Opposition Brief — Howsam v. Superior Court
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egos of Petitioners (as Comerica alleged). Petition, at App.
6-7. Rather, the trial court based its ruling on Petitioners’
own direct contact with California, stating that Petitioners
had “sufficient contacts to exercise at least ‘specific jurisdic-
tion’ over these defendants.” Id. (emphasis added). Despite
this unambiguous ruling and the allegations of the Com-
plaint, the Petition repeatedly states that the trial court’s
ruling was not based on Petitioners’ direct contact with
California. See, e.g., Petition, at pp. 12, 14, 16, 20, 22.
These misstatements are misleading at best and should be
disregarded.
7. In paragraph A of their Statement of Reasons for
Granting the Writ (“Summary of Argument”), Petitioners
state that “the sole basis for jurisdiction in California
emanates from the jurisdiction and venue provisions
included in the bank's loan and security agreements, but
Petitioners are not parties to any of those agreements.”
Petition, at p. 13. Once again, Petitioners are reading
findings into the trial court’s minute order that simply are
not there.
It is undisputed that Howsam personally signed all
the loan documents on behalf of the SPEs, including the
Loan and Security Agreements (“LSAs”), which provide
that the parties consent to the application of California
law, to jurisdiction in California, and te venue in the Los
Angeles County Superior Court. In all instances, the SPEs
were owned by Petitioners or by entities that they owned
and/or controlled. App. at pp. 89-91: Carpenter Decl., 149-
10. It is also undisputed, however, that Howsam - an
officer of Greenlight - personally came to California to
negotiate the loans. App. at p. 100. Thus, the SPE con-
tracts were not the “sole” basis on which the trial court
1}
could have exercised perscnal jurisdiction of Petitioners in
this case.
IV.
CONCLUSION
As set forth above, it is undisputed that the trial court
applied the proper minimum contacts analysis in exercis-
ing personal jurisdiction over Petitioners in this case.
Moreover, Petitioners misrepresent the record below, as
set forth in this opposition. Even if this Court finds that it
would have ruled differently, the Petition should be de-
nied. See Supreme Court Rule 10. Accordingly, Comerica
respectfully requests that certiorari be denied and that no
briefing schedule be set in this matter.
Respectfully submitted,
BUCHALTER NEMER
A Professiona! Corporation
MICHAEL L. WACHTELL
Counsel of Record
RONALD K. SITTLER
ROBERT S. ADDISON
Davip S. REIDY
1000 Wilshire Blvd., Suite 1500
Los Angeles, CA 90017-2457
Telephone: (213) 891-0700
Facsimile: (213) 896-0400
Attorneys for Real Party in Interest
COMERICA BANK, a Michigan
Banking Corporation
DATED: September 19, 2005
Page
Appendix A
First Amended Complaint of Comerica Bank........ App. 1
Appendix B
Opposition of Comerica Bank to Motion of De-
fendants Gary Howsam and Greenlight Film and
Television, Inc., to Quash Service of Summons for
Appendix C
Declaration of Robert S. Addison, Jr., in Support
of Opposition of Comerica Bank to Motion of
Defendants Gary Howsam and Greenlight Film
and Television, Inc., to Quash Service of Sum-
mons for Lack of Personal Jurisdiction ............... App. 69
Appendix D
Declaration of Carmen E. Carpenter in Support
of Opposition of Comerica Bank to Motion of
Defendants Gary Howsam and Greenlight Film
and Television, Inc., to Quash Service of Sum-
mons for Lack of Personal Jurisdiction ................ App. 85
Appendix E
Declaration of Raymond F. Gross in Support of
Opposition of Comerica Bank to Motion of De-
fendants Gary Howsam and Greenlight Film and
Television, Inc., to Quash Service of Summons for
App. 1
BUCHALTER, NEMER, FIELDS & YOUNGER
A Professional Corporation
Michael L. Wachtell (SBN: 47218)
Ronald K. Sittler (SBN: 185853)
Robert S. Addison, Jr. (SBN: 188565)
601 South Figueroa Street
Suite 2400
Los Angeles, CA 90017-5704
Telephone: (213) 891-0700/Facsimile: (213) 896-0400
Attorneys for Plaintiff
COMERICA BANK, a Michigan Banking Corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMERICA BANK, CASE NO. BC316406
a Michigan Banking FIRST AMENDED
Corporation, COMPLAINT
Plaintiff, 1. Breach of Written
vs. Contract;
2. Fraud and Deceit;
GARY HOWSAM, .
an individual: : Conspiracy to Defraud;
GFT ENTERTAINMENT, 5. Fraudulent Inducement;
INC., an Ontario : ems ‘
corporation, also known as ar , ron
GFTE, INC., and successor
to GREENLIGHT FILM - Account Stated; =
AND TELEVISION, INC. Open Book Accoun
D/B/A/ GFT ENTERTAIN-
MENT; GREENLIGHT
FILM AND TELEVISION,
INC. D/B/A/ GFT ENTER-
TAINMENT, an Ontario
Corporation; GFT CIRCLE
App. 2
FILMS, INC., an Ontario
Corporation; ROAD RAGE
FILMS, INC., a Corporation
of unknown origin; JANUS
PRODUCTIONS, INC., a
Quebec Corporation; GFT
GOING BACKFILMS, INC.,
GFT HERESY FILMS, INC.,
an Ontario Corporation;
GFT/REDWOOD KOTN
FILMS, INC., a British
GFT/REDWOOD IGNITION
FILMS, INC., a British
ADAM BENNECKE, an
individual; MICHEL
GLOCKLER, an individual;
and DOES 1 through 100,
inclusive,
Defendant.
Plaintiff COMERICA BANK (“Comerica”) alleges as
follows:
I.
PARTIES, JURISDICTION, AND VENUE
Parties
1. Comerica is a Michigan banking corporation,
licensed to do business in California.
2. On information and belief, Comerica alleges that
defendant Gary Howsam (“Howsam”) is an individual
App. 3
residing in Toronto, Ontaric, Canada, and is in the busi-
ness of producing and licensing rights in and to motion
pictures.
3. On information and belief, Comerica alleges that
defendant Mishel Glockler (“Glockler”) is an individual
residing in Los Angeles County, California.
4. On information and belief, Comerica alleges that
defendant Adam Bennecke (“Bennecke”) is an individual
residing in Los Angeles County, California, and at all
relevant times herein was an employee of Comerica.
5. On information and belief, Comerica alleges that
defendant Greenlight Film and Television, Inc. D/B/A GFT
Entertainment (“Greenlight”), is an Ontario corporation
authorized to do business in California.
6. On information and belief, Comerica alleges that
defendant GFT Entertainment, Inc. (“GFT”), is an Ontario
corporation authorized to do business in California, and is
the successor to Greenlight.
7. On information and belief, Comerica alleges that
defendant GFT Circle Films, Inc. (“GFT-Circle”) is an
Ontario corporation. On information and belief, Comerica
alleges that GFT Circle was formed, organized and oper-
ated by Howsam, and/or entities formed aaa operated by
Howsam, for the sole and limited purpose of producing and
licensing rights to the motion picture entitled “The Circle.”
8. On information and belief, Comerica alleges that
defendant Road Rage Films, Inc. (“Road Rage”) is a corpo-
ration of unknown origin. On information and belief,
Comerica alleges that Road Rage was formed, organized
and operated by Howsam, and/or entities formed and
operated by Howsam, for the sole and limited purpose of
App. 4
producing and licensing rights to the motion picture
entitled “Road Rage.”
9. On information and belief, Comerica alleges that
defendant Janus Productions, Inc. (“Janus”) is a Quebec
corporation. On information and belief, Comerica alleges
that Janus was formed, organized and operated by
Howsam, and/or entities formed and operated by Howsam,
for the sole and limited purpose of producing and licensing
rights to the motion picture entitled “Deception.”
10. On information and belief, Comerica alleges that
defendant GFT Going Back Films, Inc. (“GFT-Going
Back”) is an Ontario corporation. On information and
belief, Comerica alleges that GFT-Going Back was formed,
organized and operated by Howsam, and/or entities
formed and operated by Howsam, for the sole and limited
purpose of producing and licensing rights to the motion
picture entitled “Going Back.”
11. On information and belief, Comerica alleges that
defendant GFT Heresy Films, Inc. (“GFT-Heresy”) is an
Ontario corporation. On information and belief, Comerica
alleges that GFT-Heresy was formed, organized and
operated by Howsam, and/or entities formed and operated
by Howsam, for the sole and limited purpose of producing
and licensing rights to the motion picture entitled “Global
Heresy.”
12. On information and belief, Comerica alleges that
defendant GFT/Redwood KOTN Films, Inc. (“GFT-KOTN”)
is a British Columbia corporation. On information and
belief, Comerica alleges that GFT-KOTN was_formed,
organized and operated by Howsam, and/or entities
formed and operated by Howsam, for the sole and limited
App. 5
purpose of producing and licensing rights to the motion
picture entitled “Kevin of the North.”
13. On information and belief, Comerica alleges that
defendant GFT/Redwood Ignition Films, Inc. (“GFT-
Ignition”) is a British Columbia corporation. On informa-
tion and belief, Comerica alleges that GFT-Ignition was
formed, organized and operated by Howsam, and/or
entities formed and operated by Howsam, for the sole and
limited purpose of producing and licensing rights to the
motion picture entitled “Ignition.”
14. Comerica is currently unaware of the true names
and capacities of defendants sued herein as Does 1
through 100, inclusive, and therefore sues said Doe defen-
dants by such fictitious names. Comerica will seek leave of
this Court to amend this complaint to insert the true
names and capacities of said Doe defendants when such
information has been obtained. Comerica is further in-
formed and believes and based thereon alleges that each of
such fictitiously named defendants has participated in
some way in the wrongful acts and omissions alleged
below, and is liable to Comerica for damages and other
relief to which it is entitled.
Successor Liability of GFT
:, 15. On information and belief, Comerica alleges that
Defendant GFT was created by Howsam as part of a
scheme to escape liability for the actions of Defendant
Greenlight (detailed below), and to simply continue
Greenlight’s business, but under a new name. For these,
and possibly other, reasons, GFT, as Greenlight’s succes-
sor, is liable for Greenlight’s wrongful actions alleged
herein. Therefore, even though Comerica is informed and
App. 6
believes that GFT was not incorporated until after most or
all of the wrongful actions at issue in this case, the allega-
tions contained herein include GFT as if it Aad been
incorporated at the time of the actions.
The “Howsam Parties”
16. For the reasons set forth in paragraph 15, above,
Howsam, Greenlight, GFT, GFT-Circle, Road Rage, Janus,
GFT-Going Back, GFT Heresy, GFT-KOTN, GFT-Ignition,
and/or their agents and assigns, are hereinafter sometimes
collectively referred to as the “Howsam Parties.” On
information and belief, Comerica alleges that the Howsam
Parties are, individually and jointly, and at all times
material hereto have been owned, controlled or otherwise
dominated by Howsam. Comerica is further informed and
believes and based thereon alleges that, at all times
relevant hereto, the Howsam Parties, and each of them,
was the agent, partner or other representative of the
remaining Howsam Parties, and completely controlled,
dominated and operated the Howsam Parties, and at all
times mentioned herein was acting within the course and
scope of that agency, partnership or representation.
Comerica is further informed and believes and based
thereon alleges that the acts and conduct of each of the
Howsam Parties as alleged herein were known to, author-
ized by, and/or ratified by the other Howsam Parties, and
each of them.
17. On information and belief, Comerica alleges that
there now exists, and at all times material hereto has
existed, such a unity of ownership, interest and control
between the Howsam Parties, on the one hand, and
Howsam, on the other hand, that any individuality or
App. 7
separateness which may have existed between the
Howsam Parties, on the one hand, and Howsam, on the
other hand, has ceased. The Howsam Parties are the alter
egos of Howsam in that Howsam has completely con-
trolled, dominated, managed and operated the Howsam
Parties, and has used those entities as mere shells or
conduits through which to carry on his own business,
including engaging in the acts and/or omissions set forth
herein. Adherence to the fiction cf the separate existence
of the Howsam Parties, on the one hand, and Howsam, on
the other hand, would permit an abuse of corporate
privilege and would sanction fraud and promote injustice.
The Howsam Parties and Howsam are consequently
jointly and severally liable to Comerica for the conduct, or
lack of conduct, of each other with respect to the obliga-
tions and omissions as hereafter alleged.
Jurisdiction and Venue
18. The Court has jurisdiction over the Howsam
Parties pursuant to the express agreement by the Howsam
Parties in the Loan and Security Agreements for each film
at issue in this case, and based upon the fact that these
Defendants have done and/or do business regularly in the
State of California and, therefore, have sufficient contacts
with California to give rise to jurisdiction of California
courts over them.
19. This Court additionally has jurisdiction over
Bennecke and Glockler, as they are both residents of the
State of California.
20. Venue is proper in this Court pursuant to the
express agreement by the Howsam Parties in the Loan
and Security Agreements for each of the films at issue in
App. 8
this action, as well as due to the fact that a substantial
part of the events or omissions giving rise to this action
occurred in Los Angeles County, and the fact that one or
more of the defendants reside in this district.
Il.
INTRODUCTION AND SUMMARY
21. This case arises out of a group, or “slate,” of 7
films produced in 2000 and 2001 by the Howsam Parties,
who were and are independent film producers. The films
at issue include but are not limited to: Deception, Going
Back, Kevin of the North, Global Heresy, The Circle, Road
Rage, and Ignition (collectively, the “Films”).
22. Based on the methods described below, Comerica
provided secured financing to the Howsam parties to
enable the production of the Films. These loan obligations
(the “Production Loans”) were secured by, among other
things, the Films, and all proceeds and revenue derived
from the Films. Comerica's primary collateral, from which
it contemplated sufficient funds would be generated to
repay the Production Loans, was licensing fees from
foreign distributors, who would guarantee payment of
such fees prior to a given film’s production. As part of the
loan agreements between the Howsam Parties and Co-
merica, the Howsam Parties purportedly obtained license
agreements from a number of distributors, along with
assignments of the guaranteed licensing fees to Comerica.
Comerica relied on these license agreements and assign-
ments in making the Production Loans.
23. The true facts were, however, that the Howsam
Parties, Bennecke, and Glockler created fraudulent
App. 9
license agreements and assignments, and provided them
to Comerica in order to induce Comerica to provide loans
on the Films. The license agreements and assignments
were fraudulent in that these Defendants either forged or
affixed signatures upon numerous License Agreements
and Notices and Acknowledgments of Assignment
(“NOAs”), in an attempt to create the impression that
License Agreements and NOAs were executed. In further-
ance of the conspiracy, the Howsam Parties created falsely
inflated production budgets in order to increase sales
and/or license fees and other collateral, including tax
credits and ultimately increased the amount of each
Production Loan through their fraud.
24. As a direct result of these Defendants’ actions,
Comerica loaned money to produce the Films, was never
repaid the full amount of the loans, and was left with
inadequate or false security from which to seek repay-
ment. Consequently, Comerica has been damaged in an
amount in exc.ss of $20 Million.
It.
DETAILS OF THE FINANCING OF THE FILMS
25. As independent producers, end unlike a movie
studio, the Howsam Parties did not have significant
capital of their own to fund production of a movie, nor did
they possess collateral that would allow them to borrow
the mone’ necessary to fund production of a movie. Fur-
thermore, like most film-finance banks, Comerica will not
loan money to make a movie unless there is sufficient
collateral to ensure repayment, even in the event the
movie is a box office failure. Therefore, like many inde-
pendent film producers, the Howsam Parties utilized a
App. 10
financiag arrangement by which they would provide
collateral to Comerica in the form of guaranteed minimum
license fees (“Minimum Guarantees”) from international
distributors. Minimum Guarantees are, essentially, license
fees owed to a producer by a distributor for the right to
distribute a given film in a particular geographic region
and through specified media. To obtain a loan from Co-
tion rights to the films to various distributors around the
world, who would promise to pay Minimum Guarantees, so
long as the movies were actually completed and delivered
26. Distributors typically purchase these rights in
advance of commencement of a movie's production. The
purchase transaction involves the distributor signing a
License Agreement, in which it guarantees it will pay the
producer for the distribution rights to a film upon delivery
of the completed film. “Delivery” is a defined term, which
specifically defines what the producer must do to “deliver”
the film and trigger the distributor’s obligation to pay the
license fees. Comerica requires borrowers to purchase a
completion bond, which ensures that, if Comerica funds a
loan, the film will actually be completed and delivered.
Once the producer has obtained sufficient collateral, as
described above, to cover most of the expected negative
costs of production, Comerica will make the loan.
27. Furthermore, in order to ensure that the Mini-
mum Guarantees were ultimately paid to Comerica, and
not diverted by the Howsam Parties, the distributors were
required to sign NOAs, acknowledging that, upon delivery
of the film, the distributor would pay the Minimum Guar-
antees directly to Comerica, rather than to the Howsam
Parties.
App. 11
28. The borrowers for each production were single
purpose entities (“SPEs”), created and controlled by
Howsam, in connection with each particular motion
picture. For each loan, Howsam executed a Loan and
Security Agreement (“LSA”), an Interparty Agreement,
and other related agreements evidencing the loan obliga-
tions.
29. Hilltop Entertainment, LLC (“Hilltop”), by whom
defendant Glockler was employed, acted as the sales agent
for the Howsam Parties in connection with the Films. In
that capacity, Hilltop, on behalf of the Howsam Parties, in
instances purported to enter into License Agreements (also
referred to hereinafter as “Distribution Agreements”) and
NOAs with various distributors.
IV.
THE DEFENDANTS’ WRONGDOING
30. In order for Comerica to loan money for the
production of the Films, the Howsam Parties were re-
quired to provide the collateral described above. Working
with Glockler and Bennecke, the Howsam Parties deliv-
ered License Agreements and NOAs, which they repre-
sented to Comerica were executed by the relevant
distributors, and were thus leg.'»« ate. Comerica is in-
formed and believes, however the **»e facts were that the
Howsam Parties, Bennecke, and wlockler created and
delivered fraudulent License Agreements and NOAs by
either forging or affixing signatures upon numerous
License Agreements and NOAs, in an attempt to create
the impression that distribution agreements and assign-
ments of Minimum Guarantees were in place. These
Defendants created these false documents with full
App. 12
knowledge that they would induce Comerica to rely on
them as collateral and to make the Production Loans.
