transitional breach of contract

7/30/2019 Transitional Breach of Contract

1/13

I2aJ

456789

10l lt 2t3l41516r718t9202T22232425262728

Attomeys for PlaintiffTransitional Investors,LLC

NOSSAMAN,GUTHNER,KNOX & ELLIOTT, LLPPATRTCK .RTCHARDSBN131046)BRENDAN F. MACAULAY (SBN 162313)50 CaliforniaStreet, 4thFloorSanFrancisco,CaliforniTelephone:415)395-3Facsimile:Al5\398-2tacsimile:41 ) 398-2438DEC 4 2007mMr2t2

TRANSITIONALINVESTORS, LC, ACalifomia imited iability company,Plaintiff.

vs.MICHAEL J.JACKSON,an ndividual,MJPUBLISHINGTRUST,aDelawarerust,MJ-ATV PTIBLISHINGTRUST,a Delawarerust,KATHERINE JACKSON, an ndividual,NEWHORZON TRUST.a Delaware rust.andDOES1-50.

Defendants.

Plaintiff Transitional Investors,LLC ("Transitional") brings this Complaint againstDefendantsMichael J. Jackson "Jackson"),MJ Publishing Trust, ("MJPT"), MJ-ATV Publishing Trust("MJ-ATV"), KatherineJackson,New Horizon Trust ('New Horizon"), and DOES l-50 (collectively"Defendants")to recover over $29 million in unpaid brokerage eesand damages:

THE PARTIES1. Plaintiff Transitional s a California imited liability companywith its principalplaceof

businessn the City and County of SanFrancisco. Transitional is a private investmentcompanyengagedn the businessof lending through leveragedbuyouts,recapitalizations,commercialmortgagesand bridge loans o medium sizedcompanies,and debt restructuring n a variety of commercial settings.

214885 DOC

supERIoRouRr oF HEsrArEoFcALIFo*ffiUg;mS tSEFOR THE COUNTY OF SAN FRANCISCO

) caseWoi-*ilE 13,;) COMPLATNTFOR:)) (1) BREACHOF WRTTTENCONTRACT;) (2) NEGLIGENTMISREPRESENTATION;) (3) INTENTIONAL MISREPRESENTATION;) (4) QUANTUMMERUTT;) (s) I-lNruST ENRICHMENT;AND) (6) FRAUDULENT TRANSFER.))))))

ComplaintFor Damagesor BreachOf Contract,Misrepresentation,raudulent ransfer


2/13


3/13

t23456,7

89

1011T213t41516t71819202I22232425262728

7. DefendantsI

Doesl-5 are he rustee(s) f New current rustee(s)sunknown' SuchDefendants resued olely n its/their epresentativeapacityas rustee(s) f NewHorizon,andnot n its/their ndividualcapacity.Does6-10are ruStee(s)f theotherTrustDefendantswhosedentitiesareunknown,who aresued.olely n its/their epresentativeapacityas rustee(s),ndnot n its/their ndividualcapacity.8' Defendants oes11-50are ndividualsor entitieswhosedentity and/orinvolvementnthe mattersallegedherein is presentlyunknown to Transitional,but who are believedto be responsiblefor the actions,conduct,and damagesallegedherein, and are therefore dentified by these ictitiousdesignations' The true namesof thesedefendantswill be substitutedwhen ascertained.Transitional sinformed and believes,and thereonalleges hat eachsuchDoe Defendant s legally responsiblebycontract'agreement,agency,conspiracy,negligence,or in someotheractionablemanner, or the eventsor happenings eferredto hereinwhich have proximately caused he damageshereinafteralleged.

Alter Eeo Alleeations9. Transitionals further nformedandbelieveshat hereexisteda unityof interest nd

ownershipsetweenDefendants,uch hatany ndividualityandseparatenessndamongsuchDefendantshasceasedso that each s of the alter ego of the other. Transitional is further informed andbelieves hat Defendantssharedcommon trustees,officers, direction,control, recordsand accounts,anddisregardedand continueto disregardcorporate/trust ormalities. At all relevant timesherein,Mr.Jacksonowned 1,00%of the Trust Defendants MJPT, MJ-ATV, andNew Horizon). The MJpT assetsincludedthe publishing rights to Mr. Jackson'ssongs,and the MJ-ATV assetswere a 50%onterestn ajoint venture f Mr. Jackson imselfandsonycorporationof America.

