and Does 1-20 (collectively, “Defendants”), allege as follows: NATURE OF ACTION 1. This is a diversity action seeking injunctive relief and damages against
Defendants for fraud, conversion, breach of contract, breach of fiduciary duty, and tortious interference with contractual relations arising from and relating to the production and distribution of a feature film entitled “Shannon’s Rainbow” (the “Film”), which is currently in postproduction being finished and readied for distribution. 2. Plaintiffs are the Co-Manager and Members of Shannon's Rainbow, LLC, a
Delaware limited liability company that controls the rights to production and distribution of the Film. 3. Defendants have attempted to seize control of the Film through the ruse of
surreptitiously creating a shadow company in Utah entitled, remarkably enough, Shannon's Rainbow, LLC and now are threatening to enter distribution deals immediately for the Film in that Utah company’s name, to the detriment of Plaintiffs’ rights. That Utah company has no legal relationship of any kind with Shannon's Rainbow, LLC in Delaware. The members of the Delaware company were unaware of Defendants’ creation of the Utah entity, never consented to it, and are not members of that entity. 4. Defendants’ fraudulent conduct already has damaged Plaintiffs and, unless
Defendants are enjoined from attempting to exploit the Film under the Utah company’s name, Plaintiffs will suffer irreparable harm. THE PARTIES
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5.
Plaintiff Supernova is a New York corporation with its principal place of business Supernova is a television and film
located at 930 Fifth Avenue, New York, NY 10021.
production company and at all times relevant herein was a Co-Manager of Shannon’s Rainbow, LLC, a Delaware limited liability company, the sole business of which is to produce and distribute the Film, which currently is in post-production being finished and readied for distribution. 6. Shannon’s Rainbow, LLC was formed by the filing of a Certificate of Formation
with the Delaware Secretary of State on July 3, 2007. 7. Plaintiff Joseph DiPalma (“DiPalma”) is a domiciliary of the State of Nevada who
maintains a residence at 930 Fifth Avenue, New York, NY 10021. DiPalma is a Member of Shannon’s Rainbow, LLC by virtue of his capital contribution of $1,000,000 and is Executive Producer of the Film. 8. Plaintiff Joycelyn Engle (“Engle”) is a domiciliary of the State of Nevada who
maintains a residence located at 930 Fifth Avenue, New York, NY 10021. Engle has been in the film business for 28 years as a producer, director, and actress and is the Vice-president of Supernova. Engle is the Producer, Casting Director, Dialect Coach, and Acting Coach of the Film. 9. the Film. 10. Defendant Shannon’s Rainbow (Utah) is a Utah limited liability company. Upon Pursuant to written agreement dated July 20, 2008, Engle owns a 51% interest in
information and belief, Defendant SummitWorks, LLC is the Manager of Shannon’s Rainbow (Utah).
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11.
Defendant SummitWorks, LLC (“SummitWorks”) is a Utah limited liability
company, is a member of Shannon’s Rainbow, LLC by virtue of its capital contribution of $325,000 and, at all times relevant herein, was a Co-Manager of Shannon’s Rainbow, LLC with Supernova. 12. Upon information and belief, Defendant Frank E. Johnson (“Johnson”) is a
resident of the State of Utah, is the Director of the Film, and was the Managing Member of SummitWorks at all times relevant herein. 13. Upon information and belief, Defendant Kelly Nelson is a resident of the State of
Utah, and was a member of SummitWorks at all times relevant herein. 14. Upon information and belief, Defendant Charles Morrison is a resident of the
State of Utah, and was a member of SummitWorks at all times relevant herein. 15. Upon information and belief, Defendant Carmine “Tony” Lotita is a resident of
the State of Utah, and was a member of SummitWorks at all times relevant herein. 16. Upon information and belief, at all times relevant herein, Defendant Joseph Pia
(“Pia”) was an attorney admitted in the State of Utah. 17. Upon information and belief, Defendant John Mowod is a resident of the State of
Pennsylvania, and he co-authored the original screenplay of the Film. 18. Upon information and belief, Defendant Lawrence Richert is a resident of the
State of Pennsylvania, and he co-authored the original screenplay of the Film. 19. Defendants Does 1-20 are persons or entities who are or may be members of
Shannon’s Rainbow, LLC, whose actual identities are unknown, who are named herein as necessary parties to this dispute.
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20.
Additionally, non-party Stewart Rahr (“Rahr”) is a resident of the State of New
York, County of New York, is a member of Shannon’s Rainbow, LLC by virtue of his capital contribution of $1,000,000, and is Executive Producer of the Film.
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JURISDICTION AND VENUE 21. This Court has subject matter jurisdiction over the claims in this action pursuant
to 28 U.S.C. § 1332, because the parties in interest are of diverse citizenship, and because the amount in controversy exceeds $75,000. 22. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391. FACTUAL BACKGROUND The Creation Of Shannon's Rainbow, LLC 23. In January 2007, a TV producer in Las Vegas, Nevada named Reginald LaFrance
called Engle and told her that Johnson had a feature film script that she should read. Engle and Johnson thereafter discussed the script via telephone. 24. Johnson subsequently traveled to Los Angeles to meet Engle in person, and the
two met initially at “Jerry’s Famous Deli” in Studio City, California. At that meeting, Johnson represented to Engle that he held all rights to the script pursuant to an option he had purchased from the authors. Johnson asked Engle if her daughter, Julianne Michelle (“Michelle”), would be interested in the lead role of Shannon. Michelle was President of Supernova, had been a television and film actress since age 5, and recently had won “Best Actress in a Feature Film” for her performance in the feature film, “The House is Burning.” 25. Johnson further represented to Engle and Michelle that he was the founder and
sole Manager of SummitWorks. 26. Engle told Johnson she would give the script to Michelle to read. Michelle, after
reading the script, observed that it needed substantial work, but agreed that it was an excellent
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candidate for a feature film and agreed to take the lead role. Engle agreed to be the producer, casting director, and dialect coach for the project. 27. Johnson and Engle agreed that the Film would be shot on location in
Pennsylvania in order to obtain a tax credit that Pennsylvania was offering to companies for creating films in that state. It was estimated that the tax credit would be $1,000,000. Financing The Production Of The Film 28. Engle and Johnson subsequently discussed the issue of financing the creation of
the Film. Engle agreed to use her connections in the entertainment industry to attempt to obtain financing and, commencing in the winter of 2007, Engle and Michelle commenced an exhaustive search for funding sources, attending innumerable meetings in Manhattan and Hollywood with potential financiers in an attempt to raise capital for the Film. 29. During the months that Engle and Michelle sought financing, Johnson, Morrison,
and Nelson traveled to New York and participated in meetings and negotiations with potential funding sources. 30. On July 3, 2007, Johnson caused the formation of Shannon’s Rainbow, LLC in
Delaware, which was to be the entity that would control all aspects of the production and distribution of the Film. SummitWorks was the sole Manager of Shannon's Rainbow, LLC at that time. Attached as Exhibit “A” is a copy of the Delaware Certificate of Formation for Shannon’s Rainbow, LLC. 31. On August 8, 2007, Johnson recorded Shannon’s Rainbow, LLC’s copyright
interest in the screenplay of the Film with the U.S. Copyright Office. A copy of the Form PA is attached hereto as Exhibit “B.”
