hannibal reply brief

U.S.C.A. Docket No. 09-56584

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

HANNIBAL PICTURES , INC. a California corporation,

Plaintiff and Appellee, vs.

SONJA PRODUCTIONS, LLC, a Delaware limited liability company, andSONJA TREMONT-MORGAN, an individual,

Defendants and Appellants.

______________________________

On Appeal from The United States District Court for theCentral District of California, Los Angeles Division

Case No. 2:06-cv-01814-WDK

The Honorable William D. Keller______________________________

APPELLEE’S BRIEF______________________________

HAMRICK & EVANS, LLPA. Raymond Hamrick, Bar. No.11943810 Universal City Plaza, Suite 2200Universal City, California 91608Telephone: (818) 763-5292

ESNER, CHANG & BOYER Stuart B. Esner, Bar No. 105666 Andrew N. Chang, Bar No. 84544 Holly N. Boyer, Bar No. 221788234 East Colorado Blvd., Suite 750Pasadena, California 91101Telephone: (626) 535-9860

Attorneys for Plaintiff and Appellee Hannibal Pictures, Inc.

Case: 09-56584 10/29/2010 ID: 7527799 DktEntry: 32 Page: 1 of 75

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CORPORATE DISCLOSURE STATEMENT

Hannibal Pictures, Inc. is a California corporation with no parent or

subsidiary, and no publicly held company owns 10% or more of Hannibal Pictures,

Inc. stock.

Dated: October 29, 2010

By: s/ Stuart B. Esner

Stuart B. EsnerEsner, Chang & Boyer234 E. Colorado Boulevard, Suite 750Pasadena, CA 91101(626) 535-9860

Attorneys for Plaintiff and AppelleeHannibal Pictures, Inc.


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TABLE OF CONTENTS

JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW . . . . . . . . . . . 1

STATEMENT OF THE PERTINENT STATUTES . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A. The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1. Plaintiff Hannibal Pictures - a successful, establishedproducer of films distributed worldwide and starringOscar-winning actors. . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Defendant Sonja Morgan represents that she, herhusband, and her company has $25-50 million toproduce up to five films. . . . . . . . . . . . . . . . . . . 5

B. Ms. Morgan Fraudulently Misrepresents Her Cash Funds OnHand To The Independent Film Market, Lures Hannibal WithHer Misrepresentations Of Millions In Cash, And InducesHannibal To Agree To Allow Morgan To Fund The ProductionOf Fast Flash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

C. The Terms Of The Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . 8

D. Hannibal Satisfies Its Primary Obligation To Secure JohnTravolta’s Written Confirmation To Star In The Film. . . . . . . 9

E. Morgan Breaches The Contract And Fails To Provide TheRequired Proof Of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11


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F. The Collapse Of The Film Production Causes HannibalSignificant Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

APPELLEE’S REBUTTAL TO DEFENDANTS’ STATEMENTOF CASE AND STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . 17

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

I. DEFENDANTS’ FAILURE TO COMPLY WITH FEDERAL RULE OF CIVIL PROCEDURE 50(a), FORFEITS THEIRREQUEST THAT THIS COURT REVERSE THE DISTRICTCOURT’S DENIAL OF THE RENEWED MOTIONS FORJUDGMENT AS A MATTER OF LAW . . . . . . . . . . . . . . . . . . . . . 24

II. EVEN IF THE ISSUE HAD NOT BEEN WAIVED BYDEFENDANTS, THE ECONOMIC LOSS RULE DOES NOTEXTEND TO BAR HANNIBAL’S FRAUD BASED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

A. The Evolution Of The Economic Loss Rule. . . . . . . . . . . . . . 29

B. The District Court Properly Rejected Defendants’ Contention That The Economic Loss Rule Applied To BarHannibal From Recovering In Tort. . . . . . . . . . . . . . . . . . . . . 34

(i.) As Aptly Concluded By The District Court, Defendants’ Fraudulent Conduct Was Extraneous To The Contract And Thus Not Barred By The Economic Loss Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . 34

(ii.) Contrary To Defendants’ Position, The Economic Loss Rule Does Not Bar Tort Recovery In Every Case Where Only Economic Damage Occur. . . . . . . . 41


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III. IN ANY EVENT, SONJA MORGAN WAS NOT A PARTY TO THE CONTRACT, AND THUS CANNOT RELY UPON THEECONOMIC LOSS RULE AS A SHIELD FROM TORTLIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

IV. AS CONCLUDED BY THE DISTRICT COURT, SUBSTANTIAL EVIDENCE SUPPORTS THE DAMAGESAWARD AND THUS NEITHER A REMITTITUR NOR A NEW TRIAL IS WARRANTED . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

A. Defendants Misrepresent The Applicable Standard Of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

B. Hannibal Proved With Reasonable Certainty That The FilmWould Have Been Completed And Generated Net ProfitsShown By Expert Testimony. . . . . . . . . . . . . . . . . . . . . . . . . . 53

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

STATEMENT OF NO RELATED CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

CERTIFICATE OF COMPLIANCE WITH RULE 32(a) . . . . . . . . . . . . . . . 61


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TABLE OF AUTHORITIES

CASES

Aas v. Superior Court, 24 Cal.4th 627 (2000) . . . . . . . . . . . . . . . . . . . . . . . . 29, 44

Advisor’s Capital Investments Inc., v. Cumberland Cas. & Sur. Co., No.8:05-CV-404-T-23MAP, 2007 U.S. Dist. LEXIS 5865, 2007 WL 220189 (M.D. Fla. Jan. 26, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4th 464 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Astrium, S.A.S. v. TRW, Inc. 254 F.Supp.2d 1129 (C.D. Cal. 2003) . . . . . . . . . . 45

Calloway v. City of Reno, 116 Nev. 250, 993 P.2d 1259 (Nev. 2000) . . . . . . . . . 32

Carroll v. Nakatani, 342 F.3d 934 (9th Cir.2003) . . . . . . . . . . . . . . . . . . . . . . . . 50

City Solutions, Inc. v. Clear Channel Communications, Inc., 365 F3d 835 (9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

County of Santa Clara v. Atlantic Richfield Co.,137 Cal.App.4th 292 (2006) . . 33

Desrosiers v. Flight Int'l of Florida Inc., 156 F.3d 952 (9th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 53

Erlich v. Menezes, 21 Cal.4th 543 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 44

Frances T. v. Village Green Owners Assn., 42 Cal. 3d 490 (1986) . . . . . . . . 47, 49

Frank E. Maddocks, Inc. v. University Medical Products/USA, Inc. 2005 Cal.App. Unpub. Lexis 7546 (Cal.App. 2 Dist., Aug. 22, 2005) . . . . . . . . 44

Freund v. Nycomed Amersham, 347 F.3d 752 (9th Cir.2003) . . . . . . . . . . . . . . . 26


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Giles v. General Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007) . . 31-33

Grupe v. Glick, 26 Ca1.2d 680 (1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

H.B. Filmes, LTDA v. CBS, Inc., 2004 U.S. App. Lexis 8567, 98 Fed. Appx. 596(9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45, 46

Hangarter v. Provident Life & Acc. Ins. Co., 373 F3d 998 (9th Cir. 2004) . . . . . 53

Humetrix, Inc. v. Gemplus, S.C.A., 268 F.3d 910 (9th Cir. 2001) . . . . . . . . . . . . 58

Jimenez v. Superior Court 29, Cal.App.4th 473 (2002) . . . . . . . . . . . . . . . . . 43, 44

Kids’ Universe v. In2Labs, 95 Cal.App.4th 870 (2002) . . . . . . . . . . . . . . . . . 53, 55

Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877 (9th Cir. 2000) . . . . . . . . . 50

Krzyzanowsky v. Orkin Exterminating Co., Ins., No. C 07-05362 SBA, 2009 U.S.Dist. LEXIS 14332 (N.D. Cal. Feb. 24, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Las Palmas Assocs. v. Las Palmas Center Assocs., 235 Cal.App.3d 1220 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 38, 43

Lazar v. Superior Court, 12 Cal.4th 631 (1996) . . . . . . . . . . . . . . . . . 37, 38, 40, 43

Lincoln Gen. Ins. Co. v. Access Claims Admin., Inc., 2007 U.S. Dist. LEXIS67172, 2007 WL 2492436 (E.D. Cal. Aug. 29, 2007) . . . . . . . . . . . . . . . . . . . . . 40

Luigino’s Int’l, Inc. v. Miller, 2009 U.S. App.Lexis 2614, 311 Fed. Appx. 289(11th Cir. Ga. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Maggio, Inc. v. UFW, 227 Cal.App.3d 847 (1991) . . . . . . . . . . . . . . . . . . . . . 56, 57

McEuin v. Crown Equip. Corp., 328 F.3d 1028 (9th Cir. 2003) . . . . . . . . . . . . . 52

McLeod v. Barber, 764 So. 2d 790 (Fla. App. 2000) . . . . . . . . . . . . . . . . . . . . . . 48


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Michaelis v. Benavides, 61 Cal.App.4th 681 (1998) . . . . . . . . . . . . . . . . . . . . . . 49

Mirzai v. Matossian, 2004 Cal.App. Unpub. LEXIS 9107 (Cal.App.1st Dist. Oct. 8, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 44

N/S Corp. v. Liberty Mut. Ins. Co., 127 F.3d 1145 (9th Cir. 1997) . . . . . . . . . . . 17

Natural Soda Prod. Co. v. City of Los Angeles, 23 Ca1.2d 193 (1943) . . . . . . . . 56

Nitco Holding Corp. v. Boujikian, 491 F.3d 1086 (9th Cir. 2007) . . . . . . . . . 26, 27

Parlour Enterprises, Inc. v. The Kirin Group, Inc., 152 Cal.App.4th 281 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53, 55

Reynolds v. Bement 36 Cal.4th 1075 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-31, 37, 40, 41-43

S.M. Wilson & Co. v. Smith Internat., Inc. 587 F.2d 1363 (1978) . . . . . . . . . . . 44

Sacramento Regional Transit Dist. v. Grumman Flxible 158 Cal.App.3d 289 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Simpkins v. S. Wine & Spirits of Am., Inc., 2010 U.S. Dist. LEXIS 91971 (N.D.Cal. Aug. 9, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

StreamCast Networks, Inc. v. IBIS LLC, No. CV 05-04239, 2006 WL 5720345 (C.D. Cal. May 2, 2006) . . . . . . . . . . . . . 37

W. Emulsions, Inc. v. BASF Corp., No. 05-CV-5246 CBM(SSx), 2007 U.S. Dist.LEXIS 4837663 (C.D. Cal. Jan. 17, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Walker v. Signal Cos., Inc., 84 Cal.App.3d 982 (1978) . . . . . . . . . . . . . . . . . . . . 37

Wallace v. City of San Diego, 479 F.3d 616 (9th Cir. 2007) . . . . . . . . . . . . . . . . 26


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Wei Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020 (9th Cir. 2003) . . . . . . . . 26

Williams v. Bear Stearns & Co., 1998 Fla. App. LEXIS 16012, 725 So. 2d 397(Fla. App. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001) . . 26

Zamora v. Shell Oil Co., 55 Cal.App.4th 204, 208-213 (1997) . . . . . . . . . . . . . . 44

Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020 (9th Cir. 2003) . . . . . . . 26

STATUTES AND RULES

Fed. Rule of Civ. Proc., Rule 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Fed. Rule of Civ. Proc., Rule 50(a) . . . . . . . . . . . . . . . . . . . . . . 1, 23, 25-27, 51, 52

Fed. Rule of Civ. Proc., Rule 50(b) . . . . . . . . . . . . . . . . . . . . . . . . 23-26, 28, 34, 49

Fed. Rule of Civ. Proc., Rule 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 27, 50

Ninth Cir. Rule 28-2.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Circuit Rule 28-2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17


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JURISDICTIONAL STATEMENT

Plaintiff-Appellee Hannibal Pictures Inc. agrees with the jurisdictional

statement set forth in Appellants’ Opening Brief (“AOB”) at p. 1.