10' At all relevanttimesherein,Mr. Jacksoncontrolled,dominated,managedand operatedthe Trust Defendantsashis individual businesses nd alter egos,borrowing against heir assets,makingwithdrawalswhen and ashe needed unds. Mr. Jacksonand his agents eferredto the Trust Defendantsassimply "The Trust," "The Michael JacksonTrust," or "MJT," indicating their treatmentof the TrustDefendantsasone and the same. Mr. Jacksonand his agentsconsistently epresentedhat he and theyhad power and control over the Trust Defendantsand that he and hey were o.authorized,,to act on theirbehalf Defendantspermitted their assetso be cross-collateralizedor the purposesof lending,and

oHonzon, whose

-3-14885.DOCComplaint For Damages or BreachOf Contract,Mi.t"pr"."rrtutioilluudulent Transfer


4/13

12aJ

4)6789

101 lt213t415r6t 718l9202122232425262728

oTrustDeroposed efinancing structurescontemplated he keatmentof the fendantsas a singlepool of

assets o be mixed, matched,allocatedand collaterulizedto best suit Mr. Jacksonand their currentcashneeds. Mr..Jackson,completelycontrolled the Trust Defendants or his own purposes,ncludingdirecting the nominal trustee,KatherineJackson,when to act and which documents o sign.

t 1. The Trust Defendantswere mere shells, nstrumentalitiesand conduits through which Mr.Jacksoncarriedon his business,exercisingcompletecontrol and dominance of such business o theextent that any individuality or separateness, etween and among such Defendants,doesnot and, at allrelevant times hereinmentioned,did not exist. Permitting any distinction betweenJacksonand the TrustDefendantswith respect o Transitional's claims would permit an abuse,sanctionof fraud,promoteinjustice, and causean nequitable result and therefore, any co{porateor other separatenessetween andamong said Defendantsshould be disregarded.

12. Transitional is informed and believe,and on that basisallege, hat each of theDefendants,at all relevanttimes herein, was the agent and/oremployeeof eachof the otherDefendants,and n committing the acts herein alleged, was actingwithin the scopeof his or their authority assuchagentsand employees,and with the permission,consentandy'oratification of his or their co-Defendants.On thatbasis, Transitional further alleges hat each of the Defendantswas responsible or, participatedin, or contributedto the conductTransitional allegesherein.

JURISDICTION AND VENUE13. Pursuanto Code of Civ. Proc.$$ 395 and395.5,urisdiction is proper n Californiaand

venue s proper in San Franciscobecausemuch of the contractwas performedby Transitional in theCounty of San Francisco,becauseDefendants' failure to pay Transitional occurred n the County of SanFrancisco,and becauseTransitional is a company with its principal placeof business n this Countywhere t was solicited to perform services or Defendants.

GENERAL ALLEGATIONS14. On or aboutSeptember9,1999,Bankof America,N.A. ("BOA") madea oan o MJPT

which,aftercertainagreementsndextensions,esultedn a oanwith an aggregaterincipalamountof$72.5million to MJPT (the MJPT Loan"). To securehe MJPTLoan,MJPT pledgedo BOA its right,title and nterest n the MIJAC Libraryand he right to receive aymentsor its administration.214885 .DOC

Complaint For Damages or Breach Of Contract,Misrepresentation,FraudulentTransfer


5/13

12aJ

456789

l0111213t4t5t61718t9202 l22232425262728

o23,1998,BOA madea loan o MJ-ATV, which,aftersubsequen

oDecember5. On or about

agreements nd extensions, esulted n a loan in the aggregate rincipal amountof $200million to MJ-ATV (the "MJ-ATV Loan"). To secure he MJ-ATV lnan, MJ-ATV pledged o BOA its right, title andinterest n andto MJ-ATV's 50Yo nterest n Sony/ATV Music Publishing LLC ("Sony/ATV"), a 50-50joint venturebetweenMr. Jackson,on the one hand,Sony Corporation of America and certain of itsaffiliates, on the other hand. Sony/ATV holds a musicpublishing catalogcolloquially known as heBeatlesCatalog, currently valuedat over $1 billion.

