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COUNTERCLAIMS
ACTIVE\45594794.v3-5/5/17 1
Case 2:17-cv-00308-JAK-AFM Document 21 Filed 05/05/17 Page 2 of 11 Page ID #:353
1 and ALE AU at this time both hoped this initial termed relationship would go well and
2 that it would lead to a longer term relationship.
3 11. These discussion cumulated in an agreement whose terms are
4 documented in a February 28, 2013, letter agreement between Lust and AL US (the
5 Agreement) a copy of which is attached hereto as Exhibit A. The Agreement sets
6 forth a two-year term and furthermore specifies that the relationship at will. The
7 Agreement sets forth the monthly advances receivable by Lust and the basis for
8 recoupment of such advances from Lusts agreed share of any producer fee or profit
9 participation subsequently received by AL US for the eligible projects. The
10 Agreement also specifies the credit he will receive on such projects. Under the
11 Agreement, Lust is obligated to transfer to AL US any copyrights or other intellectual
12 property rights he has or may have with regard to any projects he works on under the
13 Agreement. The Agreement also contemplates the parties rights and obligations if
14 either party terminates or AL US decides not to renew the Agreement beyond the
15 initial two year term.
16 12. The Agreement contemplates a more formal long-form agreement, but
17 the parties acknowledged that the Agreement sets forth the basic terms of their
18 agreement. Specifically, the Agreement contemplated a long-form contract between
19 Animal Logic Interactive LLC (now ALE LLC) and SAJ, Lusts loan out company.
20 The parties agreed that Lusts loan out company, SAJ, would be responsible for all
21 employment related taxes for his services and all insurance. In the absence of the
22 subsequent long-form contract, AL US has continued to perform the Animal Logic
23 Entertainment US obligations of the Agreement.
24 13. Although the Agreement provided that Lust would receive from AL US
25 monthly advances against his agreed share of any producer fees or profit participation
26 received by ALE AU, Lust needed more money. Pursuant to a December 19, 2013
27 Retainer Advance Agreement (Loan Agreement), AL US advanced to SAJ, at
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COUNTERCLAIMS
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Case 2:17-cv-00308-JAK-AFM Document 21 Filed 05/05/17 Page 5 of 11 Page ID #:356
1 limitation, Columbia. Lusts refusal to sign Certificates that all intellectual property
2 rights he may have in such projects are owned by the Counterclaimants interferes with
3 the contracts one or more of the Counterclaimants have with third parties.
4 17. Similarly, Counterclaimants are in negotiations with a number of third
5 parties with respect to a number of other projects that Lust worked on during the term
6 of the Employment Agreement. Counterclaimants are informed and believe, and on
7 that basis allege, that Lusts public assertion that he continues to hold rights to and in
8 these projects has and is interfering with third parties willingness to contract with one
9 or more of the Counterclaimants with respect to these projects. Counterclaimants are
10 informed and believe, and on that basis allege, that Lusts assertion that he continues
11 to hold intellectual property rights in these projects is independently wrongful because
12 it constitutes a breach of an express term of the Employment Agreement.
13 FIRST COUNTERCLAIM FOR RELIEF
14 BREACH OF CONTRACT (THE EMPLOYMENT AGREEMENT)
15 (Against Lust)
16 18. Counterclaimants reallege and incorporate by reference all of the
17 averment set forth above.
18 19. AL US has performed all the terms and conditions required on its part to
19 be performed under the Agreement.
20 20. Lust has materially breached the Employment Agreement by, among
21 other things, refusing to assign to AL US any and all intellectual property rights in the
22 various projects he worked on during the term of the Employment Agreement.
23 21. As a direct and proximate cause of Lusts breach of the Employment
24 Agreement, AL US has sustained damages according to proof at or before trial.
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1 assign to AL US any and all intellectual property rights in ALE AUs projects, in
2 direct contravention of the Agreement.
