Jason Lust V Animal Logic MSJ

Case 2:17-cv-00308-JAK-AFM Document 90 Filed 03/05/18 Page 1 of 37 Page ID #:2022
1 John Shaeffer (SBN 138331)

jshaeffer@foxrothschild.com
2 Jeff Grant (SBN 218974)
jgrant@foxrothschild.com
3 Amanda Murray (SBN 305018)
amurray@foxrothschild.com
4 FOX ROTHSCHILD LLP
10250 Constellation Blvd., Suite 900
5 Los Angeles, CA 90067-6209
Telephone: 310-598-4150
6 Facsimile: 310-556-9828
7 Attorneys for Defendant and Counterclaimant
8 ANIMAL LOGIC ENTERTAINMENT, LLC,
Incorrectly identified in the complaint as Animal
9 Logic Entertainment US.
Counterclaimants/Third-Party Complainants
10 ANIMAL LOGIC LLC, and ANIMAL LOGIC ENTERTAINMENT PTY LTD.,
11 Defendant ZAREH NALBANDIAN
12 UNITED STATES DISTRICT COURT
13 CENTRAL DISTRICT OF CALIFORNIA
14 JASON LUST, an individual, Case No.: 17-CV-00308-JAK-AFM
15 Plaintiff, Hon. Judge John A. Kronstadt
16 v. DEFENDANTS,
COUNTERCLAIMANTS AND
17 ANIMAL LOGIC ENTERTAINMENT THIRD-PARTY COMPLAINANTS’
US, a California limited liability NOTICE OF MOTION AND
18 corporation; ZAREH NALBANDIAN, an MOTION SUMMARY JUDGMENT
individual; and DOES 1 through 20, OR, IN THE ALTERNATIVE, FOR
19 inclusive, PARTIAL SUMMARY JUDGMENT;
20 MEMORANDUM OF POINTS AND
Defendants. AUTHORITIES IN SUPPORT
21 ANIMAL LOGIC ENTERTAINMENT, THEREOF
22 LLC, a California limited liability

corporation; ANIMAL LOGIC LLC, a
23 California limited liability corporation, and REDACTED VERSION OF
ANIMAL LOGIC ENTERTAINMENT DOCUMENT PROPOSED TO BE
24 PTY LTD, an Australian company, FILED UNDER SEAL
25 Counterclaimants,
26 v. Date: May 14, 2018
27 JASON LUST, an individual, Time: 8:30 a.m.
Place: Courtroom 10B
28 Counterclaim-Defendant. First Street Courthouse
Continues on next Page
MOTION FOR SUMMARY JUDGMENT

1 ANIMAL LOGIC ENTERTAINMENT,

LLC, a California limited liability
2 corporation; ANIMAL LOGIC LLC, a
California limited liability corporation, and
3 ANIMAL LOGIC ENTERTAINMENT
4 PTY LTD, an Australian company
5 Third-Party Complainants,
6 v.
7 SAJ PRODUCTIONS, LLC, a California

limited liability company,
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Third-Party Defendant.
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1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD

2 PLEASE TAKE NOTICE that on May 14, 2018, in Courtroom 10B, 10th floor,
3 of this Court located at 350 West 1st Street, Los Angeles, CA 90012 at 8:30 a.m. or as
4 soon thereafter as the matter may be heard, Defendant Zareh Nalbandian, Defendants
5 and Counterclaimant Animal Logic LLC (“AL”), and Counterclaimants and Third-
6 Party Complainants AL, Animal Logic Entertainment, LLC (“ALE”) and the
7 Australian entity Animal Logic Entertainment Pty Ltd (“ALE AU”) will and hereby
8 do move this Court pursuant to Rule 56 of the Rules of Civil Procedure for summary
9 judgment, or in the alternative for partial summary judgment, on all of the causes of
10 action in the First Amended Complaint of Plaintiff and Counterclaim Defendant Jason
11 Lust (“Lust”) (Dkt. 19); all of the claims contained in the First Amended
12 Counterclaim of AL, ALE, ALE AU against Lust (Dkt. 37) and the Third-Party
13 Complaint of AL, ALE and ALE AU against SAJ Productions, LLC (“SAJ”) (Dkt.
14 38).
15 Specifically as to each of the above-referenced pleadings, this motion seeks
16 summary judgment on the following grounds.
17 1. First Amended Counterclaim (Dkt. 37)
18 a. AL is entitled to summary judgment, or at least partial summary
19 judgment, on its breach of contract claim on the grounds that
20 pursuant to the binding written contract between AL and Lust, Lust
21 was required to assign all intellectual property developed as part of
22 his services under this binding contract and he has refused to
23 execute documents consistent with this obligation despite repeated
24 requests.
25 2. Third-Party Complaint (Dkt. 38)
26 a. AL is entitled to summary judgment on its breach of contract cause
27 of action against SAJ because SAJ has refused to pay monies due
28 AL under a binding advance agreement, despite the fact that the
amount is now past due and owing and repeated demands for
1
1 repayment have been made. Lust has stipulated to judgment on

2 this claim.
3 3. First Amended Complaint (Dkt. 19)
4 a. ALE and AL are entitled to summary judgment, or at least partial
5 summary judgment, on Lust’s first cause of action for breach of
6 contract because (i) ALE is not a party to any binding contract with
7 Lust; (ii) ALE and AL have fully performed all of their obligations
8 under any such contract and are not in breach of any of its
9 provisions; and (iii) Lust remains in material breach of any such
10 contract refusing to take requested actions consistent with his
11 contractual obligation that “Copyright[s] and all related
12 [intellectual property] in the service [contracted for was] to be
13 assigned to Animal Logic.”
14 b. ALE and AL are entitled to summary judgment on Lust’s second
15 cause of action for breach of the covenant of good faith and fair
16 dealing because (i) ALE is not a party to any binding contract with
17 Lust; (ii) ALE and AL have fully performed all of their obligations
18 under any such contract; (iii) neither ALE nor AL have taken any
19 action to interfere with or compromise any rights or benefit due
20 Lust under AL’s binding contract with Lust; and (iii) Lust remains
21 in material breach of any such contract refusing to take requested
22 actions consistent with his contractual obligation that
23 “Copyright[s] and all related [intellectual property] in the service
24 [contracted for was] to be assigned to Animal Logic.”
25 c. AL, ALE, and Nalbandian are entitled to summary judgment on
26 Lust’s claim for breach of fiduciary duty claim because (i) Lust’s
27 relationship with AL was purely contractual and did not create any
28 fiduciary obligation by AL, ALE, or Nalbandian owed to Lust; and
(ii) AL has and continues to fully perform any and all obligations
2
1 under its contract with Lust and Lust’s inability to prove that AL
2 breached any contractual obligation owed to Lust precludes his
3 claim for breach of fiduciary duty;
4 d. AL, ALE, and Nalbandian are entitled to summary judgment, or at
5 least partial summary judgment, on Lust’s cause of action for fraud
6 because (i) AL, ALE, and Nalbandian did not misrepresent any
7 fact to Lust, make any false promises to Lust, or withhold any
8 information they were obligated to disclose to Lust; (ii) Lust fully
9 understood the contract he was entering with AL at the time he
10 entered the contract and cannot establish that he reasonably relied
11 on any misstatement, promise, or undisclosed fact inconsistent
12 with the terms of that binding agreement; and (iii) Lust cannot
13 establish that he suffered any cognizable damage as a result of his
14 reliance on any representation, promise or withheld fact.
15 e. ALE is entitled to summary judgment on Lust’s cause of action for
16 declaratory relief because (1) under his binding agreement with
17 AL, Lust assigned to AL all “Copyright[s] and all related
18 [intellectual property] in the service” of his binding contract and all
19 claims of rights relate to such service; and (2) producer’s
20 contributions to motion picture projects are not considered works
21 of authorship within the meaning of the Copyright Act and are
22 therefore not protected under that act.
23 f. ALE is entitled to summary judgment on Lust’s cause of action for
24 an accounting because (1) ALE is not party to any agreement with
25 Lust that could entitled Lust to an accounting; and (2) an
26 accounting is a remedy and not a cause of action.
27 MEET AND CONFER
28 On Thursday, February 15, 2018, at 3 p.m. counsel for the parties met and
conferred concerning this pending motion. During the conversation, the basis for this
3
1 motion was discussed. A few days later, on February 22, 2018, counsel for Lust
2 informed counsel for defendants that Lust would stipulate to summary adjudication as
3 to AL LLC’s first cause of action for breach of contract against SAJ with respect to
4 the $100,000 that remains outstanding on this advance. Counsel for Lust has
5 indicated that with respect to all claims, other than this one, Lust opposed both
6 summary judgment, as well as partial summary judgment.
7
Dated: March 5, 2018 FOX ROTHSCHILD LLP
8
9 By /s/ John Shaeffer
10 John Shaeffer
Jeff Grant
11 Amanda Murray
Attorneys for Defendant and Counterclaimant
13 ANIMAL LOGIC LLC, and ANIMAL
LOGIC ENTERTAINMENT PTY LTD., and
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4
1 TABLE OF CONTENTS
2
I. Introduction ........................................................................................................... 1
3
II. Background ........................................................................................................... 2
4
A. ALE ........................................................................................................... 2
5
B. Negotiation of the SFA ............................................................................. 3
6
C. The SFA .................................................................................................... 4
7
D. The Peter Rabbit Pitch .............................................................................. 6
8
E. The COE Of Peter Rabbit ......................................................................... 7
9
F. The Peter Rabbit Producers Agreement And The Producers Offset ........ 8
10
G. The Other Projects Lust Developed While With Ale ............................. 11
11
III. Discussion ........................................................................................................... 12
12
A. Summary Judgment Standard ................................................................. 12
13
B. ALE Is Entitled To Summary Judgment Against Lust On Its Breach Of
14
Contract Claim Based On Lust’s Refusal To Execute Coes................... 13
15
C. The Defendants Are Entitled To Summary Judgment On Lust’s Breach
16
Of Contract Claims ................................................................................. 15
17
1. All Monies Due Lust Under The SFA Have Been Paid Or Have
18
Been Duly Accounted .................................................................... 16
19
2. ALE Has Honored Its Obligations Under The SFA With Respect
20
To Projects To Which Lust Is Entitled To Be Attached ................ 16
21
D. The Defendants Are Entitled To Summary Judgment On Lust’s Breach
22
Of The Covenant Of Good Faith And Fair Dealing Claim .................... 19
23
E. The Defendants Are Entitled To Summary Judgment On Lust’s Breach
24
Of Fiduciary Duty Claims ....................................................................... 19
25
F. Defendants Are Entitled To Summary Judgment On Lust’s Various
26
Fraud Claims ........................................................................................... 21
27
G. Lust Holds No Intellectual Property Rights In The Projects He Worked
28
On ............................................................................................................ 24

