Complaint — Rumson Wellness LLC v. Fountainhead SBF LLC (D.N.J.)

Summary

A complaint filed June 18, 2025 as Document 1 in Rumson Wellness LLC v. Fountainhead SBF LLC, Case No. 3:25-cv-11931-MAS-TJB, in the U.S. District Court for the District of New Jersey, with a jury trial demanded. Rumson Wellness LLC, Dylan Ross and Taylor Ross sue Fountainhead SBF LLC, Community Bank & Trust and Phoenix Lender Services, LLC over an SBA 7(a) loan (SBA Loan #94237982-03) for the principal amount of $923,000. The complaint alleges that the loan funded a Water Station Technology franchise that it describes as a Ponzi scheme, and that the loan was to be secured by 120 water vending machines valued at $1,020,000 and a lien on a residence. It alleges that the defendants failed to follow SBA regulations and conduct due diligence, and seeks a declaration that the loan is unenforceable, release of the lien, restitution of payments and damages.

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Cite this document

“Complaint — Rumson Wellness LLC v. Fountainhead SBF LLC (D.N.J.).” Original at ecf.njd.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-rumson-wellness-llc-v-fountainhead-sbf-llc-dkt-1-d-n-j-eeef1d5c94/, SHA-256 16bc5c19b33cc4c9c043952f73bca87355e4b18a625e091e8af2ad79dd1afaf6.

Full text

Case 3:25-cv-11931-MAS-TJB Document 1 Filed 06/18/25 Page 1 of 22 PageID: 1

2
UNITED STATES DISTRICT COURT
3
DISTRICT OF NEW JERSEY
4

5
RUMSON WELLNESS LLC, a New Case No.
6
Jersey limited liability company;
7 DYLAN ROSS, an individual, and COMPLAINT
TAYLOR ROSS, an individual,
8
Plaintiffs,
9
v. JURY TRIAL DEMANDED
10

11 FOUNTAINHEAD SBF LLC, a
Florida limited liability company;
12 COMMUNITY BANK & TRUST, a
13 Missouri banking corporation; and
PHOENIX LENDER SERVICES,
14 LLC, a Georgia limited liability
15 company,
Defendants.
16

18
Plaintiffs Rumson Wellness LLC (“Rumson Wellness”), Dylan Ross, and

19
Taylor Ross (together, “Ross”), for their Complaint against Defendants

20
Fountainhead SBF LLC (“Fountainhead”), Community Bank & Trust

21
(“Community Bank”), and Phoenix Lender Services, LLC (“Phoenix”), hereby

22
allege as follows:

23
INTRODUCTION

24
1. This is a lawsuit seeking declaratory and equitable relief, as well as

25
damages, arising from a Small Business Administration (“SBA”) 7(a) loan (SBA

26
Loan #94237982-03) for the principal amount of $923,000 that Defendants

27
Fountainhead, Community Bank, and Phoenix originated, hold, service, and/or have

COMPLAINT
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1 otherwise sought to enforce (the “Loan”). The Loan was issued to Plaintiff Rumson
2 Wellness and guaranteed by Ross for the purposes of funding what Plaintiffs
3 believed at the time was a legitimate business opportunity with a Water Station
4 Technology (“WST”) franchise. The Loan was to be secured by 120 water vending
5 machines valued at $1,020,000 (the “Equipment Collateral”) and a lien on the
6 Ross’s residence located in Rumson, New Jersey (the “Ross Residence”).
7 Ultimately, the purpose of the Loan was entirely frustrated by the, then unknown by
8 Plaintiffs, fraudulent nature of the underlying business. Accordingly, the Loan is
9 void.
10 2. Specifically, WST was a Ponzi scheme as detailed in multiple lawsuits
11 spanning the nation (the “WST Litigation”), including, without limitation, 352
12 Capital GP LLC v. Wear, et al., Case No. 1:24-cv-05102-VEC (S.D.N.Y.), MJT
13 Water Technology, LLC et al. v. Wear, et al., Case No. 8:24-CV-01002 (C.D. Cal.),
14 and Alkaline Water Holdings, LLC et al. v. Wear, et al., Case No. 2:24-cv-01890-
15 GAM (E.D. Penn.). The Ponzi scheme was so pervasive that in addition to the WST
16 Litigation, multiple news articles have been written about the scam and at least one
17 government agency, the Washington State Department of Financial Institutions, has
18 brought a statement of charges against WST and Ryan Wear, its founder.
19 3. This case is about Defendants’ negligence and/or bad faith in approving
20 and/or enforcing the Loan. Specifically, in addition to Fountainhead’s failure to
21 observe SBA regulations and to conduct appropriate due diligence and/or disclose
22 information that would have been material to Plaintiffs’ decisions to take out and
23 guarantee the Loan, Community Bank and Phoenix have continued this bad faith and
24 negligence by demanding that Plaintiffs repay the Loan, despite their awareness that
25 the Loan resulted from fraud so pervasive that the entire purpose of the Loan has
26 been frustrated.
27 4. Plaintiffs have been placed in an unconscionable position. First, they