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The Rahr Capital Contribution To Shannon's Rainbow, LLC 32. From July 2007 through the end of that year, Engle, Michelle, and Johnson
attempted, without success, to obtain the substantial financing required to produce the Film. On December 19, 2007, in recognition of Engle’s extensive fundraising efforts, Johnson and Engle executed a finder’s fee agreement, which stated, inter alia, that “SummitWorks, LLC and Equistar, partner in the SummitWorks Film Fund 1, will assure that Supernova Media, Inc. in association with Joycelyn Engle will receive finder’s fees to the extent of 5 percent of funds raised and deposited in the in the account of SummitWorks Film Fund 1 or any other account.” A copy of that finder’s fee agreement is attached hereto as Exhibit “C.” 33. Johnson represented to Engle that SummitWorks controlled the entity entitled
SummitWorks Film Fund 1. 34. In February 2008, Engle persuaded Stewart Rahr to join Shannon's Rainbow, LLC
as a Member by making a capital contribution of $1,000,000 in Shannon’s Rainbow, LLC for the production of the Film. Attached as Exhibit “D” is a copy of the February 29, 2008 letter agreement memorializing the agreement between SummitWorks, as Manager of Shannon’s Rainbow, LLC, and Rahr (the “Rahr Investment Agreement”). 35. In particular, the Rahr Investment Agreement states that it is “between Rahr and
Shannon’s Rainbow, LLC, a Delaware limited liability company” (emphasis added). It states that Shannon’s Rainbow, LLC “shall administer the financing, production, and distribution of the film.” 36. The Rahr Investment Agreement further states that Shannon’s Rainbow, LLC
“has established a bank account in the name of Shannon’s Rainbow, LLC at Merrill Lynch Global Private Client Group (the ‘Account’). The Account number for the Working Capital
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Management Account is 795-04133. The mailing address for the Account is 8075 Leesburg Pike, Suite 600, Vienna, VA 22182.” 37. The Rahr Investment Agreement further states that Rahr’s money would be
deposited in the Account and that “none of Rahr’s funds shall be released from the Account until there has been deposited into the Account , as equity contributions to finance the production of the film, a total of $5,500,000.” 38. The Rahr Investment Agreement further requires that “Joycelyn Engle in
association with Supernova Media, Inc. shall be Executive Producer and Casting Director of the film,” and that “Julianne Michelle shall star in the lead role of Shannon.” 39. Johnson signed the Rahr Investment Agreement as Manager of SummitWorks
which, at the time, was the Manager of Shannon's Rainbow, LLC. 40. Upon information and belief, Rahr was not presented with, told about, or asked to
sign any other document concerning his capital contribution or membership in Shannon's Rainbow, LLC at the time he joined as a Member. Specifically, Rahr was not presented with, told about, or asked to sign any operating agreement concerning Shannon's Rainbow, LLC. Rahr was not told about and did not discuss with Johnson any structure by which his voting rights would be impaired. 41. The Rahr Investment Agreement further represents that “[Shannon's Rainbow,
LLC’s] Managing Partner is SummitWorks, LLC, and that a managing partner of SummitWorks, LLC is Equistar Development. Producer represents and warrants to Rahr that Equistar is
providing a completion bond for the film.” 42. of Equistar. Kelly Nelson signed the Rahr Investment Agreement as the “managing partner”
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43.
Nelson’s representation was untrue at the time and Nelson knew that that
representation was untrue when he made it. Nelson and his company, Equistar, had not and did not provide a completion bond for the Film and Nelson had no intention of providing a completion bond. Nelson made that untrue representation in order to induce Rahr to make the $1,000,000 capital contribution, and Rahr relied to his detriment on that untrue representation in making the investment. 44. On May 14, 2008, Shannon's Rainbow, LLC, by its Manager, SummitWorks,
entered into a written Agreement with Engle stating that “Joycelyn Engle will receive from the Pennsylvania tax rebate a deferred fee of $75,000 for services as acting coach during filming of ‘Shannon’s Rainbow’ and $120,000 for services as a dialect coach for ‘Shannon’s Rainbow’ and additional casting services. She will also receive an on-screen credit as acting coach, dialect coach, producer, and executive producer” (the “May 2008 PA Tax Credit Pledge”). Johnson signed the May 2008 PA Tax Credit Pledge as the Manager of SummitWorks, which was the Manager of Shannon's Rainbow, LLC at the time. The DiPalma Capital Contribution 45. Shortly before that time, a major funding deal had fallen through, jeopardizing the
survival of the project. To ensure the Film’s survival and to allow principal photography to start in June 2008, Engle persuaded Joseph DiPalma to join Shannon's Rainbow, LLC as a Member by making a capital contribution of $1,000,000. Attached hereto as Exhibit “E” is a copy of the May 14, 2008 letter agreement between DiPalma and SummitWorks, as Manager of Shannon’s Rainbow, LLC, concerning DiPalma’s capital contribution and membership (the “DiPalma Investment Agreement”).
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46.
Johnson executed the DiPalma Investment Agreement as the Manager of
SummitWorks, which was the Manager of Shannon's Rainbow, LLC at the time. 47. DiPalma was not presented with, told about, or asked to sign any other document
concerning his capital contribution or membership in Shannon's Rainbow, LLC at the time he joined Shannon's Rainbow, LLC. Specifically, DiPalma was not presented with, told about, or asked to sign any operating agreement concerning Shannon's Rainbow, LLC. DiPalma was not told about and did not discuss with Johnson any structure by which his voting rights would be impaired. 48. By the date of the DiPalma Investment Agreement in May 2008, Engle, through
her production company, Supernova, had been working on the Film for months. Engle had rewritten some of the first eight scenes of the script, since the original script was not presentable for the actors or their agents. Engle also had cast all the roles and contracts had been negotiated and executed. logistics. 49. To protect DiPalma’s investment and ensure that the Film would be produced in In addition, she had decided upon and set in motion numerous production
accordance with the highest standards, the DiPalma Investment Agreement states that “Supernova Media, Inc. will be a managing partner in Shannon’s Rainbow, LLC and participate in the producer’s share of the film.” From that moment forward, Supernova and SummitWorks were Co-Managers of Shannon’s Rainbow, LLC. 50. Johnson represented and certified in the DiPalma Investment Agreement that
“distribution of the film in approximately 800 theatres in the US and Canada including New York (Manhattan) and Los Angeles plus foreign distribution, DVD, and Cable are assured.”
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51.
Johnson’s representation was untrue at the time and Johnson knew that that
representation was untrue when he made it. Johnson had no agreements at that time for domestic theatrical distribution and, in fact, the intent of Johnson and the other Defendants was and is to skip domestic distribution entirely and sell the Film straight to a foreign distributor. 52. Johnson made that untrue representation in order to induce DiPalma to make the
$1,000,000 capital contribution, and DiPalma relied to his detriment on that untrue representation in making the investment. 53. In addition to misrepresenting to DiPalma that distribution of the Film in
approximately 800 theatres in the US and Canada was “assured,” Johnson also misrepresented his credentials to Engle and DiPalma. In positioning himself to be the director, Johnson
represented to Engle and DiPalma that he had directed the hit TV show “Touched by An Angel” for eight years. In fact, Johnson had directed only three episodes of that television show. Even if Johnson’s representation of eight years of television directing had been true, which it was not, Johnson still would have been a very hard sell for the actors, managers, and agents since he had never directed a feature film. 54. Based upon DiPalma’s capital contribution of $1,000,000, Rahr executed an
amendment to the Rahr Investment Agreement on May 20, 2008 (the “Amended Rahr Investment Agreement”), which stated that $2,250,000 (including Rahr and DiPalma’s $1M capital contributions) had been deposited into the Account, an additional $750,000 had been pledged and, accordingly, Rahr agreed that his $1,000,000 could be drawn down and applied to production costs for the Film. Again, Johnson signed as the Manager of SummitWorks, which was the Co-Manager of Shannon's Rainbow, LLC with Supernova at the time.