i
1 H. Lust’s Accounting Claim Fails As A Matter Of Law ............................. 25

2 IV. Conclusion ........................................................................................................... 25
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ii
1 TABLE OF AUTHORITIES
2
3 Cases Page(s)
4
4Kids Entertainment, Inc. v. Upper Deck Co.,
5 797 F. Supp. 2d 236 (S.D.N.Y. 2011) ..................................................................... 14
6 AAlmuhammed v. Lee,
7 202 F.3d 1227 (9th Cir. 2000) ................................................................................. 24
8 Abbit v. ING USA Annuity and Life Insurance Company,
9 252 F.Supp.3d 999 (C.D.Cal. 2017) .................................................................. 13, 21
10 Alexsam Inc. v. Green Dot Corporation,
11 2017 WL 2468769 (C.D. Cal. 2017) ....................................................................... 23
12 Alling v. Universal Manufacturing Corp.,

5 Cal.App.4th 1412 (1992) ...................................................................................... 22
13
14 Alpha Beta Food Markets v. Retail Clerks,
45 Cal.2d 764 (1945) ............................................................................................... 14
15
16 Audigier Brand Management v. Perez.
2012 WL 5470888 (C.D. Cal. 2012) ....................................................................... 23
17
18 Baltazar v. Apple, Inc.,
No. CV-10-3231-JF, 2011 WL 588209 (N.D. Cal. Feb. 10, 2011)......................... 21
19
Bank of California v. Connelly,
20
35 Cal.App.3d 350 364 (1973) ................................................................................ 20
21
Bank of the West v. Valley Nat. Bank of Arizona,
22 41 F.3d 471 (9th Cir. 1994) ..................................................................................... 22
23
Best v. Time Warner, Inc.,
24 2013 WL 66265 (W.D.N.C. 2013) .......................................................................... 23
25
California and Hawaiian Sugar Co. v. Sun Ship, Inc.,
26 794 F.2d 1433 (1986)............................................................................................... 21
27 Celotex Corp. v. Catrett,
28 477 U.S. 317 ............................................................................................................ 12

iii
1 City of Hope Nat. Med. Ctr. v. Genentech, Inc.,

43 Cal.4th 375 (2008) ........................................................................................ 19, 20
2
Colby v. Newman,
3
2013 WL 12124390 (C.D. Cal. 2013) ..................................................................... 20
4
Coughlin v. Trans World Airlines, Inc.,
5 847 F.2d 1432 (9th Cir. 1988) ................................................................................. 15
6
Effects Associates, Inc. v. Cohen,
7 908 F.2d 555 (9th Cir. 1990) ....................................................................... 14, 24, 25
8
Epstein v. Stahl,
9 176 Cal.App.2d 53 (1959) ....................................................................................... 20
10 Federal Deposit Ins. Corp. v. Air Florida System, Inc.,
11 822 F.2d 833 (9th Cir. 1987) ................................................................................... 15
12 Foley v. Interactive Data Corp.,
13 47 Cal.3d 654 (1988) ............................................................................................... 13
14 Garcia v. Google, Inc.,
15 786 F.3d 733 (9th Cir. 2015) (en banc) ................................................................... 24
16 Garcia v. Google, Inc.,

786 F.3d at 732 ........................................................................................................ 24
17
18 Gutierrez v. Girardi,
194 Cal.App.4th 925 (2011) .................................................................................... 19
19
20 Guz v. Bechtel National, Inc.
24 Cal.4th 1089 (2000) ...................................................................................... 13, 19
21
22 Hadland v. NN Inv’rs Life Ins. Co.,
24 Cal.App.4th 1578 (1994) .................................................................................... 22
23
Hoffman v. 162 North Wolfe LLC,
24
228 Cal.App.4th 1178 (2014) .................................................................................. 22
25
Hollywood Foreign Press Ass’n v. Red Zone Capital Partners II,
26 870 F.Supp.2d 881 (C.D. Cal. 2012) ....................................................................... 22
27
JMP Securities LLP v. Altair Nanotechnologies Inc.,
28 880 F.Supp.2d 1029 (N.D. Cal. 2012) ..................................................................... 23

iv
1 Kabushiki Kaisha Megahouse v. Angar Co. LLC,

2014 WL 5456523 (C.D. Cal. 2014) ....................................................................... 20
2
Marzec v. Calif. Pub. Emp. Retirement Sys.,
3
236 Cal.App.4th 889 (2015) .................................................................................... 19
4
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
5 475 U.S. 574 (1986) ................................................................................................. 12
6
Michel v. Palos Verdes Network Group, Inc.,
7 156 Cal.App.4th 756 (2007) .................................................................................... 21
8
Poly Plant Project, Inc. v, RMT International, Inc.
9 2012 WL 12887398 (C.D. Cal. 2012) ..................................................................... 20
10 Prakashpalan v. Engstrom, Lipscomb and Lack,
11 223 Cal.App.4th 1105 (2014) .................................................................................. 25
12 Pry Corp. of America v. Leach,
13 177 Cal.App.2d 632 (1960) ..................................................................................... 15
14 Redgrave v. Boston Symphony Orchestra, Inc.,
15 855 F.2d 888 (1st Cir.1988) (en banc) .................................................................... 23
16 Rosenfeld v. JPMorgan Chase Bank, NA,

732 F.Supp.2d 952 (N.D. Cal. 2010) ....................................................................... 13
17
18 Sargon Enterprises, Inc. v. University of Southern Cal.,
55 Cal.4th 747 (2012) .............................................................................................. 23
19
20 Westwater v. Rector, etc., of Grace Church,
140 Cal.339 (1903) .................................................................................................. 23
21
22 Wiz Technology, Inc. v. Coopers & Lybrand,
106 Cal.App.4th 1 (2003) ........................................................................................ 15
23
Wolf v. Superior Court,
24
107 Cal.App.4th 25 (2003) ...................................................................................... 21
25
Wolf v. Walt Disney Pictures and Television,
26 162 Cal.App.4th 1107 (2008) .................................................................................. 16
27
Yi v. Circle K Stores, Inc.,
28 258 F.Supp.3d 1075 (C.D. Cal. 2017) ............................................................... 16, 17

