THE LAW OFFICES OF TIMOTHY MCCANDLESS Timothy McCandless (State Bar No.

147715) 1800 East Garry Street, Suite 213 Santa Ana, California 92705 (714) 851-5140 Attorney for Plaintiffs, Yoshinora Nakayama dba American Motor Accessories, The Ousyu Hambai Company SUPERIOR COURT OF CALIFORNIA COUNTY OF LOS ANGELES

YOSHINORA NAKAYAMA DBA ) AMERICAN MOTOR ACCESSORIES, ) and THE OUSYU HAMBAI COMPANY, ) ) Plaintiffs, ) ) vs. ) ) BOYD CODDINGTON, SR., ) BOYD CODDINGTON, JR., and ) DOES 1 Through 100, ) Inclusive, ) ) Defendants. ) ______________________________)

Case No. COMPLAINT FOR DECLARATORY RELIEF, AND FOR DAMAGES ARISING FROM: FRAUD AND DECEIT; INTENTIONAL MISREPRESENTATION, NEGLIGENCE

Plaintiffs YOSHINORA NAKAYAMA DBA AMERICAN MOTORING ACCESSORIES and THE OUSYU HAMBAI COMPANY, allege herein as follows: GENERAL ALLEGATIONS JURISDICTION AND VENUE 1

1.

This proceeding is properly filed in the County of Orange and the damages being sought herein, exceed the minimum jurisdictional

2.

requirements of the above-entitled court.

THE PARTIES 3. At all times herein mentioned, YOSHINORA NAKAYAMA, was a

sole proprietor, doing business as AMERICAN MOTORING ACCESSORIES (hereinafter referred to as "AMERICAN"), and has complied with the fictitious business name statement requirements, of the State of California. 4. At all times herein mentioned, THE OUSYU HAMBAI COMPANY

was and is, a corporation existing by virtue of the laws of Japan. 5. At all times herein mentioned, BOYD CODDINGTON, SR., was an

individual and an officer and director of BOYDS WHEELS, INC. 6. At all times herein mentioned, BOYD CODDINGTON, JR., was an

individual and an officer and director of BOYDS WHEELS, INC. 7. Plaintiffs are ignorant of the true names and capacities of

Defendants alleged herein as DOES 1 through 100, Inclusive, and therefore, does sue said DOE Defendants by their fictitious designations. Plaintiffs allege that said Doe Defendants are

actually and proximately liable for all damages suffered by Plaintiffs. Plaintiffs will seek leave of court to amend this

complaint, when the true names and capacities of said DOE Defendants have been fully ascertained. 8. Plaintiffs are informed and believe and thereupon allege

that DOE Defendants 1 through 25, at the time in which the allegations arose herein were officers of Debtor BOYDS WHEELS, INC., and that they ratified the acts and/or omissions, of each and every Defendant alleged herein.

9.

Plaintiffs are informed and believe and thereupon allege

that DOE Defendants 26 through 50, at the time in which the allegations arose herein were Directors on the board of directors, of BOYDS WHEELS, INC., and that they ratified the acts and/or omissions, of each and every Defendant alleged herein. 10. Plaintiffs are informed and believe and thereupon allege

that DOE Defendants 51 through 100, at the time in which the allegations arose herein were commercial purchasers of wheels made from AMERICAN MOLDS, and purchased said wheels with the knowledge that such sales were in violation of the rights of Plaintiffs. THE SALES AGREEMENT 11. Defendants were in the business of designing, manufacturing

and selling custom automotive wheels, for sale to wholesales and retailers. Its market for wheels was within the United States and in foreign countries, more particularly Japan.

12.

On or about, January 5, 1995, Plaintiff THE OUSYU HAMBAI

COMPANY entered into a written contract with Defendant BOYDS, whereby, Defendants would design and produce certain wheel molds (hereinafter "MOLDS"). Plaintiffs allege that it was implied by the

conduct of the parties that YOSHI NAKAYAMA dba AMERICAN MOTORING ACCESSORIES was a disclosed third party beneficiary of the aforementioned contract. A true and correct copy of the contract is

attached hereto as Exhibit "A" and is incorporated by this reference.

14.

