(FILED: NEW YORK COUNTY CLERK 03/02/2011 Perera oaeeneeanan NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/02/2011 NEW YORK STATE SUPREME COURT COUNTY OF NEW YORK TONY LEECH, BRIAN INERFELD, and PROTOCOL PICTURES, INC., Plaintiffs, Index No._& 50 565 | [zen vs. ene THE WEINSTEIN COMPANY, LLC, RAINMAKER Plaintiffs designate New York ENTERTAINMENT INC., ESCAPE PRODUCTIONS ——_ County as the place for trial. INC., and JTM ESCAPE COMPANY LIMITED, Defendant To the Defendants: You ate hereby summoned and required to serve on Plaintiffs” attomeys an answer to the complaint in this action within twenty (20) days after the service of this summons, exclusive of the day of service, or within thirty (30) days after service is complete if this summons is not personally delivered to you within the State of New York. In case of your failure to answer, judgment will be taken against you by default for the rolicf dcmanded in the complaint, The basis of venue is CPLR § 503(a) and (c), in that Defendant The Weinstein Company, LLC, is a foreign corporation authorized to transact business in the State of New York, with its principal place of business located in New York County. Dated: New York, New York March 2, 2011 1790 Broadway, Suite 1501 New York, New York 10019 Tel, (212) 974-2400 Fax (212) 974-2944TO: THE WEINSTEIN COMPANY, LLC 375 Greenwich Street ‘New York, New York 10013 RAINMAKER ENTERTAINMENT, INC. 500-2025 West Broadway ‘Vancouver, B.C. Canada ESCAPE PRODUCTIONS, INC. 500-2025 West Broadway ‘Vancouver, B.C. Canada JTM ESCAPE COMPANY LIMITED Akara Building 24 DeCastro Street Wickams Cay 1 Road Town, Tortola British Virgin Islands‘NEW YORK STATE SUPREME COURT COUNTY OF NEW YORK TONY LEECH, BRIAN INERFELD, and PROTOCOL | me PICTURES, INC., Plaintiffs, Index No, 6 50 S@3 | 201) vs. COMPLAINT THE WEINSTEIN COMPANY, LLC, RAINMAKER, ENTERTAINMENT INC., ESCAPE PRODUCTIONS: INC., and JTM ESCAPE COMPANY LIMITED, Defendants. X Plaintiffs Tony Leech, Brian Inerfeld, an¢ Protocol Pictures, Inc. (collectively “Plaintiffs"), by theirattomeys, Judd Burstein, P.C., as and for their complaint against Defendants The Weinstein (Company, LLC, Rainmaker Entertainment Inc., Escape Productions Inc., and JTM Escape Company, Led. (collectively “Defendants”), allege as follows: INTRODUCTION 1. This case concemstwo out-of-control movie executives, the brothers Harvey and Bob Weinstein (collectively, the “Weinsteins”), who, through Defendant The Weinstein Company (*TWC”), sabotaged what should have been ahighly profitable movie through a potent combination of hubris, incompetence, profligate spending, and contempt for contractual obligations. 2. Worse still, the facts show that the Weinsteins are a real life version of Bialystock & Bloom (from the film and show “The Producers”) in that they in essence sold more than 100% of the potential profits from the film. The Weinsteins did so by using Plaintiffs’ right to share in back end profits on the movie as security for new funding from Defendant JTM Escape Company, Ltd. TIM’), Indeed, on or about June 16, 2010, a UCC-1 Financing Statement for such a securityinterest was filed with the Delaware Department of State. Nevertheless, when Plaintiffs rejected ‘TWC’s unwarranted demands that they reduce their entitlement to share in the profits of the film project, TWC fired Plaintiffs as a pretext so as to ensure that TWC would not run into trouble with their lender, JTM. 3. The truth of the allegations in this Complaint are perhaps best demonstrated by the fact that TWC paid Plaintiffs $500,000 merely so that Plaintiffs would delay filing this action and instead agree to TWC’s request for a private mediation that would take place after the Academy Awards. The allegations herein have nothing to do with the Academy Awards. Plainly, though, the ‘Weinsteins, knowing that they had been guilty ofthe incompetence and fraud alleged herein, did not want to take the chance that their reputations would be sullied by the truth at atime when the voting for the Oscars was underway. TWC has claimed that the $500,000 payment, which was made only after TWC had received the advice of David Boies, Esq., was extorted. Consequently, by way of this Complaint, Plaintiffs also seek a judgment declaring that the $500,000 was not the product of extortion. 