UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

Case
COMPLAINT FOR BREACH OF

AND DECLARATORY RELIEF

(Jury Demand)

NTY

Plaintiff, ATLANTIC-PACIFIC PROCESSING SYSTEMS, , a Nevada Corporation (hereinafter “Plaintiff ‘ or “APPS”) hereby alleges for its complaint against

Defendants DERMAKTIVE, LLC, and JORDAN DUFNER (herein collectively “Defendants”)
as follows: 1.

JURISDICTION AND VENUE

This Court has jurisdiction over this matter under 28 U.S.C. Section 1332(a)(l)

on the basis of diversity of citizenship, because the amount in controversy exceeds $75,000.00,

the parties are citizens of different states, and there is an actual controversy between the

Venue in the District of Nevada is proper under 28 U.S .C. Section 1391(b)(2)

because a substantial part of the events or omissions giving rise to the claim occurred in the

PARTIES

Plaintiff is, and at all relevant times was, a corporation duly organized and existing under and by virtue of the laws of the State of Nevada with its principal place of business located in Clark County,

Plaintiff is informed and believes and, based thereon, alleges that Defendant,

DERMAKTIVE, LLC (“Dermaktive”), at all relevant times was a limited liability company duly organized and existing under and by virtue of the laws of the State of Florida, with its principal place of business in Aventura,

Plaintiff is informed and believes, and based thereon, alleges that Defendant JORDAN DUFNER (“Dufner”), is an individual who at all relevant times was residing in Danbury, Connecticnt

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Plaintiff is informed and believes, and based thereon alleges, that there exists,
and at all relevant times there existed, a unity of interest and ownership between and among the

individual defendant Dufner and the corporate defendant Dermaktive such that any individuality

and separateness between and among the Dufner and Dermaktive have ceased and Dermaktlve is the alter ego of Dufner in that Dermaktive is, and at all relevant times was, used by Dufner as a device to avoid individual liability; Dufner has completely controlled, dominated, managed, and operated Dermaktive for his own benefit and gain; and Dufner has intermingled Dermaktive’s assets with his individual assets to suit his own
Plaintiffs do not know the true names and characters of Doe Individuals I through X and Roe Entities I through X, whether individual, corporate, associate or otherwise, and

1 Plaintiffs therefore sue these defendants by fictitious names. Plaintiffs are informed and believe

2 and therefore allege that each of the defendants designated as Doe Individuals I through X or

Roe Entities I through X is responsible in some manner for the events and happenings this
complaint describes, and Plaintiffs will ask leave ofthis court to amend this complaint to insert
the true names and characters of Doe Individuals I through X and Roe Entities I through X when
they learn of them and to join these defendants in this action.

FACTUAL BACKGROUND
Tl Payments, LLC (“Tl”) is a sub-ISO accredited by and under contract with
APPS to process credit card transactions with the card brands under APPS’ s banking

Under its agreement with APPS, Tl presents merchants to APPS for credit card

11 processing using APPS ‘ processing system. The agreement with APPS allowed Tl to market

12 credit card processing services to merchants in its own name.

13 9. On or about April 9, 2014, Dermaktive and Tl entered into a written Merchant

Application and Agreement (the “Agreement”). As part of the Agreement, Tl would provide

credit card processing services for Dermaktive, as a merchant, for a term of 36 In

exchange, Tl would receive specified

The Agreement contained the following provision: “The undersigned has

—–1- .J-+€€i:vw-,-read,..aoo….under.siood, the MerchantAgreement, which is incorporated herein by tpis

reference, and agrees on behalf of the Merchant to be bound by the terms of such Merchant

Agreement as may be amended from time-to-time.” Dermaktive received the Merchant

Agreement and was aware of the incorporated terms and conditions.

The terms and conditions of the Agreement limited the “chargebacks”

Dermaktive could A chargeback is a credit card transaction that is returned by the issuer

of the credit card. If chargebacks amounted to more than 1% of the total number of transactions

in a 30-day period, then Dermaktive would be required to fund a Merchant Reserve Account to

protect the other parties from

Tl was also allowed to terminate the Agreement if: “At any time during the term

of this Agreement, Merchant has had a monthly ratio of Chargebacks to total transactions

exceeding Card Association requirements or 1%, or Chargebacks exceed 3% of any monthly
dollar amount of total “

In the event of termination, the parties agreed Tl could charge an early

termination fee (“ETF”). In the case of a “high risk” merchant, the ETF would be equal to “the

average monthly processing fees charged to Merchant for the previous 12 months . . . multiplied

by the number of months remaining under the “

14. On or about October 24, 2014, Dermaktive entered into a Reserve Addendum to

the Agreement directly with APPS. The Reserve Addendum allowed APPS to create a reserve

Therein, Dermaktive also acknowledged that it was a “High Risk Merchant.”

15. After only a short time of providing processing services, Tl and APPS observed
that there were more chargebacks than allowed under the Agreement. APPS is informed and

believes and on that basis alleges that excessive chargebacks arose because Dermaktive’ s

business turned out to be set up to defraud consumers through its sales and advertising

16. Because Dermaktive’s chargebacks continued to be unacceptably high and to

protect consumers from fraudulent practices, Tl terminated the Agreement effective December

31, 2014 . In accordance with the Agreement, Tl calculated that the ETF was $867,135.42.

