Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-00929/USCOURTS-azd-2_07-cv-00929-4/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Strategic Diversity, Inc., a Massachusetts 

corporation; and Kenneth P. Weiss, an 

unmarried man, 

Plaintiffs, 

v. 

Alchemix Corporation, an Arizona 

corporation; and Robert R. Horton and 

Cheryl Halota Horton, husband and wife, 

Medici Associates, LLC, a Delaware 

limited liability company, 

Defendants.

No. CV-07-00929-PHX-GMS

ORDER 

Pending before the Court is Plaintiff’s Motion to Amend the Findings and 

Conclusions (Doc. 281). That motion is denied. 

Plaintiff requests that this Court amend its conclusion that: (1) Weiss had not 

previously tendered his stock, (2) that Weiss was not entitled to prejudgment interest (3) 

that Weiss was entitled to punitive damages, and (4) that judgment would be entered 

against Medici. 

1. Tender 

Weiss asserts in his motion that in both his original and his amended complaint he 

adequately tendered his stock when he noted “Plaintiffs do hereby rescind and offer to 

restore to Defendants all benefits and consideration received as a result of said 

transactions upon restoration and reinstatement of SDI’s secured loan to Alchemix and 

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security interest in Alchemix patents, and Weiss’ restoration to the Alchemix Board of 

Directors.” This argument lacks merit. The Court has previously set out in some detail 

that this demand in both Weiss’s Complaint and Amended Complaint was based on 

Weiss’s now-abandoned assertion that separate transactions between his corporation and 

Alchemix, and Weiss and Medici actually amounted to a single debt-equity swap 

between Weiss and Alchemix. What he now alleges constituted adequate tender in his 

complaint was contingent upon that assertion and upon the Defendants’ agreement to a 

number of requirements to which neither Weiss nor Strategic Diversity had any legal 

right, and which, at any rate, would have been impossible to provide had the facts been as 

Weiss then alleged them to be. 

Ironically enough, when the Ninth Circuit, which initially apparently accepted 

Weiss’s argument that the separate transactions constituted a single debt-equity swap, it 

determined that it would be impossible for the Defendants to restore the Plaintiffs to the 

status quo ante, and therefore, in light of the assumed impossibility of providing Plaintiffs 

with such a restoration authorized the new remedy of rescissionary damages in lieu of 

rescission. 

 The Ninth Circuit reasoned: 

Although Weiss stands ready to tender the 250,000 shares of Alchemix for 

the consideration he offered ($250,000) . . . . The Note has long since 

expired, coming due in July 2006. We doubt that Weiss’s demand for his 

seat on the Alchemix Board is even possible when there does not appear at 

present to be an existing board. In addition, true rescission would also 

involve the unfurling of security interests that are currently held as 

collateral on other debts. 

(Id. at 1207–08.) Such a true return to the status quo ante would have also, presumably, 

required SDI or Weiss to refund the $560,000 loan with interest that it had been repaid 

which Weiss of course, made no offer to do. At this point in the litigation, Weiss may 

not have it both ways and claim that these exaggerated demands, which were pursuant to 

a different theory of a lawsuit on which he obtained no recovery, constituted a tender of 

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his stock in a straight and simple rescission action. What he alleges constituted a tender 

in his complaint does not constitute an adequate tender under the law, and the Court will 

not revise its rulings in this respect. 

2. Prejudgment Interest 

 Weiss further erroneously asserts that the Court found that his claims were 

liquidated. The Court did not so find. Although the Court noted that “Weiss’s claim may 

be liquidated once he tenders his stock,” the Court went on to note that Weiss’s claims 

throughout this lawsuit have been ever mutating and mutable in nature. Upon remand 

from the Court of Appeals, Weiss dropped any claims on behalf of SDI, or any claim that 

he had engaged in a debt-equity swap with the Defendants, and pursued an action that 

was much more akin to a straight rescission action, although it was a claim that was being 

pursued for rescissionary damages. A straight rescission claim for the reimbursement of 

the amount he paid for his stock was certainly not the nature of Weiss’s claim from the 

beginning of the suit, or for the majority of the time Weiss was pursuing his claims. 

Weiss does not limit his request, and the Court has already fully considered and evaluated 

his arguments in making its original findings. No additional findings will be made. 

3. Punitive Damages Claims 

 Weiss merely reargues points that the Court has already considered and rejected in 

its Amended Findings of Fact and Conclusions of Law. Weiss raises no argument at this 

point that would merit reconsideration of the Court’s conclusions regarding punitive 

damages. Therefore, no additional findings shall be made. 

4. Joint and Several Liability 

 Again in his motion for reconsideration, Weiss merely reurges arguments that 

were previously raised and rejected. To the extent that he attempts to supplement these 

arguments with new arguments or authority, such as arguments as to how the Court could 

conclude based on the evidence that Alchemix somehow as an entity made, participated 

in, or induced the sale, such matters should have been raised earlier, and at this point do 

not justify additional findings. 

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IT IS THEREFORE ORDERED that the Motion to Amended the Findings and 

Conclusions (Doc. 281) is, in all respects, denied. 

 Dated this 15th day of November, 2013. 

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