Competing lawsuits between Danny Wimmer Presents and its former law firm are set to be heard beginning July 18 in Los Angeles Superior Court.

Photo

Danny Wimmer - Founder / Chief Creative Officer Of Danny Wimmer Presents.

The dispute between the parties has a CEO and former managing partner in common. At stake is potentially millions of dollars in profits earned by DWP since its initial “Welcome To Rockville” festival in 2011, as well as the company’s ability to raise further capital while the parties spar over an ownership stake.

To summarize, DWP essentially says its former investment partner and law firm have had no relationship since 2011. However, the firm of Davis Shapiro Lewit Grabel Leven Granderson & Blake notified its former client in 2015 that it claims a membership interest of 14.3 percent and is entitled to exercise member rights to a chunk of profits now that DWP has grown into a major festival force.

According to court documents, attorney Danny Hayes was a managing partner of the law firm previously called Davis Shapiro Lewit & Hayes, and was Danny Wimmer’s longtime lawyer. Hayes and Wimmer “consulted” on the subject of building DWP with legal services provided by Hayes beginning in 2010.

At the same time, Hayes brought the opportunity to invest in “Welcome to Rockville” to his then-partners at Davis Shapiro, which agreed to kick in $25,000 and take a 7.5 percent split of net profits of the successful event that took place in May 2011. According to a complaint for declaratory relief filed by DWP in November 2015, Davis Shapiro requested its capital investment, plus its share of profits, be returned.

DWP repaid the capital investment in June 2011 and the share of profits three months later. Since the first Rockville festival, Danny Wimmer Presents has expanded to present 14 events, including AftershockThe Big Ticket, Louder Than LifeNorthern InvasionAllegiance and Fort Rock festivals, most under the name sponsor Monster Energy banner. Those facts appear not to be in dispute.

What came next, however, will be for a court to decide. The Davis Shapiro investment in Rockville was understood to be a “one and done” transaction, according to DWP attorney Michael Sherman. Once the capital contribution and profit split was returned to Davis Shapiro, the firm no longer had “member” standing in the larger investor group as it had no investment stake remaining.

The firm was asked to reinvest for future events and repeatedly declined, Sherman told Pollstar. In the meantime, Hayes left New York-based Davis Shapiro under less than amicable circumstances in 2012.

Hayes is now DWP’s chief executive officer. DWP says it believed its business relationship with Davis Shapiro was long over by the time Auburn United Indian Council made a reported multimillion-dollar investment in the company in 2015 – one which apparently attracted the law firm’s attention.

Danny Wimmer Presents claims that it received a letter from Davis Shapiro dated May 22, 2015, asserting what the festival producer considered to be “a non-meritorious membership interest in DWP.”

The letter, according to the complaint, also “maliciously threatened to interfere with DWP’s business and economic relationships unless its demands were met.”

DWP filed suit asking a judge to declare that its former law firm failed to comply with California Code of Professional Conduct rules regarding business transactions between attorneys and their clients; that the law firm’s investment and membership in DWP dating from 2011 be declared null and void; and a declaration that the firm has no ownership interest in DWP from that time.

Davis Shapiro filed a cross-complaint in December 2015 challenging DWP’s version of events, the claim it had violated the CCPC rules, the terms of the agreement and whether Davis Shapiro remained a member of DWP.

Davis Shapiro’s counter-claim alleges breach of written contract and breach of fiduciary duty against DWP, and seeks a judicial declaration that it holds a “valid, 14.3 percent membership interest in DWP, together with all of the rights to which a member is entitled.”

Sherman, acting as a spokesman as well as attorney for Danny Wimmer Presents, told Pollstar that Davis Shapiro is making claims based on a “sloppy” operating agreement and that the suit is part of a “vendetta” against Hayes.

“They are embroiled in a huge litigation with their departing partner, Danny Hayes, for several years now,” Sherman said. “There was quite a bit of animus there. It was a big deal departure.

“It was nothing more than a New York Times article that appeared [in early January] 2015 announcing … a multimillion investment that caused partners in the law firm to say, basically, ‘Let’s mess with Danny Hayes, by going after his friend Danny Wimmer.’

“Danny Hayes became CEO of DWP the latter part of 2014. It’s coincidental. But why does that give the law firm the right to catch DWP and Danny Wimmer in the crossfire and make them collateral damage to the vendetta they have with Mr. Hayes? This is malicious and will be exposed as such.”