Defendants Answer Counterclaim and Third Party Complaint 2

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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.

: : : : : : : : : : : : :

Index No: 654255/13 (Justice Kapnick) DEFENDANTS’ ANSWER, COUNTERCLAIMS AND THIRD PARTY COMPLAINT

AARON ROTHMAN, individually and doing business as HAYMAKER PRODUCTIONS, LLC and HAYMAKER MEDIA INC., Third-Party Plaintiffs -against- JASON FOX, Third-Party Defendant. --------------------------------------------------------------------------

: : : : : : : : : : : : : x

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,

2013:

FILED: NEW YORK COUNTY CLERK 01/24/2014 INDEX NO. 654255/2013

NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 01/24/2014

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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.


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.


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.


Defendants admit that Rothman is a managing partner of Haymaker Productions and Haymaker Media.

JURISDICTION AND VENUE


Defendants admit that Haymaker Productions and Haymaker Media have their principal places of

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business in the State of New York. Defendants also admit that Rothman is a resident of the State of

New York.



FACTS

12. Defendants have no information and belief and, based thereon, deny the allegations in

paragraph 12 of the Complaint.








Defendants admit that Rothman did engage in negotiations with Magilla about possibly forming a

business partnership.


Defendants admit that Plaintiff agreed to provide Rothman with office space, overhead, personnel,

back office production capabilities, equipment, and a development budget of $200,000.00 per year

consisting of in-kind services and cash allocations. Defendants aver, however, that Plaintiff never

followed through with its agreement.



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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.








Defendants admit that Rothman did not sign the Deal Memo referenced in paragraph 28 of the

Complaint.




Defendants admit that they had a production agreement with Bravo for Southern Charm.








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Defendants admit that Magilla sent Haymaker Productions invoices.





Defendants admit that they began to move their staff and equipment out of the Magilla offices on July

19, 2013. Defendants aver that Magilla had ordered Defendants to move out of Magilla’s offices on

that date.



Defendants admit that it sent Plaintiff a check for $367,259.46.




Defendants admit that Magilla negotiated the check for $367,259.46.

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.


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Defendants admit that Plaintiff agreed to provide Defendants with office space, overhead, cash, credit,

and goods and services at a substantially reduced rate.









AS AND FOR A SECOND CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Fraud)


forth herein.









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AS AND FOR A THIRD CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Quantum Meruit)


forth herein.




AS AND FOR A FOURTH CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Breach of Implied Covenant of Good Faith and Fair Dealing)


forth herein.





AS AND FOR A FIFTH CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Unfair Competition)


forth herein.





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AS AND FOR A SIXTH CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Tortious Misappropriation of Goodwill)


forth herein.




AS AND FOR A SEVENTH CAUSE OF ACTION AGAINST ALL DEFENDANTS

(Violation of Section 349 of the General Business Law)


forth herein.





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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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)


Defendants’ right to substantive due process under the Fourteenth Amendment of the United States



FORTY-SECOND AFFIRMATIVE DEFENSE

(Violation of Equal Protection)


Defendants’ right to equal protection under the Fourteenth Amendment of the United States



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

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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 2013. 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.

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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, 2012.

10. 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 emailed 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 emailed to him

by Magilla. Matt Ostrom (“Ostrom”), a partner at Magilla, then mentioned in an email that the parties

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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 $200,000.00 per year to be made in equal

quarterly installments (i.e. $50,000.00 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

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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)

emailed Adam Nettler (“Nettler”), who was Eyal’s CAA agent, a proposed deal memo between

Rothman and Eyal with multiple references to Magilla. Fox also emailed 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 email notifying Magilla that Eyal had

joined him as a full business partner. Rothman also updated Magilla on his existing projects in that

email, 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.

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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 emailed 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 email 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 email requesting a

rate card for the services covered by the Deal Memo. Included in that email 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 email that she was going to work

out rates with her accountant in regard to the overall rate card and that Ragone was charging Haymaker

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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 email 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 back-

office 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 emailed 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 emailed Rothman asking him about his concerns

and again pressuring him to sign the Deal Memo. Eyal sent an email 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 $200,000.00 development fund. The

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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 emailed 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 $200,000.00 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 $200,000.00

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

$200,000.00 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.

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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 $200,000.00 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 $200,000.00 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 emailed Rothman and Eyal a revised rate card.

She stated in the email 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

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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 $200,000.00 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 6:00 pm.