31. In reality, the purported Distribution Agree-
ments did not exist. The distributors who were the pur-
ported parties to the various agreements have informed
Comerica that they did not enter into the purported
agreements bearing their names on such documents.
32. Based upon these defendants’ actions, Comerica
was led to believe that distribution rights were pre-sold to
international distributors, that the Howsam Parties had
assigned the Minimum Guarantees to Comerica, and that
those distributors had promised to pay the Minimum
Guarantees directly to Comerica as collateral. Comerica
relied upon the Minimum Guarantees in making the
Production Loans and was thereon induced to make the
loans. Had Comerica been aware of the actual facts swr-
rounding the License Agreements and NOAs, Comerica
would not have made the Production Loans. Since Co-
merica made the Production Loans with insufficient
collateral to secure repayment, and since those loans have
. not been repaid as agreed by the Howsam Parties, Co-
merica has been damaged in excess of $20 Million.
33. Furthermore, Comerica is informed and believes
that the Howsam Parties provided Comerica with budgets
that over-estimated the funds needed to complete the
relevant Films. As a result, the Howsam Parties were able
to “skim” money out of the loan proceeds, which were
never used to make the Films, in violation of the various
bond agreements, and which were never repaid to Co-
merica.
34. Further specifics of the Defendants’ wrongful
actions with regard to each of the Films are as follows:
App. 13
A. Deception
_ Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
35. Howsam established and controlled Janus
Productions Inc. (“Janus”) for the purpose of producing the
motion picture Deception.
36. Howsam, through Janus, entéred into a Loan
and Security Agreement and an Interparty Agreement,
both of which were dated November 27, 1999, with Co-
merica for the purpose of borrowing up to $1,775,000 for
the production of Deception (these agreements are referred
to collectively as the “Deception Loan Agreement”). Copies
of the Loan and Security Agreement and Interparty
Agreement are attached hereto as Exhibits “A” and “B,”
respectively, and are incorporated herein by this reference.
As security for the obligations under the Deception Loan
Agreement, Howsam and Janus pledged all of their
interest, rights and title to Deception and any and all
proceeds generated therefrom to Comerica.
37. Howsam, through Janus, entered into a Sales
Agency Agreement with Hilltop, dated October 19, 1999,
pursuant to which Janus Productions appointed Hilltop as
its sales agent for the purpose of entering into license
agreements for the exploitation of Deception in certain
territories.
Forged License Agreements
and Notices of Assignment.
le-M hen
38. On or about on September 9, 1999, Howsam,
through Janus, entered into a license agreement, with
App. 14
Tele-Munchen Fernseh GmbH & Co. Produktiongesell-
schaft, a German corporation (“Tele-Munchen”), whereby
Tele-Munchen purchased the right to exploit Deception
within German-Speaking Europe in exchange for the
payment of $250,000 by Tele-Munchen.
39. For the purposes of inducing Comerica to enter
into the Deception Loan Agreement, Howsam, through
Janus, purported to enter into an undated NOA agreement
with Tele-Munchen, which appeared to assign the pay-
ment of a Minimum Guarantee in the amount of $250,000
by Tele-Munchen, to Comerica (“Deception Tele-Munchen
NOA”). The Deception Tele-Munchen NOA contained a
forged signature as it was not signed by Herbert Kloiber or
anyone else authorized to sign on behalf of Tele-Munchen.
Videx International S.A.
40. On or about December 3, 1999, Howsam, through
Janus, purported to enter into a license agreement with
Videx International S.A. (“Videx”) whereby Videx pur-
ported to purchase the right to exploit Deception within
the territories of Mexico, Central America, Dominican
Republic, Puerto Rico, Caribbean Island, and South
America including Brazil in exchange for the payment of
$100,000 by Videx (“Deception Videx License Agreement”).
41. On or about December 3, 1999, in conjunction
with the Deception Videx License Agreement, Howsam,
through Janus, purported to enter into an NOA agreement
with Videx, which appeared to assign the payment of a
Minimum Guarantee in the amount of $100,000 by Videx,
to Comerica (“Deception Videx NOA”) (the Deception Videx
License Agreement and the Deception Videx NOA shall
hereafter be collectively referred to as the “Deception
App. 15
Videx Distribution Agreements”). The Deception Videx
Distribution Agreements were forged since they were not
signed by Cynthia Murray or anyone else authorized to
sign on behalf of Videx.
B. Going Back
Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
42. Howsam established and controlled GFT Going
Back Films, Inc. (“GFT-Going Back”) for the purpose of
producing the motion picture Going Back.
43. Howsam, through GFT-Going Back, entered into
a Loan ard Security Agreement and an Interparty Agree-
ment, botii of which were dated April 7, 2000, with Co-
merica, for the purpose of borrowing up to $4,764,000 for
the production of Going Back (these agreements are
collectively referred to as the “Going Back Loan Agree-
ment”). Copies of the Loan and Security Agreement and
Interparty Agreement are attached hereto as Exhibits “C”
and “D,” respectively. As security for the obligations under
the Going Back Loan Agreement, Howsam and GFT-Going
Back, pledged all of their interest, rights and title to Going
Back and any and all proceeds generated therefrom to
Comerica.
44. Howsam, through GFT-Going Back, entered into
a Sales Agency Agreement with Hilltop, dated March 6,
2000, pursuant to which Howsam, through GFT-Going
Back, granted to Hilltop their distribution rights in and to
Going Back for certain territories.
App. 16
Forged License Agreements
and Notices of Assignment
Eagle Pictures (Italy)
45. On or abovt March 30, 2000, Howsam, through
GFT-Going Back, purported to enter into a license agree-
ment with Eagle Pictures SPA (“Eagle Pictures”), whereby
Eagle Pictures appeared to purchase the right to exploit
Going Back within Italy in exchange for the payment of
$450,000 by Eagle Pictures (“Going Back Eagle Pictures
License Agreement”).
46. On or about March 29, 2000, in conjunction with
the Going Back Eagle Pictures License Agreement,
Howsam, through GFT-Going Back, purported to enter
into an NOA agreement with Eagle Pictures, which ap-
peared to assign the payment of a Minimum Guarantee in
the amount of $450,000 by Eagle Pictures, to Comerica
(“Going Back Eagle Pictures NOA”) (the Going Back Eagle
Pictures License Agreement and the Going Back Eagle
Pictures NOA shall hereafter be collectively referred to as
the “Going Back Eagle Pictures Distribution Agreements”).
The Going Back Eagle Pictures Distribution Agreements
were forged since they were not signed by Stefano Dam-
micco or anyone else on behalf of Eagle Pictures.
Tele-Munchen
47. On or about April 3, 2000, Howsam, through
GFT-Going Back, purported to enter into a license agree-
ment with Tele-Munchen, whereby Tele-Munchen ap-
peared to purchase the right to exploit Going Back on the
terms set forth therein in exchange for the payment of
$850,000 by Tele-Munchen (“Going Back Tele-Munchen
License Agreement”).
App. 17
48. On or about April 5, 2000, in conjunction with
the Going Back Tele-Munchen License Agreement,
Hiowsam, through GFT-Going Back, purported to enter
into an NOA agreement with Tele-Munchen, which pur-
ported to assign the payment of a Minimum Guarantee in
the amount of $850,000 by Tele-Munchen, to Comerica
(“Going Back Tele-Munchen . >A”) (the Going Back Tele-
Munchen License Agreement and the Going Back Tele-
Munchen NOA shall hereafter be collectively referred to as
the “Going Back Tele-Munchen Distribution Agreements”).
The Going Back Tele-Munchen Distribution Agreements
were forged since they were not signed by Herbert Kloiber
or anyone else authorized to sign on behalf of Tele-
Munchen.
Television Francaise 1
49. On or about April 3, 2000, Howsam, through
GFT-Going Back, purported to enter into a license agree-
ment with Television Francaise 1 (“TF-1”), whereby TF-1
appeared to purchase the right to exploit Going Back
within the territories of France and French-Speaking
Benelux in exchange for the payment of $550,000 by TF-1
(“Going Back TF-1 License Agreement”).
50. On or about April 7, 2000, in conjunction with
the Going Back TF-i License Agreement, Howsam,
through GFT-Going Back, purported to enter into an NOA
agreement with TF-1, which appeared to assign the
payment of a Minimum Guarantee in the amount of
$550,000 by TF-1, to Comerica (“Going Back ‘TF-1 NOA”)
(the Going Back TF-1 License Agreement and the Going
Back TF-1 NOA shall hereafter be collectively referred to
as the “Going Back TF-1 Distribution Agreements”). The
App. 18
Going Back TF-1 Distribution Agreements were forged
since they were not signed by Fabrice Bailly or anyone else
authorized to sign on behalf of TF-1.
Filmax Communications
51. On or about March 29, 2000, Howsam, through
GFT-Going Back, purported to enter into a license agree-
ment with Sociedad General De Derechos Audiovisuales,
S.A. (Sogedasa) (“Sogedasa”), owner of all rights related to
the name Filmax, under the name Filmax Communica-
tions (“Filmax”), whereby Filmax agreed to purchase the
right to exploit Going Back within Spain in exchange for
the payment of $350,000 by Filmax (“Going Back Filmax
License Agreement”).
52. On or about March 29, 1999, in conjunction with
the Going Back Filmax License Agreement, Howsam,
through GFT-Going Back, purported to enter into an NOA
agreement with Filniax, which appeared to assign the
payment of a Minimum Guarantee in the amount of
$350,000 by Filmax, to Comerica (“Going Back Filmax
NOA”) (the Going Back Filmax License Agreement and the
Going Back Filmax NOA shall hereafter be collectively
referred to as the “Going Back Filmax Distribution
Agreements”). The Going Back Filmax Distribution
Agreements were forged since they were not signed by
Carlos Fernandez or anyone else authorized to sign on
behalf of Sogedasa or Filmax.
App. 19
C. Kevin of the North
Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
53. Howsam established and controlled GFT/
Redwood KOTN Films, Inc. (“GFT-KOTN”) for the purpose
of producing the motion picture Kevin of the North.
54. Howsam, through GFT-KOTN, entered into a
Loan and Security Agreement and an Interparty Agree-
ment, both of which were dated May 30, 2000, with Co-
merica for the purposes of borrowing $10,428,000 for the
production of Kevin of the North (these agreements are
collectively referred to as the “KOTN Loan Agreement”).
Copies of the Loan and Security Agreement and Interparty
Agreement are attached hereto as Exhibits “E” and “F,”
respectively. As security for the KOTN Loan Agreement,
Howsam and GFT-KOTN pledged all of their interest,
rights and title to Kevin of the North and any and all
proceeds generated therefrom to Comerica.
55. Howsam, through GFT-KOTN, entered into a
Sales Agency Agreement with Hilltop, dated April 28,
2000, pursuant to which Howsam, through GFT-KOTN,
appointed Hilltop as the sales agent for the purposes of
entering into license agreements for exploitation of Kevin
of the North in all territories of the world except for the
United States, Canada, the United Kingdom, France,
Germany, Benelux, Greece and Eastern Europe, among
others.
App. 20
Forged License Agreements
and Notices of Assignments
' Dall’Angelo Pictures
56. On or about May 14, 2000, Howsam, through
GFT-KOTN, purported to enter into a license agreement
with Dall’Angelo Pictures (“Dail’Angelo”), whereby
Dall’Angelo appeared to purchase the right to exploit
Kevin of the North within the territories of Italy, San
Marino, Vatican City, Italian Speaking Switzerland,
among others, in exchange for the payment of $700,000 by
Dall’Angelo (“KOTN Dall’Angelo License Agreement”).
57. On or about June 1, 2000, in conjunction with
the KOTN Dall’Angeio License Agreement, Howsam,
through GFT-KOTN, purported to enter into an NOA
agreement with Dall’Angelo, which appeared to assign the
payment of a Minimum Guarantee in the amount of
$700,000 by Dall’Angelo, to Comerica (““KOTN Dall’Angelo
NOA”) (the KOTN Dall’Angelo License Agreement and the
KOTN Dall’Angelo NOA shall hereafter be collectively
referred to as the “KOT'N Dall’Angelo Distribution Agree-
ments”). The KOTN Dall’Angelo Distribution Agreements
were forged since they were not signed by Barbara
Dall’Angelo, or any other Dall’Angelo representative
authorized to sign on behalf of Dall’Angelo.
D. Global Heresy
Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
58. Howsam established and controlled GFT Heresy
Films, Inc. (“GFT-Heresy”) for the purpose of producing
the motion picture Global Heresy.
App. 21
59. _ »wsam, through GFT-Heresy, entered into a
Loan and Security Agreement and an Interparty Agree-
ment, both of which were dated October 10, 2000, with
Comerica for the purposes of borrowing up to $4,425,000
for the production of Global Heresy (these agreements are
collectively referred to as the “Global Heresy Loan Agree-
ment”). Copies of the Loan and Security Agreement and
Interparty Agreement are attached hereto as Exhibits “G”
and “H,” rexpectively. As security for the loan obligations,
Howsam and GFT-Heresy pledged all of their interest,
rights and title to Global Heresy and any and all proceeds
generated therefrom to Comerica.
60. Howsam, through GFT-Heresy, entered into a
Sales Agency Agreement with Hilltop, dated September
15, 2000, pursuant to which Howsam, through GFT-
Heresy, appointed Hilltop as the sales agent for the pur-
poses of entering into license agreements for exploitation
of Global Heresy in all territories of the world except for
the United States, Canada and the United Kingdom.
Forged License Agreements
and Notice of Assignment
Eagle Pictures (Italy)
61. On or about September 2, 2000, Howsam,
through GFT-Heresy, purported to enter into a license
agreement with Eagle Pictures, whereby Eagle Pictures
appeared to purchase the right to exploit Global Heresy
within Italy in exchange for the payment of $600,000 by
Eagle Pictures (“Global Heresy Eagle Pictures License
Agreement”).
62. On or about October 12, 2000, in conjunction
with the Global Heresy Eagle Pictures License Agreement,
App. 22 o
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Eagle Pictures, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $600,000 by Eagle Pictures, to Comerica
(“Global Heresy Eagle Pictures NOA”) (the Global Heresy
Eagle Pictures License Agreement and the Global Heresy
Eagle Pictures NOA shall hereafter be collectively referred
to as the “Global Heresy Eagle Pictures Distribution
Agreements”). The Global Heresy Eagle Pictures Distribu-
tion Agreements were forged since they were not signed by
Stefano Dammicco or anyone else authorized to sign on
behalf of Eagle Pictures.
Tele-Munchen
63. On or about October 12, 2000, Howsam, through
GFT-Heresy, purported to enter into a license agreement
with Tele-Munchen, whereby Tele-Munchen appeared to
purchase the right to exploit Global Heresy on the terms
set forth therein in exchange for the payment of $800,000
by Tele-Munchen (“Global Heresy Tele-Munchen License
Agreement”).
64. On or about October 12, 2000, in conjunction
with the Global Heresy Tele-Munchen License Agreement,
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Tele-Munchen, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $800,000 by Tele-Munchen, to Comerica
(“Global Heresy Tele-Munchen NOA”) (the Global Heresy
Tele-Munchen License Agreement and the Global Heresy
Tele-Munchen NOA shall hereafter be collectively referred
to as the “Global Heresy Tele-Munchen Distribution
App. 23
~Agreements”). The Global Heresy Tele-Munchen Distribu-
tion Agreements were forged since they were not signed by
Herbert Kloiber or anyone else authorized to sign on
behalf of Tele-Munchen.
Hellas World International S.A.
65. On or about October 4, 2000, Howsam, through
GFT-Heresy, purported to enter into a license agreement
with Hellas World International S.A. (“Hellas World”),
whereby Hellas World appeared to purchase the right to
exploit Global Heresy within the territories of Greece and
Cyprus in exchange for the payment of $15,000 by Hellas
World (“Global Heresy Hellas World License Agreement”).
66. On or about October 4, 2000, in conjunction with
the Global Heresy Hellas World License Agreement,
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Hellas World, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $15,000 by Hellas World, to Comerica (“Global
Heresy Hellas World NOA”) (the Global Heresy Hellas
World License Agreement and the Global Heresy Hellas
World NOA shall hereafter be collectively referred to as
the “Global Heresy Hellas World Distribution Agree~
ments”). The Global Heresy Hellas World Distribution
Agreements were forged since they were not signed by any
Hellas World representative authorized to sign on behalf
of Hellas World.
Filmax
67. On or about September 2, 2000, Howsam,
through GFT-Heresy, purported to enter into a license
App. 24
agreement with Sogedasa, under the name Filmax,
whereby Filmax appeared to purchase the right to exploit
Global Heresy within Spain in exchange for the payment
of $350,000 by Filmax (“Global Heresy Filmax License
Agreement”).
68. On or about September 2, 2000, in conjunction
with the Global Heresy Filmax License Agreement,
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Filmax, which appeared to assign
the payment of a Minimum Guarantee in the amount of
$350,000 by Filmax, to Comerica (“Global Heresy Filmax
NOA”) (the Global Heresy Filmax License Agreement and
the Global Heresy Filmax NOA shall hereafter be collec-
tively referred to as-the “Global Heresy Filmax Distribu-
tion Agreements”). The Global Heresy Filmax Distribution
Agreements were forged since they were not signed by
Carlos Fernandez, or anyone else authorized to sign on
behalf of Sogedasa or Filmax.
Rapi Films
69. On or about September 2, 2000, Howsam,
through GFT-Heresy, purported to enter into a license
agreement with Rapi Films, whereby Rapi Films appeared
to purchase the right to exploit Global Heresy within
Indonesia in exchange for the payment of $5,000 by Rapi
Films (“Global Heresy Rapi Films License Agreement”).
70. On or about September 2, 2000, in conjunction
with the Global Heresy Rapi Films License Agreement,
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Rapi Films, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $5,000 by Rapi Films, to Comerica (“Global
App. 25
Heresy Rapi Films NOA”) (the Global Heresy Rapi Films
License Agreement and the Global Heresy Rapi Films
NOA shall hereafter be collectively referred to as the
“Global Heresy Rapi Films Distribution Agreements”). The
Global Heresy Rapi Films Distribution Agreements were
forged since they were not signed by a Rapi Films repre-
sentative authorized to sign on behalf of Rapi Films.
igital Right 8 Ltd.
71. Howsam, through GFT-Heresy, purported to
enter into an undated license agreement with Digital
Right Pictures Public Co., Ltd. (“Digital Right”), whereby
Digital Right appeared to purchase the right to exploit
Global Heresy within Thailand in exchange for the pay-
ment of $20,000 by Digital Right (“Global Heresy Digital
Right License Agreement”).
