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Heights Investment Co. and Steven Spielberg vs. Denis Hoffman

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ALSCHULER, GROSSMAN & PINES
MARSHALL B. GROSSMAN (035958)
JOHN A. SCHWIMMER (109861)
2049 Century Park East Thirty-Ninth Floor
Los Angeles, California 90067-3213
Telephone: (310) 277-1226

Attorneys for Plaintiffs Heights Investment Co.,
Inc. and Steven Spielberg

SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES, NORTH CENTRAL DISTRICT

HEIGHTS INVESTMENT CO., INC., a corporation, and STEVEN SPIELBERG,
Plaintiffs,

vs.

DENIS HOFFMAN and DOES 1 through 10, inclusive,
Defendants

CASE NO.

COMPLAINT FOR:
(1) BREACH OF FIDUCIARY DUTY; AND
(2)DECLARATORY RELIEF

Plaintiffs Heights Investment Co., Inc. ("Heights") and Steven Spielberg ("Spielberg") (collectively "Plaintiffs") allege as follows:

FIRST CAUSE OF ACTION

(By Heights For Breach of Fiduciary Duty)

1. At all material times, Heights was and is a corporation authorized to do and doing business in the County of Los Angeles, State of California, owned 100% by Spielberg.

2. At all material times, Defendant Denis Hoffman ("Hoffman") was and is an individual residing in the County of Los Angeles, State of California.

3. Plaintiffs do not know the true names and capacities of those defendants sued herein as Does 1 through 10, inclusive, and therefore sues these defendants by such fictitious names. Plaintiffs will amend this complaint to allege their true names and capacities when ascertained. Plaintiffs are informed and believed and thereon allege that each of Defendants Does 1 through 10, inclusive, is in some manner legally responsible for the wrongful conduct described herein or is in some way involved with or related to the actual controversy that is the subject of this request for declaratory relief.

4. This lawsuit is filed to obtain judicial assistance to put an end to Hoffman's exploitive efforts to parlay $10,000 in financial assistance given to Spielberg more than 27 years ago into a $33 million claim to the fruits of Spielberg's distinguished career.

5. Spielberg is a director and producer of motion pictures.

6. In 1968, Hoffman provided financing of approximately $10,000 for the production of a 20-minute short subject film written by Spielberg called "Amblin'". At the time, Hoffman had no experience in producing, writing or developing projects for motion pictures. Hoffman requested, and Spielberg agreed, that the music of a band then being managed by Hoffman be used in the "Amblin'" film, and Spielberg used the music of Hoffman's band in the film.

7. In exchange for the financing provided by Hoffman, Hoffman exacted from Spielberg the young filmmaker's agreement to (a) direct "Amblin'" for no compensation whatsoever and (b) be bound for ten years to direct any script selected by Hoffman if such a script was brought to Spielberg by Hoffman. As compensation for this second film, Spielberg was to receive the payment of $25,000 plus 5% of the profits after expenses (the "1968 Amblin Contract"). A true and correct copy of the 1968 Amblin Contract is attached hereto as Exhibit A.

8. At no time did Hoffman ever bring any script to Spielberg nor did Hoffman ever produce any other motion picture.

9. In 1975, Hoffman told Spielberg that he wanted Spielberg to buy out Spielberg's remaining obligations under the 1968 Amblin Contract. Hoffman said that he would like to recoup his original outlay on the "Amblin'" film plus receive a profit. Hoffman requested $30,000 for which he agreed to transfer to Spielberg all rights to the "Amblin'" film and release Spielberg of all obligations. Because Hoffman had not brought a script to Spielberg for Spielberg to direct, Spielberg offered to try to obtain a producer's position for Hoffman on one of Spielberg's next films. Hoffman declined that offer and responded that he did not want and was not equipped to be a producer and that he wanted the $30,000 instead.

10. The respective attorneys for Hoffman and Spielberg negotiated a written buy-out agreement whereby Spielberg purchased the "Amblin'" film and all rights thereto from Hoffman for the $30,000 requested by Hoffman in lieu of the performance set forth in the 1968 Amblin Contract ("the 1977 Buy-Out Agreement"). A true and correct copy of the 1977 Buy- Out Agreement is attached hereto as Exhibit B.

11. Spielberg timely performed all of his obligations under the 1977 Buy-Out Agreement, including the payment to Hoffman of $30,000.

12. Over the years, Spielberg continued to express his appreciation for Hoffman's efforts in financing the "Amblin'" film by assisting Hoffman or Hoffman's business. For example, Spielberg caused Hoffman and Hoffman's titles studio, Cinefx, to be hired to do titles work on one or more motion pictures produced or directed by Spielberg.

