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13. Legal Proceedings
12 Months Ended
Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]  
13. Legal Proceedings

The Company was named in a action filed by Unirac, Inc. in New Mexico State Court on June 22, 2011 (Unirac, Inc. v. Power Save Energy Corporation et al., Case No. D-202-CV-2011-06295). Also named as defendants in this lawsuit were, among others, SLO 3 Holdings, Inc., Michael Forster, and Zirk Engelbrecht (“Other Defendants”). A settlement agreement was entered into on July 1, 2013, whereby the Other Defendants agreed to be responsible for paying Unirac, Inc.’s claim; however, pursuant to that settlement agreement, Unirac, Inc. retained the right to pursue the Company for payment of its claim if the Other Defendants did not honor their commitment to do so. A Stipulated Judgment (“Judgment”) was entered into in the New Mexico State Court action based upon this settlement agreement on July 19, 2013. The Plantiff has recently taken action to enforce this Judgment by filing an Application for Entry of Judgment on Sister State Judgment in San Luis Obispo County, California. Assuming that Michael Forster, Zirk Engelbrecht (aka Zirk de Maison) and/or SLO 3 Holdings, Inc. have the financial capacity to pay the Judgment, interests and any associated costs, and do not dispute the validity or enforceability of the Judgment, the Company should have no financial exposure in connection with this lawsuit. However, the Company has done no investigation to determine the financial ability of the Other Defendants to pay the funds now due pursuant to the Judgment. The Company does have information, however, that one of the defendants, Mr. Engelbrecht/de Maison, is incarcerated and his assets have been frozen. Also, the Company does not know if any of the Other Defendants are, for any reason, disputing the validity or enforceability of the Judgment.

 

The Company was engaged in litigation in the Supreme Court in the County of Westchester, New York, Index No. 11139/2009, in the matter Steeneck v. Power-Save and Engelbrecht. The claim was brought before the Court on or about May 8, 2009, although the defendants were never notified of the action until September 2012. Putting aside pleading in the alternative (duplicative claims under different legal theories for the same acts/omissions to act) the claim appears to be for approximately $200,000. As reported on Form 8-K filed with the Commission on January 18, 2013, the Company was informed that on January 10, 2013 the Court filed and entered a Decision & Order stating that the statute of limitations of the action had expired and that the plaintiff is not entitled to the relief that was sought. The plaintiff’s motion was denied and the case is now marked as disposed by the court.

 

The Company’s subsidiary, Sulfatos Chile, is engaged in arbitration in Chile, Docket Number 1639-2012 before Mr. Andres Molina del Rio, whereby Franciso Javier Morales Rivera E.I.R.L and Nunez Ojeda y da Silva LLC asked for the termination of the Engineering and Construction contract of the Anica Plant and sought damages of $1,989,300 for breach of contract. This matter was settled on May 6, 2014 by way of a public deed with the claimants and respondents both dismissing their claims and counterclaims respectively.

 

The Company’s subsidiary, Sulfatos Chile, is engaged in arbitration in Chile, Docket Number 5765-2013 before Mr. Mauricio Izquierdo, whereby in May of 2013 Minera Anica S.A. asked for the dissolution of Sulfatos Chile S.A. as a consequence of a breach of the stockholders’ agreement by Santa Teresa Minerals and seeking a to be determined amount of damages to be discussed in a different stage of the trial. Bluestone SpA (a wholly owned subsidiary of Lustros Chile S.A.), Santa Teresa and Lustros Chile SpA. filed their responses to the claim, asking the Court to dismiss it. Also, Bluestone SpA filed a counter claim against Minera Anica S.A. Minera Anica alleging, among other things, a breach of the articles of incorporation of Sulfatos Chile S.A. The probatory stage of this case is still pending.