72. On or about October 3, 2000, in cu.ujunction with
the Global Heresy Digital Right License Agreement,
Howsam, through GFT-Heresy, purported to enter into an
NOA agreement with Digital Right, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $20,000 by Digital Right, to Comerica (“Global
Heresy Digital Right NOA”) (the Global Heresy Digital
Right License Agreement and the Global Heresy Digital
Right NOA shall hereafter be collectively referred to as the
“Global Heresy Digital Right Distribution Agreements”).
_ The Global Heresy Digital Right Distribution Agreements
were forged since they were not signed by a Digital Right
representative authorized to sign on behalf of Digital
Right.
73. Howsam established and controlled GFT Circle
Films, Inc. (“GFT-Circle”) for the purpose of producing the
motion picture The Circle.
74. Howsam, through GFT-Circle, entered into a
Loan and Security Agreement and an Interparty Agree-
ment, both of which were dated November 24, 2000, with
Comerica for the purposes of borrowing $1,700,000 for the
production of The Circle (these agreements are collectively
referred to as “The Circle Loan Agreement”). Copies of the
Loan and Security Agreement and Interparty Agreement
are attached hereto as Exhibits “I” and “J,” respectively. As
security for the loan obligations, Howsam and GFT-Circle
pledged all of their interest, rights and title to The Circle
and any and all proceeds generated therefrom to Co-
merica.
75. Howsam, through GFT-Circle, entered into a
Sales Agency Agreement with Hilltop, dated January 30,
2001, pursuant to which Howsam and Circle Films ap-
pointed Hilltop as the sales agent for the purposes of
entering into license agreements for exploitation of The
Circle in all territories of the world except for the United
States and Canada.
Forged License Agreements
and Notices of Assignment
Tele-Munchen
76. On or about February 23, 2001, Howsam,
through GFT-Circle, purported to enter into a license
App. 27
agreement with Tele-Munchen, whereby Tele-Munchen
appeared to purchase the right to exploit The Circle on the
terms set forth therein in exchange for the payment of
$100,000 by Tele-Munchen (“The Circle Tele-Munchen
License Agreement”).
77. On or about February 23, 2001, in conjunction
with The Circle Tele-Munchen License Agreement,
Howsam, through GFT-C.ccle, purported to enter into an
NOA agreement with Tele-Munchen, which appeared to
assign the payment of a Minimum Guarantee in the
amount of $100,000 by Tele-Munchen, to Comerica (“The
Circle Tele-Munchen NOA”) (The Circle Tele-Munchen
License Agreement and The Circle Tele-Munchen NOA
shall hereafter be collectively referred to as the “Circle
Tele-Munchen Distribution Agreements”). The Circle Tele-
Munchen Distribution Agreements were forged since they
were not signed by Herbert Kloiber or anyone else author-
ized to sign on behalf of Tele-Munchen.
Videx
78. On or about February 24, 2001, Howsam,
through GFT-Circle, purported to enter into a license
agreement with Videx, whereby Videx appeared to pur-
chase the right to exploit The Circle within the territories
of Latin America, including Brazil in exchange for the
payment of $115,000 by Videx (“The Circle Videx License
Agreement”).
79. On or about February 24, 2001, in conjunction
with The Circle Videx License Agreement, Howsam,
through GFT-Circle, purported to enter int an NOA
agreement with Videx, which appeared to assign the
payment of a Minimum Guarantee in the amount of
App. 28
$115,000 by Videx, to Comerica (“The Circle Videx NOA”)
(The Circle Videx License Agreement and The Circle Videx
NOA shall hereafter be collectively referred to as the
“Circle Videx Distribution Agreements”). The Circle Videx
Distribution Agreements were forged since they were not
signed by Cynthia Murray or anyone else authorized to
sign on behalf of Videx.
\
Imperial Films S.A. Notice of Assignment
80. Howsam, through GFT-Circle, entered into a
license agreement, with Imperial Films 8-A. (“Imperial
Films”), whereby Imperial Films purchased the right to
exploit The Circle, om the terms set forth therein, in
exchange for the payment of an amount in excess of
$268,200 by Imperial Films.
81. On or about April 11, ‘2001, Howsam, through
GFT-Circle, purported to enter into an NOA agreement
with Imperial Films, which appeared to assign the pay-
ment of a Minimum Guarantee in the amount of at least
$268,200 by Imperial Films, to Comerica (“Circle Imperial
Films NOA”) The Circle Imperial Films NOA was forged
since it was not signed by an Imperial Films representa-
tive authorized to sign on behalf of Imperial Films.
PCV S.A.
82. On or about February 23, 2001, Howsam,
through GFT-Circle, purported to enter into a license
agreement with PCV S.A. (“PCV”), whereby PCV appeared
to purchase the right to exploit The Circle within Greece in
exchange for the payment of $8,000 by PCV (“The Circle
PCV License Agreement”).
App. 29
83. On or about February 23, 2001, in conjunction
with The Circle PCV License Agreement, Howsam,
through GFT-Circle, purported to enter into an NOA
agreement with PCV, which appeared to assign the pay-
ment of a Minimum Guarantee in the amount of $8,000 by
PCV, to Comerica (“The Circle PCV NOA”) (The Circle
PCV License Agreement and The Circle PCV NOA shall
hereafter be collectively referred to as the “Circle PCV
Distribution Agreements”). The Circle PCV Distribution
Agreements were forged since they were not signed by a
PCV representative authorized to sign on behalf of PCV.
F. Road Rage
Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
84. Howsam established and controlled GFT Road
Rage Films Inc. (“GFT-Road Rage”) for the purpose of
producing the motion picture Road Rage.
85. Howsam, through GFT-Road Rage, entered into a
Loan and Security Agreement and an Interparty Agree-
ment, both of which were dated September 20, 1999, with
Comerica for the purpose of borrowing up to $1,575,000 for
the production of Road Rage. This Loan and Security
Agreement was thereafter amended, on November 19,
1999, to increase the loan amount by $450,000, to a total
of up to $2,025,000 (these agreements are collectively
referred to as the “Road Rage Loan Agreement”). Copies of
the Loan and Security Agreement and Interparty Agree-
ment are attached hereto as Exhibits “K” and “L,” respec-
tively. As security for the loan obligations, Howsam and
GFT-Road Rage pledged all of their interest, rights and
App. 30
title to Road Rage and any and all proceeds generated
therefrom to Comerica.
86. Howsam, through GFT-Road Rage, entered into a
Sales Agency Agreement with Hilltop, dated August 10,
1999, pursuant to which Howsam and GFT-Road Rage
appointed Hilltop as the sales agent for the purpose of
entering into license agreements for the exploitation of
Road Rage in all territories of the world except for the
United States and Canada.
87. Comerica is presently unaware of any forged
License Agreements or NOAs associated with this Film.
However, the LSA for this Film contained provisions by
which the Production Loan on this Film was cross-
collateralized with another of the Films. In fact, most or
all of the Films were cross-collateralized with one or more
of the other Films. Cross-collateralization involves grant-
ing a security interest for one Film in the collateral
pledged for one of the other Films. This way, if one of the
Production Loans is paid off, the collateral pledged may be
applied to pay off another of the Films. All of the Produc-
tion Loans for Films on the GFT Slate were made within a
close time-period, and Comerica generally viewed the
Production Loans collectively as related to one another.
88. In making the loan on Road Rage, Comerica
relied upon the representations made by the Howsam
Parties and others with regard to the other Films. There-
fore, to the extent any misrepresentations were made on
the other Films, Comerica relied thereon to its detriment
in making the Production Loan for Road Rage.
App. 31
G. Ignition
Loan Agreement, Interparty Agreement,
and Sales Agency Agreement
89. Howsam established and controlled GFT/
Redwood Ignition Films, Inc. (“GFT-Ignition”) for the
purpose of producing, the motion picture Ignition.
90. Howsam, through GFT-Ignition, entered into a
Loan and Security Agreement and an Interparty Agree-
ment, both of which were dated June 23, 2000, with
Comerica for the purposes of borrowing $12,469,121 for
the production of Ignition (these agreements are collec-
tively referred to as the “Ignition Loan Agreement”).
Copies of the Loan and Security Agreement and Interparty
Agreement are attached hereto as Exhibits “M” and “N,”
respectively. As security for the loan obligations, Howsam
and GFT-Ignition pledged all of their interest, rights and
title to Ignition and any and all proceeds generated there-
from to Comerica.
91. Howsam, through GFT-Ignition, entered into a
Sales Agency Agreement with Hilltop, dated April 28,
2000, pursuant to which Howsam and GFT-Ignition
appointed Hilltop as the sales agent for the purpose of
entering into license agreements for the exploitation of
Ignition in all territories of the world except for the United
States, Canada, the United Kingdom, France, Germany,
Benelux, Greece and Eastern Europe, among others,
App. 32
Forged License Agreements
and Notices of Assignment
Mesrich Holdings Limited
92. On or about June 21, 2000, Howsam, through
GFT-Ignition, purported to enter into a license agreement
with Mesrich Holdings Limited (“Mesrich”), whereby
Mesrich appeared to purchase the right to exploit Jgnition
within the territories of Italy, among others, in exchange
for the payment of $450,000 by Mesrich (“Ignition Mesrich
License Agreement”).
93. On or about June 26, 2000, in conjunction with
the Ignition Mesrich License Agreement, Howsam,
through GFT-Ignition, purported to enter into an NOA
agreement with Mesrich, which appeared to assign the
payment of a Minimum Guarantee in the amount of
$450,000 by Mesrich, to Comerica (“Ignition Mesrich
NOA”) (the Ignition Mesrich License Agreement and the
Ignition Mesrich NOA shall hereafter be collectively
referred to as the “Ignition Mesrich Distribution Agree-
ments”). The Ignition Mesrich Distribution Agreements
were forged since they were not signed by a Mesrich
representative authorized to sign on behalf of Mesrich.
FIRST CAUSE OF ACTION -
BREACH OF WRITTEN CONTRACT
(Against the Howsam Parties and DOES 1-10)
94. Comerica incorporates paragraphs 1-93 above as
though fully set forth herein.
95. For each of the Films, Howsam signed an LSA,
an Interparty Agreement, and a Sales Agency Agreement.
The LSAs provide the terms under which Comerica loaned
App. 33
money to the Howsem Parties, and the Interparty Agree-
ments and Sales Agency Agreements provide the order in
which the parties involved in producing each of the films
will get paid upon delivery of the films.
96. Pursuant to the express terms of the LSAs and
the Interparty Agreements, the Howsam Parties agreed to
provide valid, enforceable Distribution Agreements and
NOAs. Furthermore, pursuant to the terms of the Inter-
party Agreements and the Sales Agency Agreements, the
Howsam Parties agreed that Comerica’s loans would be
repaid before any other parties claiming an interest in
revenue derived from the Films, including, without limita-
tion, revenue from the Minimum Guarantees.
97. In breach of the terms of the LSA for each Film,
the Howsam Parties failed to deliver duly executed Distri-
bution Agreements and/or executed NOAs to Comerica.
Instead, the Howsam Parties delivered forged or coun-
terfeit Distribution Agreements and NOAs. Additionally,
in breach of the Interparty Agreements and Sales Agency
Agreements, Comerica is informed and believes that the
Howsam Parties were, and are, making payments to third
parties out of revenue derived from the Films, which
should have been paid to Comerica.
98. In making its decision to loan the money for each
of the Films, Comerica relied upon the forged documents
provided to it by the Howsam Parties. However, because
the distributors whose signatures were forged or counter-
feited never actually purchased the distribution rights to
the Films, and never executed the NOAs or related docu-
ments, as described above, those distributors never paid
Comerica after each of the films was produced and deliv-
ered. As a result, more than $20 Million owed to Comerica
App. 34
by the Howsam Parties was never paid, and Comerica has
been damaged by at least that total amount.
99. Comerica has fully performed its duties and
obligations under the LSAs and Interparty Agreements,
except to the extent it was excused or prevented from
doing so by the acts and omissions of the Howsam Parties.
100. In addition, the LSAs, Interparty Agreements,
and Sales Agency Agreements contain an implied agree-
ment that each party will conduct itself in good faith and
will deal fairly with the other, and, further, that neither
party will interfere with or deprive the other of the bene-
fits of the LSAs, Interparty Agreements, and Sales Agency
Agreements. Pursuant to those implied covenants, the
Howsam Parties had a duty to conduct themselves in
accordance with those agreements and not to engage in
any action which would deprive Comerica of the benefit of
those agreements. Comerica entered into the LSAs and
Interparty Agreements, with the understanding and
expectation that it would be paid back in full, and in a
timely fashion, according to the e:.,. ress terms of the LSAs
and Interparty Agreements, and that each loan was fully
secured by the License Agreements and related NOAs.
Furthermore, as a third party beneficiary of the Sales
Agency Agreements, Comerica was entitled to be repaid
from revenue derived by each film before any other inter-
ested party.
101. By engaging in the acts and omissions alleged
herein, the Howsam Parties have breached the covenants
of good faith and fair dealing owed to Comerica pursuant
to the LSAs, Interparty Agreements, and Sales Agency
Agreements, and have acted in bad faith by failing and
App. 35
refusing, without justification, to perform their duties and
obligations under those agreements.
102. On information and belief, Comerica alleges
that the Howsam Parties have pursued this course of
conduct in bad faith and with the intent to interfere with,
injure and frustrate Comerica’s enjoyment of the benefits
and rights conferred under the terms of the LSAs and
Interparty Agreements. Even if 1!:2 conduct alleged above
were adjudged not to amount to a formal breach of the
contracts between Comerica and the Howsam Parties, the
actions of the Howsam Parties have deprived Comerica of
the benefit it sought in entering into the LSAs and Inter-
party Agreements, and the various other associated
agreements.
103. As a direct and proximate result of the afore-
said acts and omissions of the Howsam Parties, Comerica
has incurred damages in excess of $20 Million.
104. Pursuant to the LSAs and Interparty Agree-
ments, Comerica is aJso entitled to recovery of its reason-
able attorneys fees incurred in connection with
enforcement of its rights under each LSA and Interparty
Agreement.
S U -
FRAUD AND DECEIT
(Against the Howsam Parties,
Glockler, Bennecke, and DOES 11-35)
105. Comerica incorporates paragraphs 1-93 above
as though fully set forth herein.
106. As a material inducement to Comerica to enter
into the LSAs and Interparty Agreements, and to lend
App. 36
money to the Howsam Parties for the production of the
Films, the Howsam Parties, Glockler, and Does 11-35, and
each of them, represented to Comerica, among other
things, that they had sold distribution rights to the vari-
ous distributors identified above, and had obtained Li-
cense Agreements and NOAs from those distributors to
whom distribution rights had been sold.
107. The true facts, of which Comerica was unaware,
were that the Howsam Parties had not sold the distribu-
tion rights to those distributors, and the distributors had
not signed NOAs or License Agreements. Instead, the
Howsam Parties, with the assistance of Glockler and
Bennecke, delivered forged or counterfeit NOAs to Co-
merica, upon which Comerica relied in agreeing to lend
money to the Howsam Parties to produce the Films.
108. Comerica is further informed and believes, and
based thereon alleges, that Howsam and various Does,
purposefully and intentivnally directed and controlled the
Howsam Parties, Glockler, and others, and that those
Defendants made the aforesaid false representations with
the intent to deceive and induce Comerica to enter into the
LSAs and Interparty Agreements, and to loan significantly
more money to the Howsam Parties than was actually
secured by pre-sales of distribution rights, and signifi-
cantly more money than was actually necessary to produce
the Films.
109. Upon information and belief, Comerica alleges
that Bennecke falsely represented to Comerica that he had
received, on Comerica’s behalf, legitimate License Agree-
ments and NOAs when in fact he had not, and knew that
the License Agreements and NOAs identified herein were
false and/or forged. Comerica would not have entered into
App. 37
the LSAs and Interparty Agreements, or have otherwise
agreed to loan money to the Howsam Parties with respect
to the Films had Comerica known the true facts alleged
herein.
110. Furthermore, Comerica is informed and be-
lieves that Glockler was responsible for creating and/or
obtaining forged and/or counterfeit signatures on the
License Agreements and NOAs identified herein. Comerica
is informed and believes that Glockler did so on behalf of
the Howsam Defendants and at their behest with the
intent to defraud Comerica.
111. As a direct and proximate result of the fraudu-
lent representations of the Howsam Parties, Bennecke,
Glockler, and others, Comerica has incurred damages in———
excess of $20 Million. The full nature and extent of these
damages, and of the Defendants’ fraudulent acts, are
presently unknown.
112. On information and -belief, Comerica alleges
that the Howsam Parties, Bennecke, Glockler, and various
Does, and each of them, in doing the things herein alleged,
acted willfully, maliciously, oppressively and with full
knowledge of the adverse effect of their actions on Co-
merica, and with willful and deliberate disregard to the
consequences to Comerica. As a direct result of the fraudu-
lent, willful and malicious conduct of the Howsam Parties,
Bennecke, Glockler, and various Does, and each of them,
Comerica is entitled to exemplary and punitive damages
against the Howsam Parties in an amount to be deter-
mined as appropriate by the trier of fact.
(Against the Howsam Parties,
Bennecke, Glockler, and DOES 11-50)
113. Comerica incorporates paragraphs 1-93, and
106-1}2 above as though fully set forth herein.
114. Comerica alleges on information and belief that
Bennecke, Glockler, the Howsam Parties, and Does 11-50
engaged in a conspiracy to defraud Comerica as described
above, and that these defendants reached implicit or
explicit agreements with each other to aid in defrauding
Comerica. In furtherance of their agreements, these
defendants committed the fraud described herein.
115. As a direct and proximate resv't of the fraudu-
lent representations of the Howsam Parties, Bennecke,
and Glockler, Comerica has incurred damages in excess of
$20 Million. The full nature and extent of these damages,
and of Defendants’ fraudulent acts, is presently unknown.
116. On information and belief, Comerica alleges
that the Howsam Parties, Bennecke, and various Does,
and each of them, in doing the things herein alleged, acted
willfully, maliciously, oppressively and with full knowledge
of the adverse effect of their actions on Comerica, and with
willful and deliberate disregard to the consequences to
Comerica. As a direct result of the fraudulent. willful and
malicious conduct of the Howsam Parties, Bennecke,
Glockler, and various Does, and each of them, Comerica is
entitled to exemplary and punitive damages against the
Howsam Parties, Bennecke, Glockler, and Does No. 11-50
in an amount to be determined as appropriate by the trier
or fact.