45. On or about July 31, 2013, Halpert (with Haymaker Productions) emailed 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 emailed Youngelman again asking for the final

Magilla invoices, which Haymaker Productions had not yet received. Youngelman responded via

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email 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 $366,729.10. This amount

included at least $35,021.54 worth of services that, under the Deal Memo, should have been covered

by the $200,000.00 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

2/1/13.”

49. 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, 2013. Upon information and belief, Magilla hired Fox to be its general manager on or about

October 24, 2013.

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.

28 16,903v1

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 $200,000.00 per year to be made in equal quarterly installments (i.e. $50,000.00 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.


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.


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, in-

house 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.


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

29 16,903v1

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 53 – 56 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 53 –

56.

61. 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 53 – 56.

62. 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.

30 16,903v1

AS AND FOR A SECOND COUNTERCLAIM

(Fraud-In-The-Inducement)



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

$200,000.00 per year to be made in equal quarterly installments (i.e. $50,000.00 per quarter).



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.



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.


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

31 16,903v1

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.


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


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.


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

32 16,903v1

conduct that entitles Rothman and Haymaker Productions to an award of punitive damages against

Magilla in an amount sufficient to deter Magilla from similar conduct in the future.

AS AND FOR A THIRD COUNTERCLAIM

(Breach Of Contract)



74. As more fully set forth above, Magilla and Rothman and Haymaker Productions entered

into a legally binding agreement, as represented by the Deal Memo.

75. The Deal Memo provided that Magilla would provide to Rothman and Haymaker

Productions a development/overhead budget valued at $200,000.00 per year to be made in equal

quarterly installments (i.e. $50,000.00 per quarter).

76. The Deal Memo provided 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.


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.

78. The Deal Memo provided that, in the event any of the In-Kind Services were not


33 16,903v1


negotiated in good faith by Haymaker Productions and Magilla at favorable below market rates.

79. Rothman and Haymaker Productions fully performed as required under the terms of the

Deal Memo.

80. Magilla failed to perform as required by the terms of the Deal Memo by refusing to

provide Rothman and Haymaker Productions the $200,000.00 development budget, its designated

production personnel and In-Kind Services, and to negotiate rates in good faith and at favorable below

market rates.

81. In reliance upon Magilla’s commitments, Rothman and Haymaker Productions moved

into the space provided by Magilla and developed the non-scripted television program Southern

Charm, among other projects, with the expectation that Magilla would provide the benefits under the

Deal Memo, as described in paragraphs 75 – 78 above to help facilitate the costs of such projects.

82. By virtue of Magilla’s breach of the Deal Memo, Rothman and Haymaker Productions

were forced to incur additional expenses and to pay Magilla above-market rates for costs that, under

the Deal Memo, should have been covered by Magilla.

83. As a result thereof, 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.

AS AND FOR A FOURTH COUNTERCLAIM

(Declaratory Judgment)



34 16,903v1

85. As more fully set forth above, Magilla and Rothman and Haymaker Productions entered

into a legally binding agreement, as represented by the Deal Memo.

86. The Deal Memo provided that Magilla would provide to 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.


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.

89. The Deal Memo provided that, in the event any of the In-Kind Services were not



negotiated in good faith by Haymaker Productions and Magilla at favorable below market rates.

90. Magilla breached the Deal Memo by refusing to provide Rothman and Haymaker

Productions the $200,000.00 development budget, its designated production personnel and In-Kind

Services, and to negotiate rates in good faith and at favorable below market rates.

35 16,903v1

91. By virtue of Magilla’s breach of the Deal Memo, Rothman and Haymaker Productions

were forced to incur additional expenses and to pay Magilla above-market rates for costs that, under

the Deal Memo, should have been covered by Magilla.

92. Rothman and Haymaker Productions have no adequate remedy at law other than this

form of action to have its rights determined as to the matters herein set forth. An actual case or

controversy exists that requires the intervention of the Court.

93. By virtue of the foregoing, Rothman and Haymaker Productions are entitled to a

judgment declaring that they are relieved of their duties and obligations under the Deal Memo.

AS AND FOR A FIRST CAUSE OF ACTION AGAINST FOX

(Breach of Fiduciary Duty)

94. Third Party Plaintiffs/Counterclaimants repeat and reallege each and every allegation

set forth in paragraphs 1 – 51 of their Counterclaim as though fully set forth herein.

