Pipeline Productions, Inc. v. The Madison Companies, LLC, et al

Filing 735

MEMORANDUM AND ORDER sustaining in part 663 Motion for Summary Judgment; overruling 710 Motion for Reconsideration. Signed by District Judge Kathryn H. Vratil on 1/9/2020. Please review order for additional details. (ydm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
PIPELINE PRODUCTIONS, INC., et al.,

)
)
Plaintiffs,
)
)
v.
)
)
THE MADISON COMPANIES, LLC, et al.,
)
)
Defendants.
)
____________________________________________)

CIVIL ACTION
No. 15-4890-KHV

MEMORANDUM AND ORDER
On May 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
enrichment.
On 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.1 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.2 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 and
Horsepower;

1

The parties seem to have different ideas about whether OK Productions and
Mosiman are plaintiffs in Count I’s claim for breach of contract. They are not. Count I of the
Complaint (Doc. #1) filed May 5, 2015 at ¶ 25, the Amended Complaint (Doc. #56) filed
June 19, 2017 at ¶ 64 and the Second Amended Complaint (Doc. #570) filed August 30, 2019 at
¶ 150, 151, 152, unambiguously allege that the putative contract was between Backwood/Pipeline
(on the one hand) and Madison or Madison/Horsepower (on the other). Plaintiffs do not mention
OK Productions and Mosiman anywhere in any Count I.
The pretrial order and the amended pretrial order generally state that “plaintiffs” sue for
breach of contract. See Pretrial Order (Doc. #477) filed April 30, 2019; Amended Pretrial Order
(Doc. #660). Both pretrial orders are replete with sloppy, lazy and at best imprecise language
about which of the many parties in this case allegedly did what. Given the explicit pleading of
Count I in three complaints filed over the course of four years, the Court cannot read either pretrial
order as effectively asserting that OK Productions and Mosiman assert viable breach of contract
claims. When OK Productions and Mosiman sought leave to amend to join as plaintiffs, they did
not avow any intent to sue for breach of contract. See Plaintiffs’ Motion For Leave To File
Amended Complaint (Doc. #52) filed May 8, 2017. Moreover, they never sought to amend to
assert contract claims. In the pretrial order and the amended pretrial order, plaintiffs’ generic and
imprecise reference to “plaintiffs” claiming breach of contract was far from sufficient to put
defendants or the Court on notice that OK Productions and Mosiman asserted a claim for breach
of contract. With trial in less than 30 days, defendants would be highly prejudiced if OK
Productions and Mosiman were allowed to assert a previously undeveloped theory of liability on
the ground that their imprecise language in the pretrial orders could be read to expand repeated,
specific allegations of three complaints filed in 2015, 2017 and 2019.
2

Technically, OK Productions and Mosiman assert claims for successor and alter
ego liability (Count V), which are still in the case. Because they have no substantive causes of
action against Horsepower or Madison, however, they cannot recover against any successors or
alter egos to Horsepower or Madison.
-2-

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 Horsepower3 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.

This 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.

3

Defendants have taken the same linguistic shortcuts as plaintiffs by making generic
and imprecise references to “defendants” instead of listing which particular defendants assert
particular counterclaims. Amended Pretrial Order (Doc. #660). From Defendants’ Answer To
Amended Complaint And Counterclaims (Doc. #66) filed October 25, 2017, it is clear that the
counterclaimants are Madison and Horsepower. Defendants’ pleadings were far from sufficient
to put plaintiffs on notice that the Kaaboo entities and WarDawgz also assert counterclaims. The
Court is not aware that anyone is confused on this point, but with trial in less than 30 days, plaintiffs
would be highly prejudiced if the Kaaboo entities and WarDawgz were allowed to do so.
-3-

Factual Background4
I.

Parties
Brett 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.
Bryan 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

On December 5, 2019, the Court struck plaintiffs’ untimely response to defendants’
motion for summary judgment. See Memorandum And Order (Doc. #708). On December 8, 2019,
plaintiffs asked the Court to reconsider. See Plaintiffs’ Motion To Reconsider Orders 700 and 708
(Doc. #710). In almost all respects, given the Court’s rulings on defendants’ summary judgment
motion, plaintiffs’ motion for reconsideration is moot. The Court, however, overrules the motion
to reconsider. A motion to reconsider must be based on (1) an intervening change in controlling
law, (2) the availability of new evidence or (3) the need to correct clear error or prevent manifest
injustice. See Coffeyville Res. Ref. & Mktg. LLC v. Liberty Surplus Ins. Corp., 748 F. Supp. 2d
1261, 1264 & n.2 (D. Kan. 2010); see also D. Kan. R. 7.3(b); Comeau v. Rupp, 810 F. Supp. 1172,
1174-75 (D. Kan. 1992). A motion to reconsider is not a second opportunity for the losing party
to make its strongest case, to rehash arguments or to dress up arguments that previously failed.
Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324, 1332 (10th Cir. 1996); RTC v. Greif,
906 F. Supp. 1446, 1456 (D. Kan. 1995); Voelkel v. Gen. Motors Corp., 846 F. Supp. 1482, 1483
(D. Kan. 1994). A party’s failure to present its strongest case in the first instance does not entitle
it to a second chance in the form of a motion to reconsider. Cline v. S. Star Cent. Gas Pipeline,
Inc., 370 F. Supp. 2d 1130, 1132 (D. Kan. 2005). Whether to grant a motion to reconsider is left
to the Court’s sound discretion. Brumark Corp. v. Samson Res. Corp., 57 F.3d 941, 944 (10th Cir.
1995). Here, for substantially the reasons set forth in its original order, the Court finds that
plaintiffs have not satisfied this standard. See Memorandum And Order (Doc. #708).
4

