David W.

Tufts (8736)
DENTONS DURHAM JONES PINEGAR, P.C. If you do not respond to this
111 South Main Street, Ste. 2400 document within applicable time
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Salt Lake City, Utah 84110-4050 entered against you as
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Mark L. Eisenhut (Practice in Utah authorized

from March 28, 2022 to March 28, 2023 under
Rule 14-809 of the Rules Governing the Utah
State Bar. Supervised by David W. Tufts, a
member of the Utah State Bar)
CALL & JENSEN, APC
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meisenhut@calljensen.com

IN THE THIRD JUDICIAL DISTRICT COURT

IN AND FOR SALT LAKE COUNTY, STATE OF UTAH

ANGEL STUDIOS, INC., a Delaware

Corporation

Plaintiff,
COMPLAINT
v.
(Tier III)
BRAD PELO, an individual,
Case No.:
Defendant
Judge:

Plaintiff Angel Studios, Inc (“Angel” or “Company”) hereby complains and alleges against

Defendant Brad Pelo (“Defendant” or “Pelo”) as follows:

1
 PARTIES

1. Plaintiff Angel Studios, Inc. (“Angel Studios” or “Angel”), formerly known as VidAngel, Inc.,

is a Delaware Corporation having its sole place of business in Provo, Utah County, State of Utah.

2. Upon information and belief, Defendant Brad Pelo (“Pelo”) is a resident of Toquerville,

Washington County, State of Utah.

FACTUAL ALLEGATIONS

3. This complaint arises out of Defendant Brad Pelo’s (“Pelo”) actions in breach of his fiduciary

duties to Plaintiff Angel Studios, Inc. (“Angel Studios”). As an officer of the company Mr. Pelo

falsified information, divided internal teams within Angel Studios, undermined relationships with

external teams, and moved key company assets outside of the company. While still employed with

Angel Studios, he sought to undermine contractual agreements, and transferred his loyalty to the

company that holds Angel’s most important agreement. Rather than working for Angel Studios’

benefit, he switched to the other side of the negotiating table. Then, after resigning his employment,

he took the lead in negotiating against Angel Studios with. Pelo was employed with the highest salary

at Angel Studios from October 1, 2020 until December 20, 2021. Ultimately, he resigned his

employment and continued to pursue the schemes he had begun while supposedly working on Angel

Studios’ behalf. Since that time, Pelo has made every effort to sabotage Angel Studios’ most valuable

economic relationships.

Angel Studios’ Relationship of Trust with Pelo

4. Angel Studios’ mission is to be the home of stories that amplify light. Angel Studios’

crowdfunded studio platform serves audiences that have been overlooked by Hollywood and other

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media conglomerates. At Angel Studios, “Angel” investors choose which titles will be created, funded,

and distributed.

5. The VidAngel 1 founders first met and collaborated with Brad Pelo in 2018 when he asked to

license clips of their mega hit series Dry Bar Comedy for an app he was working on called Say. It was a

unique combination of Pelo’s dual interest in technology platforms and studios. VidAngel agreed to

Pelo using the Dry Bar Comedy clips for Say.

6. In the meantime, Angel Studios continued its foray into distribution of original content. In

2017 Angel Studios (then operating as VidAngel) began working with a director (whose prior projects

had not found success in Hollywood) on development of a show that would eventually become Angel

Studios' hit original series, The Chosen (“TC”). Working from a pilot (called the Shepherd), Angel Studios

helped crowdfund ten million dollars from 18,646 investors to fund Season 1 of TC, and in February

2018 Angel Studios entered an agreement with The Chosen, LLC (“TCLLC”) for distribution.

7. In 2019, Angel Studios negotiated a new agreement with TCLLC to replace the 2018

agreement. Then, in June 2020—after VidAngel had already brought record-setting success to TC –

Brad Pelo reached out to VidAngel and TCLLC wanting to help.

8. At that time, VidAngel was pursuing an appeal from a judgment in a major Hollywood studio

case, and was also mired in bankruptcy proceedings. Pelo provided counsel to the VidAngel founders

as they navigated the bankruptcy process and sought to reach a settlement with the studios. He

advocated jettisoning the filtering part of the business and focusing on becoming a modern studio.

VidAngel successfully settled its dispute with the Hollywood studios at the end of September 2020.

1
VidAngel rebranded as Angel Studios in March 2021.
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 9. After two years of collaborating with Pelo, the VidAngel founders believed they had

established a foundation for an ongoing working relationship. They also expected Pelo could help

them resolve a minor, yet festering, disagreement that had arisen with TCLLC surrounding rights to

sell merchandise for TC. When Pelo expressed interest in joining Angel Studios full time, the founders

hired him.