App. 39
(Against the Howsam Parties,
Bennecke, Glockler, and DOES 11-50)
117. Comerica incorporates paragraphs 1-93, and
106-112 above as though fully set forth herein.
118. Comerica is informed and believes that, as a
material inducement to Comerica to enter into the LSAs
and associated documents, such as the Interparty Agree-
ments, for each Film, the Howsam Parties, Glockler, and
Does 11-50, and each of them, represented to Comerica,
among other things, that the various License Agreements
and NOAs identified herein were legitimate and valid.
Furthermore, the Howsam Parties represented that the
budgets provided to Comerica were true and accurate
representations of the anticipated costs to produce each of
the Films. These defendants knew that Comerica was
relying upon their representations in entering into each of
the LSAs, Interparty Agreements, and related agreements.
119. The aforesaid warranties and representations of
the Howsam Parties, Glockler, and Does 11-50 were false
and fraudulent. Comerica is informed and believes that
Howsam and various Does purposefully and intentionally
directed and controlled the Howsam Parties, Bennecke,
Glockler, and various Does, and that all Defendants made
the aforesaid false representations with the intent to
deceive and induce Comerica to enter into the LSAs and
Interparty Agreements, and to loan significantly more
money that was actually required for the Howsam Parties
to produce the Films.
120. Comerica reasonably relied on the warranties
and represe tations of these defendants in agreeing to
App. 40
enter into the LSAs and Interparty Agreements, and to
loan the money to the Howsam Parties. Comerica would
not have entered into the LSAs and Interparty Agree-
ments, or otherwise have agreed to provide any loans to
the Howsam Parties with respect to the Films, had Co-
merica known the true facts alleged herein. Ve
121. As a direct and proximate result of the fraudu-
lent representations of the Howsam Parties, Bennecke,
Glockler, and Does 11-50, Comerica has incurred damages
in excess of $20 Million. The full nature and extent of
these damages, and of Defendants’ fraudulent acts, are
presently unknown.
122. On information and belief, Comerica alleges
that the Howsam Parties, Bennecke, Glockler, and various
Does, and each of them, in doing the things herein alleged,
acted willfully, maliciously, oppressively and with full
knowledge of the adverse effect of their actions on Co-
merica, and with willful and deliberate disregard to the
consequences to Comerica. As a direct result of the fraudu-
lent, willful and malicious conduct of the Howsam Parties,
Bennecke, Glockler, and various Does, and each of them,
Comerica is entitled to exemplary and punitive damages
against these defendants in an amount to be determined
as appropriate by the trier of fact.
FIFTH CAUSE OF ACTION ~- ACCOUNTING
(Against the Howsam Parties and Does 95-100)
123. Comerica incorporates paragraphs 1-93 above
as though fully set forth herein.
124. As a result of the wrongful action of the
Howsam Parties’ and Does 95-100, Comerica has not been
App. 41
paid the amounts owed it under the LSAs. As a result,
Comerica is entitled to an accounting of the amount owed
it by the Howsam Parties.
125. Additionally, pursuant to the LSAs, the
Howsam Parties agreed to provide Comerica with an
accurate budget and/or agreed to deliver specific movies
with final approved budgets equal to or exceeding various
specified amounts.
126. Comerica is informed and believes that these
defendants have failed and refused to provide Comerica
with an accurate budget for each of the Films. By reason
of, inter alia, the Howsam Parties’ complete dominion and
control over the production and budget of the Films and
including all amounts to be allegedly expended in the
production of the Films, and the preparation, accounting
for and payment of all items on the budgets prepared by
the Howsam Parties in connection with the Films, and
based on the terms and conditions of the parties’ agree-
ments, Comerica is entitled to a full and accurate account-
ing of the budgets for each Film, and the final actual cost
of each Film.
127. Furthermore, Comerica is informed and be-
lieves that the Howsam Parties have received payments
for license fees from distributors that should have been
paid directly to Comerica pursuant to the terms of the
LSAs, Interparty Agreements, and Licence [sic] Agree-
ments. Additionally, Comerica is informed and believes
that the Howsam Parties paid money to other parties
before paying off the loans to Comerica, as they were
required to do under the LSAs, Interparty Agreements,
and Sales Agency Agreements. As a result, Comerica is
entitled to an accounting of all License Fees received from
App. 42
distributors, all payments made to third parties, and any
other money received or paid out prior to paying off the
loans on the subject Films.
SIXTH CAUSE OF ACTION -
MONEY HAD AND RECEIVED
(Against the Howsam Parties and DOES 1-10)
128. Comerica incorporates paragraphs 1-93 above
as though fully set forth herein.
129. Within the last four years, the Howsam Parties
became indebted to Comerica in a sum in excess of $20
million for money had and received by said Defendants for
the use and benefit of Comerica.
130. The whole of the above sum has not been paid,
although demand therefor has been made.
131. There is not due, owing and unpaid from the
Howsam Parties to Comerica the sum of not less than $20
million, together with interest as may be provided by law.
F -
(Against the Howsam Parties and DOES 1-10)
132. Comerica incorporates paragraphs 1-93 above
as though fully set forth herein.
133. Within the last four years, an account was
stated by and between Comerica and the Howsam Parties
in which it was agreed and understood that said Defen-
dants were indebted to Comerica in a sum in excess of $20
million.
App. 43
134. The whole of the above sum has not been paid,
although demand therefor has been made.
135. There is not due, owing and unpaid from the
Howsam Parties to Comerica the sum of not less than $20
million, together with interest as may be provided by law.
EIGHTH CAUSE OF ACTION -
OPEN BOOK ACCOUNT
(Against the Howsam Parties and DOES 1-10)
136. Comerica incorporates paragraphs 1-93 above
as though fully set forth herein.
137. Within the last four years, the Howsam Parties
became indebted to Comerica on an open book account for
money due in a sum in excess of $20 million for money lent
at said Defendants request.
138. The whole of the above sum has not been paid,
although demand therefor has been made.
139. There is not due, owing and unpaid from the
Howsam Parties to Comerica the sum of not less than $20
million, together with interest as may be provided by law.
PRAYER FOR RELIEF
WHEREFORE, Comerica prays for judgment against
all defendants in this action, jointly and severally, as
follows:
App. 44
AS TO THE FIRST CAUSE OF ACTION:
1. For general damages in a sum of not less than
$20,000,000 or an amount according to proof, together
with interest thereon at the legal rate;
2. Attorney's fees and costs;
AS TO THE SECOND CAUSE OF ACTION:
3. For general damages in a sum of not less than
$20,000,000 or an amount according to proof, together
with interest thereon at the legal rate;
4. Exemplary and punitive damages in an amount
according to proof at the time of trial;
AS TO THE THIRD CAUSE OF ACTION:
5. For general damages in a sum of not less than
$20,000,000, or an amount according to proof, together
with interest thereon at the legal rate;
6. Exemplary and punitive damages in an amount
according to proof at the time of trial;
AS TO THE FOURTH CAUSE OF ACTION:
7. For general damages in a sum of not less than
$20,000,000, or an amount according to proof, together
with interest thereon at the legal rate;
8. Exemplary and punitive damages in an amount
according to proof at the time of trial;
App. 45
AS TO THE FIFTH CAUSE OF ACTION:
9. For an accounting of the actual budgets and costs
of each cf the Films;
_AS TO THE SIXTH CAUSE OF ACTION:
10. For damages in a sum of not less than
$20,000,000 or an amount according to proof, together
with interest thereon at the legal rate;
AS TO THE SEVENTH CAUSE OF ACTION:
11. For damages in a sum of not less thah
$20,000,000 or an amount according to proof, together
with interest thereon at the legal rate;
AS TO THE EIGHTH CAUSE OF ACTION:
12. For damages in a sum of not less than
$20,000,000 or an amount according to proof, together
with interest thereon at the legal rate;
AS TO ALL CLAIMS FOR RELIEF:
13. For a finding of constructive trust for:
(i) the distribution rights in the territories cov-
ered by all License Agreements executed in
connection with the Films;
(ii) all revenue derived from the sale of any
right in the Films;
(iii) legal title to all of the Films; and
(iv) any other interest in which Comerica should
rightfully hold a security interest pursuant
to the LSAs and Interparty Agreements;
\
App. 46
14. For an injunction precluding the Howsam Par-
ties from transferring legal title during the pendency of
this suit to frustrate Comerica’s equitable interest in any
of the foregoing items held in constructive trust;
15. For all costs of suit incurred herein;
16. For reasonable attorney's fees as may be pro-
vided by law;
17. For interest as may be provided by law; and
18. For such other and further relief, including
without limitation injunctive relief, as the Court deems to
be just and appropriate.
DATED: September 3, 2004
BUCHALTER, NEMER,
FIELDS & YOUNGER
A Professional Corporation
By:
Robert S. Addison, Jr.
Attorneys for Plaintiff
COMERICA BANK,
a Michigan Banking Corporation
App. 47
BUCHALTER, NEMER, FIELDS & YOUNGER
A Professional Corporation
Michael L. Wachtell (SBN: 47218)
Ronald K. Sittler (SBN: 185853)
Robert S. Addison, Jr. (SBN: 188565)
601 South Figueroa Street, Suite 2400
Los Angeles, CA 90017-5704
Telephone: (213) 891-0700
Facsimile: (213) 896-0400
Attorneys for Plaintiff
COMERICA BANK, a Michigan Banking Corporation
SUPERIOR COURT OF THE
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMERICA BANK, a Michi- | CASE NO. BC316406
gan Banking Corporation, =| @ppOsITION OF
Plaintiff, COMERICA BANK TO
- MOTION OF DEFEN-
: DANTS GARY
GARY HOWSAM, an individ- | HOWSAM AND
ual; GFT ENTERTAINMENT, /| GREENLIGHT FILM
INC., and Ontario corporation,| AND TELEVISION,
also known as GFTE, INC., INC. TO QUASH SER-
and previously known as VICE OF SUMMONS
GREENLIGHT FILM AND FOR LACK OF PER-
TELEVISION, INC. D/B/A SONAL JURISDICTION
GET ENTERIARMENT. | tetas Ram 8
MENT GROUP, INC., an Addison, Jr., Carmen E.
Ontario Corporation; GFT | Carpenter, and G. Raymond
CIRCLE FILMS, INC., F. “a oubenitted here-
an Ontario Corporation; —
ROAD RAGE FILMS, INC.,
App. 48
a Corporation of unknown Date: December 15, 2004
origin; JANUS PRODUC- Time: 8:30 a.m.
TIONS, INC., a Quebec Dept: 31
Corporation; GFT GOING Judge: Hon. Andria K.
BACK FILMS, INC., an Richey
Ontario Corporation; GFT
HERESY FILMS, INC.,
an Ontario Corporation;
GFT/REDWOOD KOTN
FILMS, INC., a British
Columbia Corporation;
GFT/REDWOOD IGNITION
FILMS, INC., a British
Columbia Corporation;
ADAM BENNECKE,
an individual; MICHEL
GLOCKLER, an individual;
and DOES 1 through 100,
inclusive,
Defendants.
I. D N F :
Despite their extensive and purposeful contacts with
this State in furtherance of a major fraud scheme aimed at
Comerica Bank (“Comerica”), defendants Greenlight Film .
and Television, Inc., D/B/A GFT Entertainment (“Greenlight”)
and Gary Howsam (“Howsam”) both move this Court to
quash service of summons for lack of personal jurisdiction.
The Motions of Howsam and Greenlight should be denied
because this Court has jurisdiction over these two defen-
dants based on the following:
1. Howsam and Greenlight had sufficient con-
tacts with California to justify the exercise
of personal jurisdiction;
App. 49
2. Howsam and Greenlight consented to Cali-
fornia jurisdiction; and
3. California has a compelling interest in this
action.
In the event that the Court finds insufficient evidence
contained within this Opposition, Comerica is entitled to
conduct discovery for the purpose of obtaining support for
its Opposition.
II. FACTUAL BACKGROUND
A. Howsam Came to California to Obtain Fi-
n n o i i
In 1999 and 2000, Howsam used his company,
Greenlight, to seek out and fraudulently obtain film financ-
ing from Comerica Bank-California, a California banking
corporation.’ In connection with his fraud scheme,
Howsam, both individually and as an officer of Greenlight,
personally came to California numerous times to negotiate
financing with Comerica for a number of films he planned
to produce through Greenlight, including Deception, Going
Back, Kevin of the North, Global Heresy, The Circle, Road
Rage and Ignition (collectively, the “Films”). [Declaration
of G. Raymond F. Gross (the “Gross Decl.”), 19 3 and 4;
Declaration of Carmen E. Carpenter (“Carpenter Decl.”),
44 1-4, and 7.)
The loans, amounting to over $37 million, were
negotiated by Howsam in California, and were funded
’ Plaintiff Comerica, a Michigan banking corporation, is the
successor in interest to Comerica Bank, a California corporation.
[Carpenter Decl. 7 4.]
\
App. 50
through single purpose corporate entities (the “SPEs”),
which were established and controlled by Howsam and
Greenlight. (Carpenter Decl., 99 8-10, Exs. A-N; Gross
Decl., {7 3-4.) Performance of the loan agreements was
also due in California. [Carpenter Decl., { 10, Ex’s. A-G.]
Furthermore, Howsam and Greenlight continue to do
business in California, even as recently as November,
2004, when Howsam’s successor company to Greenlight,
GFT Entertainment, Inc. (“GFT”), was in Santa Monica
marketing its films. [Declaration of Robert S. Addison, Jr.
(“Addison Decl.”), {9 11 and 12 and Ex’s A, K, and M.]
When Howsam first approached Comerica, and during
the entire business relationship thereafter, he presented
himself as a movie producer seeking financing for a
number of films. (Carpenter Decl., 75.) Typically, when
Comerica provides film financing, the producer/borrower
provides licensing agreements and an assignment of the
minimum guaranteed licensing fees to be paid by distribu-
tors, as collateral for the loans. [Carpenter Decl., 7] 8-10.)
In connection with the production and financing of films,
single purpose corporate entities are created as shell
corporations, which become the technical borrowers for
each of the subject loans; that is what occurred in this
case. [Carpenter Decl., 47 8-10.)
Howsam personally came to California and negotiated
with Comerica personnel, here in Los Angeles, to obtain
financing for the Films, which he was producing through
his company, Greenlight. [Gross Decl., {4 3-4; Carpenter
App. 51
Decl., 49 1-4, and 7.) During this negotiation process,
Howsam and Greenlight created the SPEs — one entity for
each of the Films — which were controlled by Howsam and
Greenlight. [Carpenter Decl., 74 8-9.) In fact, Howsam
personally signed all the loan documents on behalf of the
SPEs, including the Loan and Security Agreements
(“LSAs”), which provide that the parties consent to the
application of California law, to jurisdiction in this State,
and to venue in this Court. [See {{ 10.4 and 10.7 of the
LSA’s, attached as Ex’s A through G to the Carpenter
Decl.)
Each of the SPEs was owned by Greenlight, or by
another corporate entity of which Howsam was the owner
and/or officer. [See, Carpenter Decl., 1 9, Exs. H-N.] More-
over, the SPEs were virtually non-capitalized: for example,
GFT Heresy issued a total of ten shares, which were pur-
chased by Greenlight for ten cents per share, for a total of $1.
[Carpenter Decl., { 9, Ex. J.| GFT-KOTN and GFT-Ignition
each issued 101 shares at ten cents per share and, in both
cases, 100 of the shares were purchased by Greenlight (49
shares) and Redwood Films, Inc. (51 shares), both of which
are Howsam controlled entities. [Carpenter Decl., { 9, Exs.
L, N.)
Fraud By Providing Falsified Loan Col-
lateral to Comerica.
Although the SPEs were the technical borrowers on
the Comerica loans, Comerica only funded the loans to the
SPEs based on the collateral provided by Howsam and
Greenlight, all of which turned out to have been forged by
Howsam or at his direction. [Carpenter Decl., { 11-19;
Addison Decl., 713, and Ex’s N and O.] Specifically,
App. 52
Notices of Assignment of licensing fees (“NOAs”) were
delivered to Comerica, by Howsam and Greenlight, which
contained forged signatures. [Carpenter Decl., {{ 14-15;
Addison Decl., 4 13, Ex’s N and O.] As part of its ongoing
investigation into this matter, Comerica has obtained
declarations by foreign distributors, in which the distribu-
tors testify that their signatures were forged on NOAs and
other agreements. [Addison Decl. { 13, Ex’s N and O.] This
forgery and falsification of collateral occurred in California
and was clearly directed at a California bank.
Pursuant to the Sales Agency Agreements and the
Interparty Agreements, executed by Howsam, the SPEs
must pay Comerica before any other creditor, including
Hilltop’s Harel Goldstein, the sales agent for the Films is
paid. (Carpenter Deci., Exs. O-U.] Instead of honoring these
agreements, however, prior to the full repayment of Co--
merica’s loans Howsam and Greenlight misused SPE funds
that were due to Comerica, by wiring at least $57,000 from
the SPEs and GFT to Carole Goldstein (Harel Goldstein’s
wife), who had no connection to the Films. [Addison Decl.,
71 14 and 15, Ex. P})
In December 2002, the movie business of Greenlight
(d/b/a GFT Entertainment) became GFT Entertainment
Inc. (“GFT”). [See Addison Decl. 4] 3-10, Ex’s B through I.)
GFT continued to share the same address as Greenlight,
at 124 Merton Street, Suite 407 in Toronto, Canada, and,
as late as November, 2004, GFT’s website listed Greenlight
films among its “Completed Productions,” including the
Films which are the subject of this action. (See Addison
App. 53
Decl. 4{ 3-10, Ex’s B through I.) In September 2004, GFT
again changed its name, this time to Peace Arch Films, but
in each case, the same individual —- Howsam - is involved
in selling the same Films which were financed with the
same funds fraudulently obtained from Comerica. [See
Addison Decl. {J 9 and 10, Ex’s J and L.}
GFT’s website, located on the internet at www.gfte.com,
lists GFT’s address as 124 Merton Street, Suite 407,
Toronto, Ontario, Canada. [Addison Decl., 7 3.] On the
page entitled “Completed Productions,” the Films at issue
in this case are listed under the heading “Greenlight Film
& Television, Inc.” [Addison Decl., { 3.] Additionally, for
each of these films is a separate web page, listing details of
the film’s production, including Gary Howsam as producer
for all of the Films, and identifying distributors for each
film. [Addison Decl., { 3, Exs. B — H.]
