This breach of contract legal case was filed by Mr. Schanin and Mr. Anzelmo in response to the fact that HydraConnect Sales, LLC, was preparing a case against them for both fraud and breach of contract. They may have filed first, but we filed an extensive counterclaim of fraud and breach of contract, both charges of which David Schanin and Tony Anzelmo were found guilty of, regardless of the minimal amount of damage claims recovered by HydraConnect Sales, LLC. The opposition would have you believe that the monetary judgement is everything, and for the dealers it would have been, but we still feel vindicated in the fact that they were found guilty on both counts we claimed.
As you can tell from the constant claims against each other, there is no love lost between the parties in this lawsuit.
As a bit of background, HydraConnect Sales, LLC, purchased the membership interests of HydraConnect, LLC, from David Schanin and Tony Anzelmo in July of 2014 in order to save the company from termination. These two prior principles of the company felt that the company was too much work and had decided to terminate HydraConnect, LLC, in its entirety.
This would have meant no warranty, no repairs, and a significant damage to Mr. Greer’s reputation as the National Sales Manager who had used his reputation in the industry to sell products designed by HydraConnect, and met many dealers face to face promoting the product. Mr. Greer built up the company from under $60,000 in sales per month when he was contracted as the National Sales Manager, to over $310,000 per month in June of 2014 and was instrumental in HydraConnect Sales, LLC, saving the company to keep providing product to dealers and their clients.
The previous owners had terminated orders for any further product or repair parts as early as May and June of 2014. For those dealers who had product sold and required in late June and early July, this was the reason for the delays in producing product to fill orders at that time as stock was rebuilt from nearly nothing. None of the long lead products had been reordered due to the impending closing of the company, which even though orders were still being taken by the prior owners of HydraConnect, they intended to leave everyone stranded with half-finished systems and partial order deliveries as they sold used equipment and RMA returns as new product at the end of June 2014.
In order to save reputations and keep the word to the dealers to supply product, in July of 2014 HydraConnect Sales, LLC, agreed to purchase the HydraConnect, LLC, Company with several contractual obligations of the old owners. Most of these only affected HydraConnect Sales, LLC’s acquisition of the company and all related technology and documentation, but one specific section was most important to the dealers of HydraConnect products, and that was:
“none of the Intellectual Property Assets materially infringes any patent, trademark, copyright, trade secret or other proprietary right of any Person”.
This was blatantly false as we know from the Judgment and the HDBaseT and Dolby FAILED test results of the designs purchased by HydraConnect Sales, LLC, as part of HydraConnect, LLC. Not only was the Dolby technology in the HMA8x8BT and HMA16x16BT never allowed to be sold by HydraConnect, LLC, but it failed these technology holder’s internal testing when HydraConnect Sales, LLC requisitioned the required tests under the Dolby Technology License.
The HDBaseT technology, that Mr. Schanin designed (and yet continues to try to distance himself from) did not meet the standards of Valens or the HDBaseT Alliance. Mr. Schanin basically told the HDBaseT Alliance, that he did not feel he needed to join them to use their technology and patents. This is why both Mr. Schanin and Mr. Anzelmo were found to be guilty of Fraud relating to section 13.8 of our contract. One dealer in particular had a unit replaced three times by Mr. Schanin and once again by HydraConnect Sales, LLC. The issues were hardly with newer product, but found throughout the products designed by Mr. Schanin and Mr. Anzelmo.
Please remember that this case is only between Mr. Schanin, Mr. Anzelmo, and HydraConnect Sales, LLC. The technology holders such as Dolby and HDBaseT are not bound in any way by this ruling. These technology holders have been violated by Mr. Schanin and Mr. Anzelmo, and continue to prevent HydraConnect, LLC, from selling or doing business with the products as designed by Mr. Schanin and Mr. Anzelmo due to their constant disregard for patents, licenses and even federal regulations.
Mr. Schanin and Mr. Anzelmo continue to try to portray themselves as the saviors of the dealers, but do not be fooled. In a post judgment move, HydraConnect Sales, LLC, in an attempt to prevent the additional waste of time and money, gave the ownership of HydraConnect, LLC, back to them, but it was rebuffed with a threat letter from their attorney (Take a look at the HydraConnect, LLC, filings with the State of Colorado which is free and online). We know now from their statement that they are trying to form a repair company to gain new financial benefits from the dealers. Had they accepted the HydraConnect, LLC company ownership as they demanded, they would have had to honor the warranties on the product they designed.
This is beyond immoral conduct and HydraConnect Sales, LLC, highly recommends that you seek repairs from the solution provided by Zektor. We applaud them for helping the dealers who could not be helped due to the products’ bad design by Mr. Schanin and Mr. Anzelmo, and their violations of the HDbaseT and Dolby technology licenses among others.
