1 Alex M. Weingarten (SBN 204410) [email protected] 2 Eric J. Bakewell (SBN 241529) [email protected] 3 WEINGARTEN BROWN LLP 10866 Wilshire Boulevard, Suite 500 4 Los Angeles, California 90024-4340 Telephone: (310) 229-9300 5 Facsimile: (310) 229-9380
6 Lucia E. Coyoca (SBN 128314) [email protected] 7 Andrew Spitser (SBN 255917) [email protected] 8 Christopher A. Elliott (SBN 266226) [email protected] 9 MITCHELL SIBERBERG & KNUPP LLP
11377 West Olympic Boulevard 10 Los Angeles, CA 90064-1683 Telephone: (310) 312-2000 11 Facsimile: (310) 312-3100
12 Attorneys for Plaintiffs
13
14 SUPERIOR COURT OF THE STATE OF CALIFORNIA
15 FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT
WEINGARTEN BROWN LLP 16 17 DAVID BERGSTEIN, an individual; Case No.: ______
BONTEMPO HOLDINGS, LLC, a Delaware 18 limited liability company; COMPLAINT FOR: BONTEMPO PRODUCTIONS, LLC, a 19 Delaware limited liability company; 1. AIDING AND ABETTING CAPTIOL FILMS GROUP LTD., a United BREACH OF FIDUCIARY 20 Kingdom limited company; DUTY; CERULEAN PRODUCTIONS,DEADLINE.com LLC, a 21 Delaware limited liability company; 2. INTENTIONAL DE LANE LEA (POST PRODUCTION) INTERFERENCE WITH 22 LIMITED, a United Kingdom limited CONTRACTUAL RELATIONS; company; 23 EXODUS FILM COMPANY, LTD., a United 3. INTENTIONAL Kingdom limited company; INTERFERENCE WITH 24 FILM RIGHTS HOLDING COMPANY, LLC, PROSPECTIVE ECONOMIC a California limited liability company; ADVANTAGE; 25 GRAYBOX LLC, a Nevada limited liability company; 4. NEGLIGENT INTERFERENCE 26 LAVENDER PRODUCTIONS, LLC, a WITH PROSPECTIVE Delaware limited liability company; ECONOMIC ADVANTAGE; 27 LIBRARY RIGHTS COMPANY, LTD., a United Kingdom limited company; 28
COMPLAINT
1 NAILED PRODUCTIONS, LLC, a Delaware 5. INTENTIONAL limited liability company; INTERFERENCE WITH 2 PANGEA MEDIA HOLDINGS LTD, a United PROSPECTIVE ECONOMIC Kingdom limited company; ADVANTAGE; 3 R MEDIA ACQUISITIONS, LLC, a Delaware limited liability company; 6. NEGLIGENT INTERFERENCE 4 RASPBERRY FINANCES, LLC, a Delaware WITH PROSPECTIVE limited liability company; ECONOMIC ADVANTAGE; 5 REEL TRANSIT INVESTMENTS, LLC, a Louisiana limited liability company; 7. INTENTIONAL 6 REEL TRANSIT PRODUCTIONS, LLC, a INTERFERENCE WITH Louisiana limited liability company; PROSPECTIVE ECONOMIC 7 TENDERLOIN HOLDINGS, LLC, a Delaware ADVANTAGE; limited liability company; 8 TFC HOLDINGS LLC, a Delaware limited 8. NEGLIGENT INTERFERENCE liability company; WITH PROSPECTIVE 9 and ECONOMIC ADVANTAGE;
VERITUM LIMITED, a United Kingdom AND 10 limited company, 9. UNJUST ENRICHMENT 11 Plaintiffs, DEMAND FOR JURY TRIAL 12 v.
13 STROOCK & STROOCK & LAVAN LLP, a New York limited liability partnership; 14 LEVENE NEALE BENDER YOO & BRILL L.L.P., a California limited liability 15 partnership; DAVID NEALE, an individual;
WEINGARTEN BROWN LLP 16 IRVING GROSS, an individual; DANIEL ROZANSKY, an individual; 17 SANJAY SHARMA, an individual;
BETH YOUNG, an individual; 18 and DOES 1 through 50, inclusive, 19 Defendants. 20 DEADLINE.com 21 22 23 24 25 26 27 28
COMPLAINT
1 Plaintiffs David Bergstein; Bontempo Holdings, LLC; Bontempo Productions, LLC; 2 Capitol Films Group Ltd.; Cerulean Productions, LLC; De Lane Lea (Post Production) Limited; 3 Exodus Film Company, Ltd.; Film Rights Holding Company, LLC; Graybox LLC; Lavender 4 Productions, LLC; Library Rights Company, Ltd.; Nailed Productions, LLC; Pangea Media 5 Holdings Ltd.; R Media Acquisitions, LLC; Raspberry Finances, LLC; Reel Transit Investments, 6 LLC; Reel Transit Productions, LLC; Tenderloin Holdings, LLC; TFC Holdings; LLC; and 7 Veritum Ltd. allege as follows:
8 INTRODUCTION 9 1. The interests at stake in this action are paramount and concern nothing less than
10 truth and fairness in the administration of justice and the preservation of the integrity of the 11 judicial process and the bar. Defendants, a collection of prominent members of the legal 12 community, have engaged in conduct that does violence to the essence of legal ethics. In a 13 famous dissenting opinion, United States Supreme Court Chief Justice Earl Warren wrote in In 14 re Griffiths, 413 U.S. 717 (1973): 15 I am unwilling to accept what seems to me a denigration of the posture and role of a lawyer as an ‘officer of the court.’ . . . The concept of a
WEINGARTEN BROWN LLP 16 lawyer as an officer of the court and hence part of the official mechanism 17 of justice in the sense of other court officers, including the judge, albeit with different duties, is not unique in our system but it is a significant
18 feature of the lawyer’s role in the common law. This concept has sustained some erosion over the years at the hands of cynics who view the 19 lawyer much as the ‘hired gun’ of the Old West. In less flamboyant terms the lawyer in his relation to the client came to be called a ‘mouthpiece’ in 20 theDEADLINE.com gangland parlance of the 1930’s. Under this bleak view of the 21 profession the lawyer, once engaged, does his client’s bidding, lawful or not, ethical or not. 22 The role of a lawyer as an officer of the court predates the Constitution; it 23 was carried over from the English system and became firmly embedded in our tradition. It included the obligation of first duty to client. But that duty 24 never was and is not today an absolute or unqualified duty. It is a first 25 loyalty to serve the client’s interest but always within-never outside-the law, thus placing a heavy personal and individual responsibility on the 26 lawyer.
27 2. As set forth herein, Defendants have not merely abrogated their responsibilities as 28 members of the legal profession; they have made a mockery of them. Defendants crossed the
1 COMPLAINT
1 line from zealous advocates and became the “hired guns,” “mouthpieces,” and “lackeys” of their 2 patron clients warned of by Chief Justice Warren so many years ago. Defendants set upon a 3 course that had them disregard all notions of ethics and integrity as officers of the court to do 4 their “client’s bidding, lawful or not, ethical or not.”
5 3. This case arises out of the damages caused by Defendants, the foot soldiers in 6 David Molner’s campaign to scapegoat Plaintiff David Bergstein as part of a desperate effort to 7 recoup funds Molner stole from investment vehicles he controlled and otherwise distract from 8 his own malfeasance. Specifically, Molner controlled a set of entities referred to herein as 9 “Aramid.” Aramid is an investment vehicle. Molner used Aramid’s funds (funds that were not
10 his) as his personal piggy bank to fund his personal endeavors and litigation war against 11 Bergstein. Indeed, Aramid’s own independent director uncovered at least $60 million in theft by 12 Molner and misreporting of the investment fund’s net asset value. The only difference between 13 David Molner and Bernie Madoff is that Madoff was more successful.
14 4. Molner enlisted Defendants for the litigation prong of his campaign. Molner’s 15 “fight to the death” litigation struggle has spawned numerous lawsuits and legal proceedings.
WEINGARTEN BROWN LLP 16 There have been lawsuits in at least in California, New York, Bermuda, and the United 17 Kingdom.
18 5. Defendants Stroock & Stroock & Lavan LLP and its partner, Daniel Rozansky; 19 Levene Neale Bender Yoo & Brill L.L.P. and its partners David Neale, Irving Gross, and Beth 20 Young; and SanjayDEADLINE.com Sharma are counsel for Molner and Aramid and have set aside their ethical 21 obligations in pursuit of their fees and/or salary that they have been promised in exchange for 22 carrying out Molner’s litigation assault.
23 6. In the course of their representation, Defendants have crossed the line separating 24 zealous advocacy from the netherworld of unethical misconduct. Defendants knowingly used 25 the confidential, privileged, and/or proprietary information of Plaintiffs and affiliated entities to 26 carry out a litigation attack on Plaintiffs and affiliated entities. Defendants solicited and received 27 this confidential, privileged, and/or proprietary information from Susan Tregub, Plaintiffs’ 28 former attorney. As described herein: Tregub became a double agent, working for Plaintiffs but
2 COMPLAINT
1 also covertly and simultaneously working for Defendants, as a mole with unfettered access in 2 order to gather information necessary to carry out their campaign to scapegoat and destroy 3 Bergstein.
4 7. In or about 2009, Tregub began working for Aramid and Molner while continuing 5 to represent Plaintiffs and affiliated entities in ongoing litigation. She coordinated and organized 6 the filing of involuntary bankruptcy proceedings against several entities affiliated with Plaintiffs. 7 She assisted Aramid in their litigation against Plaintiffs and affiliated entities arising out of loan 8 transactions in which she had been directly involved even though Aramid’s interests were clearly 9 directly adverse to Plaintiffs’ interests in all of these cases. Moreover, she admittedly concealed
10 material evidence at Defendants’ direction. Specifically, Tregub personally removed and 11 destroyed Plaintiffs’ and affiliated entities’ documents, and she directed other parties working for 12 Plaintiffs and affiliated entities to remove and destroy documents as part of her effort to cripple 13 Plaintiffs’ ability to defend themselves.
14 8. Tregub’s conceded breach of fiduciary obligations to Plaintiffs is supported by 15 overwhelming evidence. She violated her duty of loyalty by working against Plaintiffs’ and
WEINGARTEN BROWN LLP 16 affiliated entities’ interests while she continued to represent these same individuals and entities 17 in ongoing litigation. She did not disclose that she had switched sides or obtain a waiver to bless
18 her conflicted representation. She also violated several California Rules of Professional Conduct 19 by: (1) disclosing confidential information of her clients (Rule 3-100); (2) representing interests 20 adverse to her clientsDEADLINE.com (Rule 3-310); and (3) suppressing and destroying evidence (Rule 5-220). 21 Indeed, the suppression and destruction of evidence has continued even after Defendants filed 22 litigation against Plaintiffs and affiliated entities as evidenced by an email from Tregub to 23 Rozansky that her “computer w[ould] end up at the bottom of my pool before I follow any 24 [court] order” to produce documents. These are not trivial or technical violations. They go to 25 the core of an attorney’s ethical obligations to their client and the legal profession.
26 9. During the period prior to the filing of legal proceedings against Bergstein and his 27 affiliated entities, Defendants received a steady flow of confidential, privileged, and/or 28 proprietary information Tregub to assist them in their efforts. They exchanged drafts of
3 COMPLAINT
1 pleadings with her, emailed back and forth about various issues, and participated in telephone 2 conference calls and in person meetings while Tregub was present. Not once did any Defendant 3 tell Tregub that she should not be providing them with assistance in matters adverse to Bergstein 4 or attempt to stop the free flow of confidential, privileged, and/or proprietary information that 5 was being provided to them. Defendants knowingly received from Tregub confidential, 6 privileged, and/or proprietary information about Bergstein, his business dealings, and the various 7 entities through which he conducted business. Defendants knowingly used Tregub’s assistance 8 in devising the legal strategy to be employed against Bergstein and the entities with which he is 9 or was affiliated. They used Tregub to obtain documents, identify witnesses, and solicit potential
10 creditors. When it became clear that Defendants did not have claims necessary to support their 11 position, they even went so far as to use Tregub to invent creditors in the Bankruptcy 12 proceedings. All of this aid and assistance was received by Defendants knowing full well that 13 Tregub had an ethical obligation that prohibited her from acting against Plaintiffs.
14 10. Defendants, Molner, and Tregub utilized the legal proceedings they had filed 15 against Bergstein and his affiliated entities to create an avalanche of negative publicity. Tregub
WEINGARTEN BROWN LLP 16 communicated with reporters and shared Plaintiffs’ and affiliated entities’ confidential, 17 privileged, and/or proprietary information long before any litigation was filed. Defendants knew
18 that the strategies they discussed, the decisions they made, the confidential information they 19 used, and the other information they shared with Tregub could be used to support Molner’s 20 assault on BergsteinDEADLINE.com and his affiliated entities through the press. Stroock partner and well known 21 entertainment transactional Schuyler Moore even bragged to the press that his clients, Aramid 22 and Molner, and his firm would stop at nothing to kill Bergstein’s other business ventures – 23 specifically his efforts to arrange for the purchase and sale of Miramax from Disney.
