FILED: NEW YORK COUNTY CLERK 01/24/2014 INDEX NO /2013 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 01/24/2014

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1 FILED NEW YORK COUNTY CLERK 01/24/2014 INDEX NO /2013 NYSCEF DOC. NO. 6 RECEIVED NYSCEF 01/24/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x MAGILLA ENTERTAINMENT LLC, Plaintiff-Counterclaim Defendant, -against- AARON ROTHMAN, individually and doing business as HAYMAKER PRODUCTIONS, LLC and HAYMAKER MEDIA INC., Defendants-Counterclaim Plaintiffs x AARON ROTHMAN, individually and doing business as HAYMAKER PRODUCTIONS, LLC and HAYMAKER MEDIA INC., Third-Party Plaintiffs, -against- JASON FOX, Third-Party Defendant x Index No /13 THIRD-PARTY SUMMONS Index No /13 Date Purchased TO THE ABOVE-NAMED THIRD-PARTY DEFENDANT You are hereby summoned to answer the Third-Party Summons and Complaint, copies of which together with copies of all prior pleadings in this action are herewith served upon you and to serve copies of your Answer upon the attorneys to this action as stated below. If this Third-Party Summons and Complaint was personally served upon you in the State of New York, the answer must be served within twenty (20) days after such service, excluding the date of service. If the Third-Party Summons and Complaint was not personally delivered on you within the State of New York, the answer must be served within thirty (30) days after Doc# 5 16,904v1 1

2 service of the summons is complete as provided by law. If you do not serve an answer to the attached Third-Party Summons and Complaint within the applicable time limitation stated above, a judgment may be entered against you, by default, for the relief demanded in the Third-Party Complaint. Dated New York, New York January 24, 2014 RAINES FELDMAN LLP By Richard Decker, Esq. Marc Berkemeier, Esq. Miles Feldman, Esq. (Pro Hac Vice Pending) 9720 Wilshire Boulevard, 5 th Floor Beverly Hills, California Telephone (310) MEISTER SEELIG & FEIN LLP 2 Grand Central Tower 140 East 45 th Street, 19 th Floor New York, New York Telephone (212) Attorneys for Defendants/ Counterclaimants/Third Party Plaintiffs Aaron Rothman, Haymaker Productions, LLC and Haymaker Media, Inc To Mark S. Frey Frey & Kozak LLP 358 Fifth Avenue Suite 1003 New York, New York (212) Attorneys for Plaintiff/Counterclaim Defendant Magilla Entertainment LLC Doc# 5 16,904v1 2

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x MAGILLA ENTERTAINMENT LLC, Plaintiff-Counterclaim Defendant, -against- AARON ROTHMAN, individually and doing business as HAYMAKER PRODUCTIONS, LLC and HAYMAKER MEDIA INC., Defendants-Counterclaim Plaintiffs. AARON ROTHMAN, individually and doing business as HAYMAKER PRODUCTIONS, LLC and HAYMAKER MEDIA INC., JASON FOX, -against- Third-Party Plaintiffs Third-Party Defendant x Index No /13 (Justice Kapnick) DEFENDANTS ANSWER, COUNTERCLAIMS AND THIRD PARTY COMPLAINT Third Party Action Index No. Defendants Aaron Rothman ( Rothman ), individually and doing business as Haymaker Productions, LLC ( Haymaker Productions ) and Haymaker Media Inc. ( Haymaker Media ) (collectively Defendants ), by their undersigned counsel, state as follows for their Answer, Counterclaims, and Third-Party Complaint in response to the Complaint ( Complaint ) of Plaintiff Magilla Entertainment LLC ( Plaintiff or Magilla ), which was filed on or about December 10,

4 INTRODUCTION 1. Defendants deny the allegations in paragraph 1 of the Complaint, except that Defendants admit that Plaintiff agreed to provide Rothman with office space, overhead, and a development budget consisting of in-kind services and cash allocations. Defendants also admit that Rothman s company was developing non-scripted television concepts to pitch to television networks. 2. Defendants deny the allegations in paragraph 2 of the Complaint. 3. Defendants deny the allegations in paragraph 3 of the Complaint, except that Defendants admit that Rothman had a production deal with the Bravo television network for a reality television show entitled Southern Charm. THE PARTIES 4. Defendants admit the allegations in paragraph 4 of the Complaint on information and belief. 5. Defendants admit the allegations in paragraph 5 of the Complaint. 6. Defendants admit the allegations in paragraph 6 of the Complaint. 7. Defendants deny the allegations in paragraph 7 of the Complaint, except that Defendants admit that Rothman resides in the City, County, and State of New York. Defendants further aver that Rothman is a managing partner of Haymaker Productions and Haymaker Media. 8. Defendants deny the allegations in paragraph 8 of the Complaint, except that Defendants admit that Rothman is a managing partner of Haymaker Productions and Haymaker Media. JURISDICTION AND VENUE 9. Defendants deny the allegations in paragraph 9 of the Complaint, except that Defendants admit that Haymaker Productions and Haymaker Media have their principal places of 2

