11/16/2012 1:55:00 PM,
Jeff D. Gorman
(CN) - Beyonce must face a $100 million complaint claiming that she reneged on a deal to produce a video game, putting dozens of people out of a job, a New York appeals court ruled.
In an April 2011 lawsuit
, Gate Five LLC claimed that the pop-music supernova and her brand abandoned plans to use stop-motion technology for a game called "Starpower: Beyonce."
A Manhattan judge refused motion to dismiss the lawsuit, and the First Department of the Appellate Division affirmed last week.
"Issues of fact remain as to whether defendants intended to forgo their right to terminate the licensing agreement, under a financing contingency clause, for plaintiff's failure to obtain 'committed financing or additional capital' by a certain date," the unsigned opinion states. "The record shows that defendants never objected to and worked actively toward closing on the loan which would not occur by that date."
"The record also raises issues as to whether defendants' own actions or bad faith caused or prevented plaintiff from securing financing by the deadline and whether plaintiff is entitled to an injunction to prevent defendants from utilizing their services in a competing video-game project during the prescribed period," the justices added.
Gate Five says it expected to earn $100 million from the game, and that it spent $6.7 million on the project before Beyonce Knowles-Carter abruptly pulled the plug.
"Though she had already negotiated lavish compensation terms to which she was contractually bound, Ms. Carter, at a crucial moment in the project's development, made an extortionate demand for entirely new compensation terms she suddenly decided she wanted," the complaint states. "When her maneuver backfired and drove away the financier (who found Ms. Carter too erratic to do business with), the pulled out of the project in breach of the agreement. Her actions were so unscrupulous that her then-manager (who is also her father) renounced them, while a senior member of the company that had agreed to finance the project condemned her conduct as 'morally reprehensible' in an email he sent to one of her talent agents."
Beyonce's decision allegedly destroyed Gate Five's business "and drove 70 people into unemployment, the week before Christmas."
This is second legal setback for Beyonce this fall. Last month, the U.S. Patent and Trademark Office ruled
that she cannot trademark the name of her baby daughter, Blue Ivy.