I 2

a J

NOSSAMAN,GUTHNER,KNOX & ELLIOTT, LLP (SBN 131046) PATRTCK J. RTCHARD BRENDAN F. MACAULAY (SBN 162313) 50 California 34thFloor Street,
San Francisco,Californi

4 5 6 7 8 9 10 ll t2 t3 l4

(415)395-3 Telephone: (41 Facsimile: Facsimile: 5) 398-2438 Al5\398-2t

Attomeys for Plaintiff Transitional Investors,LLC

I 4 2007 DEC

mMr2t2
supERIoR couRr oFrHEsrArEoFcALIFo*ffiUg;mS ttSE
FOR THE COUNTY OF SAN FRANCISCO

TRANSITIONAL INVESTORS, LLC, A Califomialimited liability company, Plaintiff. vs.

) caseWoi-*ilE 13,;
FOR: ) COMPLATNT
)

MICHAEL J. JACKSON,an individual,MJ trust,MJ1 5 PUBLISHINGTRUST,a Delaware ATV PTIBLISHING TRUST,a Delaware trust, 1 6 KATHERINE JACKSON, an individual,NEW ) HORZON TRUST.a Delaware trust.andDOES ) r7 1 - 5 0 . )

) ) ) ) ) )

(1) (2) (3) (4) (s) (6)

BREACH OF WRTTTEN CONTRACT; NEGLIGENTMISREPRESENTATION; INTENTIONAL MISREPRESENTATION; QUANTUM MERUTT; I-lNruST ENRICHMENT;AND FRAUDULENT TRANSFER.

18 t9 20
2T 22 23 24 25 26 27 28
1.

Defendants.

) ) )

Plaintiff Transitional Investors,LLC ("Transitional") brings this Complaint against DefendantsMichael 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 fees and damages: THE PARTIES Plaintiff Transitionalis a California limited liability companywith its principal place of

businessin the City and County of San Francisco. Transitional is a private investment company engagedin the businessof lending through leveragedbuyouts, recapitalizations,commercial mortgages and bridge loans to medium sized companies,and debt restructuring in a variety of commercial settings.

214885 LDOC
for Breach Of Contract, Complaint For Damages Transfer Misrepresentation, Fraudulent

I 2
a J

2.

Defendant Michael J. Jackson(hereinafter sometimes"Mr. Jackson") is a

oo

held in trusts he assets singer/songwriterand investor with respectto certain publishing rights and other and held createdand.controls, including DefendantsMJPT, MJ-ATV and New Horizon. He developed in the course of his professionaland commercial enterprises. Transitional is informed and theseassets believesthat Mr. Jacksonwas, at all relevant times, authorizedto act on behalf of each of the trust defendants,and enter into contractson their behalf. Transitional is informed and believes that Mr. Jacksonmaintains residencesin Las Vegas,Nevada and Los Olivos, California, near SantaBarbara. 3. Defendant MJPT is, on information and beliel a trust formed by Mr. Jacksonand

4 5 6 7 8 9

existing pursuantto the laws of the stateof Delaware, with its principal place of businessin Califomia.

1 0 On information and belief, MJPT is beneficially owned by Mr. Jackson,owns title to certain intellectual ll l2 l3
property (including songsprofessionally written by Mr. Jacksonreferred to as the MUAC Library), and retains lawyers, accountantsand other advisorswithin California. 4. Defendant MJ-ATV is, on information and belief, a trust formed by Mr. Jacksonand