As the Court has explained, even when a motion for summary judgment is unopposed, the
Court must determine whether the evidence shows that the moving party is entitled to judgment as
a matter of law. See Memorandum And Order (Doc. #708); see also Colony Nat. Ins. Co. v. Omer,
No. 07-2123-JAR, 2008 WL 2309005, at *1 (D. Kan. June 2, 2008). Accordingly, the Court has
considered the entire record and all available evidence, including stipulated evidence that the
parties identified in the Amended Pretrial Order (Doc. #660) filed November 15, 2019.
Specifically, for summary judgment purposes, the parties stipulated to 32 facts and the authenticity
of more than 400 exhibits. Id. at 2-15. Consequently, where the listed exhibits could be located,
the Court reviewed and considered them.
-4-

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 “defendants.”
II.

Negotiations
Backwood 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.
After 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.
In a 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,

-5-

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.
On 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.
On 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.
On 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

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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.”5 Mosiman Emails (Doc. #665-12).
Between 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.
III.

Subsequent Events
As 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.

5

Mosiman was apparently referencing the $272,000 that defendants had already paid
for artist deposits.
-7-

Defendants 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.
Legal Standards
Summary 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.
The 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.
The 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

-8-

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.
Analysis
Except for part of Count V, defendants seek summary judgment on all claims.6
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 of damages.
I.

Breach Of Contract (Count I)
Defendants assert that they are entitled to summary judgment on the claims of Backwood

and Pipeline for breach of contract against Madison and Horsepower. To succeed on a breach of

6

Defendants do not seek summary judgment on plaintiffs’ alter ego claims under

Count V.

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contract claim under Kansas law,7 plaintiffs must show (1) the existence of a contract between the
parties, (2) consideration, (3) plaintiffs’ performance or willingness to perform in compliance with
the contract, (4) defendants’ breach and (5) injury to plaintiffs as a result of defendants’ breach.
Britvic Soft Drinks Ltd. v. ACSIS Techs., Inc., 265 F. Supp. 2d 1179, 1187 (D. Kan. 2003).
Here, defendants assert that the evidence is legally insufficient to show the existence of a
contract. Specifically, defendants argue that the parties intended to enter a future contract and that
any alleged agreements, as part of the ongoing negotiation process, were nonbinding.
Under Kansas law, parties form a binding contract – which can be written or oral – when
they reach a meeting of the minds on all essential elements of the agreement. See Ludwikoski &
Assocs., Inc. v. Yeti Coolers, LLC, No. 13-2649-EFM, 2014 WL 3767684, at *5 (D. Kan.
July 31, 2014); see also RLI Ins. Co. v. Russell, No. 14-2479-EFM, 2015 WL 9455569, at *5 (D.
Kan. Dec. 23, 2015). For the parties to reach a meeting of the minds, “there must be a fair
understanding between [them] which normally accompanies mutual consent and the evidence must
show with reasonable definiteness that the minds of the parties met upon the same manner and
agreed upon the terms of the contract.” Felling v. Hobby Lobby, Inc., No. 04-2374-GTV, 2005
WL 928641, at *3 (D. Kan. Apr. 19, 2005) (quoting Steele v. Harrison, 220 Kan. 422, 552 P.2d
957, 962 (1976)). To determine whether the parties did so, the Court applies an objective test that
asks whether they manifested their intent to be bound by the agreement. Sw. & Assocs., Inc. v.
Steven Enterprises, LLC, 32 Kan. App. 2d 778, 781, 88 P.3d 1246, 1249 (2004). In other words,
the relevant inquiry is the “manifestation of a party’s intention, rather than the actual or real

