Electronically FILED by Superior Court of California, County of Los Angeles on 04/11/2019 02:00 PM Sherri R. Carter, Executive Officer/Clerk of Court, by D. Ramos,Deputy Clerk 2 6 VENABLE LLP David E Fink(SBN 169212) defink@venable.com Thomas E Wallerstein(SBN 232086) tew@venable.com Christina M Nordsten(SBN 304183) cmnordsten@venable.com 2049 Century Park East, Suite 2300 Los Angeles, CA 90067 Telephone: 310.229.9900 Facsimile: 310.229.9901 Attorneys for Cross-Complainants SUPERIOR COURT OF THE STATE OF CALIFORNIA 1N AND FOR THE COUNTY OF LOS ANGELES 10 Case No. 19stcv06482 Assigned to: Hon. Elizabeth Feffer Christopher Fenton, 11 Plaintiff, 12 v. m W ~_ ~ a ~ ~ ~o a ~' a U rn W W 13 14 rn a~ YW~ N a Z w o N a ~ 15 W ~ ¢''' > ~o Z J W U 16 a 0 N 17 18 DMG ENTERTAINMENT,LLC,a Delaware limited liability company; DMG ENTERTAINMENT HOLDING,LLC,a Delaware limited liability company; DMG MANAGEMENT SERVICES,INC., a Delaware corporation; NEW ASIA SUCCESS PARTNERS LIMITED, a British Virgin Islands corporation; HEALTHY SOAR INVESTMENT LIMITED,a Hong Kong corporation, DANIEL MINTZ, an individual; BING WU,an individual; PETER XIAO,an individual; and DOES 1 through 100, inclusive, CROSS COMPLAINT FOR DAMAGES AND OTHER RELIEF BASED ON CLAIMS FOR: (1) FRAUD (2) BREACH OF FIDUCIARY DUTY (3) NEGLIGENCE Action Filed: February 25, 2019 19 20 21 22 23 Defendant. DMG ENTERTAINMENT,LLC, a Delaware limited liability company; DMG ENTERTAINMENT HOLDING,LLC,a Delaware limited liability company; DMG MANAGEMENT SERVICES,INC., a Delaware corporation, and New Asia Success Partners Limited, 24 25 26 27 Cross-Complainants, ►~~ Christopher Fenton, Cross-Defendant 28 CROSS COMPLAINT Case No. 19stcv06482 1 For their Cross Complaint, Cross-Complainants DMG Entertainment, LLC,DMG 2 Entertainment Holding, LLC,and DMG Management Services, Inc.,(collectively "Cross- 3 Complainants" or"DMG CC"), allege as follows. INTRODUCTION 4 1. 5 This case arises from the actions of a once trusted corporate officer who portrayed 6 himself as a trustworthy, experienced deal maker and skilled manager, but in fact turned out to be 7 a deceitful charlatan. Cross-Complainant DMG CC is a U.S. division of a globally recognized 8 media and entertainment company. Cross-Defendant Christopher Fenton ("Fenton" or "Cross- 9 Defendant" was hired to oversee DMG CC's U.S. operations. In his capacity as President and 10 General Manager of DMG CC,Fenton misrepresented his credentials, took credit for other 11 people's work and spent far more time and energy trying to portray himself as a "player" than on 12 actually doing his job. Fenton grossly mismanaged DMG CC's investments and assets, neglected w a ll_ ~o a ~~o a a~~ 13 to perform appropriate due diligence, made critical errors in the negotiation of business 14 transactions and failed to maintain essential corporate records — he either was unwilling or unable y aw" 15 to carry out even the most basic managerial tasks. In the process, he substantially harmed DMG 16 CC's business and its brand in the marketplace, resulting in millions of dollars in damages. w w _~ ~ J N z a ~ o Q ~ w }z ~ ~ o Z J W U 0 2. 17 In addition to the foregoing, Fenton misrepresented to DMG CC his qualifications N 18 as an executive and corporate officer, and misrepresented the status, value or profitability of 19 several business transactions he negotiated on behalf of DMG CC. He also actively concealed 20 and blocked access to financial and other corporate information that would have shed light on the 21 true nature of his mismanagement. Further, and unbelmownst to DMG CC,Fenton hired a friend 22 as in-house counsel to represent DMG CC who Fenton knew was not actually a lawyer. Despite 23 his clear and well-established fiduciary duties under the law, he repeatedly placed his own 24 personal interests ahead of those of DMG CC,including but not limited to using confidential and 25 proprietary information belonging to DMG CC for his own selfish gains. In sum, Fenton 26 blatantly breached both his duty of care and his duty of loyalty to DMG CC. 27 /// 28 /// 1 CROSS COMPLAINT Case No. 19stcv06482 THE PARTIES 2 3. 3 global media and entertainment company with an impressive roster of world-class intellectual 4 property, diverse holdings and operations across motion pictures, television, comic book 5 publishing, gaming, next-gen technology and location-based entertainment. 