Monday, March 14, 2011
Court Revives Suit Over Profits From Ving Rhames Movie
Texas Forum Selection Clause Held Permissive and Inapplicable
By KENNETH OFGANG, Staff Writer
A clause in a motion picture production agreement, declaring that the parties “authorize and consent to” the filing of suit in Texas, was permissive and did not preclude suit in California when the parties and witnesses were located here, the Court of Appeal for this district has ruled.
Vacating a dismissal order and stay granted by Los Angeles Superior Court Judge Susan Bryant-Deason, Div. One reinstated the suit by Animal Film, LLC. Justice Frances Rothschild’s Feb. 23 opinion was certified Friday for publication.
Animal Film, LLC was formed by action movie star Ving Rhames to produce “Animal,” a 2005 straight-to-video film about a gang member whose son grows up on the streets while the father is in prison. In 2009, the company sued D.E.J. Productions, Inc. and its parent First Look Studios, Inc. in Los Angeles Superior Court.
The complaint alleged that the plaintiff agreed to produce and deliver the film to DEJ for $975,000, plus a $250,000 “producer deferment” once DEJ recovered its initial investment plus interest and a distribution fee, plus a percentage of the “distributor gross receipts.”
The complaint further alleged that the film generated more than $3 million in gross income by the end of 2006, the DEJ was a year late in accounting for the income, and that auditors retained by the plaintiff concluded that the defendants owed it more than $272,000 that they refused to pay.
The defendants moved to dismiss or stay, on grounds of forum non conveniens. They cited a clause stating that “the parties hereto submit and consent to the jurisdiction of the courts present in the state of Texas” in any action arising from the agreement.
Texas was the home state of Blockbuster, Inc., which was DEJ’s parent before selling the studio to First Look.
In opposition, the plaintiff argued that the clause was permissive only, and that Texas was an inconvenient forum because the parties and witnesses were all located in Los Angeles and Texas had no relationship to the case once Blockbuster sold DEJ.
Bryant-Deason agreed that the forum selection clause was permissive, but also found that California was an inconvenient forum and Texas an appropriate alternative. She stayed the action and gave the plaintiff two months to sue in Texas.
The case was subsequently dismissed by Bryant-Deason, giving rise to the appeal.
Rothschild agreed that the clause was permissive, contrary to the defense argument. The language is similar to that of clauses found to be permissive in earlier cases in California, Texas, and elsewhere, the justice said.
Where a permissive forum selection clause is involved, Rothschild went on to say, the court applies a traditional forum non conveniens analysis, determining first whether the alternative forum is suitable, and, if it is, applying a balancing test to determine where the case should be litigated.
It was unclear, she said, whether Texas was a suitable forum, because there was no showing that Texas courts would hear the case, whether the action would be timely there, and whether the defendants would waive the statute of limitations if it wasn’t.
But even if Texas was a suitable alternative forum, she said, the balance of competing public and private interests so strongly favors trying the case in California that it was an abuse of discretion for the trial judge to rule otherwise.
“The convenience of the parties, the witnesses and the location of the evidence all favor a California forum. Animal, DEJ, and First Look are all located in California. Rhames, Animal’s principal, lives in Los Angeles County. The audit of First Look took place at First Look’s Los Angeles office; the auditors who would testify at trial are located in Los Angeles; and DEJ’s and First Look’s accounting documents are located in their offices in Los Angeles. As a result, the central components of this dispute—the principal parties, the auditors, and DEJ’s and First Look’s accounting documents—are all in California.”
Even if there are witnesses in Texas as a result of Blockbuster receiving money from the film, Rothschild said, citing a 2006 Court of Appeal case, that the defendants “presented nothing to demonstrate that a Texas witness or any evidence from Blockbuster will actually be needed at trial and thus did not satisfy their burden of producing evidence that is ‘sufficient to give the court the ability to soundly exercise its discretion’ regarding that convenience factor.”
Other factors weighing in favor of the California forum are the lack of any Texas parties and the state’s interest in providing a forum for the resolution of disputes among California residents and businesses, Rothschild wrote.
Attorneys on appeal were Dennis J. Holahan for the plaintiff and Charles M. Coate and Darius Anthony Vosylius of Costa Abrams & Coate for the defendants.
The case is Animal Film, LLC v. D.E.J. Productions, Inc., B222994.
Copyright 2011, Metropolitan News Company