Judge: Stephen P. Pfahler, Case: 21STCV25399, Date: 2025-05-27 Tentative Ruling

Case Number: 21STCV25399    Hearing Date: May 27, 2025    Dept: 68

Dept. 68

Date: 5-27-25

Case: 20STCV38935 c/w 21STCV25399

Trial Date: Not Set

FURTHER STAY

MOVING PARTY: Plaintiffs, 828 Media Capital, et al.

RESPONDING PARTY:  Defendants, SSS Film Capital, LLC, et al.

RELIEF REQUESTED

Motion for Further Stay of Case Pending Appeal on Motion to Disqualify Counsel

SUMMARY OF ACTION

20STCV38935

On February 11, 2020, Plaintiffs 828 Media Capital, LLC and Todd Lunbohm and Defendants David Brown, Clear Distribution, LLC, Clear Entertainment Inc., and Fallout, LLC, entered into “various agreements” for the financing and production of a “film” entitled “Fallout.” The terms required a “commitment amount” of $1,500,000 from 828 Media, with a promised return of $1,800,000 at or prior to the maturity date established under the terms. The parties also executed a separate “side letter,” whereby the 828 Media and Clear Distribution, LLC agreed to an equal distribution of “any and all sales” following distribution. “throughout the world.”

Following investment of $285,000, the project shut down due to Covid restrictions. New terms were orally agreed upon whereby 828 Media would only invest $365,000. Plaintiff denies ever executing any written amended contract.

Meanwhile, production “unilaterally” continued without the knowledge of 828 Media and its principal, plaintiff Lundbohm, until the fourth day of principal photography. Plaintiff was subsequently presented a follow-up offer to return the $285,000 loan proceeds, due to new investors joining the project. Plaintiffs maintains the resumption of production without notice, along with other actions by Defendants, violated the terms of the contract.

On October 9, 2020, Plaintiffs filed a complaint for Breach of Contract, Breach of Good Faith and Fair Dealing, Breach of Fiduciary Duty, Aiding and Abetting, and Promissory Fraud. A 170.6 challenge to the assigned officer led to a transfer of the action to Department 68.

On January 11, 2021, the case was ordered to arbitration. On May 30, 2023, the court lifted the stay on the matter.

On April 3, 2024, defaults were entered as to Clear Distribution, LLC, David Brown, and Fallout, LLC.

21STCV25399

In the subject action, Plaintiffs 828 Media Capital, LLC, 828 Productions, LLC, and Todd Lunbohm allege said failure of the other referenced financing agreement with Fallout, LLC, et al. was the result of new financing obtained from Defendants SSS Film Capital LLC. In exchange, SSS Film Capital LLC was purportedly provided a “first position producer credit” in direct conflict with the 828 Plaintiffs’ agreement, as well as sales commission agreement. Plaintiffs also allege a similar commission agreement with Defendant SSS Entertainment LLC. Both commission agreements purportedly violate the 50% commission agreement with the 828 plaintiffs.

On July 9, 2021, Plaintiff filed a complaint for Intentional Interference with Contract, and Declaratory Relief. On October 8, 2021, Defendants filed a notice of removal to federal court. On November 6, 2023, the United States District Court, Central District, filed a notice of remand.

On January 2, 2024, Plaintiffs filed a first amended complaint for Intentional Interference with Contract; Fraudulent Conveyance; False UCC-Filings (Cal. Comm. Code § 9625); Conversion;  Breach of Contract; Breach of Fiduciary Duty; Aiding and Abetting Breach of Fiduciary Duty;  Fraud; Declaratory Relief;  Judicial Foreclosure on Collateral; and, Intentional Interference with Prospective Economic Advantage. Plaintiffs added new defendants Shaun Sanghani, Fallout LLC; Clear Entertainment, Inc.; Clear Horizon Entertainment, LLC; Clear Distribution LLC; David Raymond Brown F/K/A David Brown F/K/A David Brown Levy; and, Warner Bros. Pictures.

On February 14, 2024, the court deemed the cases related.

