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FILMTRUCKS, INC. v. EARLS

April 29, 1986

FILMTRUCKS, INC., Plaintiff,
v.
C. GREGORY EARLS, TRI DIMENSIONAL FILMS, INC., EQUITABLE PRODUCTION FUNDING OF CANADA, INC. AMSCO PARTNERSHIP, LTD., Defendants.



The opinion of the court was delivered by: SWEET

SWEET D.J.

Plaintiff Filmtrucks, Inc. ("Filmtrucks") brings this motion for a preliminary injunction pursuant to Rule 65, Fed.R.Civ.P., and for attachment pursuant to Rule 64. Fed.R.Civ.P. to ensure the availability of funds to satisfy a money judgment against defendants C. Gregory Earls ("Earls"), Tri-Dimensional Films, Inc. ("Tri-Dimensional"), Equitable Production Funding of Canada, Inc. ("Equitable") and Amsco Partnership, Ltd. ("Amsco") and garnishees Precision Film Laboratories, Inc. ("Precision") and JAD Films International, Inc. ("JAD"). For reasons set forth fully below, Filmtrucks' motion for attachment of the property of Tri-Dimensional is granted, all other preliminary relief is denied, and the motion for expedited discovery is granted.

 Parties

 Filmtrucks is a California corporation which rents equipment such as lighting fixtures, vehicles and generators for the on-location production of films and television commercials. Filmtrucks has business premises in New York and California.

 Earls, a resident of Washington, D.C., who maintains a business premise in Washington, D.C., is an officer, director and shareholder of defendant Tri-Dimensional, and an officer, director and shareholder of defendant Equitable, and is also a 35% limited partner of defendant Amsco.

 Tri-Dimensional, a corporation organized under the laws of the District of Columbia, maintains three business locations; New York, Washington, D.C. and California, and is engaged in the business of producing films, including the film "Savage Dawn" which is the subject of this action.

 Equitable is a corporation formed under the laws of Canada, and maintains a business premise in Washington, D.C. Equitable is the corporate general partner of defendant Amsco, and its business is conducted by defendant Earls who is its president.

 Amsco is a limited partnership formed under the laws of Virginia, of which defendant Equitable was, at the inception of the acts complained of herein, the general partner.

 Facts

 The dispute among the parties centers around the production of a movie entitled "Savage Dawn." On June 19, 1984, Earls and Dr. Miles Galin ("Galin") purchased all right, title and interest in the screenplay "Savage Dawn" from its author William P. Milling and assigned all right, title and interest in the screenplay to Tri-Dimensional, a production company formed on July 27, 1983 to produce the movie "Savage Dawn." On August 17, 1984, several individuals, including Galin and Earls, formed Amsco for the business of acquiring board wide ownership and the copyright of a screenplay entitled "'Savage Dawn'." At the execution of the initial limited partnership agreement, Galin and Earls were each 50% limited partners of Amsco, and Equitable, run by Earls as president, was the corporate general partner. An amended certificate of limited partnership dated January 30, 1985, indicates that 15% of Earls' limited partnership was distributed to three new limited partners, reducing Earls personal stake as a limited partner to 35%.

 According to Filmtrucks, Tri-Dimensional owned all rights in the screenplay and film "Savage Dawn," as evidenced by the security interest which Earls (on Tri-Dimensional's behalf) granted to the Screen Actors' Guild on August 13, 1984, which provided that Tri-Dimensional was and would continue to be the sole owner of the unimpaired title to the film free from prior liens, encumbrances or security interests. (Exhibit E, Order to Show Cause, April 2, 1986). This agreement was recorded in the United States Copyright office. In contrast, Amsco contends that Tri-Dimensional was the production company for the film but never owned any right or title to the movie or screenplay. According to Amsco, the limited partners and general partner raised over 1.2 million dollars to invest in production of the movie, and Tri-Dimensional submitted requests to Amsco for the payment of funds under a routine" production company agreement with Tri-Dimensional, whereby Tri-Dimensional was to pay all creditors and deliver a completed film to Amsco free of all encumbrances. Both parties agree that the production company was severly undercapitalized and that the production costs far exceeded the 1.3 million dollar budget for the film.

 From approximately August 11, 1984 through May 3, 1985, Tri-Dimensional rented various production equipment from Filmtrucks for creation of the film "Savage Dawn." When production on the movie was completed, $20-25,000 of Filmtrucks' equipment was missing from the film site, and Tri-Dimensional, joined by Filmtrucks, filed a claim with Tri-Dimensional's insurance company to recover the loss. The insurance company rejected the claim because of a lack of on-site security, leaving an outstanding debt to Filmtrucks of approximately $40,000.00.

 A May 2, 1985 letter agreement from Amsco to Precision shows that on that date Amsco claimed ownership of the rights in "Savage Dawn" and directed Precision to insure that its inventory and records reflected that ownership. Amsco assumed all of the debts for laboratory services on the film performed by Precision up to that date. According to Filmtrucks, this May 2, 1985 "transfer" of the rights to "Savage Dawn" was made without consideration and was an attempt to fraudulently convey property from Tri-Dimensional to Amsco to avoid the reach of creditors. According to Amsco, neither Earls nor Tri-Dimensional ever owned rights in the film, and there was no transfer, let alone a fraudulent one.

 Documents and affidavits submitted by defendant Amsco indicate that Film-trucks was not the only dissatisfied creditor of Tri-Dimensional and Earls. According to the affidavit of Amsco's counsel, Miles Galin became dissatisfied with Earls' management of the production company and on December 11, 1984 initiated a lawsuit against Earls and Equitable, among others, in the Southern District of New York which charged Earls with diverting funds from other properties into the production of "Savage ...


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