Johnny Depp's former managers must reframe allegations about actor's spending, judge rules

It doesn't matter whether Johnny Depp spends $2 million a month, according to an L.A. judge who on Monday ruled that the actor's headline-grabbing spending habits aren't currently relevant to his legal battle with his ex-business managers.

The highly contentious legal battle began in January, with Depp suing The Management Group and its principals, Joel and Robert Mandel, for allegedly collecting millions in fees without his consent, loaning his money without his knowledge and racking up unnecessary tax penalties and fees. TMG fired back in an explosive cross complaint that said Depp's proclivities for the finer things like expensive wine, memorabilia and real estate and his refusal to listen to their advice led to his dire financial state. (Read the full background here.)

TMG had asked the court for a declaration that "Depp authorized and directed all of TMG's payments on his behalf; (2) TMG always filed Depp's tax returns timely and only failed to pay the full extent of Depp's tax obligations because Depp was squandering vast sums of money and had insufficient funds to timely pay all of his taxes; and (3) Depp caused his own financial waste by acting directly contrary to TMG's repeated advice over the last 17 years and the advice of numerous of Depp's other advisors."

Johnny Depp through the years
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Johnny Depp through the years
HOLLYWOOD, CA - MAY 23: Actor Johnny Depp attends the premiere of Disney's 'Alice Through The Looking Glass' at the El Capitan Theatre on May 23, 2016 in Hollywood, California. (Photo by Michael Boardman/WireImage)
HOLLYWOOD, CA - MAY 23: Johnny Depp attends the premiere Of Disney's 'Alice Through The Looking Glass' at the El Capitan Theatre on May 23, 2016 in Hollywood, California. (Photo by Todd Williamson/Getty Images)
HOLLYWOOD, CA - MAY 23: Actor Johnny Depp arrives at the Los Angeles Premiere 'Alice Through The Looking Glass' at the El Capitan Theatre on May 23, 2016 in Hollywood, California. (Photo by Jon Kopaloff/FilmMagic)
LONDON, ENGLAND - MAY 10: Johnny Depp attends the European Premiere of 'Alice Through The Looking Glass' at Odeon Leicester Square on May 10, 2016 in London, England. (Photo by Karwai Tang/WireImage)
LONDON, ENGLAND - MAY 10: (L to R) Mia Wasikowska, Sacha Baron Cohen and Johnny Depp attend the European Premiere of 'Alice Through The Looking Glass' at Odeon Leicester Square on May 10, 2016 in London, England. (Photo by David M. Benett/Dave Benett/WireImage)
Johnny Depp and Amber Heard pictured on arrival to Southport Magistrates Court on April 18, 2016 in Southport, Queensland.
US actor Johnny Depp gestures during his photo call in Tokyo on January 28 2015. Depp attended the Japan premiere of his latest action comedy movie 'Mortdecai' on January 27 which will be screened in Japan from February 6. AFP PHOTO / TOSHIFUMI KITAMURA (Photo credit should read TOSHIFUMI KITAMURA/AFP/Getty Images)
CLEVELAND, AUSTRALIA - JUNE 2: (EUROPE AND AUSTRALASIA OUT) American actor Johnny Depp, dressed as 'Captain Jack Sparrow', greets locals at Cleveland in Redland City, Queensland, after a day of filming 'Pirates of the Caribbean: Dead Men Tell No Tales'. (Photo by Peter Wallis/Newspix/Getty Images)
HOLLYWOOD, CA - JANUARY 21: Actor Johnny Depp attends the premiere of Lionsgate's 'Mortdecai' at TCL Chinese Theatre on January 21, 2015 in Hollywood, California. (Photo by Jason Kempin/Getty Images)
LONDON - JANUARY 10: Johnny Depp attends the Sweeney Todd film premiere held at the Odeon Leicester Square on January 10, 2008 in London, England. (Photo by Eamonn McCormack/WireImage)
POMPANO BEACH, FL - AUGUST 29: Johnny Depp greets fans after performing as part of the Sheila Witkin Memorial Reunion Concert at Club Cinema on August 29, 2008 in Pompano Beach, Florida. (Photo by Mike Franklin/FilmMagic)
HOLLYWOOD - FEBRUARY 24: Actor Johnny Depp and singer Vanessa Paradis attends the 80th Annual Academy Awards at the Kodak Theatre on February 24, 2008 in Los Angeles, California. (Photo by Jeff Kravitz/FilmMagic)
FRANCE - MAY 10: Festival of Cannes 97: Walking up the red-carpeted steps for 'The brave' in Cannes, France on May 10, 1997 - Kate Moss, Johnny Depp. (Photo by Pool APESTEGUY/BENAINOUS/DUCLOS/Gamma-Rapho via Getty Images)
Johnny Depp and Kate Moss during 'Donnie Brasco' Premiere at Century City Cineplex Odeon Cinemas in Century City, California, United States. (Photo by Barry King/WireImage)
Actor Johnny Depp (R) kissing girlfriend, supermodel Kate Moss (L). (Photo by Rose Hartman/The LIFE Images Collection/Getty Images)
Actor Johnny Depp attends the cast of 'Benny & Joon' present Planet Hollywood with memorabilias from the film on March 22, 1993 at Planet Hollywood, California.
BEVERLY HILLS,CA - MARCH 25: Actor Johnny Depp attends the 'Benny & Joon' Beverly Hills Premiere on March 25, 1993 at the WGA Theatre in Beverly Hills, California. (photo by Ron Galella, Ltd./WireImage)
CENTURY CITY,CA - FEBRUARY 1: Actress Winona Ryder and actor Johnny Depp attend 'The Silence of the Lambs' Century City Premiere on February 1, 1991 at Cineplex Odeon Century Plaza Cinemas in Century City, California. (photo by Ron Galella, Ltd./WireImage)
Actors Johnny Depp and Winona Ryder. (Photo by Time Life Pictures/DMI/The LIFE Picture Collection/Getty Images)
UNITED STATES - OCTOBER 01: Johnny Depp and Guest (Photo by The LIFE Picture Collection/Getty Images)
1995 file photo of Johnny Depp & Kate Moss (Photo by Barry King/WireImage)
1988 File Photo of Johnny Depp at the Nosotros Benefit in Los Angeles, California taken May 13, 1988 in Los Angeles, California (Photo by Barry King/WireImage)
Nicolas Cage & Johnny Depp (Photo by Barry King/WireImage)
Actor Johnny Depp attends the 18th Annual Los Angeles Police/Celebrity Golf Tournament on May 14, 1988 at Rancho Park Golf Course in Los Angeles, California.
SHERMAN OAKS,CA - DECEMBER 13: Actor Dustin Nguyen, actor Johnny Depp and actor Peter DeLuise attend the FOX Television Stars Feed the Homeless on December 13, 1987 at Sherman Oaks Galleria in Sherman Oaks, California. (photo by Ron Galella, Ltd./WireImage)
HOLLYWOOD - FEBRUARY 24: Actor Johnny Depp and singer Vanessa Paradis attend the 80th Annual Academy Awards at the Kodak Theatre on February 24, 2008 in Los Angeles, California. (Photo by Steve Granitz/WireImage)
UNITED STATES - AUGUST 22: Matthew Perry and Johnny Depp in New York to promote their first network series on the Fox Network in 1987 (Photo by Vinnie Zuffante/Getty Images)
Johnny Depp and his girlfriend Vanessa Paradis arrive for the Los Angeles premiere of the movie 'Sleepy Hollow' November 17, 1999. (Photo by Brenda Chase/Online USA/Newsmakers)
HERBORN, GERMANY - MAY 29: Actor/Musician Johnny Depp of Hollywood Vampires performs onstage at Hessentags-Arena during the 56th Hessentag on May 29, 2016 in Herborn, Germany. (Photo by Andreas Rentz/Getty Images)