7

Kansas courts apply the rule of lex loci contractus to contract claims. Mirville v.
Allstate Indem. Co., 71 F. Supp. 2d 1103, 1107 (D. Kan. 1999). Under this rule, the law where
the parties made the contract controls. Id. Here, the parties agree that Kansas law governs
plaintiffs’ breach of contract claims.
-10-

intention.” Id. Accordingly, the Court looks to the parties’ “outward expression[s] of assent.”
Pierce v. PrimeRevenue, Inc., No. 17-2233-JWB, 2018 WL 4749331, at *2 (D. Kan. Oct. 2, 2018).
Parties can manifest an intent sufficient to form a binding contract even if they “contemplate the
subsequent execution of a formal instrument as evidence of their agreement,” and even if they
“know[ ] that there are other matters on which the have not agreed and on which they expect further
negotiation.” Phillips & Easton Supply Co. v. Eleanor Int’l, Inc., 212 Kan. 730, 735, 512 P.2d
379, 384 (1973); Storts v. Martin K. Eby Const. Co., 217 Kan. 34, 40, 535 P.2d 908, 913 (1975).
Here, defendants first assert that as a matter of law, the parties never had a meeting of the
minds. According to defendants, the fact that they continued to negotiate and disagree on various
contract terms shows that they intended to contract in the future. Alternatively, defendants argue
that their purported agreement was too uncertain to be binding. Specifically, defendants provide
an extensive list of possible terms that the parties could have included in the agreement, such as
which of defendants’ entities would make the particular payments, when they would make the
payments and who would make decisions for the new venture. Defendants argue that without
these terms, the agreement is unenforceable.
Kansas law does not support the overly-demanding standard for contract formation that
defendants propose. The record contains evidence that Mosiman and Gordon entered into a
binding agreement under which Backwood, Pipeline, Madison and Horsepower would partner to
produce Thunder.8 On November 4, 2014, Mosiman emailed Gordon to propose an agreement for
the limited purpose of producing Thunder. Mosiman’s proposal gave Gordon two options. Under

8

Defendants assert that any alleged contract involved only Backwood, Pipeline and
Horsepower – not Madison – because the parties understood that the transaction would include
only Horsepower. The email in which Mosiman proposed Option B, however, explicitly
references Madison as a party to the transaction. Accordingly, the evidence establishes a genuine
issue of material fact whether Madison was a party to the agreement.
-11-

Option B, Madison and Horsepower would receive a 51 per cent interest in Thunder. In exchange,
Madison would pay Pipeline $700,000 and advance $500,000 in operating capital for the festival.
Moreover, Pipeline would get $80,000 to book, market and produce Thunder, and Madison would
get $40,000 to run the books. In a conversation around November 6, 2014, Gordon told Mosiman
that Option B was “the only one that would work for him.” Mosiman’s Dep. (Doc. #672-16) at
11:25-12:15, 16:22-17:13, 29:17-31:6. After further discussion, Mosiman and Gordon ultimately
agreed to a slightly modified version of Option B (the $700,000 increased to $750,000), and
Gordon expressed his excitement to be Mosiman’s partner.
Defendants’ subsequent actions further suggest an objective manifestation of assent. On
November 6 – soon after they allegedly entered the agreement – Mosiman emailed Gordon to
discuss booking Chris Young for Thunder, and Gordon responded, “Do it, please!” Moreover,
Madison and Horsepower later funded $272,000 for artist payments and created four entities with
variations of the name “Thunder on the Mountain.” Finally, the record contains evidence that
Madison and Horsepower continued to exercise significant control over various aspects of the
operation, including deciding which bands to book and how much to pay them. This evidence
creates a genuine issue of material fact whether the parties entered into a binding contract.
Defendants alternatively argue that as a matter of law, their agreement was too uncertain
to be binding. This argument is without merit. The alleged agreement explains the per cent interest
that Madison and Horsepower would have in Thunder (51 per cent), how much Madison would
pay ($750,000),9 who would receive this payment (Pipeline), how much Madison would pay in

9

Originally, Option B called for Madison to invest $700,000. Mosiman Email
(Doc. #665-6). Mosiman testified that he and Gordon agreed to a modified version of Option B,
under which Madison would pay $750,000. The documents that the parties exchanged on
December 12, 2014 reflect this price modification. See Operating Agreement (Doc. #665-15) at
72.
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operating expenses ($500,000), who would book, market and produce Thunder (Pipeline), how
much Pipeline would receive for doing so ($80,000), who would make that payment (Madison),
who would run the books (Madison) and how much Madison would receive in return ($40,000).
Defendants do not cite any authority that would invalidate this purported agreement simply
because it does not contain the extensive list of detailed provisions that defendants cite.10 The fact
that the parties continued to negotiate additional details does not make their existing agreement
unenforceable. Kansas law is clear that an agreement remains enforceable even though the parties
anticipate that they will later execute a formal written document, or that they will continue to
negotiate additional provisions. See Phillips, 212 Kan. at 735; see also Storts, 217 Kan. at 40.
Because the evidence creates a genuine issue of material fact whether plaintiffs entered into
binding contract with Madison and Horsepower, defendants are not entitled summary judgment
on the breach of contract claims.
II.