16. Collectively, the MJPT Loan and the MJ-ATV Loan are referred o herein as he "BOALoans." Both of the BOA Loansbecamedue andpayable n full on December 20,2005.

17. As of the Fall of 2004, DefendantsJackson,MJPT and MJ-ATV owed approximately$272.5million ofprincipal on the BOA Loans. In the Fall of 2004, thoseDefendantswished torefinance hose oans. They alsosought additional moneyto exercisean option they believedexistedthat would permit the purchaseof the other 50% interest n the Sony/ATV Library for $200million.

18. In or about November 2004,Plaintiff Transitionalwas contacted o assistwith therefinancingof the BOA Loansand obtain additional funding to fund the purchaseof the otherhalf of theSony/ATV Library. Transitional's managingdirector, Stuart Shelly, spoke with DarienDash and DonStabler of Stabler& Associates,both of whom held themselvesout as authorized epresentatives f Mr.Jacksonand his Trust. These epresentativesnformed Transitional, n November and December 2004,that Mr. Jacksonhad a trust called the Michael JacksonTrust, or MJT, that held variousassets uch asthe MIJAC Librny anda 50%onterest n Sony/ATV, and that Mr. Jacksonwas authorized o act onbehalf of his trust.

19. On or aboutDecember30,2004, Transitionalsenta Letter of Intent o Mr. Jackson iaDon Stabler(the "LOI"). The LOI was signedby Stuart Shelly, the managingdirector of Transitional.The purposeof the LOI was to document he parties' agreement hat Transitional would providespecifiedservicesand that Defendantswould pay a fee,pursuant o the agreedupon contractual ormula.Specifically, the partiesagreed hat Transitional would "provide seniorand subordinateddebt and equityfinancing in supportof the Michael JacksonTrust's [sic] ("MJT') refinancingof its existingdebtandexerciseof its option to acquire the 50%o50%) of Sony/ATV which it does not currently own. . .." The

-5-1488s .DOCComplaint or Damagesor BreachOf Contract,Misrepresentation,raudulent ransfer


6/13

t)3456789

1011t21374l5t617l8t9202 l2223242s262728

a ILOI contemplated hat a new, bankruptcy remote, specialpurposeentity would be formed to hold theentire Sony/ATV Music Library upon consunmation of the financing. The Michael JacksonTrust wasto be the sole 100% owner of that specialpurposeentity. The total transactionvalue contemplated n theLOI was $537,500,000.Of this amount, 9272,500,000would be used o "refinanceexisting debt ofMJT" while another$200,000,000was to be used o "exercise option to purchaseof Sony/ATV."

20. The essentialpaymentterms of the LOI are set forth in Paragraph6 of the LOI, whichprovided in pertinent part:

Initial Break-Up FeeIn the event hat TI and ts financing partnersprovidesMJT with aCommitment letter of financing that will provide MJT the Five Hundredand Thirty SevenMillion Five Hundred ThousandDollars (5537,500,000)subject o specifieddeliverables equiredunder this agreementwithinthirty (30) to ninety (90) days of this LOI, which is verifiable by MJT, andMJT chooses o cancelor withdraw from this financing, MJT shallpay toTI abreak-up fee as iquidated damages n the amountof ThreeMillionDollars (3,000,000).Breakupfee in the event SonyATV Assetsare sold by MJT.After TI hasprovided its Commitment letter to MJT to provide thefinancing contemplated by this agreementand are working to complete allnecessary losing conditions,and MJT choosesaltemativefinancing orsale arrangements,...MJT shallpay to TI a total break-upfee as iquidateddamagesof nineolo9%) of the entire transactionvalue contemplated.Thisbreak-up fee will be payableat the closing of any altemativefinancing orsale. This provision will remain n effect 360 days after the expiration orthe terminationby MJT of this agreement

21. On or aboutJanuary20,2005, Mr. Jacksonsignedthe LOI as an individual andas heo'authorizedrepresentativeMJT Trust." Neither Transitional,Mr. Jacksonnor the Trust Defendantseverterminated he LOI, nor did it everexpire.