4. was, a limited liability company organized and existing under the laws of the State of Delawaxe, 8 with its principal place of business in the County of Los Angeles, State of California. `~W~m d aw n' ~ ~ J N z a ~9 0 W ~¢"' '~ ~o Z J W 5. Cross-Complainant DMG Management Services, Inc. is, and at all times relevant 10 hereto was, a corporation organized and existing under the laws of the State of Delaware, with its 11 principal place of business in the County of Los Angeles, State of California. 12 ~ ~' 0 a~ ~a~~o Cross-Complainant DMG Entertainment, LLC is, and at all times relevant hereto 7 9 N W DMG CC, based and operated in Beverly Hills, is a U.S. division of a successful 6. Cross-Complainant DMG Entertainment Holding, LLC is, and at all times relevant 13 hereto was, a limited liability company organized and existing under the laws of the State of 14 Delaware, with its principal place of business in the County of Los Angeles, State of California. 15 16 7. Cross-Defendant Christopher Fenton is and at all relevant times was, an individual residing in the County of Los Angeles, State of California. U 0 GENERAL ALLEGATIONS 17 N 8. Cross-Complainants are informed and believe, and based thereon allege that, prior 19 to working for DMG CC, Fenton was a Hollywood talent agent for over 17 years working for 20 various agencies, most notably William Morris Agency, prior to his eventual termination. During 21 Fenton's years as an agent, DMG Entertainment and Media Co., Ltd. was one of his clients. 22 23 ► ~! . 9. In or around 2014, DMG Entertainment, LLC, and DMG Entertainment Holding, LLC, were formed. In or around 2015, DMG Management Services, Inc. was formed. 10. In or around November 2013, Fenton started providing executive services to DMG 25 CC and held the titles "General Manager" and "President." Simultaneously, Fenton sold his 26 management company, "H2F," which is now owned and operated by DMG Entertainment LLC. 27 In the process of selling H2F, Fenton made false representations, wildly overstating the value of 28 H2F. For example, Fenton made false representations regarding the profitability and value of 2 CROSS COMPLAINT Case No. 19stcv06482 W r ~ ~ 1 assets held by H2F. Cross-Complainants are informed and believe, and based thereon allege, that 2 Fenton oversold and misrepresented the value of H2F for his personal gain and in order to harm 3 DMG CC. 4 11, 5 many employers and business contacts during his career, including DMG CC, in order to gain 6 advancement and personal aggrandizement. Specifically, Fenton took credit for other people's 7 work, overstated his experience in negotiating complex transactions, and misrepresented his skill 8 in managing and running a business. Indeed, Fenton frequently acted out of a desire for self- 9 promotion, rather than doing what was in the best interest of DMG CC. Unaware of the 10 foregoing, DMG CC reasonably relied on Fenton's representations when hiring him and believed 11 him to be a competent executive. Fenton's misrepresentations finally caught up with him, 12 however, after several of his deals resulted in millions of dollars in losses and DMG CC hired a 13 financial officer to review his work and oversee his conduct. a ~ o 'm o F ra W U m W ~ J N Q aw o DMG CC is informed and believes, and based thereon alleges that Fenton deceived Specifically, while Fenton served as an executive, he engaged in the following 12, 14 15 misconduct: 16 • Actively concealed his gross mismanagement; 17 • Failed to engage directly or through third-parties in proper due diligence when w }Q o ~~ ~ J Z U 0 N negotiating deals; 18 • ~~ Entered into agreements for his own personal gain rather than act in the best interest of DMG; ►~ 1 • 21 Intentionally provided false information concerning the profitability of investment deals; 22 • 23 Failed to alert DMG CC to negative financial information with respect to investment deals he negotiated; 24 • 25 Repeatedly misled DMG CC to such an extent that it was impossible for the company to make informed financial decisions; 26 27 /// 28 /// 3 CROSS COMPLAINT Case No. 19stcv06482 1 • Misrepresented the qualifications of employees he hired; in particular an in-house 2 counsel who Fenton represented was a qualified attorney, but in fact was later 3 revealed not to