Counsel Concerns

Affirming, the court of appeal noted that the defendants put forth “no precedent permitting parties to confidentiality and nondisclosure agreements or their attorneys to speak publicly after expressly forfeiting their right to do so. On the contrary, the [California] Supreme Court has construed section 425.16 to mean that 'a defendant who in fact has validly contracted not to speak or petition has in effect 'waived' the right to the anti-SLAPP statute's protection in the event he or she later breaches that contract.”

The court added: “The confidentiality provision of the Settlement Agreement expressly applies to the attorneys for the parties. As counsel, the [defendant] Law Firm can be presumed to know what it was doing when it gave up its right to speak about the Prejean settlement. There is no doubt that the Law Firm's waiver of its right to speak publicly about the settlement is clear and compelling: it was this very promise to maintain public silence that formed the basis of the settlement. Though the Law Firm did not sign the Settlement Agreement as a 'party,' it is bound by the confidentiality provision to the same extent as its client.”

New York Court Finds Malpractice Suit, over Transfer of Motion Picture Ownership, Improperly Pleaded

The New York Supreme Court, New York County, dismissed a legal malpractice suit by a film production company and its co-founder against a law firm that worked on setting up the production company. Candela Entertainment Inc. v. Davis & Gilbert LLP, 150553/2011. Plaintiff Cynthia Newport had joined with Curb Gardner to form Candela Entertainment. Candela then retained Davis & Gilbert to transfer ownership of the movie Dance Cuba from Newport's non-profit Illume Productions Inc. to Candela and to advise on film financing, including a loan from Factory Pond LLC. (Candela also consulted with outside counsel Kojo Bentil as to Factory Pond and with Patterson Belknap Webb & Tyler on Illume tax matters.)

Candela and Newport later sued Davis & Gilbert for allegedly failing to properly advise on obtaining consent from licensors of copyrighted materials used in the movie for the Illume-to-Candela ownership transfer. The plaintiffs claimed this mudded the chain of title for Dance Cuba and hurt Candela's financing ability. The complaint alleged negligence, breach of contract, breach of fiduciary duty and negligent misrepresentation.

New York County Supreme Court Justice Eileen Bransten first decided that there had been no direct attorney/client relationship between Newport and Davis & Gilbert. The retainer agreement was signed, “Agreed to and Accepted Candela Entertainment, Inc.” and the law firm's invoices were sent to Candela's co-president Gardner. “The Complaint does not allege any 'specific undertaking to complete a specific task,' that D & G embarked upon with the primary purpose of benefitting Newport individually,” Justice Bransten wrote in the unpublished opinion.

Justice Bransten went on to find no proximate cause of harm to Candela in any alleged negligence by Davis & Gilbert. The justice explained: “Plaintiffs' claims fail because they do not plead that the [copyright licensors'] consents would have been given, even if D & G had instructed Plaintiffs to obtain the consents or structured and documented the transactions differently. Nor do Plaintiffs claim that they would have foregone the transactions had they been properly advised. In fact, there are several reasons that obtaining the consents would have been unlikely,” the state justice observed in citing Cynthia Newport's affidavit that the cost of the copyright licenses had been based on Illume's non-profit status and that the U.S. embargo of Cuba “prevents most U.S. companies from realizing a 'profit' 'on any “product” made under such a license.'”

The court went on to dismiss the breach of contract, breach of fiduciary duty and negligent misrepresentation claims as being identical to the negligence claim. But the dismissal was without prejudice to allow the plaintiffs to file an amended complaint.

Stan Soocher'is Editor-in-Chief of'Entertainment Law & Finance'and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at'[email protected]'or via'www.stansoocher.com.

Anti-Slapp Motion Involving Disclosure of ex-Miss California Suit Settlement Is Denied

The California Court of Appeals, Second Appellate District, denied a defense motion to dismiss an attorney's lawsuit that alleged breach of a confidential settlement he was involved in negotiating for his client Carrie Prejean, a former Miss California USA. LiMandri v. Wildman, Harrold, Allen & Dixon LLP, B234460. Prejean's title was taken away following public comments she made about same-sex marriage. She sued the pageant's executive directors and others but entered into a confidential settlement through mediation. The next day, however, the confidential terms were disclosed via TMZ, which reported that after the pageant's counsel brought forward a home-made sex video of Prejean, she “nets a big fat zero in her settlement with the folks at Miss California USA, sources tell TMZ.” TMZ also reported that LiMandri was entitled to $100,000 under the settlement deal.