T 4 existing pursuantto the laws of the stateof Delaware, with its principal place of businessin California. l5 t6 t7 l8 19 20 2l 22 23 24 25 26 27
On information and belief, MJ-ATV is beneficially owned by Mr. Jacksonand owns title to certain intellectual property, including an interest in the comrnercially developedlibrary of songswritten by the Beatles,a former musical group of note. MJ-ATV retains lawyers, accountantsand other advisors within Califomia. 5. Defendant Katherine Jackson("Ms. Jackson") is, on information and belief, a trusteeof

of MJ-ATV, along with Jackson. At all relevant times herein, Ms. Jackson MJPT, and a manager/trustee residedin Encino, California, and took instruction from Mr. Jacksonand his advisors as to how the of MJPT and MJ-ATV should be used and/or pledged. DefendantKatherine Jacksonis sued assets solely in her representativecapacity as a trusteeof MJPT and MJ-ATV, and not in her individual capacity. 6. Defendant New Horizon is, on information and belief, a trust formed and existing

pursuantto the laws of the stateof Delaware with its principal place of businessin California and Delaware. On information and beliel New Horizon is beneficially owned by DefendantsMr. Jackson,

2 8 MJPT, and MJ-ATV, and retains lawyers, accountantsand other advisorswithin Califomia.
214885 I.DOC
a

Complaint For Damagesfor Breach Of Contract, Misrepresentation,Fraudulent Transfer

I
t
7.

Defendants Doesl-5 arethe trustee(s) of New Honzon, whose currenttrustee(s) is astrustee(s) of New otherTrustDefendants

2 unknown' SuchDefendants aresuedsolelyin its/theirrepresentative capacity 4

3 Horizon,andnot in its/theirindividualcapacity.Does6-10 aretruStee(s) of the 5 not in its/theirindividual capacity. 6

,7

whoseidentitiesareunknown,who aresued. solelyin its/theirrepresentative capacityastrustee(s), and 8' Defendants Does11-50areindividualsor entitieswhoseidentity and/orinvolvement in

the matters alleged herein is presently unknown to Transitional, but who are believed to be responsible for the actions,conduct, and damagesallegedherein, and are therefore identified by thesefictitious

8 9

designations' The true namesof thesedefendantswill be substitutedwhen ascertained. Transitional is responsibleby

1 0 informed and believes, and thereon allegesthat each such Doe Defendant is legally

1 1 contract' agreement,agency,conspiracy,negligence,or in some other actionable manner, for the events T 2 or happeningsreferred to herein which have proximately causedthe damageshereinafter 13 t4 9. Alter Eeo Alleeations Transitional is furtherinformedandbelieves that thereexisteda unity of interest and
alleged.

1 5 ownerships between Defendants, suchthat anyindividualityandseparateness andamongsuch 1 6 Defendantshas ceasedso that eachis of the alter ego of the other. Transitional is further informed and t7
believesthat Defendantssharedcommon trustees,officers, direction, control, records and accounts,and

1 8 disregardedand continue to disregardcorporate/trustformalities. At all relevant times herein, Mr. 1 9 Jacksonowned 1,00%of the Trust Defendants(MJPT, MJ-ATV, and New Horizon). The MJpT assets 20 included the publishing rights to Mr. Jackson'ssongs,and the MJ-ATV assetswere a 50%o
interestin a

2I 22 23 24 25 26

joint venture of Mr. Jackson himselfandsony corporationof America.

10' At all relevant times herein, Mr. Jacksoncontrolled, dominated,managedand operated

the Trust Defendantsas his individual businesses and alter egos,borrowing againsttheir assets, making withdrawals when and as he neededfunds. Mr. Jacksonand his agentsreferred to the Trust Defendants as simply "The Trust," "The Michael JacksonTrust," or "MJT," indicating their treatmentof the Trust Defendantsas one and the same. Mr. Jacksonand his agentsconsistently representedthat he and they to act on their

27 had power and control over the Trust Defendantsand that he and they were o.authorized,,

2 8 behalf Defendantspermitted their assetsto be cross-collateralizedfor the purposes of lending, and

214885 l.DOC

-3Complaint For Damagesfor Breach Of Contract, Mi.t"pr"."rrtutioilluudulent Transfer

o
1 proposedrefinancing structurescontemplatedthe keatment of the TrustDefendantsas a single pool of assetsto be mixed, matched,allocated and collaterulizedto best suit Mr. Jacksonand their current cash needs. Mr..Jackson,completelycontrolled the Trust Defendantsfor his own purposes,including directing the nominal trustee,Katherine Jackson,when to act and which documentsto sign. t 1. The Trust Defendantswere mere shells, instrumentalitiesand conduits through which Mr.

