SEATTLE (Legal Newsline) – The former owners of a medical pot-growing business that went belly-up are asking the U.S. District Court for the Western District of Washington for a jury trial and more than $2 million in damages, claiming they were fleeced by an attorney and his client.
Ann Anderson, Edwin Xavier Vicioso and SEO Development LLC sued the defendants Ryan Espegard, an attorney with the Gordon Thomas Honeywell LLP law firm based in Tacoma and Seattle, and Lee Owens.
The suit filed on Oct. 19 charges the defendants of engaging in misrepresentation, fraud and extortion, in what amounted to a breach of trust the plaintiffs described as “appalling.”
According to the suit, in May 2014, Anderson and Vicioso, a married couple, contacted Espegard with an interest in acquiring the rights to establish a cannabis-growing operation for the purpose of producing medical marijuana.
Anderson and Vicioso allege they shared sensitive personal and financial information with Espegard. They contracted with Michael Reid, a Washington attorney who held the rights to several cannabis licenses, to purchase four of the licenses for $100,000 with Reid to receive 2 percent of their business, the suit says.
Espegard allegedly called Vicioso and told him Reid was a felon who would be unable to obtain license approval from the state’s Liquor and Cannabis Board (LCB). That was alleged to be a lie in that Reid had no criminal record at all.
Instead, the suit states Espegard recommended Lee Owens for Vicioso to purchase a license from. The plaintiffs allege Owens was a client of Espegard and the Honeywell law firm. Espegard also recommended the couple get a new attorney, but allegedly advised them not to tell the attorney they had previously discussed the matter with him.
“In other words, after gathering sensitive, confidential information about finances from his clients, Espegard switched sides and represented the counterparty who he had steered his former clients to,” the complaint states.
The suit states Owens upped the price of licenses from the 2014 $100,000 going market rate per license in the aborted deal proposed with Reid to more than $2 million paid out over several years for a single license. In addition, the plaintiffs also were to pay legal fees Owens owed to Honeywell in connection with the license application.
In October 2014 at a meeting, Owens allegedly demanded to own a percentage of the plaintiffs' business, in addition to the above expenses and the plaintiffs agreed, feeling they had no other alternative, the suit states.
The plaintiffs allege in November 2014, a lease was acquired for the marijuana-growing business under the title SEO Development on a 30,000-square-foot building in Tacoma to house the operation, requiring a costly renovation of $1.5 million. The landlord of the facility was willing to sign a lease with the plaintiffs, but allegedly refused to have anything to do with Owens.
The plaintiffs allege they were advised by their new attorney, Hilary Bricken, they could submit a lease under SEO and the license applicant (Owens) to the LCB to the keep the process of licensing moving forward.
The lease was allegedly executed without landlord consent, which was unknown to the plaintiffs, and misrepresented as a fully valid agreement in December of 2014, they allege.
In October 2015, Espegard allegedly advised that Anderson rather than Owens should take a traceability test showing the license applicant understood the rules governing a marijuana-growing business. Anderson took and passed the test.
On Oct. 20, 2015, the LCB conducted a final inspection of the marijuana-growing facility and gave approval. However Owens allegedly told the plaintiffs they, not he, would have to run the business.
The plaintiffs alleged the defendants had created a phony shell company called L&D Holdings with no assets, employees or bank accounts and violated an agreement it would run the business until Anderson exercised an option.
Anderson exercised an option on Feb. 15, 2016, through a company called Green Kiss.
For eight months, the couple alleges they put $100,000 per month into the business paying for employees and materials.
"In June 2016, the LCB entered the Tacoma facility and ordered that it be shut down and the business wound down (with materials being either destroyed or sold) based on multiple violations, including L & D being financed and managed by Anderson and Vicioso rather than Owens prior to Green Kiss exercising the option, as at that time only Owens and his company were approved to manage and finance the company," the suit states.
The complaint states Anderson and Vicioso asked Espegard for advice and he allegedly told them to "disappear," to "go back to New York" and to delete email accounts—that he would take care of everything.
The pair did not destroy the evidence but did go back to New York, the suit states.
According to the complaint, after two years trying to get out of the financial hole from the failure of their business, the plaintiffs were hit last summer with a summons and complaint for breach of contract from Owens alleging that the pair owed him $2 million.
Owens' attorney of record for that lawsuit was Ryan Espegard of Gordon Thomas Honeywell.
The plaintiffs' complaint seeks a jury trial and over $2 million in damages plus statutory interest and punitive damages for malicious conduct, attorney fees, cost and disbursement, and further relief as the court deems proper. They are represented by Aaron A. Pelley of Cuddy & Feder in White Plains, New York.