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

1. Whether Defendants have waived their contentions that the economic

loss rule precludes Plaintiff’s recovery for any tort damages and that they are

entitled to judgment as a matter of law as to the claimed excessive damages,

because neither issue was raised in a previous Rule 50(a) motion.

2. Even assuming arguendo that the issues are not waived, whether the

economic loss rule bars a fraud claim which is not grounded in the performance of

a contract.

3. Whether Defendant Sonja Morgan, who was not even a party to the

contract, can rely on the economic loss rule to shield herself from fraud liability

just because Plaintiff has a breach of contract claim against another Defendant.

4. Whether the District Court properly denied Defendants’ post-trial

motion challenging the jury’s award of compensatory damages, where there is

substantial evidence including the testimony from a well qualified expert that it is

reasonably certain that absent Defendants’ wrongful conduct, Plaintiff, an

established production company with a proven track record, would have

completed the film which would have generated the very net profits awarded by


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the jury.

STATEMENT OF THE PERTINENT STATUTES

An addendum of the pertinent statutes (Federal Rules of Civil Procedure 50

and 59) is attached to the end of this brief. Ninth Cir. Rule 28-2.7.

STATEMENT OF THE CASE

Plaintiff Hannibal Pictures, Inc. is a well-established independent producer

of financially successful, worldwide distributed films, which star respected actors

including Oscar winners. Hannibal’s CEO Richard Rionda set out to produce the

film “Fast Flash to Big Bang” by purchasing the option to the screenplay written

by a well-known screenwriter; securing a commitment from its regular lender

Royal Bank of Scotland to finance the film’s production; obtaining (by virtue of

its reputation and track record) John Travolta’s commitment to star in the film

alongside his preferred co-star Rosario Dawson; and making several millions of

dollars of pre-sales to international film markets in anticipation of the film’s

production and distribution. The film was destined to follow the financially

successful path of Hannibal’s other films distributed to global film markets; that

is, until Defendants Sonja Morgan and Sonja Productions entered the scene.


1Record citations are as follows:- Reporter’s Transcript - Date: page- Appellant’s Excerpts of Record - “ER”: page- Appellees’ Supplemental Excerpts of Record - “SER”: page- Clerk’s Docket: “CD”: docket number

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(6/9RT:19,149-154, 6/10RT:8-15, 6/11RT:18.)1

Sonja Morgan, then the wife of John Adams Morgan, an heir to the J.P.

Morgan banking empire, made numerous misrepresentations to Hannibal which

induced Hannibal to enter into an agreement with Morgan and her production

company to fund the film’s production. These misrepresentations led Hannibal to

believe that Ms. Morgan had ample ready cash to see the project through to

completion. When it suddenly turned out Ms. Morgan lacked these funds and

Travolta withdrew, the project fell through, and Hannibal lost millions and was

effectively blacklisted in film circles and unable to produce a movie for several

years. (6/10RT:129-133, 138, 142; 6/11RT:33; 6/12RT:57, 71, 172; 6/16RT:113;

6/17RT:138, 130-161; SER:269-270, 273-274, 278-279.)

After an eight day trial, the jury returned a verdict for Plaintiff and against

Defendants on all claims, as follows:

• breach of contract and breach of the covenant of good faith and fair

dealing, against Sonja Productions - as the contracting party - and

Sonja Morgan, individually, as the alter ego of Sonja Productions

(6/19RT:30-33);


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• negligent misrepresentation and fraud, against Sonja Morgan

individually, and against Sonja Productions (6/19RT:33-38.)

• Sonja Morgan engaged in her fraudulent conduct by clear and

convincing evidence (6/19RT:39);

• Hannibal Pictures’ compensatory damages are $6,816,294.

(6/19RT:30-39.)

After evidence of Sonja Morgan’s financial condition was introduced, the

jury assessed $250,000 in punitive damages against her. (6/19RT:68.)

As detailed below, Defendants made post trial motions raising limited

issues. (6/19RT71-72.) The District Court struck the alter ego finding but

otherwise denied the motion.

STATEMENT OF FACTS

A. The Parties.

1. Plaintiff Hannibal Pictures - a successful, established producer

of films distributed worldwide and starring Oscar-winning

actors.

Plaintiff Hannibal Pictures, Inc., an established company specializing in

co-productions of motion pictures distributed worldwide (6/9RT:152-154) had

optioned the right to make an independent film called Fast Flash to Bang Time

(“Fast Flash”) and was shopping the project around. (SE:27-28, 118-123.) The


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script for Fast Flash was written by Peter Illiff, who is best known for his

screenplays for Point Break, Patriot Games and Varsity Blues. (6/10RT:8.) John

Travolta expressed interest in starring in the film, and Hannibal’s customary

lender Royal Bank of Scotland, with whom Hannibal had already made four

profitable films, had committed to lend the project $17 million budgeted for the

film. (6/10RT:12-15.)

Hannibal Pictures was founded in 1999 by Richard Rionda del Castro and

his wife, Patricia. The company finances, produces and distributes three to six

motion pictures per year with budgets ranging from three to twenty million dollars

($3,000,000-$20,000,000). (6/19RT:149-151.) Hannibal has carved out an

excellent reputation as a major player in the independent movie production

business. (6/9RT:151-154.) Hannibal’s movies have starred Oscar-winning actors

including Rod Steiger, Kevin Spacey, Gerard Depardieu, and Adrien Brody,

among others. (6/9RT:152-154, 6/9RT:19.) Every one of the films produced and

distributed by Hannibal has been profitable. (6/11RT:18.)

2. Defendant Sonja Morgan represents that she, her husband, and

her company has $25-50 million to produce up to five films.

Sonja Tremont-Morgan, then the wife of John Adams Morgan, an heir to the

J.P. Morgan banking empire, founded Sonja Productions. (6/12RT:172.) Morgan

named herself President and Chairman of Sonja Productions, and gave herself


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power of attorney to greenlight any project and/or package to go into production

for Sonja Productions. (SE:29-90; 6/16RT:21; SER:91-117.)

Ms. Morgan’s new company, Sonja Productions had a business plan to

package a slate of five pictures in the budget range of $25 million to $50 million

during the time frame of September 2005 to December 2007. (6/12RT:175,

SER:1-22.) Sonja Productions had several employees, including Silvio Sardi, who

held the title of managing director as executive in charge of production.

(6/12RT:176 -177.)

Although Sonja Productions was wholly owned by Ms. Morgan (SER:91-

117), the company had a Board of Directors, which included Morgan’s husband,

John Adams Morgan, whose profile also appeared on the website touting him as

an officer and vice president in charge of business and financing. (6/16RT:113.)

Sonja Productions announced its business plan on its website, drafted by

Mr. Sardi and approved by Ms. Morgan, stating: “Sonja Productions, established

August 2005, has cash funding to invest in 2006/2007 in five motion pictures in

the range of U.S. dollars 25 to 50 million.” (6/12RT:57, 71; SER:19.)


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B. Ms. Morgan Fraudulently Misrepresents Her Cash Funds On

Hand To The Independent Film Market, Lures Hannibal With

Her Misrepresentations Of Millions In Cash, And Induces

Hannibal To Agree To Allow Morgan To Fund The Production

Of Fast Flash.

Ms. Morgan attended the American Film Market (“AFM”) with Mr. Sardi to

meet with producers regarding potential projects. During this time, Sonja

Productions placed an ad in Variety magazine announcing that “Sonja

Productions, established in August 2005, has cash funding to invest in 2006, 2007

in five motion pictures in the range of $25 million to $50 million for each film.”

(6/11RT:27-29.) This ad included a listing of Sonja Production’s board of

directors including John Adams Morgan. (6/11RT:43.)

Around this time, Mr. Sardi introduced Ms. Morgan to attorney Donald

Barton (6/16RT:101), who subsequently became Sonja Productions’ lawyer

(6/12RT:94). During Barton’s initial meeting with Sonja Productions, Ms.

Morgan informed Mr. Barton that she was John Morgan’s wife and that she

wanted to produce a slate of movies over the next year or two and had $50 million

available and allocated to production. (6/16RT:104.) Mr. Barton testified that he

was present during meetings with Sonja Productions and various producers, and

that Ms. Morgan and Mr. Sardi told these producers that Sonja Productions had

cash to invest in projects and did not need to raise capital to fund projects.


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(6/16RT:116-117.)

Mr. Barton represented a number of producers, distributors, and writers.

(6/16RT:98.) Mr. Barton had represented Hannibal and was aware of the Fast

Flash screenplay, and thought it might be a good project for Sonja Pictures.

(6/16RT:115-116.) Sonja Morgan agreed and became interested in meeting with

Hannibal, so Mr. Barton set up a meeting between Hannibal and Sonja

Productions. (6/15RT:30-31, 6/16RT:67.)

Sonja Productions and Hannibal met on November 9, 2005 at Hannibal’s

offices. (6/11RT:32, 6/16RT:117.) The parties discussed Fast Flash and Ms.

Morgan introduced her company to Hannibal. (6/11RT:32.) Ms. Morgan

announced she had $50 million in a bank account, she loved Fast Flash, and she

wanted to produce the film with Hannibal. (6/11RT:33.)

After several discussions between Hannibal, Ms. Morgan, and the

employees of Sonja Productions, the parties entered into a deal memorandum (the

“Contract”) for the financing and production of Fast Flash. (6/18RT174.)

C. The Terms Of The Contract.

Under the Contract, Hannibal agreed to assign to Sonja Productions all its

rights, title, and interest in “Fast Flash to Bang Time,” and Sonja Productions

agreed to cash flow 100% of the approved production budget for the film,

estimated at $18,500,000.00, and to provide 60% of this amount, or


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$11,100,000.00, as equity in the project. (ER:160-166.)

Sonja Productions further agreed to pay Hannibal a producer fee of

$800,000, and to reimburse Hannibal’s prior expenses in the amount of

$52,094.00. (ER:163-164.) Hannibal would act as the exclusive international

sales agent for the film, with a fee equal to 20% of gross receipts based on a

$200,000.00 marketing budget; and Hannibal Pictures and Sonja Productions

would jointly act as sales agents for the United States, with Hannibal Pictures

receiving a fee between 6% and 12% of the sales. (ER:163-165.) Hannibal

Pictures would receive screen credit on the film and 20% of worldwide profits,

with Sonja Productions receiving 80%. (ER:165.)

D. Hannibal Satisfies Its Primary Obligation To Secure John

Travolta’s Written Confirmation To Star In The Film.

One significant condition precedent to the Contract was written

confirmation that John Travolta would be attached to the project as the male lead.

(6/18RT:174.) The Contract provided that it would be voidable if such

confirmation was not received by January 31, 2006. (ER:162.)

Hannibal Pictures informed Sonja Productions in approximately early

December 2006 that a deal with Mr. Travolta was done, subject to approval of the

female co-star and the start date. (6/10RT:83-84.) Hannibal Pictures worked

diligently to obtain approval from Mr. Travolta for a start date and for Ms.


10

Morgan’s preferred co-star, Rosario Dawson. (SER:244-256.)

On January 25, 2006, Hannibal and Sonja Productions executed a written

amendment to the Contract (“the Amendment”) extending the date for

confirmation of Mr. Travolta as male lead to February 28, 2006. (6/18RT174-175;

ER:160.) Under the Amendment Sonja Productions would immediately pay

Hannibal Pictures the reimbursement amount of $52,094. (ER:160.)

On January 27, 2006, Mr. Travolta, acting through his duly authorized

representative, confirmed his participation in the film, his approval of Rossario

Dawson as co-star, and his approval of a start date in March 2006. (ER:158.)

The project was also progressing rapidly in areas additional to casting.

Numerous visits to the production location, Florida, had resulted in meetings with

the local legislature and approval of the production of the film in Florida as well as

preapproval of the state tax rebate. (6/9RT:165, 6/10RT:141.) And, even though

production had yet to begin on Fast Flash, Hannibal had already presold the

licensing of the film to various territories around the world for the sum of Six

Million Seven Hundred Seventy Six Thousand Dollars ($6,776.000). (SER:153-

243, 259-267, 282-299.)