v
1 Zorich v. Petroff,
152 Cal.App.2d 806 (1957) ............................................................................... 19, 20
2
Statutes
3
4 Cal. Civ. Code § 1636 ................................................................................................... 16
5 Other Authorities
6 Fed. R. Civ. P. 56(a)...................................................................................................... 12
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vi
1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION
3 Only in Hollywood would someone who has received compensation and credit
4 sue because no one asked him to do any actual work.
5 A year into his two-year production services contract with Animal Logic LLC
6 (“AL LLC”),1 Plaintiff and Counterclaim Defendant Jason Lust (“Lust”) decided he
7 wanted a better deal. Unable to reach a new agreement, Defendant Zareh Nalbandian
8 – who owns the various Animal Logic entities – decided not to renew Lust’s contract.
9 Lust retains rights to credit and a share of revenues from the projects he worked on.
10 While Lust has breached his duties and obligations, Nalbandian and ALE have not.
11 Summary judgment is appropriate for the following reasons:
12 First, Lust concedes that his loan out company, SAJ Productions, LLC (“SAJ”),
13 breached its advance agreement with AL LLC and owes AL LLC $100,000.2
14 Second, Lust breached his Short Form Agreement (“SFA”)3 with ALE by
15 refusing to execute certifications that the projects he worked on are ALE’s property
16 and are transferred to a motion picture studio as part of any producer’s agreement. 4
17 Third, Lust cannot demonstrate a disputed question of material fact with
18 respect to his breach of contract claims. ALE has appropriately accounted for all
19 monies due him under the SFA. Nothing in the SFA requires ALE to continue to
20
1
21 Lust has plead he entered a contract with Animal Logic Entertainment US, which
was a division of AL, LLC. Dkt. 19 at ¶¶ 2, 23. Its assets were later transferred to
22 another entity renamed Animal Logic Entertainment, LLC (ALE”). While Lust sued
an entity that cannot be sued, courts will allow a plaintiff to correct for such an error.
23 Here ALE will be identified as the party contracting with Lust.
24 2
See accompanying Separate Statement of Undisputed Facts and Conclusions of Law
(“SS”) at ¶ 1.
25
3
A copy of the SFA (Depo. Exhibit 1000) is attached to the accompanying
26 declaration of John Shaeffer (“Shaeffer Decl.”) as Exhibit 1. Unless otherwise so
27 stated, all subsequent references to “Exhibit” or “Ex.” refer to exhibits to Shaeffer
Decl.
28 4
This type of certification, which is standard in the entertainment industry, is
hereafter referred to as “COE.”
1
1 employ Lust or to cause a studio to use his services. No evidence supports that ALE
2 or Nalbandian did anything to prevent a studio from utilizing Lust’s production
3 services. Finally, since Lust materially breached the SFA first, his claims are barred.
4 Fourth, the SFA did not form a partnership. Nothing about this contractual
5 relationship caused either ALE or Nalbandian to owe fiduciary duties to Lust. Since
6 defendants did not breach the SFA, they did not breach any fiduciary duty.
7 Fifth, Lust’s fraud-based claims have no legal merit. Lust’s contention that he
8 was defrauded into believing he entered a five-year partnership is contradicted by the
9 SFA. Lust could not have reasonably believed that any long-form agreement would
10 materially alter the terms of the SFA. Since the SFA contractually obligated Lust to
11 sign the Peter Rabbit COE, he was not fraudulently induced to sign it.
12 His concealment claims similarly lack legal merit. Not only does nothing
13 support that ALE intended when it signed the SFA to redefine its agreed to terms, the
14 economic loss rule precludes such a fraud claim.
15 Sixth, Lust’s claim for a declaration that he retains intellectual property rights
16 in the projects he worked on while under contract with ALE fails as a matter of law.
17 A producer’s contribution to the development of a motion picture project is rarely
18 considered the work of an author within the meaning of copyright. Even if it was, the
19 SFA would, at a minimum, grant ALE a license to any such copyright.
20 Seventh, an accounting is a remedy and not a cause of action.
21 While some in Hollywood believe they are special, the law does not so
22 discriminate. Like any citizen, this Court will enforce the contract sophisticated
23 parties voluntarily enter over claims that their status entitles them to more. As a
24 matter of law, the defendants here are not liable for failing to meet Lust’s aspirations,
25 nor will the law excuse Lust’s breaches simply because Lust believes he is due more.
26 II. BACKGROUND
27 A. ALE
28 Right out of high school, Nalbandian took a job with a film laboratory in
Australia. Nalbandian Depo. (Exhibit 2) at 17:2-18:13. 15 years later, in 1991, he
2
1 founded the digital post-production company Animal Logic Pty. Ltd. (“AL AU”).
2 Nalbandian Depo. (Exhibit 2) at 18:2-24. AL AU is responsible for the animation and
3 visual effects on such movies as Happy Feet, Moulin Rogue, and the various Lego
4 movies. Ex. 2 at 23:1-11, 80:17-81:19. AL AU currently employs about 500 people
5 in Sydney, Australia. Ex. 2 at 19:9-21:1.
6 In 2008, Nalbandian formed Animal Logic Entertainment Pty. Ltd. (“ALE
7 AU”) to develop and produce its own motion pictures. Ex. 2 at 21:7-22:13. Before
8 2013, ALE AU developed and produced the animated feature The Owls of the
9 Ga’Hoole for Warner Bros., and Nalbandian received a producer credit. Ex. 2 at
10 22:15-25. Thereafter, Nalbandian formed a division within AL LLC to handle the
11 development responsibility in Los Angeles, which he would later roll into ALE. Ex. 2
12 21:9-16. ALE currently employs five people in the United States. Ex. 2 at 19:15-19.
13 B. Negotiation Of The SFA
14 Nalbandian met Lust while Lust worked for the Jim Henson Company as a
15 creative executive. Ex. 2 at 79:6-15; Lust Depo. (Exhibit 3) at 73:17-75:6. When the
16 two reconnected in the Fall of 2012, Nalbandian proposed contracting for Lust’s
17 production services in Los Angeles. Ex. 3 at 79:22-80:12, 113:20-117:23; 12/20/12
18 email from Nalbandian to Lust (Depo. Exhibit 1009), a copy of which is Exhibit 4.
19 Lust would be contracted to source and develop creative properties that ALE could
20 take to studios for production. Cornish Depo. (Exhibit 34) at 20:2-19; 75:18-76:2.
21 Nalbandian proposed a two-year term and for Lust to receive a monthly advance
22 against a share of future revenues from the projects he developed. Ex. 3 at 118:16-
23 122:14; 12/20/12; Ex. 4. In January 2013, Lust, Nalbandian, and AL AU’s Chief
24 Financial Officer, Rob Cornish, developed a business plan. Ex. 2 at 98:16-20; 177:21-
25 178:17. Cornish, thereafter, provided Lust with a draft of what would become the
26 SFA along with the agreed to business plan. Ex. 3 at 177:1-180:4; 2/21/13 Email
27 from Cornish to Lust (Depo. Exhibit 1015), a copy of which is part of Exhibit 5. The
28 plan projected ALE would earn revenues by 2014, and Lust’s share would be
recouped from his advances. Id.
3
1 From its first draft, the relationship was “at will” and clearly stated that it was a
2 “contractor/employment” arrangement. Ex. 5 at AL011884-85. While this initial
3 draft reflected “[f]urther terms to be negotiated,” that provision was eliminated in the
4 subsequent draft. Ex. 3 at 180:5-182:13, 2/26/13 email from Cornish to Lust (Depo.
5 Exhibit 1016) a copy of which is Exhibit 6.
6 After months of discussion, Lust signed on March 1, 2013, a version of the
7 SFA, but indicated he still had questions. Lust asked about his credit rights and what
8 “attachment” meant in the context of the SFA. Ex. 3 at 202:25-204:17; 207:1-19;
9 210:8-211:2; 3/3/13 email from Cornish to Lust (Depo. Exhibit 1018) a copy of which
10 is Exhibit 7. Lust indicated that the phrase “to which you are entitled to be attached”
11 could be construed to negate any right he had to credit or compensation after the
12 SFA’s term. Id. Cornish responded that “to which you are entitled to be attached”
13 referred to Lust’s right to receive credit and compensation on projects he worked on
14 consistent with the 2 or 5-year sunset provision of the SFA. Ex. 3 at 207:1-19; 208:9-
15 25; Ex. 7. With respect to credit, Cornish told Lust that ALE could not guarantee him
16 credit because credit determinations were at the studio’s discretion. Ex. 3 at 203:9-
17 204:17, Ex. 7.
18 With these clarifications, on March 14, 2013, Lust executed a slightly revised
19 version of the SFA that he agrees is his binding agreement with ALE. Ex. 3 at 33:4-
20 21; Ex. 1. Lust signed the SFA on his own volition because he “wanted to do the
21 deal” and “because it was … what we agreed to.” Ex. 3 at 58:9-20; 212:22-214:23.
22 ALE negotiated the SFA without counsel. Ex. 34 at 105:17-21.
23 C. The SFA
24 The preamble to the SFA – which takes the form of a letter from Nalbandian to
25 Lust – recognizes that it will “form the basis of any long form (sic) contractual
26 relationship executed between us.” Ex. 1, Ex. 2 at 171:23-172:4. Nalbandian notes
27 that he “has defined [Lust’s] role and title as a Producer” because “President of
28 production conveys a role as an employee and less as a producing partner. It would
also work against us in validating the contractor relationship.” Ex. 1; Ex. 2 at 172:22-
4
1 173:20. Its term was two years, and Lust agrees that ALE had no obligation to extend
2 it. Ex. 1; Ex. 3 at 40:2-19. The SFA states that Lust’s producing services “will be
3 exclusive for the [t]erm” and that “[c]opyright[s] and all related IP in the services
4 [performed under the SFA were] to be assigned to Animal Logic.” Ex. 1; Ex. 2 at
5 251:12-25. The SFA recognizes that Lust will be engaged by ALE through his loan-
6 out company SAJ. Ex. 1; Ex. 2 at 28:3-19. Lust would have the right to
7 reimbursement of reasonable expenses approved in advance. Ex. 1; Ex. 3 at 60:8-13.
8 In exchange for his services, Lust would receive “[a]dvances of $220,000 [per
9 annum] payable monthly ….” Ex. 1. These advances were fully recoupable against
10 Lust’s share of Net Revenues. Ex. 1. The SFA provides that “there is no recoupment
11 in year 1, 25% only in year 2, 50% in year 3 and we go to 100% in year 4.” Ex. 1.
12 Lust’s share of Net Revenues is broken down between a share of Producer Fees and
13 Profit Participation. Ex. 1.
14 The section entitled “Attachments” provides that “[i]n the event your contract
15 with ALE is terminated for any reason or not renewed after the initial term, you will
16 be entitled to be attached to the following: any [preexisting ALE] film projects….
17 green lit (sic) for production within a two (2) year period from the date of termination;
18 [and] [a]ll other projects agreed as commencing development after the
19 Commencement [Date] greenlit for production within a five (5) year period from the
20 date of termination.” Ex. 1; Ex. 2 at 57:12-17; 115:20-116:4; Ex. 34 at 40:16-41:6;
21 69:8-18. Lust agrees that there is nothing ambiguous about this sunset clause. Ex. 3
22 at 361:19-364:12.
23 With respect to credits, the SFA provides for “‘Producer’ or ‘Executive
24 Producer’, subject to consideration such as qualification for Australian Producer
25 Offset rebates … and approvals of financiers and distributors (if required).” Ex. 1.
26 With respect to projects first developed at ALE during the term “to which [Lust is]
27 entitled to be attached, [Lust] is to be accorded a credit no less than ‘Executive
28 Producer.’” Ex. 1; Ex. 34 at 114:22-115:19.