24 11. Defendants’ conduct was unlawful and has caused substantial harm to Plaintiffs. 25 Indeed, Defendants’ actions have caused Plaintiffs to be involved in lengthy, protracted, 26 contentious, and expensive legal proceedings. Millions of dollars in legal fees and costs have 27 been incurred in these litigations. Moreover, the litigations, litigation fees and costs, resources 28 devoted to the litigations, and negative publicity accompanying the litigations have resulted in
4 COMPLAINT
1 nearly incalculable injury and damage to Plaintiffs’ business interests. For example, the value of 2 Plaintiffs’ film rights has been significantly diminished, Bergstein’s ability to arrange financing 3 for his various business ventures has been harmed, Bergstein’s compensation for engineering the 4 acquisition of a major entertainment company (Miramax) has been greatly reduced, and 5 Plaintiffs’ ability to monetize their assets has been impinged due to the cloud created by the 6 ongoing bankruptcy and lawsuits. They also have had their reputation damaged, pending 7 transactions cancelled, consulting opportunities lost, and business relationships permanently 8 damaged. These lost opportunities and other damages run into the hundreds of millions of 9 dollars as evidenced by Bergstein and his affiliated entities: (1) being involved in over $1 billion
10 of entertainment industry financing between 2006 and 2009; (2) completing over $700 million of 11 transactions in 2010; and (3) not being able to complete any new transactions since that time as a 12 result of the bankruptcy and litigation filings.
13 12. Additionally, Defendants knew (or should have known) that their actions were a 14 violation of the professional rules and obligations that govern all lawyers practicing in 15 California. For example, Defendants aided and abetted Tregub in the commission of her
WEINGARTEN BROWN LLP 16 unlawful conduct in violation of California Rule of Professional Responsibility 1-120, which 17 provides that: “A member shall not knowingly assist in, solicit, or induce any violation of these
18 rules of the State Bar Act.” Defendants also knew (or should have known) that their conduct was 19 unlawful, unethical, and would cause harm, injury, and disruption to multiple of Plaintiffs’ 20 contractual relationshipsDEADLINE.com with third parties. 21 THE PARTIES 22 13. Plaintiff David Bergstein is, and at all times relevant herein was, a resident of Los 23 Angeles County, California.
24 14. Plaintiff Bontempo Holdings, LLC (“Bontempo Holdings”) is, and at all times 25 relevant hereto was, a limited liability company organized and existing under the laws of the 26 state of Delaware. 27 28
5 COMPLAINT
1 15. Plaintiff Bontempo Productions, LLC (“Bontempo Productions”) is, and at all 2 times relevant hereto was, a limited liability company organized and existing under the laws of 3 the state of Delaware.
4 16. Plaintiff Capitol Films Group Ltd. (“CF Group”) is, and at all times relevant 5 hereto was, a limited company organized and existing under the laws of the United Kingdom.
6 17. Plaintiff Cerulean Productions, LLC (“Cerulean”) is, and at all times relevant 7 hereto was, a limited liability company organized and existing under the laws of the state of 8 Delaware.
9 18. Plaintiff De Lane Lea (Post Production) Limited (“DLL”) is, and at all times
10 relevant hereto was, a limited company organized and existing under the laws of the United 11 Kingdom.
12 19. Plaintiff Exodus Film Company, Ltd. (“Exodus”) is, and at all times relevant 13 hereto was, a limited company organized and existing under the laws of the United Kingdom.
14 20. Plaintiff Film Rights Holding Company, LLC (“FRHC”) is, and at all times 15 relevant hereto was, a limited liability company organized and existing under the laws of the
WEINGARTEN BROWN LLP 16 state of California.
17 21. Plaintiff Graybox LLC (“Graybox”) is, and at all times relevant hereto was, a
18 limited liability company organized and existing under the laws of the state of Nevada.
19 22. Plaintiff Lavender Productions, LLC (“Lavender”) is, and at all times relevant 20 hereto was, a limitedDEADLINE.com liability company organized and existing under the laws of the state of 21 Delaware.
22 23. Plaintiff Library Rights Company, Ltd. (“Library Rights”) is, and at all times 23 relevant hereto was, a limited company organized and existing under the laws of the United 24 Kingdom.
25 24. Plaintiff Nailed Productions, LLC (“Nailed”) is, and at all times relevant hereto 26 was, a limited liability company organized and existing under the laws of the state of Delaware.
27 25. Plaintiff Pangea Media Holdings Ltd. (“Pangea”) is, and at all times relevant 28 hereto was, a limited company organized and existing under the laws of the United Kingdom.
6 COMPLAINT
1 26. Plaintiff R Media Acquisitions, LLC (“R Media”) is, and at all times relevant 2 hereto was, a limited liability company organized and existing under the laws of the state of 3 Delaware
4 27. Raspberry Finances, LLC (“Raspberry”) is, and at all times relevant hereto was, a 5 limited liability company organized and existing under the laws of the state of Delaware.
6 28. Plaintiff Reel Transit Investments, LLC (“Reel Investments”) is, and at all times 7 relevant hereto was, a limited liability company organized and existing under the laws of the 8 state of Louisiana.
9 29. Plaintiff Reel Transit Productions, LLC (“Reel Productions”) is, and at all times
10 relevant hereto was, a limited liability company organized and existing under the laws of the 11 state of Louisiana.
12 30. Plaintiff Tenderloin Holdings, LLC (“Tenderloin”) is, and at all times relevant 13 hereto was, a limited liability company organized and existing under the laws of the state of 14 Delaware.
15 31. Plaintiff TFC Holdings LLC (“TFC”) is, and at all times relevant hereto was, a
WEINGARTEN BROWN LLP 16 limited liability company organized and existing under the laws of the state of Delaware.
17 32. Plaintiff Veritum Ltd. (“Veritum”) is, and at all times relevant hereto was, a
18 limited company organized and existing under the laws of the United Kingdom.
19 33. Plaintiffs Bontempo Holdings, Bontempo Productions, CF Group, Cerulean, 20 DLL, Exodus, FRHC,DEADLINE.com Graybox, Lavender, Library Rights, Nailed, Pangea, R Media, Raspberry, 21 Reel Investments, Reel Productions, Tenderloin, TFC, and Veritum are sometimes referred to 22 collectively hereafter as the “Entity Plaintiffs.”
23 34. Plaintiffs are informed and believe that Defendant Stroock & Stroock & Lavan 24 LLP (“Stroock”) is a New York limited liability partnership with its principal place of business 25 in New York, New York, and an office in Los Angeles, California.
26 35. Plaintiffs are informed and believe that Defendant Daniel Rozansky is, and at all 27 relevant times was, a resident of California and a partner in Stroock. 28
7 COMPLAINT
1 36. Plaintiffs are informed and believe that Defendant Levene Neale Bender Yoo & 2 Brill, LLP (“Levene Neale”) is a California limited liability partnership with its principal place 3 of business in Los Angeles, California.
4 37. Plaintiffs are informed and believe that Defendant David Neale is, and at all 5 relevant times was, a resident of California and a co-managing partner of Levene Neale.
6 38. Plaintiffs are informed and believe that Defendant Irving Gross is, and at all 7 relevant times was, a resident of California and a partner in Levene Neale.
8 39. Plaintiffs are informed and believe that Defendant Beth Young is, and at all 9 relevant times was, a resident of California and a partner in Levene Neale.
10 40. Plaintiffs are informed and believe that Defendant Sanjay Sharma is, and at all 11 relevant times was, a resident of California and in-house counsel for Molner-affiliated entities. 12 Plaintiffs are further informed and believe and on that basis allege that Sharma has a law degree 13 but is not licensed to practice law in the State of California. Despite that fact, Sharma does in 14 fact practice law in California.
15 41. Plaintiffs are ignorant of the true names or capacities of the defendants sued
WEINGARTEN BROWN LLP 16 herein under the fictitious names Does One through Fifty, inclusive. Plaintiffs are informed and 17 believe, and upon such information and belief allege, that each of Defendants designated herein
18 as a Doe is legally responsible in some manner for the events and happenings herein referred to, 19 and legally caused injury and damages to Plaintiffs as herein alleged. 20 42. PlaintiffsDEADLINE.com are informed and believe, and upon such information and belief allege, 21 that at all times mentioned herein, Defendants, and each of them, were, and are, the principals, 22 agents, members, managers, employers, partners, employees, co-venturers, joint venturers, legal 23 representatives, aiders and/or abettors, or alter egos of each other, and in doing the things 24 hereinafter alleged, were acting within the course and scope of such relationships and with the 25 knowledge, permission, ratification, consent and/or adoption of each of the other Defendants.
26 JURISDICTION AND VENUE 27 43. Subject matter jurisdiction is appropriate in this Court because the amount in 28 controversy exceeds this Court’s jurisdictional minimum. Venue is appropriate in Los Angeles
8 COMPLAINT
1 County because a substantial part of the events giving rise to the claims for relief occurred in Los 2 Angeles County and Defendants’ conduct caused injury in Los Angeles County. This Court has 3 personal jurisdiction over all Defendants.
4 44. The provisions of California Civil Code Section 1714.10 requiring a plaintiff to 5 seek the Court’s permission before filings certain types of claims against attorneys do not apply 6 to this action. Plaintiffs are not suing an attorney for a “civil conspiracy with his or her client 7 arising from any attempt to contest or compromise a claim or dispute.” However, should the 8 Court find that Section 1714.10 is applicable, Plaintiffs will request leave of Court to comply 9 with Section 1714.10 and re-file the Complaint.
10 SUBSTANTIVE ALLEGATIONS
11 I. PLAINTIFFS’ RELATIONSHIP WITH DAVID MOLNER AND ARAMID 12 A. Aramid Makes Loans To Plaintiffs And Affiliated Entities 13 45. Plaintiffs and affiliated entities are involved in transactions in many different 14 business sectors including distressed assets as well as acquiring, producing, and distributing 15 motion pictures. These businesses require the involvement of lending institutions and/or
WEINGARTEN BROWN LLP 16 individuals and entities that are willing to provide financing.
17 46. Molner and various entities that he controlled participated in a number of
18 financial transactions with Plaintiffs and affiliated entities relating to Plaintiffs’ film production 19 and distribution business. The Molner-controlled entities participating in these transactions 20 included AramidDEADLINE.com Entertainment Fund Limited (“AEF”), Aramid Entertainment, B.V. (“Aramid 21 B.V.”), Cayman Film Holdings Limited (“Cayman”), and Screen Capital International 22 Corporation (“SCI”) (collectively, “Aramid”). Molner is SCI’s founder and director. Molner is 23 also, directly or through SCI, a Class A shareholder of AEF and/or Aramid B.V. and/or Cayman.
24 47. Molner represented Aramid in its financial transactions with Plaintiffs and 25 affiliated entities.
26 48. From 2007 to 2009, Aramid made a series of loans to Plaintiffs and affiliated 27 entities with interest rates ranging from 15% per year to over 100% per year. Aramid was not a 28
9 COMPLAINT
1 licensed California lender during this time. Nevertheless, Plaintiffs and affiliated entities paid 2 Aramid millions of dollars in interest, loan fees, penalties, and other transaction charges.
3 B. Aramid Runs Into Financial Difficulty 4 49. In 2009, AEF began to run into serious problems with its investors. Indeed, the 5 problems were so severe that in the fourth quarter of 2009, AEF’s investors submitted over $130 6 million in demands for redemptions. By the end of 2009, 97% of all of AEF’s investors had 7 demanded a return of their money.
8 50. By the first quarter of 2010, AEF was forced to suspend paying redemptions. As 9 a result, AEF was delisted from the Cayman Islands Stock Exchange where it had been trading.
10 51. At the behest of AEF’s investors, an independent director was appointed to 11 examine Molner’s conduct. The independent director reported that there were numerous and 12 material irregularities at AEF. For example, Molner had taken over $60 million in cash out of 13 AEF. Additionally, there were a substantial number of insider transactions and a gross 14 overstating of AEF’s assets on AEF’s books and records.
15 C. Aramid And Molner Demand That Plaintiffs Cover Molner’s Fraud
WEINGARTEN BROWN LLP 16 52. In 2009, Molner became very aggressive in his dealings with Plaintiffs and 17 affiliated entities in an attempt to cover AEF’s losses and conceal the losses from AEF’s
18 investors. Molner was exaggerating the Net Asset Value of the Fund (commonly referred to as 19 the “NAV”) as part of his charade and his continuing effort to conceal evidence of his theft and 20 gross mismanagement.DEADLINE.com As part of that strategy, Molner and Aramid demanded much higher 21 interest rates on current loans than Aramid was otherwise entitled to receive. For example, 22 Molner: (1) demanded, and ultimately received, over 100% in annual interest relating to a loan 23 for a film entitled Nailed; and (2) proposed that Plaintiffs and affiliated entities take on interest 24 rates of over 50% annually in a refinancing on all outstanding loans. Plaintiffs refused to enter 25 into this usurious agreement.
26 53. Molner was furious that Plaintiffs and affiliated entities would not agree to the 27 usurious interest rates that Molner attempted to impose. As a result, Molner’s and Aramid’s 28 relationship with Plaintiffs and affiliated entities became highly adversarial.
10 COMPLAINT
1 II. DEFENDANTS, MOLNER, AND ARAMID PREPARE FOR A LITIGATION 2 WAR AGAINST BERGSTEIN AND HIS AFFILIATED ENTITIES
3 A. Molner And Aramid Arrange For Defendants To Be Their Hitmen 4 54. Molner and Aramid planned for and commenced a war against Plaintiffs and 5 affiliated entities after Plaintiffs and affiliated entities refused to agree to the usurious interest 6 rates sought by Aramid and Molner.