Further, Hannibal had secured a completion bond from International Film

Guarantors (“IFG”), a Fireman’s Fund subsidiary, which guaranteed to the film’s

producer and any financier or lender on the film, that the film would be delivered.

(6/10RT:36.) Hannibal duly and timely delivered this completion bond and all


11

other documents required under the Contract to Sonja Productions. (6/10RT:36-

38.)

Because of the imminent start date, and the immediate need to start paying

under Mr. Travolta’s pay-or-play agreement, it became critical that Sonja

Productions begin financing as provided by the Contract, so that the project could

move forward. (ER155-156.)

E. Morgan Breaches The Contract And Fails To Provide The

Required Proof Of Funds.

On January 31, 2006, Hannibal’s CEO Richard Rionda del Castro and

Patricia del Castro met with Ms. Morgan and Silvio Sardi in Los Angeles. (See

Exhibit 183.) Ms. Morgan told Mr. Rionda and others that all funds necessary to

finance the project were located at City National Bank and would be ready to be

transferred to a film production account in a couple days. (SER: 280-281.) Ms.

Morgan also stated that Sonja Productions would provide proof of funds the next

morning, February 1, 2006, and would immediately begin cash flowing to the

picture by depositing monies into an escrow account for John Travolta’s services.

(SER:280-281.) Furthermore, Ms. Morgan stated that Sonja Productions had

already issued and mailed Hannibal the promised reimbursement check for

$52,094. (SER:280-281.)

Despite Ms. Morgan’s representations, no proof of funds was ever provided


12

to Hannibal or to John Travolta’s representatives as promised. On February 1 and

2, 2006, Hannibal and attorney Donald Barton (Sonja Productions’ attorney) made

numerous attempts to contact Sonja Productions to obtain proof of funds.

(SER:269-270, 273-275, 278-279.) During the same period, Mr. Travolta’s

representatives repeatedly requested the proof of funds from Hannibal and insisted

that an amount equal to Mr. Travolta’s fixed compensation for the picture be

placed in escrow in order to sign the negotiated agreement with Mr. Travolta.

(SER:271, 275-277.) In reliance on promises from Ms. Morgan and Sonja

Productions, Hannibal repeatedly assured Mr. Travolta’s representatives that the

proof of funds and escrow monies would be forthcoming imminently. (SER:268,

272.)

On or about February 3, 2006, Ms. Morgan informed Hannibal that Sonja

Productions would not provide any funding at all for the film. Ms. Morgan also

stated, contrary to her prior representations, that there were no funds available to

finance the project. (6/10RT:129-130.) Morgan’s sudden failures and Travolta’s

withdrawal left Hannibal with no time or opportunity to salvage the production of

Fast Flash. (6/10RT:130-133,142.)

On February 6, 2006, Hannibal received the $52,094 reimbursement check

issued by Morgan and deposited the check. (SER:23-26, 257-258.) However,

Sonja Productions stopped payment on the check. (6/18RT:175.)


13

F. The Collapse Of The Film Production Causes Hannibal

Significant Damages.

Plaintiff’s expert, Lawrence P. Mortorff, a 1973 graduate of UCLA law

school, has had extensive experience in the entertainment industry with a

well-known talent agency and respected film and television production companies.

(6/17RT:101-103.) Mr. Mortorff has been involved as a producer in over

thirty-five motion pictures and has written a treatise on entertainment law.

(6/17RT:104-105.)

Mr. Mortorff emphasized that Hannibal had already “gone a long way

towards entering into [presales] agreements” by the time Defendants unilaterally

withdrew their support of Fast Flash. (6/17RT:131.) Mr. Mortorff highlighted

that it is custom and practice for producers to obtain foreign presales by having

producers “go to their buyers in their territories and try to enter into a [presale]

contract for the sale or license of rights” to a movie that has yet to be produced.

(6/17RT:114.) And in order for the buyers to value the yet to be produced movie,

the buyers will consider the elements attached, i.e., “actor, director, producer,

[and] budget.” (6/17RT:114.) Buyers also value yet to be produced movies based

upon information provided by the producers in the form of worldwide sales

projections. (Id.)

Hannibal prepared worldwide sales projections for Fast Flash based on the

following elements attached to the film: John Travolta (actor), Peter W. Illif


14

(director), Hannibal Pictures (producer), and an $18.5 million cash budget, as well

as years of expertise as a film producer. (6/10RT:18-24; SER:282-299.) As is

typical in the entertainment industry, the worldwide sales projections contained

projections for both “ask” and “take” sales figures. (6/17RT:115.) Mr. Mortorff

explained that “[m]ost foreign sales agents [or producers] are fairly experienced,

know their buyers, and know that if the picture costs $18 million it’s worth 3

percent in Spain or 6 percent in France.” (6/17RT:115.) Based upon their

experience with the markets, producers will then “establish what they are going to

ask the buyer to pay versus the take price.” (6/17RT:115.)

By way of example, Mr. Mortorff analogized “ask” versus “take” price to

the jury by looking at a real estate transaction where an individual might ask to

sell a home at a higher price then what the individual might ultimately take to sell

the home. (6/17RT:115.) Hannibal Pictures had already secured presales for Fast

Flash at prices above the take prices estimated in the worldwide sales projections.

(6/17RT:131-132; SER:153-243, 259-267.)

The damages assessment presented to the jury in the form of Mr. Mortorff’s

testimony was based on the much more conservative “take” price. (6/17RT:131-

133.) This conservative assessment of damages was presented despite the

evidence that Hannibal had already obtained presales that outperformed the

worldwide sales projections for the “take” price. The “take” price for worldwide

sales projections for Fast Flash was $15.3 million for international sales and $10


15

million for domestic sales, totaling approximately $25.3 million in sales.

(6/17RT132; SER:282-299.)

Based upon the conservative “take” price sales projections of $25.3 million,

Mr. Mortorff went through the calculations demonstrating how Hannibal Pictures

would have earned approximately Six Million Eight Hundred Thousand Dollars

($6,800,000) had Fast Flash been produced. (SER:177; 6/17RT:131-161.)

Mr. Mortorff’s calculations were based on hard damages, non-speculative

numbers based on the contract language and agreements for domestic and foreign

presales. (6/17RT:130-161.) Mr. Mortorff opined that a movie with a star like

John Travolta attached would easily be able to garner $10 million for a U.S.

distribution deal. (6/17RT:148.) Under even the most conservative of estimates,

Fast Flash would have generated at least $25 million in worldwide sales, of which

Hannibal Pictures would be entitled to approximately $7 million.

(6/17RT:152-153.) Hannibal had already secured over six million dollars in

foreign pre-sales. (SER:124-176, 187-243, 259-267, 282-299.)

Mr. Mortorff testified extensively that despite a general understanding that

there would be less foreign sales without a domestic (U.S.) distribution agreement

in place:

…with a star like John Travolta, in this case in particular, the take

price is territory by territory proven up by the sales agent Hannibal

Pictures. And a buyer to get the John Travolta picture probably


16

wouldn’t necessarily require you to have a U.S. distributor. They

would probably assume you would have one. And with a John

Travolta picture, at some point you would have a U.S. distributor.

You would never go undistributed on the picture.

(6/17RT:158.)

The following summarizes the undisputed testimony of Mr. Mortorff’s

calculations of the damages based on the terms of the contract:

1. $3.1 million: Hannibal Pictures was entitled to a 20 percent

commission for all international sales ($15.3 million). (6/17RT:132; SER:177-

186.)

2. $20,000: Hannibal Pictures was entitled to 20 percent of an ancillary

figure ($100,000). (Id.)

3. $600,000: Hannibal Pictures was entitled to a 6 percent commission

for domestic sales ($10 million). (6/17RT:132-133; SER:177-186.)

4. $200,000: Hannibal Pictures was owed marketing expenses

($200,000). (6/17RT:134; SER:177-186.)

5. $666,000: Hannibal Pictures was owed a cash tax rebate of 15

percent for the amount of the production budget that would have been spent in

Florida ($11.1 million). (6/17RT:134-135; SER:177-186.)

6. $800,000: Hannibal Pictures was owed a producer’s fee ($800,000).

(6/17RT:135; SER:177-186.)


2“Every assertion in briefs regarding matters in the record shall be supportedby a reference to the location in the excerpts of record where the matter is to befound.” Circuit Rule 28-2.8; N/S Corp. v. Liberty Mut. Ins. Co., 127 F.3d 1145,1146-1147 (9th Cir. 1997). The failure to provide proper citations to the record inthe brief is sanctionable, including dismissal of the appeal. See Circuit Rule 28-2,Adv.Comm. Note; N/S Corp. v. Liberty Mut. Ins. Co., supra, 127 F.3d at 1146.

17

7. $1.2 million: Hannibal Pictures was entitled lost recoupment of

unspent funds from the film’s budget, costs and expenses were paid ($2-$3

million). (6/17RT:136; SER:177-186.)

Ms. Morgan admitted that based on the sales projections for Fast Flash, the

film was likely to be a great success and generate millions of net profit and

producer fees to her and her company. (6/12RT:104-105.)

APPELLEE’S REBUTTAL TO DEFENDANTS’ STATEMENT

OF CASE AND STATEMENT OF FACTS

Throughout its brief, Defendants make statements that are either not

supported by the record or which are contradicted by other evidence. Since the

evidence must be reviewed in the light most favorable to the judgment,

Defendants’ slanted and unsupported presentation of the facts is improper and, at

minimum, should be stricken.2

Below Plaintiff highlights a few of Defendants’ factual

mischaracterizations:

1. Defendants’ Opening Brief: “This is case about one of the many


18

countless failed movie projects in Hollywood.” (AOB2.) Defendants’ attempt to

cast this case as just another typical pie-in-the-sky dream of starry-eyed wannabe

movie producers was contradicted by the evidence, was rejected by the jury, and

should be soundly rejected again on appeal.

In truth, this movie production - which had received firm, written

commitments from both John Travolta and his co-star Rosario Dawson, had

quickly generated pre-sales of over $6 million, and had received a $6 million loan

commitment from the Royal Bank of Scotland towards production - failed because

of Ms. Morgan’s lies that she and her husband (a J.P. Morgan heir) were able to

fund the picture with their own money, when in truth Ms. Morgan did not have the

money. (6/10RT:130-133.)

2. Defendants’ Opening Brief: “Hannibal Pictures, Inc. (“Hannibal

Pictures”) [is] a small Hollywood production company with few credits to its

name. . . .” (AOB3.)

In truth, since 1999, Hannibal has been involved in major independent

movie production starring world-famous and Oscar-winning actors, with

international distribution, and has carved out an excellent reputation as a major

player in the independent movie production business. (6/9RT:151-154.)

Hannibal’s movies have starred Kevin Spacey, Gerard Depardieu, Adrien Brody

and Rod Steiger, among others. (6/9RT:152-154, 6/11RT:19.)

3. Defendants’ Opening Brief: “Fast Flash to Bang Time (“Fast


19

Flash”) [was] a feature film potentially starring John Travolta.” (AOB3.)

Throughout Defendants’ Brief, reference is made that John Travolta was

merely a “potential” star of the film, that he did not commit to the film, and that

when Ms. Morgan purportedly “learned” Travolta would not be involved, she

withdrew her participation in the film. In truth, as numerous witnesses testified

(including Ms. Morgan’s own film manager Sardi), John Travolta’s attorney had

given written confirmation of Travolta’s commitment to do the film. Travolta’s

lawyer Mike Ossi sent Hannibal written confirmation (Ex. 156.) Several witnesses

including Ms. Morgan’s own manager Sardi confirmed it was the custom and

practice in the film industry for written confirmation to come from the star’s

agents and/or attorneys, not from the star himself. (6/17RT:81, 6/17RT:124.)

4. Defendants’ Opening Brief: Ms. Morgan’s previous film was

“critically acclaimed but a commercial failure.” (AOB3.)