be an attorney at all; 4 • Manipulated the firing of employees to further his personal agenda; 5 • Made false representations with respect to the financial records that he was required to keep as an officer; 6 7 • Entered into highly risky and financially irresponsible investments; 8 • Placed his personal interests ahead of those of his employer by cultivating his persona of a "player" even though this conduct was detrimental to DMG CC; G ~ 10 • Failed to perform industry-standard chain of title searches in underlying intellectual property; 11 12 N W r ~ ~ • Failed to execute long-term agreements for complex business transactions, relying 13 instead on simplistic short-form term sheets that are customarily used as 14 preliminary documentation of agreements for services of actors in motion pictures 15 and television projects; a ~ o ~l ~ m o a W U m W YwmN a~ J N Z a ~ o W > ¢ "' ~ ~ o Z J W 16 • Failed to disclose conflicts of interest; 17 • Utilized corporate opportunities, such as a membership in the Academy of Motion U 0 N 18 Picture Arts and Sciences, for his own personal gain rather than for the benefit of 19 DMG CC; 20 • Disclosed and used for personal gain confidential information belonging to DMG 21 CC, including attorney-client privileged information, to which he gained access as 22 an officer and fiduciary but which did not belong to him. 23 13. Fenton was originally hired by DMG CC based on (1) what he represented as his 24 ability to find opportunities and make deals based on business connections; and (2) his additional 25 representations that he had the business acumen and skills to manage a complex business. 26 Among other things, Fenton was responsible for finding profitable acquisitions, malting 27 connections, and negotiating and closing the appropriate agreements. Fenton was also 28 responsible for supervising the necessary legal and financial due diligence, investigation and 4 CROSS COMPLAINT Case No. 19stcv06482 1 ~ safeguarding needed for the business opportunities that he pursued. Notwithstanding the 2 ~ foregoing, Fenton presided over multiple investments that failed due to poor due diligence and 3 ~ mismanagement —leaving DMG CC with millions of dollars in damages and write-downs on its 4 books. Upon information and belief, Fenton was driven by his own ego and desire for personal 5 ~ glorification in the public eye; in order to cultivate the persona of a "player," his priority was 6 ~ getting a deal "done," rather than looking out for the best interest of DMG CC. Indeed, upon 7 ~ information and belief, Fenton entered into several agreements on DMG CC's behalf for the sole 8 purpose of increasing his own public profile at the expense of DMG CC. To that end, Fenton 9 abandoned the standard of business judgment expected and required of a company executive in 10 his position. 11 The S2BN Deal 12 14. In 2015, Fenton entered into an agreement with S2BN, a production company, to N ~w ~ a `~o ~ O1 0 a Q~~ 13 produce and exhibit live shows in China based on the popular Transformers characters. The 14 trademark and related rights were owned by Hasbro, which would license those rights to S2BN. IS The deal contemplated a launch date by December 2016. Although DMG CC would be required w W .m a ~ W ry z a~o w }a > >~ 16 ~ J Z W U ° ' 0 N to invest millions of dollars, Fenton assured DMG CC that the upside would be enormous. 15. 17 Despite the complexity of the transaction, Fenton documented it with only a basic 18 ~ term sheet that expressly contemplated a future long-form agreement which would contain the 19 additional terms of the parties' agreement. Subsequently, Fenton failed to complete the necessary 20 long-form agreement, leaving several terms of the agreement between the parties insufficiently 21 documented. 16. 22 Fenton's mismanagement of the deal resulted in the project launch date being 23 ~ delayed until the time the Hasbro license of the IP to S2BN was set to expire. 17. 24 Further, it was later discovered that Fenton agreed to numerous modifications, 25 agreements and understandings in the deal with S2BN that he also failed to memorialize in 26 writing. Fenton also effectively waived DMG CC's right to reporting by S2BN,resulting in 27 essentially no record keeping as Fenton spent millions of dollars of DMG CC's funds. 