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Producer Capital Fund LLC v. Lazarus Films LLC

United States District Court, D. South Carolina, Charleston Division

January 16, 2019




         The following matter is before the court on defendants Big Monster Entertainment LLC (“Big Monster”), Blue Ninja Productions LLC (“Blue Ninja”), Green Leaf Production, Inc. (“Green Leaf”), and Rudy Vegliante's (“Vegliante”) (collectively, “defendants”)[1] motion to dismiss, ECF No. 49, Green Leaf's motion to dismiss, ECF No. 55, and defendants' motion to dismiss cross-claim, ECF No. 61. For the reasons set forth below, the court grants the motions to dismiss the complaint, ECF Nos. 49 and 55, and the motion to dismiss the cross-claim, ECF No. 61.

         I. BACKGROUND

         This case arises out of a financing dispute related to the funding of a television production known as “Mission Resolve.” Plaintiff Producer Capital Fund LLC (“Producer Capital”) is the lender to defendant/cross-claimant Lazarus Films LLC (“Lazarus Films”), the company that undertook the Mission Resolve film project. Blue Ninja and Big Monster are both companies that guaranteed performance of the loan that Lazarus Films entered into with Producer Capital. Green Leaf is a corporation that is a member of Blue Ninja. Jessika and Jason Auerbach, Scott Duthie, and Vegliante are allegedly all managers of Lazarus Films, Blue Ninja Productions, and Big Monster Entertainment. Vegliante is also allegedly the CEO of Green Leaf.

         On January 12, 2016, Producer Capital made a loan to Lazarus Films, under which Lazarus Films agreed to pay $384, 408.25 and to transfer tax credits under the Pennsylvania Film Tax Credit Incentive Program by October 1, 2016. As further security for the loan, Lazarus Films, Blue Ninja, and Big Monster agreed to give Producer Capital the right, title, and interest in the Mission Resolve television program and the tax credits issued by the Pennsylvania Film Tax Credit Incentive program. Under this agreement, Producer Capital would also receive all film equipment, audio visual equipment, cameras, lighting, and proprietary materials defined as “Film Collateral and Copyright and Tax Credit Collateral” in the loan documents. Producer Capital alleges that defendants and cross-claimants have defaulted under the terms of the agreement. Producer Capital brought this suit to recover the rights to the collateral that it believes it is owed under the Note-the rights to the Mission Resolve television production and the Pennsylvania tax credits.

         Defendants[2] and cross-claimants initially brought various motions to dismiss after Producer Capital filed its complaint. ECF Nos. 16, 18, 20, 23. After the issue was fully briefed, the court held a hearing on April 17, 2018, during which it granted the motions due to lack of personal jurisdiction and gave leave to Producer Capital to file an amended complaint to clarify each defendant's relationship to South Carolina and establish jurisdiction. Producer Capital had also filed a motion for a preliminary injunction, but the court found it to be moot given the lack of jurisdiction. On July 20, 2018, Producer Capital filed an amended complaint and added Green Leaf as a defendant. ECF No. 46. Then defendants brought another motion to dismiss for lack of personal jurisdiction, failure to state a claim, and absence of an indispensable party on August 1, 2018.[3] ECF No. 49. On August 23, 2018, Green Leaf also brought a motion to dismiss, which is largely duplicative of defendants' motion. ECF No. 55. Producer Capital responded to both motions in separate but largely duplicative pleadings on August 29, 2018. ECF Nos. 57, 58.

         In addition, after Producer Capital filed its amended complaint, cross-claimants brought a cross-claim against defendants alleging unjust enrichment and seeking a declaratory judgment, equitable indemnification, and conversion for equipment purchased for the Mission Resolve project.[4] ECF No. 56. Defendants filed a motion to dismiss the cross-claim on September 12, 2018. ECF No. 61. Cross-claimants responded on October 8, 2018, ECF No. 68, and defendants replied on October 15, 2018, ECF No. 71. The court held a hearing on the three motions on January 9, 2019. The motions are now ripe for the court's review.

         II. STANDARD

         A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) [] does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient, a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         A Rule 12(b)(6) motion should not be granted unless it appears certain that the plaintiff can prove no set of facts that would support his claim and would entitle him to relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6) motion, the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.


         A. Motions to Dismiss Complaint

         The two motions to dismiss the amended complaint are largely the same and reiterate arguments made during the first round of motions to dismiss. Because Green Leaf's motion is nearly identical to defendants' motion and Green Leaf is also one of defendants, the court will refer to the arguments as belonging to defendants. First, defendants argue that the court has no jurisdiction over them. Next, they argue that Producer Capital failed to state a claim due to the invalidity of the purported guaranty agreement, and even if the agreement were valid, it requires arbitration in California. Defendants then argue that Producer Capital did not plead the fraud allegations with sufficient particularity. In defendants' final and new argument, they argue that (1) Producer Capital did not seek leave from the court to add Green Leaf as a party, as the court only gave Producer Capital permission to amend its complaint with regard to jurisdictional deficiencies; and (2) relief is possible for all parties in existing litigation in Pennsylvania, so the amended complaint should be dismissed.

         Because jurisdiction is required to address defendants' other arguments, the court will consider jurisdiction first. In evaluating a challenge to personal jurisdiction under a state's long-arm statute, the court engages in a two-step analysis. Ellicott Mach. Corp. v. John Holland Party Ltd., 995 F.2d 474, 477 (4th Cir. 1993). First, the long-arm statute must authorize the exercise of jurisdiction under the facts presented. Id. Second, if the statute does authorize jurisdiction, then the court must determine if the statutory assertion of personal jurisdiction is consistent with due process. Id. South Carolina's long-arm statute extends to the outer limits allowed by the Due Process Clause. Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir. ...

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