In truth, the relevance to Plaintiff of Ms. Morgan’s first film, The Marsh,

starring Forrest Whittaker, is that it was just another piece of Ms. Morgan’s fraud

to induce Plaintiff’s reliance on her representations that she had immediate cash

available to produce films. (6/10RT: 33-34.)

5. Defendants’ Opening Brief: Before the film got off the ground,

Defendants “withdrew from the agreement in large part because of Hannibal

Productions’ business practices” and because Ms. Morgan “was and is in the

middle of a highly contentious divorce including a custody battle over her young


20

daughter.” (AOB3.)

In truth, Defendants withdrew because her lies about her funding were

exposed - she simply could not come up with the funds to which she had

promised Hannibal (and indeed the rest of the film production world) she had free

access.

Mr. Barton, one of Ms. Morgan’s lawyers, testified that he was told by Ms.

Morgan she had $50 million to fund movies, that J.P. Morgan Bank was behind

her, that she had the backing of her husband John Adams Morgan, and that had

Barton known that there was no money, he would have ceased work on the project

because he knew that his credibility was on the line. (6/16RT:177,190,194,196.)

Kelsey Howard, an independent film producer, testified he was also told by

Ms. Morgan that she and her husband had $50 million to spend on movies and that

“money is not an issue.” (6/12RT:14-15.)

Mr. Rionda testified extensively that Ms. Morgan told him money was not a

problem for the Morgans, that they had $50 million to spend on film productions.

(6/10RT:2.)

Ms. Morgan herself admitted that she never told her attorney Mr. Barton

that she did not have money available and instead had to raise the money to invest

in the film. (6/15RT:94.)

Ms. Morgan’s website for Sonja Productions also falsely represented that it

had “$50 million in cash funding” to invest in film productions and that her


21

husband John Adams Morgan was an officer and vice president in charge of

business and financing.

6. Defendants’ Opening Brief: “Hannibal Productions did not secure

any investors after Sonja Productions withdrew and the film was never made.”

(AOB3.)

In truth, as the jury concluded from the evidence, once Defendants’

promises were exposed, Defendants failed to deliver proof of funds to John

Travolta as promised, and the film lost its ability to cast Travolta as its star

because of his tight filming schedule, Hannibal had no time to salvage the project.

(6/10RT:121-122,142.)

7. Defendants’ Opening Brief: “Sonja Productions’ business plan was

to . . . find outside investors to raise between $25 million and $50 million to

finance and produce those films.” (AOB9.)

But this is not what Ms. Morgan told Hannibal. She did not disclose that

she had to raise the money from outside investors. Her manager Silvio Sardi

contradicted Ms. Morgan’s testimony and testified the money simply was never

there. (6/11RT:58.) Every other witness, including independent witnesses like

Kelsey Howard, testified they were never given the business plan, and were never

told Ms. Morgan had to raise the money from the outside. (6/11RT:75,

6/12RT:15.) To the contrary, Ms. Morgan consistently told all parties, that she

had the cash at hand and was ready to do the deal. (Ibid.)


22

8. Defendants’ Opening Brief: “And when it became clear to Hannibal

Productions that Sonja Productions did not have $6,000,000 lying around,

Hannibal Productions’ CEO Richard Rionda del Castro suggested that Sonja

Productions falsify documentation that could be shown to Mr. Travolta as

evidence that Sonja Productions could provide Mr. Travolta’s salary with cash on

hand. Id. at 128:22-129:10. At that same meeting, Mr. Rionda tried to pressure

Sonja Productions into producing an unrelated independent film titled Chasing

the Dragon. Mr. Rionda even suggested that Sonja Productions could use the

same falsified proof of funds for both Mr. Travolta and Chasing the Dragon, and

he acknowledged that he falsely represented to prospective investors for Chasing

the Dragon that Sonja Productions had several million dollars on hand.”

(AOB16-17.)

To the extent Ms. Morgan’s assertions are unsupported by any record

citations they should be disregarded. The one record citation does not support

Morgan’s assertions and should also be disregarded.

In truth, the evidence showed that when Ms. Morgan claimed she didn’t

have $5.8 million in one account but had that amount in various accounts, Ms.

Morgan was told that it was sufficient to show proof of funds from more than one

account. (6/17RT:178; SER:273.) Mr. Rionda emphatically denied ever asking

Morgan to falsify documents, and Mr. Sardi admitted Mr. Barton also never made

such a request. (6/10RT:121-122; 6/11RT:115.) Instead, as Ms. Morgan’s own


23

manager Mr. Sardi testified, the plain fact is that Ms. Morgan’s false promises

were exposed: “I think she has two faces. She was excited up front to them

[Hannibal] because the deal was done and then the other side she was stressed

because now she knows she didn’t have the money at this time.” (6/11RT:195.)

SUMMARY OF THE ARGUMENT

Defendants ask this Court to reverse the District Court’s orders denying

their post-verdict motions for judgment as a matter of law (Rule 50(b) motions) on

the grounds that (1) the economic loss rule precluded Plaintiff from recovering in

tort, and (2) the damages relating to lost profits are excessive. However, because

neither of these issues were raised in a prior Rule 50(a) motion, they have not been

preserved on appeal. Defendants are therefore precluded from seeking reversal of

the District Court’s denial of their motions for judgment as a matter of law.

Furthermore, as explained below, the economic loss rule would not bar

recovery in tort here. As concluded by the District Court, Defendants’ fraudulent

representations were not simply reiterations of the obligations in the contract but

rather affirmative misrepresentations intended to deceive Hannibal.

Defendants’ alternative request that this Court “reverse the district court’s

denial of the motion for new trial or remittitur, hold that the jury’s damages award

was excessive as a matter of law, and thus require Hannibal Pictures to accept the

reduced award or to submit to a new trial,” similarly fails. (AOB56.) Notably,


24

Defendants’ motion for new trial was brought on the sole ground that the damages

are excessive. Thus, Defendants have not preserved the right, and have not

requested, a new trial as to the economic-loss-rule issue.

With respect to the excessive damages issue, a district court’s denial of a

motion for new trial will not be overturned absent a clear abuse of discretion – i.e.,

“only where there is an absolute absence of evidence to support the jury's verdict.”

Desrosiers v. Flight Int'l of Florida Inc., 156 F.3d 952, 957 (9th Cir. 1998)

(emphasis added). As set forth in detail below, Defendants have patently failed to

meet this high burden. As such, no new trial is warranted and the District Court’s

order should be affirmed.

ARGUMENT

I. DEFENDANTS’ FAILURE TO COMPLY WITH FEDERAL RULE

OF CIVIL PROCEDURE 50(a), FORFEITS THEIR REQUEST THAT

THIS COURT REVERSE THE DISTRICT COURT’S DENIAL OF

THE RENEWED MOTIONS FOR JUDGMENT AS A MATTER OF

LAW

Defendants ask this Court to reverse the District Court’s denial of their post-

verdict motion for judgment as a matter of law filed pursuant to Federal Rule of

Civil Procedure, Rule 50(b) and enter judgment in their favor due to (1) the

economic loss rule and (2) the supposed absence of evidence supporting the jury’s


25

damage award. (AOB56.) The first fatal flaw with Defendants’ requested relief

however is that Defendants’ failed to preserve these issues on appeal.

Defendant Sonja Morgan brought a Rule 50(a) motion on only one ground,

i.e., that there was insufficient evidence to support a finding of alter ego.

(6/17RT:164.) This Motion was later renewed under Rule 50(b) and granted by

the District Court judge (and is thus obviously not being challenged by Defendants

on appeal).

After the verdict had been reached, Defendants Sonja Productions and Sonja

Morgan brought Rule 50(b) Motions on several other grounds, including that

Plaintiff’s negligent misrepresentation and fraud claims fail under the economic

loss rule and that the damages awarded were improper because Plaintiff “failed to

offer any evidence that the movie would have been made but/for the lack of

funding by” Defendants. (CD179:20.) These issues were never previously raised

in a Rule 50(a) motion.

The scope and propriety of a Rule 50(b) motion is controlled by Rule 50(a).

Rule 50(a) permits a party to move for judgment as a matter of law after the

opposing party has been fully heard and prior to the submission of the case to the

jury. Fed.R.Civ.P. 50(a)(1). If a Rule 50(a) motion is denied, Rule 50(b) allows

the moving party to “renew” its motion within ten days after the court's entry of

final judgment in the case. Fed.R.Civ.P. 50(b). “A party cannot raise arguments

in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did


26

not raise in its pre-verdict Rule 50(a) motion.” Freund v. Nycomed Amersham,

347 F.3d 752, 761 (9th Cir.2003). The moving party is limited to the “specific

grounds” raised in the pre-verdict motion. Wallace v. City of San Diego, 479 F.3d

616, 620 (9th Cir. 2007).

The failure to raise arguments addressed in a party’s post-trial motion for

judgment as a matter of law under Rule 50(b), in a previous pre-verdict Rule 50(a)

motion, results in “a complete waiver, precluding our consideration of the merits

of the issue.” Wei Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1028-29 (9th

Cir. 2003).

This is particularly true with regard to challenges on the grounds of

sufficiency of the evidence. To preserve the right to appellate review on the

ground of insufficient evidence, a party ordinarily must make a motion for

judgment as a matter of law in the trial court. Zhang v. American Gem Seafoods,

Inc., 339 F3d 1020, 1028-1029 (9th Cir. 2003); Yeti by Molly, Ltd. v. Deckers

Outdoor Corp., 259 F3d 1101, 1109 (9th Cir. 2001). Appellate courts will thus

not review a district court denial of a judgment as a matter of law motion based on

insufficiency of the evidence unless appellant made the motion at the close of all

the evidence and before the matter was submitted to the jury pursuant to FRCP

50(a), and then renewed it after the verdict pursuant to FRCP 50(b). Nitco

Holding Corp. v. Boujikian, 491 F.3d 1086, 1089 (9th Cir. 2007); Wallace v. City

of San Diego, 479 F.3d 616, 631 (9th Cir. 2007) [issue not preserved for appeal


3While Defendants alternatively seek reversal of the District Court’s denialof their Rule 59 New Trial Motion (AOB56), it should be noted that Defendants’new trial motion was solely on the grounds of substantial evidence to support theaward of lost profit damages and did not include the argument now raisedconcerning the application of the economic loss rule. Therefore, Defendants havewaived even the right to seek a new trial based on their economic loss ruleargument.

27

where renewed Rule 50(b) motion for JMOL not preceded by Rule 50(a) motion

setting forth specific grounds raised on renewed motion.].

Where a party has failed to properly preserve a challenge to sufficiency of

the evidence, the issue is forfeited. The court will not review the matter even for

“plain error” apparent on the face of the record. Nitco Holding Corp. v. Boujikian,

supra, 491 F.3d at 1089-1090 (9th Cir. 2007) (overruling prior conflicting Ninth

Circuit cases).

Here, as the issues concerning Plaintiff’s right to recover in tort and whether

substantial evidence exists to support the lost profit damages award were not

raised in a Rule 50(a) motion, they have not been preserved on appeal.3

Defendants are therefore precluded from seeking reversal of the District Court’s

denial of their motions for judgment as a matter of law.


28

II. EVEN IF THE ISSUE HAD NOT BEEN WAIVED BY DEFENDANTS,

THE ECONOMIC LOSS RULE DOES NOT EXTEND TO BAR

HANNIBAL’S FRAUD BASED CLAIMS

Defendants argue that Hannibal’s fraud and misrepresentation claims are no

more than a restatement of the breach of contract claims and thus barred by the

economic loss rule. (AOB20-33.) Defendants ignore the context of the fraudulent

misconduct in this case as outlined by the District Court and simply reiterate the

principle that a party may not ordinarily recover in tort for the breach of

contractual duties. While Defendants criticize the District Court’s ruling denying

their Rule 50(b) motion on this ground, arguing that the District Court blindly held

that the economic loss rule did not apply simply because the tort claims concerned

fraud and misrepresentation, Defendants completely overlook the District Court’s

detailed ruling outlining the evidence of extra-contractual breaches presented to

the jury.

