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| Lecrae, who co-founded Reach Records with Ben Washer in 2004, appears in an undated promotional photo. Lecrae is not individually named as a plaintiff in the label’s lawsuit against Capitol Christian Music Group, which a federal judge has allowed to proceed. (Photo courtesy of Reach Records) |
The label co-founded by Lecrae alleges Capitol CMG abandoned a multimillion-dollar acquisition after representing that the purchase price had been approved.
A federal judge has refused to throw out a lawsuit from Reach Records, allowing the influential Christian hip-hop label to pursue claims that a Universal Music Group division backed away from a multimillion-dollar acquisition after representing that the price was final.
U.S. District Judge Waverly D. Crenshaw Jr. denied Capitol Christian Music Group’s motion to dismiss the case July 21 in the Middle District of Tennessee.
The decision keeps alive Reach’s claims of breach of contract, intentional misrepresentation and negligent misrepresentation. It is not a finding that Capitol CMG violated a contract or misled the label.
At this stage, the judge was required to accept Reach’s properly pleaded factual allegations as true and determine whether they presented legally plausible claims. Crenshaw found that all three claims met that standard.
Reach Records LLC and The Reach Group LLC filed the lawsuit Dec. 10, 2025. Lecrae, who founded Reach with Ben Washer in 2004, is not individually named as a plaintiff.
According to the judge’s summary of the allegations, Capitol CMG President Brad O’Donnell told Washer on June 14, 2025, that a UMG investment committee would need to approve the proposed acquisition.
Reach alleges O’Donnell told Washer several days later that the committee had approved both the transaction and the final purchase price.
The companies signed a letter of intent Aug. 8, 2025. The document treated the purchase price as binding and said it could not be renegotiated unless final due diligence uncovered materially adverse information, according to the opinion.
The agreement also established a process through which the companies could mutually approve a price adjustment after due diligence.
The companies then completed five rounds of due diligence.
Reach alleges Capitol CMG did not identify or communicate any materially adverse finding that would have activated the price-adjustment provision.
Drafts of a final purchase agreement moved between the companies during August and September, with the proposed price unchanged, according to the court’s account.
Reach says the deal unraveled Sept. 12.
The label alleges O’Donnell said another level of internal approval was required and that the agreed price was too high because of the earnings multiple used to calculate it. The acquisition was never completed.
Capitol CMG argued that the letter of intent was not a completed acquisition contract, but part of the continuing negotiations toward a final purchase agreement.
Crenshaw found that argument insufficient to end the case.
Although other parts of the proposed transaction remained unfinished, the judge said the letter of intent expressly identified the purchase price as one of its binding provisions.
“Reach has plausibly alleged the existence of an enforceable contract and CMG’s breach,” Crenshaw wrote.
The judge also allowed Reach’s two misrepresentation claims to continue.
Capitol CMG argued that Reach had not sufficiently alleged that O’Donnell knowingly made a false statement or that the label reasonably relied on what he said.
Crenshaw ruled that Reach had provided enough detail about the disputed statements, who allegedly made them, when they were made and the financial injury the label says it suffered.
Reach alleges it lost time and work preparing for the closing, along with the money it expected to receive from the sale. The proposed purchase price has not been publicly disclosed beyond the court’s description of it as a multimillion-dollar amount.
Capitol CMG will have an opportunity to dispute Reach’s account and present evidence as the case continues.
The conflict places one of Christian hip-hop’s foundational independent labels opposite the faith-based music operation of the world’s largest music company.
Reach began in 2004 and developed a catalog that helped move Christian rap beyond a narrowly defined religious market. Lecrae’s 2014 album, “Anomaly,” became the first release to top the Billboard 200 and Billboard’s Gospel Albums chart in the same week.
Capitol CMG is UMG’s Christian and gospel music operation. Official company materials identify O’Donnell as its longtime president and list a roster that includes Tasha Cobbs Leonard, Tye Tribbett, TobyMac, Amy Grant and Chris Tomlin.
The case now moves deeper into discovery, allowing the parties to seek documents, testimony and other evidence about the negotiations and the internal approval process.
Discovery is currently scheduled to close Dec. 4. Motions seeking a judgment before trial are due March 30, 2027, and a trial is set for Sept. 14, 2027. Those dates could change, and the case could be settled or resolved without a trial.
For Reach, the ruling is a procedural victory rather than a final judgment. It gives the label an opportunity to pursue evidence supporting its claim that Capitol CMG walked away from a price the companies had already agreed would be binding.
