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."

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.