5
1 During the term of the SFA, ALE did not earn any revenues from any project
2 on which Lust rendered services. Ex. 2 25:24-26:16; Ex. 3 at 26:10-28:9.
3 D. The Peter Rabbit Pitch
4 One project Lust developed during the term of the SFA was a hybrid (part live
5 action, part animation) adaptation of Peter Rabbit. Lust identified the property,
6 recruited Rob Lieber to be the screenwriter, and helped develop the project’s pitch.
7 Ex. 3 at 273:22-277:16; Hludzinski Depo. (Exhibit 10) at 62:20-66:21.
8 ALE believed it needed to partner with a recognized production company to
9 interest a studio in this project. Ex. 3 126:2-23. For this reason, ALE decided to pitch
10 Peter Rabbit to Olive Bridge, William Gluck’s production company. Ex. 3 127:8-18.
11
12
13 Late in 2013, Lieber pitched Peter
14 Rabbit to Gluck over the phone. Ex. 11 at 35:18- 37:10; 44:18-45:4. The pitch
15 included a discussion of potential tax incentives from the Australian Government, as
16 well as Twentieth Century Fox Film Corporation’s (“Fox”) interest in the project. Ex.
17 11 at 38:10-24, 67:15-68:9; 93:13-94:8. Due to Fox’s interest, Gluck promptly called
18 the President of Production for Columbia – his contact for his contract with Sony –
19 and asked her to buy the Peter Rabbit project. Ex. 11 at 39:17-41:18.
20
21 .
22 In mid-February 2014, Columbia provided to ALE a first draft of a Producer’s
23 Agreement. Ex. 3 at 132:3-133:16, 2/13/14 email from Greenwald to Nalbandian
24 (Depo. Exhibit 1011), a copy of which is Exhibit 14. This first draft showed
25 Columbia contracting with ALE AU to cause Nalbandian and Lust to provide
26 producing services as required by Columbia. Ex. 14 at §§ 2 and 3. Nalbandian and/or
27 Lust would receive credit as producers of Peter Rabbit only if the project was
28 completed under their supervision. Ex. 14 at § 5. The initial draft also included a
provision that Columbia had no obligation to use the services of ALE AU,
6
1 Nalbandian, or Lust, and set forth the circumstances pursuant to which Columbia
2 would have the obligation to pay the producer’s fee to ALE, even if one or both of
3 their services were not used – commonly referred to as a “Pay or Play” provision. Ex.
4 14 at § 9. The draft required ALE AU to make, at Columbia’s discretion, either
5 Nalbandian or Lust exclusively available to the production, meaning that he could
6 work on other work during the production of Peter Rabbit. Ex. 14 at § 3.2.
7 E. The COE Of Peter Rabbit
8 At this same time, Lieber informed Lust that Columbia would not allow him to
9 work on a script until the producers signed COEs – reflecting that their intellectual
10 property in the project would be transferred to Columbia – which is standard in the
11 industry. Ex. 3 at 242:24-246:15; 2/14/14; Rosen Depo. (Exhibit 33) at 42:23-43:18;
12 Hausfater5 Depo. (Exhibit 28) at 50:10-22; email from Lust to Lieber (Depo. Exhibit
13 1025) a copy of which is Exhibit 15.
14 Lust received an execution copy of his COE by March 13, 2014, but he did not
15 sign it. Ex. 3 at 246:17-247:23; 3/13/14 email from Cornish to Nalbandian (Depo.
16 Exhibit 1026) a copy of which is Exhibit 16. On April 4, 2014, Lust informed
17 Cornish that he wanted his personal attorney, Phillip Rosen, to review the matter first.
18 Ex. 3 at 220:6-23, 248:21-249:25. On April 8, Lust sent Nalbandian an email relating
19 his conversation first with Rosen and then Cornish. Ex. 3 at 217:8-17; 4/8/14 email
20 from Lust to Nalbandian (Depo. Exhibit 1020) a copy of which is Exhibit 17. Lust
21 told Nalbandian that Rosen did not believe the SFA reflected a partnership, but treated
22 Lust as an employee. Ex. 3 at 216:12-14. Lust conveyed Rosen’s suggestion that
23 Lust have his own signature line of the Peter Rabbit Producers Agreement and that he
24 negotiate his own producer fee. Ex. 3 at 221:23-223:22, 251:6-22. While he had
25 discussed this with Cornish, Lust relayed that Cornish told him to speak to
26 Nalbandian. Ex. 3 at 234:2-235:25; Ex. 34 at 118:20-119:22. Cornish informed Lust
27 at this time that he had a draft long-form agreement. Ex. 3 at 235:22-236:1; Ex. 17;
28
5
Jere Hausfater is Lust’s retained expert witness in this matter.
7
1 Ex. 34 at 47:3-19, 48:5-7. Cornish told Lust that if Lust intended the long-form to be
2 a basis for renegotiating his relationship with ALE, Cornish would not invest any
3 more time into the draft he had “because all it was doing was confirming the [SFA] as
4 it stood.” Ex. 34 at 54:1-55:3, 117:23-118:13.
5 Lust signed the COE for Peter Rabbit on April 9, 2014, before he spoke with
6 Nalbandian. Ex. 3 at 228:1-231:17, 238:3-11, 240:2-5; 4/9/14 email from Lust to
7 Emanuel (Depo. Exhibit 1024), a copy of which is Exhibit 18. He claims he did not
8 want anything in exchange for his signature on the COE. Ex. 3 at 252:20-22. Lust
9 did not sign the COE based on anything Nalbandian told him. Ex. 3 at 231:11-17.
10 After speaking with Lust, Nalbandian decided not to forward to Lust the draft
11 long-form agreement because Lust was already “looking to change the terms of [their]
12 agreement, [so] there was no point in going to a long-form based on the agreement
13 [they] had.” Ex. 2 at 279:5-21, 30:19-31:4. Nalbandian “didn’t want to engage in the
14 long-form conversation until [he] had a clear point of view as to whether [they] would
15 reach agreement on terms for a new agreement.” Ex. 2 at 318:24-319:7. For his part,
16 Lust was “100 percent” certain that the long-form would contain materially different
17 terms. Ex. 3 at 44:8-16. Lust expected that the long-form agreement would include
18 (1) his attachment to projects in perpetuity; (2) 25% share of Producer Fees and Profit
19 Participation regardless of whether he was still under contract with ALE; and (3) his
20 rights extending to any sequels or prequels. Dkt. 19 at 15.
21 F. The Peter Rabbit Producers Agreement And The Producers Offset
22 Following Lust’s execution of the COE, Columbia provided a revised version
23 of the Peter Rabbit Producers Agreement – version 3 – that Lust received on the same
24 day as Nalbandian. Ex. 3 at 302:17-303:22, 6/30/14 email from Staunton to Lust
25 (Depo. Exhibit 1035), a copy of which is Exhibit 19. This version retains Columbia’s
26 ability not to utilize the services of Nalbandian or Lust and did not change the credit
27 provision. Ex. 19 at §§ 5 and 9.
28

