CASE N~.l COMPLAINT. Plaintiff, Juan Luis Guerra Seijas ("Mr. Guerra"), sues Karen Records, Inc., Karen. Introduction

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1 WAN LUIS GUERRA SEIJAS, IN THE CIRCUIT COURT OF THE 11 TH WDICIAL CIRCUIT, IN AND FOR MIAMI-DADE COUNTY, FLORIDA. CASE N~.l CA 22 vs. Plaintiff, KAREN RECORDS, Inc., a Florida corporation; KAREN PUBLISHING COMPANY, a Florida corporation; DISTRIBUIDORA DE DISCOS KAREN, C POR A., a foreign corporation; BIENVENIDO RODRIGUEZ, an individual; ISABEL RODRIGUEZ, an individual; Defendants. COMPLAINT Plaintiff, Juan Luis Guerra Seijas ("Mr. Guerra"), sues Karen Records, Inc., Karen Publishing Company, Distribuidora J.?e Discos Karen, C Por A., Bienvenido Rodriguez, and Isabel Rodriguez, and alleges: Introduction 1. Mr. Guerra files this action for damages, an accounting arising from a breach of recording contract, and for declaratory relief.

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3 Parties 2. Plaintiff, Juan Luis Guerra Seijas, is an individual residing in the Dominican Republic but who also has a Florida residence located at 888 Biscayne Blvd., Apt. 4709, Miami, Florida Plaintiff, Juan Luis Guerra Seijas ("Mr. Guerra"), is a Grammy award winning international recording artist well-known throughout Latin America, the United States and Europe. 4. Defendant Karen Records, Inc. ("Karen Records") is a Florida corporation doing business in Miami-Dade County at 130 Rosales Court, Coral Gables, Florida Defendant Karen Publishing Company ("Karen Publishing") is a Florida corporation doing business in Miami-Dade County at 130 Rosales Court, Coral Gables, Florida Distribuidora De Discos Karen, C Por A. ("Distribuidora") is a foreign corporation with a registered principal place ofbusiness at Calle Conde No. 262, Santo Domingo, Dominican Republic, but doing business in Florida as Karen Records and Karen Publishing. 7. Bienvenido Rodriguez is an individual residing at 130 Rosales Court, Coral Gables, Florida Isabel Rodriguez is an individual residing at 130 Rosales Court, Coral Gables, Florida Jurisdiction and Venue 9. This is an action within this Court's jurisdiction as the amount in controversy exceeds $15,000, exclusive of interest and costs.

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5 10. Jurisdiction is proper in the 11th Judicial Circuit because the unlawful conduct giving rise to this action took place in Miami~Dade County, Florida. 11. This Court has statutory jurisdiction over Defendant Distribuidora pursuant to Section 48.l93(a), Florida Statutes, because Distribuidora is "[o]perating, conducting, engaging in, or carrying on a business or business venture in this state." Distribuidora does business in Florida as Karen Records and Karen Publishing from their Coral Gables office, and performs all of its contractual obligations to Plaintiff in Miami through the Karen companies. 12. This Court also has statutory jurisdiction over Distribuidora pursuant to section (g), Florida Statutes, because this is an action arising from "[b]reaching a contract in this state by failing to perform acts required by the contract to be performed in this state." 13. The exercise of jurisdiction over Distribuidora is consistent with due process because Distribuidora is operating, conducting, engaging in, or carrying on a business or business venture in this state. Moreover, Distribuidora does business in this state as Karen Publishing and/or Karen Records, and is operated by Defendants Bienvenido and Isabel Rodriguez, who live in Miami, Florida. For those reasons, and others described more fully in the General Allegations of this Complaint, Distribuidora established sufficient minimum contacts with Florida such that it should reasonably anticipate being hauled into court here. Accordingly, the assertion ofjurisdiction comports with the principles of fair play and substantialjustice. 14. Venue is proper pursuant to sections and , Florida Statutes, because defendants are Florida corporations and residents located and doing business in this county, and because Distribuidora does business in this COWlty and has agents or representatives in this county_