On or about, March 7, 1996, Plaintiff THE OUSYU HAMBAI

COMPANY entered into a new written contract (hereinafter "CONTRACT"), with Defendants, and each of them, whereby, Defendants, and each of them, would design and produce certain exclusive wheel molds, "MOLDS". The contract of March 7, 1996, specifically stated that it superseded the terms and conditions in all previous contracts. Additionally, the contract provided that Plaintiff had the exclusive rights to the molds and that no wheels would be fabricated from said MOLDS, without the express, written permission of THE OUSYU HAMBAI COMPANY. It was implied by the conduct of the parties that YOSHI

NAKAYAMA dba AMERICAN MOTORING ACCESSORIES was a disclosed third party beneficiary to the aforementioned contract.

15.

It was implied with the terms of the CONTRACT that in order

for Plaintiffs to receive the benefit of their exclusivity CONTRACT, that BOYDS would not manufacture and sell wheels from the AMERICAN 1

MOLDS, without the express written permission of Plaintiffs.

It was

further implied with the terms of the CONTRACT that given the nature of the wheel marketplace, that saturation of any particular wheel design has a lasting, deleterious effect upon the salability of wheels. That is, if Plaintiffs and/or Defendants were to saturate

the marketplace with wheels made from the AMERICAN MOLDS, that such wheels would lose their retail appeal. Plaintiffs further allege

that OHC registered and maintained all lawful rights in Japan to the use of the tradename and/or trademark "BOYDS". Plaintiffs are

informed and believe and thereupon allege that Defendants, and each of the, were informed prior to the execution of the CONTRACT that Plaintiffs were the lawful owners of the BOYDS trademark and tradename in Japan.

PATTERN OF FRAUD AND DECEIT 16. AMERICAN Beginning circa January 1995 and continuing thereafter, regularly advanced funds to BOYDS WHEELS, INC. and/or BOYD

CODDINGTON, JR. for the production of wheel MOLDS, and purchased wheels manufactured by BOYDS WHEELS, INC. from such MOLDS, which Plaintiffs then exported to its marketplace in Japan. 17. Plaintiffs are informed and believe that Defendants, and

each of them, utilized the United States Postal Service and/or other alternate courier services and/or electronic means of transmission to facilitate their fraudulent scheme.

18.

Plaintiffs are informed and believe and thereupon allege

that defendants, and each of them, entered into the CONTRACT with the intent to defraud and deceive Plaintiffs into purchasing the molds for the approximate sum of $200,000, and that wheels would be made exclusively for Plaintiffs by BOYDS. Plaintiffs further allege that

the molds were not going to be made within the premises of BOYDS, and in that regard, Defendant BOYD CODDINGTON, SR., as chief executive officer of BOYDS WHEELS, INC. 19. Plaintiffs are informed and believe and thereupon allege

Defendants, and each of them, in an effort by Defendants, and each of them, to conceal their fraudulent conduct, BOYD CODDINGTON, SR and BOYD CODDINGTON, JR. ordered certain BOYD's employees to produce wheels from the MOLDS, to modify the BOYDS production records that such production would not be accounted for, that the sales of wheels from said MOLDS would not be reflected on the books of account of BOYDS WHEELS, INC., that payment was made to BOYD CODDINGTON, SR. and BOYD CODDINGTON, JR. directly, that the shipping records for such wheels were not reflected in the BOYDS shipping records, although such sales and shipments did in fact exist. 20. Plaintiffs are informed and believe and thereupon allege

that Debtor BOYDS WHEELS, INC. failed to disclose the facts set forth in Paragraph 18, in its Bankruptcy filing, notwithstanding the fact that such facts are material to the court's analysis and determination pursuant to 28 U.S.C. 727(2)(B)(3),(4), and (7).

21.

Plaintiffs are informed and believe and thereupon allege

that Defendants, and each of them, sold thousands of AMERICAN wheels to wholesalers, who then resold said wheels to retailers in Japan, in direct violation of the CONTRACT, and in violation of the rights to the exclusive tradename and/or trademark owned by OHC, and by virtue of such sales diluted the marketplace in Japan, actually and proximately rendering said wheel MOLDS, and the current inventory of Plaintiffs worthless.

22.