APPS, on behalf of Tl, collected $336,198 . 16 of the ETF from the reserve

17. Desp_i!:e its express ohligatiQn under the Agreemeµt Qe@ktiv h_,:tsJ?-il_ d_ t() pay
the $530,937.26 balance of the

18. Dufuer personally guaranteed Dermaktive ‘s performance of all terms and

conditions of the Agreement, including the payment of the ETF (the “Guaranty”).

Tl thereafter transferred and assigned to APPS any and all of its right, title,

interest and claims to the ETF arising under and in connection with the Agreement with

FIRST CAUSE OF ACTION

(Breach of Contract against All Defendants)

Plaintiff refers and incorporates by reference the allegations of paragraph 1

through 19 as though set forth fully herein.

1 21. On or about April 9, 2014, Dermaktive and Tl entered into the Agreement. As

part of the agreement, Tl provided credit card processing services for Dermaktive for an agreed

term of 36 months . In exchange, Tl received specified fees. Dermaktive also agreed to pay the

4 ETF if the Agreement was terminated prior to the 36-month term on account of excessive

5 chargebacks.

6 22. Dermaktive violated and breached the terms of the Agreement when it allowed

its chargebacks to substantially exceed those allowed under the Agreement. As a result, Tl
terminated the
23. Tl has performed all of its obligations required under the Agreement excepting
only those obligations that were excused by Dermaktive’s prior breach of the

11 24. Pursuant to the terms of the Agreement, Tl was allowed to charge Dermaktive

the EFT for its violation and early termination of the
Dermaktive further breached the Agreement by failing to pay the entire ETF.
26. Plaintiff is the assignee of all of Tl ‘s rights and interests under the Agreement to
the

27. As a direct and proximate result of Dermaktive’s breach of the Agreement, APPS
has suffered damages in the amount of at least $530,26.

-·- – — – 1-8.. – — – – – – — .28… _ Paragraph J.0_6 oftb _ Ag;regigt .)(pressly provide for_ the recovery of _ _ _ _ _ _

attorneys ‘ fees and costs in any action brought to recover money from Dermaktive for its failure

to pay money due. It has been necessary for APPS to retain legal counsel to prosecute this

action. Pursuant to the Agreement , APPS is entitled to recover its attorney’s fees and costs

reasonably incurred in prosecuting this

SECOND CAUSE OF ACTION

(Breach of Guaranty against Defendant Dufner)

Plaintiff refers and incorporates by reference the allegations of paragraph 1

through 28 as though set forth fully

30. On or about April 9, 2014, Dufner personally guaranteed the obligations of

Dermaktive under the Agreement, including payment of the

5

Plaintiff is the assignee of all of Tl ‘s rights under the Agreement to the payment
of the

Dufner breached the Guaranty by failing to pay the balance of the ETF that

Dermaktive failed to

33. As a direct and proximate result of Dufner’s breach of the Agreement, APPS has

suffered damages in the amount of at least $530,26.

The Agreement expressly provides for the recovery of attorneys’ fees and costs

in any action arising out of the Guaranty. Ithas been necessary for APPS to retain legal counsel

to prosecute this action. Pursuant to the Agreement, APPS is entitled to recover its attorney ‘s

fees and costs reasonably incurred in prosecuting this action.

THIRD CAUSE OF ACTION

(Declaratory Relief against All Defendants)

Plaintiff refers and incorporates by reference the allegations of paragraph 1

through 28 as though set forth fully herein.

Under the Agreement , Dermaktive agreed to pay specified fees and accept

liability for

37. An actual controversy has arisen between the parties in relation to the amount of

. . _LS fees-and chargebacks thatDermaktive.. isJia_bleJor_._ Dermi,11ctiye og_t°’illl t_haj:_i_t wa.s_c;lia]_ged_

$119,199.01 in chargebacks and fees on ACH transactions that were not warranted under the

APPS contends that the charges were proper under the Agreement.

38. Plaintiff seeks a determination that Dermaktive is liable for all chargebacks and

fees as properly charged under the Agreement and that the amount of $119,01 was correctly

charged to

DEMAND FOR JURY TRIAL

Defendant hereby demands a jury trial as to all causes of actions for which he has a right

to trial by

PRAYER FOR RELIEF

WHEREFORE, APPS prays for judgment on its complaint against Dermaktive and

1 Dufner as follows:

2 1.

3 2.

For general damages in the amount of $530,937.26 ;

For a determination that Dermak:tive is liable for all chargebacks and fees as

properly charged under the Agreement and that the amount of $119,199.01 was correctly

charged to Dermaktive;

6 3.

7 4.

For reasonable attorneys’ fees and costs of suit incurred herein;

For pre-judgment and post-judgment interest on the amount recovered at the

highest legal rate from the earliest legal date; and

For such other and further relief as the Court may deem just and proper. 10

11 DATED: April 4, 2016 12

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_ _ JULANDER, BROWN & BOLLARD

Dirk 0. Julander, Bar No. 132313

doj@jbblaw.com

(Pro Hae Vice Application Pending) 9110 Irvine Center Drive

Irvine, California 92618

Attorneys for Plaintiff, Atlantic-Pacific Processing Systems, Inc.

AP Processing vs. Dermaktive

5

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