Ellefson v. Megadeth, Inc.

2005 WL 82022 (2005)

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Nature of the Case

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Facts

P and David Mustaine (D) are original members of the heavy metal rock band Megadeth. The band was formed in 1983, with Mustaine (D) as the lead guitarist, lead vocalist, and lead songwriter, and Ellefson (P) as the band's bassist. In 1990, the parties formed a formal corporation, D, with Mustaine (D) receiving eighty percent of the stock and Ellefson (P) twenty percent. P claims that Ds have defrauded P out of his share of the corporation's profits over the past fourteen years. P and Ds entered into negotiations to settle the various disputes between them. P was represented by attorney Abdo and Ds by attorney Lurie. The parties sought to reach a production agreement whereby P would continue to work with Megadeth. Discussions changed and began to focus on a buy-out of P's share of D. On April 16, 2004, P's attorney received an initial draft of a proposed 'Settlement and General Release' whereby P's interest in the corporation and various other licensing/recording agreements would be purchased. Negotiations proceeded over the next four weeks. On May 10, 2004, Mustaine (D) imposed a five o'clock deadline on Friday, May 14, 2004, for completion of the settlement. On the morning of Thursday, May 13, Abdo received an email reminding him 'that Mustaine (D) has instructed us to pull the offer to P off the table and to terminate this deal as of 5 PM PST on Friday 5/14/04 if we do not have a signed agreement in hand.' Abdo emailed back that his client 'wants to get this behind him', but expressed some concerns that the deal might not close. On Friday, May 15, Abdo sent Lurie an email with proposed language changes for a new draft. Lurie sent Abdo an email asking if his comments were complete, to which Abdo responded that he was faxing his final comments, and instructing Lurie to 'make the changes and we are done.' Approximately an hour later, Lurie sent Abdo a finalized, execution copy of the Agreement at 4:45 PM (PST). Lurie stated that 'attached is an execution copy (read only) of the above-referenced Settlement Agreement,' reiterated the five o'clock deadline, and stated that Ds reserved 'the right to make further changes pending our finalizing Exhibits A and B and the full execution of the agreement early next week.' Abdo sent Lurie an email stating that 'P told me he signed and faxed the signature page to you. Thanks for the drafting work.' Abdo's email is dated Friday, May 14, 2004, 5:16 PM. There is much dispute over whether the fax was sent prior to the 5 p.m. deadline. Ds submit no evidence in the record to support the assertion that the fax was timely. On Thursday, May 20, 2004, Lurie sent all the parties fully-executed copies of the Agreement by regular mail on that Thursday, four business days after P's signature fax was received. P suggests that the alleged date of this mailing is suspicious and that the method of mailing, regular mail, is unreasonable. On May 24, 2004, Lurie received an email from Abdo stating that P 'withdraws from these negotiations and withdraws all proposals.' Lurie stated 'we are not certain what you are talking about, but, as you know, there is a signed settlement agreement in place, which P to us more than a week ago.' On June 2, 2004, Abdo states that he received the finalized Agreement that Lurie mailed on May 20, 2004. D moved to dismiss P’s suit.