Breach Of Fiduciary Duty (Count II)
Defendants assert that they are entitled to summary judgment on plaintiffs’ breach of

fiduciary duty claims because (1) they did not owe plaintiffs a fiduciary duty and (2) if they did,
they did not breach it.11

10

Defendants complain that, among other items, the putative agreement omits
provisions regarding venue and choice of law, how new partners will join and rules for future
competition among the parties.
11

Without citing any legal authority, defendants assert that they are also entitled to
summary judgment because the record does not contain evidence of separate, cognizable damages
for these claims. Defendants apparently argue that at the summary judgment stage, the loss of
plaintiffs’ music festival business cannot qualify as damages for both the breach of contract and
breach of fiduciary duty claims. This is incorrect. While the Court will not allow plaintiffs to
make a double recovery for the same injuries, at this stage they may submit claims as alternative
theories of recovery for particular injuries. See BHC Dev., L.C. v. Bally Gaming, Inc., No. 122393-JPO, 2014 WL 781871, at *2 (D. Kan. Feb. 25, 2014).
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A.

Duty

Defendants assert that they did not owe plaintiffs a fiduciary duty because the parties did
not enter a joint venture – the basis for the alleged fiduciary duty. Under Kansas law, members of
a joint venture owe each other a fiduciary duty. See Underground Vaults & Storage, Inc. v. Cintas
Corp., 632 F. App’x 917, 922 (10th Cir. 2015). A joint venture is “an association of two or more
persons or corporations to carry out a single business enterprise for profit.” Id. at 921. Although
a joint venture can only arise through agreement between the parties, “this agreement may be found
in their mutual acts or conduct.” Id. Kansas courts consult five factors to determine whether such
an agreement exists: (1) the joint ownership and control of property, (2) the sharing of expenses,
profits and losses, and having and exercising some voice in determining the division of the net
earnings, (3) a community of control over and active participation in the management and direction
of the business enterprise, (4) the intention of the parties (express or implied) and (5) the fixing of
salaries by joint agreement. Id. Importantly, no single factor controls this analysis. Id.
Here, defendants assert that as a matter of law, their relationship with plaintiffs did not
constitute a joint venture because under the purported agreement, (1) the parties did not expressly
allocate profits and losses and (2) defendants maintained a controlling interest (51 per cent) in
Thunder. In other words, because the agreement did not provide for precisely equal control over
the enterprise, defendants argue that they were not part of a joint venture with plaintiffs.
Defendants’ rigid analysis mischaracterizes Kanas law.

As the Tenth Circuit has

explained, Kansas law does not contemplate a strict, all-or-nothing test for identifying joint
ventures. Id. (strict three-part test is no longer accurate view of Kansas law).12 Accordingly,

12

Under prior Kansas law, a joint venture required three elements: (1) joint
(continued . . .)
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contrary to defendants’ assertion, the fact that their interest in Thunder was to be slightly greater
than plaintiffs’ (by two per cent) is not dispositive. Id. The Court must assess the five relevant
factors as a whole. Id. Applying these factors, the Court finds that the evidence creates a genuine
issue of material fact whether plaintiffs and defendants entered into a joint venture.13 Specifically,
the record contains evidence that plaintiffs and defendants agreed to enter a joint venture to
produce Thunder. In doing so, plaintiffs, Madison and Horsepower maintained considerable
control and authority over the direction of the festival, and each had important roles in its
production. Indeed, the purported agreement expressly provides that while Madison would run
books, Pipeline would book, market and produce the festival – which it began to do by booking a
significant number of artists. Moreover, the agreement shows that both plaintiffs and defendants
would contribute various amounts of capital to the enterprise – which defendants began to do by
funding $272,000 for artist fees. Accordingly, the evidence creates a genuine issue of material
fact whether plaintiffs and defendants entered a joint venture and whether defendants therefore
owed plaintiffs a fiduciary duty.
B.

Breach

Defendants assert that even if they owed plaintiffs a fiduciary duty, they did not breach it.
Plaintiffs claim that defendants violated their fiduciary by trying to force plaintiffs to accept a new
deal after they had entered an agreement, bringing lawsuits against them, sending defamatory
12

(. . . continued)
ownership, (2) joint operation and (3) express or implied agreement to share in the profits and
losses. Underground Vaults & Storage, 632 F. App’x at 921. The Tenth Circuit has held that
Kansas law no longer supports this strict formula. Id.
13

Defendants again assert that because the parties contemplated that the transaction
would only include Horsepower, Madison cannot be a party to the purported joint venture. As the
Court explained above, however, the agreement explicitly references Madison as a party to the
transaction. Accordingly, like with the agreement itself, the evidence establishes a genuine issue
of material fact whether Madison was a party to the joint venture.
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letters to artist agencies and stealing their employees. See Amended Pretrial Order (Doc. #660) at
24.

