Chalk up another frustrated party accusing SouthPeak of wrongdoing. The company has been sued by Section 8 developer TimeGate, which alleges that the publisher has withheld royalty payments and entered into a PS3 licensing deal on the game with Russian company IC, an arrangement that TimeGate claims SouthPeak had no right to make.

In legal documents obtained by Joystiq, TimeGate also alleges that this SouthPeak T-shirt promotion was unauthorized, that the publisher had mislead TimeGate about sales figures and that the publisher has stated it should not have to adhere to TimeGate’s original agreement, as it had been made with Gamecock, which SouthPeak purchased in late 2008. We’ve reached out to SouthPeak for comment.

If you prefer your language far more formal, the lawsuit puts it like this: “[SouthPeak] failed to provide a sufficient sales report, withheld royalty payments and did not adhere to the obligation to act in good faith and fair dealing when they established the sham transaction in order to deprive TimeGate of royalties despite the special relationship between the parties and being in a position of trust.”

No specific amount is mentioned in the suit, with TimeGate asking only for “compensatory damages in an amount to be determined” following an independent audit of Section 8’s sales.