8
1
2
3
4 While Lust claims
5 these changes outraged him, he told no one. Ex. 3 at 307:25-308:21.
6
7 In the interim, the term of the SFA lapsed. Ex. 33 at
8 59:16-60:3; 65:3-8; 2/4/15 letter from Brenner to Rosen (Depo. Exhibit 1045), a copy
9 of which is Exhibit 9. “When [they] parted ways [Nalbandian] made a point of calling
10 every company individual that [they had worked] with together … and explained that
11 [they had] had a very successful two years together but [their] styles were somewhat
12 different and, therefore, [Nalbandian] wasn’t going to continue the relationship. But
13 [he] was very open to [Lust] continuing to be involved in whatever way [his] partners
14 saw fit going forward.” Ex. 2 at 58:25-60:1. Since Lust would no longer be under
15 contract to ALE, Nalbandian did not believe he had the power to enforce that Lust “be
16 on the set or participate in the project. It would have been by invitation” from the
17 third-party. Ex. 2 at 62:5-18.
18 When Nalbandian informed Gluck that he was not renewing Lust’s contract,
19 Gluck told Nalbandian that he preferred that Lust not be in the room in the future with
20 respect to Peter Rabbit. Ex. 2 at 58:25-60:1; Ex. 10 at 27:2-28:19; Ex. 11 at 10:18-
21 11:8; Lieber Depo. (Exhibit 21) at 32:3-14; 33:22-34:9.
22
23
24 The Producer Offset
25 is Australia’s most attractive incentive – a 40 percent tax rebate of qualifying
26 expenditures for qualifying films – i.e. films satisfying the Significant Australian
27 Content test (“SAC”). Ex. 2 at 336:8-337:1; Ex. 20 at 26:23-27:18; Ex. 20 at 81:25-
28 82:16. No film with non-Australian writers, a non-Australian director, and two non-
Australian producers has ever satisfied the SAC and qualified for a Producer Offset.
9
1 Ex. 28 at 132:3-25.
2
3
4
5
6
7
8 Columbia had no obligation to go forward with Peter Rabbit if it did not
9 receive the offset. Ex. 3 at 134:16-25, 187:10-15.
10 While the draft Producers Agreement still indicated that Lust would receive
11 producing credit, credit was conditioned on the project being completed under his
12 supervision.
13
14
15 Sometime before March of 2016, ALE’s counsel contacted Columbia and
16 requested that Lust be afforded at least executive producer credit. Ex. 20 at 126:7-21.
17
18
19
20 .
21 In April 2016, ALE’s counsel forwarded to Lust’s counsel execution copies of
22 the Peter Rabbit Producers Agreement with the request that Lust execute relevant
23 portions. Ex. 33 at 113:14-114:5, 130:17-131:17; 4/24/16 email from Emanuel to
24 Rosen (Depo. Exhibit 1055), a copy of which is Exhibit 23; Version 7 of the Peter
25 Rabbit Producers Agreement (Depo. Exhibit 1057), a copy of which is Exhibit 24.
26 While not a party to the Producers Agreement itself, Lust was to execute an
27 inducement letter – whereby Lust agreed to be bound by its terms. Ex. 33 at 132:16-
28 133:9. Lust told ALE he wanted changes to the Producers Agreement before he
would sign anything, and ALE relayed his request to Columbia. Ex. 33 at 137:12-
10
1 140:17; Ex. 20 at 169:10-171:2; 5/10/16 email from Emanuel to Marshal (Depo.

2 Exhibit 1037), a copy of which is Exhibit 25. Lust wanted (1) his own signature line
3 on the Producers Agreement; (2) a guarantee of producer credit; and (3) to be actively
4 involved in the production. Ex. 20 at 169:10-171:2; Ex. 25.
5
6
7
8
9
10
11
12
13
14 Lust’s own expert agrees that Lust is attached to
15 Peter Rabbit as a producer, as that term would be understood within custom and
16 practice in the industry, as does his own attorney. Ex. 28 at 111:12-19; Ex. 33 at
17 140:1-141:5.
18 Upon receiving commitment, that it would receive its producer’s fee for Peter
19 Rabbit, ALE AU promptly provided, and continues to provide, Lust with accountings
20 of his share and how it would be recouped from the advance. Ex. 3 at 336:22-338:16,
21 e.g. 10/10/16 email from Cornish to Lust (Depo. Exhibit 1039), a copy of which is
22 Exhibit 29. Lust never notified ALE of any objection. Ex. 3 at 336:22-338:16.
23 G. The Other Projects Lust Developed While With ALE
24 Lust developed a number of additional projects while under contract with ALE,
25 but none is currently in production. Ex. 2 at 26:5-13. ALE asked Lust to execute
26 COEs during the term of the SFA on a number of these projects, and Lust refused and
27 continues to refuse. Ex. 3 at 260:4-8; Ex. 33 at 78:3-82:10; 9/22/14 email from Lust
28 to Cornish (Depo. Exhibit 1046), a copy of which is Exhibit 30; 1/29/15 letter from
Brenner to Rosen (Depo. Exhibit 1047), a copy of which is Exhibit 31; Ex. 34 at
11
1 whole could not lead a rational trier of fact to find for the nonmoving party, there is no
2 ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
3 574, 587 (1986) (quoting First National Bank of Arizona v. Cities Service Co., 391
4 U.S. 253, 289 (1968)).
5 B. ALE Is Entitled To Summary Judgment Against Lust On Its Breach
6 Of Contract Claim Based On Lust’s Refusal To Execute Coes
7 “The elements of a breach of contract claim are: (1) the existence of a valid
8 contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's
9 breach, and (4) the resulting damages to plaintiff.” Abbit v. ING USA Annuity and
10 Life Insurance Company, 252 F.Supp.3d 999, 1009 (C.D.Cal. 2017) (citing Reichert v.
11 Gen. Ins. Co. of Am., 68 Cal.2d 822, 830 (1968)). Every contract possesses an
12 implied covenant of good faith and fair dealing in which “neither party will do
13 anything which will injure the right of the other to receive the benefits of the
14 agreement.” Foley v. Interactive Data Corp., 47 Cal.3d 654, 684 (1988). A breach of
15 this covenant – which is a species of a breach of contract – requires proof that a party
16 has “unfairly interfered with the plaintiff's rights to receive the benefits of the
17 contract.” Rosenfeld v. JPMorgan Chase Bank, NA, 732 F.Supp.2d 952, 968 (N.D.
18 Cal. 2010) (citing Judicial Council of California Civil Jury Instruction 325); Guz v.
19 Bechtel National, Inc. 24 Cal.4th 1089, 1110 (2000) (“The covenant thus cannot “be
20 endowed with an existence independent of its contractual underpinnings.” (quoting
21 Waller v. Truck Ins. Exchange, Inc. 11 Cal.4th 1, 36 (1995)).
22 There is no dispute that the SFA is a valid and binding contract (SS ¶2) or that
23 Lust received all advances and sums due him during its term (SS ¶3). In exchange for
24 these advances, Lust agreed to provide exclusive producing services during the term,
25 which included the obligation that “[c]opyright[s] and all related [intellectual
26 property] in the[se] services [was] to be assigned to [ALE].” SS ¶4. ALE hired Lust
27 to source and develop creative properties that then could be sold to studios. SS ¶5.
28 During the term of the SFA, ALE asked Lust to execute COEs requested by studios