According to defendants, these actions were in their independent business interest, and

therefore do not constitute breaches of fiduciary duty.
Under Kansas law, all joint venture members owe their co-venturers the “same fiduciary
duty to each other as do partners,” which include the duties of loyalty and care. Pipeline Prods.,
Inc. v. Horsepower Entm’t, No. 15-4890-KHV, 2017 WL 4536420, at *3 (D. Kan. Oct. 11, 2017).
This does not mean that Kansas statutes governing partnerships, such as the Kansas Partnership
Act (“KPA”), also govern relationships between parties to a joint venture. See Kan. Stat. Ann. §
56a-404. The Court has previously explained that while it “may utilize the same ‘rules’ that govern
partners to determine rights and liabilities of joint ventures, there is no authority to support a
finding that the statutes enacted under the Kansas Partnership Act apply to joint ventures.”
Underground Vaults & Storage, Inc. v. Cintas Corp., No. 11-1067-MLB, 2014 WL 4408929, at
*5 (D. Kan. Sept. 8, 2014), aff'd, 632 F. App’x 917 (10th Cir. 2015) (emphasis in original).
Here, defendants rely exclusively on the KPA to argue that they did not breach their
fiduciary duty. Specifically, defendants point to Section 56a-404(e), which provides that a partner
“does not violate a duty or obligation under this act or under the partnership agreement merely
because the partner’s conduct furthers the partner’s own interest.” Applying this provision,
defendants argue that because their actions furthered their own interests, they could not constitute
breaches of fiduciary duty.
Defendants’ argument not only lacks merit; it would stand on its head any reasonable
construction of the law with respect to fiduciary duty. As explained above, the KPA does not
govern relationships between parties to a joint venture, and defendants have not offered any
authority to the contrary. The KPA does not immunize the actions of a joint venturer merely

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because that party is acting to benefit its own business. The evidence creates a genuine issue of
material fact whether defendants breached fiduciary duties that they owed to plaintiffs.
Accordingly, the Court denies summary judgment on the breach of fiduciary claims.
III.

Fraud (Count III)
Plaintiffs claim that defendants are liable for fraud because when defendants agreed to

partner in the production of Thunder, they did not intend to perform. According to plaintiffs,
defendants intended to string plaintiffs along until defendants became positioned to achieve a
better deal.14 Defendants assert that they are entitled to summary judgment on plaintiffs’ fraud
claims because the evidence shows that when the parties entered the alleged agreement, they
intended to perform.
Under Kansas law,15 defendants have a duty to refrain from misrepresenting present facts
or intentions, and can be liable for fraud if, at the time of their promise, they had no intention of
performing. See Pipeline Prods., 2017 WL 4536420, at *4. To succeed on a claim for fraudulent
promises, plaintiffs “must prove more than mere nonperformance” of a contract.
Countrywide Realty, Co., 165 F. Supp. 2d 1181, 1204 (D. Kan. 2001)

Zhu v.

Plaintiffs must show by

clear and convincing evidence that (1) when defendants made their promise to perform, they did
not intend to do so (2) defendants did not perform, (3) defendants made the promise with the intent
to deceive and for the purpose of inducing plaintiffs to act upon the promise, (4) plaintiffs

14

Plaintiffs do not specify what kind of deal defendants were trying to achieve. See
Amended Pretrial Order (Doc. #660) at 24 (defendants attempting to force plaintiffs to accept a
“terrible deal”).
15

Kansas courts apply the doctrine of lex loci delicti, or the law of the place where
the tort occurred, in tort actions. Swimwear Sol., Inc. v. Orlando Bathing Suit, LLC, 309 F. Supp.
3d 1022, 1031 (D. Kan. 2018). Here, the parties agree that Kansas law applies to plaintiffs’ fraud
claims.
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reasonably relied and acted upon the promise and (5) plaintiffs sustained damages as a result of
their reliance. Sithon Mar. Co. v. Holiday Mansion, No. 96-2262-KHV, 1999 WL 156167, at *7
(D. Kan. Feb. 16, 1999).
Here, plaintiffs allege that when defendants promised to purchase a 51 per cent interest in
Thunder, they had no intention of honoring that promise. The record, however, lacks evidence to
support plaintiffs’ theory. To the contrary, the evidence shows that when defendants made the
promise to invest in Thunder, they did intend to perform and in respects, they did perform. For
months after the agreement in November of 2014, defendants continued to exert substantial control
over the decision-making for Thunder, and contributed significant resources to the enterprise.
Between December of 2014 and January of 2015, defendants contributed $272,000 for artist fees,
and spent more than $10,000 on continued due diligence. The record contains no evidence that in
November of 2014, when defendants made their promise, they did not intend to perform or
intended to deceive plaintiffs. Without supporting evidence, plaintiffs’ theory is just a theory.
Theories do not create genuine issues of material fact for purposes of summary judgment. The
Court therefore grants defendants summary judgment on plaintiffs’ fraud claims.
IV.

