Facts

Matthew Arnold met defendant Sun Yoo while he was a professor at the New York Film Academy. In February 2007, Sun Yoo, a former student at the Academy, requested an interview with Arnold for a magazine in Korea. During the interview, Arnold stated he was raising financing for the movie production of his original screenplay, "The Door." Sun Yoo was interested in helping to raise financing for the production, and after several meetings between the two, Sun Yoo approached Arnold with a proposal. Sun Yoo stated that her father, Chul Yoo, along with other investors in Korea were interested in investing in the project. Sun Yoo stated she wished to raise $4.5 million by June 1, 2007, for which she wanted an executive producer role and a percentage of the money raised.

Arnold agreed with the proposal and the parties entered into a Memorandum of Understanding. According to the agreement, Sun Yoo advanced $20,000 to Arnold as a sign of good faith. Subsequently, Sun Yoo and Arnold traveled to Korea to meet with Chul Yoo and other investors. Arnold was hesitant about making the trip because it would require him to leave his job at the Academy, which he did after Sun Yoo informed him of the importance of making a personal visit to secure financing. Sun Yoo and Arnold traveled to Korea from March 13, 2007 to March 31, 2007.

During the trip, Arnold, through arrangements made by Sun Yoo, met with various high-ranking Korean officers representing prominent companies interested in film investments. Following these meetings, Korean Business News, Boston Entertainment Partner, and Sae Kwang Chemical Co. Ltd. agreed to finance production of "The Door," with a budget of $4.5 million. Among the terms of the investment, the companies sought shares of gross receipts from the film's worldwide revenues.

The investors agreed that Sun Yoo would represent their interests, with the authority to act on their behalf. Sun Yoo coordinated all financing with investors. On April 23, 2007, when Arnold returned to California, he formed Dark Hall Productions (DHP), and opened a bank account under DHP to collect investment funds. Sun Yoo also formed a company, Dragon Noon Productions Inc., to facilitate her involvement in the project. Sun Yoo did not become a member of DHP, and maintained a separate entity for immigration purposes. Pursuant to the agreement, Sun Yoo transferred substantial funds into DHP's bank account, including $1,072,846 from Korean Business News, $532,990 from Boston Entertainment Partner, $1,076,078 from Sae Kwang Chemical Co., and $1,066,660 from Boston Entertainment Partner. Sun Yoo received an additional investment of $980,00 which was deposited into Dragon Noon's account.

In June 2007, Arnold met with the New York Film Commission and researched potential shoot locations in New York. That same month, Sun Yoo expressed concerns over the agreement, specifically stating concerns over the split of revenues and control over funds in DHP's account. Sun Yoo also stated to Arnold that investors did not need to make a large profit from the film because of high tax exposure, and that the investors only expected a return of their investment amounts. She also stated that any additional profits should go to Sun Yoo and her father.

Arnold stated that Sun Yoo then informed him that the investors were unhappy she was not controlling the investment funds, and demanded the entire financing be transferred into a bank account in Korea, which Arnold refused. On July 25, 2007, Sun Yoo's attorney, Harris Tulchin, requested a meeting with Arnold and his attorney, Randy Paul. During the meeting, Arnold was given three options, either he return the entire financing, $3,748,634; relinquish spending control to Sun Yoo and agree to give some creative control to the investors; or face litigation. Arnold chose to relinquish spending control to Sun Yoo.

On July 31, 2007, Tulchin held a second meeting. At this meeting, Arnold stated that Sun Yoo altered the terms of the agreement and reduced the budget of the film to $2 million, claiming investors demanded the funds be returned. Subsequently, Tulchin stopped representing Sun Yoo, and Sun Yoo stopped responding to Arnold. Arnold then learned that Sun Yoo had taken $1,945,000 out of the joint bank account and put it in Dragon Noon's account.

PLAINTIFF'S CONTENTIONS:
Arnold filed claims for fraud, conversion, breach of contract, intentional interference with contract and prospective relations, promissory estoppel, breach of the covenant of good faith and fair dealing, and unjust enrichment.

DEFENDANTS' CONTENTIONS:
Sun Yoo cross-claimed against Arnold and DHP, alleging fraudulent misrepresentation and breach of oral contract. Sun Yoo contended that Arnold had made false promises, stating that he owned all copyright interests in the film, and promising she would become a DHP member. She also alleged Arnold had told her all funds would be placed in a joint bank account, and that Arnold would secure top-rated actors to produce and star in the film.

Result

The jury awarded compensatory and punitive damages to Arnold, also finding for Arnold on the cross-claim.

Other Information

FILING DATE: Oct. 9, 2007.