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Amy R. Gurvey v. Legend Films

September 14, 2012

AMY R. GURVEY,
PLAINTIFF,
v.
LEGEND FILMS, INC. FORMERLY KNOWN AS LEGEND FILMS, LLC, JEFFREY B. YAPP, BARRY B. SANDREW, LEGEND3D, INC.,LEGEND FILMS, LLC, DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

Order Denying Plaintiff's Ex Parte Applications, [Doc. Nos. 148 and 149], ) Granting Defendants' Motion for Summary ) Judgment, [Doc. No. 118], Denying ) Plaintiff's Motion for Summary Judgment, [Doc. No. 132], Denying Plaintiff's Motion to Vacate, Transfer to SDNY for Trial, and for Extension of Time to File Pre-Trial and Documents, [Doc. No. 157], Denying Plaintiff's Motion to Stay Preliminary Pre- Trial Memo and Witness Lists, [Doc. No. 161].

The Defendants have filed a motion for summary judgment (Doc. No. 118) on all of the causes of action in Plaintiff's First Amended Complaint ("FAC"), (Doc. No. 78). The Plaintiff filed a cross motion for summary judgment, (Doc. No. 132), seeking a variety of sanctions and summary judgment on the issue of Plaintiff's 3% interest in Legend Films. The Plaintiff filed ex parte applications, (Doc. Nos. 148 and 149), on January 19, 2012 seeking: (1) an extension of time to obtain counsel to file her reply brief, and (2) leave to file an amended complaint. The Plaintiff also filed a motion to vacate a prior stipulation and transfer the case to SDNY for trial, and for an extension of time to file pre-trial documents, (Doc. No. 157). Plaintiff also filed a motion for a stay on the preliminary pre-trial memo and witness lists, (Doc. No. 161). For the reasons set forth below, the Plaintiff's ex parte applications, (Doc. Nos. 148 and 149), are DENIED; Plaintiff's motion for transfer and for extension of time to file pre-trial documents, (Doc. No. 157), is DENIED; Plaintiff's motion to stay preliminary pre-trial memo and witness list (Doc. No. 161), is DENIED AS MOOT; Defendants' motion for summary judgment, (Doc. No. 118), is GRANTED; and Plaintiff's cross motion for summary judgment, (Doc. No. 132), is DENIED.

Background

The Parties

Plaintiff, Amy Gurvey, is an attorney licensed to practice in the states of California and New York with experience and training in entertainment and intellectual property law.*fn1 She was a resident of New York until 2002, at which time she moved her residence to New Jersey. Ms. Gurvey contends that she performed legal services for Defendant Legend Films, Inc. as well as individual Defendants between 2000 and 2002.

Defendant Legend Films, Inc. ("Legend") is a San Diego-based company specializing in the restoration and colorization of old black-and-white films and television shows for DVD, HDTV, and theatrical release. Legend Films, LLC ("LLC"), the predecessor to Legend, was formed in 2001 by Defendants Yapp and Sandrew, and was incorporated in Nevada. In 2003, Legend was incorporated in California, and the LCC ceased to exist.

Defendant Barry Sandrew, Ph.D., is a California resident, and is currently serving as President and Chief Operating Officer of Legend. Sandrew is the inventor of an all-digital process for colorizing black and white films.

Defendant Jeffrey Yapp is currently a California resident and serves as Chairman of Legend's Board of Directors. In 2001, when the LLC was formed, Yapp was a resident of Oregon. Subsequently, in 2001, Yapp began working for Cablevision Systems Corporation ("Cablevision") in New York. In late 2002, Yapp moved from Oregon to New York, where he remained until early 2006.

Defendant David Martin, a California resident, is Legend's Chief Executive Officer and a member of the company's Board of Directors.

Factual Background

In late 1999, Plaintiff began performing legal services for Defendants Sandrew and Yapp in connection with breach of fiduciary duty claims against certain board members of the American Film Technologies, Inc. ("AFT"). At that time, both Sandrew and Yapp were AFT board members.

Sandrew and Yapp resigned from AFT on November 7, 2000. At that time, Plaintiff was working on various projects for Sandrew, including review of patents, contracts, and employment agreements pertaining to Sandrew and potential outsourcing companies. Plaintiff continued providing legal services to Yapp and Sandrew, and allegedly at their request also began providing legal services to Legend. Plaintiff's "General Counsel" services included aid in: formation of the company, drafting and reviewing contracts, proposals to film studios, intellectual property issues, and capital-raising activities. The Plaintiff contends that at all relevant times, Legend allegedly held Plaintiff out to the public (e.g., in its prospectus, business plan, and executive summary) as its General Counsel and part of its management team.

On November 15, 2001, Plaintiff allegedly entered into an Employment Agreement (the "Agreement") with the LLC to serve as the company's General Counsel. The Agreement was for an initial term of two years commencing January 1, 2002, with an annual base salary of $125,000 plus other renumeration and benefits, including an ownership stake in Legend. The Agreement also contained a provision that Plaintiff could only be terminated upon ninety days prior written notice with a reasonable opportunity to cure any alleged failure to perform. Additionally, upon termination Plaintiff would be entitled to salary, accrued time off, earned bonuses, stock options, and deferred compensation. Any termination without cause would obligate Legend to pay Plaintiff $100,000 as severance. Finally, the Agreement allegedly contained a "Choice of Law/Forum" clause providing:

This Agreement is to be construed and enforced in accordance with the laws of the State of New York, irrespective of the principles of conflicts of law. Any action brought pursuant to this Agreement must be instituted in the federal or state courts of the State of New York. (Employment Agreement attached to Sandrew Decl., Ex. A, ¶ 10 (June 25, 2009).)

