Each card carries the governed distillate name from the database. Open the quoted anchor before relying on the interpretation.
claimallegation
Watts signs July 18, 2024 at Greensboro as Cyberlux special counsel, declaring personal involvement in settlement payments and supporting op
Watts signs July 18, 2024 at Greensboro as Cyberlux special counsel, declaring personal involvement in settlement payments and supporting opposition to an ex parte bond application in SDCA 3:24-cv-00482, ECF 25-1.
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1 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES WATTS
15715323.2
HAHN LOESER & PARKS LLP
Gabe P. Wright (SBN 208647)
One America Plaza
600 W. Broadway, Suite 1500
San Diego, CA 92101
Telephone: 619.810.4300
Facsimile: 619.810.4301
gwright@hahnlaw.com
THOMPSON COBURN LLP
JEFFREY N. BROWN, CSB 105520
jbrown@thompsoncoburn.com
10100 Santa Monica Blvd., Suite 500
Los Angeles, California 90067
Tel: 310.282.2500 / Fax: 310.282.2501
EDWARD W. GRAY, JR. (SBN 80966)
egray@thompsoncoburn.com
1909 K Street, NW Suite 600
Washington, D.C. 20006
Tel: 202.585.6967 / Fax: 202.585.6969
ALLEN CHESSON & GRIMES
DOUGLAS GRIMES (pro hac vice application pending)
dgrimes@allenchesson.com
505 N. Church Street
Charlotte, NC 28202
Tel: 704.755.6012
Attorneys for Defendant CYBERLUX
CORPORATION
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS,
LLC, a Virginia limited liability
company; and SECURE
COMMUNITY, LLC, a Virginia
limited Liability company,
Plaintiffs,
v.
CYBERLUX CORPORATION, a
Nevada Corporation;
Defendant.
Case No. 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES
WATTS IN SUPPORT OF
DEFENDANT CYBERLUX
CORPORATION’S OPPOSITION TO
PLAINTIFFS’ EX PARTE
APPLICATION FOR ORDER TO
POST A BOND
Dist. Judge: Ruth Bermudez Montenegro
///
Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PageID.697 Page 1 of 18
claimallegation
The complaints allege improper California enforcement, nondisclosure of the settlement, sequestration exceeding $500,000 and bad faith. Exhi
The complaints allege improper California enforcement, nondisclosure of the settlement, sequestration exceeding $500,000 and bad faith. Exhibit C seeks an injunction against enforcement of the June 28, 2023 amended order, including across states. The request for broad future restraint is separate from the already expired May 31 temporary relief.
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Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PagelD. 706 Page 10 of 18
16. Despite the parties' agreements on payments and Plaintiffs' performance pursuant
to the agreements, Defendants initiated a lawsuit in California, seeking to enforce
the Agreement.3
17. Defendants, being fully aware of the above referenced federal case, without notice,
and without disclosing the Settlement Agreement, initiated a second state court
action in California against Defendants, petitioning that court to enter a stipulated
judgment, using the Virginia Amended Order. Again, without disclosing the
Settlement Agreement.
18. Finding little success with their improper actions in California, Defendants
initiated even more improper actions, attempting to side-step the Agreement and
this Court by initiating Administrative actions in Virginia using the garnishment
system. Defendants engaged garnishment attorneys and were well aware that
Virginia's garnishment system is administrative with little to no judicial
involvement.
Defendants acted in bad faith and against usual and prudent business practices by
ignoring the terms of the written and oral contracts and initiating garnishment
proceedings, writs of fieri facias and judgment liens with several banks including
Towne Bank and
PNC Bank, successfully seeking to sequester Plaintiffs'
operational funds in excess of $500,000, while dishonestly using this Court's
judgment order to justify its unfair performance of its obligations under the
settlement agreement.
20. Defendants violated the written and oral agreements and through their actions
acted in bad faith against usual and prudent business practices, breaching the
implied covenant of good faith and fair dealing and have expressed their intention
to continue such violations.
COUNT I - DECLARATORY JUDGMENT
FOR BREACH OF CONTRACT
21. Plaintiffs adopt and incorporate by reference paragraphs 1-20 of its Declaratory
Judgment Action as if set forth fully herein.
22. The parties executed the written Agreement, a valid, binding, and enforceable
contract.
23. As set forth above, Plaintiffs and Defendants entered into an oral contract, the
terms of which were to modify the timing and amounts of payments required under
3 See Case No. 3:24-cv-00196-RBM-VET, Atlantic Wave Holdings, LLC, et. al. v. Cyberlux Corporation, et.al, in
the United States District Court Southern District of California.
3
claimallegation
Exhibit C is titled Verified Complaint for Temporary Preliminary Injunction, but the supplied five-page pleading ends with counsel’s /s/ sig
Exhibit C is titled Verified Complaint for Temporary Preliminary Injunction, but the supplied five-page pleading ends with counsel’s /s/ signature and contains no separate sworn verification. It alleges likelihood of success, irreparable harm, comparative harm and public interest; no order granting this July application is attached.