10. Mr. Pelo communicated to Angel that this job was extremely important and would be his last

job in his career before he retired and Angel Studios trusted he would be a loyal and dedicated

executive who would work tirelessly for Angel Studios' success.

Pelo’s Agreement with Angel Studios

11. Angel and Pelo entered an agreement governing their employment relationship in or around

October 2020. Section 7 of the agreement included a non-solicitation provision, which stated as

follows:

Non-Solicitation. I agree that during the term of my employment with the

Company and for a period of 18 months immediately following the termination of
my relationship with the Company for any reason, whether with or without good
cause or for any or no cause, at the option either of the Company or myself, with or
without notice (the “Period of Restriction” ), I shall not either (i) directly or
indirectly solicit, induce, recruit or encourage any present employees of the Company
with whom I have had contact to leave their employment, or take away such
employees, or attempt to solicit, induce, recruit, encourage or take away employees
of the Company, either for myself or for any other person or entity or (ii) directly or
indirectly solicit or induce (or attempt to solicit or induce) any of the Company’s
customers, clients, suppliers, distributors, investors, vendors, consultants or
independent contractors with whom I had contact while employed by Company, or
with prospective customers of the Company, to terminate, reduce or negatively alter
his, her or its relationship with the Company or in any way act to the detriment of
the Company. I agree that a prospective customer of the Company is one who has
been so identified in any Company marketing report or related report, or one who
has been provided with a written or verbal proposal by the Company at any time
during the 12 months immediately preceding the effective date of my termination of
employment with the Company.

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12. The Agreement also included the following provisions in Section 9, articulating additional

expectations for Pelo’s loyalty:

(a) I agree that during the Period of Restriction I will not, other than on behalf
of the Company, directly or indirectly, without the prior written consent of the
President or Chief Executive Officer of the Company, engage anywhere in the
Restricted Area (as defined below) in (whether as an employee, agent, consultant,
advisor, independent contractor, proprietor, partner, officer, director, manager,
associate or otherwise), have any ownership interest in (except for passive ownership
of one percent (1%) or less of any entity whose securities have been registered under
the United States securities laws), or participate in the organization (or take
preparatory steps for the organization of), financing, operation, management or
control of, any firm, partnership, corporation, entity or business that is engaged or
participates in, or intends to engage or participate in, any activity or business which is
In Competition With the Company (as defined below). The Term “Restricted Area”
shall mean any state, county, city or other recognized geographic area within the
United States, any territory of the United States or any foreign country in which the
Company is conducting or has Plans to Conduct Business at any time prior to the
termination of my employment with the company. The phrase “In Competition
With the Company” shall mean direct or indirect engagement in the development,
marketing, sale or distribution of filtered streaming movies and any other planned
business or activity which has been approved by the Company’s executives during
the term of my employment. The phrase “Plans to Conduct Business” is a plan to
conduct business in a specific territory which has been so identified in any Company
strategic plan, marketing report or related report at any time during the 12 months
immediately preceding the effective date of my termination of employment with
Company.

(b) I acknowledge that my fulfillment of the obligations contained in the

Agreement, including, but not limited to, my obligation neither to disclose nor to use
the Company’s Confidential Information other than for the Company’s exclusive
benefit and my obligation not to compete contained in subsection (a) above, is
necessary to protect the Company’s Confidential Information and, consequently, to
preserve the value and goodwill of the Company. I further acknowledge the time,
geographic and scope limitations of my obligations under subsection (a) above are
reasonable, especially in light of the Company’s desire to protect its Confidential
Information, and that I will not be precluded from gainful employment if I am
obligated not to compete with the Company during the period and within the
Restricted Area as described above.

(c) The covenants contained in subsection (a) above shall be construed as a series
of separate covenants, one for each city, county, state and other political subdivision
within the Restricted Area. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained in subsection

5
 (a) above. If, in any judicial proceeding, a court refuses to enforce any of such
separate covenants (or any part thereof), then such unenforceable covenant (or such
part) shall be eliminated from this Agreement to the extent necessary to permit the
remaining separate covenants (or portions thereof) to be enforced. In the event the
provisions of subsection (a) are deemed to exceed the time, geographic or scope
limitations permitted by Utah law, then such provisions shall be reformed to the
maximum time, geographic or scope limitations, as the case may be, then permitted
by such law.

