
totaling an estimated $100,000,000.
Loreto Partners’ Breach of Contract
8. The terms of the ISA contractually obligated Loreto Partners not only to reimburse BAJA New York for the direct and indirect cost of the provision
of such services, but also, pursuant to paragraph 3 of the ISA, to pay a fee of 5% of the cost of such direct and indirect services.
9. The ISA is governed by the laws of the State of Arizona.
10. Loreto Partners has not fully reimbursed BAJA New York for the cost of the provision of all the services provided Loreto Partners under the ISA.
As only one example, certain individuals and entities provided emergency funding to BAJA New York so that it could provide services to Loreto
Partners, which sums have not been reimbursed. A Canadian citizen named Norma Butterfield loaned BAJA New York $800,000 (Canadian), and upon
information and belief, those sums were used at least in part to provide services to Loreto Partners under the ISA. Loreto Partners has not reimbursed
BAJA New York for these sums. In addition, a British Columbia corporation named Fan Tan Alley Holdings, Ltd. loaned BAJA New York $200,000 (Canadian),
and upon information and belief, those sums were used at least in part to provide services to Loreto Partners under the ISA. Loreto Partners has not
reimbursed BAJA New York for these sums. Upon information and belief, there are other un-reimbursed expenditures that Loreto Partners is obligated to
reimburse BAJA New York under the ISA. These will be identified with particularity after discovery, and by means of the accounting that plaintiff is
requesting the Court to order in this action.
11. Upon information and belief, Loreto Partners has not paid any portion of the 5% fee it owes BAJA New York under the ISA.
12. BAJA New York has demanded that Loreto Partners pay the amounts owed to it on the ISA, but Loreto Partners has refused.
13. Loreto Partners has breached its contract with BAJA New York.
14. The precise sums owed to BAJA New York by Loreto Partners await more accounting information. Upon information and belief, the current amount due
exceeds $7,000,000.
15. Loreto Partners is indebted to the plaintiff BAJA New York by a sum estimated to exceed $7,000,000, in an amount to be proven at trial.
16. Plaintiff BAJA New York is also entitled to its costs, and reasonable attorneys’ fees, pursuant to A.R.S. §12-341.01.
COUNT 1 -- BREACH OF CONTRACT
17. All allegations previously made in the Complaint are reasserted here as if set forth in their entirety herein.
18. Loreto Partners owes and owed plaintiff BAJA New York contractual duties under the ISA.
19. Loreto Partners has breached its contractual duties to plaintiff BAJA New York by failing to pay all the sums due and owing under the ISA,
including reimbursement for the cost of services, and the 5% fee on the provision of such services, as specified by the ISA.
20. Loreto Partners’ breach of contract has damaged plaintiff BAJA New York in an amount to be proven at trial, but currently estimated to be in
excess of $7,000,000.
21. Loreto Partners is indebted to plaintiff in an amount estimated to exceed $7,000,000 for breach of contract.
COUNT 2 -- ACCOUNTING
22. All allegations previously made in the Complaint are reasserted here as if set forth in their entirety herein.
23. Since August 2007, Loreto Partners has controlled the accounting functions that tracked the sums expended on the provision of services to it under
the ISA. It has possession of the books and records that are relevant and necessary to know with
precision the sums it owes to plaintiff.
24. Currently BAJA New York does not have access to information about the precise dollar amount of money it spent providing services to Loreto
Partners. Nor does it have accurate information about how much Loreto Partners has in fact reimbursed BAJA New York.
25. Loreto Partners should be ordered to render an accounting to BAJA New York on the use of funds that occurred in connection with the ISA, including
how much was expended in the provision of services on its behalf by BAJA New York; how much Loreto Partners has reimbursed BAJA New York for such
services; and how much, if any, it has paid for the 5% fee that is contractually due on all such sums.
WHEREFORE, Plaintiff prays for judgment against defendant Loreto Partners as
follows:
A. For compensatory damages in an amount to be proven at trial;
B. For an order that Loreto Partners render an accounting to plaintiff on the use of funds relating to the ISA, and its payments under that contract.
C. For costs incurred in this action;
D. For reasonable attorneys’ fees in bringing and prosecuting this action; and
E. For such other and further relief as the Court deems just and proper.
BAJA NEW YORK HEREBY DEMANDS A TRIAL BY JURY.
DATED this 13th day of April 2009.
LEWIS AND ROCA LLP
By /s/ George L. Paul
George L. Paul
Thomas J. Morgan
Attorneys for Plaintiff
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