22. From December 2004to March 2005, Transitional spentnumeroushours conducting duediligencewith respect o income, expendituresand overall financial situationof Mr. Jacksonand histrusts. This includedanalyzingdozensof boxes of financial records regarding Defendants,as well as heassets n his trusts, ncluding the MIJAC Library and Sony/ATV Library. Transitionalmet withnumerous epresentatives f Mr. Jacksonand his trusts, ncluding California-based inancial advisersand accountants. Transitional alsoworked with lawyers to help structurea transaction o suitDefendants' needsand requests.214885 .DOC

Complaint For Damages or Breach Of Contract,Misrepresentation,Fraudulent Transfer


7/13

I2aJ

456789

t0l1l213l415t6l7l8t9202T22232425262728

tDecember

Otional contacted3. During 2004 andJanuarv005.Transi a numberof lenders

with the ability to finance a transactionof this complexity, size and risk. Ultimately, Transitional choseFortress nvestmentGroup, LLC ("Fortress") to provide working capital through its lending group.

24. ln January2005,Mr. Jackson ecided hat the refinanceof the$272.5million BOALoans, as well as his desire for cashpayments,were far more pressingmatters han the effort topurchase he Sony/ATV Library. Mr. Jacksonandhis representatives herefore instructed Transitionalnot to secure unds for the purchaseof the Sony/ATV Library, which funds were initially contemplatedto be $200million. They instead nstructed Transitional to secure unds sufficient to refinance he BOALoans andprovide Mr. Jacksonwith $20 million in cash.

25. On January27,2005, Transitionaldelivered to Mr. Jackson'sauthorized epresentative,Don Stabler,a commitment letter "to confirm our intention to provide you the bridge loan forrefinancing the entire Bank of America debt" (the Commitment Letter"). The CommitmentLetter calledfor funding of approximately$330,000,000 o Mr. Jacksonand his Trust, which included$20 million togo to Mr. Jackson.

26. Attached to the Commitment Letter were three term sheetswhich outlined the termsofthe sourcesof financing. The collateral was to be "All of the assetsof the MJ Publishing Trust,including the 50oh nterest n the Sony/ATV owned by the MJ PublishingTrust, the MIJAC Catalog, andthe BMI royalty rights payable o Michael Jackson."

27. Eachof the term sheetsstated hat "By execution hereof, he undersigned Don Stabler]representshat he is authorized o act on behalf of MJ Publishing Trust and Michael J. Jackson."Eachof these erm sheetswas signed as"accepted"on February28,2005 by Don Stabler as he"authorizedrepresentativeof MJ Publishing Trust and Michael J. Jackson."

28. During February andMarch 2005,Transitional continued ts work in structuringtherefinance asrequestedby Defendants,working extensively with Defendants'representatives nd olherfinancial and legal advisors. Additionally, Transitionaldevelopedpresentationso outline thetransaction or Mr. Jacksonso he would fully understandt. Transitional sharedwith Defendantsconfidential and proprietarywork product - information that Defendantssubsequentlyutilized whenthey refinanced he Trust debt.214885 .DOC n

Complaint For Damages or BreachOf Contract, Misrepresentation,FraudulentTransfer


8/13

I2J

456789

10l l7213t4l516t7l819202 l22232425262728

osold the BOA Loans to Fortress.so that

t2005,BOA9. In May, Fortressook heplaceof

Bank of America. The sale of the BOA Loans themselvesdid not substantiallyalter the debt owed byJackson,MJPT and/or MJ-ATV, which loans remained ntact and with the original securityand terms.

30. Transitional is informed andbelieves hat, in or about March 2006, Fortress efinancedthe BOA Loans. Transitional is informed and believes hat the refinancing was accomplishedwith thecreationof a specialpurposeentity (dubbeda "Bankruptcy Remote Transaction Structure") into whichthe assets reviously held in the MJPT and MJ-ATV Trust would be transferred or no cashpaymenttothe entity known as he New Horizon Trust. Transitional is informed and believes hat MJPT and MJ-ATV have an ownership nterestof New Horizon Trust. Both MJPT and MJ-ATV remained 100%ownedby Mr. Jackson.