95. As Rothman’s agent at CAA during the period that Rothman and Haymaker

Productions were negotiating the Deal Memo with Magilla, Fox occupied a position of trust and

authority sufficient to create a fiduciary duty of care and honesty with Rothman. This duty obligated

Fox to refrain from also representing Magilla in the drafting and negotiation of the Deal Memo, and to

avoid any conflict of interest in his interactions between Rothman and Magilla.

96. Fox breached his fiduciary duty to Rothman by inducing Rothman to enter into the Deal

Memo when Fox knew that Magilla intended not to abide by the terms stated therein.

97. Fox also breached his fiduciary duty to Rothman by the very act of participating in the

negotiations between Magilla and Rothman related to the Deal Memo, knowing that his participation

was a conflict of interest.

36 16,903v1

98. Fox’s bias towards Magilla was later made evident when Fox stopped being Rothman’s

agent at CAA and became the general manager of Magilla.

99. As a proximate result of Fox’s breach of fiduciary duty, Rothman sustained damages 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.

100. Fox performed the foregoing acts, conduct, and omissions intentionally, maliciously,

oppressively, and fraudulently with the intent and design to injure Rothman’s interests. By reason of

Fox’s conduct, Rothman is entitled to recover punitive damages from Fox in an amount to be

determined in a sum according to proof.

AS AND FOR A SECOND CAUSE OF ACTION AGAINST FOX

(Fraud-In-The-Inducement)

101. Third Party Plaintiffs/Counterclaimants repeat and reallege each and every allegation

set forth in paragraphs 1 – 51 of their Counterclaim as though fully set forth herein.

102. During negotiations of the Deal Memo, Fox made representations and promises to

Rothman and Haymaker Productions that Magilla would provide to Rothman and Haymaker




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

37 16,903v1

non-scripted television programs that Haymaker Productions successfully sold and/or licensed to a

third party.


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.


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 be negotiated in

good faith by Haymaker Productions and Magilla at favorable below market rates.


at the time Fox made the representations described in paragraphs 102 – 105, Fox knew that Magilla

had no intention to perform its duties and obligations in the Deal Memo, and knew these


107. Rothman and Haymaker Productions are further informed and believe, and thereon

allege, that Fox made these representations and promises to induce Rothman and Haymaker

Productions to enter into the Deal Memo.

108. Rothman and Haymaker Productions justifiably relied upon Fox’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.

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109. As a direct and proximate result of Fox’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.


the conduct of Fox 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

conduct that entitles Rothman and Haymaker Productions to an award of punitive damages against Fox

in an amount sufficient to deter Fox from similar conduct in the future.

WHEREFORE, Rothman, Haymaker Productions, and Haymaker Media pray for judgment

against Plaintiff, Counterclaim Defendant, and Third Party Defendant as follows:

1. On the complaint against Rothman, Haymaker Productions, and Haymaker Media:

a) Dismissal with prejudice of all of Plaintiff’s claims;

2. On their counterclaims against Magilla:

a) On the First Counterclaim, an award of monetary damages and punitive damages, the

precise amount to be determined upon a full trial on the merits;

b) On the Second Counterclaim, an award of monetary damages and punitive damages, the

precise amount to be determined upon a full trial on the merits;

c) On the Third Counterclaim, an award of monetary damages, the precise amount to be

determined upon a full trial on the merits;

39 16,903v1

d) On the Fourth Counterclaim, an order declaring, adjudging, and decreeing that

Rothman, Haymaker Productions, and Haymaker Media are relieved of all duties and obligations under

the Deal Memo.

3. On their third party claims, against the third party defendant Fox:

a) On the First Third-Party Claim, an award of monetary damages and punitive damages,

the precise amount to be determined upon a full trial on the merits;

b) On the Second Third-Party Claim, an award of monetary damages and punitive

damages, the precise amount to be determined upon a full trial on the merits.

4. For prejudgment interest, attorney fees, and such further relief as this Court deems just and proper.

Dated: New York, New York RAINES FELDMAN LLP

January 24, 2014 By Richard Decker, Esq. Marc Berkemeier, Esq. Miles Feldman, Esq. (Pro Hac Vice Pending) 9720 Wilshire Boulevard, 5th Floor Beverly Hills, California 90212 Telephone: (310) 440-4100

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 10001

Defendants Answer Counterclaim and Third Party Complaint 2

Documents