28 /// 5 CROSS COMPLAINT Case No. 19stcv06482 1 2 18. In addition, and perhaps most egregiously, Fenton never reached any agreement, in writing or otherwise, requiring S2BN to extend the term of its license with Hasbro beyond the 3 ~ initial expiration date. As a result, when the launch dates of the shows were delayed, S2BN was 4 allowed to let its license with Hasbro to expire, which prevented DMG CC from moving forward 5 with the shows. Because of Fenton's negligence, the deal terminated and DMG CC suffered 6 ~ millions of dollars in damages. 7 8 9 10 0 19. Compounding the problems set forth above, Fenton did not maintain proper books and records in connection with the project. Gross Mismanagement of DMG CC 20. DMG CC employed Fenton based upon his representations that he was a "star 11 negotiator," avid deal maker, and experienced executive. In reality, Fenton was incapable of 12 putting another's interests ahead of his own, was ignorant of the basic financial concepts and 13 elements necessary to do his job competently, and had little knowledge of industry-standard due 14 diligence requirements. After numerous transactions resulted in substantial financial losses to the 15 company, DMG CC decided to hire an external financial officer to oversee Fenton's work. As 16 provided in detail below, the financial officer discovered serious mismanagement and fraudulent 17 conduct by Fenton resulting in his eventual termination. N ~w ~ a `~o '~ I-~ ~m W U om m W P~ ~ J N ~ a;o w }a"' ~ ?~ ~ J Z W U ' ° 0 N 18 19 20 21. During Fenton's employment, Fenton engaged in gross negligence and serious misconduct in the discharge of his duties as an executive. 22. Among other things, Fenton failed to produce and maintain even the most basic 21 financial records. Indeed, although Fenton represented otherwise, he kept no record of DMG 22 CC's earnings, cash flow, or income. 23 23. In addition, Fenton made misrepresentations to the Academy of Motion Picture 24 ~ Arts and Sciences in order to qualify to become a member of the Academy. 25 24. Fenton also made reckless decisions and intentional misrepresentations for the purpose of closing deals rather than acting in the best interest of his employer. For example, on 27 several occasions Fenton pursued intellectual property investments, but failed to engage in proper ►: due diligence as to its underlying ownership. On at least one occasion Fenton attempted to 0 CROSS COMPLAINT Case No. 19stcv06482 1 compete a transaction in which the seller could not establish that it had chain of title to the 2 property at issue in the transaction. 25. 3 4 utilized the services of in-house counsel. In fact, as DMG CC later discovered, not only was 5 Fenton's in-house counsel incompetent — he was not even an attorney. Rather than retaining a 6 competent, independent minded attorney to represent the interests of DMG CC,Fenton lied about 7 the qualifications of this individual, an old friend and lackey of Fenton, whom he could control. 8 Fenton lied in order to install an employee whom he could direct and control for his individual 9 benefit, lying about his qualifications in order to justify the decision. Indeed, DMG CC is 10 informed and believes, and based thereon alleges, that Fenton terminated the previous in-house 11 counsel(who was keeping appropriate checks and balances on him)in order to replace her with 12 his non-attorney friend whom he could control. M N W '= ~~ a go ' ~~~~ a Q U m As previously alleged herein, during Fenton's employment, Fenton hired and 26. 13 During Fenton's employment, Fenton routinely used simplistic short-form deal 14 memos and term sheets for complex transactions, failing to properly negotiate and document z a~o W >a"~ IS important terms of business transactions that should have been memorialized in more extensive, ~ j~ 16 specific transactional documentation. This failure by Fenton led to later confusion and disputes, 17 substantially damaging DMG CC. (~ W _ p) P~ ~ w N ~ J Z W U 0 N 18 27. After several "bad deals" and losses in investments, DMG CC decided to hire an 19 external financial officer to oversee Fenton's activities in Los Angeles. As a result of the 20 financial officer's findings, and in or around February 2018, Fenton was terminated for his poor 21 performance, gross mismanagement, and fraud on the companies he served. 