Tom Petty Defendant in 2 Court Actions
Billboard — June 9, 1979

LOS ANGELES — Tom Petty is a defendant in two separate local Superior Court suits filed by MCA Records and Shelter Records accusing him of breaching a contract.

The first suit, filed by MCA Records, seeks to require Petty to fulfill his 1976-77 Shelter-ABC packs which were acquired by the plaintiff when it purchased ABC Records last March 4.

The pleading alleges that Petty feels his binder ABC through Shelter was invalidated when MCA bought the label holdings. MCA counters that the contracts specifically provide ABC records could assign its right to Petty to others.

The filing alleges that ABC upped Petty’s loot from $50,000 per album under the Shelter paper to a $250,000 non-returnable advance against royalties, with half paid on the contract signature and the remainder paid when Petty delivered the first album.

If the initial album went 200,000, according to the agreement filed with the court, ABC could exercise its option and would advance $350,000 non-returnably against royalties, with half at the start of recordings and the remainder when the album was delivered.

Petty’s advance rose to $400,000 if a third album and subsequent albums were recorded.

Petty’s first album sold in excess of 200,000 units, the suit continues, and ABC exercised its option. ABC, to date, has paid Petty $240,000 and $40,000 to his nominees, the file states.

Petty has failed to deliver a second album, the suit charges. On March 12, 1979, Petty allegedly informed ABC and MCA his contract is non-assignable. MCA requests the court to enjoin Petty from recording for others and requiring him to fulfill his present contract.

The Shelter suit is correlative to the MCA litigation. Both suits are in the court of Judge Lucas Campbell. The Shelter pleading alleges Petty has recorded an album at Cherokee Recording here. Shelter claims it has subsidized Petty’s performances to the tune of $500,000. The suit seeks to get the court to require Petty to fulfill his Shelter pacts.

The court file indicates Petty originally signed with Shelter in June 1974 as part of a group called Mudcrutch. In 1975, Petty signed as a solo act with Shelter, being paid a $6,000 annual salary, as per the California employment code minimum. The Shelter-ABC pact, under which JJ Cale and Dwight Twilley were recorded and under which Petty later recorded with all product reverting to ABC, called for ABC to pay a $1.12 royalty to Shelter for completed $6.98-$7.98 list price albums.