31. As a result of Transitional's delivery of the CommitmentLetter, Transitional becameentitledto a minimum breakup fee of $3 million, which was eamedeven f Defendantsdecidednot tocomplete he funding that had beencommitted. However, becauseDefendantsactually completedarefinancing of the BOA Loansthrough Fortress the very lenderprocuredby Transitional), Transitionalbecameentitled to a fee of 9Yoof the $330million contemplatedby the Commitment Letter.

32. Notwithstanding its entitlement o be paid for its valuableservices,Transitional hasbeenpaid noneof its fees. There remainsdue andowing to Transitional an amount not less han $29 million.

FIRST CAUSE OF ACTIONBreach of Written Contract(Against All Defendants)33. Transitional hereby ncorporatesand reallegeseachand every allegationcontained n

Paragraphs1-32, nclusive, as hough set forth fully in this causeof action.34. The compensationermsof the contractbetweenTransitionaland Defendantswere

memorialized n the December27,2004 LOI signedby Mr. Jackson n behalf of his trustson January20,2005. The written terms of that contract require Defendants o pay Transitional a minimum breakupfee of $3 million, which was earnedeven f Defendantsdecidednot to go through with the funding thathad been committed.

35. Transitional fully performedthe contractby, among other things: (l) conducting anintensive analysisof the income,expenses, ssets, iabilities and financial situationof Defendants

-8-14885 .DOCComplaint For Damages or Breach Of Contract, Misrepresentation,FraudulentTransfer


9/13

I2aJ

456789

10111213I4l516t718l9202 l22232425262728

oOJackson,MJPT and I\4J-ATV; (2) locating and securing alend,erwilling and ableto handlea financingof this size,complexity, and risk; (3) delivering a CommitmentLetter sufficient to refinance he BOALoansandprovide Jacksonwith the additional fundshe requested;and (4) developinga refinancingstructure nvolving bridge loans,subordinatedbridge notesandpreferredbridge stock.

36. Defendantshavebreached he contractwith Transitionalby failing and refusingto payTransitionalthe feescalled for by the LOI or any other amountafter refinancing the BOA Loansontermssimilar to those nitially structuredby Transitional. BecauseDefendants efinanced he $330million as contemplatedby the Commitment Letter,the fee to which Transitional is entitled is 9%oof he$330million, or $29.7million.

37. Transitional hasperformedall of the termsof the contract,exceptany termswhich havebeenexcusedby Defendants'breachof contractand failure to perform.

38' As a direct and proximateresult of Defendants'breachesof the contractwithTransitional,Transitionalhasbeen damaged n an amountnot less than$29.7million.

39. Transitional is alsoentitled to prejudgment nterest n accordancewith Civil Code$$ 3287 and3302.

WhereforeTransitional seeksudgment asrequestedn the Prayer for Relief below.SECOND CAUSE OF ACTIONDeceiUOmission-Civ. Code S 1710(3)(Against DefendantMichaet Jackson)

40. Transitionalhereby ncorporatesand reallegeseachand every allegationcontained nParagraphs1-39, nclusive, as thoughset forth fully in this causeof action.

41. At the time Michael Jacksonsigned he LOI contract attachedon January Z0,Z}O5,M1.Jacksonand his authorizedagentshad given information to Transitional'smanagingdirector, StuartShelly, including information that Mr. Jacksonowned andwas the kusteeof the Michael JacksonTrust.that the Trust had beenformally created, hat the Trust ownedsignificant assets including assetsactuallyowned by the MJPT and MJ-ATV Trusts),and that Mr. Jacksonand his Trust intended oproceedwith debt restructuring hrough Transitional.

42- Both by entering nto a written contract with Transitional,and by providing certain factsto Transitionalwhich were ikely to misleadbecause f the ackof communicationof additional acts-214885 .DOC

Complaint For Damages or Breach Of Contract,Misrepresentation,FraudulentTransfer


10/13

I234)6789

101 lt213t415l6t71819202 l22232425262728

aMr' Jacksonhad a personaland non-contractualduty to disclose o

oTransitional whetherthe Michael

JacksonTrust in fact existed,whetherMr. Jacksonown the Trust,whether the Trust in fact owned orcontrolled he assetsof the MJPT andMJ-ATV Trusts,and whetherhe in fact intended o proceedwithdebt restructuringthrough Transitional.