On February 28, 2024, the court entered the stipulation for leave to file a second amended complaint. On March 13, 2024, Plaintiffs filed their second amended complaint: 1. Intentional Interference with Contract 2. Fraudulent Conveyance 3. False UCC-Filings (Cal. Comm. Code § 9625) 4. Aiding and Abetting False UCCFilings (Cal. Comm. Code § 9625) 5. Conversion 6. Breach of Contract 7. Breach of Fiduciary Duty 8. Aiding and Abetting Breach of Fiduciary Duty 9. Fraud 10. Declaratory Relief 11. Judicial Foreclosure on Collateral 12. Intentional Interference with Prospective Economic Advantage. Plaintiffs added in Warner Bros. Pictures (WB) on grounds that the SSS defendants contracted with WB for “worldwide distribution” of the film for $5,000,000, thereby violating Plaintiffs’ contract with the Fallout defendants. Plaintiffs depends on a conspiracy allegation among the parties.

On May 30, 2024, Plaintiffs dismissed Warner Brothers Pictures from the first cause of action for Intentional Interference with Contract without prejudice.

On October 7, 2024, the court denied Defendants’ SSS Film Capital LLC, SSS Entertainment LLC and Shaun Sanghani, motion to disqualify counsel for Plaintiffs 828 Media Capital, LLC, 828 Productions, LLC, and Todd Lunbohm. The court invited a motion for stay of the action pending any potential appeal. On October 11, 2024, the court granted the ex parte motion to stay the entire case pending the writ. On November 18, 2024, the court entered the parties joint stipulation to continue the stay, vacated the special motion to strike scheduled for December 3, 2024, and two demurrers on calendar for January 13, 2025.

RULING: Granted.

Defendants SSS Film Capital LLC, SSS Entertainment LLC and Shaun Sanghani, move to extend the stay pending the writ on the order denying the motion to disqualify. Defendants submitted a request for stay to the Court of Appeal as well, but must wait until the June 4, 2025, submission deadline for their opening brief and appendix. The motion comes as a result of Plaintiff seeking additional discovery through motions to compel further responses. Plaintiffs 828 Media Capital, LLC, 828 Productions, LLC, and Todd Lunbohm in an identified “non-opposition” to the “instant” action contends they remain entitled to discovery production, and requests a reset of the two motions to compel further responses, the two special motions to strike and the two demurrers. Defendants in reply note the agreement by Plaintiffs to stay the action.

Plaintiffs “non-opposition” to stay the “instant” action, while still requesting the right to conduct discovery into information directly or at least potentially tangentially relates to the subject matter addressed in the disqualification motion. The request may also include consideration of certain privileged information, again also potentially within the subject matter of the disqualification motion. Plaintiffs’ counsel references a declaration, but no such declaration appears filed within the instant “non-opposition.” The court declines to review previously filed declarations associated with prior motions should Plaintiffs’ counsel suggest such reference.

Defendants’ motion specifically maintains the privileged information at the core of the disqualification motion constitutes part of the subject matter for the special motion to strike. The court granted Plaintiffs limited leave to conduct discovery, thereby leading to the motion for disqualification and the stay of the action. If Plaintiffs’ counsel is in fact reversed on the motion to disqualify, any motions involving Plaintiffs’ counsel would therefore be impacted, potentially including evidence obtained by counsel from an opposing party without the consent of the other parties.

Even considering Plaintiffs’ request, however, the motion lacks sufficient functional distinctions for the court to delineate the propriety of such requested relief. The court appreciates the delays caused by the disqualification motion, but the court also notes Plaintiffs elected to use said information, and proactively filed the motion for privilege determination.

Meanwhile, the writ filing and pending June filing deadline remain undisputed. The court therefore finds the non-opposition supports an extension of the stay pending review the appellate court, and declines to reset any and all motions. The additional delays to Plaintiffs while the court of appeal considers the application presents no apparent unfair prejudice outweighing the potential burdens imposed on Defendants and the court, if the remainder of the action continues and the disqualification motion gets reversed. The motion to continue the stay of the entire action is therefore GRANTED pending updates from the appellate court.

The court will set an OSC re: Status of the Writ and Stay. Depending on the writ order and subsequent potential lift of the stay and resetting of motions, the court may set an OSC re: Discovery Referee. The court expects intensive work of reviewing each and every document with privilege implications inevitably part of the subject matter of any and all motions to compel further responses. Any potential privilege documents production may also require determination prior to any consideration of the special motions to strike.

Defendants to provide notice to all parties.