In late October or early November 2004, counsel for
GFT was informed of the content of GFT’s own website by
counsel for Comerica. [Addison Decl., 197 and 8.] On
November 16, 2004, just two weeks after that conversa-
tion, the website had been changed. [Addison Decl., 4 9,
Ex. K.] Moreover, on September 1, 2004, after the filing of
the present action against GFT, GFT Entertainment, Inc.
changed its name to Peace Arch Motion Pictures, Inc., and
the website now reflects that new name. [Addison Decl.,
4 9, Ex. J.) Significantly, on the “Completed Productions”
website page, the Greenlight films have been removed.
[Addison Decl., { 9.]
Significantly, the issue of the Los Angeles Superior
Court's jurisdiction over Howsam and Greenlight in connec-
Bank has already been litigated and adjudicated. In late
1999, around the time Howsam and Greenlight were in
California to commence the process of defrauding Co-
merica of $20,000,000, the law firm of Kaye, Scholer,
Fierman, Hays & Handler, LLP (“Kaye Scholer”) sued
Howsam and Greenlight for their failure to pay attorneys
fees owed to Kaye Scholer in connection with Howsam’s
production of the film “Helleab.” [Addison Decl., 1 16.)
Under circumstances similar to this case, Howsam and
Greenlight hired Kaye Scholer to assist in various corpo-
rate matters and to help obtain financing for the produc-
tion Hellcab, which was finally obtained from Comerica
Bank. (Addison Decl., { 16.)
After Howsam and Greenlight failed to pay their
attorneys’ fees, Kay Scholer filed suit, in response to which
Howsam and Greenlight, through their attorney, Charles
M. Coate (Howsam and Greenlight’'s present counsel), filed
a motion to quash for lack of personal jurisdiction. The Los
Angeles Superior Court, Department 78, the Honorable
Marilyn L. Hoffman presiding, denied Howsam and
Greenlight’s motion to quash, and ruled that the Court
* Comerica requests the Court take judicial notice of LASC Case
No. BC213-970, the pleadings and records on file in that case, and the
Orders issued by this Court in that case. (Addison Decl., 1 16, Ex. T.)
App. 55
held specific jurisdiction over both defendants. [Addison
Decl., { 16, Ex. T.]
The circumstances of the present case are substan-
tively no different from the Kaye Scholer case. In fact,
Howsam and Greenlight’s motion in the present case is
virtually identical to the motion filed in the Kaye Sholer
case. It is indisputable that, in the late 1990's and early
2000's, Howsam and Greenlight were active in California,
doing business with California law firms, and obtaining
film financing from Comerica, a California bank. (Carpen-
ter Decl., 74 5-7.) This Court previously held Howsam and
Greenlight subjec! \ its jurisdiction in connection. with
disputes arising out of Howsam and Greenlight’s Califor-
nia-related business, and the Court should once again rule
the same.
B. Howsam And Greenlight Had Sufficient
Contacts With California To Justify This
Court's Exercise Of Personal Jurisdiction,
California courts may exercise personal jurisdiction
over nonresident defendants “on any basis not inconsistent
with the Constitution of this state or of the United States.”
(Code Civ. Proc., § 410.10.) California’s “long-arm” statute
“manifests an intent to exercise the broadest possible
jurisdiction, limited only by constitutional considerations.”
(Sibley v. Super. Ct., 16 Cal. 3d 442, 445 (1976) (emphasis
added).)
Under the federal Constitutional standards, a state
court’s assertion of specific personal jurisdiction over a
nonresident defendant who has not been served with
process within the state requires that the defendant has
sufficient “minimum contacts” with the forum such that
App. 56
“maintenance of the suit does not offend traditional
notions of fair play and substantial justice.” (Internat.
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations
omitted); Vons Companies, Inc. v. Seabest Foods, Inc., 14
Cal. 4th 434, 445 (1996).) Specific jurisdiction is deter-
mined under a three-part test:
(1) the defendant has purposefully availed itself
of forum benefits with respect to the matter
in controversy;
(2) the controversy is related to or arises out of
the defendant’s contacts with the forum; and,
(3) the exercise of jurisdiction would not offend
traditional notions of fair play and substan-
tial justice.
(Archdiocese of Milwaukee v. Super. Ct., 112 Cal. App.
4th 423, 435-436 (2003).) All three criteria are met in this
case.
1. Howsam And Greenlight Purposefully
availed T) Ives Of California Benefit
Nonresident defendants are subject to specific juris-
diction if, by their forum-related contacts, they: (1) pur-
posefully direct activities at forum residents; (2)
purposefully derive benefit from forum activities; or (3)
purposefully avail themselves of the privilege of conduct-
ing activities with the forum state, tnus invoking the
benefits and protections of its laws. (See Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 472-475 (1985).) Howsam and
Greenlight’s activities in California satisfy all three
purposeful availment formulations.
Under the “effects test,” California courts will deter-
mine that a defendant has purposefully availed of forum
benefits if the defendant engaged in intentional conduct
expressly aimed at or targeting the forum state, and the
defendant knew the intentional conduct would cause harm
in the forum. (Archdiocese of Milwaukee, 112 Cal. App. 4th
at 436-437.) “The substantial connection between the
defendant and the forum sta‘e necessary for a finding of
minimum contacts must come about by an action of the
defendant purposefully directed toward the forum State.”
(Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102,
112 (1987) (citations omitted).) In fact, jurisdiction exists
even if the non-resident has not otherwise invoked the
benefits and protections of local law. (See Jamshid-Negad
uv. Kessler, 15 Cal. App. 4th 1704, 1708-1709 (1993).)
Here, the evidence clearly supports jurisdiction over
both Howsam and Greenlight, due to their purposeful
activity aimed at causing harm to Comerica in California.
In connection with the loans at issue in this case,
Howsam, the President of Greenlight, sought out and
obtained the loans from Comerica, a California bank, and
met with Comerica personnel on many occasions in Cali-
fornia. (Gross Decl., {9 3 and 4; Carpenter Decl., {4 5-7.)
Howsam, acting individually and on behalf of Greenlight,
presented forged and false collateral to Comerica, in
California, in order to induce Comerica into funding the
loans, of which Howsam and Greenlight obtained the
benefit. In addition, Howsam worked intimately with
Hilltop Entertainment, LLC, a California company, and its
employees and agents, all California residents, to market
App. 58
and sell the Films. [Gross Decl., 74.3 and 4; Carpenter
Decl., 7 5-7.) Howsam also signed the loan documents for
the subject loans, purportedly on behalf of the SPEs,
which were established by Howsam and wholly owned by
Greenlight. (Carpenter Decl., ¥ 10.)
b. Howsam And Greenlight Obtained The
Benefit Of The Loan Contracts Which
Were Negotiated in Californi
Although the loans were funded to the SPEs, Howsam
and Greenlight obtained the clear benefit of the fraudu-
lently obtained loans and, as such, purposefully availed of
California benefits. (See Burger King Corp., 471 U.S. at
475.) All of the SPEs were established to finance the Films
and were fully controlled by Howsam and Greenlight.
(Carpenter Decl. 498-10, Exs. H-N.] Howsam and
Greenlight’s subsequent marketing efforts were assisted
by Hilltop’s Harel Goldstein, a California sales agent, and
Howsam, both individually and as President of Greenlight,
earned a significant amount of money and enhanced his
professional reputation by getting the Films made. [Gross
Decl., 1 4.) In addition, the SPEs were required by the
loan agreements to pay Comerica before any other credi-
tor, including Mr. Goldstein. [Carpenter Decl., { 10, Exs.
A-G.] Instead of honoring these agreements, however,
Howsam and Greenlight misused SPE funds that were due
to Comerica. [Addison Decl., ¥ 14.) In 2001, prior to the
full repayment of the Comerica loans, Howsam and
Greenlight wired at least $57,000 from the SPEs to Carole
Bennett Goldstein (Harel Goldstein's wife), who was not
hired by Howsam, Greenlight, or the SPEs and, in fact,
who had no connection whatsoever to the films. [Addison
Decl., { 14 and 15, Ex. P.)
App. 59
Howsam and Greenlight continue to market and
benefit from the Films, and thus there can be no dispute
but that Howsam and Greenlight purposefully derived
benefit from their contacts with California and from the
fraud scheme that they devised and executed here againsi
Comerica.
Howsam and Greenlight engaged in repeated acts
which both California and federal courts have expressly
held are sufficient to satisfy the minimum contacts re-
quirements. Specifically, the United States Supreme Court
has held that entering into a single contract in the Cali-
fornia may subject the contracting party to California
jurisdiction. (McGee v. International Life Ins. Co., 355 U.S.
220, 223 (1957).) In McGee, the Court held that a single
life insurance policy issued to a California resident, and
the subsequent collection of premiums on that policy, was
enough to support a California court’s jurisdiction over a
Texas insurer.
In the present case, Howsam and Greenlight negoti-
ated multiple loan agreements with a California bank, in
California, and made payments thereon, thus giving rise
to California jurisdiction over them. (Carpenter Decl.,
q7 15.) In so doing, Howsam and Greenlight communicated
on a regular basis with Comerica, its Los Angeles counsel,
and its Los Angeles sales agent, via telephone, mail, and e-
mail, regarding the details of obtaining the subject loans
and the performance of those contracts. [Gross Decl., {{ 3
and 4; Carpenter Decl., {7 2, 5] (See Hall v. LaRonde, 56
App. 60
Cal. App. 4th 1324, 1344 (1997) [non-resident contacts
with California resident via e-mail and telephone resulted
in a contract and therefore minimum contacts].) Further-
more, Howsam signed loan documents, which were sent to
Comerica in California. [Carpenter Decl., { 10.]
The evidence in this case overwhelmingly demon-
strates a pattern of activity by Howsam and Greenlight in
California, which was directly related to the loans at issue
in this action, and was designed to defraud a California
bank. Howsam and Greenlight therefore purposefully
availed themselves of California benefits and should be
subject to this Court’s jurisdiction in order that they may
be called to account for their actions.
2. —_ ;
eS eee light’s F “Related Activiti
In applying minimum contacts analysis, courts con-
sider those “forum-related activities as they relate to the
specific causes of action.” (Gordy v. Daily News, 95 F. 3d
829, 835 (9th Cir.1996).) “The United States Supreme
Court has stated more than once that the nexus required
to establish specific jurisdiction is between the defendant,
the forum, and the litigation. (Vons, 14 Cal. 4th at 458;
citing, Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 411 (1984).)
In determining the nature of a defendant’s activities
in the State, California Courts inquire as to whether the
quality and nature of the activity in relation to the par-
ticular cause of action make it fair to exercise jurisdiction:
“In analyzing the defendant’s activities we must
focus upon ‘economic reality’ rather than a me-
chanical checklist. An enterprise obtains the
App. 61
benefits and protection of our laws if as a
matter of commercial actuality it has en-
gaged in economic activity within this state.”
Foster v. Mooney Aircraft Corp., 68 Cal. App. 3d 887, 892
(1977). Moreover, the Court of Appeal has clearly stated
that economic activity in the State will satisfy this inquiry:
“An isolated act of economic activity, such as
the making and performance of a contract
in the forum state, may be sufficient to accord
the forum state jurisdiction over the defendant
when the cause of action is related to that iso-
lated act of economic activity.
(Sanders v. CEG Corp., 95 Cal. App. 3d 779, 784 (1979)
(emphasis added).)
Here, Howsam and Greenlight were engaged in
economic activity with a California bank, obtained loans
by personally negotiating with Comerica personnel in
California, and defrauded Comerica by misrepresenting
material information in connection with the loans. [Car-
penter Decl., {7 10-15.) Comerica brings its claims against
Howsam and Greenlight for their actions in committing
this fraud and thereby obtaining millions of dollars from
Comerica based on forged collateral. (Carpenter Decl.,
71 14 and 15.) The loan agreements resulted from exten-
sive contacts with California, in the negotiation and
execution of the loans, and were based on forged and false
collateral which was provided by Howsam and Greenlight
- to Comerica in this State. [Carpenter Decl., {7 5-7, 14 and
15.) Accordingly, Howsam and Greenlight are subject to
this Court’s personal jurisdiction because a clear and
undeniable nexus exists between their economic activity in
California and the resulting claims by Comerica.
In extending personal jurisdiction over a non-resident
entity, California courts consider additional factors to
ensure that the assumption of jurisdiction “does not offend
traditional notions of fair play and substantial iustice”:
“We consider (1) California's interest in providing
a forum for its residents to redress grievances oc-
curring in California, (2) the relative availability
of evidence in the various forums, (3) the burden
of prosecuting and defending in California as op-
posed to prosecuting and defending the action
elsewhere, (4) the opportunity to avoid a multi-
plicity of actions and conflicting adjudications by
assuming jurisdiction, and (5) the extent to
which a plaintiff's cause of action arises out of
defendant’s local activities.”
(Sanders, 95 Cal. App.3d at 790.)
Clearly, California has a de facto compelling interest
in preventing fraud and in providing a forum to redress
Comerica’s grievances. At al) relevant times to this action,
Comerica was a California bank in the business of financ-
ing films, an industry for which California has a well-
deserved international reputation. All of Comerica’s docu-
ments in connection with these loans are in California —
specifically, in Comerica’s Los Angeles offices -— and
Howsam and Greenlight, through their alter ego SPEs,
have consented to jurisdiction here. (Carpenter Decl., { 10,
Exs. A-G.}
Howsam and Greenlight are simply wrong in their
statement that it would be unreasonable to have this
App. 63
matter litigated in California due to the location of wit-
nesses and documents. On the contrary, the majority of
percipient witnesses in this case are located in California,
and a significant number of other witnesses are located in
various countries throughout the world. There is quite
simply no single location that could possibly suit the conven-
ience of all witnesses, and Howsam and Greenlight’s point is
By conducting this litigation in California, Comerica
can avoid a multiplicity of suits against individuals and
entities located in different regions of the United States
and Canada. More importantly, this case arises from
Howsam and Greenlight’s own direct activities within this
State, which activities were aimed at harming a California
bank and involved repeated contacts with California, and
this State therefore has an interest in providing a forum to
litigate all matters directly related to those activities.
(Carpenter Decl., 1] 2-5.)
Alter Egos - the SPEs.
In connection with the loans, single purpose corporate
entities (the “SPEs”) were created and controlled by
Howsam and Greenlight to act as borrowers. These SPEs
should each be disregarded as corporate entities to the
extent that they were used by Howsam and Greenlight for
the illegitimate purpose of defrauding Comerica. Under
the “alter ego doctrine,” California courts will disregard a
corporate entity in order to exercise jurisdiction over an
individual where the corporation is “used to accomplish a
fraudulent object.” (First Western Bank & Trust Co. v.
Bookasta, 267 Cal. App. 2d 910, 914 (1968).)
App. 64
Comerica is suing the parties in this case based upon
the Loan and Security Agreements and other loan docu-
ments entered into between Comerica and the SPEs. The
Loan and Security Agreements expressly provide that
California law governs disputes related thereto, that
California has jurisdiction over such disputes, and that
Los Angeles Superior Court is the proper venue for such
disputes. [Carpenter Decl., Exs. A-G.] Furthermore, Howsam
himself signed the Loan and Security Agreements, pur-
portedly on behalf of the SPEs, and both he and Greenlight
furnished fraudulent collateral to induce Comerica to enter
- those agreements and fund the loans to the SPEs. [Car-
penter Decl., 77 10, 14 and 15, and Exs. A-G.]
1. There Was A Unity Of Interest And Owner-
ship Between Howsam, Greenlight And
The SPEs.
“There is no litmus test to determine when the corpo-
rate veil will be pierced; rather the result will depend on
the circumstances of each: particular case.” (Mesler v.
Bragg Management Co., 39 Cal. 3d 290, 300 (1985).) Two
sets of circumstances m+ generally exist, however, for
the alter ego doctrine to apply: ‘irst, the corporation must
be influenced and governed by the individual such that
there is “a unity of interest and ownership” between the
individual and the entity and their “separateness” has
ceased; second, “the facts are such that an adherence to
the fiction of the separate existence of the corporation
would, under the particular circumstances, sanction a
fraud or promote injustice.” (Minifie v. Rowley, 187 Cal.
481, 487 (1921).)
Here, a clear unity of ownership existed between
Howsam, Greenlight and the SPEs. Each of the SPEs was
App. 65
controlled by Howsam and Greenlight and all were virtu-
ally non-capitalized: for example, GFT Heresy issued a
total of ten shares, which were purchased by Greenlight
for ten cents per share, for a total of $1. (Carpenter Decl.,
Ex. J.| GFT-KOTN and GFT-Ignition each issued 101
shares at ten cents per share and, in both cases, 100 of the
shares were purchased by Greenlight (49 shares) and
Redwood Films, Inc. (51 shares), both of which are
Howsam controlled entities. (See, Carpenter Decl., { 9,
Exs. L, N.] Howsam and Greenlight established the SPEs
for the sole purpose of obtaining the loans by fraudulent
means and Howsam personally signed al] the loan docu-
ments on behalf of the SPEs, including the Loan and
Security Agreements. (See, Carpenter Decl., {7 10, 14 and
15.)
Howsam and Greenlight conducted all the negotia-
tions for the loans, and established and fully controlled the
SPEs, which were the technical borrowers. (Carpenter
Decl., 77 5-9.) Moreover, the SPEs had no assets beyond
the Films and the rights to the Films, all of which are now
controlled by Howsam, Greenlight and their successors,
who continue to obtain the full benefit of the Films.
[Carpenter Decl., ¥ 9.) In fact, the “separate” entities only
qualified for the film financing loans based on the forged
and false collateral that was intentionally provided to
Comerica by Howsam and Greenlight. (Carpenter Decl.,
41 14-18.) In further demonstration of their total domi-
nance of the SPEs and their sheer disregard of the obliga-
tions of the SPEs under the loan contracts, Howsam and
Greenlight misused SPE funds in 2001, by wiring money
to Carole Goldstein, the wife of Hilltop’s Harel Goldstein,
who had no discernable connection to the Films. [Addison
Decl., 414.) The SPEs are therefore inseparable from
App. 66
Howsam and Greenlight for the purposes of their obliga-
tions under the Loan and Security Agreements.
2. An Inequitable Result Will Follow If Howsam
And Greenlight Are Not Bound To The Terms
Of The Loan and Security Agreements.
