Espinoza Paz suit

8/9/2019 Espinoza Paz suit

1/23

ANSWER AND COUNTERCLAIM1

C:\Users\Xavier\Dropbox\Legal\Civil\Contracts\Espinoza Paz\2015.01.015 Nueva Generacion Action II\2015. 01.15 EP Pleadings\2015.02.16 firstamended COUNTER CLAIM.docx

Cause No. 2015-00749

NUEVA GENERACION MUSIC GROUP § IN THE DISTRICT COURT OF§

vs §

. § HARRIS COUNTY, TEXASISIDRO CHAVEZ ESPINOZA p/k/a §ESPINOZA PAZ §

Defendant and Counter-plaintiff § 281st JUDICIAL DISTRICTv.

NUEVA GENERACION MUSIC GROUP,MARTIN ALFONSO FABIAN RAMOS,aka MARTIN FABIAN, 24-HOUR MUSIC,LLC, MINITOS MUSICAL, S.A. de C.V.

Each, third-party Defendant

§§§§§§§

FIRST AMENDED ANSWER

AND AFFIRMATIVE DEFENSES

TO PLAINTIFF’S ORIGINAL PETITION

AND COUNTERCLAIM

COMES NOW Isidro Chavez Espinoza, p/k/a Espinoza Paz (hereafter, “PAZ”), by and

through his attorney of record, and files this Answer and Affirmative Defenses to Plaintiff’s

Original Petition and Counterclaim and would respectfully show the Court as follows:

I.

GENERAL DENIAL

Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendant denies generally

each and every allegation contained in Plaintiff’s Original Petition, and any amendments and

supplements thereto, and demands strict proof thereof by a preponderance of the evidence.

2/18/2015 1:32:1Chris Daniel - District Clerk Harris Co

Envelope No. 419By: Adiliani

Filed: 2/18/2015 1:32:1

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II.

AFFIRMATIVE DEFENSES

1. As the First Affirmative Defense, Defendant asserts a Failure to State a Cause of Action.

Plaintiff has failed to state a cause of action upon which relief can be granted. The Plaintiff fails

to allege with specificity any factual allegations to establish the requisite elements. The Plaintiff

fails to set forth ultimate facts to show that the Plaintiff is entitled to relief.

2. As the Second Affirmative Defense, the Defendant asserts Unclean Hands. The actions

of the Plaintiff should bar recovery in this action. The Plaintiff’s wrongful conduct precludes it

from seeking relief and the claim should be dismissed.

3. As the Third Affirmative Defense, the Defendant asserts Estoppel and states that the

Plaintiff is barred, in whole or in part, from recovery to the extent that it or its agents or real

parties in interest have made statements or taken actions which estop them from asserting the

claims.

4. As the Fourth Affirmative Defense, the Defendant asserts that the Plaintiff’s claims are

fraudulent, in that the Plaintiff deliberately failed to fully and faithfully perform its duties, to the

detriment of the Defendant, and is therefore not entitled to any of the relief or damages sought in

its complaint.

5. As the Fifth Affirmative Defense, the Defendant asserts Accord and Satisfaction. The

parties entered into a contract, express or implied, in which the parties agree to the discharge of a

previously existing obligation by means of a lesser payment tendered and accepted.

6. As the Sixth Affirmative Defense, the Defendant asserts Equitable Estoppel. The

Plaintiff made one or more false representation(s) of material fact, with the knowledge, actual or

constructive, of those facts, and with the intention that these should be acted on, to a party

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(Defendant) without knowledge or means of obtaining knowledge of the facts, who detrimentally

relied upon Plaintiff’s representation(s).

7. As the Seventh Affirmative Defense, the Defendant asserts Failure of Consideration.

Failure of Consideration exists because after the agreement was reached, Plaintiff’s promised

performance failed.

8. As the Eighth Affirmative Defense, the Defendant asserts Failure to Satisfy a Condition

Precedent. Events that were to happen or be performed before Plaintiff accrued a right to

enforce the obligation in question constituted a condition precedent that was never satisfied.

9.

As the Ninth Affirmative Defense, the Defendant asserts Illegality.