COMPLAINT
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1 invested in the WST Ponzi scheme due to Fountainhead’s failure to (a) follow SBA
2 regulations, (b) conduct appropriate due diligence, (c) disclose material information
3 to Plaintiffs, or (d) even verify the existence of more than one million dollars’ worth
4 of equipment Fountainhead accepted as collateral for the Loan. Now, Plaintiffs are
5 being told by Community Bank and Phoenix that they alone must bear the entire
6 economic loss or face the loss of not just all the monthly payments they have timely
7 made towards the worthless Loan, but also the foreclosure of the lien on the Ross
8 Residence if they stop making the Loan’s monthly payments.
9 5. Plaintiffs submit that: (a) the Loan is void; (b) Defendants have been
10 unjustly enriched by the payments that Plaintiffs have made towards the Loan and
11 will continue to be unjustly enriched if the Loan continues to be enforced; (c)
12 Defendants have breached their obligations owed to Plaintiffs; and (d) Defendants’
13 actions have otherwise harmed Plaintiffs.
14 6. Plaintiffs seek (a) a declaration that the Loan is unenforceable, (b) an
15 order releasing the lien on the Ross Residence, (c) restitution for payments made,
16 and (d) damages for Defendants’ misconduct, including their failure to comply with
17 relevant SBA Standard Operating Procedures (“SBA SOPs”), their failure to
18 conduct appropriate due diligence, failure to disclose material information, and their
19 efforts to enforce the Loan, including threatening foreclosure of the lien on the Ross
20 Residence.
21 THE PARTIES
22 7. Plaintiff Rumson Wellness LLC is a limited liability company formed
23 under the laws of the State of New Jersey, with its principal place of business located
24 in Rumson, New Jersey. Rumson Wellness is owned and operated by its two
25 members, Plaintiffs Dylan and Taylor Ross.
26 8. Plaintiff Dylan Ross is an individual residing in the State of New York,
27 an owner of the real property located in New Jersey which secures the Loan, an

COMPLAINT
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1 owner and operator of Plaintiff Rumson Wellness, and the spouse of Plaintiff Taylor
2 Ross. At the time of the Loan’s execution, Plaintiff Dylan Ross resided in New
3 Jersey.
4 9. Plaintiff Taylor Ross is an individual residing in the State of New York,
5 an owner of the real property located in New Jersey which secures the Loan, an
6 owner and operator of Plaintiff Rumson Wellness, and the spouse of Plaintiff Dylan
7 Ross. At the time of the Loan’s execution, Plaintiff Taylor Ross resided in New
8 Jersey.
9 10. Defendant Fountainhead SBF LLC is a limited liability company
10 formed under the laws of the State of Florida, with its principal place of business
11 located in Lake Mary, Florida. While Plaintiffs are unaware of the identities of
12 Fountainhead’s members at this time, upon information and belief, no member of
13 Fountainhead is a citizen of New York or New Jersey based on Fountainhead’s
14 formation under the laws of the State of Florida and its principal place of business
15 in Florida. Plaintiffs will seek to confirm the citizenship of Fountainhead’s members
16 through jurisdictional discovery. Upon information and belief, Fountainhead
17 conducts business activities that are directed toward or have an impact in New Jersey
18 or otherwise avails itself of the privilege of doing business in New Jersey by
19 engaging in conduct including, but not limited to, issuing the Loan which is:
20 (a) governed by New Jersey law; (b) a contract with parties who were New Jersey
21 residents at the time of its execution; and (c) secured by real property located in New
22 Jersey, specifically, the Ross Residence.
23 11. Defendant Community Bank & Trust is a banking corporation formed
24 under the laws of the State of Missouri, with its principal place of business located
25 in Neosho, Missouri. Upon information and belief, Community Bank conducts
26 business activities that are directed towards or have an impact in New Jersey or
27 otherwise avails itself of the privilege of doing business in New Jersey by engaging