Tortious Interference (Count IV)
Plaintiffs claim that defendants engaged in tortious interference when they hired away their

employees.

Defendants assert that they are entitled to summary judgment on the tortious

interference claims because plaintiffs no longer had a music festival business for which the
employees could work, and defendants did not engage in intentional misconduct when hiring them.
To succeed on a claim for tortious interference with a prospective business advantage under
Kansas law,16 plaintiffs must show (1) a business relationship or expectancy with probable future

16

In Kansas, the law of the state where plaintiffs felt the wrong governs tortious
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economic benefit to plaintiffs, (2) defendants’ knowledge of the relationship or expectancy,
(3) that but for defendants’ conduct, plaintiffs were reasonably certain to have continued the
relationship or realized the expectancy, (4) that defendants engaged in intentional misconduct and
(5) plaintiffs sustained direct and proximate damages. Pipeline Prods., 2017 WL 4536420, at *5
(citing Byers v. Snyder, 237 P.3d 1258, 1269 (Kan. App. 2010)). Moreover, plaintiffs must
demonstrate that defendants acted with malice, or “with actual evil-mindedness or specific intent
to injure.” Triple-I Corp. v. Hudson Assocs. Consulting, Inc., 713 F. Supp. 2d 1267, 1286 (D.
Kan. 2010).
Here, defendants assert that plaintiffs’ tortious interference claim must fail as a matter of
law because plaintiffs cannot satisfy several of these elements.17 Specifically, defendants assert
that the evidence shows that (1) but for defendants’ conduct, plaintiffs were not reasonably certain
to have continued their relationship with the relevant employees, (2) defendants did not engage in
intentional misconduct, (3) defendants did not act with malice and (4) plaintiffs did not suffer
damages.

interference claims. Snyder v. Am. Kennel Club, 661 F. Supp. 2d 1219, 1230 (D. Kan. 2009),
aff’d, 402 F. App’x 397 (10th Cir. 2010). Here, the parties agree that Kansas law applies.
17

In addition, defendants apparently assert that only KWS can be liable for tortious
interference because only KWS hired the employees in question. The record, however, contains
evidence that defendants used Madison and Horsepower to solicit plaintiffs’ employees. See
Drafting Consulting Agreement (Doc. #689-20). This evidence creates a genuine issue of material
fact whether Madison and Horsepower participated in stealing plaintiffs’ employees.
Defendants also assert that Kansas’ statute of limitations bars the tortious interference
claims against Kaaboo, KDM, KaabooWorks, KWS and WarDawgz. In its prior order on
defendants’ motion to dismiss, the Court dismissed these claims. See Memorandum And Order
(Doc. #712) at 24.
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A.

Continued Relationship

Defendants assert that as a matter of law, plaintiffs were not reasonably certain to continue
their relationship with Prenger, Pilsl, Wingerd and Gustafson absent interference by defendants.
According to defendants, these employees could not have continued their relationships with
plaintiffs because Thunder had collapsed, and plaintiffs could not maintain their musical festival
business. In other words, defendants assert that Prenger, Pilsl, Wingerd and Gustafson could not
have continued to work for plaintiffs because their music festival business fell apart for reasons
unrelated to defendants.18
Defendants’ argument is unpersuasive. The record contains evidence that one reason
plaintiffs had to quit the music festival business was that defendants took their employees.
Accordingly, it is circular to argue that because plaintiffs went out of the music festival business,
plaintiffs lacked a reasonable expectation of continuing their relationships with their employees.
The record contains sufficient evidence to create a genuine issue of material fact whether but for
defendants’ actions, plaintiffs were reasonably certain to have continued their relationship with
their employees.
B.

Intentional Misconduct

Defendants assert that as a matter of law, they did not engage in intentional misconduct.
Specifically, defendants argue that their actions constitute lawful competition, which does not
satisfy the misconduct element under Kansas law.

Defendants also assert that plaintiffs could not have continued their relationship
with Prenger because they fired him before he officially started working for defendants. The
record contains evidence, however, that defendants began to engage Prenger before this
termination. See Draft Consulting Agreement (Doc. #689-20). This evidence creates a genuine
issue of material fact whether Prenger would have continued working for plaintiffs but for
defendants’ conduct.
18