10. As the Tenth Affirmative Defense, the Defendant asserts Mistake. The contract in

question incorrectly reflects the true agreement because of a mutual mistake.

11. As the Eleventh Affirmative Defense, the Defendant asserts quasi estoppel. It would be

unconscionable to allow Plaintiff to maintain a position inconsistent with one to which he

acquiesced, or from which he accepted a benefit.

12.

As the Twelfth Affirmative Defense, the Defendant asserts Setoff and Recoupment.

13. The facts having not been fully developed, Defendant affirmatively pleads any of the

following defenses that may become applicable to this action: accord and satisfaction, arbitration

and award, assumption of risk, coercion, contract, contributory negligence, discharge in

bankruptcy, duress, economic duress, election of remedies, estoppel, failure of consideration,

illegality, laches, license, payment, release, res judicata, satisfaction, statute of frauds, waiver,

the failure of Plaintiff to mitigate damages, and any other matter constituting an avoidance or

affirmative defense. The Defendant reserves the right to supplement this Answer with any

additional Affirmative Defenses he may assert.

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14. Plaintiff’s own conduct is the proximate cause of any damages sustained.

III.

REQUEST FOR DISCLOSURE

15. Under Texas Rules of Civil Procedure 194, the Defendant requests that the Plaintiff

disclose, within thirty days of the service of this request, the information or material described in

Rule 194.2.

IV.

COUNTERCLAIM

DISCOVERY LEVEL

16. Counterclaimant requests discovery to be conducted in accordance with a Level 3

Discovery Control Plan under Civil Procedure Rule 190.3.

JOINED PARTIES

17. Counter-defendant Martin Alonso Fabian Ramos (“FABIAN”) is an individual believed

to be residing in Irving, Texas and who regularly does business in Harris County, Texas, who

can be served with process on his attorney Yocel Alonso at 130 Industrial Blvd, Suite 110, Sugar

Land, Texas 77487, or in any other manner authorized by statute.

18. Counter-Defendant 24-Hour Music, LLC (“24-HOUR”) is a Texas Corporation and can

be served with process through its registered agent, Dinorah Pena-Duran at 1212 Corporate

Drive, Ste 170, Irving, Texas 75038, or in any other manner authorized by statute.

19. Counter-Defendant Minitos Musical S.A. de C.V. (“MINITOS”) is a Mexican

corporation which can be served with process through its managing member, Martin Alonso

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Fabian Ramos at 4416 Windsor Ridge Drive, Irving, Texas 75038, or in any other manner

authorized by statute.

20. Counter-plaintiff believes and based on such information and belief avers that all

Counter-defendants, NUEVA, 24-HOUR, MINITOS and FABIAN, and each of them, are and at

all material times have been, the agents, servants or employees of each other, purporting to act

within the scope of said agency, service or employment in performing the acts and omitting to

act as averred herein.

21. Each of the Counter-defendants named herein is believed to, and is alleged to have been,

acting in concert with, as an employee, agent, co-conspirator or member of a joint venture of,

each of the other Counter-defendants, and are therefore alleged to be jointly and severally liable

for the claims set forth herein, except as otherwise alleged.

STATEMENT OF FACTS

22. Counter-plaintiff, PAZ, is a popular Mexican singer/songwriter, who seeks to recover

damages from Counter-defendants, his talent agents and their associates, who betrayed his trust

and embezzled from him substantial amounts of money and other valuables. PAZ seeks to

recover damages based on Counter-defendants’ conversion, breach of fiduciary duties and fraud.

Counter-plaintiff also seeks rescission of contract based on Counter-defendants’ fraud, and an

accounting against Counter-defendants.

23. Counter-Defendant Nueva Generacion Music Group, Inc. (“NUEVA”) was, at the time it

first contracted with Counter-plaintiff, a California corporation headquartered in the County of

Los Angeles, State of California. NUEVA’s principal business was that of representing musical

artists as talent agent. On or about June 27, 2007 NUEVA merged out of California and into its

affiliate, NUEVA Music Group, Inc., a Texas corporation. Said Texas entity was organized after

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the parties had contracted and with the evident purpose of circumventing California law

applicable to talent agents. FABIAN is the face of NUEVA and is its president, founder, and

majority stakeholder.