COMPLAINT
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1 in conduct including, but not limited to, acquiring the Loan which is: (a) governed
2 by New Jersey law; (b) a contract with parties who were New Jersey residents at the
3 time of its execution; and (c) secured by real property located in New Jersey,
4 specifically, the Ross Residence.
5 12. Defendant Phoenix Lender Services, LLC is a limited liability company
6 formed under the law of the State of Georgia, with its principal place of business
7 located in LaGrange, Georgia. While Plaintiffs are unaware of the identities of
8 Phoenix’s members at this time, upon information and belief, no member of Phoenix
9 is a citizen of New York or New Jersey based on Phoenix’s formation under the laws
10 of the State of Georgia and its principal place of business in Georgia. Plaintiffs will
11 seek to confirm the citizenship of Phoenix’s members through jurisdictional
12 discovery. Upon information and belief, Phoenix conducts business activities that
13 are directed towards or have an impact in New Jersey or otherwise avails itself of
14 the privilege of doing business in New Jersey by engaging in conduct including, but
15 not limited to, servicing the Loan which is: (a) governed by New Jersey law; (b) a
16 contract with parties who were New Jersey residents at the time of its execution; and
17 (c) secured by real property located in New Jersey, specifically, the Ross Residence.
18 13. Upon information and belief, each of the Defendants was the agent of
19 each of the other Defendants and, in engaging in the actions alleged herein, was
20 acting within the course and scope of such agency.
21 JURISDICTION AND VENUE
22 14. This Court has diversity jurisdiction over this action under 28 U.S.C.
23 § 1332(a) because the matter in controversy exceeds $75,000, exclusive of interest
24 and costs, and is between citizens of different states. Plaintiff Rumson Wellness is a
25 citizen of New Jersey. Plaintiffs Ross are currently citizens of New York, and, at the
26 time of the Loan’s execution, were citizens of New Jersey. Defendant Fountainhead
27 is a citizen of Florida; Defendant Community Bank is a citizen of Missouri; and

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1 Defendant Phoenix is a citizen of Georgia.
2 15. This Court has personal jurisdiction over Defendants because
3 Defendants purposefully directed their activities to New Jersey by originating,
4 holding, or servicing the Loan for Rumson Wellness, a New Jersey LLC, secured,
5 in part, by real property located in New Jersey owned by parties who were New
6 Jersey residents at the time of the Loan’s execution (i.e., the Ross Residence). The
7 Loan is governed by New Jersey law. Defendants’ conduct was directed towards and
8 actually felt in New Jersey. Further, Defendants knew or should have known their
9 conduct would harm Plaintiffs in New Jersey, where real property securing the
10 Loan – the Ross Residence – is located, and where the Loan was executed when
11 Plaintiffs were New Jersey residents.
12 16. Venue is proper in this District under 28 U.S.C. § 1391(b) because a
13 substantial part of the events or omissions giving rise to the claims occurred, and a
14 substantial part of the injuries suffered by Plaintiffs were suffered, in this judicial
15 district.
16 FACTUAL ALLEGATIONS
17 The Fraudulent WST Franchise and the Loan’s Origination
18 17. On or about May 24, 2021, Rumson Wellness entered into a Purchase
19 Order Agreement with WST to purchase water vending machines in connection with
20 a franchise business. WST represented that these water vending machines would be
21 installed at viable locations, generating revenue for Rumson Wellness.
22 18. To fund the WST franchise, Ross paid $170,000 for 20 water vending
23 machines and Rumson Wellness applied for an SBA 7(a) loan through Fountainhead
24 for the principal amount of $923,000, with most of the Loan (approximately
25 $850,000) being used to pay for an additional 100 water vending machines.
26 Fountainhead approved the Loan on July 30, 2021, with the Loan secured by the
27 Equipment Collateral and a lien on the Ross Residence. The loan agreement (“Loan

COMPLAINT
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1 Agreement”) specified the Loan’s purpose as being for “long term financing for the
2 start-up operations of a Water Station Technology Franchise Business”.
3 19. Ross intended to actively manage and operate the Rumson Wellness
4 franchise. To ensure that their WST franchise was a success, Plaintiffs performed
5 due diligence, including reference checks, speaking to current franchisors,
6 physically examining the technology of water vending machines installed for other
7 franchise owners, and scouting locations of current and potential future water
8 vending machines both nationwide and internationally. Plaintiffs also spent
9 significant time with Wear and Tyler Sadak, one of Wear’s WST colleagues, so that
10 they could understand the business model and operational aspects of WST. Plaintiffs
11 were assured by Wear and Sadak that Plaintiffs would have the ability to actively
12 monitor and manage their WST franchise and that the business would have low
13 overhead, positive cash flow, and steady revenue. The business plan developed by
14 Plaintiffs was to include the continuous reinvestment of revenue into additional
15 water vending machines and the exploration of expansion opportunities into new
16 geographical areas, including areas with limited access to clean water.
17 20. A core tenet of the WST opportunity, and crucial for active monitoring
18 of WST success, was the proprietary technology WST claimed to possess to help
19 franchisees accurately monitor individual station performance. However, WST
20 never gave Plaintiffs access to this essential operational tool, directly impeding their
21 ability to actively monitor the franchise.
22 21. The inability to monitor WST was not alarming to Plaintiffs initially as
23 they received reasonably consistent money from WST for the first two years.
24 However, in mid-2023, the promised steady revenue became increasingly
25 inconsistent and Wear became increasingly challenging to get ahold of before going
26 completely silent. Concerned, Plaintiffs began to speak with other WST franchise
27 owners and learned that others were experiencing the same issues and that some had