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55.
Upon information and belief, Rahr was not presented with, told about, or asked to
sign any other document concerning his capital contribution or membership in Shannon's Rainbow, LLC at the time he executed the Amended Rahr Investment Agreement. Specifically, Rahr was not presented with, told about, or asked to sign any operating agreement concerning Shannon's Rainbow, LLC. He was not told about and did not discuss any structure by which his voting rights would be impaired. 56. 57. Principal photography commenced on location in Pennsylvania in June 2008. Because Johnson had never directed a feature film, Engle insisted that Shannon’s
Rainbow, LLC hire Dean Cundey, an Oscar-nominated cinematographer, to work alongside Johnson. Johnson objected vehemently, but eventually relented. 58. Engle also knew from her extensive experience in the business that a good line
producer was crucial to the efficient production of the Film. Engle located several line producers with established film credits, one having been a line producer on the film “Titanic.” After agreeing to hire that person, Johnson unilaterally hired an inexperienced production manager and insisted on assuming the duties of line producer himself, with disastrous consequences. 59. Engle also knew that the success of the project depended on having an
experienced film editor, and had focused on several award-winning editors . Again, Johnson refused Engle’s suggestions and unilaterally hired his childhood friend to edit the Film, a man with very few credits who proved to be incapable of editing the Film. That decision alone cost Shannon’s Rainbow, LLC hundreds of thousands of dollars due to the poor quality of the editing, which had to be fixed at a great loss to Shannon’s Rainbow, LLC of time and money. 60. Due to Johnson’s incompetence as an administrator and his refusal to adhere to
budgetary restraints, the project ran over budget and repeatedly was in danger of running out of
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money. In July 2008, Engle loaned Shannon’s Rainbow, LLC $47,000 to pay for cast trailers that the vendor was threatening to remove from the set for rent arrears, which would have shut down filming. 61. Engle also paid for airfare for talent, Kodak film, and other production-related
costs in order to keep the project afloat. 62. Engle has not been paid for any of her services to the Film, has not received any
finder’s fees for the Rahr and DiPalma investments, and has not received any part of the Pennsylvania tax credit. 63. In July 2008, Lawrence Ross loaned Shannon's Rainbow, LLC $1,000,000, and
Johnson pledged the Pennsylvania tax credit to the repayment of that loan, notwithstanding the May 2008 PA Tax Credit Pledge to Engle that Johnson had signed. Lawrence Ross was not a member of Shannon's Rainbow, LLC at that time but was a creditor. 64. The project ran so short of funds in July 2008 that Shannon's Rainbow, LLC
required bridge financing in addition to the loan from Lawrence Ross to continue production. Defendant Pia from Utah, who claimed that Johnson had hired him to represent Shannon's Rainbow, LLC and held himself out as representing Shannon’s Rainbow, LLC, volunteered to obtain a short-term loan facility of $250,000 from a group that he claimed to know in Utah. 65. Pia, who was urging Engle to enter into a foreign distribution agreement at a time
when the Film was not even finished shooting, was angling to obtain a commission for representing Shannon's Rainbow, LLC in such a deal. On July 30,2008, Engle and Johnson, on behalf of Shannon's Rainbow, LLC, executed an Authorization Agreement (the “July 2008 Authorization Agreement”) drafted by Pia in which Shannon's Rainbow, LLC authorized Pia to
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“finalize a deal with Image Entertainment according to the basic terms of the offer previously reviewed by the Parties, with the caveat that theatrical rights be reserved.” 66. The 2008 Authorization Agreement also authorized Pia to obtain bridge financing A copy of the July 2008
for the Film in an amount between $250,000 and $450,000. Authorization Agreement is attached hereto as Exhibit “F.” 67.
The July 2008 Authorization Agreement specifically acknowledges Engle’s 51%
ownership interest in the Film, stating that “AS ENGLE OWNS NEGATIVE 51% FOR SHANNON’S RAINBOW ‘THE FILM,’ Loan of $250,000 -- $450,000 will be placed into a personal account or Shannon's Rainbow, LLC account with only Joycelyn Engle as sole signatory – a separate account” (emphasis in original). 68. On July 30, 2008, Engle, DiPalma, and Johnson executed the short-term bridge
loan with an entity in Utah named Landform, LLC. Although Engle, DiPalma, and Johnson personally were the borrowers until Shannon's Rainbow, LLC could retire the loan, Engle was forced to collateralize the loan with her personal residence. The principal amount of the loan was $250,000 but, because of a $30,000 “settlement charge,” the total cost to Shannon's Rainbow, LLC was $280,000. Upon information and belief, Pia took for his personal enrichment a “fee” of $23,000 at the expense of and to the detriment of his putative client, Shannon's Rainbow, LLC. 69. Upon information and belief, Lawrence Ross made a capital contribution of
$425,000 in Shannon's Rainbow, LLC in or about October 2008. Defendants’ Creation Of A Shadow Company In Utah 70. In or about May 2008, Johnson, as Manager of SummitWorks, caused
SummitWorks Film Fund 1 to make a capital contribution to Shannon's Rainbow, LLC. Immediately thereafter, however, SummitWorks, at the direction of Defendant Charles Morrison, 15
a member of SummitWorks, withdrew that investment because, Morrison claimed to Engle, Johnson had overstepped his authority as Manger of SummitWorks in promising and making that investment. 71. According to SummitWorks’ website, Morrison, the retired airline pilot, has
written a script about female cadets at the U.S. Air Force Academy. 72. At the time that SummitWorks withdrew its investment from Shannon's Rainbow,
LLC, Morrison complained to Engle that the money from SummitWorks Film Fund 1 that Johnson had contributed to Shannon's Rainbow, LLC was supposed to go towards financing the production of “his” movie, tentatively entitled “Bring Me Men.” Morrison publicly attacked Johnson on the set of the Film during filming for overstepping his authority as Manager of SummitWorks in providing the investment. In front of the cast and crew, Morrison berated Johnson and called him a “liar.” 73. After both Engle and DiPalma spent hours discussing the matter with Morrison,
he relented and SummitWorks returned the capital contribution in the total amount of $350,000. Immediately thereafter, however, SummitWorks withdrew and paid to itself a $24,000 fee for “development costs,” leaving a capital contribution of $325,000 in Shannon's Rainbow, LLC. 74. With the exception of Johnson, none of the members of SummitWorks has any
experience in the film industry. As stated on SummitWorks’ website, Charles Morrison is a retired airline pilot and Tony Lotita is a financial analyst who is currently CFO of PetroHunter Energy Corporation. Upon information and belief, Kelly Nelson is an executive with Paleo Technology International, a chemical technology company. 75. At the time that Morrison allowed the return of the $325,000 to Shannon’s
Rainbow, LLC’s Account at Merrill Lynch, he demanded to know when the Film would be
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finished and sold. Engle explained to him that the normal trajectory of a successful feature film starts with a release in theatres domestically with a simultaneous public relations campaign in order to generate “buzz.” After domestic release, the normal course is to contract with a sales agent to release the Film in foreign markets. 76. Engle explained to Morrison that a domestic theatrical release is necessary to
maximize the value of a foreign sales deal. Without a theatrical release in the United States and Canada first, the value of a foreign sales deal is greatly reduced. 77. Morrison stated that he did not want to wait for a domestic theatrical release and
did not want Shannon's Rainbow, LLC to engage in or pay for any advertising or public relations campaign. He stated that he wanted the fastest possible payback of his fund’s money, evidently so that production could start on “his” film. 78. Morrison, in conjunction with Pia and the other members of SummitWorks, then
concocted a scheme to take control of the Film away from Supernova, DiPalma, and Rahr without their knowledge or consent and sell it to a foreign sales agent over the objections of Plaintiffs. 79. On June 2, 2008, Johnson, in conjunction with Defendant Pia, filed Articles of
Organization in Utah for a new limited liability company named, remarkably enough, Shannon’s Rainbow, LLC (“Shannon’s Rainbow (Utah)”). Johnson appointed himself sole Manager of Shannon's Rainbow (Utah), with a power of attorney granted to Pia. The Principal Office Address was listed as 3165 Milrock Drive which is, upon information and belief, Pia’s home in Salt Lake, Utah. A copy of the Utah Articles of Organization are attached hereto as Exhibit “G.”