Pelo’s Work with Angel Studios

13. During the first eight months of Pelo’s tenure, he helped produce Angel Studios' Christmas with

the Chosen special event, and he helped negotiate a verbal agreement to merge Angel Studios. He also

helped the company rebrand from VidAngel to Angel Studios.

14. Even though the merger did not materialize from the verbal agreement, Pelo helped negotiate

a new term sheet between TCLLC and Angel for an agreement that would harmonize the parties’

views as to their respective rights. With Pelo’s involvement, Angel Studios and TCLLC agreed to

terms for a new license agreement in April 2021.

15. Angel does not yet know when Pelo shifted loyalties or whether he planned to betray Angel

Studios from the beginning. However, he began working against Angel Studios' best interests—in

breach of his fiduciary duties—at least as early as June 9, 2021. In retrospect, Angel Studios now sees

there were some early warning signs, but these red flags were not apparent at the time. The extent of

Pelo’s betrayal has only been revealed recently, and it likely runs much deeper, only to be fully

discovered under the lens of litigation.

16. Near the end of September 2020—a short time after Angel Studios hired Pelo—a TCLLC

employee commented to Angel Studios CEO that TCLLC believed Angel Studios only had a three

year term to SVOD (subscription video on demand) rights under the 2019 Agreement. Angel Studios’

CEO was shocked to hear this. He commented that if the agreement permitted TCLLC to terminate

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Angel Studios' perpetual rights, then attorneys for TCLLC must have done something deceptive.

Fortunately, when Angel Studios’ CEO searched the agreement for the term “perpetual licenses,” he

was relieved to confirm the final agreement provided multiple perpetual licenses as the parties had

intended.

17. On January 22, 2021 Angel Studios’ founders were on a filmset to help film a new ad

announcing the rebrand of Angel Studios. Pelo arrived on a bustling set and pushed for Angel Studios’

CEO to admit TCLLC's interpretation of the agreement was correct, and that Angel did not in fact

have any perpetual rights to TC under the 2019 Agreement, even though everyone else at Angel

believed it did have those rights. On information and belief, Pelo was already laying the groundwork

to undermine Angel Studios’ relationship with TCLLC in an effort to set himself up to eventually take

the reins as leader of the TC project and to build a new studio.

Red Flags During 2021

18. In 2020, TCLLC expressed various disagreements with Angel Studios regarding the

interpretation of their existing license agreement. Wanting to resolve the misalignment without

disputing the original agreement, Angel Studios engaged with TCLLC to negotiate a new agreement.

Pelo negotiated on behalf of Angel Studios for an April 2021 Term Sheet, which confirmed Angel

Studios' rights to distribute each season of TC. Angel Studios executives asked Pelo repeatedly to

request perpetual distribution rights in the term sheet (consistent with Angel Studios’ view of their

rights in the 2019 Agreement), but Pelo insisted seven years (the period TCLLC was proposing) was

as good as perpetual. Angel Studios executives also asked Pelo to add additional provisions to the

Term Sheet, which Pelo never did. Angel Studios executives were confused why Pelo insisted on terms

that were contrary to requests by all other Angel Studios executives, but ultimately went along with

Pelo’s recommendations and compromised with TCLLC to avoid future conflict. The parties thus

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agreed Angel Studios’ rights would extend for all seven seasons plus seven years after delivery of the

last season. Unfortunately, Pelo then interfered with the April 2021 agreement being finalized.

19. During the premiere of Episode 6 at a major industry conference in June 2021, TCLLC

surprised everyone with an announcement that filming of TC Season 3 was to be delayed until the

next year. While Pelo had been working closely with TCLLC in his role as Chief Distribution Officer,

he had not informed anybody at Angel Studios about TCLLC’s plan to delay Season 3 until right

before the announcement. Angel Studios' executive team could not imagine any good reason for delay,

since Season 3 already had sufficient funding to begin production (TCLLC claimed the finished scripts

needed to be re-written, but refused to send the scripts to Angel). The surprise delay upset Angel

Studios, as well as the actors who had organized their schedules to begin filming in a matter of weeks.

The delay of Season 3 has cost over $150 million in lost revenues and momentum for Angel Studios.