COMPLAINT
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1 even made claims against Wear and WST. Through these discussions with the other
2 WST franchise owners, Plaintiffs became aware of the massive scale of the fraud
3 perpetuated by Wear and WST predating the Loan. After learning of the fraud,
4 Plaintiffs investigated the locations where Wear had claimed that WST water
5 vending machines had been placed for Rumson Wellness and discovered that not a
6 single vending machine existed.
7 22. Unbeknownst to Plaintiffs, as discussed in the WST Litigation, Wear
8 and WST had been operating a Ponzi scheme since at least 2018, misrepresenting
9 machine installations and profits to induce franchisees like Plaintiffs to purchase
10 franchises that were worthless. Ultimately, as no operational machines were installed
11 for Rumson Wellness, the franchise was worthless and the Loan’s fundamental
12 purpose of funding a legitimate business was frustrated. As the Equipment Collateral
13 securing the Loan was non-existent, the Ross Residence became the unintended
14 primary source of collateral for the Loan.
15 23. The scope of the fraud was a shock to Plaintiffs, who had relied heavily
16 on Fountainhead’s assessment of fraud risk during the underwriting process for the
17 Loan. Plaintiffs reasonably believed that Fountainhead, as a sophisticated SBA
18 lender, would perform the necessary due diligence to identify, disclose, and mitigate
19 any risks with the Loan. As a professional SBA lender with access to financial data
20 and industry resources, Fountainhead was uniquely positioned to detect WST’s
21 fraudulent scheme, unlike Plaintiffs, who lacked such expertise or access. When
22 Fountainhead approved the Loan, Plaintiffs reasonably believed that Fountainhead
23 had conducted the requisite due diligence and had verified the Equipment Collateral,
24 and that the Loan’s approval was assurance that the WST franchise was a legitimate
25 and viable business opportunity.
26 24. Fountainhead’s failure to verify critical operational aspects, such as
27 water vending machine installations, access to monitoring technology, and even the

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1 existence of the Equipment Collateral, gave Plaintiffs false assurance that the WST
2 franchise business was legitimate, leading to Plaintiffs’ delayed discovery that the
3 WST franchise was a sham.
4 Fountainhead’s Negligent Due Diligence
5 25. At all times relevant, Fountainhead was subject to rules and policies
6 pertaining to SBA loans, including, without limitation, those set forth in SBA SOP
7 50 10 6 (effective October 1, 2020).
8 26. Pursuant to SBA SOP 50 10 6, Fountainhead was required to, without
9 limitation, verify franchise eligibility, document due diligence, conduct prudent
10 credit analysis, scrutinize financials, and assess collateral adequacy.
11 27. Shortly before the Loan’s origination, on May 14, 2021, Fountainhead
12 held itself out to customers on its website as “having extensive SBA loan
13 experience” with a team “involved in financing over $24 billion in total
14 projects . . . across all 50 states.” Fountainhead also claimed to be “founded by the
15 most well-known, awarded, and experienced team in the SBA industry, so our speed,
16 specialization, creativity and expertise are second to none.”
17 28. Fountainhead also promised that each customer was “a business owner
18 with a story and we always take time to understand your story and provide you with
19 the best loan solution for your precise situation,” that customers would receive
20 “responsiveness; personalized service; and the attention to detail that you deserve,”
21 and that Fountainhead would “make common sense decisions in an industry often
22 devoid of them for fear of regulatory ramifications.”
23 29. Further, on Fountainhead’s website as of May 27, 2025, Fountainhead
24 claimed that it: (a) helps small to midsize businesses finance their growth through
25 SBA loans; (b) funds only three types of loans “again and again and again” with this
26 specialization helping Fountainhead “make[s] sure your business gets exactly what
27 it needs”; (c) is the nation’s leading nonbank small business lender, having closed

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1 more than 301,000 SBA loans totaling more than $28 trillion as of January 1, 2023;
2 and (d) pays “attention to detail” and employs loan specialists who will “hold your
3 hand (if need be), and continuously update you, leaving little room for worry or
4 stress.”
5 30. Despite the representations and promises made to Fountainhead’s
6 customers, including Plaintiffs, and the requirements set forth in SBA SOP 50 10 6,
7 Fountainhead failed to verify franchise eligibility, document due diligence, conduct
8 prudent credit analysis, scrutinize financials, or assess collateral adequacy. Instead,
9 Fountainhead relied on WST’s unverified representations without independent
10 confirmation before approving the Loan for what was ultimately a sham business
11 opportunity.
12 31. Specifically, Fountainhead accepted a delayed list of Equipment
13 Collateral (which included purported, but non-existent, water vending machine
14 locations and serial numbers) from WST months after closing and failed to take the
15 steps necessary to verify Equipment Collateral installations or WST’s financial
16 viability prior to closing. Had Fountainhead conducted reasonable site visits, verified
17 third-party financial statements, performed UCC-1 searches on the Equipment
18 Collateral, independently confirmed the operational status of other WST franchises,
19 or otherwise engaged in prudent lending practices with respect to the Loan,
20 Fountainhead would have discovered WST’s pervasive fraud, which predated the
21 Loan’s origination and included actions such as furnishing fraudulent water vending
22 machine lists to lenders.
23 32. Based on the representations made by Fountainhead, Plaintiffs
24 reasonably and justifiably relied on Fountainhead to guide and support them through
25 the process of underwriting and closing the Loan and to disclose any material
26 information bearing on the transaction.
27 33. Based on the representations made by Fountainhead and