24. PAZ met Counter-Defendant FABIAN, in or around the month of December 2006. PAZ

was at the time an aspiring singer/songwriter who had penned hundreds of songs, some of which

had recently become hits, having been picked up by a famous singer of the genre. FABIAN,

upon being introduced to PAZ by a mutual acquaintance, told PAZ that he owned a California

company that promoted musicians like himself and helped them become stars.

25.

On or about March 9, 2007, FABIAN presented PAZ with a document (“the 2007

Agreement”) which he asked PAZ to sign in order to represent him. Said document is attached

hereto as Exhibit A. FABIAN explained that the 2007 Agreement would make FABIAN his

company representative who was bound to protect and advance PAZ’s artistic interests as a

singer. PAZ signed that document and thereafter relied upon FABIAN as his trusted agent to

represent him in obtaining engagements for his performances.

26.

Over the next several years FABIAN, personally and through the Counter-Defendant

entities which he controls, procured engagements and booked presentations for PAZ, in the

United States and Mexico. On information and belief, Counter-plaintiff asserts that Counter-

defendants were not licensed as talent agents and thereby failed to comply with the requirements

imposed by the applicable California Labor Code and the California Code of Regulations.

27. In May 2007, several months after contracting with Counter-plaintiff, Counter-defendants

set up an affiliate corporation in Texas also named Nueva Generacion Music Group, Inc.

Thereafter, in June 2007, Counter-defendants merged the California entity Nueva Generacion

Music Group, Inc. into the Texas entity of the same name. On information and belief, Counter-

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plaintiff asserts that the reason for this merger is to try to evade California laws which, inter alia,

rendered the compensation to Counter-defendants under the 2007 Agreement unenforceable.

28. In the month of March 2009, while the term of the 2007 Agreement had another year to

run, FABIAN invited PAZ to spend a couple of weeks at his home in Dallas, Texas. Unbeknown

to PAZ, this ostensibly friendly invitation was actually part of Cross-Defendants’ ploy to defraud

him. Cross-Defendants knew that PAZ trusted FABIAN implicitly and that in Dallas, unlike in

Mexico where PAZ and his staff reside, PAZ had no one who might have questioned FABIAN’s

misrepresentations and alerted PAZ to the fraud.

29.

During that March 2009 visit, FABIAN lied to PAZ telling him that the 2007 Agreement

had expired and that a new one needed to be signed. The fact is that the 2007 agreement,

pursuant to its terms, was to run for a period of three years. See Exhibit A, Clause 1. By this

time, however, PAZ considered FABIAN and his companies his trusted agents and believed they

were there to protect his interests as repeatedly avowed by FABIAN. He felt he had no reason to

question the veracity of FABIAN’s statements.

30.

During that March 2009 visit to FABIAN’s home in Dallas, FABIAN presented PAZ

with a new document which to PAZ looked quite similar to the one he had signed in March

2007. This new document contained several blank spaces, which FABIAN said he would fill out

so as to exercise the option permitted under the terms of the 2007 Agreement (the 2007

Agreement granted NUEVA the option to renew, at the end of the original three-year term, for

one four-year term).

31. Trusting FABIAN’s representations that the new document would only exercise the

option in the 2007 Agreement, but would be otherwise identical, PAZ signed that new document

as presented on March 9, 2009, leaving the blank spaces to be filled out by FABIAN as his

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agent. Unbeknownst to PAZ, Counter-defendants later completed the blank spaces in the new

document with abusive and self-serving provisions that were never authorized nor agreed to by

Counter-plaintiff. Counter-defendants completed the document so as to give themselves a

twenty-year deal: an exclusive agency for an initial period of five years (instead of the four-year

extension) and options for three additional renewals of five years each. With the 2009

Fraudulent Agreement, Counter-defendants intended to keep PAZ under their thumb for decades.

A copy of the March 9, 2009 document (“the 2009 Fraudulent Agreement”) is attached as

“Exhibit B.”

32.

