Build-A-Bear Workshop
ST. LOUIS — A contract dispute over Build-A-Bear Entertainment's planned animated "KABU" series has moved to federal court after the California-based defendants filed a notice of removal, arguing the case meets the requirements for diversity jurisdiction and involves more than $75,000 in controversy.
KABU Productions, Patrick Hughes and Foundation Media Partners filed the notice July 9 in U.S. District Court for the Eastern District of Missouri, removing a lawsuit that Build-A-Bear Entertainment filed June 3 in St. Louis County Circuit Court.
The defendants contend the parties are citizens of different states and that the damages sought exceed the federal jurisdictional threshold. They state that they do not concede the merits of the claims while asserting that federal jurisdiction is appropriate.
In its underlying petition, Build-A-Bear Entertainment alleges breach of contract, breach of fiduciary duty and seeks declaratory relief stemming from a production agreement for an animated web series based on the company's "KABU" brand.
The entertainment subsidiary alleges it contracted with KABU Productions and Hughes in June 2023, later amending the agreement in 2024 and 2025, to produce an animated series featuring Build-A-Bear characters.
According to the complaint, the agreement called for production of 10 episodes, each at least 11 minutes long, with an initial delivery deadline of April 1, 2024.
The project carried an approved cash production budget of approximately $2.97 million, and Hughes and KABU Productions were to receive a $200,000 producer fee, along with a contractual right to receive 5% of Build-A-Bear Entertainment's adjusted gross profit from distribution of the series for the term of the agreement and 10 years afterward, subject to performance under the contract.
Build-A-Bear alleges the defendants failed to deliver the required episodes on schedule despite repeated requests for updates and later commitments establishing revised delivery dates.
The company claims the defendants promised to deliver 10 episodes by April 15, 2025, three additional episodes by May 31, 2025, and additional promotional materials and alternate-format edits, but again failed to meet those deadlines.
The lawsuit further alleges the defendants failed to provide requested production agreements involving third parties, despite repeated demands from Build-A-Bear.
According to the complaint, the defendants refused to produce certain agreements governing the project until Build-A-Bear agreed to pay nearly $1 million in additional funding to complete production.
The complaint also alleges the defendants entered into agreements with an animation company and a Canadian tax credit entity without obtaining Build-A-Bear's prior written approval, as allegedly required under the production agreement.
Build-A-Bear additionally alleges the defendants failed to properly oversee the production process and were unaware for months of problems affecting the animation company's progress.
The complaint states the animation company later had its bank accounts seized by creditors and entered bankruptcy proceedings.
The lawsuit further alleges the defendants discussed withholding information about those financial issues and production difficulties from Build-A-Bear while attempting to keep control of the project.
Among the alleged contractual breaches, Build-A-Bear claims the defendants failed to timely deliver episodes and related production materials, withheld information regarding the project's status, refused to provide production contracts, delivered work with compromised production value, failed to adequately supervise the animation process, and failed to account for project funds.
In their notice of removal, the defendants argue the case belongs in federal court because complete diversity exists between the parties.
They state Build-A-Bear Entertainment is a Missouri limited liability company whose sole member is Build-A-Bear Workshop Inc., a Delaware corporation with its principal place of business in Missouri.
The defendants state Hughes is a California citizen and the sole member of KABU Productions and Foundation Media Partners, making those entities California citizens for jurisdictional purposes.
The defendants also argue the amount in controversy exceeds $75,000 based on the multiple claims asserted, the production agreement's $200,000 producer compensation, the disputed profit-sharing provision, the request for punitive damages and attorneys' fees, and the value of the declaratory relief sought.
They ask the federal court to accept jurisdiction and allow the case to proceed in the Eastern District of Missouri.
The company seeks damages in excess of $25,000 on each of its breach of contract and breach of fiduciary duty claims, along with attorneys' fees, costs and punitive damages.
In addition to monetary relief, Build-A-Bear seeks a declaratory judgment that it no longer must pay the defendants the contractual 5% share of adjusted gross profits, provide specified producer credits, or fulfill any additional obligations under the production agreement because of what it alleges are uncured material breaches by the defendants.
The company is represented by Philip J. Mackey, Michael J. Hickey and Michael L. Jente of Lewis Rice.
U.S. District Court for the Eastern District of Missouri case number: 4:26-cv-01073