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1 Fountainhead’s processing and approval of an SBA 7(a) loan that was subject to
2 extensive SBA requirements, Fountainhead also led Plaintiffs to reasonably and
3 justifiably believe that: (a) Fountainhead would perform the due diligence required
4 by the SBA; and (b) the underlying business purpose for the Loan was a legitimate
5 business opportunity and eligible for SBA financing.
6 34. At all times material, Fountainhead had specialized knowledge and
7 expertise that Plaintiffs relied on in entering the Loan. Upon information and belief,
8 at all times material, Fountainhead also had superior access to information relating
9 to the Loan.
10 35. Additionally, Plaintiffs’ decision to enter the Loan was premised on the
11 expectation that the Loan’s proceeds would, at least in part, be used to purchase
12 Equipment Collateral that they would then own and that would secure the Loan. This
13 was fundamental to the validity and viability of the Loan.
14 36. Had Fountainhead performed adequate due diligence and complied
15 with the requirements of SBA SOP 50 10 6, it would have discovered the fraud
16 inherent in WST and, in turn, the Loan.
17 37. Fountainhead made representations about its performance as an
18 experienced SBA lender that would — presumably — comply with all rules and
19 policies pertaining to SBA loans, including those set forth in SBA SOP 50 10 6, and
20 otherwise engage in prudent lending practices, including conducting appropriate due
21 diligence and investigating the adequacy of the Equipment Collateral.
22 Fountainhead’s representations induced Plaintiffs to not just invest in the WST
23 franchise, but also induced Ross to personally guarantee the Loan, placing the Ross
24 Residence at significant risk. All of this caused, and is continuing to cause,
25 substantial financial harm to Plaintiffs.
26 Loan Assignment and Defendants’ Bad Faith Enforcement
27 38. At an unknown date, Fountainhead assigned the Loan to Community

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1 Bank, with Phoenix as the servicing agent. As a result, upon information and belief,
2 Community Bank and Phoenix inherited Fountainhead’s obligations and liabilities
3 under the Loan Agreement.
4 39. On Community Bank’s website, as of May 27, 2025, Community Bank
5 claimed to be “committed to the growth and propriety of small businesses” and
6 “determined to help our clients achieve and build on their success” through SBA
7 lending.
8 40. On Phoenix’s website, as of May 27, 2025, Phoenix claimed to:
9 (a) have a “proven track record as a lending loan servicer”; (b) possess “deep
10 knowledge” to allow borrowers to access “SBA lending solutions essential to your
11 success and the prosperity of your community”; and (c) have “expertise across eight
12 critical areas” of lender services, including, most relevantly, “SBA loan
13 underwriting”, “servicing and operations”, and “loan audits”.
14 41. Despite the invalidity of the Loan Agreement, personal guaranties, and
15 any other documents Plaintiffs were induced to sign related to the Loan, Community
16 Bank and Phoenix have continued to enforce the Loan, demanding full repayment
17 of the Loan balance and threatening foreclosure on the lien on the Ross Residence.
18 The threatened foreclosure of the lien on the Ross Residence is particularly alarming
19 for Plaintiffs as they have timely made all payments under the Loan, despite the
20 Loan being tainted by the WST franchisors’ fraud and misconduct.
21 42. At all relevant times, Community Bank and Phoenix, in their roles as
22 assignee and servicer of an SBA loan, knew or should have known of Fountainhead’s
23 deficient due diligence, particularly given public information regarding the WST
24 fraud, including the WST Litigation and news articles, and the non-existence of the
25 Equipment Collateral.
26 43. Upon information and belief, and through publicly available sources
27 such as the WST Litigation and news articles, Community Bank and Phoenix had