43' Mr. Jacksonandhis agents ailed to disclose o Transitionalmaterial facts inlate 2004and early 2005. Theseomissions ncludedwhetherMr. Jacksonhad in fact executedany formal trustdocuments o create ormally the Michael JacksonTrust, whetherhe owned and was the trusteeof theMichael JacksonTrust, whetherthe Michael JacksonTrust in fact owned and controlled the assetsof theMJPT and MJ-ATV Trusts,and whetherMr. Jackson ntended o pursuedebt restructuring hroughTransitional.

44. The suppression nd omissionof thesematerial factsconstitutesactionable raudpursuant o Civil Code $ 1710. The fraud damageso Transitionalaccording o proof, including interestpursuant o Civil Code $ 3288. Mr. Jackson,having suppressedmateialinformation atthetime hesigned he LOI and having directedhis agents n consciousdisregardofthe rights of Transitional, spersonally iable for actualdamagesand exemplaryd.amages,ccording o proof.

WhereforeTransitionalseeksudgment asrequestedn the Prayer for Relief below.THIRD CAUSE OF ACTIONNegligentMisrepresentation

(Against All Defendants)45. Transitionalhereby ncorporatesand reallegeseachand every allegationcontained n

Paragraphs-44, inclusive,as hough set forth fully in this causeof action.46. BetweenNovember2004 andFebruary2005,Defendants epresentedo Transitional's

managingdirector, StuartShelly, that the Michael JacksonTrust was an actualand formally-createdtrust, that Mr. Jacksonownedand was the trusteeof the Trust, that the Trust owned significant assets(including assetsactuallyownedby the MJPT and MJ-ATV Trusts), and that Mr. Jacksonandhis Trustintended o proceedwith debt restructuring hrough Transitional. Suchrepresentationsncludedstatements y Darien Dash andDon Stabler n late December2004,asauthorized epresentatives f Mr.Jacksonandhis trust,by Mr. Jackson n January20,2005.

47. Transitionalreasonably elied on the representations f Defendantsand entered n the-10-14885 1.DOC ComplaintForDamagesforBreachOfContract,Mi''"p'''"',tffi


11/13

I23456789

10ITr213L4t5I6t7r819202 l22232425262728

January 0,2005LOI ConI

tract andprovided significant servicesand proprietary information toDefendants n relianceon the representations.

48" Transitional is informed and believes,and thereonalleges, hat at the time Defendantsmade hese epresentationso Transitional,Defendantsknew or shouldhaveknown that therepresentationswere unkue.49' Defendants'misrepresentations, ven f negligently made, proximately causedharm toTransitional' The harm includesthe reasonable alue of the servicesprovided,bestmeaswedby thevaluation formula in the LOI of approximately $2g.Tmillion, plus interest,according o proof at trial.

Wherefore ransitional eeksudgmentas equestedn the prayerforReliefbelow.

e*"l3il'i,tl[!lli,,.r50' Transitionalhereby ncorporatesand reallegeseachand every allegationcontained n

Paragraphs1-49, nclusive, as hough set forth fully in this causeof action.51' Transitionalrenderedwork, labor and services o Defendantsat their requestand

Defendantspromisedto pay Transitional the reasonable alue of suchwork, labor and services.52' The reasonable alue of Transitional's services or which Defendantshavenot paid is

approximately$29.7million, plus prejudgment nterest.53' No part of the abovesum hasbeenpaid, althoughTransitionalhasdemandedpayment

therefore,and there s now due and owing and unpaid from Defendants he sum of $29.7 million, plusprejudgment nterest rom the date he refinancingcloseduntil paid in full.

