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Declaration of Charles Watts in Support of Defendant Cyberlux Corporation's Opposition to Plaintiffs' Ex Parte Application for Order to Post a Bond

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DISTILLATES

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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 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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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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 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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Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PagelD. 702 Page 6 of 18 (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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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

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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Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PagelD. 705 Page 9 of 18 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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Case 3:24-cv-00482-RBM-VET Document 25-1 Filed 07/18/24 PagelD. 705 Page 9 of 18 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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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%
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.

50%
Confidence 75%Link weight 50%

WEIGH

Explained weighting

A score appears only when its components and change threshold are published.

No published WEIGH run

The active Website Edition contains no applied score snapshot for this source or its connected objects. That means not assessed—not zero.