May 21, 2013 at 10:01 AM ET
Lindsay Lohan may have finally checked into her court-mandated rehab program, but now she's facing a different kind of legal drama.
An apparel manufacturer that partnered with Lohan's leggings line 6126 is firing back at the actress' 2013 lawsuit over a licensing dispute, claiming that the embattled star's tarnished reputation severely hampered the company's ability to suitably peddle her clothing line to buyers.
In a $5 million breach-of-contract counter claim filed against Lohan Friday in a California U.S. District Court and obtained by E! News, clothing company DNAM alleges that while the starlet's leggings line initially enjoyed some success at department stores in 2010, buyers eventually began to pull back "because they did not want to be associated with Lohan's drug addled image."
The complaint states that in the spring of 2011, buyers canceled appointments and customers canceled orders, noting that "no one would touch the line." Lohan, who was in rehab at the time, was unable to endorse the brand or provide feedback, the lawsuit alleges.
The company claims that Lohan's legal troubles and her supposed drug and alcohol addictions devalued the brand, and it its seeking $5 million in damages.
Kristi Kaylor, Lohan's business partner on 6126, refutes the allegations, claiming that it was DNAM that breached their licensing agreement.
"The DNAM countersuit against 6126 is frivolous and misrepresents the facts," Kaylor tells E! News exclusively in a statement. "DNAM knows that it is in breach of the 6126 licensee agreement, and this suit is clearly nothing more than a transparent defense maneuver. Lindsay and I worked for over three years to build the 6126 brand and ensure its success; DNAM is merely trying to get out of honoring its financial obligations."
-- additional reporting by Ken Baker