Plaintiffs are informed and believe and thereupon allege

that Defendants, and each of them, made false and fraudulent representations regarding their true intentions to be bound by the exclusivity term of the contract. Defendants represented that BOYDS

would design and manufacture several wheel molds ("MOLDS"), and that Plaintiffs would order wheels from BOYDS, which were made from the MOLDS. More particularly, Defendants, and each of them, falsely

represented that BOYDS would only manufacture wheels from said MOLDS according to the orders placed by Plaintiffs. 23. The representations made by Defendants, and each of them, Plaintiffs are informed and believe and

were in fact false.

thereupon allege that the true facts were that Defendants, and each of them, would convince Plaintiffs to pay for the design and manufacture of wheels molds, and that Defendants, and each of them, would produce wheels from the Plaintiffs' MOLDS, for sale to the competitors of Plaintiffs, without the express, written consent 1

and/or knowledge of Plaintiffs, and further in direct violation of the rights to the exclusive tradename and/or trademark owned by OHC. 24. When Defendants, and each of them, represented that they

would be bound by the exclusivity term of the contract, they knew such representation to be false, and these representations were made by Defendants, and each of them, with the intent to defraud and deceive Plaintiffs and with the intent to induce Plaintiffs to act in the manner alleged herein, to wit, pay approximately $200,00 for the production of the MOLDS, and then to make wheels from said MOLDS for sale, without the express and written consent and/or knowledge of Plaintiffs.

25.

Plaintiffs at the time these representations were made by

Defendants, and each of them, at the time Plaintiffs entered into the aforementioned contract and paid for the production of the MOLDS, Plaintiffs were ignorant of the falsity of Defendants' representations and believe them to be true. In reliance on these

representations, Plaintiffs were induced to advance payment for the MOLDS, and further ordered wheels which were produced from said MOLDS by BOYDS. Had Plaintiffs known the actual facts, they would not have Plaintiffs' reliance on Defendants'

taken such action.

representations was justified because BOYDS was an automotive wheel company with international acceptance, Plaintiffs were dealing with the two most senior officers and/or directors in BOYDS, BOYDS was in

the business of procuring molds for its customers, and BOYDS had been truthful in its past dealings with Plaintiffs. 26. Plaintiffs are informed and believe and thereupon allege and participated in a

that Defendants, and each of them, conceived

conspiracy among themselves to deceive, manipulate and defraud Plaintiffs.

27.

Plaintiffs are informed and believe and thereupon alleged

that Defendants, and each of them, engaged in the conspiracy for the general purpose and intent to further BOYDS WHEELS, INC.'s illegal and improper scheme to eliminate Plaintiffs as its competitor in Japan. In this regard, Defendants' pattern of fraud and deceit

included, without limitation, the following willful, deliberate, surreptitious, and malicious acts: (a) intentionally making wheels from the AMERICAN MOLDS, without the knowledge and/or consent of Plaintiffs, (b) selling said wheels to distributors who would resell said wheels to retailers in Japan, in violation of the parties' CONTRACT, (c) causing said wheels to be entered into interstate commerce for international export, (d) intending to obtain an unfair and unlawful advantage by the sale of said wheels in the Japanese marketplace of Plaintiffs, and (e) intending to violate the rights of Plaintiffs in the use of its trademark in Japan. In reasonable

reliance on the representations of Defendants, and each of them, that the exclusivity CONTRACT would not be violated, Plaintiffs reposed great trust and confidence in Defendants, and each of them, and 1

ordered and paid for additional MOLDS and purchased approximately $5,000,000 worth of wheels from BOYDS WHEELS, INC. By virtue of the

representations contained in the CONTRACT, Plaintiffs were induced to refrain and did refrain from exercising their rights to terminate the CONTRACT.

28.

Plaintiffs are informed and believe and thereupon allege

that at all relevant times herein, Defendants, and each of them, conceived and participated in a conspiracy among themselves to deceive, manipulate and defraud Plaintiffs. Plaintiffs are further

informed and believe and thereupon allege that the general purpose and intent of said conspiracy was to further Defendants' illegal and improper scheme to eliminate Plaintiffs as its competitor in Japan. In this regard, Plaintiffs are informed and believe and thereupon allege that Defendants' pattern of fraud and deceit included, without limitation, the following willful, deliberate, surreptitious, and malicious acts and/or omissions: (a) intentionally making wheels

from the AMERICAN MOLDS, without the knowledge and/or consent of Plaintiffs, (b) selling said wheels to distributors who would resell said wheels to retailers in Japan, in violation of the parties' CONTRACT, (c) causing said wheels to be entered into interstate commerce for international export, (d) intending to obtain an unfair and unlawful advantage by the sale of said wheels in the Japanese marketplace of Plaintiffs, and (e) intending to violate the rights of Plaintiffs in the use of its trademark in Japan. 1

29.