In a tentative ruling ahead of Monday's hearing, L.A. County Superior Court Judge Teresa Beaudet found that TMG failed to allege that an actual, present controversy exists and to explain how the court's intervention would inform the parties of their future rights and responsibilities.

"TMG's action for declaratory relief seeks declarations placing culpability for Depp's financial woes on him, and freeing TMG of any past wrongdoing," Beaudet wrote. "No results or effects of such declarations on the parties' responsibilities or duties are alleged."

Further, Beaudet found that many of the allegations regarding Depp's spending from TMG's amended cross complaint are no longer relevant given her decision to sustain the demurrer to the declaration.

"The pages of allegations of Depp's allegedly outrageous spending clearly have no relevance to the 5% commission allegedly owed TMG from the Pirates of the Caribbean payout, or to the final work done by TMG on transitioning their files to Depp's new representatives," she wrote. "They would seem more relevant to the allegations of breach of oral contract related to the credit card debts, except that TMG does not specifically allege which exact expenditures by Depp were spent on which card, leading to that debt owed. Without specifics, the Court cannot find they are relevant to any cause of action in the FACC."

Beaudet had indicated she would not give TMG leave to amend its declaratory claim, but TMG attorney Suann MacIsaac convinced her to allow it. The next iteration of the claim will be a mirror of Depp's claim for declaratory relief, and, while the information about his spending is now stricken, much of it may end up being relevant to the new claim.

The promissory fraud claims against Depp will proceed, despite a challenge from his attorney Benjamin Chew. At this stage, the court assumes the truth of the facts that are pleaded. TMG alleged that its employees aided in Depp's transition to a new business manager because it had been repeatedly told it would be paid after the transition was complete.

"TMG alleged that Cross-Defendants never intended to abide by their promises and TMG reasonably relied on the allegedpromises by doing the 386 hours of work during those last two weeks of March," wrote Beaudet in her tentative ruling. "TMG has sufficiently alleged the elements of an action for promissory fraud with sufficient specificity, and the demurrer is overruled as to the sixth cause of action."

After patiently waiting through more than two hours of other cases on Beaudet's calendar, attorneys for Depp and TMG argued for only about 15 minutes. The judge changed her tentative decision only slightly, allowing TMG to amend its claim for declaratory relief.

Both sides are declaring the ruling a win.

"Today the court threw out a meritless cause of action TMG never should have asserted," said Chew after the hearing. "The fact that they had to change their theory on the fly is a sign of their desperation to distract from the real issues in the case. The court also granted Mr. Depp's motion to strike from the cross complaint a mountain of gratuitous smears about him. This was a good day for Johnny Depp."

"Today's ruling was a clear victory for The Management Group because the Court ruled in favor of our fraud claim," said TMG attorney Michael Kump of Kinsella Weitzman. "We intend to file an amended cross complaint for declaratory relief. All of the issues regarding Depp's extravagant spending continue to be fully included in the case."

Depp is also represented by Adam Waldman of The Endeavor Group and Matthew Kanny of Manatt, Phelps & Phillips.

July 10, 12:30 pm Updated headline to reflect that the actor's spending will continue to be a focus of TMG's defense and its cross complaint moving forward.

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