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odE 282581108:7220086,07/18/24 PagerD.710 Page 14 of 18
VIRGINIA:
IN THE CIRCUIT COURT OF THE CITY OF RICHMOND
CYBERLUX CORPORATION and
MARK D. SCHMIDT, individually
Plaintiffs,
V.
Case No.
ATLANTIC WAVE HOLDINGS, LLC
AND SECURE COMMUNITY, LLC
Defendants.
VERIFIED COMPLAINT FOR TEMPORARY PRELIMINARY INJUNCTION
Plaintiffs Cyberlux Corporation and Mark D. Schmidt, (hereinafter, collectively,
"Defendants"), by counsel, state as follows for its Verified Complaint for Preliminary
Injunction against Defendants Atlantic Wave Holdings, LLC and Secure Community, LLC
(hereinafter "Defendants").
INTRODUCTION
Plaintiffs bring this Emergency Application to seek immediate relief from
Defendants' practice of violating written and oral settlement agreements and acting in
bad faith against usual and prudent business practices by breaching the implied covenant
of good faith and fair dealing and sequestering Plaintiffs' business operation funds, while
dishonestly using this Court's judgment order to justify its unfair performance of its
obligations under the settlement agreements.
Without an immediate injunction from this Court, Defendants will continue to use
the pretext of this Court's judgment order to injure and harass Plaintiffs.
PARTIES
1. Plaintiff, Cyberlux is a corporation, formed under the laws of the State of Nevada.
2. Plaintift, Schmidt is an individual residing in the state of North Carolina and is the
president of Cyberlux.
claimallegation
The attached complaints contain drafting inconsistencies: both signature blocks call Cyberlux CORPORATION LLC, and the injunction introducti
The attached complaints contain drafting inconsistencies: both signature blocks call Cyberlux CORPORATION LLC, and the injunction introduction calls the plaintiffs collectively Defendants. The declaration’s Cyberlux corporation identity and the captions are not silently converted into a different LLC. The file-stamp overlays are partly obscured by the federal ECF header.
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Uped:2048B21KY262/8842520556ed 07/18/24 PagelD.704 Page 8 of 18
VIRGINIA:
IN THE CIRCUIT COURT OF THE CITY OF RICHMOND
CYBERLUX CORPORATION and
MARK D. SCHMIDT, individually
Plaintiffs,
V.
Case No.
ATLANTIC WAVE HOLDINGS, LLC
AND SECURE COMMUNITY, LLC
Defendants.
COMPLAINT FOR DECLARATORY RELIEF
Plaintiffs Cyberlux Corporation and Mark D. Schmidt, (hereinafter, collectively,
"Plaintiffs"), by counsel, state as follows for its Complaint against Defendants Atlantic
Wave Holdings, LLC and Secure Community, LLC (hereinafter "Defendants").
PARTIES
1. Plaintiff, Cyberlux is a corporation, formed under the laws of the State of Nevada.
2. Plaintift, Schmidt is an individual residing in the state of North Carolina and is the
president of Cyberlux.
3. Defendant Atlantic Wave Holdings ('AWH") is a Virginia limited liability
company, with principle place of businesses in Richmond, Virginia.
4. Defendant Secure Community, LLC (*Secure") is a Virginia limited liability
company.
Cyberlux Corporation is a corporation organized under the laws of Nevada.
Defendant Mark D. Schmidt is Cyberlux's CEO.
JURISDICTION AND VENUE
6. This Court has subject matter jurisdiction, and this Court has personal jurisdiction
over Plaintiffs under Va. Code § 8.01-328.1.
7. This Court is a proper venue pursuant to Va. Code § 8.01-262.
claimallegation
He says Cyberlux was current through May 31, Virginia writs sequestered accounts, some funds were released, and plaintiffs refused further r
He says Cyberlux was current through May 31, Virginia writs sequestered accounts, some funds were released, and plaintiffs refused further release of funds intended for settlement, then invoked missed June and July payments. This is his account of causation and payment status, not a payment ledger or judicial finding.
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2 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES WATTS
15715323.2
I, Charles Watts, declare:
1. I am the special counsel for Defendant Cyberlux Corporation
(“Cyberlux”). I am an attorney licensed to practice and in good standing in North
Carolina and am located in North Carolina. If called as a witness, I would
competently testify as to the following facts based on my personal knowledge.
2. I have been personally involved in Cyberlux’s making of payments to
Atlantic Wave Holdings, LLC and Secure Community, LLC (collectively,
“Plaintiffs”) pursuant to the terms of the Settlement Agreement between the parties
for payment of the amounts reflected in the Stipulated Judgment between the parties.
3. Following Cyberlux filing its Motion to Vacate in this case, Plaintiffs
attempted to freeze Cyberlux’s bank accounts through ministerial garnishment orders
in Virginia. Cyberlux was able to get some of those garnishment orders lifted.
4. As of May 31, 2024, Cyberlux was up to date on all payments to
Plaintiffs.
