Gerardo Ortiz Sues Former Label Del Records for Fraud, Breach of Contract
The Latin star alleges the company withheld royalty payments and misappropriated the singer's likeness.
Mexican-American singer-songwriter Gerardo Ortiz has filed suit against Del Records for breach of contract, breach of fiduciary duty, fraud, the misappropriation of his likeness and other charges, according to court records filed in the California Superior Court for Los Angeles County. Del Records previously acted as his record label, publisher and personal management company.
Filed on Friday (April 12), the lawsuit serves as a counter-claim against Del Records and its various entities (collectively referenced as "Del Entities" in the suit), which previously alleged Ortiz violated his recording contract with them in revenge for the company's refusal to loan him money to settle his tax debts. Del Records claimed that in addition to asking the company to pay him the loans in cash (which would have skirted tax laws), Ortiz failed to deliver on a promised sixth album.
In his counter-suit, Ortiz claims Del engaged in deceitful accounting practices by withholding and concealing royalties and other payments owed to him under the terms of their recording, publishing and management agreements, thereby breaching their contracts with him. He also alleges that by acting in multiple conflicting capacities on Ortiz's behalf as both record label/publisher and personal manager/agent, the company had an "inherent and irreconcilable conflict of interest."
"They purported to serve as Ortiz's talent agent, personal manager, record company/employer, and music publisher – all at the same time -- but inherently cannot do so without serving two opposing masters: Ortiz and themselves," the suit reads. "A talent agent procures the best live performance engagements for the artist and a personal manager procures the best possible recording contract and publishing deal for the artist. A talent agent and personal manager must therefore advocate for the artist against the record company and music publisher, which benefit from deals that are less favorable to the artist. As set forth herein, Defendants did not advocate for Ortiz. Instead, they took advantage of Ortiz."
Ortiz additionally claims that, after issuing two separate written notices to Del that he was terminating his contracts with them beginning in February 2019, the company continued to book live appearances for the singer, thereby misappropriating his likeness. He claims that by booking these engagements -- all the while knowing he would not appear -- the company attempted to "disappoint Ortiz's massive fan base and to tarnish Ortiz's brand."
Further, Ortiz claims that Del has refused to permit an audit into their accounting practices that could potentially turn up evidence of wrongdoing, which he also says violates the terms of their agreements. Ortiz accuses the company of using "incorrect royalty rates," providing incorrect reports, utilizing "incorrect tax computations," ensuring that the advances the company paid him remained "artificially unrecouped" and "overstating and underreporting" the cost of recordings and music videos, among other claims.
In response to Del's breach-of-contract allegations against Ortiz, the singer additionally claims that under California Labor Code § 2855 (also known as the De Havilland Law), he cannot be forced to work for Del for more than seven years regardless of any agreement. The singer first signed recording and publishing deals with Del in October 2009 and re-upped those contracts in March 2012, during which time he also entered into a personal management agreement with the company. He says the company also acted as his talent agent despite no formal agreement being in place for them to act in that capacity.
In addition to Del Records and its assorted entities, the company's CEO Jose Angel Del Villar is named as a defendant in the suit. Ortiz alleges that Villar "intentionally and explicitly" hid behind the companies for the purposes of defrauding Ortiz and other unnamed performers.
Del Records did not respond to Billboard's request for comment as of press time.
Prior to Del Records' suit against him, Ortiz publicly announced he had terminated his contract with the company on March 29, 2019, stating: "I want to thank Del Records for being with me for 9 years of my career. From this moment my musical career will be led by a new team."
Ortiz has been nominated for two Grammys and received four awards at the 2013 Mexican Billboard Awards for male artist of the year, Norteño album of the year, Norteño artist of the year, and artist of the year, songs. He also currently serves as a judge on the EstrellaTV talent competition series Tengo Talento, Mucho Talento.