4. Despite the Weinsteins’ renown as the founders of Miramax, they are utterly incapable of sceing an animated film through to completion. Rather, itis no coincidence that the Weinsteins’ successes in this genre have come through purchasing the rights to completed projects, as opposed to creating a movie out of whole clota. 5. Themoviein question here, Escape from Planet Earth (“Escape”), was the brainchild of the writer/director Plaintiff Tony Leech (“Leech”). Leech conceived of Escape as an animated action-comedy about an alien prison break from Area 51.6. Plaintiff Brian Inerfeld (“Inerfeld”), a film producer, negotiated a contract with Defendant The Weinstein Company (*TWC”) for the writing, development, and production of Escape that should have been extremely lucrative for Plaintiffs, In particular, in addition to millions of dollars in guaranteed up front money, once a modest earings threshold had been met, Plaintiffs stood to share in # hard floor of (¢., no less than) 20% of Escape's adjusted gross profit. Considering that the adjusted gross profit on a film that Leech had made with TWC immediately prior to Escape was more than $140 million, and Escape was a bigger movie, Plaintiffs stood to eam close to $50 million in back end participation alone. 7. Yet, Defendants frustrated Plaintiffs’ every effort to bring Escape into being. Just, by way of example: a. After locking the script ontwo separate occasions, the Weinsteins proceeded to unlock it, providing incessant, incoherent, and even contradictory notes that forced Leech to re-write the Escape script no less than seventeen (17) times; b. TW failed to grasp basic realities about the animation process, most egregiously that after spending tens of millions of dollars in creating characters, you cannot simply reconfigure them at the drop of hat to meet the ‘Weinsteins’ current whimsy; c. In terms of casting, Harvey Weinstein thought that it was more sensible to pay Kevin Bacon $25,000 not to be in a role that he had agreed to do for $50,000, because $50,000 was supposedly too much to pay Mr, Bacon; andd. TWCeviscerated the movie’s budget by keeping 200+ animators on payroll to in effect do nothing while Leech tried in vain to get a locked script. 8. Plaintiffs sought repeatedly but “0 no avail to convince Defendants to shut down production to avoid throwing away money on animating a film that had no seript. In fact, TWC’s ‘own President was so out of touch thet he thought only $9 million had been expended on a movie with a budget of some $30 million — while the figure was actually $19 million, When Inerfeld ‘sought to speak directly to Harvey Weinstein abcut Escape’s financial problems, he would not take or return Inerfeld’s calls, finally stating that: “I take Obama’s calls.” 9. Despite the extraordinary amount of time and energy that Plaintiffs expended accommodating TWC on Escape ~ and the opportunities they lost while doing so - TWC refused even to pay Plaintiffs the minimum up front moaey that was unequivocally due and owing under contract. Thus, ata meeting in TWC’s New York offices, Bob Weinstein told Leech that he wanted to “help you” and that Leech should meet with a writer, Craig Mazin, because that will “help you and I want to help.” When Leech mentioned in response that he had not been paid in about a year, Bob Weinstein immediately replied: “I can’t help you.” 10, TWC and its co-Defendants (other than JTM) ultimately wasted so much of their investors’ money on Escape and without amovie to show frit, that fresh capital was needed. TWC then sought out new funding sources. On information and belief, the sources of which are set forth below, TWC then secured new funding from JTM by granting STM a mortgage on TWC’s copyright to Escape. In fact, as noted above, a UCCI Financing Statement for such a security interest was filed with the Delaware Department of State, In doing so, TWC fraudulently promised away rights to share in the profits of the film that had already been pledged to Plaintiffs.11. Tt was at this point that TWC then advised Plaintiffs that if they wanted to receive their past due monies, they would have to relinquish their bargained for tight to participate in Escape's gross profits. In seeking to extort these monies, TWC hid from Plaintifis the fact that TWC had already pledged those profits to STM. 12, _ When Plaintiff’ refused to be extorted out of their back end participation, they were constructively terminated, and TWC wrongfully seized the ownership rights to Escape (which, of ‘course, ithad already pledged to JTM). Asadire:tresult, Defendants have (a) caused serious injury to Plaintiffs’ careers, (b) deprived Plaintiffs of the chance to create a remarkable movie conceived of by Leech, and (c) divested Plaintifis of their right to share in the film's profits. 