The policy behind the alter ego doctrine seeks to hold
individuals to account for their wrongful acts, even though
those acts were ostensibly done in the corporation's name:
“The alter ego doctrine arises when a plaintiff
comes into court claiming that an opposing party
is using the corporate form unjustly and in dero-
gation of the plaintiff's interests. [...] As the
separate personality of the corporation is a
statutory privilege, it must be used for legiti-
mate business purposes and must not be per-
verted. When it is abused it will be dis-
regarded and the corporation looked at as a
collection or association of individuals, so
that the corporation will be liable for acts of
the stockholders or the stockholders liable for
acts done in the name of the corporation.”
(Minifie, 187 Cal. at 487, (emphasis added) (internal cita-
tions and quotations omitted).)
In this case, the SPEs were not in reality “separate”
entities, but were established and controlled exclusively by
Howsam and Greenlight for the purpose of defrauding
Comerica. Even if the SPEs are deemed legitimate corpo-
rations, however, this Court should nonetheless disregard
the “separateness” of the SPEs to the extent necessary to
bind Howsam and Greenlight to the terms of the Loan and
Security Agreements that were signed by Howsam. (See
Automotriz etc. de California v. Resnick, 47 Cal. 2d 792,
App. 67
796 (1957).(California courts will disregard the “separate-
ness” of corporate entities where the shareholder is using
the corporations for an illegitimate purpose and “an
inequitable result will follow” if the acts of the individual
shareholder are treated as those of the corporation alone].)
The Loan and Security Agreements were only entered
into by Comerica in reliance on the forged collateral that
Howsam and Greenlight provided. [Carpenter Decl., { 14.]
Thus there can be no doubt that an inequitable result will
follow if Howsam and Greenlight are allowed simultane-
ously to bind the SPEs to jurisdiction in California, by
means their own fraud, and still evade such jurisdiction
themselves. Permitting Howsam and Greenlight to evade
their responsibility in this way would clearly sanction
fraud and promote injustice, and this court should not
countenance such a result.
D. Comerica Is Entitled to Conduct Discov-
ery To Establish Minimum Contacts.
Although Comerica has presented a _ substantial
amount of proof of Howsam and Greenlight’s minimum
contacts with California, there are other witnesses, includ-
ing these defendants, who have knowledge of their activi-
ties in California. Furthermore, these defendants created
a complex series corporate creation and re-creation,
evidence of which is in their possession. Therefore, to the
extent that this Court feels Comerica has not provided
sufficient proof that Howsam and Greenlight engaged in
sufficient minimum contacts with California to warrant
the exercise of personal jurisdiction, or that the claims
alleged in this action arose from those activities, Comerica
respectfully requests a continuance from this Court to
App. 68
conduct sufficient discovery to establish minimum con-
tacts.
“Where jurisdiction is challenged by a non-resident
defendant, the burden of proof is upon the plaintiff to
demonstrate that ‘minimum contacts’ exist between the
defendant and the forum state to justify imposition of
personal jurisdiction.” (Mihlon v. Super. Ct., 169 Cal. App.
3d 703, 710 (1985).) It is well-settled that the plaintiff is
entitled to conduct discovery on the jurisdictional issues
presented by a defendant's motion to quesh and, if unable
to complete such discovery before the hearing on the
motion, is entitled to a continuance for this purpose. (See
School Dist. of Okaloosa County v. Super. Ct. (City of
Orange), 58 Cal. App. 4th 1126, 1131 (1997).
IV. CONCLUSION
Comerica respectfully requests that Howsam and
Greenlight’s Motion be denied and that these defendants
be ordered to appear and respond to Comerica’s First
Amended Complaint.
DATED: December 3,2004 BUCHALTER, NEMER,
FIELDS & YOUNGER
A Professional Corporation
Michael L. Wachtell
By: /s/ Robert S. Addison
Robert S. Addison, Jr.
Attorneys for Plaintiff
COMERICA BANK,
a Michigan Banking
Corporation
App. 69
BUCHALTER, NEMER, FIELDS & YOUNGER
A Professional on
Michael L. Wachtell (SBN: 47218)
Ronald K. Sittler (SBN: 185853)
Robert S. Addison, Jr. (SBN: 188565)
601 South Figueroa Street
Suite 2400
Los Angeles, CA 90017-5704
Telephone: (213) 891-0700/Facsimile: (213) 896-0400
Attorneys for Plaintiff
COMERICA BANK, a Michigan Banking Corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMERICA BANK, NO. BC316406
a Michigan Banking ECLARATION OF
Corporation, S. ADDISON,
Plaintiff, IN SUPPORT OF
= MERICA’S OPPOSI-
ONS TO:
nao tr te aga 1. GREENLIGHT AND
GFT ENTERTAINMENT HOWSAM’S MOTION TO
INC., an Ontario |(QUASH;
corporation, alsoknownas |2. GREENLIGHT AND
GFTE, INC., and successor HOWSAM’S MOTION TO
toGREENLIGHT FILM _‘|STAY OR DISMISS;
AND TELEVISION, INC.
D/B/A/ GFT ENTERTAIN. [2 GFT ENTERTAIN-
MENT’S MOTION TO
FILM AND TELEVISION,
INC. D/B/A/GFT ENTER- |4. THE SPES’ MOTION
TAINMENT, an Ontario |/TO COMPEL ARBITRA-
Corporation; GFT CIRCLE [TION
App. 70
FILMS, INC.,an Ontario [Date: December 15, 2004
Corporation; ROAD RAGE : 8:30 a.m.
FILMS, INC., a Corporation |Dept: 31
of unknown origin; JANUS Wudge: Hon. Andria K. Richey
PRODUCTIONS, INC., a
Quebec Corporation; GFT
GOING BACKFILMS, INC.,.
an Ontario Corporation;
GFT HERESY FILMS, INC.,
an Ontario Corporation;
GFT/REDWOOD KOTN
FILMS, INC., a British
Columbia Corporation;
GFT/REDWOOD IGNITION
FILMS, INC., a British
Columbia Corporation;
ADAM BENNECKE, an
individual; MICHEL
GLOCKLER, an individual;
and DOES 1 through 100,
inclusive,
Defendant.
DECLARATION OF ROBERT S ADDISON, JR.
I, Robert S. Addison, Jr., declare as follows:
1. I am-an attorney duly licensed to practice law in
the State of California, and an associate attorney with the
law firm of Buchalter, Nemer, Fields & Younger, a Profes-
sional Corporation (“BNFY”), attorneys of record for
Plaintiff Comerica Bank (“Comerica”). I am personally
familiar with the facts set forth herein, either from my
own knowledge or from my review of the files and records
regarding this action. If called upon to testify in this action
App. 71
as to matters set forth herein, I could and would compe-
tently testify thereto.
2. As one of the attorneys assigned to handle this
litigation, I have possession, custody, supervision and
control of BNFY’s records and documents relating to this
action. I state that the records and documents referred to
in this Declaration constitute writings taken or made in
the regular or ordinary course of business of BNFY at or
near the time of the act, condition or event to which they
relate by persons employed by BNFY who had a business
duty to BNFY to accurately and completely take, make
and maintain such records and documents.
GFT's Website Claims Greenlight Films As Its Own
3. On October 22, 2004, I viewed and printed a
number of web pages from defendant GFT Entertainment,
Inc.'s (“GFT”) website, located on the internet at
www.gfte.com. True and correct copies of those pages are
attached hereto as Exhibits “A” through “H.” The heading
at the top of the web page lists GFT’s address as 124
Merton Street, Suite 407, Toronto, Ontario, Canada. On
the page entitled “Completed Productions,” the films at
issue in this case, The Circle, Deception, Global Heresy,
Going Back, Ignition, Kevin of the North, and Road Rage
(collectively the “Films”), are listed under the heading
“Greenlight Film & Television, Inc. [See Exhibit “A.”
Additionally, for each of these films is a separate web page,
listing details of the film's production, including Gary
Howsam as producer for all of the Films, and identifying
distributors for each film. [See Exhibits “B” through “H.”)
4. Also on GFT's website is a web page, as of July 1,
2004, providing a biography of Gary Howsam. A true and
App. 72
correct copy of that web page is attached hereto as Exhibit
“I.” Notably, on that web page, GFT makes no distinction
between GFT and Greenlight, when it states: “In 1997,
Gary Howsam founded Greenlight Film & Television Inc.
(d/b/a GFT Entertainment). As CEO of GFT, he is forging
independent production partnerships with international
filmmakers and financiers. Based in Toronto, the company
and its affiliates develop, produce, finance and distribute
feature films.”
After Being Advised of the Content of
GFT’s Website, GFT Changed the Website,
Removing the Greenlight Films
5. In late October or early November, 2004, I re-
ceived a letter from James M. Kilkowski, Esq., counsel for
GFT, in which Mr. Kilkowski requested that GFT be
dismissed from the present action. On or about November
8, 2004, I spoke with Mr. Kilkowski by telephone. He
asked me if I had read his letter and whether Comerica
would be dismissing GFT from the present action. I told
him I had read his letter, but that we would not be dis-
missing GFT because GFT is the successor entity to
defendant Greenlight and is the alter ego of Gary
Howsam.
6. Mr. Kilkowski stated that Greenlight was still in
business, and therefore GFT could not be its successor
entity. I then asked Mr. Kilkowski to name a movie that
Greenlight has produced in the last few years, to which he
replied that Greenlight was now in television production
and no longer produced movies. I told him I was aware of
that, and that is exactly the reason GFT is Greenlight’s
successor entity. Specifically, upon its creation, GFT
App. 73
simply carried on Greenlight’s movie production business,
while Greenlight focused only on television production.
7. Mr. Kilkowski then asked me why I believed GFT
had carried forward with Greenlight’s movie business. I
responded by telling him that GFT’s own website listed
Greenlight’s prior movie productions, including the seven
movies at issue in this case, as “Completed Productions,”
and the biographical information regarding Gary Howsam
on GFT’s own website did not distinguish between GFT
and Greenlight. Also, I advised him that, at the time GFT
was formed, Howsam was aware that Comerica had
learned of the fraud involved in the seven subject films,
and Comerica believes Howsam formed GFT as the suc-
cessor company to Greenlight as part of a plan to shield
Greenlight’s and his own assets from liability in connec-
tion with that fraud.
8. Mr. Kilkowski then asked me which website I was
referring to when I stated that GFT had listed
Greenlight’s films for sale as “Completed Productions,”
and I told him www.gfte.com. He said he would look into
that allegation.
9. On November 16, 2004, just two weeks after my
conversation with Mr. Kilkowski, I viewed the
www.gite.ccom website, and it had been changed. On
September 1, 2004, after the filing of the present action
against GFT, GFT Entertainment, Inc. changed its name
to Peace Arch Motion Pictures, Inc., and the website now
reflects that new name. A true and correct copy of the
press release announcing the name change is attached
hereto as Exhibit “J.” More significantly, however, on the
“Completed Productions” page, the Greenlight films have
been removed. True and correct copies of printouts of
App. 74
GFT’s “Completed Productions” web page, viewed on
November 16, 2004, is attached here to as Exhibit “K.’
10. Although the six films at issue in this case have
been removed from the “Completed Productions” page of
GFT’s website, they remain listed under the “Recent
Production Credits” web page of Gary Howsam on GFT’s
website. A true and correct copy of that web page is at-
tached hereto as Exhibit “L.”
GFT Marketed its Films at the America
Film Market in Santa Monica, California
in November, 2004
11. On November 2, 2004, I viewed the website of
Peace Arch Entertainment Group, Inc. (“Peace Arch”),
located on the internet at www.peacearch.com. On that
website was an announcement that Peace Arch would be
present at the American Film Market (“AFM”), in Santa
Monica, California, from November 3-10, 2004, and a
listing of the films to be screened and marketed there,
including The Good Shepherd, Hollywood Flies, and The
Keeper. A true and correct copy of this web page is at-
tached hereto as Exhibit “M.” Those three films were listed
on GFT’s website in October, 2004, as Completed Produc-
tions, and remain listed there on GFT’s new website
(under GFT’s new name, “Peace Arch Films”). [See Exhib-
its “A” and “K.”]
12. On November 5, 2004, I personally went to the
AFM at the Loews Hotel in Santa Monica, California, and
I saw the Peace Arch suite on the seventh floor of the
hotel.
13. In the course of our investigation into the fraud
perpetration upon Comerica, attorneys in my firm spoke
with foreign film distributors who claimed that their
signatures on various documents, including Deal Memos,
Distribution Agreements, and Notices of Assignment
(“NOAs”) had been forged. Those same distributors pro-
vided sworn declarations attesting to the forgeries. At-
tached hereto as Exhibits “N” and “O” are two such
deciarations. I am in possession of a {sic| four-inch binder
full of additional such declarations from a the [sic] foreign
distributors identified in Comerica’s First Amended
Complaint, who claim that their signatures were forged,
and can provide the same to the Court if necessary.
GFT and GFT Borrowers Made Regular,
Large Payments to Carole Goldstein, the
Wife of Harel Goldstein
14. Also in the course of our investigation into the
fraud perpetrated upon Comerica, and in connection with
the bankruptcy filed Harel and Carole Bennett Goldstein,
my firm caused bank records of Carole Goldstein to be
subpoenaed from Bank of America. Among those records,
are statements listing a number of large wire transfers
from GFT Entertainment, GFT Circle Films, Inc., and
GFT Redwood KOTN Films, Inc. to Carole Goldstein's
bank account at Bank of America. These funds transfers
include, among others, the following:
App. 76
(a) 12,000.00 from GFT Circle Films, Inc. on
April 4, 2001;
(b) 15,000.00 from GFT Circle Films, Inc. on
May 9, 2001;
(c) 10,000.00 from GFT Circle Films, Inc. on
June 8, 2001;
(d) 8,000.00 from GFT Redwood KOTN Films,
Inc. on June 19, 2001; and,
(e) 12,500.00 from GFT Entertainment, Inc. on
July 26, 2002.
15. True and correct copies of the subpoena for the
above records, the Declaration of Bank of America’s
Custodian of Records, and the specific pages identifying
the above-referenced funds transfers are attached hereto
collectively as Exhibit “P.”
Kaye Scholer v. Howsam and Greenlight
«6. I searched the Los Angeles County Superior
Court’s online records and discovered that Howsam and
Greenlight were sued in late 1999 by the law firm of Kaye,
Scholer, Fierman, Hays & Handler, LLP (“Kaye Scholer”),
LASC Case No. BC213-970, for fees allegedly owed Kaye
Scholer by Howsam and Greenlight in connection with
Kaye Scholer’s services provided to assist Howsam and
Greenlight obtain [sic] financing from Comerica Bank for
the film Hellcab. In response to Kaye Scholer’s Complaint,
Howsam and Greenlight, through their attorney, Charles
M. Coate (Howsam and Greenlight’s present counsel), filed
a motion to quash for lack of personal jurisdiction. True
and correct copies, which I downloaded off the Court’s
website, of that motion, Kaye Scholer’s Opposition thereto,
App. 77
and the Declaration of Ronald L. Liebow in support of Kaye
Scholer’s Opposition, in which he testifies to Howsam and
Greenlight’s obtaining financing from Comerica for Hellcab,
are attached hereto as Exhibits “Q” through “S,” respec-
tively. The Los Angeles Superior Court, Department 78,
the Honorable Marilyn L. Hoffman presiding, denied
Howsam and Greenlight’s motion to quash, and ruled that
the Court held specific jurisdiction over both defendants. A
true and correct copy of the Court’s Minute Order denying
Howsam and Greenlight’s Motion to Quash, which I also
downloaded off of the Court’s website, is attached hereto
as Exhibit “T.”
Potential Witnesses
17. Among the many potential witnesses who may
provide testimony in this case are the following people and
their respective cities of residence (this is not a complete
witness list):
Mishell Glockler Los Angeles, CA
Lynn Mooney Los Angeles, CA
David Pasternak Hawthorne, CA
Mark Victor Santa Monica, CA
Michael Grais Santa Monica, CA
Carole Goldstein Calabasas, CA
Harel Goldstein Calabasas, CA
G. Raymond F. Gross Los Angeles, CA
Thomas L. Harnsberger Los Angeles, CA
Carmen Carpenter Los Angeles, CA
Morgan Rector Los Angeles CA
Marco Massoni Los Angeles, CA
Adam Bennecke Upland CA
Nathan J. Hochman Beverly Hills, CA
D. Jeffrey Andrick Beverly Hills, CA
App. 78
Additionally, the many foreign distributors identified
in Comerica’s First Amended Complaint, who are located
throughout Europe and Latin America, and whose signa-
tures were forged on the relevant loan documents, are all
potential witnesses. Furthermore, huge volumes of docu-
ments and records are maintained in California by Co-
merica and by the California-based witnesses.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and
correct and that this declaration was executed on Decem-
ber 3, 2004, at Los Angeles, California.
Robert S. Addison, Jr.
App. 79
EXHIBIT N
DECLARATION OF SUNNY SAMTANI
I, SUNNY SAMTANI, declare as follows:
1. I am, and at all times relevant hereto have been,
the Production Executive of Rapi Films, a company duly
established and existing under the laws of Indonesia, with
its principal place of business in Jakarta, Indonesia, and
have held that position since 1990. As such, I have posses-
sion, custody, supervision and control of the files of Rapi
Films. The following facts are true of my own personal
knowledge except where indicated on information and
belief, and as to those matters, I believe them to be true. If
called upon to do so, I could and would testify competently
to the truth thereof.
2. The records and documents of Rapi Films refer-
enced herein constitute writings taken or made and
maintained in the regular and ordinary course of business
of Rapi Films at or near the time of the act, condition or
event to which they relate by persons employed by Rapi
Films who had a business duty to Rapi Films, respectively,
to accurately and completely take, make and maintain
such records and documents.
3. Rapi Films regularly makes records of all acts
related to the contracts it enters into, including all distri-
bution agreements, international multiple rights deal
memos, license agreements, and notice of assignment
agreements, at or near the time they occur. The sources of
information and Method and time of preparation of the
records are such that the absence of a record of a particu-
lar act, condition, or event is a trustworthy indication that
it did not occur.
App. 80
4. Ihave reviewed Rapi Films’ files and records with
respect to Rapi Films’ relations with Hil) Top Entertain-
ment LLC (“Hilltop”) prior to making this declaration.