  

The Company’s subsidiary, Lustros Chile SpA, is engaged in arbitration in Chile, Docket Number 1933-2013, before Mr. Juan Carlos Varela M. whereby Nueva Pudahuel filed a request for arbitration before the Center for Arbitration and Mediation of the Santiago Center of Commerce in December of 2013 against Lustros Chile, SpA, a wholly owned subsidiary of the Company, asking for the termination of the tails contract referred to the “Congo” project. It is also asking for the restitution of some properties, the payment of due rent, and damages in the amount of $3,017,191, (i) USD 775,396.5 for unpaid rents 2013-2014; (ii) USD 77,539.65 for each month of delay; (iii) UF 50.000.- under penalty clause. Lustros is asking for the termination of the contract, plus damages of UF 50.000 in a counterclaim under the penalty clause. On July 31, 2014 we filed our rejoinder to their claim and our rebuttal to our counter claim. On September 16, 2014 and September 29, 2014, the parties attended conciliatory hearings before the arbitrator. The arbitrator conceded an extension for the parties to continue conversations about the possibility to settle. That extension ended on October 6, 2014. In addition, Lustros Chile SpA has filed a civil law action, objection to an arbitrator Docket Number 111-2014 before the 23rd Civil Trial Court in Santiago. We are asking the Civil Trial Court to declare that Mr. Varela, as an arbitrator for the case Docket Nº 1933-2013 cannot continue the arbitration because of his objection in the process. This action was brought since the arbitrator filed a preliminary decision on the matter before he was allowed to do so. Therefore, we believe that he lacks impartiality for the final ruling. On October 16, 2014, we were informed that an injunction order was granted by Mr. Varela and executed on Lustros Chile SpA’s assets in the arbitration. As a consequence, the following assets are and will remain seized:  Lustros Chile SpA’s shares in Sulfatos (600,000 shares though it is alleged that Lustros Chile SPA does not own any property or shares in Sulfatos Chile S.A.); 24,000 shares in Bluestone SpA; bank account ending in 0748 at Itaú Bank; all credit that Lustros Chile SpA has against Sulfatos Chile S.A.; and all credit related to the current account between Lustros Chile SpA and Sulfatos Chile S.A. On October 16, 2014 the Company’s bank account at Itau Bank was levied for 29,019,497 CLP or approximately $49,636 US Dollars. These measures will remain in place until Lustros Chile SpA pays Nueva Pudahuel the full claimed amount, offers assets as guarantee, or arrives at a settlement. Lustros Chile SpA continues to vigorously defend against the actions taken and is working through its Chilean attorneys to resolve these matters as soon as reasonably possible. The arbitration and the trial are in their final stages, the parties having presented their main arguments and means of proof however no decision has been made as of the time of this filing. Our copper sulfate processing plant is currently shut down pending resolution of this matter. Should the arbitrator decide against the Company, it may be forced to liquidate some or all of its assets to satisfy the judgment.

 

The company’s subsidiary, Sulfatos Chile S.A., in engaged in litigation before the 8th Civil Trial court of Santiago, Docket Nº 18242-2013, in the matter Nueva Pudahuel S.A. v. Sulfatos Chile S.A. The claim was brought before the court on or about November 2013. Nueva Pudahuel S.A. is claiming for the payment of invoices for a total amount of $58,386.61. The company has filed a formal opposition to such claim, under articles 464 et seq of the Chilean Civil Procedural Code., which is currently in the probatory stage.

 

The Company’s subsidiary, Sulfatos Chile S.A. is involved in various labor lawsuits with former employees that are likely to have an unfavorable outcome. We have accrued approximately $345,000 as of the date of this filing to handle these claims.

 

The Company’s subsidiary, Sulfatos Chile S.A. is engaged in litigation before the 4th Civil Trial Court of Santiago, Docket N 25496-2014, in the matter of Oryxeio Ingenieria Limitada v. Sulfatos Chile S.A. On December 22, 2014 Sulfatos Chile S.A. was declared bankrupt by the court. The Board of Directors of Sulfatos Chile S.A. decided not to oppose the bankruptcy process. The Company will provide more information on these proceedings via a Current Report on Form 8-K as it becomes available.

 

Other than the foregoing, we know of no material, existing or pending legal proceedings against the Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.