A newly unsealed complaint obtained by EDM.com details how Insomniac Holdings LLC agreed to pay $2.9 million to SDC Holdings LLC to resolve ownership and control disputes over Miami’s Factory Town venue, only for the deal to unravel weeks later.
According to the lawsuit, Insomniac, the nation’s preeminent electronic music event organizer, entered into a confidential settlement with SDC and its principals, David Sinopoli, Davide Danese and Jose Coloma. The men are collectively referred to as “CDD” in the complaint.
The parties allegedly agreed to jointly produce two impending Factory Town events, the three-day Hocus Pocus festival and a show during Miami’s annual Art Basel fair. The complaint claims Insomniac agreed to make the $2.9 million “Settlement Payment” by June 20th, and in exchange, CDD and its affiliates were to relinquish all claims to Factory Town, transfer intellectual property and acknowledge the company as the venue’s sole owner and operator.
The lawsuit alleges that although CDD accepted the money, they refused to turn over key assets including brand rights, digital accounts and marketing materials, and began telling industry figures it had “won” the lawsuit. Insomniac contends these actions breached strict confidentiality and non-disparagement provisions of the settlement, which limited public statements to “agreed-upon talking points” emphasizing an amicable transition of operations.
The unsealed complaint paints a broader picture of deteriorating relations. It specifically highlights a July 31st order from retired Judge Michael Hanzman, who had been appointed as “the final arbiter on disputes” under the settlement agreement.
In that ruling, Hanzman concluded that Insomniac, as landlord, was not responsible for a wide range of temporary event-related costs that CDD had attempted to shift onto the company. He also emphasized that courts do not “rewrite deals,” noting the parties had spent months negotiating and agreeing to the terms before the 16-hour mediation.
“I do not see how the landlord, Insomniac, is remotely required to provide things like additional lighting, shuttles, clean up, DJ gear, event specific permits, meals, and other similar event-related expenses,” Hanzman determined. “As I noted, I find those to be Partnership expenses.”
However, CDD’s counsel allegedly informed both Insomniac and Hanzman by email that their clients “will not be complying” with Hanzman’s assessments, asserting the arbitrator had no jurisdiction. According to Insomniac, this declaration underscored a strategy to “sabotage” the upcoming Factory Town events while pocketing the $2.9 million settlement payment.
“The unsealed complaint and Judge Hanzman’s order speak for themselves,” Insomniac’s attorney Jordan Shaw, managing partner of Fort Lauderdale-based firm Shaw Lewenz, said in a statement shared with EDM.com. “Our goal remains the same: peace and to continue doing the great work we’ve been doing.”
Insomniac argues that CDD’s conduct threatens not only Factory Town but also Club Space, another Miami nightlife institution in which both sides retain interests. The company is seeking damages, including disgorgement of the funds, as well as injunctive relief to enforce the settlement.
Paul Turner, managing partner of Perlman, Bajandas, Yevoli & Albright, says the defendants could face grave consequences if they refuse to comply with Hanzman’s order.
“Failure to follow a judicial order of this type is akin to litigation suicide. As such, I expect compliance,” Turner tells EDM.com. “However, if they were foolish enough to violate the order, the court has an array of sanctions available including monetary and non-monetary.”
“Non-monetary include the ability to enter a judgment against defendants, making them the loser in the litigation, as well as the ability to issue a writ of bodily attachment for the arrest and incarceration of the individual(s) responsible for the noncompliance for civil contempt,” Turner continued. “Some of these sanctions are quite serious, and I would not expect the court to immediately go to the draconian end of the spectrum. Nonetheless, noncompliance will likely result in the use of one or more of the sanction arrows in the court’s quiver.”
The lawsuit was filed in the Southern District of Florida August 4th and unsealed September 10th.
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