20. After the Conference, Pelo shared with the Angel Studios team that a wealthy benefactor

wanted to help with translations of TC into languages that Angel Studios did not yet support. Pelo

reported that they proposed to use a charitable organization that provided language translation services

to invest millions in new dubbing and subtitling. Angel Studios was excited to work with them on the

new translations. Pelo now claims that when the language charity previously “approached Angel” with

the translation proposal, “Angel turned them down.” But no one at Angel Studios knew anything

about the organization previously approaching Angel Studios, or any purported rejection. Angel

Studios has since learned more about Pelo’s dealings with the wealthy benefactor at the industry

conference. On information and belief, Pelo withheld information from Angel Studios while he still

worked for it. At some point, Pelo began working to subvert Angel Studios' rights in TC, and divert

them to the benefactor. The benefactor’s representative stated in a call that they had seen a confidential

8
term sheet signed in July 2022 by TCLLC and Angel, and they were upset that Angel Studios was to

receive rights to TC that the benefactor wanted for itself.

21. The benefactor pointed out that they had begun communicating with the director and creator

of TC on or around May 25-28 of 2021 (immediately prior to the industry conference).

22. Also, employees of Angel Studios who had worked on Pelo’s team reported that Pelo had

excluded them from certain meetings involving TC at the June 2021 industry conference. At the time

of the conference, the employees thought it was strange. Pelo had claimed they could not attend the

meetings because the information to be discussed was sensitive and had to be kept close.

23. Contrary to an explicit agreement Angel Studios had with TCLLC, Pelo advocated for TCLLC

to strip Angel Studios' logo from the opening credits in the version of TC intended for use in television

broadcast. There was no benefit, and only detriment, for Angel Studios to not be the primary credit

in the TV broadcast.

Pelo’s New Agenda—Creating a Platform vs. Studio Dichotomy

24. The end of May 2021 was when Brad Pelo began engaging in unusual and confusing behavior

as an officer of the company. It seemed to Angel executives that Pelo had a new agenda different from

Angel Studios’ mission to build a studio platform powered by the crowd.

25. By June 2021, Angel Studios staff were divided in their focus between Angel Studios' core

distribution business and Pelo’s growing focus on content creation. This division led to internal rifts.

Angel Studios now understands these dynamics were caused by Pelo’s redirection of resources to

content creation, all while he held the role of Chief Distribution Officer. As these issues began to

reach a boiling point, Angel Studios' COO suggested a retreat on June 9, 2021 to unify the team, work

through the conflict, and set priorities for the coming months. To the surprise of the leadership team,

Pelo insisted at the meeting that the team debate whether Angel Studios was either a technology

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platform or a film & TV content production studio, and insisted Angel Studios had to make a choice

between the two. This was odd because Pelo and the team had rebranded Angel Studios together.

Angel Studios was and still is a full service distribution studio with innovative technology that sets it

apart from other studios, but it never aspired to do significant content creation itself, or subvert the

organic voice of the creator on social media.

26. At the same time, Angel Studios was concerned by Pelo’s use of excessive amounts of money

to create content that fell within the scope of responsibilities of the filmmakers that Angel Studios

partners with on each Angel Studios Original.

27. Angel Studios executives clarified with Pelo that they could go along with his desire to make

some changes if the focus was having Angel Studios get out of the business of direct content

production and creator voice on organic social media, but they would continue to be a full service

studio in every other way.

28. On July 13, 2021, Pelo sent the executive team a document themed “Whales and Minnows,”

continuing to push his views on this topic of “platform” versus “studio.”

29. On July 14, 2021, in an offsite meeting between Pelo and ten leaders from the team he

managed at Angel Studios, Pelo divided the team by demanding that each of them answer the question,

“which of you are ‘Team Chosen’ and which of you are ‘Team Angel’?” Pelo suggested that TC was a

“white whale” sized project, while all other Angel Studios Originals were just “minnows,” or dolphins

at best and that he wanted to build a team just to service the whale.

30. On July 19, 2021, at Pelo’s urging the executive team debated all day about Pelo’s “Whales

and Minnows” document, and again argued with Pelo about how much he was exceeding budgets on

his content creation projects. During this meeting, one Angel executive said in frustration, “Brad, I

don’t know what you’re up to, but you have an agenda.”Two days later, Pelo suggested a solution

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whereby he would move himself and some members of his team (as it turns out, the team who had

previously said they were “Team Chosen”) over to be TCLLC employees, so that Angel Studios could

remain focused on a single mission, which he doggedly referred to as a “platform.” Again, Angel

Studios executives reiterated that the only “studio” role that was not part of its business was making

content and organic social media that represents the creator’s voice, and that it was indeed both a full

service distribution studio and a platform. More importantly, all Angel Studios executives expressed

discomfort with Pelo moving to TCLLC and potentially switching sides at the table during ongoing

negotiations with TCLLC. Up until that point Pelo had represented Angel Studios in negotiations with

TCLLC. He had counseled with Angel Studios’ executives, and was keenly aware of Angel Studios’

strategies (some of which he suggested), confidential information, desired outcomes, and concerns

regarding the negotiations. He was the lead spokesperson for Angel in connection with the merger

that almost happened in late 2020, the April 2021 term sheet that had not yet been finalized, and

ongoing efforts to reach a formal agreement memorializing the terms the parties had already agreed

to in April 2021. Pelo’s proposal to become a TCLLC employee would have created a direct conflict.

