Struggling wealth management and mortgage services group Yellow Brick Road has been hit with a legal claim from the former owner of the RESI loan origination business.The Mark Bouris-led YBR acquired RESI's distribution network and mortgage book in 2014 from Sydney businessman, Peter James.Under the sale deal, James was entitled to a deferred payment (an earn-out distribution) if certain conditions were met.The earn-out payment of up to A$2.5 million was due to be paid in the year following the acquisition but James never received it.YBR notified the ASX on Wednesday that James had filed a legal claim against the company for non-payment of the earn-out incentive.In its ASX notification, YBR said it would defend the court action on the grounds that conditions for making the payment to RESI's former owner were never fulfilled."Based on advice it has received to date, YBR is confident that its interpretation of the share sale agreement is correct, and that no earn-out amount is payable," the company told the ASX. "YBR intends to defend the proceedings."Banking Day last night made phone contact with James to learn more about the basis for the legal action, however he declined to answer questions."No comment," he said.A large part of YBR's distribution system is built over RESI's former sales network.When YBR made the acquisition in July 2014, RESI had a franchised national network of 40 branches.James said at the time of the sale that he expected the RESI brand to continue growing under YBR's ownership."The RESI business will continue as a separate brand and will maintain its current management structure with Angelo Malizis remaining as CEO," James said at the time. "The YBR Group intends to build on the RESI brand strength and has a number of properties, products and platforms which they plan to introduce to RESI franchisees for the benefit of their customers." "Our strength as a national retailer of mortgage products is a perfect fit for the YBR business model, and I am excited about the future ahead," he said at the time of the sale.In June 2015 all RESI branches were rebranded to the Yellow Brick Road moniker.The court action is another problem for Bouris and his management team to address in coming months following the sharp slide in the company's share price in the last three years.YBR's share price closed at 10.5 cents on Wednesday, giving it a market capitalization of almost $30 million. In 2014, the shares were trading as high as 77 cents.The market value of the scrip is priced at a massive discount to the book value of the company, which was reported at $73.8 million on 31 December.The court action is a potential material event for YBR because a claim for up to $2.5 million would be more than double the $1.03 million net profit reported for the 12 months to the end of June last year.