LiMandri later sued in Los Angeles Court, alleging, among other things, breach of confidentiality. The defendants, who included the pageant's co-executive director Shanna Moakler and settlement lawyers, responded with an anti-SLAPP motion under Calif. Code Civ. Proc. '425.16 to strike the suit on the ground that Prejean was of public interest. The superior court dismissed a fraudulent inducement claim LiMandri had included in his complaint but otherwise allowed Limandri's suit to proceed.

Affirming, the court of appeal noted that the defendants put forth “no precedent permitting parties to confidentiality and nondisclosure agreements or their attorneys to speak publicly after expressly forfeiting their right to do so. On the contrary, the [California] Supreme Court has construed section 425.16 to mean that 'a defendant who in fact has validly contracted not to speak or petition has in effect 'waived' the right to the anti-SLAPP statute's protection in the event he or she later breaches that contract.”

The court added: “The confidentiality provision of the Settlement Agreement expressly applies to the attorneys for the parties. As counsel, the [defendant] Law Firm can be presumed to know what it was doing when it gave up its right to speak about the Prejean settlement. There is no doubt that the Law Firm's waiver of its right to speak publicly about the settlement is clear and compelling: it was this very promise to maintain public silence that formed the basis of the settlement. Though the Law Firm did not sign the Settlement Agreement as a 'party,' it is bound by the confidentiality provision to the same extent as its client.”

New York Court Finds Malpractice Suit, over Transfer of Motion Picture Ownership, Improperly Pleaded

The New York Supreme Court, New York County, dismissed a legal malpractice suit by a film production company and its co-founder against a law firm that worked on setting up the production company. Candela Entertainment Inc. v. Davis & Gilbert LLP, 150553/2011. Plaintiff Cynthia Newport had joined with Curb Gardner to form Candela Entertainment. Candela then retained Davis & Gilbert to transfer ownership of the movie Dance Cuba from Newport's non-profit Illume Productions Inc. to Candela and to advise on film financing, including a loan from Factory Pond LLC. (Candela also consulted with outside counsel Kojo Bentil as to Factory Pond and with Patterson Belknap Webb & Tyler on Illume tax matters.)

Candela and Newport later sued Davis & Gilbert for allegedly failing to properly advise on obtaining consent from licensors of copyrighted materials used in the movie for the Illume-to-Candela ownership transfer. The plaintiffs claimed this mudded the chain of title for Dance Cuba and hurt Candela's financing ability. The complaint alleged negligence, breach of contract, breach of fiduciary duty and negligent misrepresentation.

New York County Supreme Court Justice Eileen Bransten first decided that there had been no direct attorney/client relationship between Newport and Davis & Gilbert. The retainer agreement was signed, “Agreed to and Accepted Candela Entertainment, Inc.” and the law firm's invoices were sent to Candela's co-president Gardner. “The Complaint does not allege any 'specific undertaking to complete a specific task,' that D & G embarked upon with the primary purpose of benefitting Newport individually,” Justice Bransten wrote in the unpublished opinion.

Justice Bransten went on to find no proximate cause of harm to Candela in any alleged negligence by Davis & Gilbert. The justice explained: “Plaintiffs' claims fail because they do not plead that the [copyright licensors'] consents would have been given, even if D & G had instructed Plaintiffs to obtain the consents or structured and documented the transactions differently. Nor do Plaintiffs claim that they would have foregone the transactions had they been properly advised. In fact, there are several reasons that obtaining the consents would have been unlikely,” the state justice observed in citing Cynthia Newport's affidavit that the cost of the copyright licenses had been based on Illume's non-profit status and that the U.S. embargo of Cuba “prevents most U.S. companies from realizing a 'profit' 'on any “product” made under such a license.'”

The court went on to dismiss the breach of contract, breach of fiduciary duty and negligent misrepresentation claims as being identical to the negligence claim. But the dismissal was without prejudice to allow the plaintiffs to file an amended complaint.

Stan Soocher'is Editor-in-Chief of'Entertainment Law & Finance'and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at'[email protected]'or via'www.stansoocher.com.