3 31. ALE AU is informed and believes and thereon alleges that, in an effort to
4 interfere with ALE AU contracts with Columbia and Warner Brothers, Counter-
5 Defendants baselessly and deceptively asserted to Columbia and Warner Brothers that
6 he owned intellectual property rights in ALE AUs projects.
7 32. Counter-Defendants engaged in the conduct alleged herein with the intent
8 to harm ALE AU financially, to induce a breach of ALE AUs agreements with
9 Columbia and Warner Brothers, and/or to make the contractual relationships between
10 ALE AU, on the one hand, and Columbia and Warner Brothers, on the other hand,
11 less financially lucrative to ALE AU.
12 33. As a direct and proximate result of the conduct of Counter-Defendants as
13 alleged herein, ALE AU has sustained damages according to proof at or before trial.
14 34. The conduct of Counter-Defendants as alleged herein was purposeful and
15 intentional and was engaged in for the purpose of depriving ALE AU of property or
16 legal rights or otherwise causing injury, and was despicable conduct that subjected
17 ALE AU to cruel and unjust hardship in conscious disregard of its rights, and was
18 performed with fraud, oppression or malice so as to justify an award of exemplary or
19 punitive damages against Counter-Defendants in an amount according to proof at trial.
20 FOURTH COUNTERCLAIM FOR RELIEF
21 INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC
22 RELATIONS
23 (Against Lust and SAJ)
24 35. Counterclaimants reallege and incorporate by reference all of the
25 averment set forth above.
26 36. Prior to engaging in the aforementioned conduct, Counter-Defendants
27 was fully aware that Counterclaimants had business relationships motion picture
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Case 2:17-cv-00308-JAK-AFM Document 21 Filed 05/05/17 Page 9 of 11 Page ID #:360
1 studios and production companies in the entertainment industry that are likely to result
2 in economically-advantageous relationships between Plaintiffs and Columbia and
3 Warner Brothers.
4 37. Counter-Defendants engaged in the conduct alleged above, and continues
5 to engage in such conduct, with the intent to interfere with and/or destroy the
6 economically-advantageous relationships between Counterclaimants, on the one hand,
7 and which motion picture studios and production companies in the entertainment
8 industry, on the other hand, and to make those relationships less financially lucrative
9 for Counterclaimants.
10 38. Counter-Defendants conduct is independently wrongful because this
11 conduct constitutes a breach of Lusts obligations under the Agreement.
12 39. As a direct and proximate result of the conduct of Counter-Defendants as
13 alleged herein, Counterclaimants have sustained damages according to proof at or
14 before trial.
15 40. The conduct of Counter-Defendants as alleged herein was purposeful and
16 intentional and was engaged in for the purpose of depriving Counterclaimants of
17 property or legal rights or otherwise causing injury, and was despicable conduct that
18 subjected Counterclaimants to cruel and unjust hardship in conscious disregard of
19 their rights, and was performed with fraud, oppression or malice so as to justify an
20 award of exemplary or punitive damages against Counter-Defendants in an amount
21 according to proof at trial.
22 PRAYER
23 WHEREFORE, Counterclaimants pray for the following relief:
24 1. For damages in an amount to be proven at or before trial;
25 2. For exemplary or punitive damages in an amount according to proof at
26 trial;
27 3. For costs of suit incurred herein; and
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1 4. For such other and further relief as the Court may deem just and proper.
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Dated: May 5, 2017 FOX ROTHSCHILD LLP
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4 By /s/ John Shaeffer
Attorneys for Defendant and Counterclaimant
5 ANIMAL LOGIC ENTERTAINMENT, LLC,
Counterclaimants
6 ANIMAL LOGIC LLC, and ANIMAL LOGIC
ENTERTAINMENT PTY LTD
7 and Defendant ZAREH NALBANDIAN
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Case 2:17-cv-00308-JAK-AFM Document 21 Filed 05/05/17 Page 11 of 11 Page ID #:362