5. On or about the week of May 31, 2024, Plaintiffs obtained a Writ of Fieri
Facias in Virginia State Court. As a result of this Writ of Fieri Facias, Cyberlux’s
bank accounts were sequestered.
6. On May 31, 2024, the Court authorized the release of some of the money
in the sequestered bank accounts to allow for payments to vendors and employees.
However, the Court left sequestered the remaining funds for the purpose of making
payments to Plaintiffs. Attached hereto as Exhibit A is a true and correct copy of the
Virginia Court’s May 31, 2024 Order.
7. Cyberlux requested that Plaintiffs agree to the release of some of those
sequestered funds so that Cyberlux could make its payments to Plaintiffs. Plaintiffs
refused Cyberlux’s request.
8. Plaintiffs have since used their own refusal to release the funds that have
been specifically sequestered for payment under the Settlement Agreement to take the
position that Cyberlux has “missed” its June and July payments. In reality, all
Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PageID.698 Page 2 of 18
claimallegation
Watts describes Cyberlux’s understanding that Virginia relief required a new action rather than quashing a writ in the dismissed original ca
Watts describes Cyberlux’s understanding that Virginia relief required a new action rather than quashing a writ in the dismissed original case; he also invokes California forum guidance. He authenticates two attached complaints as filed July 8. The underlying hearing instructions are not transcribed.
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3 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES WATTS
15715323.2
Plaintiffs need to do is allow release of the sequestered settlement funds and they
would be paid for June and July.
9. Based upon a hearing that occurred in Virginia Circuit Court, Cyberlux
understood from the Virginia Court that to seek a release of the Writ of Fieri Facias,
Cyberlux would have to institute a new action in Virginia as opposed to seeking to
quash the Writ of Fieri Facias in the original lawsuit brought by Atlantic Wave that
has since been dismissed.
10. Based on Cyberlux’s understanding of the Virginia Court’s instructions,
as well as this Court’s instructions in Atlantic Wave Holdings, LLC, et al. v. Cyberlux
Corporation, et al. , United States District Court for the Southern District of
California, Case Number 3:24-cv-00196-RBM-VET, in connection with forum non
coveniens, Cyberlux initiated legal action against Atlantic Wave Holdings, LLC, and
Secure Community, LLC in Virginia. True and correct copies of the file-stamped
Complaints filed by Cyberlux on July 8, 2024 are attached hereto as Exhibits B and
C.
I declare under penalty of perjury under the laws of the United States that the
foregoing is true and correct.
Executed this 18th day of July, 2024, at Greensboro, North Carolina.
Charles Watts
Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PageID.699 Page 3 of 18
claimallegation
The embedded Richmond CL22-3882 order is visibly signed and entered May 31, 2024. It grants temporary injunction only, lifting judgment lien
The embedded Richmond CL22-3882 order is visibly signed and entered May 31, 2024. It grants temporary injunction only, lifting judgment liens, garnishments, writs and notices against accounts up to $550,000, effective immediately through June 11 at 5 PM. This is actual time-limited court relief, not permanent discharge.
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Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PagelD. 701 Page 5 of 18
Dirginia:
In the Circuit Court of the City of Richmond, John Marshall Courts Fuilding
ATLANTIC WAVE HOLDINGS, LLC,
AND
SECURE COMMUNITY, LLC,
Plaintiffs,
V.
Case No. CL22-3882
CYBERLUX CORPORATION,
AND
MARK D. SCHMIDT,
Defendants.
ORDER
On May 31, 2024 came the parties, by counsel, to be heard on the Defendants' "Emergency
Motion for Declaratory Reliefifiled on May 21, 2024. Upon consideration of the filings, evidence,
and arguments included in the record in the above-styled matter, the Court grants Defendants'
temporary injunction only.
IT IS HEREBY ORDERED:
(1) All judgment liens, garnishments, writs of fieri facias, and notice of judgment liens against
Defendants' accounts at any third party bank (s) and/or entity(s), including but not limited to
funds sequestered in accounts with Towne Bank and PNC Bank are hereby lifted up to
$550,000.00 effective immediately. This lift will stay in effect until June 11, 2024 at 5:00
p.m.
(2) Defendants may use up to $317,000.00 for the purpose of making payroll and shall provide
in-camera proof of payments to the Court within forty-eight (48) hours of any such
payments. For the purposes of this Order, payroll is defined as the distribution of payments
to company employees and consultants who are entitled to receive compensation as well as
other work benefits.!
(3) Defendants may use up to $230,000 for the purpose of making regularly scheduled
settlement payments to Plaintiffs and provide in-camera proof of payments to the Court.
' The Defendants shall provide a spreadsheet of all payments made pursuant to this Order with information noting
how it complies with this Order.
CL22-3882// Page 1|2
claimallegation
The order allows up to $317,000 payroll for employees and consultants with in-camera proof within forty-eight hours and a compliance spreads
The order allows up to $317,000 payroll for employees and consultants with in-camera proof within forty-eight hours and a compliance spreadsheet. It separately allows up to $230,000 regularly scheduled settlement payments to plaintiffs with in-camera proof. These category ceilings total $547,000, $3,000 below the overall $550,000 lift; the order does not allocate that difference. It does not merely release vendor/payroll funds while prohibiting settlement payments.