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7 General Allegations 15. In August 1988, Mr. Guerra entered into an exclusive recording contract ("Base Agreement") with Distribuidora. Defendant Bienvenido Rodriguez signed the Base Agreement as the representative for Distribuidora. 16. Pursuant to Articles 2 and 6 of the Base Agreement, Mr. Guerra granted Distribuidora his exclusive recording services and the exclusive worldwide right to produce, market and sell master recordings ("Records") embodying the recorded musical performances of Juan Luis Guerra. In particular, the Base Agreement required Mr. Guerra to record three long playing master records, each containing a minimum of eight musical compositions ("Musical Compositions") to be selected and approved by Distribuidora. 17. In exchange for granting Distribuidora these rights, Distribuidora agreed to pay Mr. Guerra royalties from all the record sales ofthe Musical Compositions. Pursuant to the Article 9 ofthe Base Agreement, Mr. Guerra was entitled to receive $0.50 for every record sold in the United States and Puerto Rico, and 50% of the sale revenues for all records sold elsewhere. 18. In September 1992, Mr. Guerra and Distribuidora entered an "Amended Contract" that enhanced Mr. Guerra's royalty rates. Bienvenido Rodriguez signed the Amended Contract as the representative for Distribuidora. 19. Pursuant to the Amended Contract, effective October 1, 1992, Mr. Guerra, was entitled to receive in addition to all other royalty payments: (a) 14% of the wholesale sales price of Records, less distributor discounts for all Records sold, beginning with his 1992 recording of "Areito;" and (b) 10.5% of the wholesale sales price of Records, less distributor discounts, for all sales ofthe 1989 recording of"ojala Que Llueva Cafe" and 1990 recording of"bachata Rosa."

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9 " 20. In addition, under the Amended Contract, Mr. Guerra is entitled to retain 70% of the performance, authorship, and mechanical reproduction rights (commonly referred to in the recording industry as "publishinglsongwriting revenues") ofthose Musical Compositions recorded pursuant to the Base Agreement, as amended, commencing with those Musical Compositions embodied on "Arleto." 21. In 2006, Mr. Guerra and Distribuidora entered another agreement known as the Release Agreement for the partial release ofcertain obligations under,the Base Agreement, and to further enhance Mr. Guerra's royalty rates. Once again, Bienvenido Rodriguez signed as the representative for Distribuidora. 22. Pursuant to the Release Agreement, Mr. Guerra is entitled to receive 14% of the wholesale sales price of Records, less distributor discounts, for all Records produced and sold under the Base Agreement and Amended Contract. Additionally, Mr. Guerra is entitled to 70% ofthe publishing and songwriting revenues generated by reason of the exploitation ofmusical Compositions (i.e., those musical compositions created under the Base Agreement). 23. Collectively, the Recording Contract, Amended Contract, and Release Amended Contract will be referred to hereinafter as the "Contracts." 24. Since 1992, Karen Records, and Karen Publishing (together the "Karen Companies") have performed Distribuidora's duties and obligations under the Contracts. For example, the Karen Companies compile the royalty reports, and royalty payments made to Mr.. Guerra are typically paid from the Karen Companies bank accounts at Ocean Bank and/or Commerce Bank in Miami, Florida, or at times from the personal bank account ofbienvenido and Isabel Rodriquez, the owners and principals of Distribuidora and the Karen Companies. 25. Upon information and belief, the worldwide sales of Mr. Guerra's recordings exceed 20 million records, yet since 1998 Mr. Guerra has been paid little in royalties or other

