Spillane Trial Group was delighted to be selected to defend Cross Creek, a top independent film producer whose first effort was Academy Award winner “Black Swan,” in a case eminently heading toward trial filed by French entertainment giant Studiocanal. A Cross Creek entity had contracted with Studiocanal to pay $5 million for rights to distribute “Legend,” a British Tom Hardy gangster film, in the U.S. and Canada. Concerned that Universal’s limited release plans for “Legend” frustrated the expectations of the film’s U.S. investors, Cross Creek returned the investment funds rather than pay Studiocanal. Studiocanal obtained a judgment for breach of contract, then initiated action against numerous Cross Creek entities and insiders with omnibus theories including fraud, successor liability and intentional interference with contract. Jury was waived and the case was tried for some twenty days before the judge.
Spillane Trial Group was able to convince the judge that there was no wrongdoing in formation and use of multiple “special purpose entities” (“SPEs”) in raising funds for and distributing filmed entertainment and that Cross Creek did no wrong in setting up an SPE that had no funds on hand upon execution of the “short form” distribution agreement. The firm showed the execution of the short form U.S. distribution agreement allowed Studiocanal to “greenlight” and produce Legend, and that Cross Creek had attempted to raise the needed funds between execution of the “short form” and “long form” agreements. We also showed that the first doubts about whether Universal’s release plans were consistent with investor expectations were formed only after Studiocanal had already delivered the film elements to Universal for U.S. release.
Spillane Trial Group achieved significant victories on multiple fronts: we successfully defeated Studiocanal’s tortious interference claim entirely and convinced the court to reject their “present financial ability to pay” fraud theory. The court explicitly found no legal requirement for entities to maintain funds on hand when executing distribution agreements and validated our defense of Cross Creek’s use of industry-standard special purpose entities.
Though we believed Studiocanal had failed to prove actionable falsehood or actionable reliance, we were disappointed when the Court found fraudulent concealment of the potential to return investor funds. Also, though we had shown that Cross Creek Media (“CCM”), a currently operating company, had purchased the assets of Cross Creek Pictures (“CCP”), which wound down, in a fair transaction, the Court found successor liability based on CCM’s continued operation under the Cross Creek brand and use of the same personnel and business operations.
The Court took time in its findings to congratulate the parties on “excellent lawyering” and “outstanding presentation” skills.
While the parties are discussing out-of-Court resolution, if these fail, the firm is confident that the Court’s errors will result in reversal on appeal and vindication for Cross Creek.
Spillane Trial Group thanks Cross Creek for its confidence in the firm’s ability to try high stakes complex entertainment finance issues. The lessons learned in this lengthy, complex and difficult case will enhance the firm’s ability to continue to try high stakes business disputes in the future.