Reach Records co-founder Lecrae performing live. Photo Credit: Bebrophy
A federal judge has officially rejected Capitol Christian Music Group’s motion to dismiss a breach of contract lawsuit filed by Reach Records. Now, the case, centering on an acquisition deal turned sour, is scheduled to receive a trial next year.
Judge Waverly Crenshaw Jr. just recently denied each of the Universal Music Group (UMG) subsidiary’s dismissal arguments, pertaining to the mentioned breach of contract allegations as well as separate claims for intentional and negligent misrepresentation.
Submitted to a Tennessee federal court in late 2025, Atlanta-based Reach Records’ lawsuit describes months of back-and-forth sale talks with Capitol Christian Music Group (Capitol CMG) – besides multiple purported reviews on UMG’s end.
Despite all these moving parts, however, the actual complaint is straightforward enough. The way Ben Washer- and Lecrae-founded Reach tells the story, Capitol CMG head Brad O’Donnell in July 2025 confirmed that a UMG investment committee had approved the multimillion-dollar buyout.
According to the suit, the following month then saw the parties hammer out a letter of intent (LOI) – confirming, among other things, the all-important price tag, which “was not subject to renegotiation absent material adverse findings during final due diligence.”
Said final due diligence spanned five rounds, maintained the same agreed-upon price (plus “other material terms”) throughout, didn’t result in any “adverse findings” notifications, and ultimately made way for a membership interest purchase agreement draft, per the plaintiff.
Several drafts later, “on the eve of closing the deal, Brad O’Donnell told Reach that there was a layer of approval as to the Purchase Price and that the agreed-upon price was too high due to its earnings multiple value, and, therefore, despite the agreement that the Purchase Price was not renegotiable, it was not approved,” the legal text reads.
Though it probably goes without saying at this point, the “last-minute, unjustified change of position” didn’t sit right with Reach, which is seeking a pile of damages for the would-be deal and all the resources it expended during the corresponding discussions.
Back to the dismissal attempt, Judge Crenshaw found fault with the defendant’s argument that the LOI wasn’t a final contract, but “an aid for further negotiations toward execution of the purchase agreement.”
In brief, the court determined that while certain components of the transaction were to be finalized under the LOI, the price tag was set in stone. “Reach has plausibly alleged the existence of an enforceable contract and CMG’s breach,” the judge wrote.
Capitol CMG’s attempt to beat intentional and negligent misrepresentation claims – in part, “Reach did not know that the representations made by Brad O’Donnell were false, and Reach was justified in relying on their truth” – didn’t fare any better.
Specifically, the court rejected “CMG’s self-serving after the fact explanation” that Reach had failed to demonstrate the statements at hand “were knowingly false when made.”
“The story alleged by Reach is an old and familiar tale,” Judge Crenshaw penned. “On the eve of closing, CMG pulls out of the deal because of the purchase price. … The CEO either knew or should have known whether the purchase price was final, but he led Reach to believe it was, knowingly or oblivious to the truth until closing.
“Only then was Reach damaged not only losing the lost time and work to get to closing but also the consideration it was due at closing,” he continued, proceeding to spell out that “CMG’s misrepresentations caused Reach concrete injury by inducing Reach to proceed with a transaction that CMG later abandoned over a purchase price that the parties had already set.”
With that, all eyes are on the upcoming (albeit far-off) trial, which, as noted, is tentatively scheduled to begin a year and change from now, on September 14th, 2027.