5 business in the State of New York. Defendants also admit that Rothman is a resident of the State of New York. 10. Defendants deny the allegations in paragraph 10 of the Complaint. 11. Defendants deny the allegations in paragraph 11 of the Complaint. FACTS 12. Defendants have no information and belief and, based thereon, deny the allegations in paragraph 12 of the Complaint. 13. Defendants have no information and belief and, based thereon, deny the allegations in paragraph 13 of the Complaint. 14. Defendants have no information and belief and, based thereon, deny the allegations in paragraph 14 of the Complaint. 15. Defendants deny the allegations in paragraph 15 of the Complaint. 16. Defendants deny the allegations in paragraph 16 of the Complaint. 17. Defendants deny the allegations in paragraph 17 of the Complaint, except that Defendants admit that Rothman did engage in negotiations with Magilla about possibly forming a business partnership. 18. Defendants deny the allegations in paragraph 18 of the Complaint, except that Defendants admit that Plaintiff agreed to provide Rothman with office space, overhead, personnel, back office production capabilities, equipment, and a development budget of $200, per year consisting of in-kind services and cash allocations. Defendants aver, however, that Plaintiff never followed through with its agreement. 19. Defendants deny the allegations in paragraph 19 of the Complaint. 20. Defendants deny the allegations in paragraph 20 of the Complaint. 3

6 21. Defendants deny the allegations in paragraph 21 of the Complaint, except that Defendants admit that Plaintiff agreed to provide Defendants certain in-kind services that would be offered at a reduced in-house rate that would be lower than the fair market rate of such services. 22. Defendants deny the allegations in paragraph 22 of the Complaint. 23. Defendants deny the allegations in paragraph 23 of the Complaint. 24. Defendants deny the allegations in paragraph 24 of the Complaint. 25. Defendants deny the allegations in paragraph 25 of the Complaint. 26. Defendants deny the allegations in paragraph 26 of the Complaint. 27. Defendants deny the allegations in paragraph 27 of the Complaint. 28. Defendants deny the allegations in paragraph 28 of the Complaint, except that Defendants admit that Rothman did not sign the Deal Memo referenced in paragraph 28 of the Complaint. 29. Defendants deny the allegations in paragraph 29 of the Complaint. 30. Defendants deny the allegations in paragraph 30 of the Complaint. 31. Defendants deny the allegations in paragraph 31 of the Complaint, except that Defendants admit that they had a production agreement with Bravo for Southern Charm. 32. Defendants deny the allegations in paragraph 32 of the Complaint. 33. Defendants deny the allegations in paragraph 33 of the Complaint. 34. Defendants deny the allegations in paragraph 34 of the Complaint. 35. Defendants deny the allegations in paragraph 35 of the Complaint. 36. Defendants deny the allegations in paragraph 36 of the Complaint. 37. Defendants deny the allegations in paragraph 37 of the Complaint. 38. Defendants deny the allegations in paragraph 38 of the Complaint. 4

7 39. Defendants deny the allegations in paragraph 39 of the Complaint, except that Defendants admit that Magilla sent Haymaker Productions invoices. 40. Defendants deny the allegations in paragraph 40 of the Complaint. 41. Defendants deny the allegations in paragraph 41 of the Complaint. 42. Defendants deny the allegations in paragraph 42 of the Complaint. 43. Defendants deny the allegations in paragraph 43 of the Complaint, except that Defendants admit that they began to move their staff and equipment out of the Magilla offices on July 19, Defendants aver that Magilla had ordered Defendants to move out of Magilla s offices on that date. 44. Defendants deny the allegations in paragraph 44 of the Complaint. 45. Defendants deny the allegations in paragraph 45 of the Complaint, except that Defendants admit that it sent Plaintiff a check for $367, Defendants deny the allegations in paragraph 46 of the Complaint. 47. Defendants deny the allegations in paragraph 47 of the Complaint. 48. Defendants deny the allegations in paragraph 48 of the Complaint, except that Defendants admit that Magilla negotiated the check for $367, AS AND FOR A FIRST CAUSE OF ACTION AGAINST ALL DEFENDANTS (Breach of Contract) 49. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 50. Defendants deny the allegations in paragraph 50 of the Complaint. 5

8 51. Defendants deny the allegations in paragraph 51 of the Complaint, except that Defendants admit that Plaintiff agreed to provide Defendants with office space, overhead, cash, credit, and goods and services at a substantially reduced rate. 52. Defendants deny the allegations in paragraph 52 of the Complaint. 53. Defendants deny the allegations in paragraph 53 of the Complaint. 54. Defendants deny the allegations in paragraph 54 of the Complaint. 55. Defendants deny the allegations in paragraph 55 of the Complaint. 56. Defendants deny the allegations in paragraph 56 of the Complaint. 57. Defendants deny the allegations in paragraph 57 of the Complaint. 58. Defendants deny the allegations in paragraph 58 of the Complaint. 59. Defendants deny the allegations in paragraph 59 of the Complaint. AS AND FOR A SECOND CAUSE OF ACTION AGAINST ALL DEFENDANTS (Fraud) 60. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 61. Defendants deny the allegations in paragraph 61 of the Complaint. 62. Defendants deny the allegations in paragraph 62 of the Complaint. 63. Defendants deny the allegations in paragraph 63 of the Complaint. 64. Defendants deny the allegations in paragraph 64 of the Complaint. 65. Defendants deny the allegations in paragraph 65 of the Complaint. 66. Defendants deny the allegations in paragraph 66 of the Complaint. 67. Defendants deny the allegations in paragraph 67 of the Complaint. 68. Defendants deny the allegations in paragraph 68 of the Complaint. 6

9 AS AND FOR A THIRD CAUSE OF ACTION AGAINST ALL DEFENDANTS (Quantum Meruit) 69. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 70. Defendants deny the allegations in paragraph 70 of the Complaint. 71. Defendants deny the allegations in paragraph 71 of the Complaint. 72. Defendants deny the allegations in paragraph 72 of the Complaint. AS AND FOR A FOURTH CAUSE OF ACTION AGAINST ALL DEFENDANTS (Breach of Implied Covenant of Good Faith and Fair Dealing) 73. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 74. Defendants deny the allegations in paragraph 74 of the Complaint. 75. Defendants deny the allegations in paragraph 75 of the Complaint. 76. Defendants deny the allegations in paragraph 76 of the Complaint. 77. Defendants deny the allegations in paragraph 77 of the Complaint. AS AND FOR A FIFTH CAUSE OF ACTION AGAINST ALL DEFENDANTS (Unfair Competition) 78. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 79. Defendants deny the allegations in paragraph 79 of the Complaint. 80. Defendants deny the allegations in paragraph 80 of the Complaint. 81. Defendants deny the allegations in paragraph 81 of the Complaint. 82. Defendants deny the allegations in paragraph 82 of the Complaint. 7