13
1 for projects he was then working on in addition to Peter Rabbit. SS ¶6. Lust refused,
2 and continues to refuse, to sign any of other requested COEs. SS ¶7.
3 At the time, ALE began requesting Lust to execute these additional COEs, ALE
4 had fully performed all of its obligations under the SFA. SS ¶8. The COEs that ALE
5 has asked Lust to sign are standard in the industry, and his refusal interferes with ALE
6 deriving the benefit from the SFA’s requirement that Lust assign his intellectual
7 property. SS ¶9. Finally, Lust concedes that his actions will likely cause studios not
8 to proceed with a project, which without question damages ALE. SS ¶10.
9 Lust may argue that his obligation to execute any COE was conditioned on him
10 receiving a long-form contract. “Conditions precedent are[, however,] disfavored and
11 will not be read into a contract unless required by plain, unambiguous language.”
12 Effects Associates, Inc. v. Cohen, 908 F.2d 555, 559 n. 7 (9th Cir. 1990) (rejecting
13 claim that obligation to assign copyright were conditioned on payment for visual
14 effect). “[I]t is the general rule in contract interpretation that stipulations in an
15 agreement [– like the contemplation of a later long-form agreement –] are not to be
16 construed as conditions precedent unless such construction is required by clear,
17 unambiguous language; and particularly so where a forfeiture would be involved or
18 inequitable consequences would result.” Alpha Beta Food Markets v. Retail Clerks,
19 45 Cal.2d 764, 771 (1945). Lust’s own expert agrees that there is no plain or
20 unambiguous language in the SFA that could support that Lust’s obligations under the
21 SFA were conditioned on the parties executing a long-form agreement. SS ¶11. In
22 fact, it is common in the entertainment industry for a short-from agreement like the
23 SFA not to be replaced by a long-form and still be fully enforceable.7 SS ¶12 [Ex. 33
24 at 45:3-13]. The failure to replace a short form agreement with a long-form also does
25
7
26 See Barnett, Hollywood Deals: Soft Contracts for Hard Markets, 64 Duke L.J. 605,
607 (2015) (“The Hollywood motion-picture industry regularly enters into significant
27 commitments under various species of incomplete agreements: oral communications,
informal correspondence, deal memoranda, and draft agreements that are negotiated
28 throughout a production and often remain unsigned.”). A copy is available at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2118918.
14
1 not amount to a breach of contract. SS ¶13; Cf. 4Kids Entertainment, Inc. v. Upper
2 Deck Co., 797 F.Supp.2d 236, 246 (S.D.N.Y. 2011) (“While the Term Sheet provides
3 for the execution of a long-form agreement at some unspecified point in the future,
4 that does not render the Term Sheet a non-integrated contract.”).
5 Since the essential purpose of the SFA was to develop projects that could be
6 sold to studios for production, and that studios are not likely to produce a relevant
7 project without Lust first executing a COE, his breach is material and discharged ALE
8 from any obligations under the SFA from that point forward. Pry Corp. of America v.
9 Leach, 177 Cal.App.2d 632, 639 (1960) (“‘In promises for an agreed exchange, any
10 material failure of performance by one party not justified by the conduct of the other
11 discharges the latter’s duty to give the agreed exchange even though his promise is not
12 in terms conditional,’” quoting Restatement (First) of Contracts, § 274 (1932)
13 Coughlin v. Trans World Airlines, Inc., 847 F.2d 1432, 1434 (9th Cir. 1988) (“It is
14 axiomatic that a material breach of an agreement warrants rescission.”). At a
15 minimum, Lust’s breach entitles ALE to a restitutionary remedy or damages. Federal
16 Deposit Ins. Corp. v. Air Florida System, Inc., 822 F.2d 833, 841 (9th Cir. 1987) (“a
17 breach insufficiently material to form the basis for rescission may entitle the aggrieved
18 party to a restitutionary remedy or damages.”). As a matter of law, Lust must return
19 the advances ALE paid to him during the SFA term and ALE should be discharged
20 from any future obligations to Lust with respect to any project for which he has not
21 executed a requested COE.
22 C. The Defendants Are Entitled To Summary Judgment On Lust’s
23 Breach Of Contract Claims
24 Lust alleges that the defendants breached the SFA in two respects (1) he was
25 not paid properly under the contract; and (2) “by not allowing Lust to be attached as
26 defined in [the SFA] and taking actions to prevent Lust from being attached to the
27 projects.” Dkt. 1 at 20. Each will be taken in order. First, however, Lust’s entire
28 breach of contract claim fails because he materially breached the SFA before any of
the alleged breaches he now asserts occurred. “‘A party complaining of the breach of
15
1 a contract is not entitled to recover therefor unless he has fulfilled his obligations.’”
2 Wiz Technology, Inc. v. Coopers & Lybrand, 106 Cal.App.4th 1, 12 (2003) (quoting
3 Pry Corp., 177 Cal.App.2d at 639)). During the term of the SFA, and before any
4 conduct occurred that he cites as a breach, Lust refused to execute COEs for projects
5 he worked on, in direct breach of his obligation that “[c]opyright[s] and all related IP
6 [will] be assigned to Animal Logic.” SS ¶14.
7 1. All Monies Due Lust Under The SFA Have Been Paid Or Have
8 Been Duly Accounted
9 Lust cannot create a material question of disputed fact as to whether ALE has
10 paid or accounted for all monies due him under the SFA. He concedes ALE paid him
11 what he was due during the term of the SFA. SS ¶15. ALE similarly accounted to
12 him his share of the producer fee received by ALE for Peter Rabbit, which was 12.5%
13 because all amounts were first received after the term of the SFA. SS ¶16. The SFA
14 allowed ALE to recoup this entire amount from the advances made to him during the
15 term of the SFA because ALE did not receive any of this amount until fourth year
16 after the commencement date of the SFA. SS ¶17. There is no evidence from which a
17 question of fact can be created that sums other than those already paid or accounted
18 for to Lust are due, or must be accounted to, him. SS ¶18.
19 2. ALE Has Honored Its Obligations Under The SFA With
20 Respect To Projects To Which Lust Is Entitled To Be Attached
21 Lust argues “attachment” means that ALE had an affirmative obligation not
22 only to ensure that he receive credit and compensation, but to ensure that Lust actually
23 perform producing services on any project greenlit after its term, but within its sunset
24 provision. Ex. 3 at 336:7-18. His construction is absurd.
25 “The interpretation of a contract is a judicial function.” Wolf v. Walt Disney
26 Pictures and Television, 162 Cal.App.4th 1107, 1124 (2008). “A contract must be so
27 interpreted as to give effect to the mutual intention of the parties as it existed at the
28 time of contracting ….” Cal. Civ. Code § 1636. “The parties’ objective intent,
demonstrated by the contract words and the contract as a whole, rather than the
16
1 parties’ subjective intent, controls interpretation.” Yi v. Circle K Stores, Inc., 258

2 F.Supp.3d 1075, 1083 (C.D. Cal. 2017). “If the parties disagree about the contractual
3 meaning, the court should us a two-step approach. First, the court asks whether, as a
4 matter of law, the contract terms are ambiguous; that is, the court considers extrinsic
5 evidence to determine whether the contract is reasonably susceptible to a party’s
6 proffered interpretation.” Id. “Ambiguity, however, does not arise merely because a
7 word or phrase has multiple meanings, and ‘ambiguity cannot be based on a strained
8 instead of reasonable interpretation of the contract's terms.’” Id. (quoting Univ. Green
9 Sol., LLC v. VII Pac Shores Inv., LLC, 2014 WL 1994880, at *2 (N.D. Cal. May 15,
10 2014)). Only if ambiguity persists, “[does] the court [then] admits extrinsic or parol
11 evidence to help interpret the contract.” Id. (plaintiff’s construction “mutually
12 agreeable” held to be “a strained and unreasonable interpretation.”).
13 Nothing about the use of the word “attachment” suggests that it imposes upon
14 ALE a duty to ensure that Lust actively produces any project greenlit by a studio after
15 the SFA’s term expired. As Cornish responded to Lust’s question, attachment
16 referred to Lust’s right to continue to receive credit and compensation consistent with
17 the sunset clause in the SFA. SS ¶19. Lust, himself agrees that it is the studio, rather
18 than the production company, that determines who works on a studio production. SS
19 ¶20. While credit and compensation were clearly discussed in negotiating the SFA,
20 there is no evidence that Lust even suggested to ALE that he expected ALE to cause a
21 studio to use his producing services after its term expired. SS ¶21.
22 A simple example demonstrates the absurdity of Lust’s construction. Assume
23 two partners in a law firm convince a corporation to retain their firm in a contingent
24 litigation matter. Both are identified as trial counsel in the retainer agreement. One
25 partner decided to leave the firm, but the firm agrees that the partner will receive his
26 share of any contingency and public credit. Is it reasonable to assume that at the
27 outset the departing partner expected that the firm would ensure he continued to work
28 on the case if he left? Has the departed partner suffered a compensable injury despite
receiving credit and compensation simply because he did not work on the case after he
17
1 left? Obviously, the client, and not the firm, decides whether the departing lawyer
2 continues to work on the case. Here, like the example, the studio, not the production
3 company, decides whether a former contractor will work on a motion picture. SS ¶20.
4 Both his personal lawyer and the expert he retained for this case agree with Lust
5 that the studio – not ALE – would determine how it will perform the production
6 services on any project purchased from ALE. SS ¶20. No one asserts anything about
7 the SFA requiring ALE to ensure that Lust be “Pay and Play” – a right to both be paid
8 and to perform services – with respect to any greenlit project. SS ¶22. In fact, his
9 expert admits that Lust is attached to the Peter Rabbit film, as that term would be
10 understood in the industry, even though Lust did not actually perform any post-
11 greenlight production services on the project. SS ¶23.
12 Even if “attachment” could be construed to impose some obligation on ALE
13 with respect to Lust’s ability to provide active production services on a project
14 greenlit by a studio, there is simply no evidence that ALE did anything to interfere
15 with Lust’s ability to provide such services. SS ¶24. “When [they] parted ways
16 [Nalbandian] made a point of calling every company individual that [they had
17 worked] with together … and explained that [they had] had a very successful two
18 years together but [their] styles were somewhat different and, therefore, [Nalbandian]
19 wasn’t going to continue the relationship. But [he] was very open to [Lust] continuing
20 to be involved in whatever way [his] partners saw fit going forward.” SS ¶25. ALE
21 did not have the power to enforce that Lust “be on the set or participate in the project.”
22 SS ¶26. At best, as it did with Peter Rabbit, ALE could inform a studio that Lust
23 wants to be an active producer on a project and leave it to the studio to decide whether
24 to use his services. SS ¶27.8
25
26
8
27 Lust may claim that ALE breached the SFA by not affording him producer credit on
Peter Rabbit. The SFA, however, explicitly provides that he can be afforded
28 executive producer credit if necessary to obtain a Producer Offset, and Columbia
determined that it needed to give Lust such a credit in order to qualify. SS ¶28.
18
1 D. The Defendants Are Entitled To Summary Judgment On Lust’s