2
a J

4 )

6 7 8 9

Jacksoncarried on his business,exercising complete control and dominance of such businessto the extent that any individuality or separateness, between and among such Defendants,doesnot and, at all relevant times herein mentioned,did not exist. Permitting any distinction between Jacksonand the Trust Defendantswith respectto Transitional's claims would permit an abuse,sanctionof fraud, promote

1 0 injustice, and causean inequitable result and therefore, any co{porateor other separateness between and 1l t2
among said Defendantsshould be disregarded. 12. Transitional is informed and believe, and on that basis allege, that each of the

1 3 Defendants,at all relevant times herein, was the agent and/or employeeof each of the other Defendants, t4
and in committing the acts herein alleged, was acting within the scopeof his or their authority as such

1 5 agentsand employees,and with the permission, consentandy'or ratification of his or their co-Defendants.

r6
t7 18 l9 20

On that basis, Transitional further allegesthat each of the Defendantswas responsiblefor, participated in, or contributed to the conduct Transitional allegesherein. JURISDICTION 13. AND VENUE

Pursuant to Code of Civ. Proc. $$ 395 and 395.5,jurisdiction is proper in California and

venue is proper in San Franciscobecausemuch of the contractwas performed by Transitional in the

2 1 County of San Francisco,becauseDefendants' failure to pay Transitional occurred in the County of San 22 Francisco,and becauseTransitional is a company with its principal place of businessin this County 23 where it was solicited to perform servicesfor Defendants. 24 25 14. GENERAL ALLEGATIONS On or about September 29,1999,Bankof America, N.A. ("BOA") madea loanto MJPT

26 which, aftercertainagreements andextensions, resulted in a loanwith an aggregate principalamountof 27 $72.5million to MJPT(the"MJPT Loan"). To secure theMJPT Loan,MJPT pledged to BOA its right,

28 title andinterestin the MIJAC Library andthe right to receive payments for its administration.
214885I.DOC
Complaint For Damagesfor Breach Of Contract, Misrepresentation,Fraudulent Transfer

o
1 2
a J

15.

On or aboutDecember 23,1998,BOA madea loanto MJ-ATV, which,aftersubsequent

agreements and extensions,resulted in a loan in the aggregate principal amount of $200 million to MJATV (the "MJ-ATV Loan"). To securethe MJ-ATV lnan, MJ-ATV pledged to BOA its right, title and interest in and to MJ-ATV's 50Yointerest in Sony/ATV Music Publishing LLC ("Sony/ATV"), a 50-50 joint venture betweenMr. Jackson,on the one hand, Sony Corporation of America and certain of its affiliates, on the other hand. Sony/ATV holds a music publishing catalog colloquially known as the Beatles Catalog, currently valued at over $1 billion. 16. Collectively, the MJPT Loan and the MJ-ATV Loan are referred to herein as the "BOA

4 5 6 7 8 9 l0

Loans." Both of the BOA Loans becamedue and payable in full on December 20,2005. 17. As of the Fall of 2004, DefendantsJackson,MJPT and MJ-ATV owed approximately

1 1 $272.5 million ofprincipal on the BOA Loans. In the Fall of 2004, those Defendantswished to 1 2 refinance those loans. They also sought additional money to exercisean option they believed existed 1 3 that would permit the purchaseof the other 50% interest in the Sony/ATV Library for $200 million. t4 t5 t6
18. In or about November 2004, Plaintiff Transitional was contactedto assistwith the

refinancing of the BOA Loans and obtain additional funding to fund the purchaseof the other half of the Sony/ATV Library. Transitional's managing director, Stuart Shelly, spoke with Darien Dash and Don