31. Pelo promised IF he ever switched sides it would only happen after a formal agreement was

inked with TCLLC, so that he could stay loyal to Angel Studios and advocate for it throughout the

negotiations. Pelo and Angel Studios executives decided Pelo would have to remain on Angel Studios'

payroll as an officer and executive, loyal to Angel Studios, but he would become Angel Studios’

representative at TCLLC, focusing on helping TCLLC (as an Angel Studios executive) and solidifying

the relationship between Angel Studios and TCLLC. Angel Studios and Pelo agreed Pelo may be

assigned to other partners in the future, to help Angel Studios improve its ability to build partnerships

with other filmmakers. As to other members of the team Pelo led at Angel Studios, they would be

11
redirected to projects consistent with Angel Studios’ mission, and any content-production or organic

social media projects that exceeded that mission would be phased out.

32. On July 23, 2021 Pelo produced a “Business Flow Chart” regarding the “platform” versus

“studio” issue, which clearly did not match what the executives had agreed to. Pelo’s chart suggested

Angel Studios should communicate to TCLLC that Angel Studios would only be a “platform” and

not a “studio,” a false message that could discourage TCLLC by suggesting Angel Studios would no

longer provide services necessary for TC’s success. A meeting was scheduled with TCLLC on August

2, 2021 to expedite what Angel Studios believed would be a positive change for both partners,

returning all content production and organic social media to TCLLC (the “August Presentation”).

Pelo worked with Angel Studios’ CEO and CCO for an entire weekend prior to the meeting to prepare

the presentation. He again pushed for a presentation that only focused on the false dichotomy between

“studio” and “platform,” which the same Angel executives edited substantially to better reflect their

own vision. Pelo and Angel Studios’ CEO flew to Texas to meet with TCLLC. Because Angel Studios

was going to transition content creation projects and organic social media back to TCLLC, Angel

Studios executives planned to offer that TCLLC could have an increased share of revenues to

compensate for the transition. Pelo asked Angel Studios’ CEO to remove that part of the presentation.

Angel Studios’ CEO thought that would rub TCLLC wrong, but ultimately deferred to Pelo’s counsel.

33. Pelo then manipulated the August Presentation and communications, including his direct

communications with TCLLC, to indicate that going forward Angel Studios would be nothing more

than a “platform” rather than a 21st century distribution studio platform. TCLLC received a false

message, but believing it to be true, had concerns.

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 34. Instead of correcting and clarifying the false messaging provided to TCLLC, Pelo allowed

TCLLC to continue to believe the false narrative, which harmed Angel Studios' relationship with

TCLLC and breached Pelo’s fiduciary duties.

35. Indeed, in mid-July 2022, Pelo told the President of Angel and two Angel Studios board

members that TCLLC had not agreed to finalize the April 2021 term sheet because Angel Studios had

made the decision to be a “platform” instead of a “studio.” TCLLC leaders also confirmed directly to

Angel Studios that they backed out because “Angel had decided to be a platform instead of a studio.”

That false idea came from Pelo. It caused TCLLC to believe Angel Studios was not willing or able to

perform the duties outlined for it in the April 2021 term sheet. Pelo knew this was false, and that

Angel Studios was more than willing and able, and was anxiously wanting to finalize the agreement.

Indeed, this was the most important outstanding issue for Angel Studios.

36. Pelo’s interference with the completion of the agreement caused serious damage to Angel

Studios' relationship with TCLLC–the very relationship Pelo was tasked to preserve and enhance.

37. Because of Pelo’s demand to his team of employees that they choose between “Team Chosen”

or “Team Angel,” and because content creation projects were to be phased out at Angel Studios,

employees on Pelo’s team were encouraged to stay, and told they would be reassigned to important

projects at Angel Studios. However, on information and belief acquired more recently, Pelo had

solicited these employees to leave Angel Studios. On September 15, 2021 several of these employees

departed from Angel Studios, and joined TCLLC’s payroll, contrary to Angel Studios’ desires. While

Pelo ensured Angel Studios this unwanted transition would be “seamless,” it became disruptive both

to Angel Studios and to TCLLC. Pelo caused TCLLC to believe Angel decided to “release the

department” Pelo had built, which was not true. It was Pelo who solicited “Team Chosen” to leave

Angel and join TCLLC.

