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Giant Screen Sports LLC v. Sky High Entertainment

June 28, 2007

GIANT SCREEN SPORTS LLC, ET AL. PLAINTIFFS,
v.
SKY HIGH ENTERTAINMENT, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Giant Screen Sports LLC's ("Giant Screen Films") and Giant Screen Films Vikings LLC's ("Giant Screen Vikings") (collectively referred to as "Giant Screen") motion for summary judgment on all of Defendant Canadian Imperial Bank of Commerce's ("CIBC") counterclaims brought against Giant Screen. This matter is also before the court on CIBC's motion for summary judgment on Counts VIII and IX in the second amended complaint. For the reasons stated below, we grant Giant Screen's motion for summary judgment and we grant CIBC's motion for summary judgment. In addition, we dismiss Count XI of Giant Screen's second amended complaint as a matter of law.

BACKGROUND

In October 2001, Defendant Sky High Entertainment ("Sky High") allegedly entered into a contract ("Films Contract") with Giant Screen Films under which Giant Screen Films was retained to distribute two films produced by Sky High entitled "Ultimate Gs" and "Adrenaline Rush" (collectively referred to as "Films"). According to Giant Screen, under the Films Contract, Giant Screen Films was to be the exclusive distributor of the Films. In November 2002, Sky High allegedly entered into a contract ("Vikings Contract") with Giant Screen Vikings under which Giant Screen Vikings was retained to distribute a film entitled "Vikings" ("Vikings Film").

Giant Screen contends that after the Vikings Contract was executed, Defendant Carl Samson ("Samson") falsified the terms of the Vikings Contract and forged a signature of a Giant Screen representative, Donald Kempf ("Kempf"), on the Vikings Contract so that Samson could obtain a loan from CIBC. According to Giant Screen, based upon the false information in the Vikings Contract, CIBC entered into a credit agreement ("Credit Agreement") under which it agreed to advance a loan to Sky High of approximately $2.7 million to finance the production of the Vikings Film. As part of the Credit Agreement, Sky High was allegedly required to enter into a Notice of Security, Direction of Payment and Distributor Acceptance ("Security Notice") and Giant Screen Films guaranteed Giant Screen Vikings' payment of $3 million to CIBC ("Guarantee"). In addition, as part of the Credit Agreement, Sky High entered into multi-party Pledgeholder Agreements ("Pledgeholder Agreements"). Giant Screen contends that Samson and Sky High failed to disclose the alterations to the terms of the Vikings Contract or the dealings between Sky High and CIBC.

CIBC alleges it agreed to extend financing to Sky High based on a number of agreements that were intended to limit the risk of CIBC's loan. Those agreements included the Guarantee, an insurance policy provided by Export Development Canada ("EDC") that was to insure the Guarantee, tax credits from the Canadian government to subsidize the production of the film, certain personal guarantees, a film completion guarantee, and a security interest in all of Sky High's movable property.

Giant Screen contends that it has fulfilled its obligations under the Films Contract and Vikings Contract by securing leases for the Films and the Vikings Film. However, Giant Screen claims that Sky High has refused to pay the amounts owed to Giant Screen under the Films Contract and Vikings Contract. Giant Screen also claims that in October 2004, CIBC contacted Giant Screen and demanded payments pursuant to the Security Notice and Giant Screen claims to have realized at that time the alleged fraud perpetrated by Samson and Sky High. Giant Screen also claims that when CIBC requested funds from Giant Screen, CIBC made false statements about Giant Screen's breach of its contractual obligations under the Security Notice. According to Giant Screen, in April 2005, it received a letter from CIBC indicating that it had entered into a settlement with Sky High.

Giant Screen also claims that in the Spring of 2005, Sky High was promoting a film entitled "Dinosaurs 3D" and that Sky High undermined Giant Screen's effort to distribute the Films by entering into various distribution agreements and linking promotion and distribution of the Films to "Dinosaurs 3D." Giant Screen contends that in the Summer of 2005, Sky High undermined Giant Screen's ability to distribute the Films by offering to distribute "Adrenaline Rush" for free to numerous theaters. Finally, Giant Screen alleges that Samson and Sky High told large-format theaters, post-production vendors, and others in the industry that Giant Screen was no longer distributing the Films, that the contracts were being terminated, and that the theaters and vendors should stop sending payments to Giant Screen and should cease communications with Giant Screen.

Giant Screen brought the instant action and includes in its second amended complaint a breach of contract claim against Sky High (Count I), a fraud claim against Sky High and Samson (Count II), a breach of the implied covenant of good faith and fair dealing claim against Sky High and Samson (Count III), an unjust enrichment claim against Sky High and Samson (Count IV), a quantum meruit claim against Sky High and Samson (Count V), a tortious interference with prospective business relations claim against Sky High and Samson (Count VI), a civil conspiracy claim against Sky High and Samson (Count VII), a defamation per se claim against CIBC (Count VIII), a tortious interference with prospective business relations ("TIPBR") claim against CIBC (Count IX), a declaratory judgment claim against Sky High and Samson (Count X), and a declaratory judgment claim against CIBC (Count XI). CIBC filed counterclaims and cross-claims and included a claim alleging breach of contract against Giant Screen (Counterclaim I), a claim alleging tortious interference with contract ("TIC") against Giant Screen (Counterclaim II), breach of contract claim against Samson (Cross-Claim III), breach of warranty claim against Samson (Cross-Claim IV), fraudulent inducement claim against Samson (Cross-Claim V), fraudulent inducement of a settlement agreement claim against Samson (Cross-Claim VI). CIBC moved for dismissal of Counts VIII and IX and on February 27, 2007, we denied CIBC's partial motion to dismiss. In addition, on January 16, 2007, Giant Screen and CIBC filed motions for sanctions against Sky High and Samson. On February 27, 2007, we granted in part and denied in part Giant Screen's motion for sanctions, granted in part and denied in part CIBC's motion for sanctions, and entered default judgment in favor of Giant Screen and CIBC against Samson and Sky High. CIBC moves for summary judgment on Counts VIII and IX of the second amended complaint. Giant Screen also moves for summary judgment on CIBC's counterclaims against Giant Screen.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In seeking a grant of summary judgment, the moving party must identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)(quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).

DISCUSSION

I. Giant Screen's Claims Against CIBC

CIBC moves for summary judgment on Giant Screen's defamation per se claim (Count VIII) and on Giant ...


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