7 55. Molner’s and Aramid’s war included using Defendants as counsel to carry out the 8 litigation prong of their war.
9 56. Aramid retained Levene Neale, Neale, and Gross as counsel. Specifically,
10 Levene Neale, Neale, and Gross were to craft and institute involuntary bankruptcy proceedings 11 against Plaintiffs and affiliated entities. Young was a Levene Neale partner who had previously 12 represented certain Plaintiffs and affiliated entities under Tregub’s direction.
13 57. Aramid also retained Stroock and Rozansky. Stroock and Rozansky were to 14 construct and implement a litigation strategy against Plaintiffs and affiliated entities that 15 involved filing a series of lawsuits at or about the same time as the involuntary bankruptcy
WEINGARTEN BROWN LLP 16 proceedings were initiated.
17 58. At this time, Sharma was already employed by Molner as in-house counsel for
18 SCI. With respect to Aramid’s and Molner’s litigation attack, Sharma was to interface with 19 Tregub; be a conduit of confidential, privileged, and/or proprietary information between Tregub 20 and other Defendants;DEADLINE.com and oversee and supervise the planned and ongoing litigation. 21 B. Molner And Aramid Recruit Plaintiffs’ Lawyer For The Litigation War 22 1. Plaintiffs’ Lawyer Is Intimately Involved With Plaintiffs’ Business 23 59. Susan Tregub was Bergstein’s lawyer for over a decade. Bergstein trusted and 24 had confidence in Tregub as a result of their attorney-client, professional, and personal 25 relationships. So great was Bergstein’s trust and confidence in Tregub that he gave her his 26 personal power of attorney, relied upon her in his personal estate plan, and named her as the 27 Trustee of his family trust. 28
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1 60. The Entity Plaintiffs also retained Tregub as their lawyer. The Entity Plaintiffs 2 trusted and had confidence in Tregub as a result of the retentions, representations, and attorney- 3 client relationships.
4 61. Tregub also represented other entities that were or are affiliated with some or all 5 of Plaintiffs. These other entities include R2D2 LLC (“R2D2”), a California limited liability 6 company; CT1 Holdings LLC (“CT1”), a Delaware limited liability company; Capco Group 7 LLC (“Capco”), a Delaware limited company; Capitol Film Development LLC (“CFD”), a 8 California limited liability company; and ThinkFilm LLC (“ThinkFilm”), a Delaware limited 9 company. These other entities trusted and had confidence in Tregub as a result of the retentions,
10 representations, and attorney-client relationships.
11 62. Tregub created numerous documents or other communications containing 12 confidential, privileged, and/or proprietary information regarding Plaintiffs and affiliated entities 13 as part of her relationships and legal representations. For example, Tregub drafted documents 14 relating to the creation of the Entity Plaintiffs and affiliated entities, contracts relating to or 15 involving the Entity Plaintiffs and affiliated entities, memoranda and correspondence offering
WEINGARTEN BROWN LLP 16 legal advice to Bergstein, and other documents containing legal advice for or relating to the 17 Entity Plaintiffs and affiliated entities. Similarly, Tregub offered legal advice to Plaintiffs during
18 meetings, telephone calls, and conference calls.
19 63. Likewise, Tregub was a recipient of a substantial amount of documents and 20 communicationsDEADLINE.com containing Plaintiffs’ and other affiliated entities’ confidential, privileged, 21 and/or proprietary information through her relationships and legal representations. These 22 documents and communications included draft contracts or other agreements, financial and other 23 account statements, books and records of the various entities, and materials related to ongoing 24 business negotiations.
25 64. Additionally, Tregub had access to vast amounts of confidential, privileged, 26 and/or proprietary information about Plaintiffs and affiliated entities by virtue of her 27 relationships and legal representations. This information included: (1) all of the core operating 28 and financial documents for Plaintiffs and affiliated entities; (2) all electronic records for
12 COMPLAINT
1 Plaintiffs and affiliated entities; and (3) substantial amounts of other records for Plaintiffs and 2 affiliated entities. Indeed, in many instances, Tregub was the custodian of critical documents 3 relating to Plaintiffs and affiliated entities and maintained the only copies of such documents.
4 65. Plaintiffs and affiliated entities all placed their trust and confidence in Tregub. 5 Plaintiffs and affiliated entities each viewed Tregub as someone who: (1) would (and was bound 6 to) act in their best interests; (2) had control and influence over their business affairs and 7 dealings; (3) provided them with legal and business advice; and (4) would otherwise conduct 8 herself in accordance with her legal, professional, and ethical obligations. Neither Plaintiffs nor 9 other affiliated entities believed that Tregub would act contrary to their best interests.
10 66. Tregub was so intertwined with Plaintiffs and affiliated entities that she: (1) had 11 her office in the same suite of offices; (2) was paid a monthly retainer; and (3) effectively served 12 as General Counsel.
13 2. Plaintiffs’ Lawyer Begins To Work With Molner, Aramid, And 14 Defendants 15 67. Through her representations of and relationships with Plaintiffs, Tregub was
WEINGARTEN BROWN LLP 16 involved in and/or knowledgeable about all of the transactions between Aramid and Plaintiffs. 17 For example, Tregub was involved in the negotiations concerning disputes that arose between
18 Plaintiffs and Aramid as to Aramid loans. She also managed the activities of Plaintiffs’ outside 19 counsel in a lawsuit filed by Aramid against Plaintiffs. 20 68. MolnerDEADLINE.com and Aramid knew that Tregub was involved in and/or knowledgeable 21 about the transactions between Plaintiffs and Aramid. Additionally, Molner knew that Tregub 22 was an attorney for Plaintiffs and affiliated companies. Indeed, Tregub met Molner in 23 connection with her representation of Plaintiffs and affiliated entities.
24 69. In or about 2009, unbeknownst to Plaintiffs, Molner hired Tregub to obtain her 25 assistance as Aramid prepared litigation proceedings against Plaintiffs and affiliated companies.
26 70. Tregub agreed to help Molner and Aramid. Among other things, she was hired to 27 provide factual information and advice about Plaintiffs and affiliated entities. She was paid for 28 her work against Plaintiffs and affiliated entities. During this time, Tregub continued to serve as
13 COMPLAINT
1 counsel of record for Plaintiffs and affiliated entities in ongoing litigation matters. In fact, in her 2 capacity as a secret agent for Molner, Aramid and Defendants, while Tregub was still working 3 for Plaintiffs, she directed other Bergstein employees to gather data, destroy documents and 4 deliver information as instructed by Defendants and their Master to further their plans. These 5 included another in-house lawyer, Teri Zimon, and Tregub’s assistant, Alana Guardino.
6 71. Plaintiffs were not aware that Tregub agreed to work for Molner and Aramid 7 entities.
8 III. DEFENDANTS IMPROPERLY USE PLAINTIFFS’ CONFIDENTIAL, 9 PRIVILEGED, AND/OR PROPRIETARY INFORMATION
10 A. Defendants Develop A Litigation Strategy 11 72. Aramid and Defendants began working with Tregub to initiate legal proceedings 12 against Plaintiffs beginning in or around November or December 2009. In particular, 13 Defendants, Aramid, and Tregub began working on two projects directed at harming Plaintiffs: 14 (1) a “master” complaint against Bergstein and several affiliated entities (the “Master 15 Complaint”), to be filed by Rozansky and Stroock on Aramid’s behalf; and (2) involuntary
WEINGARTEN BROWN LLP 16 bankruptcy petitions against Plaintiffs and/or affiliated entities, to be filed by Neale, Gross, and 17 Levene Neale on behalf of AEF, SCI, and other creditors. Sharma was to be involved in and
18 oversee both projects. As described herein, both of these projects involved Defendants’ knowing 19 solicitation, receipt, and use of Plaintiffs’ and affiliated entities’ confidential, privileged, and/or 20 proprietary information.DEADLINE.com 21 B. Stroock And Rozansky Work With Tregub To Draft Multiple Lawsuits 22 Against Plaintiffs 23 73. Prior to December 2009, Stroock and Rozansky began drafting the Master 24 Complaint.
25 74. Throughout December 2009 and continuing into early 2010, Tregub worked in 26 conjunction with Sharma to revise a draft of the Master Complaint that originally had been 27 prepared by Stroock and Rozansky. In emails exchanged during this period, Tregub, Sharma, 28 and Molner made several references to the use that Stroock would make of the information and
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1 documents that Tregub was preparing. For example, during emails exchanged in December 2 2009 alone, Tregub indicated that (1) she was “compiling a list of documents for reference by 3 Stroock;” (2) she was working “to get a draft off . . . [of the Master Complaint] to Stroock 4 hopefully by Monday night;” and (3) she would assist with “lin[ing] up our best evidence to date 5 for . . . Stroock’s review.” Additionally, Tregub: (1) identified email communications that she 6 believed could form the basis for a fraud claim against Bergstein; (2) analyzed various 7 agreements entered into between entities with which Bergstein is or was affiliated and Molner- 8 affiliated entities in order to recommend whether certain causes of action could be pursued; (3) 9 revised and re-drafted portions of the Master Complaint; (4) recommended the structure for
10 certain arguments; and (5) provided confidential, privileged, and/or proprietary information that 11 helped formed the factual basis for many claims.
12 75. By working on and assisting with the preparation of the Master Complaint, 13 Tregub provided confidential, privileged, and/or proprietary information about Plaintiffs to 14 Stroock and Rozansky. Stroock and Rozansky took and used this confidential, privileged, and/or 15 proprietary information without Plaintiffs’ consent thereby intentionally and substantially
WEINGARTEN BROWN LLP 16 interfering with Plaintiffs’ businesses.
17 76. During the preparation of the Master Complaint, Stroock and Rozansky (among
18 others) invited Tregub to attend strategy sessions with Stroock, Rozansky, and Aramid (among 19 others). Tregub attended these strategy sessions. At the strategy sessions, Tregub, Stroock, 20 Rozansky, and AramidDEADLINE.com strategized about ways to put maximum pressure on Plaintiffs including 21 by the litigation contemplated in the Master Complaint and parallel bankruptcy proceedings. 22 These strategy sessions often involved the sharing, discussion, and use of Plaintiffs’ confidential, 23 privileged, and/or proprietary information without Plaintiffs’ consent. When Tregub did not 24 know the answers to questions about Plaintiffs’ business affairs, she would offer to, and did, 25 canvas her internal resources that continued to work for Plaintiffs or their affiliates including, but 26 not limited to, Katrina Stagner, Teri Zimon, and Alanna Guardino, to answer the questions.
27 77. On information and belief, Stroock and Rozansky offered comments to Molner 28 and SCI on the Master Complaint. They knew that those comments would be passed on to
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1 Tregub. Stroock and Rozansky used the Master Complaint that contained Plaintiffs’ and 2 affiliated entities’ confidential, privileged, and/or proprietary information as the basis for the 3 complaints they intended to file on behalf of Aramid.
4 78. Stroock and Rozansky also solicited advice and support from Neale, Gross, 5 Levene Neale, and Sharma regarding the planned litigation for Aramid. Specifically, Stroock, 6 Rozansky, Aramid, and Tregub received comments on the complaints as well as other input on 7 litigation strategy from Neale, Gross, Levene Neale, and Sharma. The comments and strategy 8 input involved the sharing of Plaintiffs’ confidential, privileged, and/or proprietary information 9 without Plaintiffs’ consent.
10 79. Ultimately, Stroock and Rozansky, on behalf of Aramid and working in 11 conjunction with Tregub, filed multiple lawsuits in federal and state court against certain 12 Plaintiffs. These lawsuits included:
13 • Case No. CV 10-1881-JFW (PLAx) filed by AEF and Cayman against Bergstein 14 and non-party Ronald Tutor (the “Guaranty Action”).
15 • Case No. CV 10-1882-SJO (AGRx) filed by AEF, Aramid B.V., and Cayman
WEINGARTEN BROWN LLP 16 against Bergstein, Bontempo Holdings, Bontempo Productions, Tenderloin, 17 Cerulean, CG, DLL, FRHC, IM Junior, Capitol, Library Asset Acquisition
18 Company Ltd. (“LAAC”), Capco, and ThinkFilm (the “Bontempo Action”). The 19 Bontempo Action ended up in Los Angeles County Superior Court under Case 20 No.DEADLINE.com BC437131. 21 • Case No. CV 10-2258-JHN (FFMx) filed by AEF against LAAC (“TFC Library 22 Action”).
23 80. The claims asserted in the three lawsuits arose out of various loans and guaranties 24 that had been entered into between Aramid and Plaintiffs or other affiliated entities. These 25 actions are collectively referred to herein as the “Aramid Loan Litigation.”
26 81. As Stroock and Rozansky knew, the factual information supporting the claims 27 that were asserted in the Guaranty Action and the Bontempo Action were derived from the 28
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1 Master Complaint that Tregub, Sharma, and Defendants drafted and which contained Plaintiffs’ 2 confidential, privileged, and/or proprietary information.
3 82. In addition, Defendants participated in preparing papers in the TFC Library 4 Action seeking a temporary restraining order to prohibit LAAC from foreclosing on a film 5 library referred to by the parties as the “TFC Library” while preparing those papers. Rozansky 6 sought and received from Tregub information regarding the relationships between Bergstein, one 7 of his employees, and the TFC Library. Rozansky also sought and received from Tregub 8 documents relating to the TFC Library that Tregub obtained while she represented Plaintiffs.