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 38. Notwithstanding the Angel Studios executive team’s growing unease with Pelo’s increasingly

strange actions, they continued to believe Pelo was working on Angel Studios' behalf, both in his new

duties helping TCLLC, and his ongoing duties as Angel Studios' Chief Distribution Officer. In both

capacities, he held a position of trust with Angel Studios, and Angel Studios fully expected him to

honor his fiduciary obligations, including by acting with complete fidelity to Angel Studios at all times.

The Foundation Fallacy

39. Prior to Pelo joining, Angel Studios had started a non-profit foundation and it encouraged

Pelo to work on continuing a foundation strategy for mission driven projects to be able to receive

non-profit donations. This would be consistent with Angel Studios’ contracts with filmmakers which

include exclusive rights to tipping/donations.

40. In early May 2021, Pelo informed Angel Studios’ CEO that he was moving on the formation

of a new foundation, which he had begun the previous year. Angel Studios’ CEO did not understand

why a new foundation was necessary when the company had already created one, but he was grateful

Pelo was finally moving on the strategy. On July 18, 2021, Pelo proposed a Board for the new

organization, but one of his recommendations did not pass due diligence.

41. On information and belief, Pelo misrepresented to TCLLC that Angel Studios lacked interest

in utilizing a non-profit to maximize the reach of TC. The truth is that Angel Studios was and is

interested, but its expectation that Pelo would complete the project for Angel Studios' benefit was

misplaced.

42. TCLLC recently indicated it will not work with any foundation established by Angel Studios.

Instead, it will only work with the previously mentioned wealthy benefactor’s foundation. Similarly,

the wealthy benefactor has expressed that it only wants to work directly with TCLLC. On information

and belief, beginning while he was still employed as an Angel Studios executive, Pelo helped foster

14
separation between Angel Studios and the wealthy benefactor, and manipulated to divert the

opportunity away from Angel Studios and toward the wealthy benefactor’s organization. Instead of

fighting for Angel Studios' rights and most important relationship, Pelo spent his time and Angel

Studios' resources building the narrative he needed to switch sides and harm Angel Studios.

October 2021 Termination Threat

43. At the beginning of October 2021, with the April 2021 term sheet still not finalized, Pelo

announced that the director of TC wanted to meet with the Angel founders to finalize the deal.

44. Prior to the meeting, TCLLC sent over a revision to the April 2021 term sheet proposing a

provision that would allow TCLCC to build a competitor to Angel Studios without Angel Studios'

permission. During the meeting, TCLLC sprang the question, “what do you think happens when the

contract terminates?” The Angel founders were surprised and concerned by the implications of this

question.

45. The Angel founders were further surprised and very concerned when Pelo accompanied

TCLLC’s representatives to their breakout meetings during the negotiations. However, Pelo was an

executive of Angel Studios, so the Angel founders believed he would be Angel Studios' advocate, as

well as its eyes and ears in TCLLC’s breakout meetings. Pelo recently admitted he was representing

TCLLC’s interests in that meeting, not Angel Studios’.

46. Later that evening, TCLLC founders told the Angel founders that TCLLC believed it could

cancel the contract permanently and terminate Angel Studios' rights altogether. Pelo, unfortunately,

sided with and supported TCLLC (because, unknown to Angel Studios at the time, his loyalties were

by then with TCLLC).

47. TCLCC nonetheless proposed a new agreement that would guarantee a long term relationship,

which seemed reasonable to the Angel founders at first blush, especially because it seemed to

15
acknowledge that the parties had always contemplated a long-term relationship, and that Angel Studios

would have perpetual license and distribution rights.

Pelo’s Resignation and Bombshell Letter

48. Around December 2021, Pelo began discussions with Angel Studios’ CEO about resigning

from Angel Studios, and joining TCLLC.

49. On December 20, 2021, Pelo verbally tendered his “resignation,” but positioned this as more

of a proposed change in optics than anything else.