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11 payments. While Mr. Guerra has received some royalty payments, those payments are far below what he should have been paid based on the estimated worldwide sale of his recordings. Moreover, while Mr. Guerra has been provided some quarterly accounting reports ("Artist Royalty Statements") from the Karen Companies which purport to show royalty payments owed to him, these reports are not accompanied by payment, and often contain incorrect entries indicating that royalties were paid when in fact no such payments were ever made or received by Mr. Guerra. 26. The Karen Companies and the Rodriguez defendants have refused to provide Mr. Guerra with a proper accounting of sales of his recordings and calculation of royalties despite repeated demands. 27. Upon information and belief, Bienvenido and Isabel Rodriguez have dominated and controlled Distribuidora and the Karen Companies to such an extent that their independent existence from the Rodriguez' is in fact non-existent. The Rodriguez defendants co-mingle the operations, money and assets ofdistribuidora with the Karen Companies and themselves, and cause these companies to do business as each other or for the personal business of the Rodriguez' to such an extent that the companies are mere instrumentalities of themselves, or alter egos ofeach other or the Rodriguez defendants. 28. By virtue ofusing Distribuidora and the Karen Companies as their alter ego companies, both Bienvenido and Isabel Rodriguez are individually liable to Mr. Guerra for the unlawful conduct of Distribuidora and the Karen Companies in breaching the contractual obligations owed to Mr. Guerra under the Contracts. 29. Plaintiff has retained the law firm ofkozyak Tropin & Throckmorton, P.A to represent him in this action, and is obligated to pay a reasonable fee for its services.

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13 30. All conditions precedent to bringing this action have been performed, waived, have occurred, or have been excused. COUNT I BREACH OF CONTRACT 31. Plaintiff incorporates by reference the allegations contained in paragraphs 1 through 30 above. 32. Mr. Guerra entered into valid and existing Contracts with Distribuidora, who is doing business in Florida as Karen Records and Karen Publishing. 33. Under the Contracts, Mr. Guerra gave Defendants the exclusive rights to his recording services and the exclusive rights to commercially exploit Records embodying those performances, as well as certain rights in the Musical Compositions, in exchange for royalties and other payments. 34. Mr. Guerra has performed all of his obligations under the Contracts and is entitled to receive full royalty payments from Defendants. 35. Defendants have breached the Contracts by refusing to pay Mr. Guerra the royalties and other payments due and owing, and for providing false and misleading royalty statements. 36. As a result of the breach, Mr. Guerra has been damaged in an amount exceeding $15,000, excluding attorney's fees and costs. 37. As a result of Distribuidora doing business in Florida as Karen Records and Karen Publishing, each is liable to Mr. Guerra for all amounts due and owing under the Contracts. Moreover, Bienvenido and Isabel Rodriguez are each individually liable for the breach because they operate Distribuidora and the Karen Companies as their alter ego without distinction from themselves.

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15 COUNTD EQUITABLE ACCOUNTING 38. Plaintiff incorporates by reference the allegations contained in paragraphs 1 through 30 above. 39. This is an action for an equitable accounting. 40. Mr. Guerra is owed various categories of royalties from Distribuidora under the Contracts for which he has not been paid. Mr. Guerra has requested and been denied sales, royalty calculations and other infonnation related to the sales of Records pursuant to the Contracts. 41. Upon infonnation and belief based on the estimated worldwide sales ofhis Records, Mr. Guerra believes that Defendants have failed to account for sales and other sources of revenue when calculating royalties and other payments owed to him, and to provide accurate infonnation in reports delivered to him. 42. Defendants have possession of the books and records and other financial records from which a proper accounting can be made of all sales and other transactions relating to Mr. Guerra's recordings and royalties and other payments owed to Mr. Guerra. 43. Furthennore, an accounting is required from all defendants because all money and assets of the defendants relating to the Contracts and Mr. Guerra have been co-mingled among many different entities and accounts. 44. Mr. Guerra has no adequate remedy at law because absent an accounting there has not other way to detennine amounts owed to him under the Contracts. COUNT III DECLARATORY RELIEF 45. Plaintiff incorporates by reference the allegations contained in paragraphs 1 through 30 above.