Additionally, FABIAN had lied about the 2009 Fraudulent Agreement’s contents. It was

not identical to the 2007 Agreement. Counter-defendants had re-inserted and added abusive

provisions that had been expressly stricken or removed from the previous March 2007 contract.

For instance, in regard to the commissions that NUEVA was to receive, the 2007 Agreement

provided that said commissions would be earned only for those “activities” which were

attributable to NUEVA’s services. In the 2009 Fraudulent Agreement, the Counter-defendants

had re-inserted the word “artist” (which had been expressly stricken and substituted in the 2007

Agreement) in place of the word “representative,” so that NUEVA would be entitled to a

commission for all of the Artist’s activities and not just hose attributable to NUEVA’s

representation. Also, the 2009 Fraudulent Agreement had removed what was clause number 7

in the 2007 Agreement. In said clause NUEVA acknowledges that it does not have the required

talent agent’s license and therefore excludes performances in California and other jurisdictions

from the 2007 Agreement. Through these and other alterations in the 2009 Fraudulent

Agreements, Counter-defendants illicitly extracted significant advantages from PAZ.

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33. The 2009 Fraudulent Agreement establishes that attorney Alonso was Cross-defendants’

attorney who advised them in the creation of the 2009 Fraudulent Agreement. On information

and belief, PAZ asserts that attorney ALONSO drafted the 2009 Fraudulent Agreement when he

knew that the 2007 Agreement had another year to run; also, attorney ALONSO altered the 2007

Agreement provisions to aid Counter-defendants self-dealing at PAZ’s expense and in violation

of Counter-defendants fiduciary duties.

34. Whereas FABIAN represented to PAZ that the 2009 Fraudulent Agreement was identical

to the 2007 Agreement, the fact was that Cross-Defendants had changed the 2007 Agreement in

many important respects. In each and every instance, the change made favored NUEVA at the

expense of PAZ. The ironic result is that the 2009 Fraudulent Agreement, executed when a

famous Paz would have been entitled to demand better terms than when he was less known, is

actually more favorable to Counter-defendants at PAZ’s expense.

35. PAZ became aware of the fact that Counter-defendants had fraudulently inserted

overreaching provisions into the 2009 Fraudulent Agreement sometime in January 2012. PAZ

reached out to FABIAN to demand that these matters be corrected. FABIAN said he might be

willing to correct some of the egregious alterations, but refused to rescind the 2009 Fraudulent

Agreement.

36. PAZ informed FABIAN he would rather retire than continue under such an oppressive

relationship. FABIAN threatened PAZ with severe consequences, even imprisonment, unless

PAZ continued to perform with Counter-defendants NUEVA as his agent. PAZ then decided to

continue working but to distance himself from FABIAN and Counter-defendants as much as

possible. From that point on, the parties have maintained a strained relationship. PAZ, feeling

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he had no choice, continued to perform and Counter-defendants continued to receive a large part

of the proceeds that PAZ earned.

37. On information and belief, Cross-plaintiff asserts that FABIAN controls NUEVA and is

its majority stake-holder. At various times over the period of the relationship with PAZ,

FABIAN has used other companies he controls, including Cross-defendants 24-HOUR and

MINITOS to further defraud PAZ out of his earnings. For instance, on or about June 7, 2010,

FABIAN caused PAZ to sign a three-party accord (“2010 Three-Party Accord”) wherein PAZ,

Arpa Records, LLC (“ARPA”) and 24-HOUR agreed to share in the revenues from PAZ’s

recording agreement. Under said 2010 Three-Party Accord, FABIAN’s company, 24-HOUR,

was to receive 20% and ARPA and PAZ were to receive 40% each. Counter-defendants

provided no additional consideration beyond that required under the 2009 Fraudulent Agreement,

so they were not legally entitled to take said additional commission from PAZ. But what is

worse, PAZ never received his 40% share and it appears that ARPA never received their share

either, as alleged in a complaint filed against FABIAN and 24-HOUR in Los Angeles Superior

Court as case no. BC565455. Evidently, FABIAN and Cross-defendants, who were at best

entitled to 20%, kept the entirety for themselves.