50. Pelo, however, knew things about TCLLC’s and Pelo’s intentions that others at Angel Studios

did not know, and that Pelo failed to share with Angel Studios, contrary to his fiduciary duties. It is

now apparent he had learned, and likely participated in discussions at TCLLC, whereby TCLLC was

going to propose a separation from Angel Studios. Without revealing this information, Pelo asked to

cash out his Angel Studios stock options. Near the same time, his son, who also worked at Angel

Studios, caused discord by indicating to other Angel Studios employees that Angel Studios was about

to lose its relationship with TCLLC—information unknown to Angel Studios, which Pelo’s son could

only have heard from Pelo. When employees approached Angel Studios’ CEO with what Pelo’s son

had told them, he was shocked, and hoped the rumors spread by Pelo’s son were not true.

51. On January 3, 2022—almost immediately after he transitioned from Angel Studios to TCLLC,

and after having asked to cash out his Angel Studios stock options—Pelo, on behalf of TCLLC, sent

a “bombshell” letter to Angel Studios asking Angel Studios to voluntarily give up its distribution rights

for TC. His email, with an attached letter, claimed TCLLC had “outgrown Angel Studios' current size

and rate of capacity,” and “proposed” terms to end the relationship (a dramatic 180 degree turn from

“all the particulars” the parties had recently agreed to).

16
 52. Under Pelo’s proposal, TCLLC would reclaim all distribution rights for TC, remove from

Angel Studios any right to receive compensation for distributing TC—including, specifically, through

its “Pay It Forward” system—and leave Angel Studios with nothing beyond the right to distribute

older seasons of TC for free (i.e., with no prospect for generating a single penny of revenue). Pelo’s

letter expressly ended negotiations regarding an agreement to replace the 2019 Agreement.

53. After Pelo’s resignation, Angel Studios discovered other concerning things Pelo had done while

an executive at Angel Studios: (1) Pelo had been approached by a streaming platform that was interested

in acquiring exclusive rights from TCLLC for Season 3 of TC (another reason for TCLLC to attempt

to terminate Angel Studios’ rights). Pelo refused to share that information with others at Angel Studios

purportedly because he signed a Non-disclosure Agreement on behalf of TCLLC; and (2) Pelo had

conversations with Hollywood agents about potential documentaries for TC that would be sold to

one of the world’s largest streaming services (without going through Angel Studios).

54. In the final days of his employment, Pelo shared confidential, proprietary information

belonging to Angel Studios with at least two other persons, one of whom was employed by TCLLC.

Those disclosures resulted in damage to Angel Studios' relationship with its employees who hold

positions related to the work Pelo had been performing for Angel Studios.

55. On April 4, 2022, TCLLC appointed Pelo as President of TCLLC.

56. In July, 2022, Angel Studios, through its President, and TCLLC, through its Co-CEO, reached

an agreement in good faith after an all-day and late-into-the-night mediation in July 2022. Both leaders

signed the non-binding agreement and vowed to work towards a more complete binding agreement

consistent with its terms. Pelo torpedoed the agreement.

17
 57. The anticipated revenues from an uninterrupted ongoing relationship with TCLLC would be

approximately $2.6 Billion over the remaining seasons. Pelo has interfered with Angel Studios’ ability

to recognize those revenues.

JURISDICTION AND VENUE

58. This Court has jurisdiction under Utah Code Ann. § 78A-5-102.

59. This Court has personal jurisdiction over Pelo because Pelo resides in and regularly

does business in Utah, and additionally because Pelo has consented to personal jurisdiction in his

written agreement with Angel Studios.

60. Venue is appropriate in this Court under at least Utah Code Ann. §§ 78B-3-304 and

78B-3-307.

FIRST CAUSE OF ACTION

Breach of Fiduciary Duty
61. Angel Studios incorporates by reference all the above paragraphs.

62. During his employment with Angel, Pelo had a fiduciary duty to act in its best interest

in all matters within the scope of his employment, to avoid the use of Angel Studios’ assets and

business opportunities for personal gain or the benefit of a competitor, and to avoid competing with

Angel. Pelo’s fiduciary duties included a duty of loyalty, and a duty to maintain sensitive information

as confidential.

63. Pelo breached his fiduciary duties in a number of ways, including but not limited to by

secretly changing his loyalties to TCLLC, by literally switching sides at the negotiating table, by helping

TCLLC strategize to sever or materially change its relationship with Angel Studios, by communicating

false and/or misleading information to TCLLC to cause TCLLC to lose trust in Angel Studios, by

manipulating relationships to foster third parties to potentially replace all or a substantial part of Angel

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Studios’ role and rights with TCLLC, by negotiating in TCLLC’s interests and against Angel Studios’

interests with potential licensees that would acquire rights directly from TCLLC rather than through

Angel Studios, and otherwise causing harm to Angel Studios’ interests.