1 7 Stabler of Stabler & Associates,both of whom held themselvesout as authorizedrepresentatives of Mr. 1 8 Jacksonand his Trust. Theserepresentatives informed Transitional, in November and December 2004, t9 20 2l 22 23 24 25 26 27 28
that Mr. Jacksonhad a trust called the Michael JacksonTrust, or MJT, that held various assetssuch as the MIJAC Librny anda 50%o interest in Sony/ATV, and that Mr. Jacksonwas authorizedto act on behalf of his trust. 19. On or aboutDecember30,2004, Transitionalsenta Letter of Intent to Mr. Jacksonvia

Don Stabler (the "LOI"). The LOI was signed by Stuart Shelly, the managing director of Transitional. The purpose of the LOI was to document the parties' agreementthat Transitional would provide specified servicesand that Defendantswould pay a fee, pursuantto the agreedupon contractualformula. Specifically, the parties agreedthat Transitional would "provide senior and subordinateddebt and equity financing in support of the Michael JacksonTrust's [sic] ("MJT') refinancing of its existing debt and exerciseof its option to acquire the 50%o (50%) of Sony/ATV which it does not currently own. . .." The
21488s I.DOC -5Complaint For Damages for BreachOf Contract, Misrepresentation, Transfer Fraudulent

a
t
)

LOI contemplatedthat a new, bankruptcy remote, specialpurpose entity would be formed to hold the entire Sony/ATV Music Library upon consunmation of the financing. The Michael JacksonTrust was to be the sole 100% owner of that specialpurpose entity. The total transactionvalue contemplatedin the LOI was $537,500,000. Of this amount, 9272,500,000 would be used to "refinance existing debt of MJT" while another$200,000,000was to be used to "exercise option to purchaseof Sony/ATV." 20. The essentialpayment terms of the LOI are set forth in Paragraph6 of the LOI, which

3 4 5 6 7 8 9 10 11 t2 13 74 l5 t6 17 l8 t9 20 2l 22 23 24

provided in pertinent part: Initial Break-Up Fee In the event that TI and its financing partnersprovides MJT with a Commitment letter of financing that will provide MJT the Five Hundred and Thirty SevenMillion Five Hundred ThousandDollars (5537,500,000) subjectto specified deliverablesrequired under this agreementwithin thirty (30) to ninety (90) days of this LOI, which is verifiable by MJT, and MJT choosesto cancel or withdraw from this financing, MJT shall pay to TI abreak-up fee as liquidated damagesin the amount of Three Million Dollars (3,000,000). Breakup fee in the event Sony ATV Assets are sold by MJT. After TI has provided its Commitment letter to MJT to provide the financing contemplated by this agreement and are working to complete all necessary closing conditions, and MJT choosesaltemative financing or sale arrangements,...MJT shall pay to TI a total break-up fee as liquidated (9%) of the entire transactionvalue contemplated. This damagesof nineolo break-up fee will be payable at the closing of any altemative financing or sale. This provision will remain in effect 360 days after the expiration or the termination by MJT of this agreement 21. On or about January 20,2005, Mr. Jacksonsigned the LOI as an individual and as the

o'authorized representative MJT Trust." Neither Transitional, Mr. Jacksonnor the Trust Defendantsever terminated the LOI, nor did it ever expire. 22. From December 2004 to March 2005, Transitional spentnumeroushours conducting due

diligence with respectto income, expendituresand overall financial situation of Mr. Jacksonand his trusts. This included analyzing dozensof boxes of financial records regarding Defendants,as well as the assetsin his trusts, including the MIJAC Library and Sony/ATV Library. Transitional met with numerousrepresentatives of Mr. Jacksonand his trusts, including California-basedfinancial advisers and accountants. Transitional also worked with lawyers to help structure a transactionto suit

2s
26 27

2 8 Defendants' needsand requests.

2148851.DOC
Complaint For Damages for Breach Of Contract, Misrepresentation,Fraudulent Transfer

t
I 2
a J

23.