38. PAZ, having lost whatever trust he had bestowed upon FABIAN and Counter-defendants,

began to arrange his bookings without Counter-defendants’ intervention whenever he could. As a

result of PAZ’s more direct involvement, PAZ became convinced, and so he asserts on

information and belief, that Cross-defendants had been keeping a much larger share of the

proceeds than what the agreement allotted. Although the agreement called for NUEVA to

receive thirty percent of the income, an extremely high share relative to typical agreements of the

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asserts on information and belief that NUEVA has, at various other times, conveyed PAZ’s

property to other parties to be identified and has kept the proceeds of said conveyances.

42. Throughout 2012 and most of 2013, the parties maintained this strained and distant

relationship, with NUEVA offering to make amends through token modifications to the 2009

Fraudulent Agreement, but PAZ refusing to trust again. In 2013, NUEVA offered to sell the

2009 Fraudulent Agreement to a third party and sought PAZ’s consent. PAZ avoided

communicating with NUEVA and wanted to have nothing to do with it, although he continued to

allow NUEVA to collect thirty percent share of PAZ’s take for his performances.

43.

In the latter part of 2013, NUEVA filed action against PAZ for breach of contract in

Harris County, Texas as Case No. 2013-64241. For his part, on December 15, 2013 PAZ

presented NUEVA a termination letter (See “Termination of Agency Letter” attached as Exhibit

E) formally notifying NUEVA that they were irrevocably ter minated as PAZ’s agent, stating:

“On this date you are informed that neither Nueva Generacion nor anyone acting for them has

any right to present himself/herself as my agent and/or representative in any capacity and for any

purpose.” In early 2014, PAZ filed action against NUEVA in California Superior Court for

fraud, breach of fiduciary duties and related causes of action.

44. In the Texas case, PAZ objected to the jurisdiction of the court in Houston and this Court

authorized Plaintiff some expedited discovery in preparation for the jurisdictional challenges.

The parties tried to mediate unsuccessfully, but then decided to meet again to attempt to settle

their dispute with only the parties and one attorney per side present.

45. On or about February 25th 2014 NUEVA and PAZ settled Case No. 2013-64241, which

was then pending before this Court (“the 2014 Settlement”). The 2014 Settlement was reached

at about 9:00pm on February 25, 2014, after more than twelve hours of marathon discussions

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where present counsel for NUEVA and PAZ were in attendance along with PAZ and FABIAN

as president of NUEVA. The broad outlines of the 2014 Settlement were written out by

Attorney ALONSO in four handwritten notebook pages, with numerous markings, cross-outs,

interlineations, corrections, winding arrows, scrawling along the margins, and scratch-outs. This

document was signed by all present as a statement of the parties agreement reached that day (the

“Handwritten Agreement”, Exhibit D).

46. Given that many areas of the relationship between PAZ and NUEVA were not yet

addressed in the Handwritten Agreement, the parties inserted a provision into the Handwritten

Agreement expressly reserving any and all claims stemming from the 2009 Fraudulent

Agreement. See Exhibit D, Clause 5 (the parties agree to release one another “with the

exception of the terms contained in… the March 9, 2009 Agreement.” This provision was to act

as a “safety valve” to make sure that the parties came together and completed the work of

drafting a finalized document as mutually agreed.

47. The Handwritten Agreement capped the total of payments which NUEVA was to receive

from PAZ at a grand total of $4,500,000. PAZ was to pay an aggregate amount of one million

dollars via wire transfer during the remainder of 2014 plus either: 1) an additional total of

$3,500,000 to be paid to NUEVA on or before December 31, 2014, or otherwise 2) thirty percent

of the revenue from PAZ’s performances starting on January 1, 2015. Said payments of 30% of

PAZ’s revenue from his performances was to continue being paid to NUEVA until the

aforementioned grand total was paid in full. Unlike the first $1,000,000.00 which was to be wire

transferred from PAZ to NUEVA, the balance of 3,500,000.00 could be paid in any appropriate

manner, including, for example, offset or credit for money or valuables belonging to PAZ

already in NUEVA’s possession (Handwritten Agreement clause 1(c)).