13. Inaddition to Escape, TWC has breached its contractual obligations to pay Inerfeld fees as a producer on a host of other movies. Far from disavowing its obligations to Inerfeld in this regard, TWC has simply refused to honor them. 14, This action, which also seeks in the altemative to rescind Plaintiffs” agreement with TWG, follows. PARTIES 15. Plaintiff Leech is an individual residing in Los Angeles, California. In addition to coming up with the idea for Escape, Leech devoted some four (4) years of his life to writing and directing the movie. Indeed, Leech relocated to Vancouver, Canada, in order to work closely with Defendant Rainmaker Entertainment Inc. (“Rainmaker”), the animation/production company hired ‘tomake Escape. Leech also made the move to Vancouver to allow TWC and Rainmaker to benefit financially by applying a local tax credit to his director’s salary. (See discussion of tax credit infra). In short, Leech was the consummate team player.16. Plaintiff Inerfeld is an individual residing in Los Angeles, California. 17. _ Plaintiff Protocol Pictures Inc. (“Protocol”), is a California Corporation with offices located at 9336 Washington Blvd., Culver City, California, 18. Upon information and belief, Defendant TWC isa Delaware limited liability company with primary offices located at 375 Greenwich Street, New York, New York. TWC was founded by the Weinsteins. 19. Upon information and belief, Defendant Rainmaker is a corporation incorporated under the laws of British Columbia. 20. Upon information and belief, Defendant Escape Productions Inc. (“Escape Productions”), isa corporation incorporated under the laws of British Columbia, and a wholly owned subsidiary of Rainmaker, 21. Upon information and belief, JTM is a company organized under the laws of the British Virgin Islands. FACT! TIONS TO ALL C; ION A. Background 22, The Weinsteins came to prominen:e in Hollywood through their early successes with Miramax, which they founded in 1979. Miramax was a leading independent motion picture distribution and production company before it was acquired by The Walt Disney Company (‘Disney”) in 1993. The Weinsteins proceeded to operate Miramax as a division of Disney until 2005, when they left to found TWC. 23, Until very recently with The King’s Speech, after the Weinsteins left Miramax for TWC, commercial success and critical acclain have proven elusive for them. TWC’s moreprominent flops have included Clerks 2 and Nine, the latter of which was one of the biggest bombs 0f 2009, despite its star filled cast of Daniel Day-Lewis, Penelope Cruz, Sophia Loren, Judi Dench, Kate Hudson, and Nicole Kidman, among others. 24, Therecent financial troubles of TWC and the Weinsteins have been well-documented in the press. For example, an article in the March 2011 edition of Vanity Fair reported that, as of 2008, TWC had exhausted $450 million of a $500 million credit line, and was behind on payment of another $75 million loan, B. Plaintiffs and TWC’s Initial Success Wi ilm Hoodwinked 25, One of TWC’s few, highly profitable movies was the 2005 animated film Hoodwinked, which was written and directed by Plaintiff Leech along with Cory Edwards and Todd Edwards (collectively, the “Hoodwinked Creative Team”). 26. Hoodwinked was produced by Blue Yonder Films with Kanbar Entertainment. 27. The original Hoodiwinked was entirely animated by the Hoodwinked Creative Team, using inexpensive techniques that are far removed from the costly processes employed in such blockbuster films as Toy Story and Finding Nemo. While Hoodwinked was cost effective to make, with a total estimated budget of some $8,000,0C0, the film grossed approximately $150,000,000 worldwide, including $55,000,000 in the United States. 28. In conection with the making of Hoodwinked, Plaintifis realized that it is not necessary to own an animation studio in order to rroduce a highly profitable animated film. Rather, Plaintiffs created a new business model, wherety they develop their own creative materials and retain an animation studio as their agent, while procuring funding for the project through the moviestudio/distribution company that buys the film. In exchange, Plaintiffs are paid for delivering the film and also receive the all important credits. 