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80.
On July 28, 2008, Defendants changed the Principal Office Address to 170 S.
Main Street in Salt Lake City, and also changed the Manager from Johnson to Morrison. A copy of that filing is attached as Exhibit “H.” 81. On January 13, 2009, Morrison changed his address from 170 S. Main St. to 8815
Jeremy Road in Park City, Utah. A copy of that filing is attached as Exhibit “I.” 82. In June 2008, when Defendants created the shadow company in Utah, Rahr and
DiPalma were the principal investors in and majority members of Shannon's Rainbow, LLC by far, but Johnson and the other Defendants did not notify them of their intent to form a company in Utah with the same name. 83. Supernova was the Co-Manager of Shannon's Rainbow, LLC, but Defendants did
not advise it or Engle of their scheme. 84. DiPalma and Rahr have never consented to the formation of Shannon's Rainbow
(Utah), have no relationship with that entity, and Shannon's Rainbow (Utah) has no authority of any kind to act in any way concerning the Film. 85. Defendants never advised Plaintiffs that they had formed an entirely new entity.
Rather, in July 2008, Johnson nonchalantly advised Engle during the shooting of the Film that he had “moved” the address of the company to Utah for the convenience of Pia and Morrison. He did not tell Engle that an entirely unrelated company had been created, of which Rahr and DiPalma were not members and with which Plaintiffs had no legal relationship whatever. 86. Johnson also did not disclose to Engle that he had cut out Supernova as a Co-
Manager in the Utah company, or that he had designated himself the sole Manager of that company.
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87.
Engle, who was entirely preoccupied with shooting the Film and keeping the
project alive, had no reason to question Johnson and did not engage a lawyer to research the issue. 88. Several days after creating the Utah entity, Defendants compounded their fraud by
registering with the U.S. Copyright Office security agreements with the Screen Actor’s Guild and the Directors Guild of America. The filings were made on June 16, 2008 and the forms list “Shannon's Rainbow, LLC, a Utah LLC” as the “Owner,” notwithstanding the fact that Engle personally owns a 51% interest in the Film. 89. Upon information and belief, Defendants further compounded their fraud by
subsequently accessing Shannon's Rainbow, LLC’s bank accounts to pay monies to and for the benefit of the Utah company. 90. At all times relevant herein, Pia and Defendants maintained control of the books
and records of Shannon's Rainbow, LLC. 91. Upon information and belief, Pia has taken the books and records of Shannon's
Rainbow, LLC, possesses them now in Utah, and exercises dominion and control over them. 92. Defendants sought to conceal their fraud by entrapping Plaintiffs into ratifying it.
In July 2008, Pia sent Engle a proposed operating agreement for Shannon's Rainbow, LLC that Pia had drafted, which stated that Shannon's Rainbow, LLC was a Utah company. It also stated that Rahr and DiPalma were “Preferred Class A” members with no voting rights, omitted any mention of Supernova as a Manager, and listed Johnson as the sole Manager. 93. Engle, DiPalma, and Rahr refused to sign it because that agreement improperly
described their interests in the Film, they never agreed to give up all voting rights in Shannon's Rainbow, LLC, and because it provided that SummitWorks would control all revenue related to
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the Film and would pay itself a fee of 3% per annum. They did not have an attorney review the proposed document at the time and did not comprehend Defendants’ scheme to have them join a Utah company that was entirely unrelated to Shannon's Rainbow, LLC, the Delaware company in which DiPalma and Rahr had made their $1M capital contributions and in which they already were members. 94. The date of that proposed operating agreement was June 2, 2008, which was not
the date on which it was presented to Plaintiffs. Instead, it corresponds to the date of creation of Shannon's Rainbow (Utah). By back dating the proposed operating agreement, Defendants sought to legitimize their scheme. 95. Thereafter, Johnson and Pia sent additional proposed operating agreements to
Plaintiffs in July and December 2008 and in January 2009. Plaintiffs likewise refused to sign any of them. 96. The July, December, and January proposed operating agreements listed, in Each of those proposed
“Schedule ‘A,’” the capital contributions in the Utah company.
agreements lists SummitWorks as having contributed $325,000, and list Johnson as the Manager of Shannon's Rainbow, LLC (Utah). 97. In September 2008, Pia demanded that Engle sign a purported “Producer’s
Agreement” that he had drafted, which contained a “Short Form Chain of Title” which purported to transfer Engle’s 51% ownership interest in the Film to Shannon's Rainbow (Utah): Joycelyn Engle and Supernova Media, Inc. (hereinafter referred collectively to as “Producer”), hereby exclusively grants, sells and assigns (collectively, “Assignment”) to Shannon’s Rainbow, LLC. (hereinafter referred to as “Company”), a Utah Limited Liability Company, and its successors and assigns the following: All right, title, and interest in and to the Picture “Shannon’s Rainbow” (the “Property”) and every element and part therein, including all intellectual property rights, throughout the world in perpetuity (in all
20
language versions, respectively); Any and all causes of action which Producer now has or hereafter may have for any past, present or future infringement or interference with any of the rights granted to Company in and to the Property or the copyrights therein and thereto. Engle refused to sign that agreement. Pia Commences A Frivolous Action In Utah 98. Pia, who, upon information and belief, represents SummitWorks, Shannon's
Rainbow (Utah), and also held himself out as representing Shannon's Rainbow, LLC, is directly and completely conflicted from representing any entity in this matter. 99. Notwithstanding the clear ethical and legal proscriptions, Pia started pestering
Engle in July 2007, while shooting was still in progress, to sign a contract with a foreign sales agent who would sell the Film in foreign territories and drafted a “sales representative agreement” that would have granted Pia 10% of the gross proceeds of the Film, worldwide, which was grotesquely advantageous to Pia and would have paid Pia more than the investors would receive. Engle flatly rejected that gambit. 100. Engle explained to Pia, a neophyte in the entertainment business, that bypassing a
domestic theatrical release and concurrent advertising and PR campaign would doom the Film to garnering a fraction of the revenues it otherwise would generate. 101. When Engle continued to refuse to sign Pia’s outrageous documents legitimizing
Defendants’ fraud and refused to agree to bypassing a domestic theatrical release and selling the Film directly to foreign, Pia instituted an action in the U.S. District Court for the Central District of Utah in November 2008, entitled Shannon's Rainbow, LLC, a Utah limited liability company v. Supernova Media, Inc. and Joycelyn Engle, 08 CV 00880 (the “Utah Complaint”). 102. In it, Pia alleged, inter alia, that Shannon's Rainbow (Utah) owns the Film’s
script, and all rights to develop, produce, and exploit the Film, but withheld from that Court the
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July 20 Authorization Agreement acknowledging Engle’s 51% ownership interest in the Film. A copy of the Utah Complaint is attached hereto as Exhibit “J.” 103. Although Pia mentions in the Utah Complaint the $2M capital contributions by
Rahr and DiPalma in Shannon's Rainbow, LLC, he withheld from that Court the fact that Rahr and DiPalma never invested any money in the Utah entity, are not members of it, and have no relationship with it. 104. Pia alleges in the Utah Complaint that Engle breached the Shannon's Rainbow
(Utah) Operating Agreement, yet withheld from that Court that Engle, Supernova, Rahr, and DiPalma never signed any such document. 105. 106. The Utah Complaint is entirely frivolous. The Utah Complaint was filed on November 14, 2008. The 120 days within
which to serve that complaint expired on or about March 14, 2009. It has never been served. Pursuant to Federal Rule 4(m), it should be dismissed. 107. Pia and the other Defendants never intended to serve the Utah Complaint, but
only filed it for its in terrorem effect, and have attempted to use it to extort a capitulation to their demands. 108. Pia and Defendants Nelson and Johnson each have told Engle on numerous
occasions and in writing that they have no intention of serving the Utah Complaint but will withdraw it only if Engle, Rahr, and DiPalma agree to sign an Operating Agreement of the Utah company signing away their rights. 109. The Utah Complaint has damaged Shannon's Rainbow, LLC by preventing Engle No responsible domestic
from negotiating a domestic theatrical distribution agreement.