2 Breach Of The Covenant Of Good Faith And Fair Dealing Claim
3 “The covenant of good faith and dealing, implied in every contract, exists
4 merely to prevent one contracting party from unfairly frustrating the other party’s
5 right to receive the benefit of the agreement actually made.” Guz v. Bechtel National,
6 Inc. 24 Cal.4th 1089, 1110 (2000) (emphasis in original). “It cannot impose
7 substantive duties or limits on the contracting parties beyond those incorporated in the
8 specific terms of their agreement.” Id. (covenant did not prevent termination of at-
9 will employee). Here, Lust’s breach of the covenant of good faith and fair dealing
10 claim depends on the Court adopting his construction of attachment. To the extent the
11 Court does not find that “attachment” as used in the SFA, imposes an affirmative
12 obligation on ALE to cause studios to use Lust’s production services on any project,
13 his claim for breach of such a duty would not be founded on “a benefit of the
14 agreement actually made” and fails as a matter of law.
15 E. The Defendants Are Entitled To Summary Judgment On Lust’s
16 Breach Of Fiduciary Duty Claims
17 Lust’s claim for breach of fiduciary duty fails first as a matter of law because he
18 fails to prove any breach of the SFA. Zorich v. Petroff, 152 Cal.App.2d 806, 810
19 (1957) (immaterial whether partnership was created because no breach of contract
20 proven). Ignoring this threshold failing, “[t]he elements of a cause of action for
21 breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the
22 fiduciary duty; and (3) damage proximately caused by the breach.” Gutierrez v.
23 Girardi, 194 Cal. App. 4th 925, 932 (2011) (internal quotation and citation omitted).
24 “Whether a fiduciary duty exists is generally a question of law.” Marzec v. Calif.
25 Pub. Emp. Retirement Sys., 236 Cal.App.4th 889, 915 (2015). “‘[B]efore a person can
26 be charged with a fiduciary obligation, he must either knowingly undertake to act on
27 behalf and for the benefit of another, or must enter into a relationship which imposes
28 that undertaking as a matter of law.’” City of Hope Nat. Med. Ctr. v. Genentech, Inc.,

