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Rozone Productions, LLC v. Raczkowski

September 29, 2010

ROZONE PRODUCTIONS, LLC; RTR ILLUMINATED INVESTORS 3, LLC; AND ROBERT T. ROSEN, PLAINTIFFS,
v.
ANDREW ROCKY RACZKOWSKI; TICKETS PLUS INCORPORATED, D/B/A STAR TICKETS PLUS; GOOD MUSIC AGENCY, INC., D/B/A TALENT BUYERS NETWORK; BRIAN KNAFF; AND ROBERT J. STRUYK, DEFENDANTS.



The opinion of the court was delivered by: Jeffrey L. VIKEN United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

INTRODUCTION

Plaintiffs' complaint (Docket 1) alleges causes of actions against defendants Good Music Agency, Inc., and Brian Knaff*fn1 for (1) breach of contract; (2) intentional misrepresentation; (3) deceit; (4) breach of fiduciary duty; (5) tortious interference with a valid business relationship or expectancy; and (6) civil conspiracy. Id. at pp. 7-8. Defendants deny any misconduct in their relationship with plaintiffs and assert counterclaims for (1) breach of contract and (2) misrepresentation. (Docket 20). Defendants filed a motion to dismiss plaintiffs' complaint under Fed. R. Civ. P. 12(b)(6). (Docket 57). The motion, made after the pleadings are closed, is a Rule 12(c) motion for judgment on the pleadings. The motion was briefed by the parties and is ripe for resolution.

PLAINTIFFS' ALLEGATIONS

A Rule 12(b)(6) motion to dismiss for failure to state a claim made after the pleadings are closed will be treated as a motion for judgment on the pleadings under Rule 12(c). Fed. R. Civ. P. 12(c). To analyze the motion to dismiss, plaintiffs' factual allegations must be taken as true. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009); Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009). A court is "not bound to accept as true a legal conclusion couched as a factual allegation." Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 555 (2007).*fn2 The following factual statements taken from plaintiffs' complaint are deemed true for this analysis.

Plaintiffs Rozone Productions, LLC, and RTR Illuminated Investors 3, LLC, entered into a joint venture agreement.*fn3 (Docket 1 ¶ 11). Rozone promoted musical concerts*fn4 on August 4, 5 and 6, 2008, at the Sturgis Motorcycle Rally in South Dakota. Id. The concerts featured the popular musicians KISS, John Fogerty, and Kenny Chesney. Id. These three musical groups were hired by Rozone. Id. A fourth entertainer, Larry the Cable Guy, was also under contract to perform. Id.

By a written contract, Good Music was hired by Rozone to line up the musicians for the concerts. Id. at ¶ 12. Good Music, in turn, recommended to Rozone that it use Star Tickets to sell the tickets for the concerts. Id. Good Music represented to Rozone they had worked with Star Tickets on other concerts and Star Tickets was a sound ticket vendor. Id. Rozone relied on this representation. Id. Rozone had a number of telephone conversations and internet contacts with the Chief Executive Officer of Star Tickets, Andrew Rocky Raczkowski. Id. at ¶ 13. On May 1, 2008, Rozone and Star Tickets entered into a written contract for Star Tickets to sell the tickets to the Rally concerts for Rozone. Id.

Attendance at the concerts was enormous. Id. at ¶ 14. Representatives of the Sturgis Motorcycle Rally commented the crowd for the Kenny Chesney concert was the largest concert crowd ever at the Sturgis Motorcycle Rally.*fn5 Id. An expert from the School of Engineering at North Carolina State University opined the crowd for the Kenny Chesney concert exceeded 42,000 persons. Id. Raczkowski and Star Tickets reported to Rozone that ticket sales for all three concerts combined (i.e., KISS, John Fogerty and Kenny Chesney) were roughly at 25,000 persons. Id. at ¶ 15.

It is customary in the industry for Rozone, the concert promoter, to take immediate possession of the boxes containing the ticket stubs. Id. at ¶ 16. This is done so an accurate count can be made if a question should arise concerning the attendance figures--as the ticket stub count can then be compared to the number reported to the concert promoter by the company selling the tickets. Id. After the concerts, Raczkowski (and therefore Star Tickets acting through its agent) took possession of the ticket boxes himself. Id. Raczkowski destroyed ticket stubs from the ticket boxes so the number of ticket sales reported to Rozone would jibe with the number of ticket stubs in the ticket boxes. Id. Rozone discovered that Raczkowski ended up destroying more ticket stubs than the number of ticket sales reported to Rozone by Raczkowski and Star Tickets. Id. Raczkowski made statements about his involvement in the ticket accounting practices to persons at the airport in South Dakota and on three other occasions. Id. at ¶ 17.

Robert Struyk acted as a consultant and agent for Rozone in promoting the concerts. Id. at ¶ 18. It is believed that Struyk had full knowledge of prior problems with Star Tickets' accounting and ticket sales practices but failed to inform Rozone. Id.

Raczkowski and Star Tickets paid Knaff $2 for every ticket sold. Id. at ¶ 19. Raczkowski and Star Tickets covered up this $2 per ticket payment in a vague total of "fees and expenses" that were reported to Rozone. Id. Rozone never gave Raczkowski and Star Tickets the authority to pay Knaff. Id. Rozone never gave Knaff the authority to accept this payment. Id.

Good Music caused Larry the Cable Guy, who was under contract with Rozone, to refuse to perform at the concerts. (Docket 1 at ¶ 20). Rozone was required to pay all three musical groups (KISS, John Fogerty, and Kenny Chesney) for their performances at the concerts regardless of the number of tickets that were sold. Id. at ¶ 21. Plaintiffs lost millions of dollars and Rosen, individually, was required to advance roughly $1,000,000 to Rozone during the concerts. Id.

As against defendants Good Music Agency and Knaff, plaintiffs' complaint contains the following allegations:

1. Count One--Breach of Contract: Good Music Agency and Knaff is in breach of contract through the foregoing conduct and other conduct causing damage to the plaintiffs in an amount to be determined by a jury.

Id. at ¶ 36.

2. Count Two--Intentional Misrepresentation. Good Music Agency and Knaff engaged in intentional misrepresentation through the foregoing conduct and other conduct causing damage to the plaintiffs in an amount to be determined by a jury.

Id. at ¶ 37.

3. Count Three--Deceit: Good Music Agency and Knaff engaged in deceit through the foregoing conduct and other conduct causing damage to the plaintiffs in an amount to be determined by a jury.

Id. at ¶ 38.

4. Count Four--Breach of Fiduciary Duty: Good Music Agency and Knaff breached the fiduciary duty to plaintiffs through the foregoing conduct and other conduct causing damage to the plaintiffs in an amount to be determined by a jury.

Id. at ¶ 39.

5. Count Five--Tortious Interference with a Valid Business Relationship or Expectancy: Good Music Agency and Knaff engaged in tortious interference with a valid business relationship or expectancy by the foregoing conduct and other conduct causing damage to the plaintiffs in an amount to be determined by a jury.

Id. at ¶ 40.

6. Count Six--Civil Conspiracy: Good Music Agency and Knaff engaged with two or more persons with the intended purposes of accomplishing one or more of the foregoing counts, had a meeting of the minds on the object or course of action to be taken, which then took place ...


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