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Generally, allegations of “intent to do a harmful act without reasonable justification”
satisfy the intentional misconduct element. Pipeline Prods., 2017 WL 4536420, at *5 (citing
Linden Place, LLC, v. Stanley Bank, 167 P.3d 374, 380 (Kan. App. 2007)). When plaintiffs and
defendants are business competitors, however, defendants can avoid liability by satisfying a series
of requirements.19 U.S. Transp., Inc. v. Torley, No. 08-1403-MLB, 2011 WL 3704723, at *5 (D.
Kan. Aug. 23, 2011). One such requirement is that defendants did not employ “wrongful means.”
Id. at 6. The Tenth Circuit has defined “wrongful means” as independently actionable conduct, or
conduct which itself could form the basis for liability. Id.
Nothing in the record suggests that for purposes of this particular tortious interference
claim, plaintiffs and defendants were “competitors.” Even if they were, the record contains
evidence that defendants engaged in independently actionable conduct by breaching their fiduciary
duty to plaintiffs. See Ayres v. AG Processing Inc., 345 F. Supp. 2d 1200, 1214 (D. Kan. 2004)
(independently actionable conduct includes breach of fiduciary duty). As explained above, the
evidence creates a genuine issue of material fact whether defendants breached a fiduciary duty by
hiring away plaintiffs’ employees. Accordingly, the evidence also creates a genuine issue of
material fact whether defendants engaged in intentional misconduct for purposes of the tortious
interference claim.
C.

Malice

Defendants assert that as a matter of law, they did not act with malice when hiring
plaintiffs’ employees. According to defendants, they did not intend to injure plaintiffs, but simply

19

These requirements come from Restatement (Second) of Torts § 768. Although the
Kansas Supreme Court has not yet addressed the issue, the Tenth Circuit has determined that the
Kansas Supreme Court would apply these requirements in competitor cases. See DP-Tek, Inc. v.
AT & T Global Info. Solutions Co., 100 F.3d 828, 832 (10th Cir. 1996).
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desired the skill and expertise of Prenger, Pilsl, Wingerd and Gustafson for their own music festival
business.
Contrary to their assertion, the record contains evidence that defendants intended to injure
plaintiffs’ music festival business when they hired away plaintiffs’ employees. Defendants were
soliciting Prenger as early as March of 2015. Although defendants dispute that the Thunder
agreement was enforceable at that time, negotiations were still in progress, and defendants had
already begun partial performance by, among other things, supplying $272,000 for artist fees and
exerting substantial control over decision-making for the festival. Shortly after engaging Prenger,
defendants sent plaintiffs a materially different agreement, refused to further perform and hired
more of plaintiffs’ employees. This evidence creates a genuine issue of material fact whether
defendants acted with malice toward plaintiffs. Defendants’ belief that Prenger, Pilsl, Wingerd
and Gustafson could help their business does not establish good faith as a matter of law.
Defendants are not entitled to summary judgment on this issue.
D.

Damages

Defendants assert that as a matter of law, any tortious intereference did not cause damages
to plaintiffs. As to Prenger, Pilsl and Wingerd, defendants invoke the same argument that the
Court has already rejected – that because Prenger, Pilsl and Wingerd could not help plaintiffs
produce music festivals, plaintiffs did not suffer damages when they lost these employees. As the
Court explained above, defendants have not cited any authority for the proposition that they can
escape liability for tortious interference through the tortious interference itself. The evidence
establishes a genuine issue of material fact whether plaintiffs’ suffered damages when defendants’
hired away Prenger, Pilsl and Wingerd. The same is true for Gustafson. Mosiman testified that it

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cost approximately $4,500 to train Gustafson’s replacement. Accordingly, the Court denies
defendants’ motion for summary judgment on the tortious interference claims.
V.

Successor Liability (Count V)
Plaintiffs claim that as successors to Madison and Horsepower, Kaaboo, KDM,

KaabooWorks, KWS and WarDawgz are liable for Madison and Horsepower’s actions.
Defendants assert that they are entitled to summary judgment on plaintiffs’ successor liability
claim because as a matter of law, Kaaboo, KDM, KaabooWorks, KWS and WarDawgz are not
successors to Madison and Horsepower. Defendants do not cite a single piece of evidence on the
issue of successor liability, but simply refer the Court to arguments in support of their prior motion
to dismiss – which the Court already denied. See Memorandum And Order (Doc. #712) filed
December 19, 2019.
For purposes of summary judgment, defendants have the initial burden of showing the
absence of any genuine issue of material fact. Celotex Corp., 477 U.S. at 323; Nahno-Lopez, 625
F.3d at 1283. It is not the Court’s responsibility to comb through the evidence to determine
whether such an issue exists. Accordingly, defendants have not shown that they are entitled to
summary judgment on issue whether Kaaboo, KDM, KaabooWorks, KWS and WarDawgz are
liable as successors to Madison and Horsepower.
VI.

Damages
Plaintiffs seek to recover damages for attorneys’ fees, Mosiman’s personal debt and

punitive damages. Defendants assert that under Kansas law, plaintiffs cannot recover such
damages.20

20

Defendants also assert that plaintiffs cannot recover for damages suffered by nonparties, which are part of plaintiffs’ expert valuations of their music festival business. This issue
(continued . . .)
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A.