Furthermore, Defendants’ emphasis on the harm caused by the fraudulent

conduct as being purely economic and therefore absolutely barred by the economic

loss rule is misplaced. The California Supreme Court has expressly rejected

barring tort recovery simply because the Defendant’s intentional breach of a duty

imposed by law caused purely monetary harm to the Plaintiff.

The District Court’s ruling denying Defendants’ request to limit Hannibal’s

damages to only those in contract should thus be affirmed.


29

A. The Evolution Of The Economic Loss Rule.

The economic loss rule originated in products liability cases where the

product purchasers brought claims because their expectations were frustrated

when the product did not work properly. In this setting the Courts held that the

purchaser’s remedy is in contract alone, for he has suffered only economic losses.

See Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988-989.

As explained by the Robinson Court, the function of the economic loss rule

is to prevent tort law from shifting back to sellers a specific risk that better rests

with buyers-the risk that a product will not perform to a particular level beyond

that warranted by the seller. Id. at 997-998.

While the economic loss rule first arose in product liability cases, it has

since also been given limited application outside of that setting. Thus, in Aas v.

Superior Court, 24 Cal.4th 627, 642-643 (2000), the Court applied the economic

loss rule to preclude recovery of tort damages in the context of a case where the

Plaintiff claimed that the Defendant negligently failed to perform a contract to

construct a home. See Robinson, at pp. 990-991. But, in reaching this conclusion,

the Court emphasized that “conduct amounting to a breach of conduct becomes

tortious when it also violates a duty independent of the contract arising from

principles of tort law.” Aas, at p. 643. Thus, in Robinson, the Court explained:

“Tort damages have been permitted in contract cases where a breach

of duty directly causes physical injury [citation]; for breach of the


30

covenant of good faith and fair dealing in insurance contracts

[citation]; for wrongful discharge in violation of fundamental public

policy [citation]; or where the contract was fraudulently induced.

[Citation.]” [Citation] “[I]n each of these cases, the duty that gives

rise to tort liability is either completely independent of the

contract or arises from conduct which is both intentional and

intended to harm. [Citation.]” [Citations]

The Court elaborated: “Focusing on intentional conduct gives

substance to the proposition that a breach of contract is tortious

only when some independent duty arising from tort law is

violated. [Citation.] If every negligent breach of a contract gives rise

to tort damages the limitation would be meaningless, as would the

statutory distinction between tort and contract remedies.” [Citation]

Robinson, at pp. 989-990 (emphasis added).

Accordingly, the Supreme Court held that the “economic loss rule is

designed to limit liability in commercial activities that negligently or inadvertently

go awry, not to reward malefactors who affirmatively misrepresent and put people

at risk.” Robinson, at p. 991.

Because of the extra measure of blameworthiness inhering in fraud,

and because in fraud cases we are not concerned about the need for

‘predictability about the cost of contractual relationships’ [citation],


31

fraud plaintiffs may recover ‘out-of-pocket’ damages in addition to

benefit-of-the bargain damages.” [Citation] In addition, “California

also has a legitimate and compelling interest in preserving a business

climate free of fraud and deceptive practices.” [Citation] Needless to

say, Dana’s fraudulent conduct cannot be considered a “‘socially

useful business practice[ ].’” [Citation] As one court stated, “Simply

put, a contract is not a license allowing one party to cheat or defraud

the other.” [Citation]

Robinson, at pp. 991-992.

Therefore, in California, the economic loss doctrine bars recovery in tort for

purely monetary harm in product liability and negligence cases. While some

courts have further extended the rule to bar recovery for other tort claims, it is only

where the Plaintiff’s claim is that the Defendant failed to perform what was

promised in the contract. Obligations breached by a Defendant outside of the

contract are not barred by the economic loss rule as they do not concern mere

restatements of contractual breaches.

Further, and contrary to Defendants’ claim, there is no support for the

extension of the doctrine to bar recovery in tort where the Defendant had a duty

imposed by law (tort duty) rather than by contract and where the Defendant’s

intentional breach of that duty caused purely monetary harm to the Plaintiff.

Giles v. General Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007) is


4While Giles interpreted Nevada law, the Court highlighted the similarity ofNevada law to California law. See Giles, at p. 877 [“The leading Nevada case onthe economic loss doctrine is Calloway v. City of Reno, 116 Nev. 250, 993 P.2d1259 (Nev. 2000). Calloway is conceptually similar to Seely, the paradigmaticproduct liability case decided by the California Supreme Court thirty-five yearsearlier.”]

32

on point.4 In Giles, this Court explained that while ‘the economic loss doctrine

has not been confined to product liability cases. When applied in cases outside the

product liability context, the doctrine has produced difficulty and confusion. In

such cases, as lamented by the Florida Supreme Court, “the [economic loss] rule

has been stated with ease but applied with great difficulty.’ [citation omitted.]” Id.

p. 874.

One reason for the difficulty is that many courts have stated in overly

broad terms that purely economic losses cannot be recovered in tort.

[Citations]

Such broad statements are not accurate. Tort law has

traditionally protected individuals from a host of wrongs that

cause only monetary damage. As the Utah Supreme Court has

noted, “torts such as fraud and conversion exist to remedy purely

economic losses.” Grynberg v. Questar Pipeline Co., 2003 UT 8, 70

P.3d 1, 11, 13 (Utah 2003) (emphasis added). Many courts have

explicitly refused to extend the economic loss doctrine beyond the

product liability context or beyond claims for negligence and strict


33

liability. [citations omitted]

Giles, at pp. 874-877, emphasis added.

Thus, this Court explained that “Most courts that have applied the economic

loss doctrine beyond product liability cases have done so to bar recovery of

economic loss in negligence and strict liability. [citations omitted]” Id. The Court

noted that while some courts have applied the economic loss doctrine to bar

recovery on tort claims beyond negligence and strict liability, “they have usually

amounted to nothing more than a failure to perform a promise contained in a

contract.” Id.

Giles accordingly makes clear that the economic loss analysis does not

focus solely on the harm alleged by reason of the tortious conduct, but rather

whether the tortious conduct involves nothing more than a breach of the

contractual obligations. Once it is established that the tort is outside of the

contract, the analysis ends and the economic loss doctrine does not apply. Accord

County of Santa Clara v. Atlantic Richfield Co. 137 Cal.App.4th 292, 328-329

(2006) [the first prong of the analysis is whether the tortuous conduct arose from a

duty independent of the contract].

Therefore, as summarized by Giles, the economic loss rule “does not bar

recovery in tort where the Defendant had a duty imposed by law rather than by

contract and where the Defendant’s intentional breach of that duty caused purely

monetary harm to the plaintiff.” Giles, at p. 879 fn. 5. As now explained, when


34

these principles are applied here, it is evident that Defendants fall short of

undermining the judgment under the economic loss rule.

B. The District Court Properly Rejected Defendants’ Contention

That The Economic Loss Rule Applied To Bar Hannibal From

Recovering In Tort.

(i.) As Aptly Concluded By The District Court, Defendants’

Fraudulent Conduct Was Extraneous To The Contract And

Thus Not Barred By The Economic Loss Rule.

As is clear from its order denying Defendants’ Rule 50(b) motion, the

District Court analyzed whether Defendants’ fraudulent conduct inducing

Hannibal to enter into the contract constituted conduct violating an independent

duty outside of the contract. The District Court properly concluded that

Defendants’ fraudulent conduct was extraneous to the contract and thus not barred

by the economic loss rule.

Defendants argue that “[b]ecause courts are required to analyze each

Plaintiff’s tort claim on its own terms, the district court misapplied California law

when it failed to analyze whether Sonja Productions or Ms. Tremont’s allegedly

tortuous conduct violated a tort duty independent of the contract.” (AOB25.)

Defendants’ position is puzzling as the District Court did precisely that.

(ER:12-13.) The District Court noted that the testimony and evidence presented at


35

trial supported the jury’s finding that Ms. Morgan and Sonja Productions, LLC

committed fraud and made material misrepresentations inducing Hannibal to enter

the contract. (ER:12-13.) In fact, the District Court thoroughly detailed the

misconduct of Defendants giving rise to tort liability. (ER:12-13.)

The District Court explained that Hannibal based its tort claims on, inter

alia:

(1) Mrs Morgan personally reviewed and approved the language on

Sonja Production, LLC’s website, which stated: “Sonja Productions

established August 2005, has cash funding to invest in 2006/2007 in

5 motion pictures in the range of USD $20,000,000 to $50,000,000

for each film.” (SER:19);

(2) Richard Rionda testified that he read the website and understood

that Sonja Productions LLC was “extremely well capitalized ...[and]

[i]t has cash available immediately for five motion pictures (6/10RT:

29);

(3) Richard Rionda testified that Sonja Productions, LLC’s website

stated that John Adams Morgan was the “vice president in charge of

financing and banking” and Sonja Productions, LLC shared an office

with Mr. Morgan’s company (6/9RT:150; SER:1-22);

(4) Donald Barton, Plaintiff’s attorney, testified that he was told at a

meeting with Ms. Morgan that she had “50 million [dollars] allocated


36

for the production of movies” (6/9RT:104);

(5) Richard Rionda testified that Donald Barton told him that Ms.

Morgan had “unlimited funding available...[a]nd that she had case,

$50 million.” (6/10RT:25);

(6) Richard Rionda testified that at a November 9, 2005 meeting with

Ms. Morgan, she stated that “she had $50 million on [sic] the bank

account at City National Bank in Beverly Hills...and she wanted to

could [sic] produce the film and finance the film” and also stated

“that money was never an issue; that she had immediate cash

available; that it would be available in 48 hours” (6/10RT:32-34); and

(7) Silvio Sardi, managing director of Sonja Productions, LLC,

testified “[w]hen we were with [Plaintiff], obviously we would not

bring out the situation that we don’t have the money because we

cannot say to him we sign the deal and we don’t have the money”

(6/11RT:56-57).

These fraudulent representations were not simply reiterations of the

obligations in the contract but rather affirmative misrepresentations intended

to deceive Hannibal.

Where, as here, a party engaged in fraudulent conduct, the Plaintiff is not

limited to suing on the contract. California law is clear: “An action for

promissory fraud may lie where a defendant fraudulently induces the plaintiff to


37

enter into a contract.” Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996); see

also StreamCast Networks, Inc. v. IBIS LLC, No. CV 05-04239, 2006 WL

5720345, at *10 (C.D. Cal. May 2, 2006) (“One circumstance in which courts have

routinely recognized the availability of both a fraud and a contract action is a case

in which a party contends that it was fraudulently induced to enter into a

contract.”)

In Lazar, the California Supreme Court addressed the defendant’s argument

that tort and contract remedies should be kept separate, and held that “fraudulent

inducement of contract-as the very phrase suggests-is not a context where the

traditional separation of tort and contract law obtains.” Lazar, 12 Cal.4th at 645

(internal citation and quotation marks omitted). “[P]laintiff’s claim [for fraudulent

inducement] does not depend upon whether the defendant’s promise is ultimately

enforceable as a contract.” Id. at p. 638. Other California cases have made this

abundantly clear. Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979,

992 (2004) (“Simply put, a contract is not a license allowing one party to cheat or

defraud the other.”); Erlich v. Menezes, 21 Cal.4th 543, 551-552 (1999) (“Tort

damages have been permitted in contract cases where ... the contract was

fraudulently induced.”) (citing Las Palmas Assocs. v. Las Palmas Center Assocs.,

235 Cal.App.3d 1220, 1238-39 (1991); Walker v. Signal Cos., Inc., 84 Cal.App.3d

982, 996 (1978) (“[Punitive damages] may, however, [b]e awarded where a

defendant fraudulently induces the plaintiff to enter into a contract.”).


38

Thus, contrary to Defendants’ characterization, the fraud claims were not

duplicative of the breach of contract claim. Here, the fraud claims relate to

misrepresentations in connection with entering into the contract, and not simply

misrepresentations relating to the performance of the contract’s terms.