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Dirginia:
In the Circuit Court of the City of Richmond, John Marshall Courts Fuilding
ATLANTIC WAVE HOLDINGS, LLC,
AND
SECURE COMMUNITY, LLC,
Plaintiffs,
V.
Case No. CL22-3882
CYBERLUX CORPORATION,
AND
MARK D. SCHMIDT,
Defendants.
ORDER
On May 31, 2024 came the parties, by counsel, to be heard on the Defendants' "Emergency
Motion for Declaratory Reliefifiled on May 21, 2024. Upon consideration of the filings, evidence,
and arguments included in the record in the above-styled matter, the Court grants Defendants'
temporary injunction only.
IT IS HEREBY ORDERED:
(1) All judgment liens, garnishments, writs of fieri facias, and notice of judgment liens against
Defendants' accounts at any third party bank (s) and/or entity(s), including but not limited to
funds sequestered in accounts with Towne Bank and PNC Bank are hereby lifted up to
$550,000.00 effective immediately. This lift will stay in effect until June 11, 2024 at 5:00
p.m.
(2) Defendants may use up to $317,000.00 for the purpose of making payroll and shall provide
in-camera proof of payments to the Court within forty-eight (48) hours of any such
payments. For the purposes of this Order, payroll is defined as the distribution of payments
to company employees and consultants who are entitled to receive compensation as well as
other work benefits.!
(3) Defendants may use up to $230,000 for the purpose of making regularly scheduled
settlement payments to Plaintiffs and provide in-camera proof of payments to the Court.
' The Defendants shall provide a spreadsheet of all payments made pursuant to this Order with information noting
how it complies with this Order.
CL22-3882// Page 1|2
claimallegation
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, not
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, notes defendants’ objections including jurisdiction, and takes the remainder under advisement pending written ruling. It does not resolve all underlying enforcement merits.
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(4) Plaintiffs will refrain from issuing any new garnishments, writs of fieri facias and notice of
Judgment liens to any and all third party bank(s) and/or entity(s) until close of business? on
June 11, 2024.
(5) This Order expires by close of business on June 11, 2024.
The Court NOTES the Defendants' objection to the Court's ruling, including the Court's
ruling on jurisdiction. The Court further NOTES that it will accept, in camera, documentation of
the payment of payroll and payments on the judgment owed. The Court hereby ORDERS the
remainder of this matter be TAKEN UNDER ADVISEMENT pending the issuance of a written
ruling.
The Clerk is DIRECTED to forward a certified copy of this Order to the parties.
The Court DISPENSES with the parties' endorsements pursuant to Rule 1:13.
It is so ORDERED.
ENTER:
5/31 2024.
Jacqueline S. McClenpey, Judge
2 For purposes of this Order close of business shall be 5:00 p.m.
CL22-3882// Page 2|2
claimallegation
Exhibit B is Cyberlux and Schmidt’s July 8 declaratory complaint. It alleges a $1,572,500 instalment settlement after liability sanctions, a
Exhibit B is Cyberlux and Schmidt’s July 8 declaratory complaint. It alleges a $1,572,500 instalment settlement after liability sanctions, a stipulated judgment not on the merits, and later written/oral payment modifications. It seeks declarations of enforceability, payment credits, breach and improper enforcement, release of funds and fees. Those pleaded theories are not findings merely because the complaint was filed.
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VIRGINIA:
IN THE CIRCUIT COURT OF THE CITY OF RICHMOND
CYBERLUX CORPORATION and
MARK D. SCHMIDT, individually
Plaintiffs,
V.
Case No.
ATLANTIC WAVE HOLDINGS, LLC
AND SECURE COMMUNITY, LLC
Defendants.
COMPLAINT FOR DECLARATORY RELIEF
Plaintiffs Cyberlux Corporation and Mark D. Schmidt, (hereinafter, collectively,
"Plaintiffs"), by counsel, state as follows for its Complaint against Defendants Atlantic
Wave Holdings, LLC and Secure Community, LLC (hereinafter "Defendants").
PARTIES
1. Plaintiff, Cyberlux is a corporation, formed under the laws of the State of Nevada.
2. Plaintift, Schmidt is an individual residing in the state of North Carolina and is the
president of Cyberlux.
3. Defendant Atlantic Wave Holdings ('AWH") is a Virginia limited liability
company, with principle place of businesses in Richmond, Virginia.
4. Defendant Secure Community, LLC (*Secure") is a Virginia limited liability
company.
Cyberlux Corporation is a corporation organized under the laws of Nevada.
Defendant Mark D. Schmidt is Cyberlux's CEO.
JURISDICTION AND VENUE
6. This Court has subject matter jurisdiction, and this Court has personal jurisdiction
over Plaintiffs under Va. Code § 8.01-328.1.