2005.Transi tional contacteda numberof lenders 2004 andJanuarv DuringDecember

with the ability to finance a transactionof this complexity, size and risk. Ultimately, Transitional chose FortressInvestment Group, LLC ("Fortress") to provide working capital through its lending group. 24. ln January 2005,Mr. Jacksondecidedthat the refinanceof the $272.5million BOA

4 5 6 7 8 9

Loans, as well as his desire for cashpayments,were far more pressingmattersthan the effort to purchase the Sony/ATV Library. Mr. Jackson and his representativestherefore instructed Transitional not to securefunds for the purchaseof the Sony/ATV Library, which funds were initially contemplated to be $200 million. They insteadinstructed Transitional to securefunds sufficient to refinance the BOA Loans and provide Mr. Jacksonwith $20 million in cash. 25. On January27,2005, Transitional delivered to Mr. Jackson'sauthorizedrepresentative,

t0
l1 l2

Don Stabler,a commitment letter "to confirm our intention to provide you the bridge loan for refinancing the entire Bank of America debt" (the Commitment Letter"). The Commitment Letter called

1 3 for funding of approximately $330,000,000to Mr. Jacksonand his Trust, which included $20 million to l4 15 t6 l7 l8 t9 20
go to Mr. Jackson. 26. Attached to the Commitment Letter were three term sheetswhich outlined the terms of

the sourcesof financing. The collateral was to be "All of the assetsof the MJ Publishing Trust, including the 50ohinterest in the Sony/ATV owned by the MJ Publishing Trust, the MIJAC Catalog, and the BMI royalty rights payable to Michael Jackson." 27. Each of the term sheetsstatedthat "By execution hereof, the undersigned[Don Stabler]

represents that he is authorized to act on behalf of MJ Publishing Trust and Michael J. Jackson."

2 T Each of theseterm sheetswas signed as "accepted" on February 28,2005 by Don Stabler as the 22 23 24 25 26 27 28
"authorized representativeof MJ Publishing Trust and Michael J. Jackson." 28. During February and March 2005, Transitional continued its work in structuring the

refinance as requestedby Defendants,working extensively with Defendants' representatives and olher financial and legal advisors. Additionally, Transitional developedpresentations to outline the transactionfor Mr. Jacksonso he would fully understandit. Transitional sharedwith Defendants confidential and proprietary work product - information that Defendantssubsequentlyutilized when they refinancedthe Trust debt.
214885I.DOC
n

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

t
I 2
J

29.

took the placeof BOA sold the BOA Loans to Fortress.so that Fortress In May, 2005,

Bank of America. The sale of the BOA Loans themselvesdid not substantiallyalter the debt owed by Jackson,MJPT and/or MJ-ATV, which loans remained intact and with the original security and terms. 30. Transitional is informed and believes that, in or about March 2006, Fortressrefinanced

4 5 6 7 8 9

the BOA Loans. Transitional is informed and believes that the refinancing was accomplishedwith the creation of a specialpurpose entity (dubbed a "Bankruptcy Remote Transaction Structure") into which previously held in the MJPT and MJ-ATV Trust would be transferredfor no cashpayment to the assets the entity known as the New Horizon Trust. Transitional is informed and believes that MJPT and MJATV have an ownership interest of New Horizon Trust. Both MJPT and MJ-ATV remained 100%

1 0 owned by Mr. Jackson. ll

31. As a result of Transitional's delivery of the Commitment Letter, Transitional became

7 2 entitled to a minimum breakup fee of $3 million, which was eamed even if Defendantsdecidednot to 1 3 completethe funding that had been committed. However, becauseDefendantsactually completed a t4 l5 16 t7 l8 19 20 2l 22 23 24 25 26 27 28
33. refinancing of the BOA Loans through Fortress(the very lender procured by Transitional), Transitional becameentitled to a fee of 9Yoof the $330 million contemplatedby the Commitment Letter. 32. Notwithstanding its entitlement to be paid for its valuable services,Transitional has been

paid none of its fees. There remains due and owing to Transitional an amount not less than $29 million. FIRST CAUSE OF ACTION Breach of Written Contract (Against All Defendants) Transitional hereby incorporatesand reallegeseach and every allegation containedin