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theatrical distributor will enter into a distribution agreement concerning a film whose ownership rights are in litigation. Rahr’s Attorney Exposes The Scheme 110. Pia continued to attempt to pressure Plaintiffs to ratify Defendants’ fraud by
executing an agreement for Shannon's Rainbow (Utah). On January 12, 2009, Pia wrote to Rahr and told him that he could not find any documents evidencing Rahr’s investment into Shannon's Rainbow, LLC, and enclosed post hac “subscription documents” which, of course, fraudulently identified Shannon's Rainbow (Utah) as the entity in which Rahr had made his $1M capital contribution. 111. On February 2, 2009, Lawrence J. Fossi, Esq., Rahr’s attorney, responded by
enclosing the Rahr Investment Agreement and the Amended Rahr Investment Agreement which, of course, Pia already had. Fossi also noted that the subscription documents that Pia had sent to Rahr denoted Shannon's Rainbow LLC as a Utah company that owns a “subsidiary company that is also called ‘Shannon's Rainbow, LLC,’ but that is a Delaware company that was formed before the Utah company.” A copy of the February 2, 2009 letter is attached hereto as Exhibit “K.” 112. Pia responded by letter dated March 16, 2009 in which he claimed that the Utah
company had been formed “because the majority of the principals reside in Utah and dealings with the Screen Actors Guild and the Directors Guild of America were made simpler.” A copy of the March 16, 2009 letter is attached hereto as Exhibit “L.” 113. Pia’s representation was utterly false and nonsensical on its face since the only
member of Shannon's Rainbow, LLC residing in Utah was SummitWorks, and there is no conceivable reason why business with the Screen Actor’s Guild or the Directors Guild of America would be affected by the state of registration of a company. 23
114.
Pia also attached to his letter two documents, purporting to be operating
agreements of Shannon's Rainbow, LLC and Shannon's Rainbow (Utah). 115. The Shannon's Rainbow (Utah) operating agreement purports to be the one dated
June 2, 2008 and given to Engle in July 2008. It had been altered, however, to replace Johnson as the sole Manager of Shannon's Rainbow (Utah) with Morrison, and Schedule “A” of that operating agreement also was altered to reflect an inflated and fraudulent capital contribution in the Utah company by SummitWorks of $575,000, instead of the $325,000 that had appeared in all other versions of the purported Shannon's Rainbow (Utah) operating agreement. 116. The document purporting to be the Shannon's Rainbow, LLC operating agreement
had never been provided to Rahr, DiPalma, or Engle or even disclosed to them and, upon information and belief, is an entirely fraudulent document that was an after-the-fact creation by Pia in an effort to support Defendants’ fraud. In any event, none of Plaintiffs ever signed it. Plaintiffs Continue Their Efforts To Complete The Film 117. Against the backdrop of Defendants’ fraud and their continuing machinations to
dump the Film to a foreign distributor and pocket a quick advance, the Film languished. 118. The Film currently is in the post-production laboratory of Efilm in Hollywood
awaiting completion, where it has been for months. The sound track also is awaiting completion, which is being performed at Sony’s sound laboratory, also in Hollywood. 119. Since Defendants perpetrated their fraud, they improperly have taken monies
from the Shannon's Rainbow, LLC bank accounts and paid themselves “salaries” and other unknown “reimbursements.” As such, Johnson represented to Engle in February 2009 that there was no money left to pay for post production, without which the Film could not be finished.
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120.
Defendants refused to release any additional monies to finish the Film and
continued their demand that Supernova and Engle agree to bypass any marketing and domestic theatrical release and sell the Film straight to foreign. 121. At the same time, however, the two co-managers of Shannon’s Rainbow LLC,
Summitworks and Supernova, entered into an agreement that contradicted Defendants’ position with respect to distribution, and granted various exclusive rights to Engle, Supernova, and to Rahr (the “February 11, 2009 Agreement”). 122. Specifically, the February 11, 2009 Agreement explicitly provided that “No
arrangements will be made or approved regarding foreign distribution, DVD sales and the like until theatrical US and Canadian distribution is essentially complete.” added) 123. The February 11, 2009 Agreement further guaranteed Ms. Engle “final approval (emphasis
over the appearance of the film,” and granted Mr. Rahr the right to arrange “for Theatrical USA and Canadian Distribution” of the Film and to retain any proceeds from such distribution arrangements to offset his expenses, up to 120% of his cash outlay with the remainder to be deposited in a bank of Rahr’s choosing, located in New York City. (emphasis added) 124. In order to complete the Film and market it to maximize its revenue, Engle and
DiPalma agreed in a letter agreement dated March 9, 2009 to loan Shannon's Rainbow, LLC $300,000 to be used for print and advertising (“P&A”) costs for a theatrical release in the U.S. and Canadian markets (the “March 2009 Loan Agreement”). That agreement states that “Stewart Rahr or Joycelyn Engle must approve the final version of the film for distribution.” 125. The March 2009 Loan Agreement also states that
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It is agreed that Joycelyn Engle will negotiate a contract with a distributor and approve all arrangements for P&A with respect to the feature film....It is further agreed that Larry Richert, John Mowod, and Frank E. Johnson and Supernova Media are authorized on a nonexclusive basis by Shannon's Rainbow, LLC to arrange and negotiate foreign distribution in all territories and media, domestic DVD, TV, and Cable, but in the event that an entity other than Supernova Media is successful in negotiating foreign distribution, Supernova Media must approve said negotiation before execution of the contract. In any event, all distribution proceeds will be deposited into a new special collection agency bank account designated by Supernova Media, Inc. with two signatures required, Joycelyn Engle and Frank E. Johnson. Defendants’ Accelerating Fraud 126. From the Fall of 2008 through March 2009, Pia and the Defendants maintained a
constant pressure on Plaintiffs to ratify their fraud by signing an operating agreement with Shannon's Rainbow (Utah). 127. In addition to filing the frivolous Utah Complaint, Pia and the other Defendants
have attempted simply to bypass Engle, DiPalma, and Rahr entirely. 128. On February 19, 2009, Pia sent a letter to Supernova stating that Shannon's
Rainbow (Utah) “has agreed that John Mowod and Larry Richert are now a part of the management team of Shannon’s Rainbow…Henceforth they will be included in any and all material discussions relative to the picture including and distribution decisions.” 129. Larry Richert and John Mowod are the two original authors of the screenplay for
the Film. They have arranged loans to Shannon's Rainbow, LLC at certain times but have never personally made a capital contribution to Shannon's Rainbow, LLC and are not and have never been members of Shannon's Rainbow, LLC. 130. On April 9, 2009, Pia sent to his co-Defendants and to Engle a document entitled
“Notice of Consent of Approval of Written Consent” (the “Utah Consent”).