7. This Court is a proper venue pursuant to Va. Code § 8.01-262.
claimallegation
Both complaints describe a June 30, 2023 arrangement to pay twenty-five percent of scheduled July payments on July 3 and another $10,737 on
Both complaints describe a June 30, 2023 arrangement to pay twenty-five percent of scheduled July payments on July 3 and another $10,737 on July 6, then resume the schedule in August. They allege supporting emails and completed payments; those emails and bank receipts are not included.
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FACTUAL ALLEGATIONS
8. Defendants sued Plaintiffs in Virginia State Circuit Court in 2023 for alleged
breaches of 2021 agreements entered between the parties.
9. Defendants obtained discovery sanctions against Plaintiffs, including liability
sanctions. The Virginia court thereafter ordered a trial limited to damages.
10. In the face of these sanctions, Plaintiffs entered into a Settlement Agreement
(hereinafter "Agreement") with Defendants that called for a total amount ot
$1,572,500 to be paid in scheduled monthly installments.
11. At the request of Defendants, Plaintiffs agreed to a Stipulated Judgment
memorializing the total amount due, which Judgment incorporated the Settlement
Agreement containing the payment schedule.
12. This Stipulated Judgment was not on the merits nor did it recite any finding of
legal liability by Plaintiffs and resulted in a dismissal of Defendants' Complaint.
13. Soon after executing the confidential Settlement Agreement, the parties
renegotiated terms, including payment deadlines. 1
14. Pursuant to the Settlement provisions and the renegotiated terms, Plaintiffs timely
made all payments and continue to make payments to date. Both before and after
the Settlement Agreement was renegotiated, Plaintiffs continue to timely make
payments in accordance with the written and oral agreements made with
Defendants who continue to accept such payments.
15. Plaintiffs performed or substantially performed all of the material duties that the
Settlement Agreement and the subsequent agreements and amendments reached
required except for those things for which Plaintiffs were excused from
performing.z
' On or about June 30, 2023, the parties reached an agreement that Plaintiffs would pay 25% of the scheduled July
monthly payments to Defendants on July 3, 2023 and would pay an additional $10,737 to Defendants on July 6,
2023. Thereafter, all remaining payments would be back on the payment schedule referenced in the Settlement
Agreement, beginning August 1, 2023. This agreement was confirmed in emails between the parties.
Representatives of the parties communicated regularly and Defendants orally agreed upon the schedule of the
payments described in this footnote upon which Plaintiffs relied and upon which the parties performed. On July 3rd
and July 6, 2023, Plaintiffs made the agreed-upon payments bringing all amounts due under the Settlement
Agreement current immediately upon making the July payments.
2 On or about September 5, 2023, Plaintiffs and William Welter on behalf of Defendants conferred and mutually
agreed that, as of September 2023, the total remaining amounts due to Defendants, collectively, was $386, 138.44
and the remaining amount due to Strikepoint Consulting, a Virginia Liability Company, under the Settlement
Agreement was $49,652.70. On or about September 8, 2023, Plaintiffs wired payments to Defendants in excess of
the amounts then-due pursuant to the Settlement Agreement. The parties agreed that those amounts paid by Plaintiffs
in excess of the amounts then due under the Settlement Agreement would be credited to future monthly payments
due under the Settlement Agreement.
2
claimallegation
Both complaints allege September 5, 2023 agreement with Welter that remaining balances were $386,138.44 for Atlantic Wave/Secure collectivel
Both complaints allege September 5, 2023 agreement with Welter that remaining balances were $386,138.44 for Atlantic Wave/Secure collectively and $49,652.70 for Strikepoint, followed by September 8 wires exceeding then-due amounts and agreed future credits. These are alleged balances and credit terms, not original bank proof or a current payoff.
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FACTUAL ALLEGATIONS
8. Defendants sued Plaintiffs in Virginia State Circuit Court in 2023 for alleged
breaches of 2021 agreements entered between the parties.
9. Defendants obtained discovery sanctions against Plaintiffs, including liability
sanctions. The Virginia court thereafter ordered a trial limited to damages.
10. In the face of these sanctions, Plaintiffs entered into a Settlement Agreement
(hereinafter "Agreement") with Defendants that called for a total amount ot
$1,572,500 to be paid in scheduled monthly installments.
11. At the request of Defendants, Plaintiffs agreed to a Stipulated Judgment
memorializing the total amount due, which Judgment incorporated the Settlement
Agreement containing the payment schedule.
12. This Stipulated Judgment was not on the merits nor did it recite any finding of
legal liability by Plaintiffs and resulted in a dismissal of Defendants' Complaint.
13. Soon after executing the confidential Settlement Agreement, the parties
renegotiated terms, including payment deadlines. 1
14. Pursuant to the Settlement provisions and the renegotiated terms, Plaintiffs timely
made all payments and continue to make payments to date. Both before and after
the Settlement Agreement was renegotiated, Plaintiffs continue to timely make
payments in accordance with the written and oral agreements made with
Defendants who continue to accept such payments.