64. Pelo’s actions have proximately caused and will continue to cause Angel damage in

terms of lost profits, impaired future earning capacity, and diminution in the value of its customer

goodwill.

65. Pelo’s conduct was willful and malicious, intentionally fraudulent, and/or made with

a knowing and reckless indifference towards Angel Studios’ rights and business.

66. As a result, Angel Studios is entitled to punitive damages.

SECOND CAUSE OF ACTION

Breach of Contract
67. Angel incorporates by reference all the above paragraphs.

68. The Agreement between Angel and Pelo is valid and enforceable as written under Utah

law. The Agreement is supported by mutual consideration, was negotiated in good faith, contains

covenants necessary to protect the goodwill and legitimate business interests of Angel, and is

reasonable in its restrictions as to time and geographic scope.

69. Angel has performed all its obligations under the Agreement.

70. During and after his employment with Angel, Pelo breached the Agreement in multiple

ways, including but not limited to:

a. Pelo induced and/or encouraged Angel employees to leave Angel, both before and

after he resigned from his employment at Angel.

b. Pelo induced TCLLC to terminate, reduce and/or negatively alter its relationship with

Angel.

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 c. Pelo induced TCLLC to explore licensing/distribution opportunities with Angel

Studios’ competitors, and to compete with Angel directly.

d. Pelo engaged in competition with Angel on behalf of TCLLC.

71. Pelo’s conduct, as set forth herein, violates the non-solicitation, non-competition, and

non-disclosure obligations in the Agreement.

72. As a direct and proximate result of Pelo's breaches of contract, Angel Studio has

suffered, and will continue to suffer, damages in an amount to be proved at trial. Angel Studios is

entitled to recover such amount from Pelo.

73. Pursuant to the terms of the Agreement, Pelo is also liable to Angel Studios for its

reasonable attorney fees and court costs incurred to enforce its rights against Pelo.

THIRD CAUSE OF ACTION

Intentional Interference with Existing Economic Relationships

74. Angel Studios incorporates by reference all the above paragraphs.

75. Angel Studios had and still has an existing economic relationship with TCLLC, including an

exclusive distribution agreement. That distribution agreement grants to Angel licensing and

distribution rights with respect to TC.

76. Pelo has interfered with Angel Studios’ relationship with TCLLC by enticing TCLLC to end

or materially alter its relationship with Angel Studios, to interpret the agreement in ways detrimental

to Angel Studios, and to breach the agreement.

77. Pelo was aware of the existence of that relationship and intentionally interfered with it through

independently tortious and wrongful means, including but not limited to breaching his fiduciary and

contractual obligations to Angel Studios, using his knowledge of confidential information against

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Angel Studios, and advocating on behalf of TCLLC while having duties to advocate on behalf of

Angel Studios’ interests.

78. Pelo’s actions were intentional and were undertaken for the purpose of interfering with Angel

Studios’ economic relationships and/or undertaken with the knowledge that interference was

substantially certain to occur as a result of his actions.

79. Angel Studios was injured by Pelo’s unlawful conduct. As a result of Pelo’s tortious

interference, Angel Studios has suffered and will continue to suffer damages, including lost profits,

impaired future earning capacity, and diminution in the value of its customer goodwill. Angel Studios

is entitled to recover such damages at trial.

80. Pelo’s conduct was willful and malicious, intentionally fraudulent, and/or made with a

knowing and reckless indifference towards Angel Studios’ rights and business. As a result, Angel

Studios is entitled to an award of punitive and exemplary damages.

JURY DEMAND

Angel Studios demands a trial by jury as to all claims that may be tried to a jury.

CIVIL TIER

This is a Tier III discovery case under Rule 26(c)(3).

DEMAND FOR RELIEF

1. Judgment against Pelo for its actual damages, including compensatory and consequential

damages and interest thereon;

2. Judgment against Pelo for punitive and exemplary damages;

3. Award to Angel Studios of its reasonable attorneys’ fees and costs incurred in bringing and

pursuing this action; and

4. Any other relief the Court deems equitable and just.

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DATED: September 6, 2022 DENTONS DURHAM JONES PINEGAR,
P.C.
CALL & JENSEN, APC

/s/Mark L. Eisenhut
David W. Tufts (8736)
Mark L. Eisenhut (Practice in Utah authorized
from March 28, 2022 to March 28, 2023
under Rule 14-809 of the Rules Governing
the Utah State Bar. Supervised by David W.
Tufts, a member of the Utah State Bar)
Attorneys for Plaintiff

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