Sounds like the project ended in dev hell before the IP rights fight, and the disagreement was the final straw.
That said, it's unfortunately not uncommon that an indie dev's second game ends up in dev hell. Vanripper wrote quite a bit on how Awaria's dev cycle was a trainwreck (ironic, given its name). He got overconfident from Helltaker's smooth dev time, and suffered the consequences.
EDIT: oh, yea, nearly forgot Copper Dreams from Whalenought Studios, who had a small amount of critical acclaim from Serpent in the Staglands. Ended up in horrible dev hell, was eventually released as Mechajammer, and was massively scaled down from the original Kickstarter concept. It also led to the devs closing down the original studio, and opening a different one for their third game (Banquet for Fools).