5. At all times relevant hereto, I have been a person
authorized to approve and sign contracts on behalf of Rapi
Films pertaining to the acquisition of distribution rights to
motion pictures and to the assignment to other parties of
Rapi Films’ payment obligations under those distribution
rights contracts. The only other person authorized to
approve and sign such agreements on behalf of Rapi Films
is my colleague, Gope Samtani, who has held the title of
Chief Executive Officer of Rapi Films at all times relevant
hereto.
6. Rapi Films has in the past entered into motion
picture distribution agreements with Hilltop. In connec-
tion with these agreements, Rapi Films has entered into
various types of agreements with Hilltop, which include
international multiple rights deal memos and notice of
assignment agreements, I have reviewed the document
entitled “AFMA International Multiple Rights Deal
Memo,” dated September 2, 2000, (a true and correct copy
of which is attached hereto anc marked as Exhibit “A”),
which purports to be an agreersent between Rapi Films, as
distributor, and Hilltop, as licensor, pertaining to the
motion picture Global Heresy. Neither the original nor a
copy of Exhibit “A” is contained in the business record files
of Rapi Films. Rapi Films did not enter into any agree-
ment with Hilltop to purchase distribution rights pertain-
ing to Global Heresy. On Exhibit “A,” in the signature
block for Rapi Films, is a signature that purports to be a
signature that I placed on this document. I did not sign
Exhibit “A” or authorize my signature to be placed on this
App. 81
document, and it was not signed by any person authorized
to do so on behalf of Rapi Films.
7. [have reviewed the document entitled “Notice and
Acknowledgment of Assignment,” dated September 2,
2000, (a true and correct copy of which is attached hereto
and marked as Exhibit “B”), which purports to be an
agreement between Rapi films, as distributor, GFT
Heresy Films Inc. (“GFT”) as licensor, Hilltop, as agent for
GFT, and Comerica Bank — California (“Comerica Bank”),
pertaining to the motion picture, Global Heresy. Neither
the original nor a copy of Exhibit “B” is contained in the
business record files of Rapi Films. Rapi Films did net
enter into any agreement with Hilltop to assign to Co-
merica Bank, Rapi Films’ purported payment obligations
for the purchase of motion picture distribution rights
pertaining to Global Heresy. On page seven of Exhibit “B,”
in the signature block for Rapi Films, is a signature that
purports to be a signature that I placed on this document.
I did not sign Exhibit “B” or authorize my signature to be
placed on this document, and it was not signed by any
person authorized to do so on behalf of Rapi Films.
8. I have reviewed the agreement entitled “AFMA
International Multiple Rights Deal Memo,” dated October
17, 1999 (a true and correct copy of which is attached
hereto and marked as Exhibit “C”) which was entered into
between Rapi Films, as distributor, and Hilltop, as licen-
sor, through which Rapi Films purchased certain distribu-
tion rights to Road Rage. | did sign Exhibit “C,” on behalf
of Rapi Films. Exhibit “C” or a copy thereof is contained in
Rapi Films’ business record files. Based upon my review of
Exhibits “B” and “C,” it appears to me that the signature
in the signature block for Rapi Films on Exhibit “B,” is a
App. 82
copy or forgery of the signature which I placed on Exhibit
C.”
I declare under penalty of perjury under the laws of
the State of California and under the laws of the United
States of America that the foregoing is true and correct
and that this Declaration was executed this 24th day of
February, 2003, at Los Angeles, California.
/s/ Samtani
SUNNY SAMTANI
EXHIBIT O
DECLARATION OF MESRICH HOLDINGS LIMITED
We, the undersigned Mr. Andrés M. Sanchez and Mrs.
Miriam E. Rivera, on behalf of LPS. Management Ltd.,
Sole Director of Mesrich Holdings Limited, declare as
follows:
1) We are the directors of the company Mesrich Holdings
Limited, with registered offices at PO. Box 3175, Road
Town, Tortula, British Virgin Islands.
2) We are aware of the fact that during the year 2000
Hilltop Entertainment LLC (hereinafter “Hilltop”) started
with our company a negotiation regarding the distribution
of a movie titled “IGNITION”.
This negotiation was never finalized and Mesrich Holdings
Limited did not purchase, or agree to purchase from
Hilltop, or from any other third party, the rights pertain-
ing to the movie titled “IGNITION”.
App. 83
3) One year later Mesrich Holdings Limited received a
fax (document attached hereto in copy under No 1) from
GFT Entertainment showing a request for funds regarding
the distribution of the movie titled “IGNITION”.
Mesrich Holdings Limited replied to this request declaring
that negotiation started with Hilltop terminated in July
2000 without success, and therefore there were no obiiga-
tions whatsoever due by Mesrich Holdings Limited to
Hilltop, nor to any third party, regarding the movie titled
“IGNITION”.
Copy of this document was also sent to Comerica Bank
California, indicated by GFT as assignee bank, to the
attention of Mrs. Carmen Carpenter, (document attached
hereto in copy under No 2).
4) Thereafter Mesrich Holdings Limited never received
any further document or request regarding the film titled
“IGNITION”, until September 2003, when a letter was
sent to Mesrich Holdings Limited care of our law firm by
Comerica's Bank-California solicitors (document No 3).
A copy of a Notice and Acknowledgement of Assignment
was attached to said letter where a supposed signature of
a representative of Mesrich Holdings Limited appears.
Mesrich Holdings Limited never entered into this agree-
ment; our company was not even aware of the existence of
this document until the letter received from the solicitors
of Comerica Bank-California.
No representative of Mesrich Holdings Limited did not
ever sign this document and we strongly believe that the
signature on this agreement is untrue.
App. 84
5) Considering the facts indicated above, we declare that
Mesrich Holdings Limited did not purchase or agree to
purchase any rights pertaining to the film “IGNITION”,
and furthermore that the signature on the Notice and
Acknowledgement of Assignment is not ours or of any
authorized representative of the company.
We declare under penalty of perjury under the laws of
California that the foregoing is true and correct.
Executed September 25, 2003
/s/ Andrés M. Sanchez Miriam E. Rivera
Andrés M. Sanchez and Miriam E. Rivera
On behalf of I.P.S. Management Ltd.
App. 85
BUCHALTER, NEMER, FIELDS & YOUNGER
A Professional Corporation
Michael L. Wachtell (SBN: 47218)
Ronald K. Sittler (SBN: 185853)
Robert &. Addison, Jr. (SBN: 188555)
601 South Figueroa Street, Suite 2400
Los Angeles, CA 90017-5704
Telephone: (213) 891-0700 / Facsimile: (213) 896-0400
Attorneys for Plaintiff
COMERICA BANK, a Michigan Banking Corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMERICA BANK, a Michi4 CASE NO. BC316406
gan Banking Corporation, | neCLARATION OF
Plaintiff, CARMEN E. CARPEN-
” TER IN SUPPORT OF
: COMERICA’S OPPOSI-
GARY HOWSAM, an individ- | TIONS TO:
gpa ENTERTAINMENT), GREENLIGHT AND
» an Ontario corporation, | Hows awrs MOTION
also known as GFTE, INC.
' : ; TO QUASH;
and previously known as
GREENLIGHT FILM AND 2. GREENLIGHT AND
TELEVISION, INC. D/B/A/ HOWSAM’S MOTION
GFT ENTERTAINMENT. TO STAY OR DISMISS;
PEACE ARCH ENTER.
TAINMENT OROUF, INC. | Sg GT ENTERTAIN
an Ontario Corporation; GFT QUASH; AND
CIRCLE FILMS, INC., an
Ontario Corporation; ROAD | 4. THE SPES’ MOTION
RAGE FILMS, INC., a Corpo- | TO COMPEL ARBI-
ration of unknown origin; TRATION
JANUS PRODUCTIONS, Date: December 15, 2004
INC., a Quebec Corporation; | Time: 8:30 a.m.
App. 86
GFT GOING BACKFILMS, | Dept: 31
INC., an Ontario Corporation;| Judge: Hon.
GFT HERESY FILMS, INC., Andria K. Richey
an Ontario Corporation;
GFT/REDWOOD KOTN
FILMS, INC., a British
Columbia Corporation;
GFT/REDWOOD IGNITION
FILMS, INC., a British
BENNECKE, an individual;
MICHEL GLOCKLER, an
individual; and DOES 1
through 100, inclusive,
Defendant.
DECLARATION OF CARMEN E. CARPENTER
I, Carmen E. Carpenter, declare and state as follows:
1. I am a Vice President for Comerica Bank (“Co-
merica”). In my capacity as Vice President, I am one of the
custodians of the books, records, and files of Comerica
(“Records”) as they pertain to the loans made which are
the subject of the action herein, including documents and
copies of documents created by and/or provided to Co-
merica. | am thoroughly familiar with the manner in
which the Records are prepared and maintained. The
Records are prepared and maintained in the ordinary
course of Comerica’s business by duly authorized employ-
ees who have personal knowledge of the act, condition, or
event being recorded and who have a business duty to so
record such matters at or near the time of their occur-
rence. The Records are prepared in such a manner as to
be thoroughly reliable. As of the date hereof, I have re-
viewed the Records, including those created by, and those
App. 87
provided to, Comerica, as they pertain to loans made by
Comerica for the production of films entitled: The Circle,
Deception, Global Heresy, Going Back, Ignition, Kevin of
the North, and Road Rage (the “Films”). As to the follow-
ing facts, | know them to be true either of my own per-
sonal knowledge or have gained knowledge of them from
my knowledge of Comerica’s Records. If called upon to
testify in this action as to the matters set forth herein, I
2. In my capacity as Vice President for Comerica, I
am engaged in the day-to-day management of a portfolio of
clients for the Bank’s entertainment group. In that regard,
I am the bank officer supervising the loans made to the
single purpose corporate entities, which were the borrow-
ers of the production loans made for the Films (“GFT
Borrowers” or “SPEs”). I succeeded to this position, super-
vising the loans made to the GFT Borrowers, in August,
2001, when my predecessor Adam Bennecke (“Bennecke”)
left the Bank. Prior to August, 2001, Bennecke was pri-
marily responsible for supervising and documenting the
loans with Howsam. At the time the first loan with a GFT
Borrower was made, in September, 1999, I was working at
Comerica. From that time until August, 2001, I observed
Bennecke maintain regular contact with Gary Howsam
(“Howsam”) in connection with Comerica’s financing of the
Films. Specifically, I observed Bennecke regularly on the
phone with Howsam, I saw letters and e-mails exchanged
between Bennecke and Howsam, and on a number of
occasions I saw Howsam in our office in Los Angeles
meeting with Bennecke and others.
3. Also, during the period from 1999 to 2001, I
attended regular portfolio meetings at which Bennecke
was present, and during which Bennecke would provide
App. 88
regular updates and reports on the loans being made by
Comerica to finance the Films.
4. In approximately early 2001, Comerica Bank-
California, a California Corporation, with which I was
employed, merged with Imperial Bank, and became
Comerica Bank-California, a California Corporation.
Subsequently, Comerica Bank-California merged with
Comerica Bank, a Michigan Banking Corporation, which it
remains today. After the merger between Imperial Bank
and Comerica Bank-California, | began working for
Morgan Rector, who had come in from the Imperial Bank
side. In or around March and April of 2001, Mr. Rector,
Bennecke, and I met weekly to review loans, including the
ones for the Films. After a short time, Mr. Rector told me
that he was concerned that Bennecke had lost control over
the subject loans, and he asked me to monitor the loans
and take over the administration of them if necessary.
Within the next few months, I occasionally engaged in
communications with Howsam. In August, 2001, Bennecke
left Comerica, and I became the main contact for Howsam
at Comerica.
Gary Howsam and Greenlight/GFT
5. Comerica’s primary contact for each of the GFT
Borrowers was, and remains, Howsam, a Canadian film
producer. During the time period in which the films were
financed and produced, Howsam was the president of
Greenlight Film and Television, Inc. d/b/a GFT Enter-
tainment (“Greenlight”). Based upon my conversations
with Howsam during that time period, the written corre-
spondence between Howsam and Comerica, and the fact
that the names of most of the SPEs begin with “GFT,”
App. 89
Howsam’s film production company was primarily known
to Comerica as “GFT.”
6. Attached hereto as Exhibits “V" through “Z” are
true and correct copies of letters and emails between GFT,
a tiny sampling of the hundreds of pages of correspon-
dence to and from Howsam related to his business deal-
ings with Comerica in California. Letters from Gary
Howsam, such at [sic] the ones attached hereto, were
almost invariably on “GFT Entertainment” letterhead, and
frequently addressed multiple loans and Films within a
single letter.
7. During the period of time during which the Films
were produced and financed, Howsam was a sizeable
customer of Comerica. He sought and obtained financing
for numerous films he was producing during that time, in
addition to the Films at issue in this case. Also, in the
process of arranging the financing for the subject loans,
Comerica personnel, including Adam Bennecke, myself,
and others, met personally with Howsam, spoke with
Howsam on the phone on a regular basis, and exchanged
extensive e-mails and written correspondence. | also
attended the annual American Film Markets, held in
Santa Monicr , California, during that time, and saw, and
sometimes met with, Howsam, who was also there.
Howsam’s SPEs - The GFT Borrowers
8. Howsam controls each of the GFT Borrowers,
which are:
(a) GFT Circle Films, Inc. (“GFT-Circle”), which
is a single purpose entity formed for the
App. 90
purpose of producing the motion picture The
Circle;
‘b) Janus Productions Inc. (“Janus”), which is a
single purpose entity formed for the purpose
of producing the motion picture Deception;
(c) GFT Heresy Films, Inc. (“GFT-Heresy”),
which is a single purpose entity formed for
the purpose of producing the motion picture
Global Heresy,
(d) GFT Going Back Films, Inc. (“GFT-Going
Back”), which is a single purpose entity
formed for the purpose of producing the mo-
tion picture Going Back;
(e) GFT/Redwood Ignition Films, Inc. (“GFT-
Ignition”), which is a single purpose entity
formed for the purpose of producing, the mo-
tion picture Ignition;
(f) GFT/Redwood KOTN Films, Inc. (GFT-
KOTN”), which is a single purpose entity
formed for the purpose of producing the mo-
tion picture Kevin of the North;
(g) Road Rage Films, Inc. (“Road Rage Films”),
which is a single purpese entity formed for
the purpose of producing the motion picture
Road Rage.
9. Among the many documents required by Comerica
for the loans for each Film, the corporate records detailing
the formation of each SPE was provided to Comerica by
Howsam. True and correct copies of those corporate
records are attached hereto as Exhibits “H” through “N,”
respectively Gary Howsam was the president of
Greenlight, and was an officer of each of the GFT Borrow-
ers. The majority or all of the shares in each of the GFT
App. 91
Borrowers were owned by Greenlight, or by another
corporate entity of which Howsam was the owner and/or
officer. For example, GFT Heresy issued a total of ten
shares, which were purchased by Greenlight for ten cents
each. GFT-KOTN and GFT-Ignition each issued 101 shares
at ten cents per share. In both cases, 100 of the shares
were purchased by Greenlight (49 shares) and Redwood
Films, Inc. (51 shares), both of which are Howsam con-
trolled entities.
The Loan and Security Agreements
10. Howsam, through each of the GFT Borrowers,
entered into Loan and Security Agreements with Comerica
for each of the Films, as follows:
(a) On November 24, 2000, for the purposes of
borrowing $1,700,000 for the production of The Circle,
Howsam signed The Circle Loan Agreement on behalf of
GFT-Circle. As security for the loan obligations, Howsam
and GFT-Circle pledged all of their interest, rights and
title to The Circle and any and all proceeds generated
therefrom to Comerica.
(b) On November 27, 1999, for the purpose of
borrowing up to $1,775,000 for the production of Decep-
tion, Howsam signed the Deception Loan Agreement on
behalf of Janus. As security for the obligations under the
Deception Loan Agreement, Howsam and Janus pledged
all of their interest, rights and title to Deception and any
and all proceeds generated therefrom to Comerica.
(c) On October 10, 2000, for the purposes of
borrowing up to $4,425,000 for the production of Global
Heresy, Howsam signed the Global Heresy Loan Agreement
App. 92
on behalf of GFT-Heresy. As security for the loan obliga-
tions, Howsam and GFT-Heresy pledged all of their
interest, rights and title to Global Heresy and any and all
proceeds generated therefrom to Comerica.
(d) On April 7, 2000, for the purpose of borrow-
ing up to $4,764,000 for the production of Going Back,
Howsam signed the Going Back Loan Agreement on behalf
of GFT-Going Back. As security for the obligations under
the Going Back Loan Agreement, Howsam and GFT-Going
Back, pledged all of their interest, rights and title to Going
Back and any and all proceeds generated therefrom to
Comerica.
(e) On June 23, 2000, for the purposes of borrow-
ing US $12,469,121 for the production of Ignition, Howsam
signed the Ignition Loan Agreement on behalf of GFT-
Ignition. As security for the loan obligations, Howsam and
GFT-Ignition pledged all of their interest, rights and title
to Ignition and any and all proceeds generated therefrom
to Comerica.
(f) On May 30, 2000, for the purposes of borrow-
ing $10,428,000 for the production of Kevin of the North,
Howsam signed the KOTN Loan Agreement on behalf of
GFT-KOTN. As secunty for the KOTN Loan Agreement,
Howsam and GFT-KOTN pledged all of their interest,
rights and title to Kevin of the North and any and all
proceeds generated therefrom to Comerica.
(g) On September 20, 1999, for the purposes of
borrowing $1,575,000 for the production of Road Rage,
Howsam signed the Road Rage Loan Agreement on behalf
of Road Rage Films. As security for the Road Rage Loan
Agreement, Howsam and Road Rage Films pledged all of
App. 93
their interest, rights and title to Road Rage and any and
al) proceeds generated therefrom to Comerica.
True and correct copies of these Loan and Security
Agreements are attached hereto as Exhibits “A” through
“G,” respectively.
11. Comerica’s collateral for each of the production
loans made to the GFT Borrowers was made up of, in part,
assignments to Comerica of minimum guaranteed licens-
ing fees to be paid by foreign distributors for each of the
delivering executed License Agreements, Deal Memos, and
Notices of Assignment (“NOAs”) (collectively, the “Collat-
era] Agreemenis”). The Collateral Agreements were
supposed to be signed by the foreign distributor who was
purchasing, in advance, the distribution rights to a given
Film. By the Licensing Agreements, the distributor was
guaranteeing it would pay a minimum licensing fee for the
subject Film. The NOAs are absolutely critical to Co-
merica’s decision to extend the loans because the NOAs
amend and supersede the License Agreements, which are
executed between the foreign distributors and the GFT
Borrowers. The NOA is the document that creates a direct
obligation from the distributor to Comerica. Without an
NOA, there is no guarantee of payment of the license fees
to Comerica, and Comerica, therefore, would not agree to
extend a loan. All of the production loans to the GFT
Borrowers were made within a close time-period, and
Comerica generally viewed those loans collectively as
related to one another.