29, Credits are crucial not only because they provide exposure, but also in light of the custom and practice in Hollywood known as the “quote system.” Pursuant to the quote system, a creative team is not paid less than what they made on their last film. 30. Notably, Kanbar Entertainment bas sought arbitration against TWC in connection with alleged extensive delays associated with the release of the sequel to Hoodvvinked, namely, Hoodwinked Too. Consistent with their incompetence and failure to honor contractual obligations as detailed herein, the Weinsteins have managed to ruin a great story and a promising script for Hoodwinked Too, such that Leech raised the possibility with Inerfeld of having his name excised from the writing credits. Put another way, TWC is on the verge of killing what is at present its only franchise. C. The Escape Agreement 31. In addition to Hoodwinked, Plaintiffs came to the Weinsteins with Escape, among other projects. 32, Regarding Escape, TWC entered into a written agreement, dated January 28, 2006, with Leech and Cory Edwards (“Edwards”) as signatories. (The “Escape Agreement”) (a true and accurate copy of the Escape Agreement is annexed hereto at Exhibit A and incorporated herein by reference). 33. As of January 28, 2006, it was already clear based upon its current domestic box office results that Hoodwinked would be a financial success, which gave the struggling TWC astrong incentive to enter into the Escape Agreement, In fact, in referring to Plaintiffs and their collaborators, Harvey Weinstein stated that “I want these guys to build me the next Pixar.” 34. The Escape Agreement provides for, inter alia: a. A$1,000,000 guaranteed fee to Leech and Edwards for writing the Escape screenplay; and b. A $1,000,000 directing fee for Leech; (Ex. Aatp. 1). 35. Additionally, while Leech, Edwards, and TWC were the only signatories to the Escape Agreement, the contract also expressly provides for TWC to pay producer fees in the following amounts: $500,000 for Stutzman and $1,100,000 for Shestack, Inerfeld, Little and Mischel (inerfeld, Stutzman, Little, and Shestack, along with Leech and Edwards, are collectively referred to herein as the “Creative Team”). ([d., at p. 2) 36. The Escape Agreement further called for contingent compensation, or back end participation, to be paid to the Creative Team and then allocated and paid among themselves as they determine in their sole discretion. (Jd., at p.2, 4). Based upon this contingent compensation, the Creative Team stood to substantially profit from the film’s first dollar adjusted gross, with their participation escalating pursuant to a sliding scale to an unheard of hard floor, i.e., minimum, of 20%, and the number could go as high as 27.5%. (See Ex. A at p. 2, 94). Additionally the Creative ‘Team was entitled to receive (a) what amounts to a 40% royalty on video rentals, and (b) 50% of merchandising after certain minimal expenses were recouped by TWC.37. Putsitmply, Inerfeld negotiated anextraordinarily lucrative contingent compensation package. Indeed, upon information and belief, one of the principal motives for TWC’s cheating Plaintifis out of their rights to Escape was to deprive them of this back end participation. 38. _ Asacknowledged ina series of writings dated September 18, 2006, that were signed by Leech, Edwords, John Shestack, Preston Stutzman, and Gregory Little, all development and production fees on Escape were assigned to Inerfeld’s company, the Plaintiff Protocol. 39. The Escape Agreement provided for a reversion of rights “[i]f the picture is not greenlit....” (Ex. A at p. 2, § 5). 40. As discussed in more detail infra, Escape was first “greenlit” in or around August 41, In the customs and practice of the filmmaking industry, a contract that guarantees payment even if an actor, director, producer, ef, s released from a film is known as a “pay-or-play” contract. 