10 83. Defendants deny the allegations in paragraph 83 of the Complaint. AS AND FOR A SIXTH CAUSE OF ACTION AGAINST ALL DEFENDANTS (Tortious Misappropriation of Goodwill) 84. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 85. Defendants deny the allegations in paragraph 85 of the Complaint. 86. Defendants deny the allegations in paragraph 86 of the Complaint. 87. Defendants deny the allegations in paragraph 87 of the Complaint. AS AND FOR A SEVENTH CAUSE OF ACTION AGAINST ALL DEFENDANTS (Violation of Section 349 of the General Business Law) 88. Defendants repeat and reallege their responses to paragraphs 1 48 above as if fully set forth herein. 89. Defendants deny the allegations in paragraph 89 of the Complaint. 90. Defendants deny the allegations in paragraph 90 of the Complaint. 91. Defendants deny the allegations in paragraph 91 of the Complaint. 92. Defendants deny the allegations in paragraph 92 of the Complaint. The Wherefore clause that begins at the end of the Seventh Cause of Action on page 16 of the Complaint sets forth a demand for relief that requires no response; to the extent a response is required, Defendants deny the allegations and deny causing any damages to Plaintiff. AFFIRMATIVE DEFENSES Without assuming any burden of proof that it would not otherwise bear, Defendants assert the additional defenses below and expressly reserve and do not waive the right to assert any and all 8

11 additional defenses at such time and to such extent as discovery and factual developments establish a basis therefore. FIRST AFFIRMATIVE DEFENSE (Failure to State a Claim) 93. The allegations of the Complaint fail to state a claim upon which relief can be granted. SECOND AFFIRMATIVE DEFENSE (Good Faith) 94. Defendants at all times acted in the exercise of good faith and reasonableness with respect to Plaintiff. THIRD AFFIRMATIVE DEFENSE (Failure to Mitigate) 95. Plaintiff has suffered no damages and/or failed to mitigate its damages. FOURTH AFFIRMATIVE DEFENSE (Third Party Causation) 96. Any and all damages alleged to have been suffered by Plaintiff were not caused by or related to any act and/or omission chargeable to Defendants. FIFTH AFFIRMATIVE DEFENSE (Third Party Conduct) 97. Plaintiff s claims are barred, in whole or in part, because any damages purportedly suffered by Plaintiff were the result of the conduct of third parties. 9

12 SIXTH AFFIRMATIVE DEFENSE (Speculative Damages) 98. Plaintiff s claims are barred in whole or in part because Plaintiff s alleged damages, if any, are speculative. SEVENTH AFFIRMATIVE DEFENSE (Unclean Hands) 99. Plaintiff is estopped and barred, in whole or in part, by its own conduct from recovering the relief being sought. EIGHTH AFFIRMATIVE DEFENSE (Laches, Estoppel, and Waiver) 100. Plaintiff s claims are barred, in whole or in part, by the doctrine of laches, estoppel, and waiver. NINTH AFFIRMATIVE DEFENSE (Statute of Limitations) 101. The Complaint should be dismissed because Plaintiff s claims are precluded by applicable statutes of limitations TENTH AFFIRMATIVE DEFENSE (Offset and Recoupment) 102. Plaintiff s claims are barred, in whole or in part, by the doctrine of offset and recoupment. 10

13 ELEVENTH AFFIRMATIVE DEFENSE (Business Judgment Rule) 103. Plaintiff s claims are barred, in whole or in part, by New York s Business Judgment Rule. TWELFTH AFFIRMATIVE DEFENSE (Excuse from Performance) 104. Plaintiff is barred from claiming or recovering any relief on the grounds that Plaintiff excused Defendants from performing certain duties or obligations set forth in the parties deal memorandum. THIRTEENTH AFFIRMATIVE DEFENSE (Prevention of Performance) 105. Plaintiff is barred from claiming or recovering any relief on the grounds that Plaintiff prevented Defendants from performing certain duties or obligations set forth in the parties deal memorandum. FOURTEENTH AFFIRMATIVE DEFENSE (No Loss Occurred) 106. Defendants deny that Plaintiff sustained any damage or loss, if any, by reason of omission on the part of Defendants, or any agent, servant, or employee of Defendants. FIFTEENTH AFFIRMATIVE DEFENSE (Unjust Enrichment) 107. The Complaint, and/or each purported claim contained therein, is barred, in whole or in part, because such recovery would result in unjust enrichment to Plaintiff. 11

14 SIXTEENTH AFFIRMATIVE DEFENSE (Frivolous Claims) 108. The Complaint, and/or each purported claim contained therein, is barred, in whole or in part, on the ground that it is frivolous, unreasonable, not brought in good faith and groundless. Accordingly, Defendants are entitled to recover all costs and attorneys fees incurred herein. SEVENTEENTH AFFIRMATIVE DEFENSE (Consent/Ratification) 109. The Complaint, and/or each claim contained therein, is barred, in whole or in part, on the ground that Plaintiff expressly and/or impliedly consented to, ratified and/or acquiesced in the alleged acts or omissions, if any, and is therefore barred from any relief as prayed for in the Complaint. EIGHTEENTH AFFIRMATIVE DEFENSE (Justification) 110. The conduct of Defendants was at all times justified under the circumstances. NINETEENTH AFFIRMATIVE DEFENSE (Business Necessity) 111. Defendants contend that any and all conduct of which Plaintiff complains and which is attributed to Defendants was accomplished for and conducted due to business necessity. TWENTIETH AFFIRMATIVE DEFENSE (Express and Implied Consent) 112. Defendants allege that they acted, at all times mentioned in the Complaint, with the express or implied consent of Plaintiff. 12

