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Pipeline Productions, Inc. v. Horsepower Entertainment

United States District Court, D. Kansas

October 11, 2017

PIPELINE PRODUCTIONS, INC., et al., Plaintiffs,
v.
HORSEPOWER ENTERTAINMENT, et al., Defendants.

          MEMORANDUM AND ORDER

          KATHRYN H. VRATIL UNITED STATES DISTRICT JUDGE.

         On May 21, 2015, Pipeline Productions, Inc. and Backwood Enterprises, LLC brought suit against Horsepower Entertainment and The Madison Companies, LLC. Complaint (Doc. #1). On June 19, 2017, OK Productions, Inc. and Brett Mosiman joined as plaintiffs, and plaintiffs named Bryan Gordon as an additional defendant. Amended Complaint (Doc. #56). Plaintiffs assert state law claims for breach of contract, breach of fiduciary duty, fraud and tortious interference with a prospective business advantage. Id. at ¶¶ 63-86. This matter comes before the Court on defendants' Motion To Dismiss For Failure To State A Claim. (Doc. #59) filed July 10, 2017. For the reasons below, the Court sustains defendants' motion in part.

         Legal Standard

         In ruling on a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., the Court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible - not merely conceivable - on its face. Id. at 679-80; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In determining whether a complaint states a plausible claim for relief, the Court draws on its judicial experience and common sense. Iqbal, 556 U.S. at 679. The Court need not accept as true those allegations which state only legal conclusions. See id.

         Plaintiffs bear the burden of framing their claim with enough factual matter to suggest that they are entitled to relief; it is not enough to make threadbare recitals of a cause of action accompanied by conclusory statements. See Twombly, 550 U.S. at 556. Plaintiffs make a facially plausible claim by pleading factual content from which the Court can reasonably infer that defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. Plaintiffs must show more than a sheer possibility that defendant has acted unlawfully - it is not enough to plead facts that are “merely consistent with” defendant's liability. Id. (quoting Twombly, 550 U.S. at 557). A pleading which offers labels and conclusions, a formulaic recitation of the elements of a cause of action or naked assertions devoid of further factual enhancement will not stand. Iqbal, 556 U.S. at 678. Similarly, where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the pleading has alleged - but has not “shown” - that the pleader is entitled to relief. See id. at 679. The degree of specificity necessary to establish plausibility and fair notice depends on context because what constitutes fair notice under Rule 8(a)(2), Fed. R. Civ. P., depends on the type of case. Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir. 2008) (citing Phillips v. Cty. of Allegheny, 515 F.3d 224, 232-33 (3d Cir. 2008)).

         Procedural And Factual Background

         Pipeline Productions, Inc. is a Kansas corporation with its principal place of business in Lawrence, Kansas. Doc. #56 at ¶ 7. Backwood Enterprises, LLC is an Arkansas limited liability corporation with its principal place of business in Lawrence, Kansas. Id. at ¶ 8. Pipeline and Backwood (collectively, “Pipeline”) produce live music and music festivals. Id. Brett Mosiman and Nathan Prenger conduct business for Pipeline and related entities, including OK Productions.[1]

         The Madison Companies, LLC is a Delaware limited liability company with its principal place of business in Greenwood Village, Colorado. Id. at ¶ 11. Horsepower Entertainment, a Delaware limited liability company, is a wholly-owned subsidiary of Madison with its principal place of business in Greenwood Village, Colorado. Id. at ¶ 12. Madison and Horsepower (collectively, “Horsepower”) provide venture capital. Bryan Gordon is the principal of Horsepower. Id. at ¶ 13.

         Highly summarized, the complaint alleges as follows. On November 4, 2014, Mosiman proposed a joint venture agreement between Pipeline and Horsepower for the limited purpose of owning and producing the Thunder Mountain Festival (“Thunder”). Id. at ¶ 32. On November 4, 2014, [2] Horsepower, through its principal Gordon, orally accepted a modified version of Mosiman's proposal. Horsepower agreed that it would (1) pay Pipeline $750, 000 for a 51 per cent interest in Thunder, (2) provide $500, 000 of operating capital for Thunder and (3) pay Pipeline $80, 000 to operate and produce Thunder. Id. at ¶ 33.

         Based on the November 4 Agreement, Pipeline personnel spent more than 4, 000 hours on Thunder from November of 2014 through May of 2015. Id. at ¶ 37. Their efforts included creating infrastructure, contracting with vendors, setting up ticketing and marketing and promoting Thunder. Id. Mosiman used his industry contacts to obtain commitments from approximately 50 artists. Id. at ¶ 38. As part of its commitment to provide operating capital, Horsepower provided $272, 000 to pay deposits for music artists. Id. at ¶ 39. Pipeline kept Horsepower informed about Thunder's progress and provided daily reports about advance ticket sales. Id. at ¶ 41.

         Based on music industry expectations and ticket sales, Horsepower forecasted that Thunder would generate a loss in 2015. Id. at ¶ 47. In March and April of 2015, Horsepower and Pipeline began to debate the terms of the November 4 Agreement. Id. at ¶¶ 48-52. Horsepower refused to fulfill its commitment to (1) provide $268, 000 to produce Thunder, (2) fund its purchase of a 51 per cent interest in Thunder and (3) pay Pipeline $80, 000 for operating costs. Id. at ¶ 53. Despite Pipeline's continued efforts, it cancelled Thunder. Id. at ¶ 53. Around this time, defendants hired some of plaintiffs' key employees, including Nate Prenger and ticketing employees. Id. at ¶ 57.

         On April 15, 2015, Horsepower filed suit against Pipeline, Mosiman and Prenger. Among other things, Horsepower sought a declaratory judgment that it did not have any obligations regarding the production of Thunder. Pipeline removed the case to the United States District Court for the District of Delaware. On December 4, 2015, that court dismissed Horsepower's claims for lack of jurisdiction over the parties or the case.

         On May 21, 2015, the week after it removed the Delaware case, Pipeline sued Horsepower in this Court. On February 22, 2017, the Court overruled Horsepower's motion to dismiss or to transfer to the District of Delaware. See Memorandum And Order (Doc. #37). On April 27, 2017, the Court overruled Horsepower's motion for reconsideration. See Memorandum And Order (Doc. #50).

         On June 19, 2017, Pipeline filed its amended complaint in this Court. Doc. #56. Pipeline asserts breach of contract (Count 1), breach of fiduciary duty related to a joint venture (Count 2), fraud (Count 3) and tortious interference (Count 4). Doc. #56 at ¶¶ 63-86. The amended complaint added OK Productions, Inc. and Mosiman as plaintiffs. Id. at ΒΆ 13. It also joined Gordon as defendant on ...


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