Attorneys’ Fees

Plaintiffs seek to recover the attorneys’ fees that they incurred in this case and others.
Defendants assert that as a matter of law, Kansas law bars such damages.
Defendants first argue that plaintiffs cannot recover attorneys’ fees for this case. Under
Kansas law, the Court may not award attorney fees unless a statute authorizes the award or an
agreement between the parties allows it. See Snider v. Am. Family Mut. Ins. Co., 297 Kan. 157,
162 (2013). Here, neither exception applies. Accordingly, plaintiffs cannot recover for such
attorneys’ fees. The Court grants defendants summary judgment on this issue.
Plaintiffs also seek to recover for the attorneys’ fees that they expended to defend lawsuits
in Delaware and Colorado. Plaintiffs claim that the lawsuits were frivolous, and they seek to
recover attorneys’ fees which they incurred before the courts in those jurisdictions dismissed the
cases for lack of personal jurisdiction.

Plaintiffs have not asserted a claim for malicious

prosecution or otherwise alleged how such fees would be recoverable in this case. Accordingly,
the Court grants summary judgment on this issue.
B.

Punitive Damages

Defendants assert that they are entitled to summary judgment on all punitive damage
claims. To recover punitive damages in a breach of contract action under Kansas law, plaintiffs
must prove an independent tort which results in additional injury. Underground Vaults & Storage,
2014 WL 4408929, at *5. Punitive damages “punish the wrongdoer for his malicious, vindictive

20

(. . . continued)
is the subject of pending motions: Defendants’ Motion To Exclude Testimony Of Plaintiffs’ Expert
Steven L. York (Doc. #716) filed December 23, 2019 and Defendants’ Motion To Exclude
Testimony Of Plaintiffs’ Expert A.J. Wasson (Doc. #715) filed December 23, 2019. The Court
will address those issues at the hearing on January 15, 2020, and therefore defers any further
analysis in the summary judgment context.
-24-

or willful and wanton invasion of another’s rights, with the ultimate purpose being to restrain and
deter others from the commission of similar wrongs.” Brand v. Mazda Motor Corp., 978 F. Supp.
1382, 1393 (D. Kan. 1997). Defendants display wantonness when they realize that their acts place
others in imminent danger or risk of injury, but fail to prevent such injury because of indifference
to whether the injury occurs. Id. By statute, Kansas law requires plaintiffs to prove by clear and
convincing evidence that defendants acted with willful or wanton conduct. Id. (citing K.S.A.
§ 60-3701(c)).
Here, the evidence creates a genuine issue of material fact whether plaintiffs can recover
punitive damages. Contrary to defendants’ characterization, this is more than just an action for
breach of contract. Plaintiffs have brought multiple tort claims, including one for tortious
interference. As explained above, the record reveals a genuine issue of material fact whether
defendants engaged in tortious interference by maliciously hiring away plaintiffs’ employees. The
Court therefore denies defendants’ summary judgment on this issue.
C.

Mosiman’s Personal Debts

Plaintiffs seek to recover Mosiman’s personal debts, which allegedly total more than
$4,000,000. Mosiman is no longer a plaintiff, so he cannot recover for his debts. The two
remaining plaintiffs – Backwood and Pipeline – have not advanced any legal theory which would
allow them to recover for Mosiman’s personal debts. See Cochrane v. Schneider Nat. Carriers,
Inc., 980 F. Supp. 374, 378 (D. Kan. 1997) (loss to non-parties irrelevant to plaintiffs’ damages).
Accordingly, the Court grants defendants summary judgment on this issue.
IT IS THEREFORE ORDERED that Defendants’ Motion For Summary Judgment
(Doc. #663) filed November 18, 2019 is SUSTAINED in part. The Court grants defendants
summary judgment on plaintiffs’ fraud claims (Count III), along with plaintiffs’ damage claims

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for attorneys’ fees and Mosiman’s personal debts.
IT IS FURTHER ORDERED that Plaintiffs’ Motion To Reconsider Orders 700 and 708
(Doc. #710) filed December 8, 2019 is OVERRULED.
The following claims remain for trial on February 3, 2020: claims of Backwood and
Pipeline against Madison and Horsepower for breach of contract (Count I), breach of fiduciary
duty (Count II), and tortious interference (Count IV), claims of Backwood and Pipeline against
Kaaboo, KDM, KaabooWorks, KWS and WarDawgz for alter ego and successor liability
(Count V), and counterclaims of Madison and Horsepower against Pipeline, Backwood, Mosiman
and OK Productions for breach of contract, promissory estoppel and unjust enrichment.
Dated this 9th day of January, 2019 at Kansas City, Kansas.
s/ Kathryn H. Vratil
KATHRYN H. VRATIL
United States District Judge

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