Although Plaintiff's complaint appears to assert that the alleged Agreement was signed by both parties, no signed agreement has been produced. Defendants included a copy of the "proposed" version of the Agreement with their Motion to Dismiss, (Doc. No. 8), which they allege has been supplied by Gurvey and was never signed by Legend or any of its employees. In her opposition to Defendants' motion to dismiss, Gurvey concedes that the Agreement was never signed.*fn2 However, she continues to maintain that a valid "contract" existed between the parties. Id.

In February of 2002, shortly after allegedly entering into the Agreement, Plaintiff joined the law firm of Cowan, Liebowitz, & Latlaw, P.C. ("Cowan") in an "of counsel" capacity. Under her employment contract with Cowan, however, Plaintiff states that she was permitted to continue working as general counsel to Legend, and Cowan held no rights to her 3% stock interest in Legend.

Ms. Gurvey claims that she continued to perform legal services for Legend through October of 2002. In November of 2002, Mr. Yapp allegedly informed her by phone she was to be terminated without cause. Since then, Yapp has allegedly admitted that the company terminated Plaintiff because it lacked funds to pay her. In September of 2008, however, it was reported that Legend had successfully raised $13 million in venture capital funding.

Plaintiff now claims she still has not been paid the $125,000 salary, stock interest, and $100,000 severance owed to her under the Agreement, as well as for services rendered to individual Defendants prior to the formation of the LLC. The Plaintiff contends that Mr. Yapp allegedly made repeated representations to her that she would be paid under the Agreement that never came to fruition. Moreover, in 2005, the Plaintiff alleges that in order to dissuade her from filing suit for breach of contract, Defendants allegedly offered her 40,000 shares of Legend stock, but did not provide her with requested due diligence documentation, so she was never able to ascertain the value of the offered shares and therefore did not accept Defendants offer.

Procedural Background

Plaintiff brought the instant action in the United States District Court for the Southern District of New York on October 29, 2008. On December 8, 2008, Defendants moved to dismiss the complaint for lack of personal jurisdiction or, in the alternative, to transfer the case. Before the New York court could rule on the motion, however, the parties stipulated to the transfer of the action to the United States District Court for the Southern District of California. The case was transferred to this Court on May 1, 2009. (Doc. No. 1, p. 99-100).

The Plaintiff's complaint stated seven causes of cation against Defendants as follows: (1) the first cause of action is brought in Quantum Meruit against Defendants Sandrew and Yapp for services rendered to these defendants in their capacity as directors of American Film Technologies ("AFT"); (2) the second cause of action is brought in Quantum Meruit against Sandrew and Yapp for services rendered to these individual defendants before the formation of Legend Films; (3) the third cause of action is brought in Qunatum Meruit against Legend Films for services rendered to Legend Films; (4) the forth cause of action is for breach of contract against Legend Films; (5) the fifth cause of action is for breach of contract as to all Defendants; (6) the sixth cause of action is a claim of promissory estoppel against all Defendants; and (7) the seventh cause of action seeks specific performance against Legend

The Defendants filed a motion to dismiss, (Doc. No. 8), which was granted-in-part and denied-in-part by this Court's order of January 4, 2010, (Doc. No. 37). The Court granted Defendants' motion to dismiss the first and second cause of action without leave to amend, finding these claims to be barred by the statute of limitations.

The Plaintiff filed her FAC on March 30, 2011, in which she alleges the following six causes of action: (1) Quantum Meruit against Legend Films; (2) breach of contract against Legend Films; (3) breach of contract as to all Defendants; (4) promissory estoppel against all Defendants;(5) specific performance against Legend Films; and (6) failure to pay wages pursuant to New York labor law section 198 against Legend Films.

The Defendants have filed a motion for summary judgment (Doc. No. 118) on all of the causes of action in Plaintiff's First Amended Complaint ("FAC"), (Doc. No. 78). The Plaintiff filed a cross motion for summary judgment, (Doc. No. 132), seeking a variety of sanctions and summary judgment on the issue of Plaintiff's 3% interest in Legend Films. The Plaintiff filed ex parte applications, (Doc. Nos. 148 and 149), on January 19, 2012 seeking: (1) an extension of time to obtain counsel to file her reply brief, and (2) leave to file an amended complaint. The Plaintiff also filed a motion to vacate a prior stipulation and transfer the case to SDNY for trial, and for an extension of time to file pre-trial documents, (Doc. No. 157). Plaintiff also filed a motion for a stay on the preliminary pre-trial memo and witness lists, (Doc. No. 161).

Legal Standard

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Miller v. Glenn Miller Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the nonmoving party's claim, or to a defense on which the nonmoving party will bear the burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos. Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). When the nonmoving party would bear the burden of proof at trial, the moving party may satisfy its burden on summary judgment by simply pointing out to the Court an absence of evidence from the nonmoving party. Miller, 454 F.3d at 987. "The moving party need not disprove the other party's case." Id.

Once the movant has made that showing, the burden shifts to the opposing party to produce "evidence that is significantly probative or more than 'merely colorable' that a genuine issue of material fact exists for trial." LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009) (citing FTC v. , 265 F.3d 944, 954 (9th Cir. 2001)); see also Miller, 454 F.3d at 988 ("[T]he nonmoving party must come forward with more than 'the ...


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