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17 46. Paragraph seven of the 2006 Release Agreement provides that for a sole and irrevocable tenn of three years, or from October 23,2006, to October 23,2009 ("Three-Year Tenn"), Mr. Guerra is entitled to 70 percent of all the publishing and songwriting royalties generated by the Musical Compositions created under the Base Agreement, and Defendant Distribuidora is entitled to 30 percent of such royalties. 47. Paragraph seven further provides that after the expiration ofthe Three-Year Tenn, or on October 23,2009, Mr. Guerra is entitled to collect and keep 100 percent ofthe publishinglsongwriting royalties generated by the exploitation ofthe Musical Compositions created under the Base Agreement. 48. On October 23,2009, Mr. Guerra served a notice on Defendants Distribuidora and Mr. Rodriguez that the Three-Year Tenn provided in the Seventh Paragraph had expired and that Mr. Guerra was entitled to collect and keep 100 percent of the publishinglsongwriting royalties generated by the exploitation of the Musical Compositions created under the Base Agreement. 49. Defendants never responded or objected to Mr. Guerra's notice. 50. Recently, however, Defendants served notice on Mr. Guerra that they are entitled to 30 percent of the publishinglsongwriting royalties generated by the Musical Compositions created under the Base Agreement, as though the Three-Year Tenn had never, and will never, expire. 51. Defendants' collection and retention of any royalties related to the Musical Compositions created under the Base Agreement would be a violation of the Release Agreement. 52. Pursuant to section , Florida Statutes, "[a]ny person claiming to be interested or who may be in doubt about his or her rights under a... contract... may have

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19 determined any question of construction or validity arising under such... contract... and obtain a declaration of rights, status, or other equitable or legal relationship thereunder." 53. Moreover, "[a] contract may be construed either before or after there has been a breach of it." , Fla. Stat. 54. Mr. Guerra is an interested party pursuant to section and requests that the Court declare the parties' respective rights with regard to the 2006 Release Agreement such that Juan Luis Guerra (or his publishing entity) be granted the "administration rights" in and to all of the Musical Compositions created under the Base Agreement, and that such "administration rights" include but are not limited to the rights to license the exploitation ofthe Musical Compositions in all forms ofmedia, technologies and configurations, to collect all monies earned whatsoever from the exploitation ofthe Musical Compositions, and to license public performance rights in and to the Musical Compositions. 55. Defendants' recent notice and attempt to collect and retain any ofthe royalties related to the Musical Compositions generated under the Base Agreement creates a present, ripe controversy that raises doubts about the parties' respective contractual rights and requires the interpretation ofa contract. WHEREFORE, Plaintiff, Juan Luis Guerra Seijas, respectfully requests that this Court: a) Enter a judgment against Karen Records, Inc., Karen Publishing Company, Distribuidora de Discos Karen, C Por A, Bienvenido Rodriguez, and Isabel Rodriguez for damages; b) Enter an order requiring Defendants to provide to Mr. Guerra a full accounting for all transactions related to Mr. Guerra and the Contracts; c) Require Defendants to immediately provide for inspection and reconciliation all books, records and other financial documents related Mr. Guerra and the Contracts;

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21 d) Declare that since October 23,2009, pursuant to paragraph Seventh ofthe 2006 Release Agreement, Defendants are not entitled to any of the publishing/songwriting revenues related to the Musical Compositions created under the Base Agreement; e) Award Mr. Guerra his attorney's fees, costs and expenses incurred in the accounting and in bringing this action; and f) Grant such additional relief as this Court deems appropriate. DEMAND FOR JURY TRIAL Plaintiff, Juan Luis Guerra Seijas, demands trial by jury ofall triable issues Dated this 20th day ofjune Respectfully submitted, KOZY AK TROPIN & THROCKMORTON, P.A. Counsel for Plaintiff 2525 Ponce de Leon Boulevard 9 th Floor Coral Gables, Florida Tel: (305) I Fax:(305) By: Gl?~~ Fla. Bar No Daniel Cervantes Fla. Bar No

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