15. Plaintiffs performed or substantially performed all of the material duties that the
Settlement Agreement and the subsequent agreements and amendments reached
required except for those things for which Plaintiffs were excused from
performing.z
' On or about June 30, 2023, the parties reached an agreement that Plaintiffs would pay 25% of the scheduled July
monthly payments to Defendants on July 3, 2023 and would pay an additional $10,737 to Defendants on July 6,
2023. Thereafter, all remaining payments would be back on the payment schedule referenced in the Settlement
Agreement, beginning August 1, 2023. This agreement was confirmed in emails between the parties.
Representatives of the parties communicated regularly and Defendants orally agreed upon the schedule of the
payments described in this footnote upon which Plaintiffs relied and upon which the parties performed. On July 3rd
and July 6, 2023, Plaintiffs made the agreed-upon payments bringing all amounts due under the Settlement
Agreement current immediately upon making the July payments.
2 On or about September 5, 2023, Plaintiffs and William Welter on behalf of Defendants conferred and mutually
agreed that, as of September 2023, the total remaining amounts due to Defendants, collectively, was $386, 138.44
and the remaining amount due to Strikepoint Consulting, a Virginia Liability Company, under the Settlement
Agreement was $49,652.70. On or about September 8, 2023, Plaintiffs wired payments to Defendants in excess of
the amounts then-due pursuant to the Settlement Agreement. The parties agreed that those amounts paid by Plaintiffs
in excess of the amounts then due under the Settlement Agreement would be credited to future monthly payments
due under the Settlement Agreement.
2
entityobservation
Charles Watts
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2 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES WATTS
15715323.2
I, Charles Watts, declare:
1. I am the special counsel for Defendant Cyberlux Corporation
(“Cyberlux”). I am an attorney licensed to practice and in good standing in North
Carolina and am located in North Carolina. If called as a witness, I would
competently testify as to the following facts based on my personal knowledge.
2. I have been personally involved in Cyberlux’s making of payments to
Atlantic Wave Holdings, LLC and Secure Community, LLC (collectively,
“Plaintiffs”) pursuant to the terms of the Settlement Agreement between the parties
for payment of the amounts reflected in the Stipulated Judgment between the parties.
3. Following Cyberlux filing its Motion to Vacate in this case, Plaintiffs
attempted to freeze Cyberlux’s bank accounts through ministerial garnishment orders
in Virginia. Cyberlux was able to get some of those garnishment orders lifted.
4. As of May 31, 2024, Cyberlux was up to date on all payments to
Plaintiffs.
5. On or about the week of May 31, 2024, Plaintiffs obtained a Writ of Fieri
Facias in Virginia State Court. As a result of this Writ of Fieri Facias, Cyberlux’s
bank accounts were sequestered.
6. On May 31, 2024, the Court authorized the release of some of the money
in the sequestered bank accounts to allow for payments to vendors and employees.
However, the Court left sequestered the remaining funds for the purpose of making
payments to Plaintiffs. Attached hereto as Exhibit A is a true and correct copy of the
Virginia Court’s May 31, 2024 Order.
7. Cyberlux requested that Plaintiffs agree to the release of some of those
sequestered funds so that Cyberlux could make its payments to Plaintiffs. Plaintiffs
refused Cyberlux’s request.
8. Plaintiffs have since used their own refusal to release the funds that have
been specifically sequestered for payment under the Settlement Agreement to take the
position that Cyberlux has “missed” its June and July payments. In reality, all
Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PageID.698 Page 2 of 18
inferenceinference
The embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised
The embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised a settlement-payment window. Whether later refusals caused June/July nonpayment requires actual release, transfer and request timing before and after June 11.
inferenceinference
The two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the a
The two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
otherattribution
Complete supplied 18-page source reviewed at SHA-256 8b6deaaf6eecc4173aa935b809180bff2eeb68a95a5fa6113c7d8ac650342bb3. Source assertions, or
Complete supplied 18-page source reviewed at SHA-256 8b6deaaf6eecc4173aa935b809180bff2eeb68a95a5fa6113c7d8ac650342bb3. Source assertions, original visual features, filing/communication context and identified missing attachments are retained. Full eighteen-page reading and material order/signature image comparison: version_896503c6fe3b4a6cbb33ce4ebd1a92f6, SHA256 8b6deaaf6eecc4173aa935b809180bff2eeb68a95a5fa6113c7d8ac650342bb3; original source and extraction retained.
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1 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES WATTS
15715323.2
HAHN LOESER & PARKS LLP
Gabe P. Wright (SBN 208647)
One America Plaza
600 W. Broadway, Suite 1500
San Diego, CA 92101
Telephone: 619.810.4300
Facsimile: 619.810.4301
gwright@hahnlaw.com
THOMPSON COBURN LLP
JEFFREY N. BROWN, CSB 105520
jbrown@thompsoncoburn.com
10100 Santa Monica Blvd., Suite 500
Los Angeles, California 90067
Tel: 310.282.2500 / Fax: 310.282.2501
EDWARD W. GRAY, JR. (SBN 80966)
egray@thompsoncoburn.com
1909 K Street, NW Suite 600
Washington, D.C. 20006
Tel: 202.585.6967 / Fax: 202.585.6969
ALLEN CHESSON & GRIMES
DOUGLAS GRIMES (pro hac vice application pending)
dgrimes@allenchesson.com
505 N. Church Street
Charlotte, NC 28202
Tel: 704.755.6012
Attorneys for Defendant CYBERLUX
CORPORATION
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS,
LLC, a Virginia limited liability
company; and SECURE
COMMUNITY, LLC, a Virginia
limited Liability company,
Plaintiffs,
v.