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48. At the time of the 2014 Agreement, NUEVA held funds and other valuables which were

the property of PAZ that NUEVA had received as PAZ’s agent. There were also funds that

belonged to PAZ which were being held by third parties, which would require NUEVA’s

authorization in order to be released to PAZ. These needed to be accounted for and other issues

needed to be addressed and fleshed out in a properly drafted document that would achieve the

stated purpose of the 2014 Settlement: to resolve all claims between the parties.

49. Although the Handwritten Agreement is in Spanish, one look at the document makes it

completely obvious that this was not intended to be the finalized agreement. The Handwritten

Agreement is not in the least presentable. More importantly, the relationship between NUEVA

and PAZ is complex and the broad outlines memorialized in the Handwritten Agreement leave

many issues unaddressed. This was clear to all present and, in particular, to counsel for NUEVA

and PAZ.

50. Equally clear was the parties’ intent to settle all pending issues between the parties

pursuant to the 2014 Settlement. This intent was expressly written into the Handwritten

Agreement, which states: “Plaintiff and Defendant agree that they are releasing by these means

all grievance and complaint which exists between the parties,” but excludes the 2009 Fraudulent

Agreement from said release. It was agreed that counsel for both parties would flesh out the

details of the 2014 Settlement and craft a more complete document that would appropriately

reflect the totality of the 2014 Settlement, including a finalized disposition of the issues pending

under the 2009 Fraudulent Agreement (the “Pending Finalized Document”).

51. Few hours after having reached the 2014 Settlement, early in the morning of February 26,

2014, PAZ’s counsel (Attorney Chavez) e-mailed NUEVA’s counsel (Attorney ALONSO) a

reminder that NUEVA’s counsel was to begin preparation of the “finalized, cleaned-up version,”

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i.e. the Pending Finalized Document. NUEVA’s counsel acknowledged the request answering

“let me see what I can do on that.”

52. Two days after said email exchange, on February 28, 2014, a first installment of the one

million dollars to be paid in under the 2014 Settlement became due. Before tendering payment,

PAZ through counsel again demanded NUEVA via email that it produce a first draft of the

Pending Finalized Document. In that email, attorney Chavez warned Attorney Alonso that

unless the parties came through on the agreement to flesh out the 2014 Settlement in a more

formal document, the Handwritten Agreement would be fatally ambiguous (due to the exclusion

of the 2009 Fraudulent Agreement from the settlement, among other reasons). Additionally,

attorney Chavez described with greater specificity the unaddressed issues that were to be part of

said Pending Finalized Document. First amongst these, attorney Chavez highlighted the fact that

“Nueva Generación is not and will not be, under any concept, my client’s agent,” adding: “I

think enough was said during our [settlement] meeting so that not even the least doubt can

remain with respect to my client’s position in this regard.” Also, given that attorney Alonso had

failed to produce the fleshed out agreement he promised, attorney Chavez sent Alonso a

proposed draft of the Pending Finalized Document as an attachment to that February 28, 2014

email. A copy of said version of the Pending Finalized Document is attached hereto as Exhibit C.

53. Attorney ALONSO answered the same day insisting that PAZ “must make the first

payment today,” but adding: “Nonetheless, I hope to have a draft this coming week so that both

parties can make changes.”

54. PAZ paid the first and second installment due in February and March 2014, respectively,

for a total of one million dollars. Regardless, Attorney Alonso’s promised draft never came

through. In fact, on March 4, 2014 Attorney Alonso revealed he had no intention of producing

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the promised draft of the Pending Finalized Document and left the job to attorney Chavez,

stating: “why don’t you send me a draft of what you want us to sign... so that I can discuss it with

NUEVA?”

55. PAZ, through counsel, did produce a “proposed fleshed-out settlement agreement” and

presented it to NUEVA on March 27, 2014 for its consideration. On April 9, 2014 NUEVA,

through counsel, responded with five proposed modifications to the proposed agreement. In the

ensuing months, PAZ and NUEVA, through their counsel, continued to negotiate some aspects

of the Pending Finalized Document.

56.