9 C. Levene Neale, Neale, And Gross Work With Tregub To Put Bergstein-
10 Affiliated Entities Into Involuntary Bankruptcy 11 83. From December 2009 through March 2010, Tregub also worked hand-in-hand 12 with Aramid, Levene Neale, Neale, and Gross to prepare petitions, motions, and other papers 13 necessary to force the entities affiliated with Bergstein into involuntary bankruptcy.
14 84. Tregub and Aramid began consulting with Neale regarding the potential for 15 bankruptcy proceedings against entities affiliated with Bergstein as early as December 8, 2009.
WEINGARTEN BROWN LLP 16 In fact, Tregub is the person who introduced Neale and Levene Neale to Molner. This is not 17 surprising as Ron Bender – a name partner at Levene Neale – is Tregub’s cousin. Tregub also
18 lobbied for Aramid to hire Levene Neale to represent Aramid in the planned involuntary 19 bankruptcy filings to be filed against entities affiliated with Plaintiffs. 20 85. OverDEADLINE.com the next several months, Tregub communicated regularly with Neale, Gross, 21 and other attorneys at Levene Neale regarding the planned bankruptcy filings. For example:
22 • On December 8, 2009, Tregub met with Molner and Neale to discuss the 23 orchestration of the involuntary bankruptcy filings.
24 • On December 9, 2009, Tregub wrote to Sharma stating that: “Aramid 25 now has substantial unsecured claims. So, I think it is important to think 26 about some of the BK scenarios we discussed yesterday.” Sharma 27 responded: “I know we talked about forcing him [Bergstein] into bk but 28 was there something we need to do now other than apply for writs?”
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1 Tregub responded: “No, just the issue of forcing an involuntary and 2 making a motion for appointment of an interim trustee to get DB 3 [Bergstein] out of there makes sense.”
4 • On December 12, 2009, Tregub wrote to Molner relaying confidential, 5 privileged, and/or proprietary information she was told by a friend who 6 “works at Capitol” about “David’s plans” for two films for which Aramid 7 had loaned money to Plaintiffs and/or affiliated entities – “namely to 8 foreclose and wipe you out to force you to the table.” Based on this 9 information, Tregub recommended to Molner that: “[W]e should consider
10 the BK option – pushing the companies in, getting an interim trustee 11 appointed, and oust him [Bergstein] from being able to do anything.”
12 • On December 25, 2009, Tregub sent a five page memorandum entitled 13 “Bankruptcy Outline for Capitol Entities” which laid out a strategy for 14 pushing Bergstein-affiliated entities into bankruptcy. In the 15 memorandum, Tregub relied on confidential, privileged, and/or
WEINGARTEN BROWN LLP 16 proprietary information that she could have only known through her work 17 for Plaintiffs and affiliated entities. For example, Tregub included
18 information about the day-to-day operation of the company, its upper 19 management, its revenue and operational costs, pending lawsuits, 20 DEADLINE.comjudgments and other liabilities, and the transfer of assets to third parties. 21 None of this information could have otherwise been known to Aramid.
22 • On January 13, 2010, Tregub sent Neale an email attaching a 23 “Bankruptcy Plan – First 30-60 days.” This document outlined the plan 24 for putting Plaintiffs and affiliated entities into bankruptcy.
25 86. Neale, Gross, and other attorneys at Levene Neale solicited from Tregub 26 confidential, privileged, and/or proprietary information she had obtained while representing 27 Plaintiffs and affiliated entities. Neale, Gross, and Levene Neale intended for this confidential, 28 privileged, and/or proprietary information to be used in the bankruptcy proceedings. Ultimately,
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1 Neale, Gross, and Levene Neale knowingly used this information in the bankruptcy proceedings 2 without Plaintiffs’ consent thereby Plaintiffs to suffer significant harm, injury and damages.
3 87. In particular, Neale directed and worked with Tregub on the preparation of a 4 master strategy memorandum that guided the preparation of the bankruptcy filings. In preparing 5 that memorandum, Tregub used confidential, privileged, and/or proprietary information about 6 entities affiliated with Bergstein to recommend a particular strategic course of action. In 7 addition, Tregub worked with Neale and Molner to identify the Bergstein affiliated entities that 8 ultimately would be placed into bankruptcy.
9 88. Tregub also provided confidential, privileged, and/or proprietary information she
10 gained while serving as counsel for Plaintiffs and affiliated entities to: (1) compile a list of 11 creditors that could be used as petitioning creditors in involuntary bankruptcy filings; and (2) 12 determine which persons and entities to solicit to join the proceedings.
13 89. From January to March 2010, Tregub contacted dozens of the creditors at the 14 direction of Neale and Levene Neale. She attempted to recruit the creditors to join the planned 15 involuntary petitions. Tregub referred the potential creditors to Neale. Neale, Gross, and Levene
WEINGARTEN BROWN LLP 16 Neale incorporated those creditors into the bankruptcy proceedings. Examples of the work 17 performed by Neale, Gross, Levene Neale, and Tregub during this time and relating to the
18 recruitment and use of potential creditors include:
19 • On January 3, 2010, Tregub wrote to Molner (in response to a Molner 20 DEADLINE.comrequest) stating that: “Doing list of creditors is not a problem. I can tell 21 you 10 different creditors for 10 different entities (including R2D2 (one of 22 which is AIB).”
23 • On January 4, 2010, Tregub wrote to Molner attaching a “Creditors 24 Matrix” listing creditors of an entity affiliated with Plaintiffs.
25 • On January 7, 2010, Tregub wrote to Neale stating that: “I have put 26 together a list of creditors based on the litigation matters and David 27 Molner is thinking about trying to do a call with a bunch of them.” 28
19 COMPLAINT
1 • On January 11, 2010, Tregub reiterated that: “I have created a list of 2 creditors with judgments and will have a binder with their judgments in 3 the next day or so.”
4 • On January 19, 2010, Tregub wrote to Neale, Molner, and Sharma with a 5 further revised list of creditors.
6 • On January 29, 2010, Tregub sent a list of possible petitioning creditors 7 “that I think can be approached.”
8 • On February 3, 2010, Tregub wrote to Neale stating: “David, Attached is a 9 workbook that contains 2 spreadsheets. The first is a summary of most of
10 the litigation pending against the companies that are our primary targets 11 right now. In it, I have inserted the contact information for the attorneys 12 who are representing those Plaintiffs against the various Capitol entities.” 13 Tregub continued: “The second spreadsheet sets forth by entity the 14 creditors listed on the first spreadsheet for whom judgments have been 15 entered.”
WEINGARTEN BROWN LLP 16 • On February 5, 2010, Tregub wrote to Neale stating that: “I think you and 17 I should go over the creditor list and decide who is the best target to call.”
18 At Neale’s direction, Tregub then contacted no fewer than twenty of these 19 potential creditors and put any creditor willing to assist in contact with 20 DEADLINE.comNeale. 21 • On February 17, 2010, Tregub wrote to Neale, Molner, and Sharma with a 22 list of potential creditors for entities affiliated with Plaintiffs.
23 • On February 19, 2010, Tregub wrote to Neale, Molner, and Sharma with a 24 list of litigation against Plaintiffs and affiliated entities and a petitioning 25 creditor matrix. According to Tregub, she and Neale had “approached 26 virtually all of these creditors and virtually all have expressed willingness 27 to participate.” 28
20 COMPLAINT
1 90. Levene Neale, Neale, and Gross knowingly used confidential, privileged, and/or 2 proprietary information provided by Tregub to determine the targets of the bankruptcy 3 proceedings, identify petitioning creditors, and recruit those creditors. They would not have 4 been able to determine the identity of or recruit sufficient numbers of petitioning creditors to 5 sustain the petitions in the bankruptcy proceedings without the confidential, privileged, and/or 6 proprietary information provided by Tregub without Plaintiffs’ consent.
7 91. Levene Neale and Neale also orchestrated the improper purchase of a claim 8 against entities affiliated with Plaintiffs by working with Tregub and using Plaintiffs’ and 9 affiliated entities’ confidential, privileged, and/or proprietary information. For example:
10 • On February 1, 2010, Molner pressured Tregub to draft an assignment 11 agreement in the hopes that The Salter Group (“TSG”) would assign its 12 clams to Aramid. Tregub wrote to Neale noting that Molner “was anxious 13 to get NDA done today.” Tregub further stated that: “He gave me the 14 proposed terms for the assignment and wanted me to draft up the 15 agreement – are you okay with that or would you to do it?” Tregub then
WEINGARTEN BROWN LLP 16 drafted and circulated an “Assignment agreement” which would assign 17 TSG’s claims to Aramid.
18 • On or about February 3, 2010, Tregub sent a draft of the assignment 19 agreement to Molner with her thoughts. As a result, Tregub had provided 20 DEADLINE.comNeale and Molner a template for the assignment of claims that was a 21 confidential signed agreement related to a Bergstein-affiliated entity that 22 Tregub could only have obtained in the course of her work for that entity.
23 • On February 5, 2010, Tregub wrote to Molner, copying Neale and 24 Sharma, reminding him that the TSG deal needed to be “tied up.”
25 • On February 11, 2010, Neale sent an email to Molner, Tregub, and 26 Sharma stating: “PLEASE HOLD OFF ON ANY FURTHER 27 DISCUSSIONS WITH TSG. In researching the issue of an involuntary 28 trustee, I came across language in one of the Bankruptcy Rules that says a
21 COMPLAINT
1 transferee of a claim . . . must tender a signed statement that the claim 2 ‘was not transferred for the purpose of commencing the case.’ Given this, 3 I don’t think we should proceed with the Salter deal unless you believe 4 that you could demonstrate some other business purpose for the deal.”
5 • Subsequently, Levene Neale, Neale, Tregub, Molner, and Sharma decided 6 to convert the transaction to a “collection” agreement. Tregub wrote to 7 Neale stating that: “I spoke to [Molner]. He told me he told you about this 8 idea of SCI being a collection agent for the claims. I am going to work his 9 ideas into an agreement. Does this work for you?” Tregub forwarded a
10 Molner email with ideas about how to circumvent the rules against 11 purchasing the TSG claim. Multiple drafts were then circulated among 12 this group of a new “Collection Agreement.”
13 92. Levene Neale and Neale knowingly used confidential, privileged, and/or 14 proprietary information provided by Tregub in devising a plan for purchasing the TSG claim for 15 use in the involuntary bankruptcy proceedings. They would not have known of the existence of
WEINGARTEN BROWN LLP 16 any claim by TSG, much less any way to use the claim in the involuntary bankruptcy 17 proceedings, but for their solicitation and receipt from Tregub of Plaintiffs’ and affiliated
18 entities’ confidential, privileged, and/or proprietary information.
19 93. Levene Neale was also involved in the improper purchase of potential claims 20 against entities affiliatedDEADLINE.com with Plaintiffs from Allied Irish Bank (“AIB”). AIB had loaned funds 21 to an entity affiliated with Plaintiffs. AIB sued when it was not repaid in full. In December 22 2009, Tregub engaged in settlement talks with AIB and ultimately reached a settlement. These 23 settlement discussions occurred without Plaintiffs’ or affiliated entities’ knowledge and after 24 Tregub began working with Molner and Defendants. Not surprisingly given Plaintiffs’ and 25 affiliated entities’ lack of knowledge regarding the settlement, AIB believed that an entity 26 affiliated with Plaintiffs defaulted on the settlement. Thereafter, Aramid asked AIB to be a 27 petitioning creditor for the involuntary bankruptcy proceedings. Aramid also sought to purchase 28 AIB’s claim pursuing the same strategy that it had with TSG. For example, an Aramid attorney
22 COMPLAINT
1 (Justin Grove) wrote to Neale, Sharma, and Tregub on February 11, 2010 asking “to discuss the 2 proposed AIB buy-out.” In further conversations among this group and Molner, Grove stated 3 that: “On the call tomorrow, let’s make sure to discuss the acquisition of the AIB [claim] in the 4 context of the US BK laws as discussed in the US today with respect to The Salter Group claim.” 5 Ultimately, a group of emails entitled “Collections Agreement” was circulated among this group 6 in March 2010. In short, Aramid and its team of lawyers attempted to manufacture an AIB claim 7 and then purchase the AIB claim to use in the involuntary bankruptcy proceedings. As with 8 Defendants’ other conduct described herein, Tregub’s sharing of Plaintiffs’ and affiliated 9 entities’ confidential, privileged, and/or proprietary information was key to the effort to obtain
10 AIB’s claim.
11 94. During February and March 2010, Gross also worked with and directed Tregub in 12 contacting former employees of the entities affiliated with Plaintiffs to prepare declarations that 13 would be used in support of a planned Emergency Motion For An Order Appointing A Trustee 14 (the “Trustee Motion”) to be filed in the bankruptcy court shortly after the bankruptcy 15 proceedings were initiated. At Gross’s direction, Tregub recruited three such employees.
