Prejean was stripped of her crown in August for breaching her contract and refusing to make appearances. The 22-year-old beauty then sued the state organization, claiming it engaged in slander and discriminated against her because of her religious beliefs, causing severe emotional distress.
On Monday, K2 Productions filed a demurrer and cross-complaint, claiming that after Prejean sparked a media firestorm with her answer to a question about gay marriage at the Miss USA pageant, she had "an inflated sense of self," turned further against her state team, abandoned her obligation as the titleholder, and violated multiple provisions of her contract.
Prejean finished second in the Miss USA pageant in April after she was asked for her opinion about states legalizing gay marriage, and she replied: "I think it's great that Americans are able to choose one or the other ... same sex marriage or opposite marriage," then added, "I believe that marriage should be between a man and a woman ... that's how I was raised."
In its countersuit, K2 Productions claims that according to her contract, Prejean agreed "to give both the Miss Universe Organization and K2 control over rights to her name, likeness, and image; control over her public appearances; and control over her provision of any entertainment, literary, endorsement and related services, both in connection with the State Pageant and during her reign (if she won) as Miss California USA."
Aside from becoming "completely belligerent and uncooperative" with the organization in refusing to agree to public appearances, the cross-compliant claims that Prejean made several unauthorized appearances without the required authorization from K2 Productions, and that she negotiated and entered into a publishing agreement and began preparations for a book about her life, to be called "Standing Still."
The lawsuit also claims she failed to repay money K2 Productions advanced to her to pay for breast augmentation surgery, and that she lied about a set of semi-nude photos of her that surfaced in the media after the Miss USA controversy.
Prejean allegedly told Miss California director Keith Lewis that the semi-nude photos were taken when she was a minor and that there were "no other photos." But the countersuit claims that the photos were taken when Prejean was around 21 years old, and it mentions another set of photos that later surfaced on TMZ.com.
"If that were not enough, K2 is informed and believes that there are additional photos of Ms. Prejean, yet to be published (and which K2 has not yet seen), that are even more graphic than the photos described that have been published in the news media," the suit stated.
Lewis told Foxnews.com that the organization has "received confirmation from multiple extremely reliable sources that additional photographs and video exist that are even more graphic and explicit than those currently published."
Prejean's lawyer, Charles Limandri, told Foxnews.com that they have "no idea" what the defendants are referring too in their claims of having racy photos and possible footage of the former beauty queen.
"We don't know what they're talking about," Charles Limandri said. "It is highly unprofessional and irresponsible to mention photos that haven't even seen yet."
In the demurrer that was also filed, K2 Productions asks that parts of Prejean's suit should be dismissed immediately as they contain "rambling, irrelevant information and unfounded causes of action." The demurrer also points out that despite Prejean’s claim that she was wrongfully terminated, she does not sue for breach of contract, calling it "a claim one might expect to be her most obvious cause of action.
"That is because there are no grounds by which Ms. Prejean can assert that she was improperly de-crowned as Miss California USA."
Prejean alleged that Miss California State Directors Keith Lewis and Shanna Moakler disclosed private medical facts of her breast augmentation to the media, but the demurrer calls that claim "far-fetched" considering "she paraded on national television in a bikini for the very purpose of showing her figure as enhanced by that surgery."
"The 'private facts' about which she makes this claim were not the least bit private. Plaintiff cannot dispute this," the demurrer claimed. "While it is not clear from the Complaint, if Plaintiff contends that the mere fact of her breast augmentation is private, that is a contention that cannot withstand scrutiny as a matter of law. Indeed, Plaintiff admits in her Complaint that 'such surgeries are common among beauty pageant contestant and titleholders.' This admission is fatal to the cause of action."
The defendants allege that they "owe no duty to plaintiff under the Confidentiality of Medical Information Act" and also claim that Prejean bears no grounds to sue K2 Productions for religious discrimination as it is not a "business establishment," and thus not subject to the Unruh Civil Rights Act.
The complaint also alleges that in December 2008 it was Prejean who voiced her desire for breast augmentation, although she "did not have the money to pay for it." According to the documents, in January 2009, Prejean and K2 Productions entered into an oral agreement whereby K2 Productions agreed to loan Ms. Prejean money ($5,200) to pay for the surgery.
The documents also allege that in June this year Prejean attempted to "undermine K2 Productions" and interfere with the franchise contract by writing an email to Miss Universe Organization President, Paula Shugart, with suggestions on who she felt should take over Keith Lewis's position as the State Director.