App. 94
HOWSAM HIRED HILLTOP ENTERTAINMENT,
LLC AS HIS SALES AGENT FOR THE FILMS
12. As part of the process of obtaining financing for
the Films from Comerica, a California bank, Howsam
hired Hilltop Entertainment, LLC (“Hilltop”), a California
company, as his sales agent to market the Films and
obtain the Collateral Agreements on his behalf. The
primary contact at Hilltop in connection with the Films
and the related loans was Harel Goldstein. | have met Mr.
Goldstein, and I have also met his wife, Carole Bennett
Goldstein.
13. The sales agency agreement between Howsam
and Hilltop was memorialized in Sales Agency Agreements
between Hilltop and the GFT Borrowers, pursuant to
which Hilltop was appointed as the sales agent for the
purposes of entering into license agreements for exploita-
tion of each of the Films in all territories of the world
except for the United States and Canada. True and correct
copies of each of the Sales Agency Agreements are at-
tached hereto as Exhibits “O” through “U,” respectively.
The Forged Collateral Agreements
14. As a condition of making a production loan to a
GFT Borrower, Comerica required assignments of the GFT
Borrower's right to receive the license fees from the
foreign film distributors. These assignments, on which
Comerica relied to make a loan to each of the GFT Bor-
rowers, were (or were to have been) memorialized in a
contractual document entitled “Notice and Acknowledg-
ment of Assignment” (“NOA”), entered into by Comerica,
Hilltop and/or the GFT Borrower, a bond company, and,
purportedly, the foreign distributor for each territory in
App. 95
which the Film was purportedly sold, and which were
delivered to Comerica by Howsam and his agents. Co-
merica entered into the Loan and Security Agreements for
each of the Films in specific reliance upon the NOAs
provided to it by Howsam.
15. Although some of the agreed-upon license fees
were paid by distributors on the subject loans, in or
around the early Summer of 2001, Comerica and I began
to receive, frum many of the purported foreign distributors
of the Films, refusals of, or questions concerning, payment
request notices sent by the Bank to these foreign distribu-
tors for collection of the assigned license fees. Comerica, in
seeking to clear up the confusion concerning these refusals
to pay, presented to the foreign distributors, copies of the
respective contracts submitted to Comerica by Hilltop
and/or Howsam, and represented to the Bank as being
signed by the respective foreign distributors. When pre-
sented with copies of the contract(s) with signatures
attributed to them, and which had been provided to
Comerica (purportedly on their respective behalf), the
foreign distributors disavowed the signatures attributed to
them, and/or claimed such signatures were forged. Each of
these foreign distributors firmly contended that they had
never reached such agreements with Hilltop to purchase
the Film and/or Films purported to have been purchased
by them.
Howsam’s Connection to the Fraud
16. As a result of the sheer number of these forged
agreements, Comerica and | began to suspect that Hilliop
and its employees were involved in, or knew facts concern-
ing, the apparent fraud committed with regard to the
App. 96
Films. We then shared our suspicions with Howsam, and
asked him if he knew anything about such fraud. Howsam
both professed surprise at the apparent fraud, and denied
knowing anything about it, including whether Harel
Goldstein and/or Hilltop were involved.
17. Also in the Summer of 2001, soon after the Bank
inquired of Hilltop, and raised its suspicions, concerning
the validity of contracts which had been rejected by many
of the foreign distributors who had purportedly bought
rights in the Films, Harei Goldstein appeared at Co-
merica’s Entertainment Group offices, where | work, in
Beverly Hills, California. Harel Goldstein told Adam
Bennecke and I that he understood the seriousness of the
situation, but he apologized for not being able to discuss
matters related to the Films and the fraud, on the grounds
that he had been told by his attorneys not to discuss the
facts concerning the situation with us. He then began to
cry while telling us that he had children and a family.
18. In early 2003, I attended the American Film
Market, in Santa Monica, California. At that time, Morgan
Rector, President of the Entertainment Group, and I met
with Howsam, to discuss the outstanding loan balances for
the Films, owed by Howsam’s SPEs, and Comerica’s
ongoing efforts to recover its substantial damages caused
as a result of the fraud with the Films. In particular, we
advised Howsam of rumors we had been hearing that
Goldstein was still doing business in the film industry.
Howsam responded by complaining about what a bad
situation Goldstein had put him in, and how Goldstein's
actions had almost cost him his business. Howsam then
told us that he heard from Goldstein from time to time,
who would ask him for money and would request to do
business together. I found the idea of Goldstein asking
App. 97
Howsam for money to be inexplicable, and inconsistent
with Howsam’s prior statements regarding the circum-
stances Goldstein put Howsam in. Howsam’s SPEs, and
potentially Howsam’s production company, GFT Enter-
tainment, and himself personally, were now on the hook
for millions of dollars in unpaid loan balances due to
forged contracts submitted during the loan process. We
asked Howsam why Goldstein would be contacting calling
him, asking for money, and seeking to do more business
together, but Howsam could not explain why Goldstein
would do so, and Howsam denied having given Goidstein
any business or money since the discovery of the fraud.
19. I have since learned that Howsam and Goldstein
continue to conduct film production business together, and
that tens of thousands of dollars were being paid on a
regular basis to Goldstein’s wife by Howsam’s company,
GFT Entertainment, and by some of the GFT Borrowers.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and
correct, and that this Declaration is executed on December
3, 2004, in Beverly Hills, California.
Carmen Carpenter
App. 98
BUCHALTER, NEMER, FIELDS & YOUNGER
A Professional Corporation
Michael L. Wachtell (SBN: 47218)
Ronald K. Sittler (SBN: 185853)
Robert S. Addison, Jr. (SBN: 188565)
601 South Figueroa Street
Suite 2400
Los Angeles, CA 90017-5704
Telephone: (213) 891-0700 / Facsimile: (213) 896-0400
Attorneys for Plaintiff
COMERICA BANK, a Michigan Banking Corporation
SUPERIOR COURT OF THE
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
COMERICA BANK, CASE NO. BC316406
a ae Banking DECLARATION OF G.
Corporation, RAYMOND F. GROSS IN
Plaintiff, SUPPORT OF CO-
ai MERICA’S OPPOSI-
TIONS TO:
Oe CPT ENTERTAIN. |1:_ GREENLIGHT AND
; ) HOWSAM’S MOTION TO
MENT, INC., an Ontario QUASH;
corporation, also known as
GFTE, INC., and previously |2. GREENLIGHT AND
known as GREENLIGHT |HOWSAM’S MOTION TO
FILM AND TELEVISION, |STAY OR DISMISS;
INC. D/B/A GPTENTER _|s. GFT ENTERTAIN.
ENTERTAINMENT GROUP, Ouyagu, AND
INC., an Ontario Corporation;
4. THE SPES’
GFT CIRCLE FILMS, INC.,
| MOTION TO COMPEL
an Ontario Corporation, = | ARBITRATION
ROAD RAGE FILMS, INC.,
App. 99
a Corporation of unknown ARBITRATION
origin; JANUS PRODUC- Dete D ber 15, 2004
TIONS, INC., a Quebec Time: 8:30 a.m
Corporation; GFT GOING Dept 31 ta a
BACK FILMS, INC., an
Ontario Corporation;GFT |Judge: Hon. Andria K Richey
HERESY FILMS, INC., an
Ontario Corporation;
GFT/REDWOOD KOTN
FILMS, INC., a British |
Columbia Corporation; |
GFT/REDWOOD IGNITION
FILMS, INC., a British
Columbia Corporation;
ADAM BENNECKE, an
individual; MICHEL
GLOCKLER, an individual;
and DOES 1 through 100,
inclusive,
Defendant.
DECLARATION OF G. RAYMOND F. GROSS
I, G. Raymond F. Gross, declare as follows:
1. I am an attorney duly licensed to practice law in
the State of California, and I am an attorney with the law
firm of Gipson, Hoffman & Pancoine (“GHP”). I am per-
sonally familiar with the facts set forth herein, either from
my own knowledge or from my review of the files and
records regarding this action. If called upon to testify in
this action as to matters set forth herein, I could and
would competently testify thereto.
2. During the period of approximately January, 1999
to August, 2001, GHP was retained as counsel for Co-
merica Bank in connection with Comerica’s entertainment
App. 100
finance business. In the ordinary course and scope of my
duties as counsel for Comerica, I was responsible for
working with Comerica bank officers and Comerica’s film
finance customers to negotiate, document and execute loan
agreements. During that process, I sometimes met in
person with Comerica loan officers and Comerica’s cus-
tomers/borrowers.
3. From the fall of 1999 until early 2001, I met on at
least five occasions, in Los Angeles, California, with Gary
Howsam (“Howsam”), a movie producer who obtained film
production loans from Comerica. Seven such loans were
made in connection with the films entitled The Circle,
Deception, Global Heresy, Going Back, Ignition, Kevin of
the North, and Road Rage (the “Films”). In addition to the
meetings I had with Mr. Howsam in California regarding
the loans for the Films, I frequently spoke with Mr.
Howsam by telephone, exchanged extensive e-mails and
written correspondence with Mr. Howsam regarding the
loans, and received necessary documentation for each loan
from Mr. Heowsam. During that same time period, I also
worked with Howsam on other Comerica financing deals,
and, on at least one occasion, in early 2000, I accompanied
Mr. Howsam to the premier [sic] of one of his films (not
one of the Films listed above) in Santa Monica, California.
4. In connection with the loans for the Films, | also
had contacts with Harel Goldstein of Hilltop Entertain-
ment, LLC (“Hilltop”), which was the California-based
sales agent hired by Howsam’s companies to market films
to various distributors around the world. Since Hilltop was
selling the distribution rights to the Films, and since the
minimum guaranteed license fees to be paid by those
distributors constituted a portion of the collateral for
Comerica’s loans to Howsam’s companies, it was necessary
App. 101
for me to communicate fairly regularly with Howsam, and,
to a lesser extent, with Hilltop during the process of
documenting and closing the loans for each of the Films.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and
correct and that this declaration was executed on Decem-
ber ___, 2004, at Los Angeles, California.
G. Raymond F. Gross
FILED —
CD SEP 2 7 2005
No. 05-229 ornicr orm
In The
Supreme Court of the United States
Qu=
GARY HOWSAM, a Canadian national and
GREENLIGHT FILM & TELEVISION INC., an Ontario,
Canada corporation,
Petitioners,
Vv.
SUPERIOR COURT OF THE COUNTY OF LOS
ANGELES,
Respondent,
COMERICA BANK, a Michigan corporation,
Real Party In Interest.
.
>
On Petition For A Writ Of Certiorari To The Supreme
Court Of California
&
REPLY TO OPPOSITION TO PETITION FOR A
WRIT OF CERTIORARI
CHARLES M. COATE, Counsel of Record, COSTA
ABRAMS & COATE, LLP 1221 Second Street, Third FI.
Santa Monica, California 90401 Tel: (310) 576-6161
Counsel for Petitioners
TABLE OF CONTENTS
Ill. Absent Guidance from This Court, The Indeterminacy of The
Alter Ego Doctrine as applied by Federal and State Courts
such as California for Jurisdictional Purposes renders the Due
Process Clause unreasonably and unconstitutionally vague......... 5
PERTAIN cexvecersseveveescneunevceveseeveuensyoousveusoveessecscoseneenumnenpiants 8
TABLE OF AUTHORITIES
Case Law Page
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 [62 L. Ed.
Tr WL 6 | Recaro ks ene 3,6
Assoc. Vendors, Inc. v. Oakland Meat Co., 26 Cal. Rptr. 806, 815 (Cal. Ct.
Sea-Land Servs., Inc. v. Pepper Source, 993 F. 2d 1309, 1312 (™ Cir.
Shaffer v. Heitner, 433 U.S. 186 (1977) .......asserrssersercrseossersrsevecesssocessees a
Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 107 S. Ct.
PO, FEE, Ge BTS Grid itn erin avintcierennmiiianiininemneal
United States v. First National City Bank, 379 U.S. 378,
TE EI EN RE AN CEE ee NS aa
Statutes and Regulations
United States Constitution, Fourteenth Amendment ...... ... ............«....6, 8
Commentators and Treatises
Lonny S. Hoffman, The Case paren Vicarious Juriadiction, (2004)
152 University of Pennsylvania Law Review 1023, 1081.................+0 2,6
Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and
The Corporation, 52 U. Chi. Law Review 89, 89 (1985) ............ceseeeee 5
Jonathan M. Landers, A Unified Approach to Parent, Subsidiary
and Affiliate Questions in Bankruptcy, 42 U. Chi. Law Review
FE Gri cicecddcveccstccinecsacccesss ccecascotsséetmmesiandiantacocevesoosonte 5
Steven M. Bainbridge, Abolishing Veil Piercing, 26 1 Corp. L. 479,
__: SRR eeeercenncrwn 6dbacuniaitnintinadebetadisenienteatusndennstns 5
Philip I. Blumberg, The Law of Corporate Groups: Procedural
Problems in the Law of Parent and Subsidiary
er iciidecinatevtsdndcaetetscdeiidvesbuctnnedchinsromielbta 5
I. Introduction
Petitioners are not alone in decrying an arbitrary and
contradictory conflating of the policies underlying the
application of the alter ego doctrine with one’s
constitutional right of due process to be free from the
unreasonable assertion of jurisdiction over one’s person.
Indeed, one noted commentator recently having reviewed
the application of the alter ego doctrine in relation to the
exercise of jurisdiction throughout the Federal Circuits and
the State Courts of this country has described it as
“ambiguous” and “unprincipled.” Lonny S. Hoffman, The
Case Against Vicarious Jurisdiction, (2004) 152
University of Pennsylvania Law Review 1023, 1081.
Indeed, Professor Hoffman in his article presciently
described the manner in which the instant record has
unfolded: “the_corporate law doctrine of veil piercing
...ma mi in és j ictional
cult to identi d t * (Id. at 1027). Such
a line has been crossed in this case. Under the
circumstances, Petitioners respectfully submit that given
the arbitrary application in which the alter ego doctrine is
applied in jurisdictional contexts throughout the Federal
Circuits and State Courts of this Country, including by the
State of California in this case, warrants the guidance of
this Court in order to prevent the abusive exercise of
jurisdiction by the State in an arbitrary and
unconstitutiona] manner.
Therefore, this honorable Court should grant this
petition for certiorari because it raises unique issues of
jurisdiction as well as international sovereignty, comity,
and conflict of laws between the United States and
Canada. Indeed, the notion of excising specific jurisdiction
based solely on imputed or vicarious conduct eviscerates
the jurisdictional concept of fair warning which is intended
to give “a degree of predictability to the legal system that
allows potential defendants to structure their primary
conduct with some minimum assurance as to where that
conduct will and will not render them liable to suit.”
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
297 (62 L. Ed. 2d 490, 100 S. Ct. 559] (1980).
Accordingly, Petitioners respectfully request that the
instant petition for certiorari be granted. a
Il. There Is No Evidence That Petitioners Committed
Fraud in California
Comerica brazenly declares that Petitioners
committed fraud in California. However, Comerica readily
admits that “Petitioners did not enter into any contracts
with Comerica.” (Oppo. at p. 7). Rather, “consistent with
[Real Party in Interest’s}] norma) business practices,
[Comerica Bank] required [Petitioners] to create the SPEs
... for each film, which entities then became the borrowers
for each of the subject loans.” (Oppo. at p. 5). In short,
the very deal structure that was admittedly created at the
behest of Comerica now serves as the basis of its novel
theory that these SPEs were fraudulently conceived at
conception and its corresponding alter ego theory.
Comerica’s direct participation in the required creation of
these entities turns alter ego theory on its head and renders
Comerica as a willing and knowing participant in the
creation and vapitalization of these entities. Yet, the State
of California is a willing adherent in Comerica’s novel
approach to an ever expanding and elastic concept of how
far the alter ego doctrine may be stretched to secure
jurisdiction over an international defendant.
Despite such telling admissions on Comerica’s part, it
has somehow convinced the State of California to assert
personal jurisdiction over Canadians that it readily admits
it had no contractual privity with, nor sought. Indeed, the
State of California has re-drafted the parties’ agreements
after the fact at the behest of this very sophisticated
Plaintiff. The facts which belie the application of personal
jurisdiction in violation of the due process clause of the
U.S. Constitution cannot be stated more succinctly than by
Comerica itself.
Indeed, the paltry evidence relied upon by Comerica
distilled to its essence is that Petitioners have been to
California and that 2 distribution contracts may have or
appear to have been signed by others than the distributors.
However, from the trial court’s order denying the motion
to quash it does not even appear to rely upon the
inconclusive statements from said foreign distributors.
Nor, does the foregoing, even if relied upon, in anyway
establish jurisdiction, let alone by a preponderance of the
evidence, the standard governing the instant jurisdictional
question. Comerica also weakly argues on one hand that
the SPEs were established by Petitioners to facilitate
funding of the loars, yet on the other, readily admits that it
was Comerica, not Petitioners which required such SPEs
to be established. (Oppo. at p. 5). Moreover, Comerica
now makes much of the purported undercapitalization of
such SPEs as further evidence of the purported fraud
(Oppo. at p. 6), yet readily admits that it reviewed the
prarreasstye of each such SPE “maans _fee_many
film,” ie adhe cnaaiirtdinia-and ter eae caie (Oppo.
at p. 90) Clearly, capitalization or undercapitalization did
not concern Comerica at the time the loans were made and
it can hardly be relied upon as evidence of a fraud in the
inception when it was fully disclosed to Comerica before
any funding of the subject loans occurred. Mere bluster
and saber rattling cannot suffice for evidence in hailing
ir *mnational defendants into a U.S. Court in connection
‘ ‘\ @ transaction to which they were not parties.
Correspondingly, Petitioners respectfully request that the
instant petition for certiorari be granted.
Ill, Absent Guidance from This Court, The
Indeterminacy of The Alter Ego Doctrine as applied by
Federal and State Courts such as California for
Jurisdictional Purposes renders the Due Precess Clause
unreasonably and unconstitutionally vague.
For years innumerable judicial commentator
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