WEINGARTEN BROWN LLP 16 Thereafter, Gross, Tregub, and the declarants worked together, using confidential, privileged, 17 and/or proprietary information provided by Tregub, to draft declarations in support of the Trustee
18 Motion. In particular, Gross worked personally with Tregub to draft the declarations, which 19 were then forwarded to the declarants, the other Defendants, and Molner for comments. Tregub 20 also forwarded internalDEADLINE.com emails to Defendants to use in the declarations and Trustee Motion. 21 95. On March 17, 2010, Levene Neale filed involuntary bankruptcy petitions against 22 certain entities affiliated with Bergstein to initiate the bankruptcy proceedings. Specifically, 23 Levene Neale, working with Tregub and using Plaintiffs’ confidential, privileged, and/or 24 proprietary information, initiated involuntary bankruptcy proceedings against R2D2, CT1, 25 Capco, CFD, and ThinkFilm (collectively the “Debtors”). The involuntary bankruptcy cases are 26 currently pending before the Honorable Barry Russell in the United States Bankruptcy Court for 27 the Central District of California (the “Bankruptcy Proceedings”). At times, Bergstein has 28
23 COMPLAINT
1 directly or indirectly held membership interests in one of more of the Debtors, and the Entity 2 Plaintiffs are indirectly owned by and/or affiliated with Debtors.
3 96. The Trustee Motion and supporting declarations were filed by Levene Neale in 4 the Bankruptcy Proceedings on March 18, 2010. The Trustee Motion itself contained 5 confidential information about the Debtors that could only have come from Tregub. The 6 declarations, prepared with the assistance of Tregub and the confidential, privileged, and/or 7 proprietary information she provided, were essential to the bankruptcy court’s decision to 8 appoint a trustee over Debtors.
9 97. During the course of the preparation of the involuntary bankruptcy petitions and
10 the Trustee Motion, Levene Neale, Neale, and Gross repeatedly invited Tregub to attend – and 11 she did attend (as did Stroock lawyers) – multiple conference calls and meetings to discuss 12 strategy for how best to use the bankruptcy cases and litigation to put the most pressure on 13 Plaintiffs.
14 98. Additionally, Levene Neale and/or Aramid received dozens (and counting) of 15 written communications from Tregub containing confidential, privileged, and/or proprietary
WEINGARTEN BROWN LLP 16 information of Plaintiffs and affiliated entities for use in preparing the involuntary bankruptcy 17 petitions. These communications included information about financial data, copyrights, tax
18 returns, privileged legal advice and communications, and corporate structure.
19 99. Similarly, Levene Neale and Aramid solicited and received from Tregub 20 confidential financialDEADLINE.com information about the Debtors. This information included a workbook 21 with confidential information about litigation and creditors, a film library, investment 22 information, and a corporate history.
23 100. As part of Defendants’ coordinated strategy, Stroock, Rozansky, and Sharma 24 were regular participants in strategy discussions regarding the bankruptcy proceedings. These 25 strategy discussions involved the knowing sharing, discussion, and use of Plaintiffs’ confidential, 26 privileged, and/or proprietary information without Plaintiffs’ consent. 27 28
24 COMPLAINT
1 D. Defendants Assist Aramid In Purchasing Claims Against Plaintiffs And 2 Affiliated Entities That They Would Not Otherwise Have 3 101. Defendants worked with Tregub, Molner, and Aramid to purchase claims or 4 potential claims against Plaintiffs and affiliated entities that Molner and Aramid would not 5 otherwise have.
6 102. The claims that Aramid purchased or attempted to purchase through these efforts 7 included the TSG and AIB claims in which Neale, Levene Neale, Sharma, and other Defendants 8 were involved.
9 103. Additionally, Stroock, Rozansky, and other Defendants attempted to replicate the
10 TSG, AIB, and involuntary bankruptcy proceedings efforts by acquiring claims against Gerova 11 Financial Group, Ltd. (“Gerova”). Gerova was a company to whom Bergstein has loaned 12 millions of dollars, money that is secured by Gerova’s assets.
13 104. Seeing an opportunity to do further damage to Bergstein by wiping out Gerova’s 14 assets (i.e., the collateral for Bergstein’s loans to the company), Aramid and Molner have 15 initiated involuntary insolvency proceedings against Gerova in its jurisdiction of incorporation,
WEINGARTEN BROWN LLP 16 Bermuda. Those proceedings were initiated when Aramid purchased the lawsuit of Eric Seal, a 17 former Gerova vendor who claimed that he was owed $90,000 and had filed suit in Indiana.
18 Seal’s claim has since been dismissed by the Indiana Court.
19 105. Once it became clear that Seal’s claim would likely be dismissed, however, 20 Aramid and MolnerDEADLINE.com began scouring the globe to locate other potential creditors of Gerova who 21 could substitute in as new petitioning creditors in Bermuda. That effort was conducted, in large 22 part, by Rozansky, who personally contacted multiple potential creditors with offers to purchase 23 whatever claims they might have (real or imagined) against Gerova to help with the insolvency 24 proceeding in Bermuda. When all other efforts failed, Molner and Aramid spent $750,000 to get 25 a $1 million claim from Maxim Group, LLC (who had underwritten Gerova’s IPO several years 26 ago) assigned to it – despite the fact that the Note evidencing the claim has an anti-assignment 27 provision. Those proceedings are currently pending. 28
25 COMPLAINT
1 E. Defendants Attempt To Hide Their Conduct 2 106. At all times that Defendants worked with Tregub, Defendants knew that Tregub 3 had acted or was acting as counsel for Plaintiffs and affiliated entities. In fact, Defendants knew 4 that Tregub continued to represent at least Bergstein and one of the entities affiliated with 5 Bergstein at the time Defendants were assisting Tregub in breaching her fiduciary and 6 contractual duties to Plaintiffs.
7 107. Knowing this, Rozansky attempted to hide his role in inducing and assisting 8 Tregub’s breaches. After months of participating in communications involving Tregub, 9 Rozansky requested that Molner not include Tregub on emails sent to Rozansky. Rather,
10 Rozansky requested that Molner (or Sharma) act as an intermediary, forwarding to Tregub 11 communications from Rozansky, and forwarding to Rozansky information from Tregub.
12 108. Similarly, Defendants, Aramid, and Tregub devised a “pivot and pass” strategy 13 whereby Tregub would provide Plaintiffs’ and affiliated entities’ confidential, privileged, and/or 14 proprietary information to Aramid, and Aramid would forward that information onto Defendants. 15 For example, Tregub emailed Molner on March 12, 2010 stating that: “I think for BK stuff you
WEINGARTEN BROWN LLP 16 should CC me and then forward to Dan [Rozansky].”
17 109. The idea behind the “pivot and pass” strategy was to: (1) avoid having Tregub
18 appear on emails to Defendants in an attempt to cover-up Defendants’ solicitation and receipt of 19 Plaintiffs’ and affiliated entities’ confidential, privileged, and/or proprietary information; and (2) 20 allow Tregub to DEADLINE.comcontinue to funnel this information to Defendants. Indeed, on or about March 21 15, 2010, Tregub and Molner exchanged emails relating to Bergstein, Tregub requested that the 22 information be forwarded to Levene, and Molner responded that Sharma should be the “pivot 23 and pass” person who transmitted information from Tregub to Levene.
24 F. Defendants Continue To Work With Tregub Against Plaintiffs’ Interests 25 After The Filing Of The Bankruptcy Cases And The Aramid Litigation 26 110. Defendants continued to assist Tregub in breaching her duties even after the 27 Aramid Guaranty Action, Bontempo Action, and Bankruptcy Proceedings were filed. 28
26 COMPLAINT
1 Defendants continued to consult with Tregub regarding those actions and make use of the 2 confidential, privileged, and/or proprietary information she provided.
3 IV. DEFENDANTS STONEWALL DISCOVERY RELATING TO THE IMPROPER 4 CONDUCT BY PLAINTIFFS’ LAWYER AND DEFENDANTS 5 111. On March 25, 2010, Plaintiffs Bergstein, TFC, Library Rights, Reel Transit, 6 Tenderloin, Bontempo Holdings, Lavender, and Nailed (among others) sued Tregub in Los 7 Angeles Superior Court, Case No. BC 434558 (the “Tregub Action”), for professional 8 negligence and breach of fiduciary duty based on her assisting Aramid in bringing the Aramid 9 Guaranty Action, Bontempo Action, and Bankruptcy Proceedings. Capitol Films later joined the
10 Tregub Action as a plaintiff (collectively, the plaintiffs in the Tregub Action are referred to as 11 the “Tregub Plaintiffs”).
12 112. The Tregub Plaintiffs immediately sought discovery from Tregub to determine the 13 extent of her involvement in the legal proceedings filed by Aramid. The Tregub Plaintiffs 14 noticed Tregub’s deposition and requested documents on an expedited basis. When Tregub 15 asserted the attorney-client privilege and refused to produce documents, the Tregub Plaintiffs
WEINGARTEN BROWN LLP 16 filed a motion to compel her to produce the documents.
17 113. The Tregub Plaintiffs also served subpoenas for the production of business
18 records on numerous parties Tregub communicated with including Stroock, Levene Neale, and 19 SCI. Tregub filed a motion to quash these subpoenas and vowed in an email communication to 20 Rozansky that herDEADLINE.com “computer w[ould] end up at the bottom of my pool before I follow any order 21 of [the Tregub Case court].”
22 114. On or about September 17, 2010, the court in the Tregub Action granted the 23 Tregub Plaintiffs’ motion to compel her to produce documents and denied Tregub’s motion to 24 quash the subpoenas served on third parties. The court held that the attorney-client privilege did 25 not apply to prevent Tregub from disclosing communications with Aramid and its attorneys, 26 including Stroock and Levene Neale. The court ordered Tregub to produce the documents 27 sought within ten days, by no later than September 27, 2010. 28
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1 115. Tregub did not comply with the order, and instead sought writ review of the 2 court’s order compelling production of documents. The Court of Appeal summarily denied the 3 writ the day after it was filed, on or about September 29, 2010. Despite the denial of the writ, 4 Tregub still refused to produce the documents that had been ordered to be produced.
5 116. In October 2010, Stroock filed a Motion for Protective Order in the Tregub 6 Action on behalf of Aramid to preclude the production of the documents sought by the Tregub 7 Plaintiffs. This motion, along with all subsequent discovery disputes in the Tregub Action, was 8 referred to a discovery referee, the Honorable Eli Chernow, Retired Los Angeles Superior Court 9 Judge. After extensive briefing and hearings by Judge Chernow, he issued his report and
10 recommendations to the court on January 20, 2011. On or about March 14, 2011, the court 11 adopted Judge Chernow’s report and recommendation. Judge Chernow’s report and 12 recommendations found that Tregub was retained to provide factual information and advice 13 about Mr. Bergstein and his entities, and information as to other entities who might be adverse to 14 Mr. Bergstein and his entities. The court, in adopting the report, ordered that the documents 15 sought by the Tregub Plaintiffs be produced.
WEINGARTEN BROWN LLP 16 117. Following the Court’s March 14, 2011 order, the Tregub Plaintiffs requested that 17 Stroock and Levene Neale produce the documents pursuant to the subpoenas that had been
18 served on them in 2010, to which Stroock and Levene Neale had previously objected on 19 privilege grounds. Rather than produce the documents, Aramid filed a writ petition seeking to 20 overturn the Court’sDEADLINE.com March 14 order. That writ petition was summarily denied on April 21, 21 2011.
22 118. Even after the writ petition was denied, Stroock and Levene Neale still refused to 23 produce documents claiming that the two court orders were not applicable to them. The Tregub 24 Plaintiffs, therefore, were forced to file yet another motion to compel, this time to compel 25 Stroock’s and Levene Neale’s (and SCI’s) compliance with the subpoenas. Judge Chernow 26 received extensive briefing from Stroock, Levene Neale, and SCI (represented by Stroock) and 27 from counsel for the Tregub Plaintiffs, and conducted a hearing on the motion on June 17, 2011. 28 On September 12, 2011 (after the Tregub Case was delayed because the trustee sought to remove
28 COMPLAINT
1 the Tregub case to the bankruptcy court, and the bankruptcy court remanded the case back to 2 state court), Judge Chernow issued another report and recommendation that the motion to 3 compel be granted and sanctions be awarded. The court adopted Judge Chernow’s report and 4 recommendation on December 12, 2011.
5 119. Because of the inordinate delay and repeated refusals by Tregub, Aramid, and 6 Defendants to abide by their discovery obligations in the Tregub Case, Plaintiffs did not learn for 7 well over a year of the depth of Tregub’s involvement in the Aramid Litigation and the 8 Bankruptcy Cases. Nor were Plaintiffs aware of the extent of Defendants’ aid in and inducement 9 of Tregub’s conduct.
10 120. While the Tregub Case Plaintiffs were spending well over a year trying in vain to 11 get the documents necessary to prove their claims, Defendants also instructed Tregub not to 12 produce the documents sought by the Tregub Plaintiffs in the Tregub Action. Tregub went along 13 with Defendants’ instructions, going so far as to tell Rozansky that her “computer w[ould] end 14 up at the bottom of my pool before I follow any order of [the Tregub Case court].”
15 V. DEFENDANTS WERE AWARE OF TREGUB’S REPRESENTATION OF
WEINGARTEN BROWN LLP 16 PLAINTIFFS 17 121. Aramid is and was represented by Neale, Gross, and Levene Neale in the
18 Bankruptcy Proceedings. Neale, Gross, and Levene Neale also played an active role in strategy 19 for the litigations handled by Stroock and Rozansky. 20 122. AramidDEADLINE.com is and was represented by Rozansky and Stroock in the Aramid Loan 21 Litigation. Rozansky and Stroock also played an active role in plotting strategy for the 22 Bankruptcy Proceedings.
23 123. At the time Defendants began working with Tregub against her current and 24 former clients, each Defendant was aware that Tregub: (1) represented Plaintiffs in the past; and 25 (2) continued to represent Plaintiffs and affiliated entities in ongoing litigation.