42, With respect to the Escape Agreement, Inerfeld negotiated rights that were highly ‘unusual in the film industry, in that the contract is“pay-and-play.” Because the Creative Team was granted pay-and-play rights, once Escape was greenlit, not only wes TWC contractually bound to pay the Creative Team for the project, the Creative Team could not be replaced. In other words, if Escape is to be made, Plaintifis have the bargained for right to “play.” Nevertheless, as shown herein, TWC repeatedly violated Plaintiffs’ rights in this and other respects. 43. The Escape Agreement calls for, inter alia, the following credits: a. Writing: Tony Leech and Cory Edwards b. Directing: Tony Leech, 10c. Producing: Preston Stutzman, Brian Inerfeld, John Shestack and Greg Little. (Ex. Aatp.3,97). 44, ‘The receipt of credit on a film is a unique and important factor in the development ofa filmmaking career, and the loss of such expesure cannot adequately be compensated by money damages alone. 45. The Hscape Agreement states that Mainframe Entertainment (“Mainframe”) was to be engaged as the animation studio for development of the project, pursuant to a customary production services agreement. (Id., at p. 3, ]8.), However, as discussed in more detail infra, in or around August 2006, Mainframe was purchased by Rainmaker. 46. Thereafter, TWC decided to proceed with Rainmalcer as the animation studio for Escape through, upon information and belief, its wholly owned subsidiary, Defendant Escape Productions. As shown herein, that decision proved disastrous for the Escape project. 47. Upon information and belief, Escape Productions entered into a Production Services Agreement (“PSA”) for Escape with TWC that contemplated cash flow in the amount of approximately $33 million, However, because the animation/production of the movie was to take place in Vancouver, Canada, upon information and belief, the parties were entitled to a recoupable tax credit such that the actual cost to make Escape was originally budgeted to net out at approximately $29 million, 48. The Escape Agreement does not contain a merger clause (Ex. A passim), and while itreferences the possible execution of. further long form contract, the Escape Agreement states that it is final and binding unless and until a long form agreement is executed. (Id, at p. 3, { 10). 49. No long form agreement was ever entered into with regard to Escape. ua forum 50. The Escape Agreement is governed by California law; it does not cont selection clause. Id. D. ‘eenlit and Animatic ins 51, Edwards and Leech delivered the initial Escape script in compliance with the terms of the Escape Agreement. 52, The Creative Team’s delivery of che initial script began a process of revisions back and forth between the Creative Team and TWC, and in or around August 2006, Harvey Weinstein ‘greenlit the Escape script. 53. Once the Escape script received the greenlight, the initial stages of the enimation process could begin, whereby the Escape characters were modeled out of clay as well as on ‘computer, the animators proceeded with the riggirg process, pursuant to which the characters? means and manner of locomotion are designed, the creatures? textures were developed, and scenes were created, etc. 54. Prom a financial standpoint, once Escape received the greenlight and the PSA was signed, Rainmaker ramped up production, ultimately hiring some 250 people to work on the animation process. 55. The characters created by the costly and time consuming animation process cannot be changed ona whim. Rather, revisions are only achieved by essentially starting over, at great cost and delay. Nevertheless, as shown infra, the Weinsteins were unable to grasp this basic concept about animation. 12E The Weinsteins Create Turmoil Over the Escape Script 56. After initially approving the Escaze script in August 2006, the Weinsteins proceeded to materially alter the screenplay on a regular basis. 57. Initially, in or around late March to early April 2007, Eric Robinson (“Robinson”), at the ti ea TWC Vice President, flew to Vancouver with a message from Bob Weinstein that they had to “add a boy” to the movie, because “little boys like little boys.” 58. The artifice in the original Escape script that brought the hero, Gary, an alien from the Planet Baab, to Earth was his mission to fre his family from their imprisonment in Area 51 ‘Nevertheless, the actual story that Harvey Weinstein had been sold on was an alien prison break, with the focus of the adventure being the escape from the Area 51 prison, Consequently, adding a boy to the plot necessitated materially changing the entire storyline, thus creating enormous difficulties for Leech. Bob Weinstein either failed to realize, or did not care about, the wrench he had just thrown into the Escape production. 