15 TWENTY-FIRST AFFIRMATIVE DEFENSE (Failure of Consideration) 113. Plaintiff s claims are barred by the doctrine of failure of consideration. TWENTY-SECOND AFFIRMATIVE DEFENSE (Lack of Consideration) 114. Plaintiff s claims are barred by the doctrine of lack of consideration. TWENTY-THIRD AFFIRMATIVE DEFENSE (Acted in Strict Accordance) 115. At all times relevant herein, Defendants were guided by and acted in strict accordance with all of their legal duties and obligations imposed by the agreements, if any, and governing law. TWENTY-FOURTH AFFIRMATIVE DEFENSE (No Breach) 116. Defendants did not breach any duty owed to Plaintiff pursuant to the terms of any agreements, if any, or as required by governing statutory or common law. TWENTY-FIFTH AFFIRMATIVE DEFENSE (Performance of Obligations) 117. Defendants have performed all of their obligations with regard to any agreements entered into with Plaintiff. TWENTY-SIXTH AFFIRMATIVE DEFENSE (Failure of Condition Precedent) 118. To the extent that a condition precedent to any recovery by Plaintiff, as required by any contractual agreement, written, oral, and/or otherwise demonstrated by course of performance or the custom of the trade, has not occurred, the claims in the Complaint are barred in whole or in part. 13

16 TWENTY-SEVENTH AFFIRMATIVE DEFENSE (Breach by Plaintiff) 119. To the extent that there is a finding that there existed a contract between Plaintiff and Defendants, Plaintiff failed to abide by and comply with the terms of the written and/or oral contracts it entered into with Defendants which deprived Defendants of the benefits they had under such agreements. TWENTY-EIGHTH AFFIRMATIVE DEFENSE (Material Breach) 120. Plaintiff failed and refused to perform those contractual and other legal obligations required under the terms of the parties alleged contract, and thereby materially breached that contract. By virtue of Plaintiff s material breaches, Defendants are excused and exonerated from any performance or obligation of any kind or nature whatsoever under the contract. TWENTY-NINTH AFFIRMATIVE DEFENSE (Invalid or Unenforceable Contract) 121. Plaintiff s claims for breach of contract are barred in that the purported contract on which Plaintiff bases its action is unlawful, void, unenforceable, and invalid as a matter of law. THIRTIETH AFFIRMATIVE DEFENSE (Statute of Frauds) 122. The Complaint is barred because Plaintiff is attempting to enforce an agreement that was required to be in writing to be enforceable. 14

17 THIRTY-FIRST AFFIRMATIVE DEFENSE (Fraud, Mistake, Duress) 123. To the extent that Defendants entered into any agreements due to fraud, mistake, and/or duress, the Complaint is barred in whole or in part. THIRTY-SECOND AFFIRMATIVE DEFENSE (Payment In Full) 124. To the extent Defendants have paid Plaintiff in full for all services provided by Plaintiff, Plaintiff s causes of action find no basis in law or fact and are barred. THIRTY-THIRD AFFIRMATIVE DEFENSE (Apportionment of Fault) 125. Plaintiff is legally responsible or otherwise at fault for the damages alleged in the Complaint. Defendants therefore request that in the event of a finding of any liability in favor of Plaintiff or settlement or judgment against Defendants, an apportionment of fault be made among all parties. THIRTY-FOURTH AFFIRMATIVE DEFENSE (Not Willful) 126. The alleged conduct of which Plaintiff complains, if committed, which Defendants deny, was not willful or malicious, but rather was made in good faith, honestly, and in the exercise of Defendants good faith business judgment. 15

18 THIRTY-FIFTH AFFIRMATIVE DEFENSE (Defendants Conduct Not Unlawful Or Unfair) 127. Defendants business practices were not unlawful or unfair, in that Defendants complied with all applicable statutes and regulations. As a result, Defendants conduct did not amount to commercial piracy. THIRTY-SIXTH AFFIRMATIVE DEFENSE (Defendants Conduct Not Fraudulent Or Likely To Mislead or Deceive) 128. Defendants business practices were not fraudulent and were not likely to mislead or deceive Plaintiff (or the public), in that Defendants did not make, and the Complaint does not allege, any false representation by Defendants. THIRTY-SEVENTH AFFIRMATIVE DEFENSE (Breach of Implied Covenant of Good Faith and Fair Dealing) 129. Plaintiff s claims for breach of contract are barred by Plaintiff s breach of the covenant of good faith and fair dealing implied in the contract alleged in the Complaint. THIRTY-EIGHTH AFFIRMATIVE DEFENSE (Res Judicata/Collateral Estoppel/Claims Preclusion/Issue Preclusion) 130. Defendants allege that Plaintiff s claims in this matter are barred based on the doctrines of res judicata, collateral estoppel, claim preclusion, and/or issue preclusion. THIRTY-NINTH AFFIRMATIVE DEFENSE (Failure to State a Claim for Punitive Damages) 131. The Complaint fails to state facts sufficient to constitute a claim for exemplary or punitive damages. 16