Defendants’ position that Hannibal cannot recover under principles of tort

law simply because the fraudulent conduct was successful in inducing a signed

contract between the parties is ludicrous. Such a position is at odds with

California law recognizing the availability of both fraud and contract actions

where a plaintiff contends it was fraudulently induced to enter into a contract.

As explained in Las Palmas, “no public policy is served by permitting a

party who never intended to fulfill his obligations to fraudulently induce another

to enter into an agreement.” Las Palmas, supra, 235 Cal.App.3d at p. 1238; see

also Lazar, 12 Cal.4th at p. 646 (“Because of the extra measure of

blameworthiness inhering in fraud, and because in fraud cases we are not

concerned about the need for ‘predictability about the cost of contractual

relationships’ . . . , fraud plaintiffs may recover ‘out-of-pocket’ damages in

addition to benefit-of-the-bargain damages.”)

California courts have weighed the risk of allowing claims for fraudulent

inducement in a breach of contract action, and determined that the goal of

certainty in commercial settings is not served by immunizing tortfeasors from the

consequences of their intentional acts. Las Palmas, supra, 235 Cal.App.3d at pp.


39

1238-39 (“Recognizing the adverse effect fraud has on commercial transactions,

the law permits a defrauded party to seek punishment of the wrongdoer through

the imposition of punitive damages.”)

To accept Defendants’ argument is to accept that, as long as a tortfeasor

convinces its victim to enter into a contract, liability is limited to contract

damages. But nothing in the cases cited by Defendants supports this outcome.

Defendants repeatedly mischaracterize the many authorities refusing to

apply the economic loss rule to bar recovery for intentional torts concerning

conduct outside of the contract, as applying some “categorical exception” for fraud

claims. (AOB24-28 [specifically the cases cited by Defendants in footnote 3, p.

27].) Defendants fail to appreciate that instead of blindly applying a “categorical

exception” to fraud or fraudulent inducement claims, the cases cited are in fact

applying the law and determining that the intentional torts claims are not mere

restatements of breaches of the contract. See Krzyzanowsky v. Orkin

Exterminating Co., Ins., No. C 07-05362 SBA, 2009 U.S. Dist. LEXIS 14332 ,

*31-34 (N.D. Cal. Feb. 24, 2009) [summary judgment denied: while the plaintiff

did not plead fraudulent inducement, the court noted that questions of fact existed

as to whether the defendant fraudulently induced the plaintiff to enter into the

contract and thus whether the defendant breached a duty outside of his contractual

obligations]; W. Emulsions, Inc. v. BASF Corp., No. 05-CV-5246 CBM(SSx),

2007 U.S. Dist. LEXIS 4837663 (C.D. Cal. Jan. 17, 2007) [court notes that


40

pursuant to Robinson, supra, “the economic loss rule does not bar [plaintiff’s]

fraud and intentional misrepresentation claims because they were independent of

[Defendant’s] breach of contract.”]; Lincoln Gen. Ins. Co. v. Access Claims

Admin., Inc., 2007 U.S. Dist. LEXIS 67172, 2007 WL 2492436 (E.D. Cal. Aug.

29, 2007) [The district court distinguished between tort claims based on whether

they merely reiterate a breach of contract or whether there is an independent duty

that the Defendant has breached, and if the latter the rule does not bar the claim].

Thus, these authorities confirm that the analysis of whether tort recovery is

barred by the economic loss rule is dependent upon whether the fraudulent

conduct merely echoes a breach of contract or failure to perform an obligation of

the contract, or whether the fraudulent conduct concerns a duty imposed on the

defendant by law. In determining whether the economic loss rule applies, the

inquiry is whether the contracting party’s alleged conduct falls within the scope of

the contractual relationship, or whether there were separate, affirmative

misrepresentations that the other party justifiably relied on to its detriment.

Robinson, at p. 990 (citing Lazar, supra, 12 Cal.4th 631, 638).

Defendants fail to present any argument or evidence that the District Court’s

findings as to the sufficiency of the evidence supporting the jury’s finding of fraud

and misrepresentations outside of the contract was in error. Rather, Defendants

argue that the fraudulent claims must be interconnected with the breach of contract

claims and thus barred by the economic loss doctrine simply because the damages


41

alleged for the fraud claims are similar to those for breach of contract. This

however is not the law.

(ii.) Contrary To Defendants’ Position, The Economic Loss Rule

Does Not Bar Tort Recovery In Every Case Where Only

Economic Damage Occur.

Defendants argue that the fraud and misrepresentation claims cannot be

independent of the contract claims simply because the damages arising from such

fraudulent conduct may be the same as those available in the breach of contract

claim. (AOB20-36.) Defendants claim the damages awarded for Defendants’

fraud is the same as the damages awarded for Defendants’ breach of contract.

(AOB20-21, 32.) Defendants cite only their own motions as support for this

proposition. (AOB30-31 [relying on Ms. Morgan’s Motion for Judgment].) To

the contrary, the record reflects that Hannibal suffered damage beyond the lost

profits under the terms of the parties’ contract. As Mr. Rionda testified, Hannibal

was blacklisted and unable to make a film for several years, and Mr. Mortorff

explained that in addition to the profits lost as a result of Morgan’s fraud,

Hannibal’s reputation, credibility and future business were also severely damaged.

(6/10RT:138, 6/17RT:138, 130-161.)

In any event, in Robinson the Supreme Court expressly rejected the

proposition that the economic loss rule bars tort recovery in every case where only


42

economic damage occurs. Robinson, at p. 991 fn. 7.

Similar to Defendants here, the dissent in Robinson argued that because the

damage caused by the alleged tortuous conduct was purely economic, and thus

available under the breach of contract claims, the economic loss rule precluded

tort recovery. Just as Defendants argue, the dissent explained:

Robinson’s damages consisted exclusively of the costs associated

with identifying and replacing the defective product, costs that fall

squarely within the definition of economic loss. (See Jimenez v.

Superior Court, supra, 29 Cal.4th at p. 482, 127 Cal.Rptr.2d 614, 58

P.3d 450.) Because Robinson suffered only economic loss, its

recovery should have been limited to contract damages under its

breach of contract and breach of warranty claims.

This application of the economic loss rule solves the problem of how

to sanction deceit without chilling commercial relationships. It allows

tort liability in those instances where a misrepresentation may have

led to actual property damage or personal injury and, in doing so,

both sanctions and deters opprobrious conduct. But by excluding tort

recovery in those cases, like this one, where the only damages are

economic, it preserves the valuable distinction between tort and

contract remedies and avoids the problems that would arise if every

routine breach were susceptible to both tort and contract claims.


43

Robinson, dissent, at p. 997-998 (see also Jimenez v. Superior Court 29 Cal.4th

473, 482 (2002) defining economic loss as including: “damages for inadequate

value, costs of repair and replacement of the defective product or consequent loss

of profits-without any claim of personal injury or damages to other property”).

Rejecting the dissent’s assertion, the Robinson majority explained that there

cannot be a bright line rule barring tort recovery in every case where the tort

damages are purely economic. Robinson, at p. 991 fn. 7. The Court stressed that

the economic loss rule was developed in the context of product liability claims and

extended to negligent breach of contract claims. Ibid. “Dealing with affirmative

acts of fraud and misrepresentation raises different policy concerns than those

raised by negligence or strict liability claims.” Ibid. (emphasis added).

As echoed above, these policy concerns ensure that a party’s fraudulent

conduct will not go unpunished simply because of the existence of a contract. See

Las Palmas, supra, 235 Cal.App.3d at p. 1238 (“no public policy is served by

permitting a party who never intended to fulfill his obligations to fraudulently

induce another to enter into an agreement.”); see also Lazar, 12 Cal.4th at p. 646.

Thus, in Mirzai v. Matossian, 2004 Cal.App. Unpub. LEXIS 9107, 72-75

(Cal.App.1st Dist. Oct. 8, 2004), the court rejected the defendant’s argument that

the “economic loss rule” precludes tort damages for plaintiffs’ claims of

intentional misrepresentation and trespass since the breach resulted neither in

bodily injury nor property damage, but only economic loss. In reaching this


44

conclusion the Court cited e.g. the following cases, Jimenez v. Superior Court 29

Cal.4th 473, 482 (2002) [“recovery under the doctrine of strict liability is limited

solely to ‘physical harm to person or property’ “]; Aas v. Superior Court, supra, 24

Cal.4th 627 [homeowners may not recover damages in negligence for construction

defects that have not caused property damages]; Erlich, supra, 21 Cal.4th at pp.

552-554 [emotional distress damages not recoverable for the negligent breach of a

contract to construct a house where contractor’s negligence directly caused only

economic injury]; Sacramento Regional Transit Dist. v. Grumman Flxible 158

Cal.App.3d 289, 293 (1984) [“where damage consists solely of ‘economic losses,’

recovery on a theory of products liability is precluded”]; Zamora v. Shell Oil Co.

55 Cal.App.4th 204, 208-213 (1997) [economic loss rule precluded homeowners’

from recovering in negligence or strict liability for defective pipes used in the

construction of the plumbing systems in their homes where the pipes did not leak

or otherwise fail]; S.M. Wilson & Co. v. Smith Internat., Inc. 587 F.2d 1363, 1376

(1978) [buyer could not recover against seller on negligence cause of action for

the failure of a tunnel drilling machine to perform as expected]. Cited at Mirzai,

at pp. *73-74; see also Frank E. Maddocks, Inc. v. University Medical

Products/USA, Inc. L 2002396, 2 -3 (Cal.App. 2 Dist., 2005) [California Appellate

Court held the economic loss rule inapplicable to plaintiff’s fraud and intentional

misrepresentation claims, despite the fact that the damages awarded on the fraud

claims was equal to those awarded on the breach of contract, as the fraud claims


45

“did not arise out of the purchase of a defective product” and “because such claims

are independent of the terms of the contract itself.”]

Defendants’ reliance on Astrium, S.A.S. v. TRW, Inc. 254 F.Supp.2d 1129

(C.D. Cal. 2003) to support its position that where the Plaintiff suffered only

contract-based damages as a result of the tortious conduct, the economic loss rule

applies to bar tort recovery is not persuasive. In Astrium the Court expressly

concluded that the alleged tortious conduct involved only breaches of the contract.

“Essentially, Astrium’s fraud claims relate to how Defendants breached their

contractual duties toward Astrium.” Astrium, at p. 1136. Thus, the Court properly

held that because the allegations of fraud concerned mere breaches of the contract,

the economic loss rule applied.

Defendants’ emphasis on the Astrium court’s discussion of the lack of

extra-contractual harm suffered by the Plaintiff to suggest that the analysis of

whether the tort claim is barred by the economic loss rule depends upon whether

the damages are the same as those for the breach of contract is simply erroneous.

(See AOB27-28.) Astrium does not support such a blanket proposition. In H.B.

Filmes, LTDA v. CBS, Inc., 98 Fed. Appx. 596, 599 (9th Cir. Cal. 2004), this Court

explained the narrowness of Astrium:

CBS contends that H.B.’s fraud theory concerns an alleged fraud in

the performance of a contract, which, CBS says, is not actionable

under California law. However, the case on which CBS relies for this


46

proposition, Astrium v. TRW, 254 F. Supp. 2d 1129 (C.D. Cal. 2003)

has a far more limited holding. In Astrium, the District Court was

bound by a state court holding that “in actions arising from the sale or

purchase of a defective product, a plaintiff seeking to recover in tort

rather than in contract must be able to demonstrate that its economic

losses were accompanied by either (1) physical damage … or (2)

bodily injury.” Id. at 1135-36 at 1135-36.

The case at hand does not arise “from the sale or purchase of a

defective product,” but instead from the alleged misrepresentation of

revenues. It is thus factually more similar to Roddenberry v.

Roddenberry, in which the Plaintiff, Mrs. Roddenberry, was advised

by letter that she was receiving the full percentage of profits to which

she was entitled pursuant to a divorce settlement agreement, although

she was in reality receiving a lesser share. 44 Cal. App. 4th at 665.