Paragraphs1-32, inclusive, as though set forth fully in this causeof action. 34. The compensationterms of the contract between Transitional and Defendantswere

memorializedin the December27,2004 LOI signedby Mr. Jacksonon behalf of his trustson January 20,2005. The written terms of that contract require Defendantsto pay Transitional a minimum breakup fee of $3 million, which was earnedeven if Defendantsdecidednot to go through with the funding that had been committed. 35. Transitional fully performed the contract by, among other things: (l) conducting an

intensive analysis of the income, expenses, assets,liabilities and financial situation of Defendants
214885I.DOC -8Complaint For Damagesfor Breach Of Contract, Misrepresentation,Fraudulent Transfer

oO
I Jackson,MJPT and I\4J-ATV; (2) locating and securing alend,erwilling and able to handle a financing of this size, complexity, and risk; (3) delivering a Commitment Letter sufficient to refinance the BOA Loans and provide Jacksonwith the additional funds he requested;and (4) developing a refinancing structureinvolving bridge loans, subordinatedbridge notes and preferred bridge stock. 36. Defendantshave breachedthe contract with Transitional by failing and refusing pay to

2
a J

4 5 6 7 8 9 10

Transitional the fees called for by the LOI or any other amount after refinancing the BOA Loans on terms similar to those initially structuredby Transitional. BecauseDefendantsrefinanced the $330 million as contemplatedby the Commitment Letter,the fee to which Transitional is entitled is 9%oofthe $330million, or $29.7million. 37. Transitional has performed all of the terms of the contract, except any terms which have

1 1 been excusedby Defendants' breach of contract and failure to perform. 12

38' As a direct and proximate result of Defendants' breachesof the contract with

1 3 Transitional, Transitional has been damagedin an amount not less than$29.7 million. I4 l5 16 t7 18 l9 20 2l 22 23 24
40. 39. Transitional is also entitled to prejudgment interest in accordancewith Civil Code

$$ 3287 and3302. Wherefore Transitional seeksjudgment as requestedin the Prayer for Relief below. SECOND CAUSE OF ACTION DeceiUOmission-Civ. Code S 1710(3) (Against Defendant Michaet Jackson) Transitional hereby incorporatesand reallegeseach and every allegation containedin

Paragraphs1-39, inclusive, as though set forth fully in this causeof action. 41. At the time Michael Jacksonsigned the LOI contract attachedon January Z0,Z}O5,M1.

Jacksonand his authorized agentshad given information to Transitional's managing director, Stuart Shelly, including information that Mr. Jacksonowned and was the kustee of the Michael JacksonTrust. that the Trust had been formally created,that the Trust owned significant assets(including assets

25 actually owned by the MJPT and MJ-ATV Trusts), and that Mr. Jacksonand his Trust intendedto

26 proceedwith debt restructuring through Transitional. 27

42Both by entering into a written contract with Transitional, and by providing certain facts

28 to Transitionalwhich were likely to misleadbecause of the lack of communicationof additionalfacts214885I.DOC

Complaint For Damagesfor Breach Of Contract, Misrepresentation,Fraudulent Transfer

I 2 3 4
)

a
debt restructuring through Transitional. 43'

Mr' Jacksonhad a personaland non-contractualduty to disclose to Transi tional

whether the Michael

JacksonTrust in fact existed,whether Mr. Jacksonown the Trust, whether the Trust in fact owned or controlled lhe assetsof the MJPT and MJ-ATV Trusts, and whether he in fact intended to proceedwith

Mr. Jacksonand his agentsfailed to discloseto Transitional material facts inlate 2004