By reason of the active concealment by Defendants, and each

of them, of the pattern of fraud and deceit as hereinabove alleged, Plaintiffs were unaware and had no reasonable grounds to suspect such fraudulent activities until approximately February 1997, at which time wheels having been made from Plaintiffs' MOLDS were being sold in Japan, by local competitors. FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT (As Against Boyds Wheel, Inc., Boyd Coddington, Sr. and Does 1 through 50, Inclusive) 30. Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations as though such have been fully set forth herein. 31. Plaintiffs performed each and ever term and condition of

the CONTRACT, except for those terms, if any from which Plaintiffs' obligation of performance was excused by the conduct of Defendants. 32. Notwithstanding the full performance by Plaintiffs as

hereinabove alleged, Defendants, and each of them, breached the CONTRACT in that Defendants, and each of them, among other things, caused wheels to be made from Plaintiffs' MOLDS in violation of the exclusivity term of the CONTRACT, exported said wheels to Japanese competitors of Plaintiffs, and violated Plaintiffs' rights to the trademark and/or tradename BOYDS, on said wheels.

33.

As a direct, proximate and foreseeable result of

Defendants' breach of CONTRACT as hereinabove alleged, Plaintiffs have been damaged in an amount the full extent of which has not yet 1

been fully ascertained, and as such is subject to proof at time of trial, but, in no event less than the jurisdictional requirements of the above-entitled court. SECOND CAUSE OF ACTION FOR FRAUD AND DECEIT (As Against Boyd Wheels, Inc., Boyd Coddington, Sr. Boyd Coddington, Jr., and Does 1 through 50, Inclusive) 34. Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations and Paragraphs 31 through 33 of the First Cause of Action as though such have been fully set forth herein. 35. Plaintiffs are informed and believe and thereupon allege

that in furtherance of negotiations with Defendants, and each of them, that is, to induce Plaintiffs to advance additional monies for more MOLDS, Defendants, and each of them, commenced a course of dealing with Plaintiffs in or about, March 1996, wherein they made representations to Plaintiffs regarding their continued good faith in complying with the exclusivity terms of the CONTRACT. 36. At the time such representations, and each of them,

Plaintiffs had no knowledge or reasonable grounds to suspect that such representations, or any of them, were false, incomplete, inaccurate or untrue. Therefore, in reasonable reliance of such

representations, made by parties in whom Plaintiffs reposed great trust and confidence, Plaintiffs were induced to refrain from exercising its rights to terminate the CONTRACT, and were induced to advance additional monies for the purchase of custom wheel MOLDS, and wheels made from said MOLDS. 1

37.

In truth, and in fact, the representations of Defendants as Plaintiffs are

hereinabove alleged, and each of them, were false.

informed and believe and thereupon allege that the true facts, which facts were willfully concealed from Plaintiffs by Defendants, and each of them, were that Defendants, and each of them, conceived and participated in a conspiracy among themselves to deceive, manipulate and defraud Plaintiffs. Plaintiffs are further informed and believe

and thereupon allege that the general purpose and intent of said conspiracy was to further Defendants' illegal and improper scheme to eliminate Plaintiff as its competitor in Japan. In this regard,

Plaintiffs are informed and believe and thereupon allege that Defendants, and each of them, engaged in a pattern of fraud and deceit including, without limitation, the following willful, deliberate, surreptitious, and malicious acts and/or omissions: intentionally making wheels from the AMERICAN MOLDS, without the knowledge and/or consent of Plaintiffs, (b) selling said wheels to distributors who would resell said wheels to retailers in Japan, in violation of the parties' CONTRACT, (c) causing said wheels to be entered into interstate commerce for international export, (d) intending to obtain an unfair and unlawful advantage by the sale of said wheels in the Japanese marketplace of Plaintiffs, and (e) intending to violate the rights of Plaintiffs in the use of its trademark in Japan. (a)

38.

By reason of the active concealment by Defendants, and each

of them, of the pattern of fraud and deceit as hereinabove alleged, Plaintiffs were unaware and had no reasonable grounds to suspect such fraudulent activities until in or about, February 1997, at which time Plaintiffs discovered wheels which were made from their MOLDS were being sold by Plaintiffs' local Japanese competitors, in direct violation of the exclusivity term of the parties' CONTRACT, and when wheels were discovered at a distributor ready for export to Japan. 39. Plaintiffs are informed and believe and thereupon allege

that the true facts as hereinabove alleged were known to Defendants, and each of them, and that the representations and concealment as hereinabove alleged were committed by Defendants, and each of them, with the willful, intentional, and deliberate intent to defraud and deceive Plaintiffs and to induce the reliance and continued reliance by Plaintiffs as hereinabove alleged. 40. As a direct, proximate and foreseeable result of the fraud

and deceit of Defendants, and each of them, as hereinabove alleged, Plaintiffs have been damaged in an amount which has not yet been fully ascertained, and as such is subject to proof at time of trial, but in no event less than the jurisdictional requirements of this Court. THIRD CAUSE OF ACTION FOR BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING (As Against Boyds Wheels, Inc. and Does 1 Through 50 Inclusive) 1

41.

Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations, Paragraphs 31 through 33 and Paragraphs 35 through 40 of the First and Second Causes of Action as though such have been fully set forth herein. 42. The CONTRACT entered into between the parties under

applicable California law include an implied covenant of good faith and fair dealing with obligated Defendants to perform their obligations under the CONTRACT fairly and in good faith and to refrain from any act that would prevent or impede Plaintiffs from realizing its rights under the CONTRACT.

43.

At all times relevant hereto, Defendants, and each of them,

knew that Plaintiffs had performed all conditions, covenants, and promises required to be performed by it in accordance with the terms and conditions of the CONTRACT, or was otherwise excused from such promises, covenants and conditions by virtue of Defendants' conduct. 44. Defendants breached the implied covenant of good faith and

fair dealing by, without justification, by selling wheels which were made from Plaintiffs' MOLDS and then selling such wheels without the knowledge and/or consent to the competitors of Plaintiffs' in Japan. 45. Defendants intended to and did, in fact, deprive Plaintiffs

of the benefit it was entitled to receive pursuant to the terms of the CONTRACT. 46. As a direct, proximate and foreseeable result of

Defendants' breach of the implied covenant of good faith and fair 1

dealing as hereinabove alleged, Plaintiffs have been damaged in an amount which has not yet been fully ascertained, and as such is subject to proof at time of trial, but in no event less than the jurisdictional requirements of this Court. FOURTH CAUSE OF ACTION FOR UNFAIR COMPETITION CALIFORNIA BUSINESS AND PROFESSIONS CODE 17200 (As Against Boyds Wheel, Inc. and Does 1 Through 100, Inclusive) 47. Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations, Paragraphs 31 through 33, Paragraphs 35 through 40 and Paragraphs 42 through 46 of the First, Second and Third Causes of Action as though such have been fully set forth herein.

48.

Defendants', and each of them, intentionally acted as

alleged herein, including but not limited to, and without limitation, entering into an illegal and improper scheme to manufacture wheels from Plaintiffs' MOLDS, that such wheels would be sold to retailers in the Plaintiffs' marketplace in Japan, the purpose of which was to flood the marketplace with such designs that the MOLDS of Plaintiffs would become virtually worthless, therein to obtain a sale premium

thereby, constitutes unfair competition in violation of California Business and Professions Code 17200 etc. et seq. 49. Plaintiffs are informed and believe and thereupon allege

that Defendants, and each of them, performed the above-mentioned acts

and/or omissions for the purpose of eliminating Plaintiffs as a competitor and destroying competition. 50. Pursuant to California Business and Professions Code

17200 and California common law, Plaintiffs seek an injunction against Defendants prohibiting the further sale of wheels from Plaintiffs' MOLDS; and enjoining the use, transfer or other disposition of Plaintiffs' MOLDS and wheels. 51. Defendants' conduct is causing immediate and irreparable

injury to Plaintiffs and its goodwill and reputation, and will continue to both damage Plaintiff and the public good unless enjoined by this Court. 52. Plaintiff has no adequate remedy at law.

Defendants threaten to and unless restrained, will continue

to make wheels from Plaintiffs' MOLDS, and to continue to offer to sell and sell to purchasers the above-mentioned wheels.

53.

As a proximate result of the above-mentioned acts and/or

omissions of Defendants, Plaintiffs have been deprived of the patronage of a large number of their actual and potential customers, all to their damage in an amount the totality of which has not yet been fully ascertained, but in no event is less than $2,000,000.00. 54. Plaintiffs allege that their are entitled to the recovery

of treble damages as provided for by statute. FIFTH CAUSE OF ACTION FOR NEGLIGENCE (As Against Boyd Wheels, Inc., Boyd Coddington, Sr. Boyd Coddington, Jr., and Does 1 through 50, Inclusive) 1

55.

Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations and Paragraphs 31 through 33 of the First Cause of Action as though such have been fully set forth herein. 56. that Plaintiffs are informed and believe and thereupon allege

on or about, March 7, 1996, Plaintiffs YOSHI NAKAYAMA dba

AMERICAN MOTORING ACCESSORIES and THE OUSYU HAMBAI COMPANY entered into a CONTRACT, with Defendant BOYDS, whereby, BOYDS would design and produce certain wheel MOLDS, for the exclusive use by Plaintiffs. See Exhibit "B" attached hereto. 57. Plaintiffs are informed and believe and thereupon allege

that at the time of making the contract to build said MOLDS, Defendants, BOYDS WHEELS, INC., its officers and directors, had a

duty to Plaintiffs to exercise reasonable supervision over its acts and/or omissions of its officers and directors, to wit, BOYD CODDINGTON, SR. and BOYD CODDINGTON, JR., in the course and scope of their employment.

58.

Plaintiffs allege that Defendants, and each of them,

represented that BOYDS would not produce wheels from the MOLDS, without the express, written permission of Plaintiffs. Plaintiffs

are informed and believe that Defendants, and each of them, failed to exercise reasonable supervision over the acts and/or omissions of its officers and directors, such that wheels were produced by BOYDS WHEELS, INC. from the Plaintiffs MOLDS, and said wheels were sold 1

into the stream of commerce, to competitors of Plaintiffs. Plaintiffs further allege on information and belief that the unauthorized sale of wheels produced from the Plaintiffs' MOLDS, saturated the market place such that Plaintiffs' MOLDS were rendered worthless. 59. Plaintiffs are informed and believe and thereupon allege the

that defendants, and each of them, negligently supervised

officers and directors of BOYDS WHEELS, INC., and that negligent supervision directly and actually caused Plaintiffs to suffer damages, as alleged herein. 60. As a proximate result of Defendants' negligent supervision

of its officers and directors, Plaintiffs suffered damages in an amount the totality of which has yet to be ascertained, but in no event less than $2,000,000.

SIXTH CAUSE OF ACTION FOR DECLARATORY RELIEF (As Against Boyd Wheels, Inc.) 61. Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations and Paragraphs 31 through 33 of the First Cause of Action as though such have been fully set forth herein.

62.

An actual controversy has arisen and now exists between

Plaintiffs and Defendants concerning their respective rights and duties in that Plaintiffs contend that circa March 1996, Defendants, 1

and each of them, falsely represented to Plaintiffs that Plaintiffs would have an exclusive right to make wheels from the MOLDS, and BOYDS would not make wheels from the MOLDS, except for their own uses, that such uses did not imply that BOYDS was entitled to make all of the wheels it desired from the Plaintiffs' MOLDS, that such unapproved use of said MOLDS caused the deterioration of said MOLDS, and that Plaintiffs' marketplace was saturated with its product such that Plaintiffs' MOLDS became virtually worthless, and were in effect denied the benefit of their bargain, whereas, Defendants contend that their respective acts and/or omissions were appropriate. 63. Plaintiff desires a judicial determination of their rights

and duties, and a declaration as to whether the written Contract between Plaintiffs and Defendant was enforceable. 64. A judicial determination is necessary and appropriate at

this time under the circumstances in order that Plaintiffs may ascertain their rights and duties under the written Contract.

SEVENTH CAUSE OF ACTION TO DETERMINE DISCHARGEABILITY (As Against Boyd Wheels, Inc.)

65.

Plaintiffs reincorporate Paragraphs 1 through 29 of the

General Allegations and Paragraphs 31 through 33, Paragraphs 35 1

through 40, Paragraphs 42 through 46, and Paragraphs 48 through 54 of the First, Second, Third and Fourth Causes of Action as though such have been fully set forth herein.

66.

The within action is a core proceeding brought pursuant to

11 U.S.C. Sections 523(a)(2)(A)(4)(6) to determine dischargeability of a debt owing form Defendant to Plaintiffs and to except such debt from Defendant's discharge in the above-entitled bankruptcy proceeding now pending before this Court. 67. On or about, January 30, 1998, Defendant BOYDS WHEELS, INC.

(hereinafter referred to as "BOYDS") filed a Voluntary Petition under Chapter 11 of the Bankruptcy Code as Case No. SA98-11545RA in the Central District of California, Santa Ana Division of the United States Bankruptcy Court. 68. On or about, January 5, 1995, Plaintiff THE OUSYU HAMBAI

COMPANY entered into a contract with Defendant BOYDS, whereby, BOYDS would design and produce certain wheel molds (hereinafter "MOLDS"). Plaintiffs allege that it was implied by the conduct of the parties that YOSHI NAKAYAMA dba AMERICAN MOTORING ACCESSORIES was a disclosed third party beneficiary of the aforementioned contract. A true and

correct copy of the contract is attached hereto as Exhibit "A" and is incorporated by this reference. 69. On or about, March 7, 1996, Plaintiff THE OUSYU HAMBAI