19 FORTIETH AFFIRMATIVE DEFENSE (Violation of Procedural Due Process) 132. The Complaint, to the extent that it seeks exemplary or punitive damages, violates Defendants right to procedural due process under the Fourteenth Amendment of the United States Constitution and the Constitution of the State of New York, and therefore fails to state a cause of action upon which exemplary or punitive damages can be awarded. FORTY-FIRST AFFIRMATIVE DEFENSE (Violation of Substantive Due Process) 133. The Complaint, to the extent that it seeks exemplary or punitive damages, violates Defendants right to substantive due process under the Fourteenth Amendment of the United States Constitution and the Constitution of the State of New York, and therefore fails to state a cause of action upon which exemplary or punitive damages can be awarded. FORTY-SECOND AFFIRMATIVE DEFENSE (Violation of Equal Protection) 134. The Complaint, to the extent that it seeks exemplary or punitive damages, violates Defendants right to equal protection under the Fourteenth Amendment of the United States Constitution and the Constitution of the State of New York, and therefore fails to state a cause of action upon which exemplary or punitive damages can be awarded. FACTS COMMON TO ALL CAUSES OF ACTION PARTIES 1. Upon information and belief, at all times relevant herein, Counterclaim Defendant Magilla Entertainment LLC ( Magilla ) was and is a limited liability corporation duly organized and 17

20 existing under and by virtue of the laws of the State of New York, and maintains an office for the transaction of business in the City, County, and State of New York. 2. Upon information and belief, at all times relevant herein, Third Party Defendant Jason Fox ( Fox ) works in the City, County, and State of New York as the general manager of Magilla, and has been doing so since October Prior to that, he worked as a talent agent at CAA in the City, County, and State of New York, and represented both Aaron Rothman ( Rothman ) and Magilla. 3. Counterclaimant/Third Party Plaintiff Haymaker Productions, LLC ( Haymaker Productions ) was and is a limited liability corporation duly organized and existing under the laws of the State of New York, and maintains an office for the transaction of business in the City, County, and State of New York. 4. Counterclaimant/Third Party Plaintiff Haymaker Media Inc. ( Haymaker Media ) was and is a corporation duly organized and existing under the laws of the State of New York, and maintains an office for the transaction of business in the City, County, and State of New York. 5. Counterclaimant/Third Party Plaintiff Rothman is an individual who resides in the City, County, and State of New York. Rothman is a managing partner of Haymaker Productions and Haymaker Media. FACTS Rothman s Development Of Non-Scripted Television Shows 6. On or about July 4, 2012, Rothman optioned the rights for a non-scripted television program entitled Southern Charm, which was originally entitled Southern Gents (since these titles refer to the same non-scripted television program, that program is referred to below as Southern Charm ). Rothman shot the pilot for Southern Charm and then pitched it to several networks. 18

21 7. On or about July 13, 2012, the television network Bravo made an offer to purchase and air Southern Charm. None of the documentation between Bravo and Rothman, Haymaker Productions, and Haymaker Media stated that Magilla must be involved in the project. In fact, Magilla was not mentioned at all in said documentation. 8. On or about September 5, 2012, Rothman was working for Redline Films, and Josh Halpert ( Halpert ), a line producer, was working for him. On or about September 5, 2012, Halpert sent a full 6 x 60 budget to Bravo for the non-scripted television series Southern Charm, at Bravo s request. 9. On or about November 15, 2012, Lara Spotts, the vice president of Development at Bravo, sent Rothman creative notes on Southern Charm and stated that she wanted final delivery of the casting tape for that show by November 30, On or about December 12, 2012, Rothman sent Bravo a complete series plan and description (aka series bible ) for Southern Charm, per Bravo s request. Negotiations Between Haymaker And Magilla 11. On or about October 19, 2012, Magilla approached Rothman with a proposal to enter a deal where Magilla would provide Rothman production assistance. 12. On or about January 1, 2013, which was well after Rothman had negotiated with Bravo regarding purchasing Southern Charm, Rothman ed Fox (who was then still his agent at CAA) and Magilla his initial thoughts on entering a deal with Magilla for production assistance. Fox was also representing Magilla at that time. 13. On or about January 19, 2013, Rothman verbally agreed to deal points ed to him by Magilla. Matt Ostrom ( Ostrom ), a partner at Magilla, then mentioned in an that the parties 19

22 could draft an operating agreement on a future date if the parties agreed the business relationship was working. No document was signed between the parties on that date. 14. On or about February 1, 2013, Haymaker Productions and Magilla entered into a Deal Memorandum (the Deal Memo ). As part of the Deal Memo, Magilla partners Ostrom, Laura Palumbo, ( Palumbo ), and Brian Flanagan ( Flanagan ) agreed that Magilla would provide Haymaker Productions the following during the term of the Deal Memo, which was two years A development/overhead budget valued at $200, per year to be made in equal quarterly installments (i.e. $50, per quarter). This amount was described as being non-recoupable by Magilla. Its designated production personnel and in kind services (described below) to fulfill the development, pre-production, and post-production services customarily rendered by a first-class production company for each of the non-scripted television programs that Haymaker Productions successfully sold and/or licensed to a third party, such as Bravo. In kind services including designated office space at Magilla s current office location, internet and phone access, in-house development, editing, production equipment and production coordination, in-house production counsel, finance services, and information technology ( IT ) services. (Collectively referred to herein as In- Kind Services ). 15. The Deal Memo further stated that Haymaker Productions should use Magilla s production counsel to negotiate all of the terms and conditions of its production agreements, including, but not limited to, production schedules, budgets, credits, lock, exclusivity, and production/ep fees. 16. The Deal Memo further stated that, in the event any of the In-Kind Services were not otherwise included in the budget with a third party for the development and/or production of original 20

