MTV Chelsea Houska left "Teen Mom" in 2020.
Lawyers for former “Teen Mom” star Chelsea Houska and her husband, Cole DeBoer, have fired back against claims they are hiding assets amid a $3 million federal lawsuit brought against them by their former business partners. Houska and DeBoer have also countersued the consulting company, Envy Branding LLC, with both sides accusing the other of withholding money made through social media promotions.
Envy sued Houska and DeBoer, along with Houska’s company, C&A Enterprises, and their manager William Dzombak, along with his firm, The William Gerard Group, in April 2020, accusing them of breach of contract. Houska left “Teen Mom 2” that same year. According to court documents, Envy said it had entered into a contract to provide consulting to Houska and DeBoer in 2016 in exchange for a cut of profits made through brand deals. Envy claimed the couple didn’t pay them royalties and owe the company $3 million.
Court documents reveal that Houska and DeBoer countersued in May 2020, arguing that Envy actually owes them $150,000. The former MTV reality show stars also said they do not owe Envy any money. Envy has denied the claims made in the countersuit. According to court documents, Envy claims Houska and DeBoer were required to pay 35 percent of all fees from social media deals to Envy and 40 percent on foreign deals,
The case is being heard in the Southern District of New York federal court in Manhattan and a trial is not likely until at least 2023. Both sides agreed in recent letters to the judge that discovery will need to be extended through November 2022, with motions due in December 2022. No trial date has been set. The lawsuit developments come as Houska and DeBoer are set to star in a new HGTV show, “Farmhouse Fabulous,” which is set to air in spring 2023.
Houska & DeBoer’s Attorneys Say a Letter to the Judge About a Discovery Dispute Was Written ‘Solely to ‘Prejudice’ Them ‘by Putting Inflammatory & Unfounded Accusations on the Public Record
Southern District of NY
The two sides are currently in a dispute about discovery and what materials they should be handing over as a potential trial nears. Settlement and mediation talks broke down in April, according to court documents. Discovery is set to be completed by the end of October, but Envy’s attorneys have sought an extension. In a letter to the judge, Envy attorneys argued the ex-“Teen Mom” star hasn’t turned over everything she was required to. The discovery process requires both sides to turn over documents and financial statements.
In a September 6, 2022, response, attorneys for DeBoer and Houska have asked U.S. Magistrate Judge Sarah L. Cave to “disregard” an August 31, 2022, letter from Envy’s attorneys because of a “blatant failure” to first confer with the opposing party to settle the discovery dispute before bringing it to the judge’s attention, as required by the judge’s rules.
The couple’s attorneys wrote, “Presumably, Plaintiff decided to depart from the previous path of cooperation and adherence to the rules solely in order to be able to prejudice Defendants by putting inflammatory and unfounded accusations on the public record.”
Envy’s Lawyers Accused Houska & DeBoer of Creating LLCs to Hide Documents & Financial Information From Them
Southern District of NY
In the August 30 letter to the judge from Envy’s attorneys obtained by Heavy, they said Houska and DeBoer’s attorneys “failed to disclose the existence” of multiple LLCs, including Dakota LN LLC, Down Home DeBoers LLC, DeBoer Holding Company LLC and Aubree Says LLC.
According to the letter, Envy says they learned the couple had “failed to produce critical documents related to the concealed entities, including a series of licensing agreements and the resulting revenue” during the deposition of their manager, Dzombak, on August 18, 2022. Envy said Dzombak testified the couple “shut down” C&A Enterprises after Envy threatened a lawsuit and it was “stripped of all assets.” They then created a new company, Dakota LN, according to the letter.
Envy’s lawyers wrote in the letter, “Simply put, Defendants possess and are plainly aware of documents they were already ordered to produce. Defendants’ conduct has unnecessarily and vexatiously increased Plaintiff’s fees and expenses throughout this litigation.”
Houska and DeBoer’s lawyers responded, “Plaintiff’s argument that Defendants failed to comply with its discovery obligations or failed to disclose relevant information as required by a prior court order is unfounded. Defendants have complied with their discovery obligations and are continuing to look for and produce relevant documents. … Plaintiff sought documents relating to when and why Dakota Ln, LLC was created based on its theory that Dakota Ln, LLC was created as a continuation of C&A Enterprises, LLC.” The couple’s attorneys say they have turned over more than 400 additional documents in an effort to cooperate.
Lawyers for Houska & DeBoer Say Envy’s Attorneys Violated a Confidentiality Order
Southern District of NY
Lawyers for Houska and DeBoer also called out Envy’s attorneys for including the transcript of the deposition of Dzombak, which they said violates an order from the judge making the transcript confidential for the 30 days after a deposition is conducted.
“Defendants respectfully request that the Court admonish Plaintiff and direct it to refile the relevant deposition excepts under seal and in the interim we ask that the Court seal Docket No. 52 or at least the portion thereof consisting of the testimony quotes and transcript. Defendants are not, unlike Plaintiff, eager to seek sanctions willy nilly, but it is evident that it is Plaintiff which has engaged in improper conduct, not Defendants,” the lawyers wrote in the September 6 letter.
They added, “Moreover, Plaintiff’s letter also mischaracterizes Mr. Dzombak’s testimony. The cited testimony reflects that Mr. Dzombak did not testify that Dakota Ln, LLC was created to avoid litigation, hide assets, or any other nefarious reason that Plaintiff attempts to conjure up. Instead, when asked repeatedly whether Dakota Ln was formed to attempt to hide money from Envy Branding, Mr. Dzombak said no. … When asked whether C&A Enterprises, LLC currently has any assets, Mr. Dzombak testified that he assumed not and later clarified that because he is not its owner, he did not have actual knowledge as to its assets and his testimony about it had been based on assumptions.”
The lawyers for the reality stars added, “The Court should recognize that taking Mr. Dzombak’s testimony out of
context in an attempt to misrepresent the facts to its advantage is hardly a valid basis for its premature
request for judicial approval of its request for leave to amend to add new party defendants.”