COMPANY entered into a second contract with Defendant BOYDS., whereby, BOYDS would design and produce certain wheel molds. 1 The

contract of March 7, 1996, specifically stated that it superseded the terms and conditions in all previous contracts. Additionally, the contract provided that Plaintiff had the exclusive rights to the molds and that no wheels would be fabricated from said MOLDS, without the express, written permission of THE OUSYU HAMBAI COMPANY. implied by the conduct of the parties that YOSHI NAKAYAMA dba AMERICAN MOTORING ACCESSORIES was a disclosed third party beneficiary to the aforementioned contract. It was

70.

Plaintiffs are informed and believe and thereupon allege

that circa June 1996, Defendant BOYDS breached the contract by producing wheels from Plaintiffs MOLDS without the express, written consent of Plaintiffs and that such wheels were sold to other wholesalers of wheels. 71. Plaintiffs are informed and believe and thereupon allege

that the unauthorized sales of wheels beginning in June 1996, were at least partly motivated in an effort by BOYDS to unlawfully influence the then current price of BOYDS corporate stock, then being publicly traded. 72. Plaintiffs are informed and believe and thereupon allege

that at the time of making the contract to build wheel molds, Defendant BOYDS, had no intention of abiding by the exclusivity component of the CONTRACT, and once the molds came into the possession of BOYDS, Defendant began producing wheels utilizing the

MOLDS, for its own purpose, and sold those WHEELS to the competitors of Plaintiffs. 73. Plaintiffs are informed and believe and thereupon allege

that Defendant BOYDS represented that BOYDS would not produce wheels from the AMERICAN molds, without the express, written permission of Plaintiffs. 74. Plaintiffs are informed and believe and thereupon allege

that defendant BOYDS entered into the CONTRACT with the intent to defraud and deceive Plaintiffs into purchasing the MOLDS for the approximate sum of $200,000, and that wheels would be made exclusively for Plaintiffs by BOYDS.

75.

Plaintiffs are informed and believe and thereupon allege

Defendants, and each of them, that in a effort to conceal their fraudulent conduct, Defendant BOYDS ordered certain employees to produce wheels from the MOLDS, to modify the BOYDS production records that such production would not be accounted for, that the sales of wheels from said MOLDS would not be reflected on the books of account of BOYDS, that the shipping records for such wheels were not reflected in the BOYDS' shipping records, although such sales and shipments did in fact exist. 76. Plaintiffs are informed and believe and thereupon allege

that Defendant BOYDS made false and fraudulent representations regarding its true intentions to be bound by the exclusivity term of the contract. Defendant represented that BOYDS would design and 1

manufacture several wheel MOLDS, and that Plaintiffs would order wheels from BOYDS, which were made from the MOLDS. More

particularly, Defendant BOYDS falsely represented that BOYDS would only manufacture wheels from said MOLDS according to the orders placed by Plaintiffs. 77. false. The representations made by Defendant BOYDS, were in fact Plaintiffs are informed and believe and thereupon allege that

the true facts were that Defendant BOYDS would convince Plaintiffs to pay for the design and manufacture of wheels molds, and that Defendant BOYDS would produce wheels from the Plaintiffs' MOLDS, for sale to the competitors of Plaintiffs, without the express, written consent and/or knowledge of Plaintiffs.

78.

When Defendant BOYDS represented that they would be bound

by the exclusivity term of the contract, they knew such representation to be false, and these representations were made by Defendant BOYDS with the intent to defraud and deceive Plaintiffs and with the intent to induce Plaintiffs to act in the manner alleged herein, to wit, pay approximately $200,00 for the production of the MOLDS, and then to make wheels from said MOLDS for sale, without the express and written consent and/or knowledge of Plaintiffs. Additionally, Plaintiffs allege that BOYDS intended that Plaintiffs would order wheels made from the MOLDS, thereby receiving income from those sales, while BOYDS failed to disclose that it was selling Plaintiffs' wheel designs in violation of its CONTRACT. 1

79.