26 124. Among other things, Levene Neale was well aware of Tregub’s long-time 27 representation of Plaintiffs and affiliated entities because Levene Neale had previously 28 represented several related business entities while Tregub served as their de facto general
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1 counsel. In the course of those representations, Levene Neale had worked with Tregub in her 2 capacity as attorney for R Media, a company owned by Graybox Holdings, LLC. During the 3 course of the representation of R Media, Levene Neale learned confidential, privileged, and/or 4 proprietary information about not just R Media, but also R2D2, and certain other entities 5 affiliated with Plaintiffs. In that case, R Media was represented by Beth Young of Levene Neale, 6 who reported to Tregub, who was managing and directing the litigation on R Media’s behalf.
7 125. Stroock also was aware of Tregub’s representation of Plaintiffs. Indeed, Tregub 8 forwarded multiple emails to Rozansky and Stroock associate Eric Harbert containing 9 confidential, privileged, and/or proprietary information about Plaintiffs or affiliated entities.
10 126. Tregub also copied Defendants on various email communications in which she 11 discussed upcoming motions to be relieved as counsel in actions in which she represented certain 12 Plaintiffs or affiliated entities. As a result, Defendants were aware of her continuing 13 representation in those actions.
14 127. Moreover, Defendants – each of whom is a lawyer or a law firm whose lawyers 15 are members of the bar and aware of the rules governing the practice of law – knew or should
WEINGARTEN BROWN LLP 16 have known that: (1) Tregub owed each of her current and former clients, including Plaintiffs, 17 the duties of loyalty and confidentiality in perpetuity; and (2) that even if Tregub no longer
18 represented Plaintiffs and affiliated entities that she was not permitted to use any confidential, 19 privileged, and/or proprietary information against them in subsequent representations. 20 VI. PLAINTIFFSDEADLINE.com ARE DAMAGED 21 A. Plaintiffs Are Unable To Sell Any Films Because Of The Ongoing Litigation 22 128. Plaintiffs have suffered nearly insurmountable damage and injury to their business 23 operations since the filing of the Bankruptcy Proceedings and Aramid Loan Litigation. For 24 example, film libraries in which Plaintiffs had an interest that were comprised of valuable 25 distribution rights for nearly 600 films have been unexploited for over two years. The Trustee in 26 the Bankruptcy Proceedings claims to control those rights, yet has failed to enter into any 27 agreements to exploit the rights and has failed to collect film revenues from any of the domestic 28 or international distributors that had prior agreements with Plaintiffs or affiliated entities.
30 COMPLAINT
1 B. Plaintiffs’ Value And Businesses Are Diminished By The Ongoing Litigation 2 129. In addition, Plaintiffs have suffered a diminution in overall value as a direct result 3 of the bankruptcy filings and the appointment of a Trustee to oversee the Debtors. With the 4 valuable film rights being unexploited for two years, those rights have decreased in value by 5 several fold. As a result, Bergstein’s investment of capital in the Debtors is now virtually 6 worthless, and his notes to the Debtors evidencing several loans made to them remain unpaid and 7 likely never will be repaid.
8 130. Plaintiffs have lost the ability to enter into virtually any business transaction as a 9 result of the very public pillory of Bergstein, his business reputation, and that of any business
10 transaction with which he has been identified. There have been numerous articles written about 11 Bergstein and his businesses since the filing of the Bankruptcy Proceedings. Of those articles, 12 more than 60 were authored by a reporter from the Hollywood Reporter, who spoke with both 13 Molner and Tregub on numerous occasions. These articles characterize Bergstein in the most 14 degrading terms. As a result of the public vilification and demonization of Bergstein, he has lost 15 several business opportunities, not just in the entertainment industry, but other business spheres
WEINGARTEN BROWN LLP 16 as well, costing him millions of dollars in fees and revenues. Bergstein’s relationships with 17 financiers, bankers, investors, and other lenders has been severely and nearly irreparably
18 damaged.
19 131. Defendants knew or should have known of Plaintiffs’ efforts to sell films on 20 behalf of PlaintiffsDEADLINE.com and affiliated entities and otherwise conduct business relating to their film 21 distribution rights. Defendants also knew or should have known that Plaintiffs had successful 22 relationships with multiple international distributors for their films.
23 132. Defendants knew or should have known that their actions as described herein 24 would cause Plaintiffs to lose the ability to sell or distribute films as they had done in the past.
25 C. Bergstein Loses The Benefit Of His Miramax Deal Because Of The Ongoing 26 Litigation 27 133. In late 2009, Bergstein learned of an opportunity to acquire the Miramax Film 28 Company (“Miramax”) from The Walt Disney Company (“Disney”). Thereafter, Bergstein
31 COMPLAINT
1 actively pursued this opportunity. Bergstein put a substantial amount of his own time, energy, 2 and money into the potential acquisition. Among Bergstein’s efforts were: (1) running due 3 diligence for the acquisition; and (2) negotiating the structure, terms, and documents with 4 Disney. Through the negotiations, Bergstein obtained agreement with Disney on terms that 5 would prove very favorable to the ultimate buyer.
6 134. Molner, Aramid, and Defendants generated a litany of negative press about 7 Bergstein as a result of their litigation and bankruptcy filings at approximately the same time as 8 Bergstein’s negotiations with Disney. As described herein, these litigation and bankruptcy 9 filings were based largely on Plaintiffs’ and affiliated entities’ confidential, privileged, and/or
10 proprietary information Defendants obtained from Tregub.
11 135. Based on the timing of Defendants’ litigation activities, Defendants’ improper and 12 unlawful actions were designed to inflict as much harm on Bergstein as possible. This included 13 tarnishing Bergstein in the eyes of Disney and the other individuals and entities involved with 14 the Miramax acquisition.
15 136. Bergstein took on a less visible role in the Miramax acquisition as a result of the
WEINGARTEN BROWN LLP 16 negative press about Bergstein generated by Molner, Aramid, and Defendants.
17 137. The Miramax acquisition closed in December 2010. It was the largest transaction
18 in the independent film space in ten years. It has been an overwhelming success due to 19 Bergstein’s well thought out negotiating strategy. 20 138. BergsteinDEADLINE.com did not reap the substantial benefits that he had sown with his Miramax 21 acquisition plan and his work on the acquisition. This resulted from Bergstein’s lower visibility 22 after Molner, Aramid, and Defendants launched their improper litigation campaign premised on 23 Plaintiffs’ and other affiliated entities’ confidential, privileged, and/or proprietary information 24 obtained from Tregub.
25 139. Prior to the harm resulting from Defendants’ litigation activities, Bergstein put 26 together the Miramax acquisition. Bergstein was to be a continuing major participant in the 27 venture going forward. Additionally, there was a plan to move other assets into Miramax that 28 would have greatly increased the value of those assets and of Miramax (beyond the substantial
32 COMPLAINT
1 increase in value that Miramax has already seen as a result of Bergstein’s work). Moreover, 2 Bergstein would have obtained a very valuable springboard into many other larger transactions 3 through a successful execution of the Miramax acquisition while playing a leading role in the 4 process would have provided.
5 140. However, Defendants’ litigation activities completely changed the dynamics of 6 the Miramax acquisition and Bergstein’s role in the acquisition and the result has been a 7 substantial reduction in the benefits of that deal.
8 141. Bergstein’s compensation was set forth in a series of agreements referred to as the 9 “Miramax Acquisition Agreements.” Under the Miramax Acquisition Agreements, Bergstein
10 and his affiliated entities were entitled to: (1) a $6.1 million payment at the closing of the 11 Miramax acquisition; (2) a $6.1 million deferred payment payable at the earlier of five years 12 after closing of the acquisition or the occurrence of other specified events; (3) a 3.33% interest in 13 the new Miramax company; and (4) a consulting agreement of at least one year in duration.
14 142. Bergstein and his affiliated entities have not received the overwhelming majority 15 of the compensation that they were promised under the Miramax Acquisition Agreements.
WEINGARTEN BROWN LLP 16 143. Defendants knew or should have known about Bergstein’s efforts to acquire 17 Miramax given their familiarity with the entertainment industry and Bergstein as well as their
18 relationships with Molner, Aramid, and Tregub (all of whom were knowledgeable about 19 Bergstein’s business). Additionally, Defendants knew or should have known that their conduct 20 would damage BergsDEADLINE.comtein’s pursuit of Miramax and/or result in a diminished role for Bergstein in 21 the Miramax acquisition.
22 144. As a result of Defendants’ wrongful conduct, Bergstein did not receive the benefit 23 to which he was entitled and that he would have otherwise received as part of the Miramax 24 acquisition.
25 145. Defendants’ wrongful conduct was a substantial factor in causing Bergstein to 26 lose the benefit he was entitled as part of the Miramax acquisition. 27 28
33 COMPLAINT
1 FIRST CAUSE OF ACTION 2 For Aiding And Abetting Breach Of Fiduciary Duty 3 By All Plaintiffs Against All Defendants 4 146. Plaintiffs hereby reallege and incorporate Paragraphs 1-145, inclusive, as though 5 fully set forth herein.
6 147. Tregub had a fiduciary duty to Plaintiffs and affiliated entities arising out of her 7 attorney-client, professional, and personal relationships with them. Plaintiffs and affiliated 8 entities placed their trust and confidence in Tregub due to their retention of her as counsel, her 9 representation of them as counsel, and their relationships with her. Plaintiffs and affiliated
10 entities believed that Tregub would act in their best interests and not work against their interests.
11 148. Tregub breached her fiduciary duty to Plaintiffs and affiliated entities by taking 12 multiple actions including, but not limited to: (1) stealing their confidential, privileged, and/or 13 proprietary information; (2) misusing their confidential, privileged, and/or proprietary 14 information; (3) sharing and disseminating their confidential, proprietary, and/or privileged 15 information; (4) providing their confidential, privileged, and/or proprietary information to
WEINGARTEN BROWN LLP 16 Aramid and Defendants; (5) assisting Aramid and Defendants in filing legal proceedings against 17 Plaintiffs and affiliated entities; (6) working for and with Aramid and Defendants while
18 representing Plaintiffs and affiliated entities in ongoing litigation and professional work; and (7) 19 using her knowledge of Plaintiffs’ and the affiliated entities’ finances and operations to 20 maximize the harmDEADLINE.com caused to Plaintiffs by her actions. 21 149. Defendants knew of Tregub’s fiduciary duty to Plaintiffs and affiliated entities. 22 They knew that Tregub represented Plaintiffs and affiliated entities in past and ongoing 23 litigation. They also knew that Tregub had access to substantial amounts of Plaintiffs’ and 24 affiliated entities’ confidential, privileged, and/or proprietary information. Additionally, 25 Defendants are attorneys themselves and are well familiar with the duties owed to clients and 26 former clients.
27 150. Additionally, Defendants knew that Tregub breached her fiduciary duty to 28 Plaintiffs and affiliated entities. Specifically, Defendants knew that Tregub shared and
34 COMPLAINT
1 disseminated Plaintiffs’ and affiliated entities’ confidential, proprietary, and/or privileged 2 information. Defendants also knew that Tregub: (1) assisted Aramid and Defendants with 3 litigation against Plaintiffs and affiliated entities; and (2) used her knowledge of Plaintiffs’ and 4 the affiliated entities’ finances and operations to maximize the harm caused to Plaintiffs by her 5 actions.
6 151. Defendants knowingly provided substantial assistance to Tregub in breaching her 7 fiduciary duties. Defendants: (1) solicited and obtained from Tregub confidential, privileged, 8 and/or proprietary information of Plaintiffs and affiliated entities; (2) used the confidential, 9 privileged, and/or proprietary information that Tregub had learned in her capacity as a lawyer for
10 Plaintiffs and affiliated entities; (3) suggested, assisted, and/or encouraged Tregub to contact 11 former employees of some or all of the Plaintiffs and affiliated entities to obtain information of 12 and about Plaintiffs affiliated entities; (4) used the confidential, privileged, and/or proprietary 13 information that Tregub learned from the former employees in litigation and bankruptcy 14 proceedings; (5) encouraged and worked with Tregub to prepare declarations and other pleadings 15 that were used in the involuntary bankruptcy proceedings and against Plaintiffs in other
WEINGARTEN BROWN LLP 16 litigation; (6) invited Tregub to attend strategy sessions with Defendants and Aramid; (7) used, 17 shared, and disseminated during these strategy sessions Plaintiffs’ and affiliated entities’
18 confidential, privileged, and/or proprietary information that had been obtained by Tregub; and 19 (8) assisted Tregub in disrupting Plaintiffs’ efforts to discover the nature of Tregub’s and 20 Defendants’ tortiousDEADLINE.com acts. 21 152. Defendants’ assistance to Tregub in breaching her fiduciary duties to Plaintiffs 22 was a substantial factor in causing Plaintiffs’ harm. Defendants used the information Tregub 23 provided in multiple litigation and bankruptcy proceedings which Tregub did not have the 24 necessary skill or means to accomplish without Defendants’ assistance.
25 153. As a direct and proximate result of the conduct of Defendants as hereinabove 26 alleged, Plaintiffs have suffered monetary damages in an amount that they are presently unable 27 to ascertain but which is an amount in excess of several millions of dollars including, but not 28 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and
35 COMPLAINT
1 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 2 opportunities, and other harm. Plaintiffs will seek leave to amend this complaint to allege the 3 exact amount of such damage when they have ascertained the same.