13. In late 1985, more than seven years after the 1977 Buy-Out Agreement, Hoffman came to Spielberg once again to ask Spielberg to provide Hoffman with financial help in starting a gourmet donut business. In recognition and appreciation of Hoffman's 1968 financial assistance on the "Amblin'" film, Spielberg provided the requested financial assistance to Hoffman for his donut business.

14. Accordingly, Spielberg, through his wholly owned corporation, Heights, (a) invested $15,000 in a limited partnership called Designer Donuts ("Designer Donuts") in exchange for a 20% interest in Designer Donuts as a limited partner and (b) provided more than $60,000 in additional financial backing to Hoffman's Designer Donuts business.

15. At all material times, Hoffman was and is the general partner of Designer Donuts, with its principal place of business at 7042 Pacific View Drive, Los Angeles, California.

16. As the general partner of Designer Donuts, Hoffman owed fiduciary duties to Heights to act in the best interests of Designer Donuts and not for his own self-interest or to the detriment of Heights as a limited partner.

17. Hoffman breached his fiduciary duties to Heights by, among other things, (a) failing to cause Designer Donuts to make any distributions to Heights on account of its limited partner interest in the more than nine years that Designer Donuts has been in operation, notwithstanding recent representations by Hoffman's representatives that the business of Designer Donuts has been "very good," (b) causing Designer Donuts to fail to pay Heights various loan and equipment lease payments that Designer Donuts was contractually obligated to pay Heights, without any cause therefor, and (c) failing to provide Heights with regular and adequate information or reports concerning the business affairs, financial prospects, or financial performance of Designer Donuts.

18. As a direct and proximate result, Heights has been damaged in an amount not yet ascertained, but which Heights is informed and believes and thereon alleges is in excess of the jurisdictional minimum of this Court. Heights will seek leave of this Court to amend this complaint when the true nature and amount of its damages has been ascertained.

SECOND CAUSE OF ACTION
(By Spielberg For Declaratory Relief)

19. Plaintiffs reallege and incorporate by this reference paragraphs 1 through 11, above.

20. In or about May 1995, nearly twenty years after the consummation of the 1977 Buy-Out Agreement and with Spielberg's reputation as a filmmaker well established, Hoffman surfaced once again and claimed, for the first time, that the 1977 Buy-Out Agreement was voidable and that Spielberg was still obligated to direct a picture for Hoffman pursuant to the 1968 Amblin Contract or to pay damages for the alleged breach thereof. Hoffman demanded tens of millions of dollars from Spielberg based on specious claims that the 1977 Buy-Out Agreement had been procured by Spielberg through fraud. Spielberg refused to yield to these baseless claims and prefers that they be litigated in a court of law.

21. An actual controversy now exists between Spielberg and Hoffman. Spielberg contends that the 1977 Buy-Out Agreement is valid and has been fully performed by Spielberg, and that Spielberg does not owe any obligations or monies of any kind whatsoever to Hoffman with respect to the 1977 Buy-Out Agreement or the 1968 Amblin Contract. Hoffman contends otherwise.

22. Spielberg desires a judicial determination of his and Hoffman's respective rights and duties with respect to the 1977 Buy-Out Agreement. In particular, Spielberg desires a declaration that the 1977 Buy-Out Agreement is valid and has been fully performed by Spielberg, and that Spielberg does not owe any obligations or monies of any kind whatsoever to Hoffman with respect to the 1977 Buy-Out Agreement or the 1968 Amblin Contract.

23. The requested declaratory relief is necessary and appropriate at this time to enable Spielberg to establish that he has no further obligations to Hoffman with respect to the 1977 Buy-Out Agreement or the 1968 Amblin Contract.

WHEREFORE, Plaintiffs pray for judgment against Defendants as follows:

1. On the First Cause of Action, for damages according to proof;

2. On the Second Cause of Action, for a declaration by this Court that the 1977 Buy-Out Agreement is valid and has been fully performed by Spielberg, and that Spielberg does not owe any obligations or monies of any kind whatsoever to Hoffman with respect to the 1977 Buy-Out Agreement or the 1968 Amblin Contract; and

3. For costs of suit and for general relief.

ALSCHULER, GROSSMAN & PINES
By: Marshall B. Grossman
By: John A. Schwimmer
Attorneys for Plaintiffs
Heights Investment Co., Inc. and Steven Spielberg

EXHIBIT A

AN AGREEMENT

FROM: STEVEN SPIELBERG

TO: DENIS C. HOFFMAN

To recompense for financing my story to be made into a short film I agree to direct one feature film for DENIS C. HOFFMAN sometime during the next ten years.

I will be paid $25,000 plus 5% of the profit after all expenses.

I will direct any script of DENIS HOFFMAN's selection and I will perform my services for him anytime during the next ten years at his choosing unless I am involved in a project. In which case I will make myself available to him immedit\ately following said project.

/s/Steven A. Spielberg
/s/Denis C. Hoffman
[by hand] 9-28-68

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