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1 actual or constructive knowledge of WST’s widespread fraud and the fraudulent
2 nature of the underlying business venture funded by the Loan.
3 44. In April 2025, Plaintiffs requested a reduction of the Loan’s principal,
4 a lump-sum payoff, and a release of the lien on the Ross Residence, based on WST’s
5 fraud and Fountainhead’s negligent due diligence, which falsely assured Plaintiffs
6 that WST was a viable franchise. Phoenix, on behalf of Community Bank, rejected
7 this request, falsely claiming that a write-down of the Loan would be an “offer in
8 compromise” that required liquidation of the Ross Residence.
9 45. Further, Phoenix has insisted that Plaintiffs continue to make Loan
10 payments under the threat of legal action and foreclosure of the lien on the Ross
11 Residence.
12 Plaintiffs’ Harm and the Ongoing Threatened Harm
13 46. As a result of WST’s fraud and Defendants’ actions, Rumson Wellness
14 has incurred an almost-million-dollar Loan obligation, has paid approximately
15 $350,000 thus far towards the Loan, and received no operational franchise or
16 Equipment Collateral, rendering the business worthless. Plaintiffs also face threats
17 of foreclosure of the lien on the Ross Residence, causing further significant financial
18 harm and stress.
19 47. Defendants’ refusal to negotiate in good faith and continued efforts to
20 enforce the Loan, despite Plaintiffs’ good faith performance and diligence in seeking
21 resolution, exacerbates Plaintiffs’ harm. The continued enforcement of a loan used
22 to fund a nonexistent business, which Defendants knew or should have known was
23 a sham, is fundamentally inequitable and constitutes bad faith.
24 48. Absent judicial relief, Defendants will unjustly retain payments made
25 under the Loan, enforce the remainder of the term of the void Loan, and, potentially,
26 foreclose the lien on the Ross Residence, all of which would cause Plaintiffs
27 considerable harm.

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1 49. Declaratory relief, restitution, and damages are necessary to remedy
2 Defendants’ misconduct and protect Plaintiffs’ rights.
3 Invalidity and Unenforceability of Jury Trial Waiver
4 50. Plaintiffs acknowledge that the Loan Agreement contains a purported
5 waiver of the right to a jury trial. However, Plaintiffs assert that this waiver is
6 unenforceable because:
7 (a) The waiver’s scope is limited to disputes “arising out of, under or in
8 connection with this Agreement or the transactions contemplated
9 herein.” Plaintiffs’ claims for unjust enrichment and negligent
10 misrepresentation arise from Defendants’ independent tort and
11 equitable duties, extending beyond the mere interpretation or breach
12 of contractual terms.
13 (b) The waiver provision itself is unconscionable. Given the fraudulent
14 nature of the underlying WST franchise, which was unknowable to
15 Plaintiffs but should have been discovered by Fountainhead, and the
16 overall circumstances surrounding the Loan’s origination and
17 enforcement, the enforcement of a waiver of a fundamental
18 constitutional right to a jury trial would be oppressive and contrary
19 to public policy.
20 (c) The entire Loan Agreement, including the jury waiver provision,
21 was procured through negligent misrepresentation, as detailed
22 herein, rendering the entire contract voidable, including any
23 purported waiver of rights contained therein. Plaintiffs would not
24 have entered into the Loan Agreement, or agreed to any of its terms,
25 had they known the underlying business was a sham Ponzi scheme.
26

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1 FIRST CAUSE OF ACTION
2 (Negligent Misrepresentation – Against All Defendants)
3 51. Plaintiffs reallege and incorporate by reference the allegations set forth
4 in paragraphs 1-50 as if fully set forth herein.
5 52. Defendants owed Plaintiffs a duty of exercising reasonable care and
6 competence in complying with all applicant rules and regulations, including the SBA
7 SOPs, and to conduct themselves in relation to the Loan and Plaintiffs in a manner
8 expected of SBA-approved lenders, assignees, and servicers of similar standing,
9 experience, and expertise. Fountainhead further owed Plaintiffs a duty of exercising
10 reasonable care and competence in performing necessary due diligence to identify
11 and mitigate any risks with the Loan, including by verifying franchise eligibility,
12 financials, and Equipment Collateral before approving the Loan. Additionally,
13 Community Bank and Phoenix, as assignee and servicer, had a duty of exercising
14 reasonable care and competence in investigating WST’s fraud before enforcing the
15 Loan, given their actual or constructive knowledge of Fountainhead’s due diligence
16 failures and the non-existence of the Equipment Collateral.
17 53. Fountainhead, in its role as an SBA lender, negligently made incorrect
18 statements, negligently failed to disclose material information, or supplied false
19 information to Plaintiffs regarding the viability and legitimacy of the WST franchise.
20 By approving and disbursing the Loan for a “Water Station Technology Franchise
21 Business” without exercising reasonable care or competence in verifying the
22 Equipment Collateral, scrutinizing financials, or investigating readily discoverable
23 indicia of fraud as required by SBA SOP 50 10 6 and as would be expected from a
24 lender of the standing and experience that Fountainhead claimed to possess,
25 Fountainhead implicitly represented that WST was a legitimate and viable business
26 eligible for SBA financing.
27 54. Community Bank and Phoenix perpetuated this negligent