23 concepts such as non-scripted television programs, a rate for any such In-Kind Service would be negotiated in good faith by Haymaker Productions and Magilla and accounted for on a case-by-case basis. 17. In exchange for the benefits above, assuming that Magilla would actually provide said benefits to Haymaker Productions, Haymaker Productions agreed to offer Magilla a 33 and one-third percent (33.3%) membership interest in Haymaker Productions. Negotiations Between Rothman And Eyal 18. On or about February 8, 2013, Fox (who was both Rothman s and Magilla s agent) ed Adam Nettler ( Nettler ), who was Eyal s CAA agent, a proposed deal memo between Rothman and Eyal with multiple references to Magilla. Fox also ed Nettler the current working deal memo between Rothman and Magilla with the note Here is the final deal, not signed yet but working under. 19. On or about February 10, 2013, Rothman and Eyal verbally agreed to partnership deal points, which was negotiated on their behalves by their CAA agents (Fox and Nettler). 20. On or about February 15, 2013, Rothman sent an notifying Magilla that Eyal had joined him as a full business partner. Rothman also updated Magilla on his existing projects in that , and he described the Southern Charm project as moving forward at Bravo. 21. On or about February 16, 2013, Haymaker Media was formed. The Southern Charm project was contracted with Bravo under this entity. 22. On or about February 22, 2013, Rothman and Eyal signed the partnership agreement between them, negotiated by Nettler and Fox. 21

24 Magilla s Pattern And Practice Of Ignoring The Terms Of The Deal Memo 23. On or about February 20, 2013, Rothman and Eyal, as part of Haymaker Productions, had their first meeting with Magilla. In that meeting, Palumbo, a partner of Magilla, stated that, despite the clear terms in the Deal Memo that In-Kind Services would include production counsel, Haymaker Production s legal services would not be covered by Magilla under the terms of the Deal Memo and that it would not be possible to have Mark Ragone ( Ragone ) (i.e. Magilla s counsel) act as Haymaker Production s counsel without paying him separately. She suggested that Rothman discuss with Ragone his hourly rate. 24. Following the meeting on February 20, 2013, Palumbo ed Rothman stating that Haymaker Productions must hire and pay for its own back office production support, including production insurance, corporate legal services, accounting, payroll, health insurance, CPA services, and production legal services. This was despite the fact that the Deal Memo specifically stated that such back office production support would be included in the In-Kind Services. Palumbo included in that a cheat sheet with contacts and recommendations for hiring service providers for these services. 25. On or about March 1, 2013, Rothman sent the partners of Magilla an requesting a rate card for the services covered by the Deal Memo. Included in that was Rothman s concern that Magilla s lawyer (Ragone) was not considered "in house" as was previously discussed. Rothman also stated that Haymaker Productions was not expecting to pay full market rates for legal counsel, pursuant to the Deal Memo. 26. On or about March 4, 2013, Palumbo responded in an that she was going to work out rates with her accountant in regard to the overall rate card and that Ragone was charging Haymaker 22

25 Productions a fair and discounted rate. She therefore reiterated legal back office services would not be provided by Magilla despite the terms of the Deal Memo. 27. On or about March 8, 2013, Rothman received an from Valerie Smaltini, Magilla s vice president of operations, stating that Haymaker Productions needed to bring on a line producer, despite the inclusion of same as In-Kind Services in the Deal Memo as part of the backoffice support. Rothman responded stating that this was not what he believed to be in the Deal Memo. Palumbo responded later that day stating that it was better for Haymaker Productions to get its own line producer instead of using one of Magilla s. 28. On or about March 8, 2013, Magilla further advised Rothman that Haymaker Productions needed to hire its own accountant. Magilla advised that it did not have someone available to provide those services to Haymaker Productions, despite the inclusion of same as In-Kind Services in the Deal Memo as part of the back-office support. 29. On or about March 22, 2013, Palumbo ed Rothman asking why he had not yet signed the Deal Memo. She claimed that the deal was already closed and that the Deal Memo must be signed immediately. 30. On or about March 25, 2013, Palumbo ed Rothman asking him about his concerns and again pressuring him to sign the Deal Memo. Eyal sent an to Palumbo in response stating that, as a full partner of Haymaker Productions, he needed to sign off on the deal and that he had questions about it. Palumbo responded stating that the deal was already closed before Eyal and Rothman had entered their partnership. 31. On or about March 26, 2013, Rothman and Eyal met with Magilla to discuss their concerns. They again asked for a rate card to understand the fees that Haymaker Productions was accruing with Magilla and the non-recoupability of the $200, development fund. The 23

26 representatives from Magilla agreed during that meeting that the development money was owed and non-recoupable by Magilla. 32. Also on March 26, 2013, after receiving continued pressure from Palumbo and Fox (who was still both Rothman s agent and Magilla s agent at that time), Rothman signed the Deal Memo. 33. On or about April 8, 2013, Eyal ed Palumbo asking to withdraw money for living expenses, separate from a partner draw for partners, an idea he discussed with Palumbo and Ostrom previously. In her response, Palumbo stated that none of the $200, overhead/development budget would be owed or kick in until after the Southern Charm production budget from Bravo ran dry. This was contrary to the terms of the Deal Memo, which specifically stated that the $200, development/overhead budget would be paid on a quarterly basis during the first year of the parties agreement. This also was contrary to previous representations made by Ostrom, who stated that Magilla would not make money until Rothman, Haymaker Productions, and Haymaker Media did. 34. On or about April 23, 2013, Haymaker Productions asked for camera rental rates from Magilla. It received no response thereto. On or about April 26, 2013, Haymaker Productions advised that it would be renting some cameras from Magilla. Invoices And Rate Cards 35. On or about April 29, 2013, Haymaker Productions received its first invoice from Magilla (having not yet received the requested rate card). The invoice included charges for every service and equipment Haymaker Productions used at Magilla with no costs borne by Magilla per the $200, development budget in the Deal Memo. Furthermore, all of the services and rentals were being billed at rates that appeared to be equal or above market rate, despite the terms of the Deal Memo. 24

