Brea, Calif.-based Pura Vida Farms has sued former partner Chris Elsie for breach of contract, conversion, fraud, false advertising and other offenses.
Elsie officially parted ways with Pura Vida on Jan. 31 and has started a new venture, Stella Farms, which has no affiliation with Pura Vida. The lawsuit alleges that Elsie purposefully represented Pura Vida and Stella as one company when speaking to Pura Vida customers and others in the produce industry.
The suit names as defendants Elsie, Stella Farms, Elsie's wife Tracey, and Elsie's holding company Desert Star Consulting. Other defendants, currently listed as Does 1 through 100, could be named later.
"On information and belief, Defendants wrongfully, intentionally, and substantially interfered with and exercised control over Pura Vida's property by falsely notifying companies Pura Vida had changed its name to Stella Farms, requesting these companies change the name of Pura Vida's account name to Stella Farms, preventing Pura Vida from gaining access to and checking on the status of its accounts receivables, billing Pura Vida's customers for product Pura Vida shipped prior to January 31, 2017, and taking payments that rightfully belong to Pura Vida," Pura Vida stated in its complaint.
Pura Vida has sued for breach of contract; breach of the covenant of good faith and fair dealing; conversion; intentional interference with contract; false advertising; unfair competition; fraud; accounting; and declaratory relief.
A letter dated Feb. 6 from Pura Vida's attorney to Elsie listed some of the company's disputes with him and advised him that Pura Vida would file suit in 10 days if its demands were not met.
Among the allegations in the letter are that Elsie asked Texas retailer H-E-B to change the name on its Pura Vida account and that Elsie asked data management company Azzule to do the same.
The latter action resulted in Pura Vida's food safety certificates being attributed to Stella and Pura Vida not having access to its own documents in that portal, according to the letter, which was included in the court filing.
Pura Vida also said in its complaint that Elsie committed fraud when he entered into the agreement to sell his interest in the company.
The defendants "never intended to comply with the Agreement and were plotting to breach it before the Agreement was even signed," Pura Vida states in the lawsuit. "They induced Plaintiffs to sign the Agreement based on false promises, hoping to gain a release from all their past sins and wrongful conduct they intended to commit the moment they signed the Agreement."
The lawsuit alleges that Elsie breached his fiduciary duty to Pura Vida by creating his new venture Jan. 4, 2016, long before the agreement was signed, and naming it Pura Vida Fresh.
Pura Vida discovered that action before the agreement was signed and required the name be changed, and Elsie later did so, according to the lawsuit.
Pura Vida also states in its complaint that Stella employees and agents have used the words Pura Vida in their e-mail addresses and that defendants copied data to which they were not entitled from Pura Vida's database and have been using that information to their benefit.
Elsie had been an owner of Pura Vida since 2008, along with Wes Liefer, who now has sole ownership of Pura Vida.
The parties signed an agreement Dec. 23 that Elsie would sell his interest and no longer have any association with Pura Vida effective Jan. 31.
As part of the agreement, offices in Scottsdale, Ariz., and in Moultrie, Ga., that previously belonged to Pura Vida are now offices of Stella, and people who previously worked for Pura Vida in those offices still work there but are now employed by Stella.
Pura Vida's operations in California - address of headquarters in Brea, phone numbers, email addresses and personnel - are unchanged.
Liefer referred all questions about the lawsuit to his attorney, who declined to provide more information than was detailed in the lawsuit.
Elsie did not respond to messages seeking comment.