After a lull in the negotiations, PAZ presented another version of the proposed Pending

Finalized Document on October 20, 2014. Ten days later, on October 30, 2014, NUEVA

informed PAZ that it was reneging on its promise to produce a Pending Finalized Document

accurately reflecting the 2014 Settlement’s intent to resolve all issues between the parties,

stating: “we prefer that the Settlement Agreement be honored as is.”

57. From that point forward, PAZ, reached out to NUEVA just about weekly, insisting that

the parties need to sit down and hammer things out amicably so as to avoid wasteful litigation.

NUEVA chose to either ignore or openly scorn PAZ’s requests for open dialogue and a

resumption of good faith negotiations to produce the Pending Finalized Document.

58. Time and again NUEVA rejected PAZ’s overtures. Still, on January 2, 2015, PAZ

informed NUEVA that PAZ intends to fully honor the 2014 Settlement but also demanded that

NUEVA live up to its end of the bargain. On January 7, 2014, NUEVA filed its new original

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59. Counter-defendants’ willful, wanton and malicious actions are intended to abuse, oppress

and harass Counter-plaintiff. As a result of said actions, Counter-plaintiff has been damaged in

amounts to be proven at trial but which exceed ten million dollars.

FIRST CAUSE OF ACTION

(Breach of Contract - NUEVA)

60. Plaintiff alleges and incorporates by reference the allegations set forth in paragraphs 1

through 26 as if fully set forth herein.

61. On or about February 25, 2014 the parties entered into the 2014 Settlement, which was

broadly outlined via the Handwritten Agreement. As part of the 2014 Settlement, the parties

agreed to flesh out a formal Pending Finalized Document that would resolve the totality of the

issues pending between the parties, including the issues regarding the 2009 Fraudulent

Agreement, pursuant to the 2014 Settlement.

62. PAZ (hereinafter, Counterclaimant) performed all conditions, covenants and promises

required on its part to be performed under the 2014 Settlement, except those that NUEVA

waived or prevented by its wrongful actions, or that it rendered impossible to perform. .

63. NUEVA breached the 2014 Settlement by reneging on its promise to flesh out a Pending

Finalized Document that would resolve all issues between the parties pursuant to the 2014

Settlement, and thereby denied Counterclaimant the benefit of his bargain.

64. NUEVA’s breach caused Counterclaimant to sustain damages in amounts to be

determined at trial, but believed to not be less than 4,500,000.

SECOND CAUSE OF ACTION

(Breach of Covenant of Good Faith and Fair Dealing - NUEVA)

65. Counterclaimants repeat and incorporate herein by reference the allegations in the

preceding paragraphs of this Counterclaim.

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66. NUEVA had a legal obligation to undertake its activities pursuant to the 2014 Settlement

in a manner consistent with good faith and fair dealing. In undertaking actions throughout the

contractual relationship intended to harm Counterclaimant, NUEVA breached the covenant of

good faith and fair dealing.

67. By reason of the foregoing, Counterclaimant has been damaged as a result of NUEVA’s

illegal actions in amounts that will be determined at trial, but believed not to be less than

$4,500,000.

THIRD CAUSE OF ACTION (Fraud – 2009 Fraudulent Agreement)

68.

Counterclaimant repeats and incorporates herein by reference the allegations in the

preceding paragraphs of this Counterclaim,

69. Counter-defendants represented to PAZ that the 2009 Fraudulent Agreement was only an

exercise of the four-year option permitted under the 2007 Agreement. Said representation was

false and was a material element in inducing PAZ to enter into the 2009 Fraudulent Agreement,

70. At the time Counter-defendants made the aforementioned false representation, Counter-

defendants knew it to be false, or made said material representation recklessly without any

knowledge of its truth and as a positive assertion,

71. Counter-defendants made said material misrepresentation with the intent that PAZ should

act upon it; PAZ did act upon Counter-defendants’ misrepresentation by entering into the 2009

Fraudulent Agreement. As a direct consequence of Counter-defendants material

misrepresentation, PAZ suffered damages in amounts to be determined at trial, but believed to be

in excess of ten million dollars.