Plaintiffs at the time these representations were made by

Defendant BOYDS, at the time Plaintiffs entered into the aforementioned contract and paid for the production of the MOLDS, Plaintiffs were ignorant of the falsity of Defendant's representations and believe them to be true. In reliance on these

representations, Plaintiffs were induced to advance payment for the MOLDS, and further ordered wheels which were produced from said MOLDS by BOYDS. Had Plaintiffs known the actual facts, they would not have Plaintiffs' reliance on Defendant's

taken such action.

representations was justified because BOYDS was an automotive wheel company with international acceptance, Plaintiffs were dealing with the two most senior officers and/or directors in BOYDS, BOYDS was in the business of procuring molds for its customers, and BOYDS had been truthful in its past dealings with Plaintiffs. 80. Plaintiffs allege that Defendant BOYDS made the

aforementioned representations, and committed the aforementioned acts and/or omissions, and/or failures to disclose with the intention and purpose of deceiving the Plaintiffs as to their intent to be bound by the terms and conditions of the CONTRACT.

81.

Plaintiffs justifiably relied on the representations made

by Defendant BOYDS and actually and proximately suffered a loss as a result of the aforementioned representations, and committed the aforementioned acts and/or omissions, and/or failures to disclose.

82.

As a proximate result of Defendant's fraud and deceit and

the facts herein alleged, Plaintiffs were induced to expend approximately $200,000 for wheel MOLDS, Defendant BOYDS caused wheels in an amount as yet unknown to be produced from Plaintiffs' MOLDS, caused such wheels to be sold to wholesalers who then resold the wheels to the competitors of Plaintiffs in Japan. By virtue of the

acts and/or omissions of the Defendant BOYDS the market in Japan was saturated with Plaintiffs' wheel designs, such that Plaintiffs were unable to sell their own wheels, thereby, rendering their wheel MOLDS worthless. By reason of the fraudulent conduct, deceit and/or

omissions of fact on the part of Defendant BOYDS, Plaintiffs allege that they have suffered damages in an amount the totality of which has yet to be ascertained, but in no event less than 1.2 million dollars. 83. Plaintiffs allege that the acts and/or omissions of

Defendant BOYDS, was wanton, willful and oppressive and deserving the imposition of exemplary and punitive damages in an amount the totality of which has not yet been fully ascertained, and as such is subject to proof at time of trial. 84. Defendant BOYDS made the aforementioned acts and/or

omissions under false pretenses, false representations or actual fraud, and for that reason the indebtedness to the Plaintiffs is nondischargeable pursuant to 11 U.S.C. Sections 523(a)(2)(A)(4)(6). WHEREFORE, Plaintiffs pray for judgment as follows: For The First Cause Of Action: 1

1.

For compensatory damages according to proof at time of trial;

2.

For reasonable attorney's fees as provided by contract

and/or statute; 3. 4. For costs incurred herein; and For such other and further relief as the court deems just

and proper. For The Second and Third Causes of Action: 1. trial; 2. For special damages arising by virtue of the fraudulent For general damages in an amount subject to proof at time of

conduct of Defendants, in an amount subject to proof at time of trial; 3. For exemplary and punitive damages in an amount subject to

proof at time of trial; 4. 5. 6. For attorney's fees as provided by contract and/or statute; For costs of suit incurred herein; and For such other and further relief as the court may deem just

and proper. For The Fourth Cause Of Action: 1. For a permanent injunction enjoining Defendants, and each

of them, from using Plaintiffs' MOLDS in the future; 2. For an order requiring Defendants, and each of them, to show

cause, if any they have, why they should not be enjoined as set forth below, during the pendency of this action;

3. trial; 4. trial; 5.

For trebled damages in an amount subject to proof at time of

For reasonable attorney's fees subject to proof at time of

For costs incurred herein; and

6.

For such other and further relief as the court may deem just

and proper. For The Fifth Cause Of Action: 1. of trial; 2. For reasonable attorney's fees as provided by contract For general damages in an amount subject to proof at time

and/or statute; 3. 4. For costs of suit incurred herein; and For such other and further relief as the court may deem just

and proper. For The Sixth Cause Of Action: 1. For a declaration that the exclusivity contract is

enforceable; 2. For reasonable attorney's fees as provided by contract

and/or statute; 3. 4. For costs of suit incurred herein; and For such other and further relief as the court may deem just

and proper. For The Seventh Cause Of Action: 1

1. 2.

For an Order determining that the debt is non-dischargeable; For reasonable attorney's fees as provided by contract

and/or statute; 3. /// /// /// /// For costs of suit incurred herein; and

4.

For such other and further relief as the court may deem just

and proper. Dated: June 30, 1998 THE LAW OFFICES OF TIMOTHY MCCANDLESS

By _______________________ Timothy McCandless Attorney for Plaintiffs, Yoshinora Nakayama dba American Motor Accessories, The Ousyu Hambai Company