Canceled Thunder on the Mountain Music Festival Leads to Lawsuits

Thunder on the Mountain was expected to be one of the larger weekend country music festivals in Arkansas in 2015.

But the event at Mulberry Mountain near Ozark, which was going to feature the singer Carrie Underwood and the Zac Brown Band, was canceled June 15, 2015, just 11 days before the festival was scheduled to start.

The legal fights over the festival started months before the approximately 50 music acts were to take the stage and continued after the event was canceled.

The venture capitalist firm Madison Cos. LLC of Greenwood Village, Colorado, first sued the promoters of the event, Pipeline Productions Inc. and Backwood Enterprises LLC, both of Lawrence, Kansas, in April 2015 in state court in Delaware over a dispute over their business arrangement. Madison alleged that it didn’t have a binding agreement with Pipeline and the $270,000 it gave the companies should be considered a loan.

Pipeline then sued Madison Cos. in May 2015 in U.S. District Court in Kansas, alleging breach of contract and breach of fiduciary duty. Pipeline argued it did have an agreement and the money was only a partial payment for the Thunder on the Mountain event.

Madison’s lawsuit was dismissed in December, and Pipeline’s case is pending.

But the lawsuits didn’t end there.

The cancellation sparked more legal claims from festival ticket holders and those who bought camping passes and vendor booths who alleged they haven’t received a refund. The damages could be more than $5 million, according to court filings.

“It’s very frustrating for our clients, because it’s been over a year now,” said Scott Poynter of Little Rock, who is one of the attorneys representing the proposed class members.

The proposed Arkansas class members filed the lawsuit in Pulaski County Circuit Court a week after the event was canceled. The plaintiffs received a default judgment in December against Pipeline because it never answered the complaint. The Madison Cos., however, wanted the case to be settled in arbitration. Pulaski County Circuit Court Judge Alice Gray denied the request, and Madison has appealed the ruling to the Arkansas Court of Appeals.

Poynter also has a proposed nationwide class-action case in U.S. District Court in the Eastern District of Arkansas. But that case has been put on hold while the arbitration question is pending at the Arkansas Court of Appeals.

He said his concern is Pipeline and Madison are “blowing through the money by suing each other” and there won’t be funds left for the class members.

“Truly, our clients are the only ones innocent here,” Poynter said.

Brett Mosiman, a principal in Pipeline and Backwood, said in an affidavit in February in Pipeline’s case against Madison that the lawsuit involving Madison is financially hurting him and his companies.

“I am now faced with next to no ongoing income, legal bills and no real way to move forward until I recover restitution from this case,” he said in the affidavit.

William Skepnek of Lawrence, Kansas, an attorney for Pipeline, told Arkansas Business that he believes his client will win the case against Madison.

“Madison basically decided not to follow up with their commitment,” he said.

An attorney for Madison, Richard Benenson of Denver, didn’t immediately return a call for comment.

But in its court filings, Madison said it never received any money from ticket or other sales associated with the Thunder on the Mountain festival.

The court filings from the various lawsuits, however, give a peek inside the music festival industry and the disagreement that led to the canceling of the festival.

Businesses in northwest Arkansas helped promote the festival with ticket giveaways.

Thunder on the Mountain

Brett Mosiman has been in the business of live music, concert and music festival productions for more than 30 years.

Mosiman produced Thunder on the Mountain in 2013, featuring country singers Toby Keith and Luke Bryan.

But “the expectation in the industry is that music festivals require several years of brand development to achieve profitability,” Mosiman said in the lawsuit. “It would be expected that Thunder might not be profitable in 2015.”

There wasn’t a Thunder on the Mountain in 2014.

In January 2014, Mosiman met Bryan Gordon, who was the primary principal of Madison, according to Pipeline Production’s lawsuit.

Gordon wanted to partner with Mosiman in the music festival production industry, “using Mosiman’s developed reputation and expertise, and Madison’s financial resources,” according to the lawsuit.

Gordon proposed that their companies form a jointly owned company through which they could produce music festivals on an ongoing basis.

They signed a letter of intent on July 28, 2014, which expired on Nov. 1, 2014.

But both sides have different views of the events after that.

According to Mosiman, he sent an email to Gordon on Nov. 4, 2014, suggesting they form a joint venture between the two companies to own the Thunder on the Mountain music festival, which was scheduled for June 26-28, 2015.

The proposal called for Gordon’s Madison to pay $750,000 for a 51 percent interest in Thunder and Madison would pay $500,000 for operating capital for the festival. In addition, Madison would pay Pipeline $80,000 to operate and produce the festival, according to Pipeline’s complaint.

Pipeline said Gordon agreed.

Pipeline “would not have pursued production of Thunder but for Madison’s commitment to the terms of the November 4 proposal, as modified,” the complaint said.

After the agreement was in place, Pipeline said, the company’s workers spent more than 4,000 hours between November 2014 and May 2015 producing the festival.

“During this time Mosiman used his industry contacts to obtain commitments from approximately 50 artists,” the lawsuit said.

From the date of the first ticket sale, though, Madison received emails projecting that Thunder would lose money in 2015.

Pipeline said that Madison then backed away from the arrangement and “has attempted to re-characterize its investment in Thunder as a loan, and had repudiated the agreement it made on November 4-6, 2014.”

Madison hasn’t paid the $500,000 to produce Thunder or to pay for its 51 percent interest in the festival, Pipeline said. Nor has it paid Pipeline $80,000 for operating costs, according to Pipeline’s filings.

Instead, Pipeline has had to cover “Madison’s default by paying over $700,000 in production costs needed for Thunder,” the lawsuit said.

Pipeline accused Madison of breach of contract and breach of fiduciary duty and is seeking a declaratory judgment that said Madison made a contract with Pipeline.

‘A Total Collapse’

Madison said in its lawsuit that the case is about Pipeline’s “attempt to force [Madison] into a business deal to which they never agreed.”

After the letter of intent was signed, Madison raised “serious concerns” about Pipeline’s accounting of expenses, Madison said in its lawsuit, filed in Delaware.

Still, Madison said that it made the payments to Pipeline “in a show of good-faith.”

It said the parties agreed that the money was a loan and the interest rate was 10 percent.

Madison said the money hasn’t been repaid and is owed.

Mosiman said in his affidavit that the dispute with Madison “has led to a total collapse of my business and financial world.” Mosiman also had the Phases of the Moon Music & Art Festival at Mulberry Mountain scheduled in October 2015, but that too was canceled.

Mosiman estimated his damages at more than $10 million.

Madison hasn’t filed an answer in the case yet and a court date hasn’t been set.