FOURTH CAUSE OF ACTION

(Breach of Fiduciary Duties)

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72. Counterclaimant repeats and incorporates by reference the allegations contained in the


73. Counter-defendants acted as Counterclaimant’s talent agent starting in the year 2007 and

as such stood in the position of Counterclaimant’s fiduciary,

74. Counter-defendants breached their fiduciary duty to Counterclaimant in that, inter alia, it

failed to keep and render accounts that were clear and accurate, failed to place the interests of

Counterclaimant above its own, failed to exercise ordinary care, skill and caution in

administering Counterclaimant’s property, failed to keep trust property separate from its own

property and to properly designate it as trust property, failed to fully and accurately disclose all

material facts necessary for Counterclaimant to protect his own interests, and engaged in self-

dealing against the interests of Counterclaimant.

75. Cross-defendants’ breach of fiduciary duties proximately caused injury to

Counterclaimant and Cross-defendants illicitly accrued benefits for themselves as a result,

FIFTH CAUSE OF ACTION

(Conversion)

76. Counterclaimant repeats and incorporates by reference the allegations contained in the


77. Counter-claimant owned or had the right to immediate possession of money and other

valuables in Counter-defendants’ possession, included but not limited to, moneys received by

Counter-defendants pursuant to the 2010 ARPA Agreement.

78.

Counter-defendants wrongfully exercised dominion or control over Counter-claimant’s

property to the exclusion of and inconsistent with the Counter-claimant’s rights,

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79. Counter-claimant demanded return of his property from Counter-defendants, but

Counter-defendants have failed to return it. Said conversion has caused PAZ damages in

amounts to be determined at trial.

V

JURY DEMAND

80. Defendant exercises his right to trial by jury.

VI

PRAYER

81. WHEREFORE, premises considered, Defendant respectfully prays as follows:

a.

That Plaintiff take nothing by its action and that all its claims be dismissed with

prejudice,

b. That the 2014 Settlement be declared rescinded; that the parties be returned to their

position ex-ante and that COUNTER-DEFENDANTS be ordered to reimburse to

Counterclaimant the $1,000,000 that COUNTER-DEFENDANTS received under the

2014 Settlement,

c. That COUNTER-DEFENDANTS be compelled to pay money and restore property

that it holds in trust for Counterclaimant,

d. That COUNTER-DEFENDANTS be ordered to account for moneys held in trust for

Counterclaimant,

e.

That COUNTER-DEFENDANTS be compelled to reimburse all sums earned as

compensation as Counterclaimant’s fiduciary,

f.

That a constructive trust be placed upon all funds and all property held by

COUNTER-DEFENDANTS for Counterclaimant,

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g. That trust property which COUNTER-DEFENDANTS wrongfully disposed be traced

and that Counterclaimant recover said property or proceeds from said property,

h. That the Court award Defendant his reasonable and necessary attorney’s fees and

costs of Court,

i. That Defendant receive such other further relief at law or in equity to which he may

be justly entitled, and

j. That Counterclaimant be awarded actual damages including pre and post- judgment

interest at the maximum rate allowed by law.

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Respectfully Submitted

XAVIER LAW FIRM

/s/ Xavier V. Chavez Xavier V. ChavezState Bar No.: 24069495

Attorney for Defendant25775 Oak Ridge Drive, Ste 120The Woodlands, Texas 77380

Phone: (281) 296-3741Fax: (281) [email protected]

John W. HavinsTBN 09239800Ky A. JurgensenTBN 240718042211 Norfolk St., Ste 525Houston, TX 77098T: 713/650-3600

F: 713/650-3601 [email protected] [email protected]

ATTORNEYS FOR DEFENDANTCOUNTER-PLAINTIFF

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mailto:[email protected]:[email protected]:[email protected]


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CERTIFICATE OF SERVICE

I certify that a true copy of the above was served on each attorney of record or party inaccordance with the Texas Rules of Civil Procedure on February 16, 2015.

/s/ Xavier V. Chavez ___________________Xavier V. ChavezAttorney for Defendant

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Espinoza Paz suit

Documents

Transcript of Espinoza Paz suit