27 36. In fact, the April 29, 2013 invoice even included charges for any time Haymaker Productions communicated with anyone on Magilla s staff. It further included Magilla s charges for using its own attorney (Ragone) to negotiate the Deal Memo with Rothman. This attorney charge was later removed, but it still is indicative of a strategy and plan by Magilla to not follow the terms of the Deal Memo in an egregious manner. 37. After questioning various items on the April 29, 2013 invoice, Palumbo responded to Haymaker Productions stating that it must pay in full. Despite the terms of the Deal Memo, she stated that it was her understanding that if Haymaker Productions was "cash positive," it should be paying Magilla back in full and not drawing down the $200, development budget, even for development expenses unrelated to the Southern Charm series. 38. On or about May 21, 2013, Palumbo provided Haymaker Productions a rate card for the first time. It was clear that the rates were consistently above market rate, and that they may have been reverse-engineered from the Southern Charm budget to meet or exceed each budget line item. 39. On or about May 28, 2013, Rothman met with Flanagan, another partner of Magilla, in an attempt to resolve rate issues and to understand why the $200, development budget was not being paid. Flanagan stated during that meeting that Magilla would go back to the idea that it would provide great rates for all equipment, rentals, and office space. Flanagan further agreed that the development budget was not recoupable by Magilla, and that Haymaker Productions would probably spend the full amount of that budget. 40. On or about June 17, 2013, Palumbo ed Rothman and Eyal a revised rate card. She stated in the that she was providing rates on everything but camera rentals, even though Haymaker Productions had been using Magilla cameras on the Southern Charm shoot and still did not know what Magilla would be charging for them. The revised rate card also still did not include costs 25

28 for Magilla staff that Haymaker Productions had been invoiced for in the past. Also, the rates on the revised rate card were still not at below-market rates as promised for in the Deal Memo. In fact, Magilla could run a profit renting rooms and providing the services at the rates provided for in the revised rate card. 41. Haymaker Productions further attempted to receive clear statements from Magilla about the costs in the rate card and the $200, development budget, but received no further clarification or statements from Magilla. Haymaker Productions Move Out 42. On or about July 12, 2013, Haymaker s accountant, Cindy Borda, met with Magilla s controller, Eric Youngleman ( Youngleman ), to discuss a final invoice and Haymaker Production s planned move out of the Magilla offices. 43. On or about July 16, 2013, Eyal met with the Magilla partners in Los Angeles and advised them that Haymaker Productions was going to get out of the partnership and move out of Magilla s facilities. Eyal discussed this for an hour with Palumbo and reiterated it with Flanagan, Ostrom, and Fox. 44. On July 19, 2013, Haymaker Productions began its move out. It was told by Magilla that it needed to be out of the building by 600 pm. 45. On or about July 31, 2013, Halpert (with Haymaker Productions) ed Youngelman (with Magilla) asking for any remaining open invoices. Youngelman responded that the final invoices were out for review. Haymaker Productions Payment Of Invoices 46. On or about August 8, 2013, Halpert ed Youngelman again asking for the final Magilla invoices, which Haymaker Productions had not yet received. Youngelman responded via 26

29 with final invoices attached. A review of these invoices showed that Magilla was billing Haymaker Productions more than 200% of what a third party vendor was charging for identical camera rentals for Southern Charm, for example. 47. The total amount of the outstanding Magilla invoices was $366, This amount included at least $35, worth of services that, under the Deal Memo, should have been covered by the $200, development budget. 48. On or about September 3, 2013, Haymaker Productions delivered a check in the full amount of all remaining invoices totaling $367,259.46, at that time. Haymaker Productions wrote the following on the check Full pmt. for all materials & services provided for the project known as Southern Charm & full settlement of Haymaker Productions LLC/Magilla Deal Memo dated as of 2/1/ Magilla cashed the check on September 13, 2013 and wrote on the check Notwithstanding the foregoing this check is accepted without prejudice, under protest, and with full reservation of all rights. 50. On September 28, 2013, Haymaker Productions advised Magilla that it did not accept Magilla s reservation of rights. 51. Upon information and belief, Fox s employment with CAA ended on or about October 24, Upon information and belief, Magilla hired Fox to be its general manager on or about October 24, AS AND FOR A FIRST COUNTERCLAIM (Fraud Promise Without Intent To Perform) 52. Counterclaimants repeat and reallege each and every allegation set forth in paragraphs 1 51 of their Counterclaim as though fully set forth herein. 27