59. Tremendous turmoil then ensued on the Escape project, with the Weinsteins constantly sending the Creative Team notes, some of them conflicting, regarding their ever changing vision for the movie. 60. Ina vain effort to accommodate the whims of the Weinsteins, Leech and Edwards developed no less than 17 different versions of the Escape script. The Weinsteins treated the different scripts like a buffet, instructing the Crearive Team to combine various parts that they liked from one script with those from another, without regard for, or apparent understanding of, the concept of a cohesive story line. 3B61. Nevertheless, despite creating some 17 different scripts, Leech was not even paid the minimum amount called forby the Escape Agreement—which plainly did not contemplate all ofthis extra work, 62. Throughout the extended period of re-writes, Inerfeld and Leech traveled to New ‘York on numerous occasions to meet with Harvey Weinstein and other TWC executives in order to salvage the project. 63, Leech also flew to New York on two separate occasions to help Harvey Weinstein find a co-financier for Escape, even though it kad nothing to do with his role as writer/director. TWC rewarded Leech for his troubles by, among other slights, leaving him to pay a hotel bill that TWC had assured would be covered, F. Cost Over the Weinsteins’ In« ic _TWC’s Breach 64, After the Weinsteins purported to unlock the formerly locked Escape script, the Plaintiffs found themselves faced with a ramped up production for a movie that did not have an agreed upon storyline. 65. At the beginning of the animation process, the absence of a locked script is less damaging than at later stages. To explain, certain basic groundwork animation can be accomplished absent a script, e.g. the animators create characters, work on the characters’ locomotion (rigging), and build sets where the scenes will take place. The failure to have a locked script is nevertheless problematic even at the very beginning of production, considering that when a story changes as drastically as it did here, different sets became obsolete and good money can be ~ and in this case ‘was — wasted building sets that are never used. 1466. — Moreover, after the groundwork is set, there becomes precious litle to do until the story is locked. If that happens, as it did here, kaving some 250 employees on payroll to in effect do nothing is a complete and utter waste of money. 67. Consequently, beginning in or around mid-2008, Inerfeld lobbied TWC and Rainmaker to shut down production because Escape was hemorchaging money without a script. 68. Basedupon subsequent events, it ecame obvious that Rainmaker’s primary concer was keeping money flowing to it from TW in order to fund Rainmaker’s operations. (See discussion infra). Making matters worse, Rainmaker was proving to be incompetent. 69. After it became obvious that Rainmaker did not have the expertise to make Escape, let alone the desire to do so within the confines cf the movie's budget, Inerfeld sought to convince TWC to explore moving production from Rainrcaker. 70, OnoraboutNovember2007, then TWC President Michael Cole (“Cole”) agreed that TWC would indemnify Inerfeld from any claims by Rainmaker in connection with Inerfold’s seeking to transfer production away from Rainmaker. 71. Cole had the actual and apparent authority to grant indemnity to Inerfeld on the part of TWC. 72. On February 16, 2008, Inerfeld spoke with Ed Jones (“Jones”), a Producer with Rainmaker and Officer in Escape Productions, who detailed the serious problems he was experiencing with Rainmaker’s production technologies and the personnel in charge, specifically, Paul Gertz, Larry DeFlorio, and Billy Dwelly. When Inerfeld instructed Rainmaker’s CEO, Warren Franklin (“Franklin”), to remove these individuals from the Escape project, Franklin initially refused. Inerfeld was instead informed that Franklin would be much more involved in production. 