SAN FRANCISCO — A federal judge has denied a defense motion to dismiss contract litigation brought by Carbon Crest LLC.
U.S. District Judge William Alsup entered the order last month in the Northern District of California.
Carbon Crest accused Tencue Productions LLC, Jeffrey Wilk and ten other unnamed defendants of hiring the Delaware-based company to help sell their business and then went back on the deal when it came time to pay.
Carbon Crest was founded and managed by Paul Lewis. Tencue Productions, an event production and consulting company, was founded and managed by Jeffrey Wilk and his life partner. In a previous agreement, Tencue gave Lewis a monthly payment for advisory work. Lewis recommended the company form a board of directors. Up until he was asked to resign, Lewis was a member of the board.
Three years ago, Wilk spoke with Lewis about a $20 million offer from Opus Agency to buy Tencue. The two agreed that Lewis' company would handle the negotiations. At the end of July 2017, the two companies, Tencue and Carbon Crest, entered into a sales agreement. Carbon Crest was to negotiate and maximize the value of Tencue, manage the whole process and evaluate other possible buyers. According to the contract, Carbon Crest was to be paid 7% up to $25 million dollars and 30% over $25 million, if the original interested purchaser bought the company, 10% up to $25 million and 30% over that amount should another party buy Tencue.
A third party ended up expressing interest, for which Carbon Crest negotiated a purchase price of $40 million, but Wilk declined. Shortly after Lewis was asked to resign from the board, which Lewis claimed was to hide information from him and cheat his company out of the compensation that was due. Tencue informed Lewis it had canceled their initial agreement, planned to end the sale agreement because selling the company was "not appropriate now or in the near future." However, Carbon Crest was informed of Tencue's intent to sell and offered Carbon Crest a million dollars to get out of the sale agreement. In 2019, Opus Agency announced it acquired Tencue. Carbon Crest didn't know how much the sale was for but filed the lawsuit anyway.
Judge Alsup ruled the decision as to whether or not the contract is enforceable should be made after an opportunity for discovery and either a motion for summary judgement is filed or a trial is held.