The California Court of Appeals held that, at trial, Mrs. Roddenberry

had been able to satisfy every element of fraud, including duty of

disclosure. Id. at 666. We conclude from this holding that H.B.

likewise may be able to show that CBS had a duty of disclosure, and

we reverse the grant of summary judgment as to CBS’s fraud claim.

Here, just as in H.B. Filmes, this is not a product liability case. The harm caused

by the tortious conduct therefore is not dispositive of whether the economic loss


47

rule applies.

Thus, contrary to the representations of Defendants, the economic loss

doctrine is not a blanket bar to the recovery of tort damages for economic losses.

Rather, recovery is barred when the claim alleged only economic damages

resulting from an alleged breach of contract. Here, as properly concluded by the

District Court, based on the evidence presented at trial, the fraud and

misrepresentations were not mere breaches of the contract but rather separate

independent tort breaches.

III. IN ANY EVENT, SONJA MORGAN WAS NOT A PARTY TO THE

CONTRACT, AND THUS CANNOT RELY UPON THE ECONOMIC

LOSS RULE AS A SHIELD FROM TORT LIABILITY

Sonja Morgan, individually, was not a party to the contract. As such, she

was not and could not be sued individually for breach of contract. See Reynolds v.

Bement 36 Cal.4th 1075, 1087 (2005) [It is well established that a corporate

officer is not personally liable for the corporation’s breach of contract based solely

on his or her official position.] That said, an officer or director may be sued

individually for their tortious conduct (see Frances T. v. Village Green Owners

Assn. 42 Cal. 3d 490, 503-504 (1986) [Officer and directors are liable to third

persons injured by their own tortious conduct regardless of whether they acted on

behalf of the corporation and regardless of whether the corporation is also liable]),


48

which is precisely what occurred in this case. Ms. Morgan was sued in her

individual capacity for her tortious misconduct.

Nowhere in the Opening Brief do Defendants challenge the sufficiency of

the evidence against Ms. Morgan, individually, for her fraud and

misrepresentations. Rather, Defendants seek to shield Ms. Morgan from any

personal liability for the jury’s verdict under the guise of the economic loss rule.

However, because Ms. Morgan is not a party to the contract, the economic loss

rule cannot apply to bar Hannibal’s tort claims against her.

In the absence of contractual privity, the economic loss rule does not apply.

(See Simpkins v. S. Wine & Spirits of Am., Inc., 2010 U.S. Dist. LEXIS 91971

(N.D. Cal. Aug. 9, 2010); see also Luigino’s Int’l, Inc. v. Miller, 311 Fed. Appx.

289, 294-295 (11th Cir. Ga. 2009) [the economic loss rule is only applicable to

situations “where the parties are either in contractual privity or the defendant is a

manufacturer or distributor of a product, and no established exception to the

application of the rule applies.”]; Advisor’s Capital Investments Inc., v.

Cumberland Cas. & Sur. Co., No. 8:05-CV-404-T-23MAP, 2007 U.S. Dist.

LEXIS 5865, 2007 WL 220189, at *2 n.5 (M.D. Fla. Jan. 26, 2007) [economic loss

rule does not bar claims of fraudulent inducement and negligent misrepresentation

because Plaintiffs and defendants were not in contractual privity]; McLeod v.

Barber, 764 So. 2d 790, 792 (Fla. App. 2000) [“[T]he law is clear that the

economic loss doctrine does not apply to tort claims where there is no contractual


5Furthermore, it should be noted that pursuant to Ms. Morgan’s Rule 50(b)Motion, the District Court found that there was no alter ego and thus that Ms.Morgan could not be personally liable for the breach of contract. Ms. Morganshould not be entitled to escape liability on the contract because the corporationhas a separate identity from her, but at the same time argue that she is entitled tothe benefit of the economic loss rule which arises from the very existence of a

49

relationship between the parties.”]; Williams v. Bear Stearns & Co., 725 So. 2d

397, 399 (Fla. App. 1998) [economic loss rule does not apply to tort claims of

negligent misrepresentation and breach of fiduciary duty against three defendants

who had no contractual relationship with the complaining party].

Here, as there was no privity between Hannibal and Sonja Morgan,

individually, the economic loss rule does not apply to preclude Hannibal’s fraud

claims against Ms. Morgan. Such a result not only comports with the law but also

sound public policy. It is simply unconscionable that a tortfeasor such as Ms.

Morgan should be shielded from liability under the economic loss rule, when she

is not personally liable for the breach of contract claims. As noted by the

California Supreme Court, the legal fiction of the corporation as an independent

entity was never intended to insulate officers and directors from liability for their

own tortious conduct. Frances T., supra, 42 Cal. 3d at pp. 507-508; Michaelis v.

Benavides, 61 Cal.App.4th 681, 688 (1998).

Accordingly, even if the Court were to conclude that the economic loss rule

undermines the fraud judgment against Sonja Productions, the fraud judgment

against Ms. Morgan individually must still be affirmed.5


contractual relationship.

6It should be noted that this Court has the discretion to deem the issue ofsufficiency of the evidence procedurally barred, even if construed as part ofDefendants’ Rule 59 motion, as a Rule 59 motion may not be used to raisearguments for the first time when they could reasonably have been raised earlier inthe litigation. See Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir.2003) (citingKona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000)).

50

IV. AS CONCLUDED BY THE DISTRICT COURT, SUBSTANTIAL

EVIDENCE SUPPORTS THE DAMAGES AWARD AND THUS

NEITHER A REMITTITUR NOR A NEW TRIAL IS WARRANTED

Defendants’ second challenge on appeal concerns the sufficiency of the

evidence supporting the jury’s award of damages. As explained above,

Defendants’ position that the judgment must be reversed because the District

Court erred in denying the motion for JNOV is forfeited. Defendants’ alternative

request that this Court reverse the District Court’s denial of the motion for new

trial and force Plaintiff to accept a remittitur, or submit to a new trial, is meritless.6

Defendants argue that the judgment must be reversed because the jury

improperly allowed Plaintiff to recover $6.5 million in lost profits. (AOB37-55.)

Defendants introduce their argument by criticizing Plaintiff’s evidence of lost

profits as “purely hypothetical” (ignoring Defendants’ fraud made it so);

erroneously claiming (without authority) Defendants were entitled to a

“presumption” that the film would have generated no profit; and arguing that the


51

jury awarded lost profits damages on the “unsubstantiated assumptions” that the

film would have been completed, much less successful (again ignoring that on

appeal, the evidence is viewed in the light most favorable to Plaintiff). All of

Defendants’ arguments are legally and factually flawed.

The District Court properly rejected Defendant Sonja Morgan’s arguments

in her Rule 59(a) Motion for New Trial and Remittitur that the damages awarded

to Plaintiff against Defendants were not recoverable under the specious theory that

Fast Flash was an unestablished business and could not recover lost profits.

(CD:200.) The District Court explained,

“Based on the evidence presented, it is reasonable to conclude that Fast

Flash to Bang Time would have been made but/for Defendants’ actions

given that Plaintiff had, among others, a commitment from the Royal Bank

of Scotland to finance the entire production, secured an acting commitment

from John Travolta, made approximately $6.7 million in foreign presales,

and arranged a filming start date. Moreover, the Court finds that Larry

Mortoff was a credible witness and possessed the necessary skills, based on

his background, to adequately estimate the film’s projected revenue and,

accordingly, calculate the amount of loss suffered by the Plaintiff as a direct

result of Defendants’ actions. . . . The facts and testimony presented at trial

established a reasonable basis for the jury’s damages award and the Court

will not intervene because Defendant, without a suitable legal basis, simply


52

disagrees with jury’s conclusions.”

(ER3-4 (emphasis added).)

As Defendants have patently failed to meet their “substantial burden” of

demonstrating that the District Court abused its discretion, no new trial is

warranted and the District Court’s order should be affirmed.

A. Defendants Misrepresent The Applicable Standard Of Review.

In arguing that the District Court erred in denying Defendants’ motion for

new trial on the issue of excessive damages, Defendants misstate the applicable

standard of review, contending among other things that “the trial evidence failed

to establish as a matter of law that the film would have been completed or

generated revenue” (AOB40), “the overwhelming evidence at trial established that

Hannibal Pictures would not have made money from Fast Flash” (AOB41),

“Hannibal Pictures could not as a matter of law demonstrate with reasonable

certainty that it would have received any of the compensation that it claimed to

have lost” (AOB47), and “Mr. Mortorff’s methodology is insufficient for three

reasons to project with sufficient certainty the occurrence or amount of lost

profits” (AOB50).

As this Court made clear: “We review the district court’s ruling on a motion

for a new trial under Rule 59(a) for an abuse of discretion. McEuin v. Crown

Equip. Corp., 328 F.3d 1028, 1032 (9th Cir. 2003).


53

A district court’s denial of a motion for new trial will not be overturned

absent a clear abuse of discretion – i.e., “only where there is an absolute absence

of evidence to support the jury's verdict.” Desrosiers v. Flight Int'l of Florida

Inc., 156 F.3d 952, 957 (9th Cir. 1998) (emphasis added); see Hangarter v.

Provident Life & Acc. Ins. Co., 373 F3d 998, 1005 (9th Cir. 2004); City Solutions,

Inc. v. Clear Channel Communications, Inc., 365 F3d 835, 843 (9th Cir. 2004).

Therefore, contrary to Defendants’ arguments, this Court’s review is limited

to whether there is any evidence in support of the jury’s damage award.

As now detailed, and as the District Court explicitly found, there is

abundant evidence in support of the jury’s damages award.

B. Hannibal Proved With Reasonable Certainty That The

Film Would Have Been Completed And Generated Net

Profits Shown By Expert Testimony.

Defendants agree that Plaintiff was required only to present evidence

sufficient to allow “a reasonable trier of fact to find with reasonable certainty lost

net profits” from the alleged misconduct by Defendants. Kids’ Universe v.

In2Labs, 95 Cal.App.4th 870, 887 (2002); see also Parlour Enterprises, Inc. v.

The Kirin Group, Inc., 152 Cal.App.4th 281, 289 (2007); Arntz Contracting Co. v.

St. Paul Fire & Marine Ins. Co. 47 Cal.App.4th 464, 489-490 (1996) [“As to the

reasonableness of the assumptions underlying the experts’ lost profit analysis,


54

criticisms of an expert’s method of calculation is a matter for the jury’s

consideration in weighing that evidence.]

Nevertheless, Defendants challenge the amount of the jury’s damages award

of lost profits with several arguments, all of which are meritless.

Defendants first argue, without any authority, that “California law presumes

that a Plaintiff cannot recover lost compensation that might have been received

from an unestablished business venture.” (AOB38-40.) This contention is both

factually and legally erroneous.

First, there is considerable evidence to support the fact that Hannibal was an

established business. Hannibal was founded in 1999, and finances, produces and

distributes three (3) to six (6) motion pictures per year with budgets ranging from

three to twenty million dollars ($3,000,000-$20,000,000). (6/11RT:149-151.)

Hannibal was involved in several other productions during the pre-production of

Fast Flash. (6/10RT:51.)

Moreover, the attempt by Defendants to analyze Fast Flash as an

unestablished business venture is improper and illogical. In fact, if Defendants’

argument is taken to its logical conclusion, any movie that is not a sequel, a

spin-off, or part of a movie franchise, would be an embryonic venture. Clearly,

the relevant analysis does not examine the movie itself, but rather the producers

behind it.

Second, none of the cases cited by Defendants, nor any other case of which


55

Plaintiff is aware, holds that there is any such presumption against recovery of lost

profits. To the contrary, whether or not the business venture is established,

California law permits the plaintiff’s ability to recover lost profits. Indeed, the

very cases that are cited by Defendants make it clear that recovery for lost profits

is permissible even where a business is unestablished: “On the other hand, lost

anticipated profits for an unestablished business whose operation is prevented or

interrupted are generally not recoverable because their occurrence is uncertain,

contingent and speculative. Nevertheless, they may be recovered “ ‘where the

evidence makes reasonably certain their occurrence and extent.’ [Citations.]”