6 7 8 9

and early 2005. Theseomissions included whether Mr. Jacksonhad in fact executedany formal trust documentsto createformally the Michael JacksonTrust, whether he owned and was the trusteeof the Michael JacksonTrust, whether the Michael JacksonTrust in fact owned and controlled the assetsof the MJPT and MJ-ATV Trusts, and whether Mr. Jacksonintendedto pursue debt restructuringthrough

1 0 Transitional. 1l t2
44. The suppression and omission of thesematerial facts constitutesactionablefraud

pursuantto Civil Code $ 1710. The fraud damagesto Transitional according to proof, including interest

1 3 pursuantto Civil Code $ 3288. Mr. Jackson,having suppressedmateialinformation atthetime he t 4 signed the LOI and having directed his agentsin consciousdisregardofthe rights of Transitional, 1 5 personally liable for actual damagesand exemplary d.amages, according to proof. l6 t7 18 19
45. Wherefore Transitional seeksjudgment as requestedin the Prayer for Relief below. THIRD CAUSE OF ACTION Negligent Misrepresentation (Against All Defendants)

is

Transitional hereby incorporatesand reallegeseach and every allegation containedin

20 Paragraphsl-44, inclusive, as though set forth fully in this causeof action. 2l

46. Between November 2004 and February 2005, Defendantsrepresented to Transitional's

22 managing director, Stuart Shelly, that the Michael JacksonTrust was an actual and formally-created 23 trust, that Mr. Jacksonowned and was the trusteeof the Trust, that the Trust owned significant assets 24
(including assetsactually owned by the MJPT and MJ-ATV Trusts), and that Mr. Jackson and his Trust

25 intended to proceedwith debt restructuring through Transitional. Such representations included 26

statements by Darien Dash and Don Stabler in late December 2004, as authorizedrepresentatives of Mr.

27 Jacksonand his trust,by Mr. Jacksonon January 20,2005. 28

47.
214885 1.DOC

Transitional reasonablyrelied on the representations of Defendantsand enteredin the

-10ComplaintForDamagesforBreachOfContract,Mi''"p'''"',tffi

I
I 2 3 4 5 6 7 8 9 10 IT January 20,2005LOI Contract andprovided significant servicesand proprietary information
Defendantsin reliance on the representations. 48" Transitional is informed and believes,and thereon alleges,that at the time Defendants to

made theserepresentations to Transitional, Defendantsknew or representations were unkue. 49'

should have known that the

Defendants' misrepresentations, even if negligently made, proximately causedharm to

Transitional' The harm includes the reasonablevalue of the servicesprovided, best measwedby the valuation formula in the LOI of approximately $2g.T million, plus interest, accordingto proof at trial.

Wherefore judgmentasrequested Transitional seeks in the prayerfor Relief below.

r2

e*"l3il'i,tl[!lli,,.r
50' Transitional hereby incorporatesand reallegeseach and every allegation containedin servicesto Defendantsat their requestand

1 3 Paragraphs1-49, inclusive, as though set forth fully in this causeof action. L4 51' Transitional renderedwork, labor and t5 I6 t7

Defendantspromised to pay Transitional the reasonable value of such work, labor and services. 52' The reasonablevalue of Transitional's servicesfor which Defendantshave not paid is

approximately $29.7 million, plus prejudgment interest. 53' No part of the above sum has beenpaid, although Transitional has demanded payment

r8

1 9 therefore, and there is now due and owing and unpaid from Defendantsthe sum of $29.7 million, plus 20 prejudgment interest from the date the refinancing
closed until paid in full.

2l 22 23 24 25 26

Wherefore Transitional seeksjudgment as requestedin the prayer for Relief below. FIFTH CAUSE OF ACTION Unjust Enrichment (Against All Defendants) 54' Transitional hereby incorporatesand reallegeseach and every allegation containedin

Paragraphsl-53, inclusive, as though set forth fully in this causeof action. 55' By virtue of the servicesprovided by Transitional to Defendants, and by the failure of in a sum exceeding

27 Defendantsto pay Transitional its fees, Defendantshave beenunjustly enriched 28

$29.7 million, such sum to be precisely determinedaccording to proof attial.
214885I.DOC -1lComplaint For Damages for BreachOf Contract, fuft

o
I 2
a J

56.