19
1 43 Cal.4th 375, 386 (2008) (quoting Comm. on Children's Television, Inc. v. General
2 Foods Corp., 35 Cal.3d 197, 221 (1983)).
3 Where, as here, a claim is made that a fiduciary relationship was created by
4 contract, “the language must ‘clearly establish a fiduciary relationship.’” Poly Plant
5 Project, Inc. v, RMT International, Inc. 2012 WL12887398, *7 (C.D. Cal. 2012)
6 (quoting First Citizen Fed. Sav. And Loan Ass’n v. Worthen Bank and Trust, 919 F.2d
7 510, 514 (9th Cir. 1990). Lust’s subjective belief that the SFA formed a partnership is
8 not enough. Colby v. Newman, 2013 WL 12124390 *21 (C.D. Cal. 2013); Epstein v.
9 Stahl, 176 Cal.App.2d 53 (1959) (“The relationship between the parties is not to be
10 determined by the label which the pleader gives to an agreement.”). Lust’s own
11 lawyer told him that the SFA did not create the partnership. SS ¶29.
12 “An essential element of a partnership or joint venture is the right of joint
13 participation in the management and control of the business.” Bank of California v.
14 Connelly, 35 Cal.App.3d 350, 364 (1973). Nothing in the SFA suggests that Lust
15 would have such control. SS ¶30. Instead, Nalbandian alone furnished “all of the
16 capital and all other expenses for the acquisition of the properties,” he “alone w[as] to
17 share in any losses” and the projects pursued were at Nalbandian’s ultimate discretion.
18 Bank of California, 35 Cal.App.3d at 365; Zorich, 152 Cal.App.2d at 801; SS ¶31.
19 “California law generally does not impose fiduciary duties on commercial
20 parties in arms’ length relationships, but may find a fiduciary relationship in special
21 situations, such as when unusual circumstances give rise to an unusual level of trust or
22 vulnerability.” Kabushiki Kaisha Megahouse v. Angar Co. LLC, 2014 WL 5456523,
23 *10 (C.D. Cal. 2014). Courts construing California law repeatedly conclude that an
24 agreement to jointly develop and exploit intellectual property alone is insufficient to
25 impose fiduciary obligations. City of Hope, 43 Cal.4th at 392 (“the trial court here
26 erred in instructing the jury that a fiduciary relationship is necessarily created when a
27 party, in return for royalties, entrusts a secret idea to another to develop, patent, and
28 commercially develop”); Colby v. Newman, 2013 WL 12124390, *21 (C.D. Cal.
2013) (“an agreement to develop a patent does not necessarily give rise to a fiduciary
20
1 duty”); Wolf v. Superior Court, 107 Cal.App.4th 25, 32 (2003) (fact that parties would
2 jointly share in the profits from exploiting a project insufficient).
3 F. Defendants Are Entitled To Summary Judgment On Lust’s Various
4 Fraud Claims
5 Lust pleads claims for intentional fraud and concealment. Dkt. 19 at 24-30.
6 His claim of constructive fraud fails with his breach of fiduciary duty claim. Michel v.
7 Palos Verdes Network Group, Inc., 156 Cal.App.4th 756, 762 (2007) (“Constructive
8 fraud is a unique species of fraud applicable only to a fiduciary or confidential
9 relationship.”).
10 “‘To state a claim for fraud or intentional misrepresentation under California
11 law, a Plaintiff must allege: (1) misrepresentation (false representation, concealment,
12 or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to
13 induce reliance; (4) justifiable reliance; and (5) resulting damage.’” Abbit v. ING USA
14 Annuity and Life Insurance Company, 252 F.Supp.3d 999, 1024-25 (C.D. Cal. 2017);
15 Baltazar v. Apple, Inc., No. CV-10-3231-JF, 2011 WL 588209, at *3 (N.D. Cal. Feb.
16 10, 2011). Lust cannot establish questions of fact with respect to these elements.
17 Lust asserts three affirmative misrepresentations, two of which he contends
18 caused him to enter the SFA, and the third he contends caused him to sign the COE
19 for Peter Rabbit. (1) Nalbandian told Lust that they would pursue a five-year
20 partnership; (2) Nalbandian and Cornish represented a long-form agreement would
21 more fully set forth the terms of their partnership; and (3) Lust signed the Peter Rabbit
22 COE relying on representations that he would be a “Priority Producer.” SS ¶32. Lust
23 asserts three facts that were concealed; again two directed to his entry of the SFA and
24 one to induce him to sign the COE for Peter Rabbit. (1) Defendants defined
25 “attachment” differently than set out in the SFA; (2) Defendants defined “advances”
26 differently than set forth in the SFA; and (3) Defendants intended to remove Lust as a
27 producer on Peter Rabbit when he signed the COE for that project. SS ¶33.
28 One cannot be fraudulently induced to do what one is already contractually
obligated to do. California and Hawaiian Sugar Co. v. Sun Ship, Inc., 794 F.2d 1433,
21
1 1439 (1986) (“No damage is inflicted on a party which is induced to perform its own
2 contract.”); Bank of the West v. Valley Nat. Bank of Arizona, 41 F.3d 471, 477 (9th
3 Cir. 1994) (“ Plaintiff “was contractually obligated to make the October payment ….
4 so the payment was not made based upon a fraudulent concealment”). Lust’s
5 misrepresentation and concealment claims tied to his execution of the COE fail for
6 this reason. SS ¶34.
7 Both of Lust’s remaining affirmative misrepresentation claims fail as a matter
8 of law due to the lack of any reasonable reliance. Lust could not reasonably rely on
9 any representation that he was entering a five-year partnership with Nalbandian
10 because the SFA clearly states that it had a two-year term. SS ¶35; Hadland v. NN
11 Inv'rs Life Ins. Co., 24 Cal.App.4th 1578, 30 Cal.Rptr.2d 88, 95 (1994) (holding that
12 reliance on representations conflicting with “the express provisions of the written
13 contract” was “unjustified as a matter of law”); Alling v. Universal Manufacturing
14 Corp., 5 Cal.App.4th 1412, 1437 (1992) (parol evidence of fraud is not admissible to
15 show a promise “directly at variance with the promise of the writing.”) Similarly,
16 since custom and practice dictates that a long-form agreement would not materially
17 alter the terms of the SFA (SS ¶36), Lust, as an experienced entertainment executive
18 (SS ¶37), could not reasonably rely that it would. Hoffman v. 162 North Wolfe LLC,
19 228 Cal.App.4th 1178, 1197-1198 (2014) (affirming grant of summary judgment for
20 lack of reasonable reliance by sophisticated real estate agent); Hollywood Foreign
21 Press Ass'n v. Red Zone Capital Partners II, 870 F.Supp.2d 881 (2012) (“Evidence of
22 custom and practice applies regardless of whether the signatories are industry insiders,
23 because ‘when there is a custom in a certain industry, those engaged in that industry
24 are deemed to have contracted in reference to that practice unless the contrary
25 appears.’” (quoting Midwest Television, Inc. v. Scott, Lancaster, Mills & Atha, Inc.,
26 205 Cal.App.3d 442, (1988)). Additionally, there is no evidence that, at the time of
27 contracting, any defendant represented to him that it would. SS ¶38.
28 Lust’s two remaining purported omissions are merely contentions that
defendants did not intend to perform their obligations under the SFA. Specifically,
22
1 Lust asserts that defendants did not intend to “attach” him to projects or to treat his
2 “advances” as he understood they would at the time of contracting. “A fraud claim
3 fails when it merely states an alleged breach of contractual duties and does not
4 concern representations that are collateral or extraneous to the parties’ contract.” Best
5 v. Time Warner, Inc., 2013 WL 66265 *4 (W.D.N.C. 2013) (citing Robinson
6 Helicopter Co. v. Dana Corp., 34 Cal.4th 979, 989 (2004)); Alexsam Inc. v. Green
7 Dot Corporation, 2017 WL 2468769, *4 (C.D. Cal. 2017) (fraud claim failed because
8 plaintiff did not suffer harm beyond a broken contractual promise); Audigier Brand
9 Management v. Perez., 2012 WL 5470888, *5 (C.D. Cal. 2012) (same); JMP
10 Securities LLP v. Altair Nanotechnologies Inc., 880 F.Supp.2d 1029, 1043 (N.D. Cal.
11 2012) (no fraud claim because the “assertions of tortious conduct come down
12 essentially to a claim [of] … broke[n] …. promises”). Moreover, there is no evidence
13 that any defendant had such an intent at that time the SFA was entered. SS ¶39.
14 Finally, Lust cannot articulate any legally-cognizable claim of injury. Prior to
15 joining ALE, Lust had not received a producer credit on any theatrically-released
16 motion picture. SS ¶40. The likelihood that a studio would have produced any
17 project he developed at ALE had he not contracted with ALE is minuscule, and any
18 calculation of such harm would be inadmissible. SS ¶41; Sargon Enterprises, Inc. v.
19 University of Southern Cal., 55 Cal.4th 747 (2012) (“where the operation of an
20 unestablished business is prevented or interrupted, damages for prospective profits
21 that might otherwise have been made from its operation are not recoverable for the
22 reason that their occurrence is uncertain, contingent and speculative” (further
23 quotations omitted)). Similarly, Lust cannot articulate any recoverable harm resulting
24 from his failure to actually render production services on Peter Rabbit because (1) it is
25 pure speculation that the actual services would have enhanced his reputation; and (2)
26 he cannot identify any work he lost as a result of his failure to actually render services
27 on Peter Rabbit. SS ¶42; Westwater v. Rector, etc., of Grace Church, 140 Cal. 339
28 (1903) (“Damages to health, reputation, or feelings are not clearly ascertainable either
in their nature or origin.”); Redgrave v. Boston Symphony Orchestra, Inc., 855 F.2d
23
1 888, 894 (1st Cir. 1988) (en banc) (limiting award for reputational injury to specific
2 work lost).
3 G. Lust Holds No Intellectual Property Rights In The Projects He
4 Worked On
5 Lust seeks a declaration that he retains intellectual property rights in the
6 projects he developed during the SFA term, even though he did not fix any
7 development work he did on these project in a tangible medium until 2017. SS ¶42;
8 Garcia v. Google, Inc., 786 F.3d 733, 744 (9th Cir. 2015) (en banc) (“the author is the
9 party who actually creates the work, that is, the person who translates an idea into a
10 fixed, tangible expression entitled to copyright protection.” (quoting Cmty. for
11 Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989))). Without showing more,
12 his work as a producer developing these projects is not the work of an author within
13 the meaning of the Copyright Act. AAlmuhammed v. Lee, 202 F.3d 1227, 1235 (9th
14 Cir. 2000). “Everyone from the producer and director to casting director, costumer,
15 hairstylist and ‘best boy’ gets listed in the movie credits because all of their creative
16 contributions really do matter,” but each is not an author in the copyright sense. Id. at
17 1233. In AAlmuhammed, the Ninth Circuit recognized that if a mere “creative
18 contribution were all that authorship required,” then virtually every “research
19 assistants, editors, and former spouses, lovers and friends [could claim a copyright in a
20 work] and would endanger authors who talk with people about what they are doing.”
21 Id. No court anywhere has held that production assistance in developing a feature
22 film is copyrightable. See Garcia v. Google, Inc., 786 F.3d at 732 (holding that
23 actress did not possess any copyright in her performance in a film).
24 Even if Lust could possess a copyright in his development work, the SFA
25 required him to transfer any such interest to ALE. SS ¶44. Where a contract requires
26 the assignment of a copyright, no copyright claim rests simply because of the lack of a
27 formal assignment. Effects Associates, Inc., 908 F.2d at 558-59. In Effect Associates,
28 an effects company sued for copyright infringement when it was not paid for the
effects. Affirming the grant of summary judgment, the Ninth Circuit noted that while
24
1 the effects company had not executed a writing sufficient to assign its rights in the
2 effects to the filmmaker, its contract with the filmmaker requiring that it assign such
3 rights was sufficient to grant the filmmaker a non-exclusive license to any
4 copyrightable work. Id.
5 H. Lust’s Accounting Claim Fails As A Matter Of Law
6 An accounting is a remedy and not a cause of action and since Lust cannot
7 establish any misconduct that could entitle him to an accounting, his accounting claim
8 fails. Prakashpalan v. Engstrom, Lipscomb and Lack, 223 Cal.App.4th 1105, 1137
9 (2014) (“Some underlying misconduct on the part of the defendant must be shown to
10 invoke the right to this equitable remedy.”).
11 IV. CONCLUSION
12 For the foregoing reasons, the Defendants, Counterclaimants, and Third-Party
13 Complainants respectfully request that the Court grant them summary judgment or
14 partial summary judgment.
15
Dated: March 5, 2018 FOX ROTHSCHILD LLP
16
17 By /s/ John Shaeffer
John Shaeffer
18 Jeff Grant
19 Amanda Murray
Attorneys for Defendant and Counterclaimant
21 ANIMAL LOGIC LLC, and ANIMAL
LOGIC ENTERTAINMENT PTY LTD., and
23
24
25
26
27
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Case 2:17-cv-00308-JAK-AFM Document 90 Filed 03/05/18 Page 1 of 37 Page ID #:2022

1 John Shaeffer (SBN 138331)

22 LLC, a California limited liability

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MOTION FOR SUMMARY JUDGMENT

1 ANIMAL LOGIC ENTERTAINMENT,

7 SAJ PRODUCTIONS, LLC, a California

MOTION FOR SUMMARY JUDGMENT

1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD

1 repayment have been made. Lust has stipulated to judgment on

MOTION FOR SUMMARY JUDGMENT

MOTION FOR SUMMARY JUDGMENT

1 H. Lust’s Accounting Claim Fails As A Matter Of Law ............................. 25

MOTION FOR SUMMARY JUDGMENT

12 Alling v. Universal Manufacturing Corp.,

MOTION FOR SUMMARY JUDGMENT

1 City of Hope Nat. Med. Ctr. v. Genentech, Inc.,

16 Garcia v. Google, Inc.,

MOTION FOR SUMMARY JUDGMENT

1 Kabushiki Kaisha Megahouse v. Angar Co. LLC,

16 Rosenfeld v. JPMorgan Chase Bank, NA,

MOTION FOR SUMMARY JUDGMENT

MOTION FOR SUMMARY JUDGMENT

1 MEMORANDUM OF POINTS AND AUTHORITIES

MOTION FOR SUMMARY JUDGMENT

MOTION FOR SUMMARY JUDGMENT

1 140:17; Ex. 20 at 169:10-171:2; 5/10/16 email from Emanuel to Marshal (Depo.

MOTION FOR SUMMARY JUDGMENT

1 parties’ subjective intent, controls interpretation.” Yi v. Circle K Stores, Inc., 258

1 D. The Defendants Are Entitled To Summary Judgment On Lust’s

MOTION FOR SUMMARY JUDGMENT

MOTION FOR SUMMARY JUDGMENT

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