WhereforeTransitionalseeksudgment as requestedn the prayer for Relief below.FIFTH CAUSE OF ACTIONUnjust Enrichment(Against All Defendants)

54' Transitionalhereby ncorporatesand reallegeseachand every allegationcontained nParagraphs-53, inclusive, as hough set forth fully in this causeof action.55' By virtue of the servicesprovided by Transitionalto Defendants,andby the failure of

Defendants o pay Transitional ts fees,Defendantshavebeenunjustly enriched n a sum exceeding$29.7million, suchsum to bepreciselydeterminedaccording o proof attial.

- 1 l -14885 .DOC ComplaintForDamagesor BreachOf Contract,uft


12/13

I2aJ

456789

10l l1213t415t6t71819202 l22232425262728

othere6. Transitional fore requests hat the Court find and order that Defendants hold as

constructive rustees or Transitional suchsums aswould otherwisehavegone o Transitional, n that itwould be qnjust and nequitablefor Defendants o retain suchamounts n light of their aforementionedbreaches,misrepresentations,alsepromisesand omissionsand that suchDefendantsshall disgorgesuchsums o Transitional.

57. Defendants'wrongful conductas describedabovewas fraudulent,oppressive,andmalicious, or were carried out in consciousor recklessdisregardof Transitional's rights, such hatTransitional is entitledto punitive and exemplary damagesn a sum sufficient to make and exampleofand punish Defendants.

WhereforeTransitional seeksudgment as requestedn the Prayerfor Relief below'SIXTH CAUSE OF ACTION

Fraudulent Transfer(Against Michaet Jackson,New Horizon and Does1-5,11-50)58. Transitionalhereby ncorporatesand reallegeseachand every allegationcontained n

Paragraphs-57, inclusive, as hough set forth fully in this causeof action.59. Transitional s informed andbelieves hat, in or aboutMarch 2006,Defendantsdirected

the transferof most or all of the assets reviously held in MJPT andMJ-ATV to one known as heNewHorizon Trust,with approximately $20 million transferred o Mr. Jackson. Transitional is informed andbelieves hat the transferswere madewith knowledgeof the debt to Transitional and with the intent tohinder, delay or defraudknown existing creditorsof Michael Jacksonand MJPT and MJ-ATV'including Transitional. Transitional is informed and believesthat the kusts did not receivereasonablyequivalentvalue for the assets ransferredand the debtor trustswere about o engagen a transaction orwhich the remaining assetswere unreasonablysmall.

60. The transferof assets rom MJPT and MJ-ATV to New Horizon constituteda fraudulenttransfer under Califomia law with respect to the unpaid obligation to Transitional because,among otherthings,Defendantscontinued to retainde acto control of the assetsafter transfer,substantiallyall of theassetswere transferred,Mr. Jacksonpersonallyprofited from the transfer, he value of the considerationreceivedwas unreasonablysmall relative to the value of the assets ransferred, he debtor trustswereaboutto engagen a transaction or which the remaining assetswere unreasonablysmall, and the

-12-214885 .DOCComplaint For Damages or Breach Of Contract,Misrepresentation,FraudulentTransfer


13/13

12aJ

456789

101112l31415t6t7l8r9202 l22232425262728

Oafter a substantialdebt was incurred.ransferoccurredshortly

61. As aresultof the fraudulentransfers, ransitionals entitledo provisionaleliefsufficientg satisfy ts claimasa creditor,ncludinganattachmentnderCaliforniaaw, Civil Code53439.07,n addition o damagesndprejudgmentnterestashereinafter rayedor.

Wherefore ransitional eeksudgmentas equestedn the Prayeror Reliefbelow.PRAYER FOR RELIEFWHEREFORE, ransitional emandsudgmentagainstDefendantss ollows:

1. Fordamageso beprovenat trial, but not less han$29.7million;2. Forprejudgmentnterest;3. For attomeys'ees;4. Forpunitivedamages;5. Forcosts f suit;6- For suchprovisionalemedies smaybe appropriate;nd7. For suchotherand urther eliefas his Courtdeemsust,properandequitable'

Dated:uly 13,2007 NOSSAMAN,GUTHNER,KNOX & ELLIOTT,LLPBRENDANF. MACAULAY

-13-

v:Plainti f Transitional

214885.DOC@eachofContract,Misrepresentation,FraudulentTransfer

transitional breach of contract

Documents