United States District Court, D. Kansas
MEMORANDUM AND ORDER
KATHRYN H. VRATIL UNITED STATES DISTRICT JUDGE
21, 2015, Pipeline Productions, Inc. and Backwood
Enterprises, LLC sued Horsepower Entertainment and The
Madison Companies, LLC. Complaint (Doc. #1). On June
19, 2017, OK Productions, Inc. and Brett Mosiman joined as
plaintiffs. Amended Complaint (Doc. #56). On August
30, 2019, plaintiffs added as defendants Kaaboo LLC,
KaabooWorks Services LLC (“KWS”), KaabooWorks
LLC, Kaaboo Del Mar LLC (“KDM”) and WarDawgz,
LLC. Second Amended Complaint (Doc. #570). As of
November 15, 2019, plaintiffs alleged that defendants had
reneged on their promise to partner in the production of a
music festival, and brought claims for breach of contract
(Count I), breach of fiduciary duty (Count II), fraud (Count
III), tortious interference (Count IV) and successor and
alter ego liability (Count V). See Amended Pretrial
Order (Doc. #660). Defendants assert counterclaims
against Pipeline, Backwood, OK Productions and Mosiman for
breach of contract, promissory estoppel and unjust
December 19, 2019, the Court dismissed the tort claims by OK
Productions and Mosiman (Counts II, III and IV), thereby
eliminating their affirmative claims for relief in this
litigation. See Memorandum And Order (Doc.
#712). The Court also dismissed plaintiffs' tortious
interference claims (Count IV) against Kaaboo, KWS,
KaabooWorks, KDM and WarDawgz. Id. Because Mosiman
and OK Productions have no remaining claims for affirmative
relief, the Court dismisses them as plaintiffs. As a result, the
following claims remain:
1. Breach of Contract (Count I): Pipeline and Backwood
against Madison and Horsepower;
2. Breach of Fiduciary Duty (Count II): Pipeline and Backwood
against Madison and Horsepower;
3. Fraud (Count III): Pipeline and Backwood against Madison
4. Tortious Interference (Count IV): Pipeline and Backwood
against Madison and Horsepower;
5. Successor and Alter Ego Liability (Count V): Pipeline and
Backwood against Kaaboo, KDM, KaabooWorks, KWS and WarDawgz;
6. Breach of Contract Counterclaim: Madison and
Horsepower against Pipeline, Backwood, OK Productions
and Brett Mosiman;
7. Promissory Estoppel Counterclaim: Madison and Horsepower
against Pipeline, Backwood, OK Productions and Brett Mosiman;
8. Unjust Enrichment Counterclaim: Madison and Horsepower
against Pipeline, Backwood, OK Productions and Brett Mosiman.
matter is before the Court on Defendants' Motion For
Summary Judgment (Doc. #663) filed November 18, 2019.
For reasons stated below, the Court sustains defendants'
motion in part.
Mosiman produces live music festivals, and is the principal
and owner of music festival entities OK Productions, Backwood
Enterprises and Pipeline Productions (except where otherwise
noted, collectively referred to as “plaintiffs”).
Nate Prenger, Brian Pilsl, Brian Wingerd and Taylor Gustafson
worked for plaintiffs.
Gordon, Seth Wolkov and Rob Walker own Madison, a venture
capital firm. Madison owns Horsepower, a music festival
business. In November of 2014, Madison and Horsepower formed
Kaaboo and KDM. Seven months later, in June of 2015, they
formed KaabooWorks and KWS. In December of 2016, Gordon,
Wolkov and Walker, along with Barbara O'Hare, formed
WarDawgz. Except where otherwise noted, the Court refers to
Madison, Horsepower, the Kaaboo entities and WarDawgz as
owned a music festival called “Thunder on the
Mountain” (“Thunder”). On July 28, 2014,
Pipeline, OK Productions, Mosiman and Prenger executed a
Letter of Intent (“LOI”) under which Horsepower
would invest in a new company, Pipeline Festivals, LLC.