CYBERLUX CORPORATION, a
Nevada Corporation;
Defendant.
Case No. 3:24-cv-00482-RBM-VET
DECLARATION OF CHARLES
WATTS IN SUPPORT OF
DEFENDANT CYBERLUX
CORPORATION’S OPPOSITION TO
PLAINTIFFS’ EX PARTE
APPLICATION FOR ORDER TO
POST A BOND
Dist. Judge: Ruth Bermudez Montenegro
///
Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PageID.697 Page 1 of 18
questionquestion
What bank releases, in-camera payment reports and creditor communications show whether the authorised $230,000 settlement window was used or
What bank releases, in-camera payment reports and creditor communications show whether the authorised $230,000 settlement window was used or frustrated?
questionquestion
Do the June and September 2023 communications and bank records establish the pleaded oral amendments and future-payment credits?
questionquestion
What later rulings resolved the July complaints and the matters taken under advisement in May?
allegation
CONNECT
Reviewed relationships
The canvas follows the database: source to DISTIL record, DISTIL record to knowledge object, then reviewed relationship. Position alone means nothing.
Exhibit B is Cyberlux and Schmidt’s July 8 declaratory complaint. It alleges a $1,572,500 instalment settlement after liability sanctions, a stipulated judgment not on the merits, and later written/oral payment modifications. It seeks declarations of enforceability, payment credits, breach and improper enforcement, release of funds and fees. Those pleaded theories are not findings merely because the complaint was filed.supportsThe two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
Specifically named source propositions support the bounded distinction or question.
The order allows up to $317,000 payroll for employees and consultants with in-camera proof within forty-eight hours and a compliance spreadsheet. It separately allows up to $230,000 regularly scheduled settlement payments to plaintiffs with in-camera proof. These category ceilings total $547,000, $3,000 below the overall $550,000 lift; the order does not allocate that difference. It does not merely release vendor/payroll funds while prohibiting settlement payments.supportsWhat bank releases, in-camera payment reports and creditor communications show whether the authorised $230,000 settlement window was used or frustrated?
Specifically named source propositions support the bounded distinction or question.
The embedded Richmond CL22-3882 order is visibly signed and entered May 31, 2024. It grants temporary injunction only, lifting judgment liens, garnishments, writs and notices against accounts up to $550,000, effective immediately through June 11 at 5 PM. This is actual time-limited court relief, not permanent discharge.supportsThe embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised a settlement-payment window. Whether later refusals caused June/July nonpayment requires actual release, transfer and request timing before and after June 11.
Specifically named source propositions support the bounded distinction or question.
He says Cyberlux was current through May 31, Virginia writs sequestered accounts, some funds were released, and plaintiffs refused further release of funds intended for settlement, then invoked missed June and July payments. This is his account of causation and payment status, not a payment ledger or judicial finding.supportsThe embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised a settlement-payment window. Whether later refusals caused June/July nonpayment requires actual release, transfer and request timing before and after June 11.
Specifically named source propositions support the bounded distinction or question.
The order allows up to $317,000 payroll for employees and consultants with in-camera proof within forty-eight hours and a compliance spreadsheet. It separately allows up to $230,000 regularly scheduled settlement payments to plaintiffs with in-camera proof. These category ceilings total $547,000, $3,000 below the overall $550,000 lift; the order does not allocate that difference. It does not merely release vendor/payroll funds while prohibiting settlement payments.supportsThe embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised a settlement-payment window. Whether later refusals caused June/July nonpayment requires actual release, transfer and request timing before and after June 11.
Specifically named source propositions support the bounded distinction or question.
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, notes defendants’ objections including jurisdiction, and takes the remainder under advisement pending written ruling. It does not resolve all underlying enforcement merits.supportsDid the May 31 order prohibit settlement payments?
Specifically named source propositions support the bounded distinction or question.
Exhibit B is Cyberlux and Schmidt’s July 8 declaratory complaint. It alleges a $1,572,500 instalment settlement after liability sanctions, a stipulated judgment not on the merits, and later written/oral payment modifications. It seeks declarations of enforceability, payment credits, breach and improper enforcement, release of funds and fees. Those pleaded theories are not findings merely because the complaint was filed.supportsWhat later rulings resolved the July complaints and the matters taken under advisement in May?
Specifically named source propositions support the bounded distinction or question.