22 Fenton Is Withholding Critical Information and Access Regarding H2F 23 28. 24 As previously alleged herein, DMG Entertainment LLC now owns Fenton's former management company H2F. 29. 25 Upon information and belief, Fenton actively used H2F's bank accounts and email 26 ~, ~ account to perform his duties as an executive, and to conduct other personal business that 27 conflicted with his duties. Zs /// CROSS COMPLAINT Case No. 19stcv06482 1 30. DMG CC is further informed and believes, and based thereon allege, that Fenton 2 ~ surreptitiously used the foregoing H2F accounts to conceal his activities from DMG CC. 31. 3 4 After Fenton was terminated, DMG CC repeatedly asked him to provide all email login and password information, as well as necessary bank account access information for the 5 ~ H2F accounts. The H2F bank accounts and email account belong to DMG CC. Yet, Fenton has 6 ~ refused to provide this information to DMG CC since he was terminated in February 2018. 32. 7 8 Upon information and belief, Fenton is withholding the H2F accounts to cover up his fraud, self-dealing and gross mismanagement. Fenton Improperly Disclosed Confidential Information Belonging To DMG CC 9 10 33. As an officer and manager, Fenton had access to confidential, proprietary, and 1 1 ~ privileged information and was legally obligated to protect said confidences even after his 12 employment relationship terminated. However, instead of protecting said confidences, Fenton 13 utilized confidential and privileged attorney-client communications between DMG CC and its 14 counsel for his own personal gain and to DMG CC's detriment. Fenton's conduct is even more 15 egregious because it was not necessary for Fenton to breach his duty to maintain corporate 16 confidences. Rather, his actions were gratuitous and malicious, designed solely to harm DMG N ~W ~ a go ~~~ 'a a U m w w .m W ~J`" a;o z w r Q ~~0 ~ J Z W U m 0 N 7 17 CC. 18 FIRST CAUSE OF ACTION 19 (Fraud) 20 21 22 34. The Cross-Complainants re-allege and incorporate by reference each and every allegation set forth in paragraphs 1 through 33 above, as though fully set forth herein. 35. As previously alleged herein, during Fenton's employment, Fenton made several 23 ~ misrepresentations to DMG CC,including the following: 24 a) Fenton misrepresented his experience and took credit for other people's work. 25 b) Fenton misrepresented the value of H2F. Fenton made false representations 26 regarding the future profitability and value of assets held by H2F. Cross- 27 Complainants are informed and believe, that Fenton oversold and misrepresented 28 the value of H2F for his personal gain and to the detriment ofDMG CC. 8 CROSS COMPLAINT Case No. 19stcv06482 c) Fenton misrepresented the profitability and status of the S2BN deal. As previously 1 2 alleged herein, Fenton misrepresented the progress of the development of the 3 underlying project causing a lapse of third-party licenses which were essential for 4 the success off the S2BN transaction. d) Fenton misrepresented that DMG CC was being properly managed. Fenton failed 5 6 to produce and maintain financial records of DMG CC's earnings, cash flow, or 7 income. Upon information and belief, Fenton's lack of record keeping was done 8 for the purpose of concealing the true state of DMG CC's finances. e) Fenton misrepresented the qualifications of employees that he hired including in- 9 10 house counsel who Fenton represented was a qualified attorney, but in fact was 11 later revealed not to be an attorney at all. 12 ~ Fenton misrepresented the value of deals entered into on DMG CC's behalf. 13 g) Fenton misrepresented the extent of due diligence he performed on deal N W r ~ ~ a N O a W~~ 14 acquisitions. For example, Fenton misrepresented that he performed industry- N 15 standard chain of title searches on underlying intellectual property. Specifically, 16 Fenton pursued and negotiated deals for intellectual property, vouching for its 17 authenticity, when it later was revealed that the seller could not establish it had 18 chain of title to the property at issue in the transaction. ~ ~ O w Y~m a P~ ~ J z a ~ o W >Q"' fro ' Z J W U 0 N 19 36. At the time Fenton made these representations he knew they were false. 