Pursuant to the LOI, Horsepower would own 51 per cent of
several festivals that plaintiffs had previously produced,
including Thunder. The LOI provided that unless the parties
agreed otherwise, the LOI would automatically terminate on
November 1, 2014. That date arrived, and because the parties
had not finalized any agreement, the LOI terminated.
November 1, 2014, the parties began discussing a transaction
that would only involve Thunder. On November 4, 2014, Mosiman
emailed Gordon to propose two alternative investment
scenarios. “Option A” called for an investment of
$1.4 million for 50 per cent of a new company that would own
Thunder. Under “Option B, ” Madison would invest
$700, 000, plus $500, 000 in operating capital, in exchange
for a 51 per cent interest in a new company that would own
Thunder. Moreover, Madison would pay Pipeline $80, 000 to
book, market and produce Thunder, and Madison would receive
$40, 000 to run books.
phone call on November 6, 2014, Gordon accepted a slightly
modified version of Option B (increasing $700, 000 to $750,
000). Gordon stated that Option B was “the only one
that would work for him, ” and “made it very
clear that he was very excited about the opportunity”
to be Mosiman's partner. Mosiman's Dep.
(Doc. #672-16) filed November 18, 2019 at 11:25-12:15,
16:22-17:13, 29:17-31:6. The verbal agreement did not contain
all relevant provisions, such as when payments were due and
which of defendants' entities would pay them, but Mosiman
understood that the parties would flesh out those details
later. Later that day, Mosiman emailed Gordon to discuss
booking Chris Young for the festival, to which Gordon
responded, “Do it, please!” Gordon Email
(Doc. #684-9) filed November 29, 2019. Plaintiffs
subsequently made commitments to many artists, sold tickets
and solicited vendors for Thunder. Defendants created four
entities with variations of the name “Thunder on the
Mountain, ” made $272, 000 in artist deposits and
instructed plaintiffs which artists to book for the festival.
November 24, 2014, Gordon emailed Mosiman advising him that
Horsepower's investment committee had met to discuss the
proposal and the meeting had gone well, with the proposal
garnering unanimous approval. Gordon stated that they were
“green to go, subject to docs, lease finalization and
final due dili.” Gordon Email (Doc. #665-9)
filed November 18, 2019. In response, Mosiman did not contend
that an agreement was already in place.
December 12, 2014, Gary Burghart, defendants' Chief Legal
Officer, sent to Mosiman and Prenger drafts of proposed
operating agreements for the Thunder entities and a draft
contribution agreement calling for plaintiffs and an
affiliated entity to contribute certain assets. The drafts
reflected defendants' agreement to pay $750, 000 to
purchase the 51 per cent interest in Thunder. The
accompanying email stated, “These documents are drafts
and subject to continuing review and comment by Bryan
Gordon.” Burghart Email (Doc. #665-15) filed
November 18, 2019 at 2. Through March of 2015, defendants
spent more than $10, 000 conducting substantial due diligence
on a wide variety of issues.
December 16, 2014, Burghart had a telephone conference with
Matt Gough (counsel for plaintiffs) and John Murdock (outside
counsel for Horsepower), in which they identified and
discussed several points on which the parties disagreed,
including how the parties would make certain decisions for
Thunder. On January 7, 2015, Gough emailed Murdock and
Burghart that the parties had not addressed “one or two
of the open issues, ” and that with respect to some of
the open items, he believed that Mosiman and Gordon would
continue to negotiate. Gough Email (Doc. #665-20).
Similarly, in an internal email between Mosiman and Prenger,
Mosiman acknowledged the existence of “two outstanding
issues” and proposed sending an email to Gordon about
those issues. Mosiman continued, “We gotta get this
closed or I'll be at the homeless shelter. The risk is he
says fuck it - ‘m out but we have nearly $300K of his
money now with NO signed agreement to get it back or charge
for it.” Mosiman Emails (Doc. #665-12).