1573, Franklin's supposed increased involvement did not help matters, and by the end of the year, Messrs. Gertz, DeFlorio, and Dwelly had all been terminated, after Rainmaker was forced to concede that Inerfeld had been right about them. 74, — Inerfeld also had dealings with Jones about identifying other possible animation studios for Escape. While Jones agreed to move the rigging to a facility in Texas run by Reel FX Entertainment (“RFX”), he ignored Inerfeld’s request for a bid from RFX to make the entire movie. 75. Itwasonly ater, in or around April 2008, that Inerfeld learned Jones’s motivation for splitting the Escape production between two competing fucilities ~ Jones had been entertaining discussions to head the operations of both RFX and Rainmaker. Accordingly, by refusing to pursue any option that involved a complete severance with Rainmaker, but allowing the rigging work to go to REX, Jones was playing both sides against the middle. 76. Inearly July 2008, Leech and Inerfeld met with Jones personally and directed him not, to spend money, initiate new production, or hire anyone. In direct violation of this instruction, Jones ‘went ahead and purchased licenses to use Shotgun asset-tracking software, costing some $100,000. Notably, this license would allow Rainmaker to use the Shotgun software on other projects than Escape, yet, upon information and belief, it was paid for atleast in substantial part out of Escapes budget. When Leech confronted Jones, he claimed that Rainmaker’s CEO Franklin was responsible for the decision, 77. Ina late July 2008 conversation, Inerfeld advised Paul Gertz, an Executive Vice President at Rainmaker, that he was going to stop production until there was an approved story reel. Gertz refused, invoking the PSA as his justification. 1678. Uponinformation and belief, Rainmaker/Escape Productions was aware of the terms of the Escape Agreement. 79. Rainmaker/Escape Productions was aware that the refusal to halt production so as to keep paying itself in order to, in effect, do nothing jeopardized the entire Escape project as well as Plaintiffs’ rights under the Escape Agreement. 80. When Rainmaker proved to be obstructionist, Inecfeld repeatedly asked TWC executives to halt production and further to empower him to get the movie made, whether at Rainmaker or another more suitable facility. Despite his efforts, Inerfeld received no substantive response let alone support from TWC. 81. In fact, far from listening to Inerfeld, TWC failed even to honor the Creative Team’s assignments of payment rights to Protocol. (See supra). Instead, TWC would supposedly send payments intended for the Creative Team directly to Rainmaker for distribution. Rainmaker would then balk at paying Protocol, claiming thet it could not do so for various tax reasons. Upon information and belief, such excuses were merely pretexts. 82, Consistent with its utter disregard for Plaintiffs’ pay-and-play rights, in or around late July to early August 2008, Inerfeld was advised that TWC’s Chief Operating Officer Lee Solomon (“Solomon”) had already made the decision — without consulting the Creative Team ~ to keep production at Rainmaker, 83, After Solomon had apparently decided to stay with Rainmaker, Inerfeld still sought to shut down production to save money. In response, Rainmaker’s CEO Franklin claimed that if production were stopped, the movie would become ineligible for the Vancouver tax credit/recoupment. This claim was false. Ww84, Upon information and belief, Franklin knew that his claim that halting production ‘would render Escape ineligible for favorable tax xeatment was false, and only stated so as an excuse for his unjustified refusal to shut down production. This information and beliefs based in part upon Paul Gertz, a former Rainmaker executive, having admitted to Inerfeld that he and Franklin had colluded to keep payments flowing to Rainmaker at times when production should have been shut down, 85. Faced with Rainmaker’s false claim about the potential loss of the tax recoupment, in or around mid-August 2008, Inerfeld sought out Warren Nimehuk, upon information and belief a senior partner in the Canadian branch of Pricewaterhouse Coopers, LLP, to participate in a conference call with executives from Rainmaker, Mr. Nimehuk then explained that shutting down production would not render Escape ineligible for the tax credit. When Inerfeld advised TWC executives of Rainmaker’s duplicity, instead of expressing outrage, they continued to placate Rainmaker. 