Transitionaltherefore requests that the Court find and order that Defendants hold as

constructive trusteesfor Transitional such sums as would otherwise have gone to Transitional, in that it would be qnjust and inequitable for Defendantsto retain such amountsin light of their aforementioned false promises and omissions and that such Defendantsshall disgorge such breaches,misrepresentations, sums to Transitional. 57. Defendants' wrongful conduct as describedabove was fraudulent, oppressive,and

4 5 6 7 8 9 10 ll 12 13 t4 15 t6 t7

malicious, or were carried out in consciousor recklessdisregardof Transitional's rights, such that Transitional is entitled to punitive and exemplary damagesin a sum sufficient to make and example of and punish Defendants. Wherefore Transitional seeksjudgment as requestedin the Prayer for Relief below' SIXTH CAUSE OF ACTION Fraudulent Transfer (Against Michaet Jackson, New Horizon and Does 1-5, 11-50) 58. Transitional hereby incorporatesand reallegeseach and every allegation contained in

Paragraphsl-57, inclusive, as though set forth fully in this causeof action. 59. Transitional is informed and believesthat, in or about March 2006, Defendantsdirected

previously held in MJPT and MJ-ATV to one known as theNew the transfer of most or all of the assets Horizon Trust, with approximately $20 million transferredto Mr. Jackson. Transitional is informed and

1 8 believes that the transferswere made with knowledge of the debt to Transitional and with the intent to 1 9 hinder, delay or defraud known existing creditors of Michael Jacksonand MJPT and MJ-ATV' 20 2l 22 23 24 25 26 27 28
including Transitional. Transitional is informed and believes that the kusts did not receive reasonably equivalent value for the assetstransferredand the debtor trusts were about to engagein a transactionfor were unreasonablysmall. which the remaining assets 60. The transfer of assetsfrom MJPT and MJ-ATV to New Horizon constituted a fraudulent

transfer under Califomia law with respect to the unpaid obligation to Transitional because,among other things, Defendantscontinued to retain defacto control of the assetsafter transfer, substantially all of the assetswere transferred,Mr. Jacksonpersonally profited from the transfer, the value of the consideration received was unreasonablysmall relative to the value of the assetstransferred,the debtor trusts were about to engagein a transaction for which the remaining assetswere unreasonablysmall, and the
214885I.DOC -12Complaint For Damages for Breach Of Contract, Misrepresentation,Fraudulent Transfer

O
1 transferoccurredshortly after a substantialdebt was incurred. 2
a J

61.

relief is entitledto provisional Transitional transfers, As a resultof the fraudulent

underCalifornialaw, Civil Code sufficienttg satisfyits claim asa creditor,includingan attachment prayedfor. interestashereinafter andprejudgment in additionto damages 53439.07, judgmentasrequested in the Prayerfor Relief below. seeks Transitional Wherefore PRAYER FOR RELIEF judgmentagainst asfollows: Defendants demands Transitional WHEREFORE, 1. 2. 3. 4. 5. 67. to be provenat trial, but not lessthan$29.7million; For damages interest; For prejudgment For attomeys'fees; For punitivedamages; of suit; For costs and asmaybe appropriate; For suchprovisionalremedies just, properandequitable' For suchotherandfurtherrelief asthis Courtdeems

4 5 6 7 8 9 10 11 12 l3 14 15 t6 t7 l8

Dated:Iuly 13,2007

NOSSAMAN,GUTHNER,KNOX & ELLIOTT, LLP BRENDAN F. MACAULAY

r9
20 2l 22 23 24 25 26 27 28
l.DOC 214885

v:
Plainti ff Transitional

-13@eachofContract,Misrepresentation,FraudulentTransfer