COMPLAINT
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1 misrepresentation by continuing to enforce the Loan and demanding payment
2 without investigating WST’s widespread fraud, despite their actual or constructive
3 knowledge of the fraud and Fountainhead’s initial due diligence failures, thereby
4 reaffirming the implicit representation of the legitimacy of the business opportunity
5 connected to the Loan.
6 55. Defendants, including Fountainhead, knew or should have known that
7 these representations regarding WST’s legitimacy were false or could not be
8 substantiated, as WST’s pervasive fraud significantly predated the Loan.
9 Fountainhead’s failure to conduct timely and thorough due diligence, as required by
10 its role as an SBA lender, constituted negligence.
11 56. Plaintiffs reasonably and justifiably relied on Defendants’ implicit and
12 explicit representations regarding the legitimacy and viability of the WST franchise
13 by investing in the worthless WST franchise and executing the Loan Agreement.
14 Ross also justifiably relied on these representations by personally guaranteeing the
15 Loan and allowing a lien to be placed against the Ross Residence under the belief
16 that: (a) Rumson Wellness would receive a legitimate, operating franchise that
17 would raise revenue more than sufficient to pay off the Loan; and (b) the Equipment
18 Collateral existed and would serve as the primary collateral for the Loan. This
19 justifiable reliance directly caused Plaintiffs substantial financial losses and the
20 current threatened risk of foreclosure of the lien on the Ross Residence.
21 57. Plaintiffs are entitled to damages for their losses, rescission of the Loan,
22 release of the lien on the Ross Residence, and/or other equitable relief to remedy
23 Defendants’ negligent misrepresentation.
24 SECOND CAUSE OF ACTION
25 (Breach of Implied Covenant of Good Faith and Fair Dealing – Against All
26 Defendants)
27 58. Plaintiffs reallege and incorporate by reference the allegations set forth

COMPLAINT
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1 in paragraphs 1-57 as if fully set forth herein.
2 59. The Loan Agreement between Rumson Wellness and Fountainhead and
3 guaranteed by Ross, assigned to Community Bank and serviced by Phoenix, includes
4 an implied covenant of good faith and fair dealing, requiring Defendants to act
5 honestly and reasonably to fulfill the Loan’s purpose of funding a viable WST
6 franchise business.
7 60. Plaintiffs performed their obligations required under the Loan
8 Agreement.
9 61. Defendants breached the implied covenant of good faith and fair
10 dealing by acting in bad faith with the intent to deprive Plaintiffs of the Loan’s
11 reasonably expected benefits, namely, a functioning WST franchise capable of
12 generating revenue to repay the Loan.
13 62. With respect to Fountainhead, Fountainhead acted with bad faith by:
14 (a) approving the Loan without conducting the necessary due diligence which would
15 have allowed Fountainhead to identify, disclose and mitigate any risks with the
16 Loan; and (b) failing to comply with all applicable rules and regulations, including
17 SBA SOPs. Fountainhead’s failure to comply with the covenant of good faith and
18 fair dealing placed Plaintiffs at risk of funding a sham enterprise, thereby
19 undermining the Loan’s purpose.
20 63. Community Bank and Phoenix acted with bad faith by enforcing the
21 Loan and threatening foreclosure of the lien on the Ross Residence, despite actual
22 or constructive knowledge of WST’s fraud and Fountainhead’s deficient due
23 diligence and the nonexistence of the Equipment Collateral. Their pursuit of
24 payments for a nonexistent franchise was unreasonable and intended to extract
25 benefits to which they were not entitled, denying Plaintiffs the Loan’s intended
26 bargain.
27 64. As a proximate result of Defendants’ breaches of the covenant of good

COMPLAINT
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1 faith and fair dealing, Plaintiffs were deprived of the Loan’s reasonably expected
2 benefits, lost all payments made towards a nonexistent franchise, incurred a
3 substantial Loan obligation for a worthless asset, and are at risk of foreclosure of the
4 lien on the Ross Residence, all of which cause Plaintiffs significant financial harm
5 and stress.
6 65. Plaintiffs are entitled to damages for their losses, rescission of the Loan,
7 release of the lien on the Ross Residence, and/or other equitable relief to remedy
8 Defendants’ breach.
9 THIRD CAUSE OF ACTION
10 (Unjust Enrichment – Against All Defendants)
11 66. Plaintiffs reallege and incorporate by reference the allegations set forth
12 in paragraphs 1-65 as if fully set forth herein.
13 67. Defendants have received a benefit from Plaintiffs in the form of
14 principal and interest payments on the Loan and the continued lien on the Ross
15 Residence. The retention of these benefits by Defendants, where the Loan funded a
16 fraudulent Ponzi scheme and yielded no legitimate business opportunity to Plaintiffs,
17 would be unjust, particularly given the underlying fraud and Fountainhead’s
18 negligence in failing to perform the requisite due diligence that would have
19 uncovered said fraud.
20 68. At the time Plaintiffs conferred these benefits by making payments on
21 the Loan and by pledging the Ross Residence as collateral securing the Loan,
22 Plaintiffs reasonably expected remuneration in the form of a viable franchise
23 business and receipt of the Equipment Collateral. Defendants, including
24 Fountainhead, knew or should have known, through the exercise of reasonable
25 diligence, that the WST franchise was a sham. Community Bank and Phoenix, as
26 assignees, inherited this unjust benefit and continued to seek its retention despite
27 their actual or constructive knowledge of the fraud and the worthlessness of the

