The company that licenses the brand for Miami’s Ultra Music Festival won a key appellate dispute against the estate of co-founder Alex Omes.
The Third District Court of Appeal ruled Wednesday that Omes’ brother, Carlos, will not be appointed president of Ultra Enterprises Inc., and will have to accept the court’s valuation of Alex Omes’ shares, which was about 2 percent of what Alex Omes argued it should be.
The Ultra festival draws hundreds of thousands of electronic dance music fans to downtown Miami for three days each March and has other events across the world. The festival got its start in 1999, when Alex Omes and co-founder Russell Faibisch put together a one-day concert for about 10,000 people.
As the festival took off, Faibisch became concerned Omes was using his Ultra connections to compete with the company on the side, according to court records. Omes was ousted as president of Ultra in 2010 for self-dealing.
Shareholders agreed in 2012 to give the company the right to redeem the shares of anyone competing with Ultra. The directors voted to redeem Omes’ 30 percent stake in the company, which they valued at $1,200 per share. Omes countered that his stock was worth more than $111,000 per share, and he sued Ultra and its owners.
Aelx Omes was found dead the morning the case was set to begin trial in January 2015. His autopsy did not determine a cause of death but found he had cocaine and other drugs in his system. After Carlos Omes took over the case as estate representative, Miami-Dade Circuit Judge Jennifer Bailey ruled his 300 shares were worth $2,400 each, for a total of $720,000.
“Ultra is a lot like other startups in the 21st century,” Bailey wrote in the 2016 order. “They may be very famous, such as Amazon, but it takes a long time to make money because they require significant reinvestment to grow the brand. The fact that Ultra is a famous Miami electronic dance festival does not automatically translate into profits and corresponding marketable value, which is the legal standard.”
Carlos Omes appealed the valuation. He also argued he should be installed as president of Ultra based on a 2005 memorandum of understanding Alex Omes signed with Faibisch and his brother, Charles Faibisch, which established their roles in the company.
But the appellate court affirmed Bailey’s findings, ruling the memorandum was not a shareholder agreement that would prevent any corporate action without Alex Omes’ approval. The judges also found Carlos Omes’ claims of corporate error were barred because his brother gave up his shareholder rights.
“By electing to participate in the appraisal process and returning the duly signed ‘Exercise of Appraisal Rights’ and ‘Stock Power’ forms, the trial court properly found that Omes lost all rights as a shareholder … and instead became entitled to payment of fair value for the shares,” Third DCA Judge Richard Suarez wrote, with Chief Judge Leslie Rothenberg and Judge Thomas Logue concurring. “This is dispositive of the appeal.”
Carlos Omes’ attorney, Joel Magolnick of Marko & Magolnick in Miami, did not immediately respond to a request for comment.
Ultra was represented by Miami attorneys Peter Valori and Russell Landy of Damian & Valori, and Akerman appellate practice co-chair Gerald Cope, a former chief judge of the Third DCA. Valori also did not respond to a request for comment by deadline.