Bit Parts

Investment Firm Can Proceed Against Artist in Litigation Funding Dispute

The U.S. District Court for the Central District of California denied Danish recording artist Aura Dione's motion to dismiss a suit against her that alleges failure to reimburse an investment firm for funding Dione's litigation against her manager. Europlay Capital Advisors LLC v. Joensen, 2:17-cv-02377. Dione (Maria Louis Joensen) battled her manager Khalid Schroeder over intellectual property rights in her music. Europlay Capital agreed to retain the law firm Skadden, Arps, Slate, Meagher & Flom to represent Dione in the Schroeder case and says Dione orally agreed to reimburse Europlay within 12 months of the end of the management litigation. Dion won $1.689 million from Schroeder and the ownership rights to her music. Europlay later sued Dione alleging breach of contract and fraud for non-payment of any of the more than $2 million in legal fees that Europlay paid Skadden. Dione filed a motion to dismiss Europlay's complaint under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure for failure to state viable claims. Dione argued Europlay couldn't proceed on the breach of contract claim because, by offering to be Dion's “legal consultants” regarding Schroeder, the investment firm had engaged in the unauthorized practice of law in California. District Judge Christina A. Snyder noted, however, that Dione's “contention that Europlay engaged in the unauthorized practice of law, and therefore should be estopped from enforcing the alleged oral agreement, has no bearing upon whether Europlay has properly stated a claim for relief for breach of oral contract pursuant to Rule 12(b)(6). Instead, accepting plaintiff's allegations as true, the Court cannot make the inference at this stage that Europlay is estopped from stating this claim.” District Judge Snyder then decided about Europlay's fraud claim: “Here, plaintiff alleges more than a mere failure to pay in order to support its claim of fraud in the inducement. Europlay alleges that [Dione] gave repeated assurances to it that payment would be made as it continued to advance funds to pay for her lawsuit, and that she absconded from this jurisdiction [back to Europe] to avoid repayment that she knew would come due in the following months. In light of these allegations, Europlay sufficiently alleges a claim for fraudulent promising at the pleading stage of this case.”

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Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and a tenured Associate Professor of Music & Entertainment Studies at the University of Colorado's Denver Campus. He is author of the book Baby You're a Rich Man: Suing the Beatles for Fun & Profit (ForeEdge/University Press of New England). For more, visit www.stansoocher.com.