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Tina-Engler

Dear Author

Ellora’s Cave Settles with Chris Brashear

As of April 8, 2011, the three year lawsuit between Ellora’s Cave and Chris Brashear has come to an end.  On April 7, 2008, Chrissy Brashear filed suit against Ellora’s Cave alleging that she was entitled to a distribution of profits from 2005 until the date at which defendants bought out her 5% shares.   EC’s response to the litigation was to not participate, which you simply cannot do in a litigation.

EC refused to give up documents such as tax returns and ledgers.   The failure to respond the request for documents impaired Brashear’s ability to proceed with her claim.   EC blamed it on their first lawyer who they fired.   EC retained new counsel but the pattern of delay and duck continued.   Brashear filed a motion for sanctions (a request asking the court to punish EC for its delinquent behavior).   The court granted the motion after EC and its counsel failed to show up for a hearing.   EC asked the court to set aside the sanction and promised it would deliver the documents requested by Brashear.   EC never did.

Ellora’s Cave was given one last chance to respond to the discovery but instead of responding, they filed for a protective order asking the court to limit what documents EC had to produce to Brashear.   The Court granted the motion in part and denied the motion in part.   A pretrial hearing was scheduled.

No attorney showed up for the pretrial nor did any of the representatives for EC.   As the court order noted, the court placed phone calls, waited sixty-five minutes, and still there was no response.   The court then ordered a judgment against EC in favor of Brashear.   (PDF order here).

Fed up with Ellora’s Cave, the court set out the behavior by EC that it characterized as contumacious.  (twenty seven page ruling (PDF)).

A trial would proceed but only on the damages that Brashears was claiming.  Those damages were set out in a trial brief filed by Brashears. (PDF)  The trial brief laid out the calculation of damages alleged by Brashear.  First, it alleged Brashear was entitled to over $140,000 in unpaid distribution.  The follow table represents the distributions made to Engler and Marks from 2006 to May 17, 2010.

[table id=59 /]

The distributions in 2010 only include data up to May 17, 2010, as Ellora’s Cave has not divulged any post May 17, 2010 data.  Interesting that in this period of great digital growth, EC’s profits (as seen through it’s distribution) is declining.  In valuing Brashears’ 5% ownership in EC, EC’s expert is alleged to opine that Brashear’s interest in EC amounts to approximately $51,700 whereas Brashear’s expert values her 5% shares at $121,500.

The trial brief also asserts that Ellora’s Cave is diverting assets away from the company.  First, by borrowing money through commercial lines of credit and loans in EC’s name and then transferring those loan funds to Engler, Marks, and others at substantially lower interest rates.  Second, EC is paying above market rate rent to its landlord (who happens to be Tina Engler).  For example, in 2009, the market rent is around $40,131, and EC was paying to Engler $97,200 in rent.

All told, Brashears claimed about $350,000 in actual economic damages as well as damages for defamation and punitive damages (designed to “punish” the wrongdoer as opposed to “compensatory” damages that are designed to make the plaintiff “whole”) and attorneys’ fees.

The settlement is confidential (PDF) and thus we won’t know what has been paid although if Ellora’s Cave did pay in authors (as I suspect that they may have given their cash flow problems), we may see some authors’ backlists appearing on the Samhain site in the future.

Dear Author

Chrissy Brashears Files Suit Against Ellora’s Cave

Hat tip to SB Sarah who has the scoop. According to the petition, Christina Brashears is a 5% shareholder of Ellora’s Cave beginning in July of 2003. September In 2005, Brashears was terminated from her position as Director, Chief Operating Office and Publisher. Her main claims are as follows:

  • She is entitled to a buyout of the 5% of shares.
  • She is entitled to distribution of the profits according to the 5% for 2005, 2006, and 2007.
  • She has been defamed both in writing and verbally.

1. Buy/Sell Agreement

The Buy/Sell Agreement provides that at the Shareholder’s election (Brashears) upon termination, she can choose to tender (offer) her shares in the following order:

  • first to Tina Engler. If Engler refuses, then to
  • Engler’s issue (daughter or perhaps husband). If those heirs refuse, then to
  • Other shareholders (in this case Patty Marks). If those other shareholders refuse, then to
  • The corporation (EC). If the corporation does not choose to purchase them during a certain time, then . . .
  • Shareholder (Brashears) can offer them to the free market.

The purchase price for those shares is defined in Paragraph 1.04(a) of the Contract and is either by unanimous agreement or the fair market value of the Company as of August 2005 (last day of the month preceding the instigating event) divided by the number of outstanding shares.

2. Distribution of Profits.

The only contract attached to the Complaint was the Buy/Sell Agreement. There may be another agreement which forms to the terms of dividends shareholders are entitled to. According to the Complaint, however, it is alleged that EC has not paid Brashears “the sums to which Brashears is entitled as a shareholder” despite Brashears paying income tax on sums to which she believes she would be entitled.

3. Defamation

Engler, without privilege to do so, has willfully defamed Brashear by libel and slander, including, without limitation, by wrongly accusing her widely and publicly of illegal acts of discrimination, of other improper actions as an officer of EC and of lacking a suitable temperament to conduct business appropriately, thereby injuring Brashear in her trade and occupation, all to Brashear’s damage.

Brashears has asked for the following relief:

  • Inspection of the books
  • Valuation of her shares and
  • Compensatory and Punitive Damages

I’m still digesting this and will be updating this post as the night goes on. Non-legalese summary:

Brashears is saying that she owns 5% shares of EC and hasn’t seen a dime since she was terminated even though she paid taxes on what she believed to be her rightful share. EC is allegedly undervaluing the company by shifting away profits to other corporations and generally not acting with the best interests of the corporation in mind. She doesn’t want to own 5% anymore but wants to be justly paid for her shares. She also wants money damages for the libel and slander of EC employees.

Is it wrong for me to hope that there is a summary judgment in this case filed by someone? I’ll give you the odds of EC filing some type of counter claim at 10 to 1.