4 154. The intentional actions of Defendants as alleged herein constitute acts of 5 oppression, fraud, and malice. Plaintiffs, therefore, are entitled to recover punitive damages in 6 addition to their actual damages.
7 SECOND CAUSE OF ACTION 8 For Intentional Interference With Contractual Relations 9 By All Plaintiffs Against All Defendants
10 155. Plaintiffs hereby reallege and incorporate Paragraphs 1-154 inclusive, as though 11 fully set forth herein.
12 156. Pursuant to oral agreements with each Plaintiff (the “Attorney-Client 13 Agreements”), Tregub represented each Plaintiff in various business and litigation matters. This 14 work included representing certain Plaintiffs in litigation involving Aramid.
15 157. In the course of her representation of Plaintiffs, Tregub was privy to massive
WEINGARTEN BROWN LLP 16 amounts of confidential, privileged, and/or proprietary information. This information was 17 imparted to Tregub in confidence so that Plaintiffs could obtain her legal advice on a myriad of
18 issues relating to their respective businesses, business plans, and litigation strategies, among 19 other things. 20 158. EachDEADLINE.com of the Attorney-Client Agreements contained an implied-by-law obligation 21 on the part of Tregub to: (1) maintain inviolate the confidence of, and at every peril to herself to 22 preserve the secrets of, each Plaintiff in matters relating to Tregub’s then-existing or former 23 representation of Plaintiffs; and (2) refrain from acting in any way that would injure any Plaintiff 24 in matters relating to Tregub’s present or former representation of Plaintiffs. That duty, which 25 continues even after the attorney-client relationship ends, is firmly entrenched in case law and 26 codified in Section 6068 of the California Business and Professions Code and in the California 27 Rules of Professional Conduct that govern the obligations of California lawyers including Rule 28 3-100.
36 COMPLAINT
1 159. Defendants knew of the Attorney-Client Agreements. However, Defendants 2 intentionally sought to have Tregub breach those agreements by: (1) providing confidential, 3 privileged, and/or proprietary information to Defendants and (2) assisting in preparing multiple 4 litigation and bankruptcy proceedings against Plaintiffs and affiliated entities.
5 160. Defendants intended to disrupt the performance of the Attorney-Client 6 Agreements and caused Tregub to breach the agreements. For example, Defendants intended to 7 use the confidential, privileged, and/or proprietary information obtained and shared by Tregub in 8 the litigation and bankruptcy proceedings against Plaintiffs and affiliated entities. Defendants 9 also directed Tregub to obtain additional confidential, privileged, and/or proprietary information
10 by contacting former employees of Plaintiffs and affiliated entities that could be used to sabotage 11 and destroy Plaintiffs and affiliated entities.
12 161. Defendants’ conduct in inducing Tregub to breach her Attorney-Client 13 Agreements was a substantial factor in causing Plaintiffs’ harm. Defendants used the 14 information Tregub provided to initiate multiple litigation and bankruptcy proceedings which 15 Tregub did not have the necessary skill or means to accomplish without Defendants’ assistance.
WEINGARTEN BROWN LLP 16 162. As a direct and proximate result of the conduct of Defendants as hereinabove 17 alleged, Plaintiffs have suffered monetary damages in an amount that they are presently unable
18 to ascertain but which is an amount in excess of several millions of dollars including, but not 19 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 20 bankruptcy proceedings,DEADLINE.com lost profits, diminution in value of Entity Plaintiffs, lost business 21 opportunities, and other harm. Plaintiffs will seek leave to amend this complaint to allege the 22 exact amount of such damage when they have ascertained the same.
23 163. The intentional actions of Defendants as alleged herein constitute acts of 24 oppression, fraud, and malice. Plaintiffs, therefore, are entitled to recover punitive damages in 25 addition to their actual damages. 26 27 28
37 COMPLAINT
1 THIRD CAUSE OF ACTION 2 For Intentional Interference With Prospective Economic Advantage 3 By All Plaintiffs Against All Defendants 4 164. Plaintiffs hereby reallege and incorporate Paragraphs 1-163, inclusive, as though 5 fully set forth herein.
6 165. As of early 2010, the films and film libraries in which Plaintiffs had an interest 7 were being marketed and sold domestically and internationally. Plaintiffs or affiliates of 8 Plaintiffs had existing economic relationships with multiple domestic and international film 9 distributors which: (1) had previously purchased films whose rights were owned by Plaintiffs or
10 affiliated entities; and (2) would have been expected to purchase the future film rights owned by 11 Plaintiffs or affiliated entities. These future sales would have resulted in a future economic 12 benefit to Plaintiffs and affiliated entities.
13 166. However, despite these existing relationships, the distribution rights as to the 14 films in the film libraries with which Plaintiffs and affiliated entities are associated have not been 15 exploited for the past two plus years because of the improperly filed Bankruptcy Proceedings and
WEINGARTEN BROWN LLP 16 Aramid Loan Litigation. In addition, as to those distributors which had agreements in place with 17 Plaintiffs and affiliated entities in 2010 to distribute the films and film libraries in which
18 Plaintiffs had an interest, the revenues earned from the distribution of those films has not been 19 received or collected as a result of the Bankruptcy Proceedings. 20 167. DefendantsDEADLINE.com knew or should have known of Plaintiffs’ and their affiliates existing 21 successful relationships with multiple domestic and international film distributors for their films 22 given their familiarity with the entertainment industry and Plaintiffs as well as their relationships 23 with Molner, Aramid, and Tregub (all of whom were knowledgeable about Bergstein’s 24 business).
25 168. Defendants knew or should have known that their actions as described herein 26 would cause Plaintiffs and affiliated entities lost sales, revenues and profits, because of the taint 27 of the Bankruptcy Proceedings and the imposition of a trustee over the Debtors. 28
38 COMPLAINT
1 169. Defendants intended to disrupt Plaintiffs’ and affiliated entities’ economic 2 relationships with film distributors as part of Molner’s and Aramid’s war against Bergstein and 3 his affiliated entities.
4 170. As described above, Defendants’ engaged in wrongful conduct. Among other 5 things, Defendants: (1) used Tregub, the attorney for Plaintiffs and affiliated entities, to obtain 6 confidential, privileged, and/or proprietary information about Plaintiffs and affiliated entities; (2) 7 used the confidential, privileged, and/or proprietary information provided by Tregub to initiate 8 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) misused 9 the bankruptcy and litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on
10 Plaintiffs and Plaintiffs’ economic relationships with third parties (including multiple 11 distributors) through their improper use of the bankruptcy process and Plaintiffs’ and affiliated 12 entities’ confidential, privileged, and/or proprietary information.
13 171. Plaintiffs’ relationships with the multiple film distributors were disrupted through 14 Defendants’ actions.
15 172. Because the rights to distribute the films that comprise the film libraries have not
WEINGARTEN BROWN LLP 16 been exploited for over two years or the revenues collected from pre-Bankruptcy filing contracts 17 and agreements, Plaintiffs have been and continue to be harmed. Defendants’ wrongful conduct
18 was a substantial factor in causing that harm.
19 173. As a direct and proximate result of the conduct of Defendants as hereinabove 20 alleged, PlaintiffsDEADLINE.com have suffered monetary damages in an amount that they are presently unable 21 to ascertain but which is an amount in excess of several millions of dollars including, but not 22 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 23 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 24 opportunities, and other harm. Plaintiffs will seek leave to amend this complaint to allege the 25 exact amount of such damage when they have ascertained the same.
26 174. The intentional actions of Defendants as alleged herein constitute acts of 27 oppression, fraud, and malice. Plaintiffs, therefore, are entitled to recover punitive damages in 28 addition to their actual damages.
39 COMPLAINT
1 FOURTH CAUSE OF ACTION 2 For Negligent Interference With Prospective Economic Advantage 3 By All Plaintiffs Against All Defendants 4 175. Plaintiffs hereby reallege and incorporate Paragraphs 1-174, inclusive, as though 5 fully set forth herein.
6 176. As of early 2010, the films and film libraries in which Plaintiffs had an interest 7 were being marketed and sold domestically and internationally. Plaintiffs or affiliates of 8 Plaintiffs had existing economic relationships with multiple domestic and international film 9 distributors which: (1) had previously purchased films whose rights were owned by Plaintiffs or
10 affiliated entities; and (2) would have been expected to purchase the future film rights owned by 11 Plaintiffs or affiliated entities. These future sales would have resulted in a future economic 12 benefit to Plaintiffs and affiliated entities.
13 177. However, despite these existing relationships, the distribution rights as to the 14 films in the film libraries with which Plaintiffs and affiliated entities are associated have not been 15 exploited for the past two plus years because of the improperly filed Bankruptcy Proceedings and
WEINGARTEN BROWN LLP 16 Aramid Loan Litigation. In addition, as to those distributors which had agreements in place with 17 Plaintiffs and affiliated entities in 2010 to distribute the films and film libraries in which
18 Plaintiffs had an interest, the revenues earned from the distribution of those films has not been 19 received or collected as a result of the Bankruptcy Proceedings. 20 178. DefendantsDEADLINE.com knew or should have known of Plaintiffs’ and affiliated entities’ 21 existing successful relationships with multiple domestic and international film distributors for 22 their films given their familiarity with the entertainment industry and Plaintiffs as well as their 23 relationships with Molner, Aramid, and Tregub (all of whom were knowledgeable about 24 Bergstein’s business).
25 179. Defendants knew or should have known that Plaintiffs’ and affiliated entities’ 26 existing economic relationships would be disrupted if Defendants did not act with reasonable 27 care. Additionally, Defendants knew or should have known that their actions as described herein 28
40 COMPLAINT
1 would cause Plaintiffs and affiliated entities lost sales, revenues and profits, because of the taint 2 of the Bankruptcy Proceedings and the imposition of a trustee over the Debtors.
3 180. In performing the acts alleged herein, Defendants acted without reasonable care 4 and/or with the intent of maximizing the negative consequences of their actions on Plaintiffs and 5 affiliated entities.
6 181. As described above, Defendants’ engaged in wrongful conduct. Among other 7 things, Defendants: (1) used Tregub, the attorney for Plaintiffs and affiliated entities, to obtain 8 confidential, privileged, and/or proprietary information about Plaintiffs and affiliated entities; (2) 9 used the confidential, privileged, and/or proprietary information provided by Tregub to initiate
10 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) misused 11 the bankruptcy and litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on 12 Plaintiffs and Plaintiffs’ economic relationships with third parties (including multiple 13 distributors) through their improper use of the bankruptcy process and Plaintiffs’ and affiliated 14 entities’ confidential, privileged, and/or proprietary information.
15 182. Plaintiffs’ relationships with the multiple film distributors were disrupted through
WEINGARTEN BROWN LLP 16 Defendants’ actions.
17 183. Because the rights to distribute the films that comprise the film libraries have not
18 been exploited for over two years or the revenues collected from pre-Bankruptcy filing contracts 19 and agreements, Plaintiffs have been and continue to be harmed. Defendants’ wrongful conduct 20 was a substantialDEADLINE.com factor in causing that harm. 21 184. As a direct and proximate result of the conduct of Defendants as hereinabove 22 alleged, Plaintiffs have suffered monetary damages in an amount that they are presently unable 23 to ascertain but which is an amount in excess of several millions of dollars including, but not 24 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 25 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 26 opportunities, and other harm. Plaintiffs will seek leave to amend this complaint to allege the 27 exact amount of such damage when they have ascertained the same. 28
41 COMPLAINT
1 FIFTH CAUSE OF ACTION 2 For Intentional Interference With Prospective Economic Advantage 3 By Bergstein Against All Defendants 4 185. Plaintiffs hereby reallege and incorporate Paragraphs 1-184, inclusive, as though 5 fully set forth herein.
6 186. Prior to the filing of the Bankruptcy Proceedings, Bergstein had economic 7 relationships with financiers, bankers, investors, and other lenders that provided funding and 8 capital to support business ventures in which Bergstein was involved. These relationships 9 would likely have resulted in economic benefit to Bergstein. However, Bergstein has lost the
10 ability to enter into virtually any business transaction as a result of Defendants’ conduct in this 11 matter as described herein. Bergstein’s relationships with financiers, bankers, investors, and 12 other lenders has been severely and nearly irreparably damaged.
13 187. Defendants knew or should have known about Bergstein’s economic relationship 14 with financiers, bankers, investors and other lenders given their familiarity with the 15 entertainment industry and Bergstein as well as their relationships with Molner, Aramid, and
WEINGARTEN BROWN LLP 16 Tregub (all of whom were knowledgeable about Bergstein’s business).
17 188. Defendants intended to disrupt Bergstein’s economic relationship with
18 Bergstein’s financiers, bankers, investors and other lenders, through their litigation conduct, 19 which was designed to inflict maximum damage on Bergstein’s business and economic 20 relationships. DEADLINE.com 21 189. As described above, Defendants’ engaged in wrongful conduct. Among other 22 things, Defendants: (1) solicited Tregub, the attorney for Plaintiffs and affiliated entities, for 23 confidential, privileged, and/or proprietary information of Plaintiffs and affiliated entities; (2) 24 used the confidential, privileged, and/or proprietary information obtained from Tregub to initiate 25 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) abused 26 the litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on Plaintiffs and Plaintiffs’ 27 economic relationships with third parties (including Bergstein’s financiers, bankers, investors, 28
42 COMPLAINT
1 and other lenders) through their improper use of the litigation process and Plaintiffs’ and 2 affiliated entities’ confidential, privileged, and/or proprietary information.