COMPLAINT
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1 underlying venture.
2 69. Plaintiffs are entitled to restitution of all payments made under the
3 Loan, release of the lien on the Ross Residence, and/or other equitable relief to
4 prevent Defendants’ unjust enrichment.
5 FOURTH CAUSE OF ACTION
6 (Declaratory Relief – Against All Defendants)
7 70. Plaintiffs reallege and incorporate by reference the allegations set forth
8 in paragraphs 1-69 as if fully set forth herein.
9 71. An actual controversy exists between Plaintiffs and Defendants
10 regarding the enforceability of the Loan. Plaintiffs contend the Loan is void or
11 voidable and that Defendants have acted negligently, have breached the covenant of
12 good faith and fair dealing, and have been and would continue to be unjustly
13 enriched by payment of the Loan. Defendants assert that the Loan is enforceable.
14 72. This controversy is definite and concrete, touching the tangible interests
15 of Plaintiffs, who face ongoing financial harm and the imminent threat of foreclosure
16 of the lien on the Ross Residence.
17 73. The controversy is adversarial, as Plaintiffs and Defendants have
18 directly opposing legal positions regarding the validity and enforceability of the
19 Loan. Under the NJ Declaratory Judgment Act (N.J.S.A. 2A:16-50 et seq.) and
20 federal law (28 U.S.C. § 2201), this Court may declare the parties’ rights.
21 74. A declaration from this Court will relieve Plaintiffs from the
22 uncertainty and insecurity surrounding their obligations under the Loan Agreement
23 and the validity of the lien on the Ross Residence.
24 75. The Loan is voidable under New Jersey law because WST’s
25 misrepresentations constituted fraud in the inducement and the underlying business
26 the Loan was intended to fund was a sham Ponzi scheme. Accordingly, the
27 fundamental purpose of the Loan was frustrated, rendering the consideration

COMPLAINT
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1 received by Plaintiffs worthless and the Loan Agreement itself fundamentally
2 unenforceable from its inception. Furthermore, because the essential bargained-for
3 exchange in the Loan failed, the Loan is voidable or subject to rescission.
4 76. Plaintiffs have no other adequate remedy at law to address the ongoing
5 harm caused by the unenforceable Loan and the threat to the Ross Residence.
6 Declaratory relief is necessary to determine the parties’ rights and obligations and to
7 prevent further damage to Plaintiffs. The issue is ripe for decision, as the facts
8 underlying the dispute are fully developed, and the threat of foreclosure is imminent.
9 77. Plaintiffs are entitled to a declaration that the Loan is unenforceable,
10 the lien on the Ross Residence is void, and no further repayment of the Loan is owed,
11 thereby preventing foreclosure of the lien on the Ross Residence and resolving the
12 controversy.
13 PRAYER FOR RELIEF
14 WHEREFORE, Plaintiffs respectfully request that judgment be entered in
15 their favor on each of the claims stated herein and against Defendants, and that they
16 be awarded relief that includes, but is not limited to, an order:
17 1. For any and all legal or equitable remedies available under state law,
18 including, without limitation, recission and reformation;
19 2. For awards of damages against Defendants in an amount to be
20 determined at trial but expected to be no less than $350,000;
21 3. For an order directing Defendants to disgorge and return all payments
22 made by Plaintiffs, including all principal and interest payments made to date, as
23 restitution for unjust enrichment;
24 4. Declaring the Loan void, unenforceable, and/or subject to rescission
25 due to WST’s fraud, the frustration of the Loan’s purpose, and/or Defendants’
26 negligence and breach of the covenant of good faith and fair dealing, and ordering
27 the release of the lien on the Ross Residence;

COMPLAINT
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1 5. Awarding Plaintiffs their full costs of suit, including but not limited to,
2 reasonable attorneys’ fees, as permitted by law;
3 6. Awarding prejudgment interest as permitted by law;
4 7. For joint and several liability under applicable law; and
5 8. For such other relief as the Court deems just and proper.
6

7 Dated this 18th day of June, 2025. Respectfully submitted,
8
By: s/ James T. Prusinowski
9 James T. Prusinowski
10
THE CHILLA BUSINESS COUNSEL, LLC
268 South Street
11 Morristown, New Jersey 07960
12
Telephone: (973) 660-1095

13 Ashley J. McDonald (pro hac vice
14 forthcoming)
Randall Moeller (pro hac vice
15 forthcoming)
16 Focal PLLC
900 1st Avenue S., Suite 201
17 Seattle, Washington 98134
18 Telephone: (206) 529-4827
Facsimile: (206) 260-3966
19
20 Attorneys for Plaintiffs

COMPLAINT
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1 DEMAND FOR JURY TRIAL
2 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiffs
3 demand trial by jury in this action of all issues so triable.
4

5 DATED: June 18, 2025 s/ James T. Prusinowski
6 James T. Prusinowski

7 Attorneys for Plaintiffs
8

19
20

COMPLAINT
(Case No.______________) – 22

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