20 37. At the time Fenton made these representations DMG CC believed them to be true. 21 38. Fenton also omitted and actively concealed the following material facts from 22 DMG CC: a) Upon information and belief, Fenton did not conduct adequate due diligence on the 23 investments and acquisitions he was pursuing. 24 25 b) Fenton concealed his mismanagement of DMG CC. 26 c) Fenton concealed his lack of knowledge and experience. 27 d) Fenton concealed his mismanagement ofthe S2BN transaction. 28 /// 9 CROSS COMPLAINT Case No. 19stcv06482 e) Fenton concealed DMG CC's financial status by failing to keep and maintain 1 financial records of DMG CC's earnings, cash flow, or income. 2 3 39. The Cross-Complainants are informed and believe, and based thereon allege that 4 Fenton intended to induce DMG CC to act on Fenton's material misrepresentations and 5 omissions. 6 40. DMG CC acted upon Fenton's material misrepresentations and omissions with 7 ~ justifiable reliance. 8 9 10 41. As a direct and proximate result of Fenton's fraud, the Cross-Complainants have been damaged in an amount to be proven at trial, but not less than $30 million. 42. Fenton's acts were undertaken intentionally and in conscious disregard of DMG 11 CC's interests and rights, and with fraud, oppression, and malice. Therefore, DMG CC is entitled 12 to an award of punitive and exemplary damages sufficient to punish Fenton and deter similar 13 conduct in the future. N ~W ~ a.`~o a Q~~ 14 SECOND CAUSE OF ACTION 15 (Breach of Fiduciary Duty) w w _~ ~ Y ~ W m Q a ~ 0 w 'a"' ~ ~~ r ~ 16 z w 43. The Cross-Complainants re-allege and incorporate by reference each and every U ' ° 0 N 17 18 allegation set forth in paragraphs 1 through 42 above, as though fully set forth herein. 44. Fenton owed fiduciary duties to DMG CC,including of the utmost loyalty, duty of 19 care, disclosure, good faith and fair dealing, and the duty to place DMG CC's interests over those 20 of himself. 21 45. Fenton presided over multiple investments that failed because Fenton was driven 22 by his own ego and desire for personal gain; looking to get a deal "done" and cultivate the 23 persona of a "player," rather than look out for the best interest of DMG CC. To that end, Fenton 24 abandoned all business judgment expected and required of a company executive in his position. 25 46. Fenton breached his fiduciary duty of care when he mismanaged and concealed his 26 mismanagement. As previously alleged herein, Fenton's mismanagement includes but is not 27 limited to Fenton's:(1)failure to maintain financial records of DMG CC's earnings, cash flow or 28 income;(2) mismanagement of the S2BN deal;(3)failure to undertake or direct any type of due 10 CROSS COMPLAINT Case No. 19stcv06482 1 diligence with respect to investment and acquisition deals;(4)failure to hire competent 2 employees; and (5)failure to document and execute long-term agreements for complex business 3 transactions. Fenton breached his fiduciary duty of loyalty when he put his interests ahead of 4 47. 5 DMG CC interests. 6 48. As previously alleged herein, Fenton put his interests ahead ofDMG CC by 7 cultivating his persona as a "player," motivated to get a deal "done" rather than look out for the 8 best interest of DMG CC. This includes but is not limited to Fenton's conduct with respect to the 9 S2BN deal. Specifically, Fenton breached his duty of loyalty when he actively concealed his 10 mismanagement of the S2BN transaction. 11 12 49. As previously alleged herein, Fenton breached his duty of loyalty when he used corporate opportunities, such as membership in the Academy, for his own personal gain. N ' " _~ a,`~~ a ~~~'~ 'I~ W U 50. 13 14 As previously alleged herein, Fenton breached his continuing duty of loyalty when he failed to provide DMG CC with access to the H2F email and bank accounts. W ~ Y W ~ 51. z a~o w } a "' IS ~ ~~ 16 ~ J Z W U m ~ ~7 DMG CC. 18 52. As previously alleged herein, Fenton breached his continuing duty of loyalty when he divulged confidential, proprietary, and attorney-client privileged information belonging to N As a direct and proximate result of Fenton's breach of his fiduciary duty, DMGCC 19 I has suffered damages in an amount to be proven at trial, but not less than $30 million. 53. 20 I Fenton's acts were undertaken intentionally and in conscious disregard of DMG 21 CC interests and rights, and with fraud, oppression, and malice, Therefore, DMG CC is entitled 22 to an award of punitive and exemplary damages sufficient to punish Fenton and deter similar 23 conduct in the future. 