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131.
The Utah Consent states that the “members” of Shannon's Rainbow (Utah) had
resolved to sell the Film to a foreign distributor and that the members and managers of Shannon's Rainbow (Utah) are authorized immediately to sell the Film. A copy of the Utah Consent is attached hereto as Exhibit “M.” 132. The Utah Consent purports to have been signed by the members of Shannon's
Rainbow (Utah), which has absolutely no rights in the Film or to enter into agreements concerning its distribution. 133. The Utah Consent seeks to compound Defendants’ fraud by converting Plaintiffs’
interest in the Film. 134. On April 10, Johnson sent Engle an email in which he stated that he was
executing Defendants’ plan to sell the Film straight to foreign distribution and further stated that “We can get the $442,000 with a foreign advance, plus our producer's salary, and at least some if not all of Stewart's and Joe Di Palma's $ 2 million investment at Cannes and beyond…” 135. If Defendants are successful in their scheme to create a copy of the Film and sell
it to a foreign distributor, Plaintiff’s ability to maximize the Film’s critical and economic success will be destroyed. 136. In that event, money damages are incalculable and Plaintiffs will suffer
irreparable harm. 137. the status quo. Plaintiffs have no adequate remedy at law and require injunctive relief to maintain
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FIRST CLAIM FOR RELIEF (Declaratory Judgment As Against All Defendants And Preliminary Injuctive Relief As Against All Defendants) 138. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
137 as fully set forth herein. 139. Defendants’ surreptitious registration of Shannon’s Rainbow (Utah) was done to
usurp the rights of Plaintiffs and control the distribution of the Film in derogation of Plaintiffs’ rights in the Film. Defendants have represented to the world that Shannon’s Rainbow (Utah) is the holder of all rights and interests in and to the Film when, in fact, it has no rights in the Film. 140. Defendant Shannon’s Rainbow Utah has further held itself out as having rights to
the Film by explicitly seeking, through the Utah Consent, to prematurely secure foreign distribution of the Film in contravention of contracts entered into by its Manager, SummitWorks, and thereby convert Plaintiffs’ interests in the Film. Such premature foreign distribution would not only be invalid given that Shannon’s Rainbow (Utah) lacks any interest in or rights to the Film, but would also significantly devalue revenue potential for both domestic and foreign distribution of the Film going forward and will, therefore, cause irreparable harm to Plaintiffs’ interest in the Film. 141. hereto. 142. Accordingly, Plaintiffs are entitled to an Order declaring: that Engle owns a 51% A justiciable controversy exists as to the rights and obligations of the parties
interest in the Film; that Shannon’s Rainbow, LLC controls all decisions concerning the production, distribution; and exploitation of the Film, including, without limitation, final cut approval of the Film in all respects; that Shannon’s Rainbow (Utah) has no rights in and to the
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Film whatever, and declaring the relative membership interests in Shannon’s Rainbow, LLC of the members who made capital contributions therein. 143. Plaintiffs are further entitled to preliminary injunctive relief as against all
Defendants, except as to Defendants Ross and Does 1 through 20, enjoining them from holding themselves out as having any interest in the Film and further enjoining them from entering into any agreement with respect to the distribution or other exploitation of the Film. SECOND CLAIM FOR RELIEF (Conversion As Against All Defendants Except Does 1 - 20) 144. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
143 as fully set forth herein. 145. Defendants (with the exception of Defendants Does 1 through 20) have taken the
books and records of Shannon’s Rainbow, LLC to Utah and wrongfully exercised and continue to exercise dominion and control over them to the exclusion of Supernova Media, Co-Manager of Shannon’s Rainbow, LLC. 146. Defendants also wrongfully have accessed the bank account(s) of Shannon’s
Rainbow, LLC and wrongfully have taken funds rightfully belonging to Shannon’s Rainbow, LLC. 147. In one such instance, SummitWorks, Manager of Defendant Shannon’s Rainbow
(Utah), improperly took approximately $25,000 from Shannon’s Rainbow, LLC’s bank account as purported “development costs.” 148. In doing so, SummitWorks improperly and wrongfully exercised dominion and
control over Shannon’s Rainbow, LLC’s property.
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149.
As a result of Defendants’ conversions, Shannon’s Rainbow, LLC is entitled to
recover from Defendants an amount to be determined at trial which amount is believed to be not less than $3,000,000. 150. In addition, by converting monies rightfully belonging to Shannon’s Rainbow, Accordingly,
LLC, Defendants acted willfully and wantonly and with an evil purpose.
Shannon’s Rainbow, LLC is entitled to punitive damages in an amount to be determined at trial. THIRD CLAIM FOR RELIEF (Intentional Interference With Economic Relations As Against All Defendants Except Defendants Does 1 - 20) 151. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
150 as fully set forth herein. 152. Plaintiffs had multiple business relationships with third parties including sales
agents and distributors for distribution of the Film. 153. relationships. 154. Defendants (with the exception of Defendants Does 1 through 20) have engaged Plaintiffs had and have a reasonable expectation of economic gain from those
in conduct that has had an adverse effect on those relationships including making inaccurate statements about Shannon’s Rainbow (Utah)’s relationship to and interest in the Film. 155. Said Defendants have intentionally interfered with Plaintiffs’ business
relationships in order to cause harm to Plaintiffs’ business and to benefit Defendants. 156. Said Defendants’ wrongful conduct was done for the improper purpose of
procuring commissions and other fees and payments for certain Defendants and by improper means through making false and misleading statements regarding Defendant Shannon’s Rainbow (Utah)’s interests and rights to the Film.
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157. relationships. 158.
Defendants’ improper conduct was the proximate cause of harm to Plaintiffs’
As a result of Defendants’ intentional interference with Plaintiffs’ economic
relations, Plaintiffs have been damaged in an exact amount to be determined at trial, which amount in believed to be not less than Five Million Dollars ($5,000,000.00). 159. Defendants’ conduct was willful and wanton and done with an evil motive.
Accordingly, Plaintiffs are entitled to punitive damages in an amount to be determined at trial. FOURTH CLAIM FOR RELIEF (Civil Conspiracy As Against All Defendants Except Defendants Does 1 - 20) 160. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
159 as fully set forth herein. 161. Upon information and relief Defendants (with the exception of Defendants Does 1
through 20) worked together and formed a common scheme to defraud Plaintiffs from the opportunity to maximize the critical and economic success of the Film. 162. Defendants’ scheme was to, among other things, prevent Plaintiffs from
exploiting the Film in order to take control of the Film by use of Defendant Shannon’s Rainbow (Utah), which company has absolutely no interest in the Film or relationship with Plaintiffs. 163. Defendants conspired to accomplish the object of defrauding Plaintiffs and take
control of the Film. 164. Upon information and belief, Defendants had a meeting of the minds relating to
their common scheme to defraud Plaintiffs. 165. As set forth herein, Defendants have committed one or more unlawful overt acts
in their scheme to defraud Plaintiffs.