Parlour Enterprises, Inc. v. Kirin Group, Inc., 152 Cal.App.4th 281, 287-288

(2007) citing Kids’ Universe v. In2Labs, 95 Cal.App.4th 870, 883 (2002).

Thus, even assuming arguendo that the relevant analysis was for an

unestablished business, Plaintiff established the damages in the form of lost profits

with reasonable certainty. Moreover, “expert testimony alone is a sufficient basis

for an award of lost profits in the new business context when the expert opinion is

supported by tangible evidence with a ‘substantial and sufficient factual basis’

rather than by mere ‘speculation and hypothetical situations.’” Parlour

Enterprises, Inc. v. Kirin Group, Inc., 152 Cal.App.4th 281, 287-288 (2007)

(internal citations omitted) (emphasis supplied).

Defendants’ second argument is equally meritless. Defendants contend that

“the trial evidence failed to establish as a matter of law that the film would have


56

been completed or generated revenue.” (AOB40-47.) At the outset, Defendants

misstate the appropriate standard of review. Plaintiff is not required to establish as

a matter of law that the evidence below demonstrated that the film would have

been made. On appeal, viewing the evidence in the light most favorable to the

jury’s verdict, the only question is whether there is any evidence to support the

jury’s conclusion that the film would have been completed and generated revenue.

Not only is there any evidence in the record to support the jury’s conclusion,

there is abundant evidence. Plaintiff had a letter of commitment from the Royal

Bank of Scotland to fully finance the film. (6/16RT:68-71,120.) Hannibal took

several steps in pre-production, including budgets, schedules, casting major stars

such as Rosario Dawson and John Travolta and location scouting. Plaintiff had

also secured foreign pre-sales for over six million dollars for Fast Flash before and

after Sonja Productions became involved. (SER:125-143.) As noted above, there

was abundant evidence presented that Hannibal, which specializes in international

co-productions of motion pictures, financed, produced and distributed three to six

films per year with budgets ranging from three to twenty million dollars.

(6/9RT:149-151.) This evidence fully demonstrated “there has been ‘operating

experience sufficient to permit a reasonable estimate of probable income and

expense.’” Maggio, Inc. v. UFW, 227 Cal.App.3d 847, 870 (1991) (quoting

Natural Soda Prod. Co. v. City of Los Angeles, 23 Ca1.2d 193, 199 (1943); see

Grupe v. Glick, 26 Ca1.2d 680, 693 (1945) (“anticipated profits dependent upon


57

future events are allowed where their nature and occurrence can be shown by

evidence of reasonable reliability”).

Defendants’ argument that it is mere speculation whether “Fast Flash”

would have been made is belied by Hannibal’s long experience and expertise in

the movie business. The defendant in Maggio, Inc. v. UFW, made a similar

argument contending that by virtue of simply entering into a new contract, a

business which had been in operation “for years” should be recognized as a “new

business.” Maggio, Inc. v. UFW, 227 Cal.App.3d at 870. The Court rejected that

argument outright and found this logic to be without merit. Id. Equally and

comparably compelling, Hannibal’s experience in the independent movie

production field does not make its production of the movie Fast Flash to Bang

Time a new and unestablished business venture. Much like the business in

Maggio, Inc. v. UFW, Hannibal has a demonstrated track record in producing

motion pictures for numerous years. (6/9RT:149-151.) Given Hannibal’s

extensive background and experience in the motion picture business, coupled with

the evidence that Royal Bank of Scotland had committed to finance the production

and John Travolta and his desired co-star Rosario Dawson had agreed to star in the

film, there is ample evidence to support the jury’s conclusion that it is reasonably

certain Fast Flash would have been completed and distributed.

Defendants’ third argument is that “Hannibal Pictures failed to rebut the

presumption that Fast Flash would not have generated revenues” and “at most, the


58

trial evidence supports a damages award of $212,094.” (AOB47-52.) This

argument too is meritless. First, as discussed above, there is no such presumption,

so Defendants improperly frame the issue on appeal. To the contrary, given the

appropriate standard of review, it is presumed there is evidence supporting the

jury’s conclusion that the film would have generated revenues. Humetrix, Inc. v.

Gemplus S.C.A., 268 F.3d 910, 921 (9th Cir. 2001).

Second, as detailed above, the abundant evidence at trial supporting the

judgment, including the expert testimony from Mr. Mortorff, established the

reasonable certainty that Fast Flash would have generated the revenues awarded

by the jury and further that because of the collapse of the film, Hannibal was

blacklisted and unable to make a film for several years. (6/10RT:138,

6/17RT:130-161.) Defendants did not present an alternate theory of damages, nor

did they present any rebuttal by way of expert witnesses.

In short, Hannibal amply demonstrated that more than a reasonable

probability existed that Fast Flash would have been made and resulted in a profit,

but for Defendants’ tortious conduct. For all the reasons discussed above, the

District Court acted well within its discretion in denying Defendants’ post-trial

motions based on the abundant evidence at trial, the applicable legal authority

governing the recovery of lost profits, and the appropriate standard of review on

appeal.


59

CONCLUSION

For the foregoing reasons, the judgment should be affirmed in full.

Dated: October 29, 2010 Respectfully submitted,

HAMRICK & EVANS, LLP

ESNER, CHANG & BOYER

By: s/ Stuart B. Esner


60

STATEMENT OF NO RELATED CASES

There are no known related cases pending in the Ninth Circuit.

s/ Stuart B. Esner


61

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)

Pursuant to Rule 32(a)(7)(b)(I) of the F.R.A.P., I hereby certify that the

foregoing brief contains 13,101 words, excluding the parts of the brief exempted

by Fed.R.App.P. 32(a)(7)(B)(iii).

This brief complies with the typeface requirements of Fed.R.App.P. 32(a)(5)

and the type style requirements of Fed.R.App.P. 32(a)(6) because it has been

prepared in a proportionally spaced typeface using WordPerfect in 14-point Times

New Roman font.

S/ Stuart B. Esner


ADDENDUM


ADDENDUM OF PERTINENT STATUTES

Federal Rules of Civil Procedure 50

Rule 50. Judgment as a Matter of Law in a Jury Trial; Related Motion for a

New Trial; Conditional Ruling

(a) Judgment as a Matter of Law.

(1) In General. If a party has been fully heard on an issue during a jury trial

and the court finds that a reasonable jury would not have a legally

sufficient evidentiary basis to find for the party on that issue, the court

may:

(A) resolve the issue against the party; and

(B) grant a motion for judgmen t as a matter of law aga inst the party on

a claim or defense that, under the controlling law, can be maintained

or defeated only with a favorable finding on that issue.

(2) Motion. A motion for judgment as a matter of law may be made at any time

before the case is submitted to the jury. The motion must specify the

judgment sought and the law and facts that entitle the movant to the

judgmen t.

(b) Renewing the Motion After Trial; Alternative Motion for a N ew Trial. If the

court does not grant a motion for judgment as a matter of law made under Rule

50(a), the court is considered to have submitted the ac tion to the jury subject to the

court’s later deciding the legal questions raised by the motion. No later than 28

days after the entry of judgment–or if the motion addresses a jury issue not

decided by a verdict, no later than 28 days after the jury was discharged–the

movant may file a renewed motion for judgment as a matter of law and may

include an alternative or joint request for a new trial under Rule 59. In ruling on

the renew ed motion, the court may:

(1) allow judgment on the verdict, if the jury returned a verdict;

(2) order a new trial; or

(3) direct the entry of judgment as a matter of law.

(c) Granting the Renewed Motion; Conditional Ruling on a Motion for a New

Trial.

(1) In Genera l. If the court grants a renewed motion for judgment as a matter

of law, it must also conditionally rule on any motion for a new trial by


determining whether a new trial should be granted if the judgment is later

vacated or reversed. The court must state the grounds for conditionally

granting or denying the m otion for a new trial.

(2) Effect of a Conditional Ruling. Conditionally granting the motion for a

new trial does not affect the judgment’s finality; if the judgm ent is

reversed, the new trial must proceed unless the appellate court orders

otherwise. If the motion for a new trial is conditionally denied, the

appellee may assert error in that denial; if the judgment is reversed, the

case must proceed as the appellate court orders.

(d) Time for a Losing Party’s New-Trial Motion. Any motion for a new trial under

Rule 59 by a party against whom judgment as a matter of law is rendered must be

filed no later than 28 days a fter the entry of the judgment.

(e) Denying the M otion for Judgment as a Matter of Law; Reversal on Appea l.

If the court denies the motion for judgment as a m atter of law, the prevailing party

may, as appellee , assert grounds entitling it to a new trial should the appella te

court conclude that the trial court erred in denying the motion. If the appellate

court reverses the judgment, it may order a new trial, direct the trial court to

determine whether a new trail should be granted, or direct the entry of judgmen t.

Federal Rules of Civil Procedure 59

Rule 59. New Trial; Altering or Amending a Judgment

(a) In General.

(1) Grounds for New Trial. The court may, on motion, grant a new trial on all

or some of the issues–and to any party–as follows:

(A) after a jury trial, for any reason for which a new trial has heretofore

been granted in an action at law in federal court; or

(B) after a nonjury trial, for any reason for which a rehearing has

heretofore been gran ted in a suit in equity in federal court.

(2) Further Action After a Nonjury Trial. After a nonjury trial, the court

may, on a motion for a new trial, open the judgment if one has been

entered, take additional testimony, amend findings of fact and conclusions

of law or make new ones, and direct the entry of a new judgmen t.

(b) Time to File a Motion for New Trial. A motion for new trial must be filed no

later than 28 days after the entry of judgment.

(c) Time to Serve Affidavits. When a motion for a new trial is based on affidavits,

they must be filed with the motion. The opposing party has 14 days after being

served to file opposing affidavits. The court may permit reply affidavits.


(d) New Trial on the Court’s Initiative or for Reasons Not in the Motion. No later

than 28 days after the entry of judgment, the court, on its own, may order a new

trial for any reason that would justify granting one on a party’s motion. After

giving the parties notice and an opportunity to be heard, the court may grant a

timely motion for a new trial for a reason not stated in the motion. In either event,

the court must specify the reasons in its order.

(e) Motion to Alter or Amend a Judgmen t. A motion to alter or amend a judgment

must be filed no later than 28 days af ter the entry of the judgmen t.


9th Circuit Case Number(s) U.S.C.A. Docket No. 09-56584

******************************************************************CERTIFICATE OF SERVICE

When All Case Participants are Registered for the Appellate CM/ECF System

I hereby certify that I electronically filed the foregoing with the Clerk of the Courtfor the United States Court of Appeals for the Ninth Circuit by using the appellateCM/ECF system on (date) _____________________________

I certify that all participants in the case are registered CM/ECF users and thatservice will be accomplished by the appellate CM/ECF system.

Signature (use “s/” format) ____________________________

******************************************************************CERTIFICATE OF SERVICE

When Not All Case Participants are Registered for the Appellate CM/ECFSystem

I hereby certify that I electronically filed the foregoing with the Clerk of the Courtfor the United States Court of Appeals for the Ninth Circuit by using the appellateCM/ECF system on (date) October 29, 2010

Participants in the case who are registered CM/ECF users will be served by theappellate CM/ECF system.

I further certify that some of the participants in the case are not registeredCM/ECF users. I have mailed the foregoing document by First Class Mail, postageprepaid, or have dispatched it to a third party commercial carrier for deliverywithin 3 calendar days to the following non-CM/ECF participants:

David L. Evans

HAMRICK & EVANS, LLP

10 Universal Drive, Suite 2200

Universal City, CA 91608

Signature s/ Vicki R. Butler


hannibal reply brief

Documents

plaintiff hannibal pictures

appellee hannibal pictures

california corporation

circuithannibal pictures

appelleehannibal pictures

economic loss rule

united states district

esner stuart