86. During this same time frame, on or about August 15, 2008, TWC’s Chief Operations Officer, Solomon, telephoned Inerfeld seeking hisagreement to animate the film Dragons (see infra) with a company called Crest that was located in India, As Inerfeld and TWC Vice President Robinson had both agreed that Crest’s work was subpar, Inerfeld did not support the proposal. 87. With Solomon on the phone, Inerfeld then tured the topic to Escape, because Solomon had been avoiding Inerfeld on the subject for some time, Specifically, Inerfeld endeavored to explain the tax, budgetary, and production Lurdles facing the film. Remarkably, Solomon demonstrated his complete ignorance about Escape’s finances when he stated that they were “S9 million in the hole.” Inerfeld responded that present expenditures were actually closer to $19 1Bmillion. Faced with bis $10 million error, Solomon simply stated that he did not have time to address the matter because he was “going to the Hamptons,” 88. The production overruns were compounded not only by Rainmaker’s conflict of interest, butalso by its ineptitude. Inparticular, Rainmaker had entered into employment agreements that were supposed to be for two-year terms, but which let employees quit at will, even after receiving significant re-location and other expeases out of Escape’s budget. On the other hand, Rainmaker needlessly gave each employee a two-week period before they could be fired. ker 89, Despite being the actual producer on the movie, Inerfeld was cut off from Rai executives and had no input as to how the money budgeted for the film was being spent. IF TWC had not restricted Inerfeld’s authority vis-a-vis Rainmeker, it would have been natural for him as Producer to review model employment agreements before they were implemented. 90. When Inerfeld inquired why Rainmaker had awarded each employee a two-week grace period prior to termination, he was advised that it was required by law. However, upon information and belief, the governing Canadian/Vancouver law has no such requirement. Rather, Rainmaker had erroneously and negligently relied upon aregulation that only applied to government employees. While Inerfeld advised TWC of this costly error on the part of Rainmaker, Defendant ‘once again failed to do anything about it. 91. In or around late August 2008, TWC unilaterally decided to retain Alex Johns (“Johns”) to prepare a report for TWC on the Escape production. TWC failed to consult with Plaintiffs regarding this decision. 92, _Atthis point in time, the Escape production was in turmoil. Leech was consumed with endless re-writes to the script in order to address TWC's shifting vision for the film, which vp‘materially interfered with his directorial duties. However, with the exception of a few senior executives at Rainmaker, none of the animation crew had any contact with TWC, and they were consequently unaware of why Leech could not lock the script and start directing, By hiring Johns to look over the shoulder of the Creative Team, TWC directly undermined their authority with the animation crew. 93. It was not until in or around early Fall 2008 that Inerfeld was finally able to stop production on Escape — for the first time, 94. On September 9, 2008, Inerfeld met with Catherine Winder (”Winder”), atthe time a consultant for Rainmaker, who was later brought on as Rainmaker’s President and Executive Producer. During this meeting, Winder advised Inerfeld that it would cost no less than $50 million. to make Escape. Winder produced a variety of colored graphs to “prove” her point. 95, Inxesponse, Inerfeld advised in words or substance that they were going to bring in Escape for $30 million, and if not at Rainmaker, then somewhere else. Even the news that Rainmaker had hired a consultant to argue that the original production budget should be exceeded by more than 60% did not phase TWC. 96. The animation assets were created at Rainmaker using Maya software. Digital Dimension, an Ontario based animation company that the Creative Team had considered retaining for some or all of the production work on Escape, used XSI as opposed to Maya. In mid to late September 2008, Inerfeld instructed Stuart Lowder to send the Escape assets to Digital Dimensions to test whether they could be converted to XSI - which would have made a transition to Digital Dimension far more efficient. Thereafter, Inerfeld learned that the assets were never sent to Digital Dimension, based upon the instruction of Franklin, Rainmaker’s CEO. 20