30 53. Upon information and belief, at the time Ostrom, Palumbo, and Flanagan, on behalf of Magilla, promised Rothman and Haymaker Productions that it would provide a development/overhead budget valued at $200, per year to be made in equal quarterly installments (i.e. $50, per quarter) as part of the Deal Memo, Magilla had the pre-conceived and undisclosed intent not to grant Rothman and Haymaker Productions this benefit under the Deal Memo. 54. Upon information and belief, at the time Ostrom, Palumbo, and Flanagan, on behalf of Magilla, promised Rothman and Haymaker Productions that it would provide its designated production personnel and In-Kind Services to fulfill the development, pre-production, and post-production services customarily rendered by a first-class production company for each of the non-scripted television programs that Haymaker Productions successfully sold and/or licensed to a third party, Magilla had the pre-conceived and undisclosed intent not to grant Rothman and Haymaker Productions this benefit under the Deal Memo. 55. Upon information and belief, at the time Ostrom, Palumbo, and Flanagan, on behalf of Magilla, promised Rothman and Haymaker Productions that it would provide In-Kind Services, including designated office space at Magilla s current office location, internet and phone access, inhouse development, editing, production equipment and production coordination, in-house production counsel, finance services, and IT services, Magilla had the pre-conceived and undisclosed intent not to grant Rothman and Haymaker Productions this benefit under the Deal Memo. 56. Upon information and belief, at the time Ostrom, Palumbo, and Flanagan, on behalf of Magilla, promised Rothman and Haymaker Productions that, in the event any of the In-Kind Services were not otherwise included in the budget with a third party for the development and/or production of original concepts such as non-scripted television programs, a rate for any such In-Kind Service would 28

31 be negotiated in good faith by Haymaker Productions and Magilla at favorable below market rates, Magilla had the pre-conceived and undisclosed intent not to negotiate such rates in good faith. 57. Magilla s representations about the benefits under the Deal Memo described in paragraphs were false when Magilla made them. 58. Rothman and Haymaker Productions are informed and believe, and thereon allege, that at the time Magilla made the representations described in paragraphs 53 56, Magilla knew that Magilla had no intention to perform its duties and obligations in the Deal Memo, and knew these representations and promises to be false. 59. In actuality, Magilla sought to use Haymaker Productions already negotiated deals with Bravo in relation to the non-scripted television program Southern Charm as a means of gaining additional financial benefits, production credits, and a closer relationship with Bravo and any other third party for which Haymaker Productions entered into a deal for television programs. 60. Haymaker Productions and Rothman reasonably relied upon the assurances and representations by Magilla about the benefits under the Deal Memo, as described in paragraphs Haymaker Productions and Rothman would not have entered into the Deal Memo with Magilla but for Magilla s representations about the benefits under the Deal Memo, as described in paragraphs In reliance upon Magilla s false representations, Rothman and Haymaker Productions have been damaged in an amount to be determined at trial, but in no event less than Three Hundred Sixty-Seven Thousand, Two Hundred Fifty-Nine Dollars and Forty-Six Cents ($367,259.46), together with interest and the costs and disbursement of this action, and punitive damages, all in an amount to be determined by the trier of fact in this case. 29

32 AS AND FOR A SECOND COUNTERCLAIM (Fraud-In-The-Inducement) 63. Counterclaimants repeat and reallege each and every allegation set forth in paragraphs 1 51 of their Counterclaim as though fully set forth herein. 64. During negotiations of the Deal Memo, Ostrom, Palumbo, and Flanagan, on behalf of Magilla, made representations and promises to Rothman and Haymaker Productions that Magilla would provide to Rothman and Haymaker Productions a development/overhead budget valued at $200, per year to be made in equal quarterly installments (i.e. $50, per quarter). 65. During negotiations of the Deal Memo, Ostrom, Palumbo, and Flanagan, on behalf of Magilla, made representations and promises to Rothman and Haymaker Productions that Magilla would provide Rothman and Haymaker Productions its designated production personnel and In-Kind Services to fulfill the development, pre-production, and post-production services customarily rendered by a first-class production company for each of the non-scripted television programs that Haymaker Productions successfully sold and/or licensed to a third party. 66. During negotiations of the Deal Memo, Ostrom, Palumbo, and Flanagan, on behalf of Magilla, made representations and promises to Rothman and Haymaker Productions that Magilla would provide Rothman and Haymaker Productions In-Kind Services, including designated office space at Magilla s current office location, internet and phone access, in-house development, editing, production equipment and production coordination, in-house production counsel, finance services, and IT services. 67. During negotiations of the Deal Memo, Ostrom, Palumbo, and Flanagan, on behalf of Magilla, made representations and promises to Rothman and Haymaker Productions that, in the event any of the In-Kind Services were not otherwise included in the budget with a third party for the 30

33 development and/or production of original concepts such as non-scripted television programs, a rate for any such In-Kind Service would be negotiated in good faith by Haymaker Productions and Magilla at favorable below market rates. 68. Rothman and Haymaker Productions are informed and believe, and thereon allege, that at the time Magilla made the representations described in paragraphs 64 67, Magilla knew that Magilla had no intention to perform its duties and obligations in the Deal Memo, and knew these representations and promises to be false. 69. Rothman and Haymaker Productions are further informed and believe, and thereon allege, that Magilla made these representations and promises to induce Rothman and Haymaker Productions to enter into the Deal Memo. 70. Rothman and Haymaker Productions justifiably relied upon Magilla s false representations and promises to their detriment and agreed to enter the Deal Memo. Had Rothman and Haymaker Productions known the truth that Magilla did not intend to abide by the terms of the Deal Memo, they would never have agreed to enter into the Deal Memo. 71. As a direct and proximate result of Magilla s false representations and promises, as alleged above, Rothman and Haymaker Productions have been damaged in an amount to be determined at trial, but in no event less than Three Hundred Sixty-Seven Thousand, Two Hundred Fifty-Nine Dollars and Forty-Six Cents ($367,259.46), together with interest and the costs and disbursement of this action. 72. Rothman and Haymaker Productions are informed and believe, and thereon allege, that the conduct of Magilla alleged above was undertaken with the intent to injure Rothman and Haymaker Productions, or with a willful and conscious disregard of Rothman and Haymaker Production s rights, and constitutes clear and convincing evidence of outrageous, oppressive, malicious, and fraudulent 31