Jury finds festival investors breached contract, awards $7.06M

A Kansas jury has awarded two Lawrence, Kansas-based companies $7.06 million after finding two other companies liable for backing out of a deal to fund an Arkansas country music festival, leading to its cancellation in 2015.

The jury returned the verdict on Feb. 13 for plaintiffs Pipeline Productions Inc. and Backwood Enterprises LLC against The Madison Companies LLC and Horsepower Entertainment LLC.

According to the lawsuit, filed in 2015 in the U.S. District Court for the District of Kansas, the primary person associated with Pipeline and Backwood is Brett Mosiman, of Lawrence, Kansas. Mosiman owns The Bottleneck, a Lawrence bar and music venue, and is co-founder of Wakarusa, a music and camping festival.

The primary person associated with Horsepower and Madison, which are both based in Greenwood Village, Colorado, is Bryan Gordon, according to the suit.

The dispute between the parties stems from an oral agreement between Mosiman and Gordon regarding Gordon’s financial backing, via Madison, for the Thunder in the Mountain country music festival in Arkansas in 2015.

According to the suit, the two men met in early 2014 and Gordon expressed an interest in partnering with Mosiman to produce music festivals.

For several months, the two discussed possible proposals. In November 2014, Mosiman sent an email to Gordon proposing a joint venture agreement.

The proposal required Madison to pay Pipeline and Backwood $700,000 for the purchase of a 51 percent interest in the Thunder on the Mountain music festival, and a $500,000 advance of operating capital and payment of certain operating expenses.

At the time, the Thunder on the Mountain Festival was relatively new, having begun in 2013.

Mosiman alleges Gordon orally accepted a slightly modified version, in which Madison would pay the plaintiffs $750,000 for a 51 percent stake in the festival, along with $500,000 for operating capital and $80,000 to operate and produce the festival.

Work on the festival continued, and Mosiman obtained commitments for the event from approximately 50 artists,  including Carrie Underwood and the Zac Brown Band, according to the suit. Madison funded $272,000 of its operating capital commitment by paying the artists directly.

The plaintiffs alleged that after Madison became aware that the festival would not turn a profit in 2015, it reneged on its agreements and withheld funding. Because the artists went unpaid, the festival was cancelled in 2015.

Their suit included claims of breach of contract, breach of fiduciary duty and tortious interference.

Madison and Horsepower denied the plaintiffs’ claims, alleging that Backwood and Pipeline failed to repay a loan for artist deposits. They countersued for breach of contract and unjust enrichment.

The jury found Horsepower liable for breach of contract against Pipeline and Backwood; found Horsepower and Madison liable for Pipeline and Backwood’s claims of fiduciary duty; and found Horsepower liable for tortious interference against Pipeline and Backwood.

The jury found Madison was not liable for tortious interference against Backwood. It also did not find Backwood and Pipeline liable for counterclaims of breach of contract and unjust enrichment.

Jack McInnes of the McInnes Law Firm in Prairie Village, Kansas represented Pipeline and Backwood. He said the jury exonerated Mosiman, in addition to awarding significant damages.

So many artists went unpaid in the wake of the cancelled festival that Mosiman was unable to continue doing festival work, McInnes said.

“They also made findings that are hopefully going to clear his reputation in the industry,” he said. “So it was a neat feeling. It was a good feeling.”

McInnes said Judge Kathryn H. Vratil will hold a bifurcated hearing to decide additional successor liability and alter ego claims. He said the plaintiffs allege the defendants fraudulently transferred assets and employees to other associated companies during the lawsuit.

Benjamin Scheibe of Browne George Ross in Los Angeles represented Madison and Horsepower. He could not be reached for comment.

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