Additional immoral conduct by Mr. Schanin was shown in providing a false affidavit on behalf of Mr. Howard Borsa, a former HydraConnect Sales, LLC, rep in the Georgia region. Mr. Schanin submitted a document he wrote himself and presented it to the court as the affidavit of Mr. Borsa. Mr. Borsa not only denied this being his affidavit, but when Mr. Schanin claimed in additional court documents that Mr. Borsa wrote it, but just didn’t sign it, Mr. Borsa had to go so far as to call the Judge in the case to protest his name being used and explain that he had nothing to do with this document. This again shows what HydraConnect Sales, LLC, has been up against in this court case where continual lies and half-truths have been submitted as evidence by the Plaintiffs.
In the end, the excessive contract breaches of the sales contract with HydraConnect Sales, LLC, and constant slander of Mr. Greer will catch up to them. Mr. Schanin and Mr. Anzelmo are both guilty of fraud in the judgement we received in this case, and the willful violation of the patents of the HDBaseT Alliance is hardly the “technical glitch” they would have you believe. The fraud charge is against both individuals for their false claims of compliance to HydraConnect Sales, LLC. It is up to Dolby and HDBaseT to continue any legal action against Mr. Schanin and Mr. Anzelmo. Hopefully now that the civil judgment has been issued, the criminal charges will be filed quickly by the state of Colorado, as HydraConnect Sales, LLC, has provided the proper authorities extensive evidence in this case.
As a final statement, Mr. Schanin and Mr. Anzelmo are simply better funded than HydraConnect Sales, LLC, and as we all know very well from the court cases we see in the news and on TV, typically whoever has the most money wins in court. If HydraConnect Sales, LLC, had not been harmed so egregiously by Mr. Schanin and Mr. Anzelmo, products could have been redesigned and licenses properly paid so that HydraConnect, LLC could still be in business with better and newer products. HydraConnect Sales, LLC, also feels we have a strong appeals case, but could not afford to appeal the decision due to the expensive bond required. Again, only the rich win in court. After nearly a quarter million in attorney’s fees for HydraConnect Sales, LLC, so far, very little hope remains for continuing with the brand in any meaningful way.
We again wish the dealers good luck in working with solutions such as what Zektor has supplied. Regardless of the rivalry in the past, I find it exemplary of them to have come up with a solution such as their HDMI output board.
August 6, 2015 - Original Open Letter from HydraConnect Sales, LLC
Update 3/7/2016 (obsolete due to addtional fighting between the parties)
- As of March 7, 2016, HydraConnect® Sales, LLC, no longer owns the HydraConnect, LLC, company memberships. HydraConnect Sales, LLC, is no longer responsible for or involved with any of the HydraConnect, LLC, products, services or company operations. This includes all Matrix and associated products offered by HydraConnect, LLC, for sale now or in the past.
Unsurprisingly, in the Judgment received last week, both Anthony Anzelmo and David Schanin, the previous owners, and HydraConnect Sales, LLC, were found in breach of contract. Additionally, Anthony Anzelmo and David Schanin were found guilty of Fraud relating to the license of technology used in the HydraConnect, LLC, products.
Due to the length of time it took to get a judgment, and due to the confirmation we have received of the violations by each individual organization (regardless of the judgment's opinion) such as Dolby (confirmed in writing and a failed test by Dolby), HDBaseT (confirmed by the Judge and in writing) , FCC (confirmed FCC regulations and via phone calls with testing companies and the FCC legal council), etc,, restoration of operations of the HydraConnect, LLC, company by HydraConnect® Sales, LLC, is not viable.
Due to the Judgment's opinion that the creators of the products are somehow not liable for the fact that so many aspects of the HydraConnect, LLC, products were untested and unlicensed even though we were able to prove fraud in the case of HDbaseT Licensing, HydraConnect® Sales, LLC, has decided to transfer the membership interests of HydraConnect, LLC, back to the original owners as part of the remedy in this case.
HydraConnect® Sales, LLC, obviously does not agree with much of the Judgment, including the Judgment basically ignoring proof from Dolby that Dolby never licensed the products of HydraConnect, LLC, for sale even after a failed test of the HydraConnect, LLC, HMA8x8BT matrix product conducted by Dolby was presented to the court.
It was our hope that the Judgment would validate each of the claimed issues and supply compensation from the former owners in order to relaunch HydraConnect, LLC, and once again service the products and their warranties, but only a subset of the licensing violations was acknowledged by the court. The court does not have any power over Dolby,HDBaseT, HDMI Alliance, the FCC, UL, or other technology holders and regulatory agencies in this case, and therefore does not release HydraConnect, LLC, and/or HydraConnect® Sales, LLC, from complying with each violation we have identified as defective in the original designs originally purchased. The fact that the Judge released the opposition from their liability to HydraConnect® Sales, LLC, in many of these issues, does not have any binding effect on each of the technology groups and regulatory agencies holding HydraConnect, LLC, product designs in violation.
As HydraConnect, LLC, is no longer owned by HydraConnect® Sales, LLC, any and all warranty or service questions should be directed to the current owners of HydraConnect, LLC.