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166. 167.
Defendants in fact defrauded Plaintiffs of at least $4,000,000. As a direct and proximate cause of Defendants’ scheme to defraud Plaintiffs and
usurp control over the Film, Plaintiffs have been damaged in an amount to be proven at trial, which amount is believed not to be less than $5,000,000. 168. In effecting their conspiracy, Defendants acted willfully and wantonly and with an
evil purpose. Accordingly, Plaintiffs are entitled to punitive damages in an amount to be determined at trial. FIFTH CLAIM FOR RELIEF (Breach of Fiduciary Duty As Against Defendants SummitWorks, Johnson, Morrison, Nelson, and Lotita) 169. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
168 as fully set forth herein. 170. Defendants Johnson, Morrison, Nelson, and Lotita were members of
SummitWorks, at all times relevant herein. 171. SummitWorks was at all relevant times herein a Co-Manager of Shannon’s
Rainbow, LLC. As a Manager, SummitWorks owed a fiduciary duty to Shannon’s Rainbow, LLC and as Members of SummitWorks, Defendants Johnson, Morrison, Nelson and Lotita also owed a fiduciary duty to Shannon’s Rainbow, LLC. 172. Said Defendants owed Shannon’s Rainbow, LLC and its investors a duty of
honesty, integrity, and good faith which duty included a duty of loyalty and a duty of care. 173. Said Defendants breached their fiduciary duty to Shannon’s Rainbow, LLC by: a) taking for their own personal aggrandizement excessive salaries for services and non-existent and exaggerated “development costs”;
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b) creating a shadow company in Utah, also named Shannon’s Rainbow, LLC, and attempting to usurp the business opportunities of Shannon’s Rainbow, LLC for the benefit of themselves and Shannon’s Rainbow (Utah); c) by taking and wrongfully exercising dominion and control over the books, records, and bank accounts of Shannon’s Rainbow, LLC for the benefit of themselves and Shannon’s Rainbow (Utah); d) by attempting to negotiate distribution deals with foreign distributors on behalf of Shannon’s Rainbow (Utah), which entity has no rights in the Film in contravention of written agreements and acknowledgments that such foreign distribution would cause harm to the Film and revenues received from it; e) misappropriating corporate opportunities to distribute the Film by attempting to enter into deals with distributors, in derogation of Plaintiffs’ rights; and f) acting against the interests of Plaintiffs. 174. The aforesaid acts constitute willful misconduct, or in the alternative, gross
negligence by said Defendants. 175. Plaintiffs. 176. As the direct and proximate result of Defendants’ breach of fiduciary duty, Said Defendants’ actions constitute a breach of their fiduciary duty owed to
Plaintiffs have been damaged in an amount to be determined at trial, which amount is believed to be not less than Ten Million Dollars ($10,000,000.00).
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177.
In breaching their fiduciary duty, Defendants acted willfully and wantonly and
with an evil purpose. Accordingly, Plaintiffs are entitled to punitive damages in an amount to be determined at trial. SIXTH CLAIM FOR RELIEF (Fraud As Against Defendant Shannon’s Rainbow (Utah)) 178. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
177 as fully set forth herein. 179. 180. Engle owns a 51% interest in the Film. On June 16, 2008, a few days after the creation of Shannon’s Rainbow (Utah),
Defendant Pia, on behalf of Shannon’s Rainbow (Utah), registered with the U.S. Copyright Office security agreements with the Screen Actors Guild and the Directors Guild of America. 181. the Film. 182. That filing was fraudulent inasmuch as Plaintiff Engle is a 51% “Owner” of the Those filings list “Shannon’s Rainbow, LLC a Utah LLC” as the sole “Owner” of
Film. Upon information and belief, her name was intentionally omitted from the filings with the U.S. Copyright Office. 183. As result of Shannon’s Rainbow’s (Utah)’s fraudulent filing with the U.S.
Copyright Office, Plaintiff Engle is entitled to an Order striking that fraudulent filing. 184. The filing by Shannon’s Rainbow’s (Utah), through Defendant Pia, was made
willfully and wantonly and with an evil motive. Accordingly, Plaintiff Engle is entitled to punitive damage in an amount to be determined at trial.
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SEVENTH CLAIM FOR RELIEF (Fraudulent Misrepresentation As Against Defendants Johnson and SummitWorks) 185. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
184 as fully set forth herein. 186. Johnson and SummitWorks represented and certified in the DiPalma Investment
Agreement that distribution of the Film in approximately 800 theaters in the U.S. and Canada including New York (Manhattan) and Los Angeles plus foreign distribution, DVD, and cable was assured. 187. Johnson and SummitWorks’s representation was untrue at the time and Johnson
knew that that representation was untrue when he made it. 188. Johnson made that untrue misrepresentation in order to induce DiPalma to make a
$1,000,000 capital contribution into Shannon’s Rainbow, LLC. 189. DiPalma relied to his detriment on that untrue misrepresentation in making the
capital contribution and was injured thereby. 190. As a result of Johnson’s fraudulent misrepresentation, DiPalma is entitled to
recover an amount to be determined at trial, which amount is not less than $1,000,000. 191. In making that fraudulent misrepresentation, Johnson and Summitworks acted
willfully and wantonly and with an evil purpose. Accordingly, DiPalma is entitled to recover punitive damages in an amount to be determined at trial, which amount is not less than $1,000,000.
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EIGHTH CLAIM FOR RELIEF (Fraudulent/Negligent Misrepresentation As Against Defendant Johnson) 192. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
191 as fully set forth herein. 193. Johnson misrepresented himself to Plaintiffs as an experienced film director,
having directed eight years of the television show “Touched By An Angel.” 194. Johnson knew that, in fact, he was not an experienced film director and that prior
to the production of the Film he had little or no experience working in that capacity, having directed, in fact, only three episodes of “Touched By An Angel” before he was fired. 195. Johnson misrepresented himself as an experienced film director to induce
Plaintiffs to, among other things: a) make capital contributions toward the production of the Film in an amount exceeding $2,000,000; b) agree to pay unreasonable and unjustified fees to Defendants and their affiliates, managers, employees, agents, and the like; c) reimburse Johnson for unsubstantiated and improper costs and fees; and d) take loans on the Film. 196. At the time Johnson made those misrepresentations, he knew or should have
known that those misrepresentations were false. 197. The information that Johnson provided was materially misleading and/or false.
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198.
Defendants reasonably and justifiably relied on Johnson’s misrepresentations and
governed nearly all of their production and distribution decisions based on Johnson’s representations to Plaintiffs’ detriment. 199. Because of Johnson’s misrepresentations, Plaintiffs contributed money and
intellectual property to Shannon’s Rainbow, LLC, provided services and expertise, entered agreements with actors and crew, expended millions of dollars, raised financing, purchased and rented equipment, undertook financing and loan obligations, made commitments to vendors, entered into agreements with motion pictures unions including the Screen Actors Guild and the Directors Guild, and took steps to produce the Film, all of which are actions that Plaintiffs would not have taken but for Johnson’s misrepresentations. 200. Plaintiffs’ reliance on Johnson’s misrepresentations was justified and reasonable
based on the information Johnson provided to Plaintiff about his experience and expertise in the television industry. 201. Plaintiffs relied on Johnson’s misrepresentations to their detriment by producing a
Film with a less experienced and less talented director at a disproportionately high cost. 202. As a result of Johnson’s misrepresentations, Plaintiffs are entitled to recover
damages in an amount to be determined at trial, but not less than $4,000,000. 203. Johnson’s fraudulent conduct was willful and wanton and committed with a
reckless disregard for Plaintiffs’ rights. 204. Accordingly, Plaintiffs are entitled to punitive damages in an amount to be
awarded at trial.