January and March of 2015, the parties continued to negotiate
several terms of the agreement, including provisions relating
to loans, equipment leases and liquor licenses. On March 29,
2015, Murdock sent Gough copies of an operating agreement and
ten other agreements, along with marked-up versions showing
changes from previous drafts. On April 7, 2015, Gough
responded that plaintiffs did not agree to the new terms.
Gough also warned defendants that reneging on the deal would
substantially harm plaintiffs. The parties later ceased
negotiations, and plaintiffs cancelled Thunder. Plaintiffs
have not produced another music festival.
early as March of 2015, before the parties ceased their
negotiations, defendants were communicating with Prenger
about coming to work for them. On July 1, 2015, plaintiffs
fired Prenger. The next day, KWS officially hired him.
Defendants later hired or retained several of plaintiffs'
other employees, including Pilsl, Wingerd and Gustafson.
have filed two lawsuits against plaintiffs. In Delaware,
defendants sought a declaration that the parties did not
enter into a joint venture and recoupment of the $272, 000
that they had paid for Thunder artist deposits. In Colorado,
defendants sued plaintiffs for defamation. The courts
dismissed both cases for lack of personal jurisdiction.
judgment is appropriate if the pleadings, depositions,
answers to interrogatories and admissions on file, together
with the affidavits, if any, show no genuine issue as to any
material fact and that the moving parties are entitled to
judgment as a matter of law. See Fed. R. Civ. P.
56(c); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1986); Hill v. Allstate Ins.
Co., 479 F.3d 735, 740 (10th Cir. 2007). A factual
dispute is “material” only if it “might
affect the outcome of the suit under the governing
law.” Liberty Lobby, 477 U.S. at 248. A
“genuine” factual dispute requires more than a
mere scintilla of evidence in support of a party's
position. Id. at 252.
moving parties bear the initial burden of showing the absence
of any genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986); Nahno-Lopez v.
Houser, 625 F.3d 1279, 1283 (10th Cir. 2010).
Once the moving parties meet their burden, the burden shifts
to the nonmoving parties to demonstrate that genuine issues
remain for trial as to those dispositive matters for which
they carry the burden of proof. Applied Genetics
Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d
1238, 1241 (10th Cir. 1990); see Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574, 586-87 (1986). To carry their burden, the
nonmoving parties may not rest on their pleadings but must
instead set forth specific facts supported by competent
evidence. Nahno-Lopez, 625 F.3d at 1283.
Court views the record in the light most favorable to the
nonmoving parties. Deepwater Invs., Ltd. v. Jackson Hole
Ski Corp., 938 F.2d 1105, 1110 (10th Cir. 1991). It may
grant summary judgment if the nonmoving parties' evidence
is merely colorable or is not significantly probative.
Liberty Lobby, 477 U.S. at 250-51. In response to a
motion for summary judgment, parties cannot rely on ignorance
of facts, speculation or suspicion, and may not escape
summary judgment in the mere hope that something will turn up
at trial. Conaway v. Smith, 853 F.2d 789, 794 (10th
Cir. 1988); Olympic Club v. Those Interested Underwriters
at Lloyd's London, 991 F.2d 497, 503 (9th Cir.
1993). The heart of the inquiry is “whether
the evidence presents a sufficient disagreement to require
submission to the jury or whether it is so one-sided that one
party must prevail as a matter of law.” Liberty
Lobby, 477 U.S. at 251-52.
for part of Count V, defendants seek summary judgment on all
claims.Specifically, defendants argue that the
evidence does not create genuine issues of material fact on
plaintiffs' claims regarding (1) breach of contract by
Madison and Horsepower (Count I), (2) breach of fiduciary
duty by Madison and Horsepower (Count II), (3) fraud by
Madison and Horsepower (Count III), (4) tortious interference
by Madison and Horsepower (Count IV) and (5) successor
liability of Kaaboo, KDM, KaabooWorks, KWS and WarDawgz
(Count V). Defendants also seek summary judgment on the issue
Breach Of ...