3 190. Bergstein’s relationships with his financiers, bankers, investors, and other lenders 4 were disrupted through Defendants’ actions.
5 191. Because Bergstein has been unable to secure the same level of financing on 6 comparable terms that he was able to obtain prior to the filing of the improper Bankruptcy 7 Proceedings, Bergstein has been and continues to be harmed. Defendants’ wrongful conduct was 8 a substantial factor in causing that harm.
9 192. As a direct and proximate result of the conduct of Defendants as hereinabove
10 alleged, Bergstein has suffered monetary damages in an amount that he is presently unable to 11 ascertain but which is an amount in excess of several millions of dollars including, but not 12 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 13 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 14 opportunities, and other harm. Bergstein will seek leave to amend this complaint to allege the 15 exact amount of such damage when he has ascertained the same.
WEINGARTEN BROWN LLP 16 193. The intentional actions of Defendants as alleged herein constitute acts of 17 oppression, fraud, and malice. Bergstein, therefore, is entitled to recover punitive damages in
18 addition to his actual damages.
19 SIXTH CAUSE OF ACTION 20 ForDEADLINE.com Negligent Interference With Prospective Economic Advantage 21 By Bergstein Against All Defendants 22 194. Plaintiffs hereby reallege and incorporate Paragraphs 1-193, inclusive, as though 23 fully set forth herein.
24 195. Prior to the filing of the Bankruptcy Proceedings, Bergstein had economic 25 relationships with financiers, bankers, investors, and other lenders that provided funding and 26 capital to support business ventures in which Bergstein was involved. These relationships 27 would likely have resulted in economic benefit to Bergstein. However, Bergstein has lost the 28 ability to enter into virtually any business transaction as a result of Defendants’ conduct in this
43 COMPLAINT
1 matter as described herein. Bergstein’s relationships with financiers, bankers, investors, and 2 other lenders has been severely and nearly irreparably damaged.
3 196. Defendants knew or should have known about Bergstein’s economic relationship 4 with financiers, bankers, investors and other lenders given their familiarity with the 5 entertainment industry and Bergstein as well as their relationships with Molner, Aramid, and 6 Tregub (all of whom were knowledgeable about Bergstein’s business).
7 197. Defendants knew or should have known that Bergstein’s existing economic 8 relationships would be disrupted if Defendants did not act with reasonable care.
9 198. In performing the acts alleged herein, Defendants acted without reasonable care
10 and/or with the intent of maximizing the negative consequences of their actions on Plaintiffs and 11 affiliated entities.
12 199. As described above, Defendants’ engaged in wrongful conduct. Among other 13 things, Defendants: (1) solicited Tregub, the attorney for Plaintiffs and affiliated entities, for 14 confidential, privileged, and/or proprietary information of Plaintiffs and affiliated entities; (2) 15 used the confidential, privileged, and/or proprietary information obtained from Tregub to initiate
WEINGARTEN BROWN LLP 16 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) abused 17 the litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on Plaintiffs and Plaintiffs’
18 economic relationships with third parties (including Bergstein’s financiers, bankers, investors, 19 and other lenders) through their improper use of the litigation process and Plaintiffs’ and 20 affiliated entities’DEADLINE.com confidential, privileged, and/or proprietary information. 21 200. Bergstein’s relationships with his financiers, bankers, investors, and other lenders 22 were disrupted through Defendants’ actions.
23 201. Because Bergstein has been unable to secure the same level of financing on 24 comparable terms that he was able to obtain prior to the filing of the improper Bankruptcy 25 Proceedings, Bergstein has been and continues to be harmed. Defendants’ wrongful conduct was 26 a substantial factor in causing that harm.
27 202. As a direct and proximate result of the conduct of Defendants as hereinabove 28 alleged, Bergstein has suffered monetary damages in an amount that he is presently unable to
44 COMPLAINT
1 ascertain but which is an amount in excess of several millions of dollars including, but not 2 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 3 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 4 opportunities, and other harm. Bergstein will seek leave to amend this complaint to allege the 5 exact amount of such damage when he has ascertained the same.
6 SEVENTH CAUSE OF ACTION 7 For Intentional Interference With Prospective Economic Advantage 8 By Bergstein Against All Defendants 9 203. Plaintiffs hereby reallege and incorporate Paragraphs 1-202, inclusive, as though
10 fully set forth herein.
11 204. In late 2009, Bergstein learned of an opportunity to purchase Miramax from 12 Disney. Bergstein actively pursued the opportunity and obtained an agreement with Disney on 13 terms that would prove to be very favorable to the buyer.
14 205. Meanwhile, Molner, Aramid, and Defendants generated a barrage of bad press 15 about Bergstein through their litigation campaign. The litigation initiated by Molner, Aramid,
WEINGARTEN BROWN LLP 16 and Defendants was based largely on the confidential, privileged, and/or proprietary information 17 that had been obtained from Tregub.
18 206. As a result of Defendants’ litigation campaign, Bergstein took a lower visibility 19 role during the Miramax acquisition process. 20 207. Bergstein,DEADLINE.com Disney, and the affiliated entities and individuals working on the 21 Miramax acquisition were in an economic relationship that would have benefitted Bergstein.
22 208. Defendants knew or should have known about Bergstein’s economic relationship 23 given their familiarity with the entertainment industry and Bergstein, and their relationships with 24 Molner, Aramid, and Tregub (all of whom were knowledgeable about Bergstein’s business).
25 209. Defendants intended to disrupt Bergstein’s economic relationship through their 26 litigation campaign which was timed to inflict maximum damage on Bergstein.
27 210. As described herein, Defendants’ engaged in wrongful conduct. For example, 28 Defendants: (1) solicited Tregub, the attorney for Plaintiffs and affiliated entities, for
45 COMPLAINT
1 confidential, privileged, and/or proprietary information of Plaintiffs and affiliated entities; (2) 2 used the confidential, privileged, and/or proprietary information obtained from Tregub to initiate 3 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) abused 4 the litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on Plaintiffs and Plaintiffs’ 5 economic relationships with third parties (including Disney and the affiliated entities and 6 individuals working on the Miramax acquisition) through their improper use of the litigation 7 process and Plaintiffs’ and affiliated entities’ confidential, privileged, and/or proprietary 8 information.
9 211. Bergstein’s economic relationship with Disney and the affiliated entities and
10 individuals working on the Miramax acquisition was disrupted as Bergstein took on a lower 11 visibility role as a result of Defendants’ conduct.
12 212. Bergstein was harmed by Defendants’ conduct as Bergstein ultimately received 13 far less compensation in connection with the Miramax acquisition than he would otherwise have 14 been due or than was promised to him. Defendants’ wrongful conduct was a substantial factor in 15 causing that harm.
WEINGARTEN BROWN LLP 16 213. As a result of Bergstein’s less visible role in the Miramax acquisition, Bergstein 17 was harmed. Defendants’ wrongful conduct was a substantial factor in causing that harm.
18 214. As a direct and proximate result of the conduct of Defendants as hereinabove 19 alleged, Bergstein has suffered monetary damages in an amount that he is presently unable to 20 ascertain but whichDEADLINE.com is an amount in excess of several millions of dollars including, but not 21 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and 22 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 23 opportunities, and other harm. Bergstein will seek leave to amend this complaint to allege the 24 exact amount of such damage when he has ascertained the same.
25 215. The intentional actions of Defendants as alleged herein constitute acts of 26 oppression, fraud, and malice. Bergstein, therefore, is entitled to recover punitive damages in 27 addition to their actual damages. 28
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1 EIGHTH CAUSE OF ACTION 2 For Negligent Interference With Prospective Economic Advantage 3 By Bergstein Against All Defendants 4 216. Plaintiffs hereby reallege and incorporate Paragraphs 1-215, inclusive, as though 5 fully set forth herein.
6 217. In late 2009, Bergstein learned of an opportunity to purchase Miramax from 7 Disney. Bergstein actively pursued the opportunity and obtained an agreement with Disney on 8 terms that would prove to be very favorable to the buyer.
9 218. Meanwhile, Molner, Aramid, and Defendants generated a barrage of bad press
10 about Bergstein through their litigation campaign. The litigation initiated by Molner, Aramid, 11 and Defendants was based largely on the confidential, privileged, and/or proprietary information 12 that had been obtained from Tregub.
13 219. As a result of Defendants’ litigation campaign, Bergstein took a lower visibility 14 role during the Miramax acquisition process.
15 220. Bergstein, Disney, and the affiliated entities and individuals working on the
WEINGARTEN BROWN LLP 16 Miramax acquisition were in an economic relationship that would have benefitted Bergstein.
17 221. Defendants knew or should have known about Bergstein’s economic relationship
18 given their familiarity with the entertainment industry and Bergstein, and their relationships with 19 Molner, Aramid, and Tregub (all of whom were knowledgeable about Bergstein’s business). 20 222. DefendantsDEADLINE.com knew or should have known that Bergstein’s economic relationship 21 would be disrupted if they failed to exercise reasonable case.
22 223. In performing the acts alleged herein, Defendants acted without reasonable care 23 and/or with the intent of maximizing the negative consequences of their actions on Bergstein.
24 224. As described herein, Defendants’ engaged in wrongful conduct. For example, 25 Defendants: (1) solicited Tregub, the attorney for Plaintiffs and affiliated entities, for 26 confidential, privileged, and/or proprietary information of Plaintiffs and affiliated entities; (2) 27 used the confidential, privileged, and/or proprietary information obtained from Tregub to initiate 28 bankruptcy and other litigation proceedings against Plaintiffs and affiliated entities; (3) abused
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1 the litigation process to cause Plaintiffs’ harm; and (4) inflicted harm on Plaintiffs and Plaintiffs’ 2 economic relationships with third parties (including multiple international film distributors) 3 through their improper use of the litigation process and Plaintiffs’ and affiliated entities’ 4 confidential, privileged, and/or proprietary information.
5 225. Bergstein’s economic relationship with Disney and the affiliated entities and 6 individuals working on the Miramax acquisition was disrupted as Bergstein took on a lower 7 visibility role as a result of Defendants’ conduct.
8 226. Bergstein was harmed by Defendants’ conduct as Bergstein ultimately received 9 far less compensation in connection with the Miramax acquisition than he would otherwise have
10 been due or than was promised to him. Defendants’ wrongful conduct was a substantial factor in 11 causing that harm.
12 227. As a result of Bergstein’s less visible role in the Miramax acquisition, Bergstein 13 was harmed. Defendants’ wrongful conduct was a substantial factor in causing that harm.
14 228. As a direct and proximate result of the conduct of Defendants as hereinabove 15 alleged, Bergstein has suffered monetary damages in an amount that he is presently unable to
WEINGARTEN BROWN LLP 16 ascertain but which is an amount in excess of several millions of dollars including, but not 17 limited to, attorneys’ fees incurred as a result of Defendants’ initiation of multiple litigation and
18 bankruptcy proceedings, lost profits, diminution in value of Entity Plaintiffs, lost business 19 opportunities, and other harm. Bergstein will seek leave to amend this complaint to allege the 20 exact amount of DEADLINE.comsuch damage when he has ascertained the same. 21 NINTH CAUSE OF ACTION 22 For Unjust Enrichment 23 By All Plaintiffs Against All Defendants 24 229. Plaintiffs hereby reallege and incorporate Paragraphs 1-228, inclusive, as though 25 fully set forth herein.
26 230. Defendants have been retained as counsel for Aramid with respect to litigations 27 and bankruptcy proceedings against Plaintiffs and affiliated entities. 28
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1 231. Neale, Gross, and Levene Neale initiated involuntary bankruptcy proceedings 2 against Plaintiffs’ affiliated entities. Stroock and Rozansky initiated litigation against Plaintiffs.
3 232. Defendants provided legal services to Aramid before and after the filing of the 4 bankruptcy proceedings and the other litigation.
5 233. The legal services provided by Defendants to Aramid relied in large part on 6 Tregub’s assistance, and Plaintiffs’ and affiliated entities’ confidential, proprietary, and/or 7 privileged information that Defendants obtained from Tregub. As detailed herein, Defendants’ 8 solicitation, receipt, and use of this information was wrong, improper, and unjust.
9 234. Defendants have been paid for their legal services. The legal fees received are a
10 benefit received as a result of Defendants’ solicitation, receipt, and use of Plaintiffs’ and 11 affiliated entities’ confidential, proprietary, and/or privileged information.
12 235. Defendants received benefits at Plaintiffs’ expense from their wrong, improper, 13 and unjust actions including, but not limited to, legal fees they have been paid for their work.
14 236. Plaintiffs seek restitution from Defendants relating to their ill-gotten gains 15 received at Plaintiffs’ expense.
WEINGARTEN BROWN LLP 16 PRAYER 17 WHEREFORE, Plaintiffs, and each of them, pray for damages against Defendants as
18 follows:
19 1. Entry of judgment against Defendants on all counts of the Complaint 20 2. ForDEADLINE.com actual and consequential damages according to proof at trial but in anticipated 21 to be in excess of $100 million;
22 3. For restitution against Defendants; 23 4. For disgorgement of all fees and other benefits paid to Defendants; 24 5. For punitive damages in a sum sufficient to punish and make an example of 25 Defendants;
26 6. Entry of a permanent injunction enjoining Defendants and their respective 27 successors, agents, servants, officers, directors, employees, and all persons acting in concert with 28 them from pursuing the policies, acts, and practices complained of herein;
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