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NINTH CLAIM FOR RELIEF (Breach of Contract Against Defendants Johnson and SummitWorks) 205. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
204 of the Complaint as fully set forth herein. 206. SummitWorks executed a finder’s fee agreement on December 19, 2007, in which
SummitWorks and Equistar, partner in the SummitWorks Film Fund 1, guaranteed that Supernova, “in association with” Engle would receive a finder’s fee equaling 5 percent of funds raised and deposited in the account of SummitWorks Film Fund 1 or any other account in connection with the Film. 207. Engle performed her duties pursuant to the finder’s fee agreement by raising
capital contributions for the Film from, inter alia, Rahr and DiPalma, totaling over $2,000,000. 208. agreement. 209. As a result of SummitWork’s breach of contract, Engle is entitled to recover an SummitWorks has failed and refused to honor the December 19, 2007 finder’s fee
amount to be determined at trial, which amount is not less than $100,000. TENTH CLAIM FOR RELIEF (Breach of Contract Against Defendants Johnson and SummitWorks) 210. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
210 of the Complaint as fully set forth herein. 211. SummitWorks executed the May 2008 PA Tax Credit Pledge pledging that Engle
would receive from the PA Tax Rebate a deferred fee of $75,000 for services as acting coach during filming of the Film and $120,000 for services as a dialect coach in the Film and additional casting services.
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212. Pledge. 213. Pledge. 214.
Engle performed all of her duties pursuant to the May 2008 PA Tax Credit
SummitWorks has failed and refused to honor the May 2008 PA Tax Credit
As a result of SummitWork’s breach of contract, Engle is entitled to recover an
amount to be determined at trial, which amount is not less than $195,000. ELEVENTH CLAIM FOR RELIEF (Breach of Contract Against Defendants Johnson and SummitWorks) 215. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
215 of the Complaint as fully set forth herein. 216. SummitWorks, through Frank Johnson, executed the February 11, 2009
Agreement, explicitly providing that foreign distribution of the Film would not be arranged until the domestic and Canadian distribution was essentially complete. 217. Similarly, SummitWorks, through Frank Johnson, executed the March 2009 Loan
Agreement which provided, among other things, that securing U.S. and Canadian distribution prior to execution of any agreement for foreign distribution was more advantageous for the Film, and that Plaintiff Supernova held the right to approve any negotiation concerning foreign distribution prior to execution of a foreign distribution agreement.. 218. Less than two months later, SummitWorks has failed and refused to honor both
the February 11, 2009 Agreement and the March 2009 Loan Agreement, and has, as Manager for Shannon’s Rainbow (Utah), taken steps to secure foreign distribution of the Film, including upon information and belief, commencing negotiations for foreign distribution agreements in spite of Supernova’s repeated disapproval, pursuant to its rights under the March 2009 Loan Agreement.
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219.
SummitWorks’ actions are in direct contravention of its written and binding
representations and agreements. 220. As a result of SummitWorks’ breach of contract, Supernova is entitled to recover
an amount to be determined at trial, which amount is not less than One Million Dollars ($1,000,000.00) as well as injunctive relief barring SummitWorks or Defendant Johnson from taking any further steps in seeking to secure foreign distribution in contravention of the March 2009 Loan Agreement. TWELFTH CLAIM FOR RELIEF (Fraudulent Misrepresentation As Against Defendant Nelson) 221. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
220 of the Complaint as fully set forth herein. 222. Nelson’s representation and warranty that his company, Equistar would provide a
completion bond for the Film was untrue at the time he made that representation. 223. Nelson made that untrue representation in order to induce Rahr to make a
$1,000,000 capital contribution to Shannon’s Rainbow, LLC. 224. Rahr relied to his detriment on that untrue misrepresentation in making the
investment and was injured thereby. 225. As result of Nelson’s fraudulent misrepresentation, Rahr was damaged in an
amount to be determined at trial, but which is believed to be not less than $1,000,000. 226. In making the aforesaid fraudulent misrepresentation, Nelson acted willfully and
wantonly and with an evil purpose. Accordingly, Rahr is entitled to punitive damages in an amount to be determined at trial, which amount is believed to be not less than $1,000,000.00.
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THIRTEENTH CLAIM FOR RELIEF (Malpractice And Prima Facie Tort As Against Defendant Pia) 227. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
226 of the Complaint as fully set forth herein. 228. Pia held himself out to Plaintiffs and the world as representing Shannon's
Rainbow, LLC. 229. At the same time that Pia claimed to be representing Shannon's Rainbow, LLC, he
formed Shannon's Rainbow (Utah) and has acted as that entity’s attorney since its creation against the interests of Plaintiffs and Shannon's Rainbow, LLC. 230. Pia deliberately has injured the interests of his putative client, Shannon's
Rainbow, LLC for his personal enrichment at the expense of and to the detriment of Shannon's Rainbow, LLC, to which he owes a duty of utmost care. 231. As a result of Pia’s malpractice and prima facie tort, Plaintiffs are entitled to
recover damages against Pia in an amount to be determined at trial, which amount is believed to be at least $10,000,000. FOURTEENTH CLAIM FOR RELIEF (Constructive Trust, as against all Defendants Except Defendants Ross and Does 1-20) 232. Plaintiffs repeat and reallege the allegations contained in paragraphs 1 through
231 as fully set forth herein. 233. Defendants have wrongfully obtained or received possession or control of
Plaintiffs’ funds and property, including investment proceeds and capital contributions. 234. Defendants will be unjustly enriched if permitted to retain possession and control
of Plaintiffs’ funds and property.
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235.
The Court should therefore impose a constructive trust with respect to any and all
amounts paid to Defendants or allegedly due to Defendants. 236. Plaintiffs are therefore entitled to judgment against Defendants. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests that the Court: (a) Declare that Plaintiff Engle owns a 51% interest in the Film and that Shannon’s Rainbow, LLC controls all decisions concerning the production, distribution, and exploitation of the Film, and that Shannon’s Rainbow (Utah) has no rights in and to the Film whatever; (b) Preliminarily enjoin Defendants from holding Shannon’s Rainbow (Utah) out as has having any rights to or proprietorship over the Film, and from engaging in negotiations, or otherwise seeking to secure foreign distribution or other any other release of the Film; (c) award Plaintiffs compensatory and punitive damages resulting from Defendants’ conversion of Plaintiffs’ properties; (d) award Plaintiffs compensatory and punitive damages resulting from Defendants’ intentional interference with Plaintiffs’ economic relations; (e) award Plaintiffs compensatory and punitive damages resulting from Defendants’ civil conspiracy; (f) award Plaintiffs compensatory and punitive damages resulting from Defendants’ breach of fiduciary duty owed to with Plaintiffs; (g) award Plaintiffs compensatory and punitive damages resulting from fraud committed by Defendant Shannon’s Rainbow (Utah); (h) award Plaintiffs compensatory and punitive damages resulting from the fraudulent misrepresentation committed by Defendants Johnson and SummitWorks;
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