The complaints allege improper California enforcement, nondisclosure of the settlement, sequestration exceeding $500,000 and bad faith. Exhibit C seeks an injunction against enforcement of the June 28, 2023 amended order, including across states. The request for broad future restraint is separate from the already expired May 31 temporary relief.supportsThe two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
Specifically named source propositions support the bounded distinction or question.
Both complaints allege September 5, 2023 agreement with Welter that remaining balances were $386,138.44 for Atlantic Wave/Secure collectively and $49,652.70 for Strikepoint, followed by September 8 wires exceeding then-due amounts and agreed future credits. These are alleged balances and credit terms, not original bank proof or a current payoff.supportsThe two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
Specifically named source propositions support the bounded distinction or question.
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, notes defendants’ objections including jurisdiction, and takes the remainder under advisement pending written ruling. It does not resolve all underlying enforcement merits.supportsWhat bank releases, in-camera payment reports and creditor communications show whether the authorised $230,000 settlement window was used or frustrated?
Specifically named source propositions support the bounded distinction or question.
The order allows up to $317,000 payroll for employees and consultants with in-camera proof within forty-eight hours and a compliance spreadsheet. It separately allows up to $230,000 regularly scheduled settlement payments to plaintiffs with in-camera proof. These category ceilings total $547,000, $3,000 below the overall $550,000 lift; the order does not allocate that difference. It does not merely release vendor/payroll funds while prohibiting settlement payments.supportsDid the May 31 order prohibit settlement payments?
Specifically named source propositions support the bounded distinction or question.
He says Cyberlux was current through May 31, Virginia writs sequestered accounts, some funds were released, and plaintiffs refused further release of funds intended for settlement, then invoked missed June and July payments. This is his account of causation and payment status, not a payment ledger or judicial finding.supportsWhat bank releases, in-camera payment reports and creditor communications show whether the authorised $230,000 settlement window was used or frustrated?
Specifically named source propositions support the bounded distinction or question.
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, notes defendants’ objections including jurisdiction, and takes the remainder under advisement pending written ruling. It does not resolve all underlying enforcement merits.supportsWhat later rulings resolved the July complaints and the matters taken under advisement in May?
Specifically named source propositions support the bounded distinction or question.
The embedded Richmond CL22-3882 order is visibly signed and entered May 31, 2024. It grants temporary injunction only, lifting judgment liens, garnishments, writs and notices against accounts up to $550,000, effective immediately through June 11 at 5 PM. This is actual time-limited court relief, not permanent discharge.supportsDid the May 31 order prohibit settlement payments?
Specifically named source propositions support the bounded distinction or question.
Both complaints allege September 5, 2023 agreement with Welter that remaining balances were $386,138.44 for Atlantic Wave/Secure collectively and $49,652.70 for Strikepoint, followed by September 8 wires exceeding then-due amounts and agreed future credits. These are alleged balances and credit terms, not original bank proof or a current payoff.supportsDo the June and September 2023 communications and bank records establish the pleaded oral amendments and future-payment credits?
Specifically named source propositions support the bounded distinction or question.
Both complaints describe a June 30, 2023 arrangement to pay twenty-five percent of scheduled July payments on July 3 and another $10,737 on July 6, then resume the schedule in August. They allege supporting emails and completed payments; those emails and bank receipts are not included.supportsThe two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
Specifically named source propositions support the bounded distinction or question.
Exhibit C is titled Verified Complaint for Temporary Preliminary Injunction, but the supplied five-page pleading ends with counsel’s /s/ signature and contains no separate sworn verification. It alleges likelihood of success, irreparable harm, comparative harm and public interest; no order granting this July application is attached.supportsWhat later rulings resolved the July complaints and the matters taken under advisement in May?
Specifically named source propositions support the bounded distinction or question.
Both complaints describe a June 30, 2023 arrangement to pay twenty-five percent of scheduled July payments on July 3 and another $10,737 on July 6, then resume the schedule in August. They allege supporting emails and completed payments; those emails and bank receipts are not included.supportsDo the June and September 2023 communications and bank records establish the pleaded oral amendments and future-payment credits?
Specifically named source propositions support the bounded distinction or question.
Exhibit C is titled Verified Complaint for Temporary Preliminary Injunction, but the supplied five-page pleading ends with counsel’s /s/ signature and contains no separate sworn verification. It alleges likelihood of success, irreparable harm, comparative harm and public interest; no order granting this July application is attached.supportsThe two complaints repeat a common payment-credit narrative and seek different forms of relief; repetition is not independent proof of the alleged amendments or overpayments.
Specifically named source propositions support the bounded distinction or question.
The order bars new garnishments, writs and notices through June 11 close of business, defines that time as 5 PM, expressly expires then, notes defendants’ objections including jurisdiction, and takes the remainder under advisement pending written ruling. It does not resolve all underlying enforcement merits.supportsThe embedded court order narrows a simple assertion that court restraint made all settlement payment impossible: it specifically authorised a settlement-payment window. Whether later refusals caused June/July nonpayment requires actual release, transfer and request timing before and after June 11.
Specifically named source propositions support the bounded distinction or question.
WEIGH
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