24 /// 25 /// 26 /// 27 /// 28 /// 11 CROSS COMPLAINT Case No. 19stcv06482 7 THIRD CAUSE OF ACTION 2 (Negligence) 3 4 54. allegation set forth in paragraphs 1 through 53 above, as though fully set forth herein. 5 55. Fenton was retained to find opportunities and make deals on DMG CC's behalf 6 based on his connections and additional representations that he had the business acumen and 7 skills to manage a complex business. Among other things, Fenton was responsible for finding 8 profitable acquisitions, making connections, and negotiating and closing the appropriate 9 agreements. Fenton was also responsible for supervising the necessary due diligence, 10 investigation and safeguarding needed for the business opportunities that he pursued. 11 M W ~~ a ll 0 o a ¢Um The Cross-Complainants re-allege and incorporate by reference each and every 56. Fenton had a duty of care to use skill, prudence, and diligence in providing his 12 services. Fenton breached his duty of care by failing to perform his services and mismanaging 13 DMG CC's investments and assets. Among other things, Fenton concealed his mismanagement, 14 failed to undertake any type of due diligence with respect to deals and investments he negotiated, 15 failed to keep proper records of DMG CC's financials, failed to alert DMG CC of negative 16 financial information, hired unqualified employees, and failed to execute long form agreements 17 for complex business transactions. w w -m . a Y W m N Q ¢ w o N a ~ Q ~,~ W }Z ~' o~ Z J U ' ° 0 N 18 19 57. As a proximate result of Fenton's negligence, DMG CC was damaged in an amount to be proven at trial, but not less than $30 million. 20 PRAYER FOR RELIEF 21 WHEREFORE,the Cross-Complainants respectfully pray for the following relief: 1. Entry ofjudgment for Cross-Complainants and against Cross-Defendant on all 22 counts of the Complaint; 23 2. For actual, compensatory an consequential damages according to proof but in an 24 amount no less than $30,000,000; 25 3. For punitive damages in a sum sufficient to punish and make an example of Cross- 26 Defendant; 27 28 /// 12 CROSS COMPLAINT Case No. 19stcv06482 1 4. For prejudgment and postjudgment interest according to proof; 2 5. For injunctive relief requiring Cross-Defendant to provide Cross-Complainant 3 4 with access to H2F email and bank accounts; 6. For such other and further relief as the Court deems just and proper. 5 6 VENABLE LP Dated: April 11, 2019 7 By: 8 David E Fink Attorneys for Cross-Complainants 9 10 11 0 12 ~~ a go I mo a a~~ 13 M N W 14 w W -m a' Yw°' a N Q a W o N a ~ 1 .I W }¢ '" '~ ~O ~ J Z W U 0 N 16 1 / 18 19 20 21 22 23 24 25 26 27 28 13 CROSS COMPLAINT Case No. 19stcv06482 DEMAND FOR JURY TRIAL 1 2 Cross-Complainants demand a trial by jury. 3 Dated: April 11, 2019 BLE LLP VE 4 s By: David E Fi 6 Attorneys for Cross-Complainants 7 8 9 10 11 0 12 ~~ a go a mmo a w~m 13 M N W 14 w W ~ J N N w o a ~ z a Q ~ w }Z 1J > = O 16 ~ J Z W U m 0 17 N 1O 19 20 21 22 23 24 25 26 27 I 28 14 CROSS COMPLAINT Case No. 19stcv06482 PROOI'OF SERVICE 1 2 STATE OF CALIFORNIA ) 3 COUNTY OF LOS ANGELES ) ss. 4 5 I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is Venable LLP, 101 California Street, Suite 3800, San Francisco, California. 6 7 8 9 10 11 0 0 "~ a te ¢ a ~Z a ~~~ o a °~ Wpm W a Y a N N ~p W ~ ~.. O 12 On April 11, 2019, I served a copy of the foregoing documents) described as CROSSCOMPLAINT FOR DAMAGES AND OTHER RELIEF BASED ON CLAIMS FOR: 1) FRAUD,2)BREACHOF FIDUCIARY DUTY,AND 3)NEGLIGENCE on the interested parties in this action addressed as follows: David Albert Pierce John R. Baldivia Dhara J. Patel PIERCE LAW GROUP LLP 9100 Wilshire Boulevard Suite 225 East Tower Beverly Hills, CA 90212-3415 CounselfoN Plaintiff CHRISTOPHER FENTON 13 By placing true copies thereof enclosed in a sealed envelopes) addressed as stated above. 14 ~ Q U N d avio z ~~"' W ~-- is w ~ c~ ~ UW ~ a ~~ BY PERSONAL SERVICE(CCP §1011): I caused to be delivered such envelopes) by hand to the addressees) as stated above. 16 a J N Q I / 18 I declare under penalty of perjury under the laws ofthe State of California that the above is true and correct. Executed on April 11, 2019, at San Francisco, California. 19 20 Barbara J. ope 21 22 23 24 25 26 27 28 PROOF OF SERVICE