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MITCHELL SILBERBERG & KNUPP LLP LUCIA E. COYOCA ( SBN 128314), lec@msk.com NAHLA B. RAJAH ( SBN 218838 ), nbr@msk.com 11377 West Olympic Boulevard Los Angeles , California 90064-1683 Telephone : (310) 312-2000 Facsimile : (310) 312-3100 Attorneys for Defendant R MEDIA ACQUISITIONS, LLC, a Delaware Limited Company

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SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES WEST DISTRICT JOHN CUSACK, an individual ; CUSACK ENTERPRISES, LLC, Plaintiffs,
V.

CASE NO. SC098923 NOTICE OF HEARING ON DEMURRERS AND DEMURRERS TO FIRST AMENDED COMPLAINT BY DEFENDANT R MEDIA ACQUISITIONS, LLC; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS Judge: Honorable Terry B. Friedman Dept: J Hearing Date: February 10, 2009 Hearing Time: 8:45 a.m. File Date: July 8, 2008 Trial Date: None Set

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INTERMEDIA FILM EQUITIES USA, INC., a California Corporation; INTERMEDIA FILM EQUITIES LTD., a business entity of unknown form; IM STOPPING POWER GmbH, a business entity of unknown form; R MEDIA ACQUISITIONS, LLC, a Delaware Limited Company, and successor-in-interest to IM STOPPING POWER GmbH; and DOES 1 through 20, inclusive, Defendants.

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TO ALL PARTIES AND THEIR ATTORNEY'S OF RECORD:

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PLEASE TA

NOTICE that, on February 10, 2009, at 8:45 a.m., or as soon thereafter

as counsel can be heard in Department J of the above entitled court, located at 1725 Main Street, Santa Monica, California 90401, Defendant R Media Acquisitions, LLC ("R Media"), will and hereby does demur to the first, fourth and fifth causes of action alleged in the First Amended Complaint ("FAC") filed by Plaintiffs John Cusack and Cusack Enterprises, LLC ("Plaintiffs"). R Media' s demurrers are made pursuant to Code of Civil Procedure Sections 430. 10, 430.30, and 430.50 , and are based upon this notice, the accompanying demurrers to the FAC, the accompanying memorandum of points and authorities, all records presently on file with the Court, any reply R Media may submit in support of the demurrers , and any additional arguments or evidence presented prior to or at the hearing on the demurrers.

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DATED : November 4, 2008

MITCHELL SILBERBERG & KNUPP LLP Lucia E . Coyoca Nahla B. Raj an

By: Nahla B. Raj Attorneys for D R MEDIA ACQUI ant NS, LLC

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DEMURRERS Pursuant to California Code of Civil Procedure ("CCP") Sections 430.10(e), 430.10(f) and 430.30(x), Defendant R Media Acquisitions, LLC ("R Media") for itself alone, and no other defendant, hereby demurs to the first, fourth, and fifth alleged causes of action in the First Amended Complaint ("FAC") of Plaintiffs John Cusack and Cusack Enterprises, LLC ("Plaintiffs") on each of the following grounds:

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Demurrer to First Alleged Cause of Action The purported First Cause of Action for breach of contract fails to state facts sufficient to constitute a cause of action against R Media. CCP 430.10(e). Demurrer to Fourth Alleged Cause of Action The purported Fourth Cause of Action for express contractual indemnity fails to state facts sufficient to constitute a cause of action against R Media. CCP 430.10(e). Demurrer to Fifth Alle ed Cause of Action The purported Fifth Cause of Action for breach of covenant of good faith and fair dealing fails to state facts sufficient to constitute a cause of action against R Media. CCP 430.10(e). The purported Sixth Cause of Action for breach of covenant of good faith and fair dealing fails because it is uncertain. CCP 430.10(f).

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20 21 22 WHEREFORE, Defendant R Media prays that the Court sustain its demurrers to the first, fourth and fifth causes of action without leave to amend.

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Mitchell Silberberg & Knupp LLP

DATED: November 4, 2008

MITCHELL SILBERBERG & KNUPP LLP Lucia E. Coyoca Nahla B. Raj an

By: Nahla B. R Attorneys for R MEDIA ACQU NS, LLC

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MEMORANDUM OF POINTS AND AUTHORITIES

INTRODUCTION Plaintiffs John Cusack and Cusack Enterprises, LLC (collectively, "Plaintiffs") filed a First

Amended Complaint ("FAC") containing six causes of action against numerous defendants.I It appears that the FAC alleges only two causes of action against Defendant R Media Acquisitions, LLC ("R Media"). The FAC's allegations are divided into several parts; each cause of action is separated by a heading specifying the cause of action and the defendants against which the cause of action is asserted. However, the allegations underneath the heading in the fifth cause of action do not match the defendants identified in the headings. As a result, although R Media is clearly being sued by Plaintiffs in the first and fourth causes of action, it is unclear if the fifth cause of action is also alleged against R Media. Therefore, the fifth cause of action is impermissibly uncertain as to R Media because it is impossible to determine if the allegations in that cause of actions are actually directed against R Media. In addition, the first and the fourth causes of action fail to state facts sufficient to constitute a cause of action against R Media. The first cause of action is for breach of contract. R Media was not a party to any contract with Plaintiffs. The fourth cause of action, for express contractual indemnity, is based on R Media's indemnity agreement with IM Internationalmedia AG ("Indemnity Agreement"), attached to the FAC as Exhibit 4. Plaintiffs attempt to step into the shoes of IM Internationalmedia AG and sue R Media for indemnity. As Plaintiffs have no legal right to do so, this cause of action fails. Thus, the first, fourth and fifth causes of action all fail, and this demurrer should be sustained without leave to amend.

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H.

ALLEGATIONS OF FACTS SET FORTH IN FAC According to Plaintiffs, in or about June 2007, IM Stopping Power GmbH ("Intermedia

GmbH") and Intermedia Film Equities Ltd. ("Intermedia Ltd.") purportedly agreed to pay actor I Plaintiff's FAC also adds a defendant, Capco Group, LLC ("Capco"). R Media is informed and believes that Capco's response to the FAC is due on November 13, 2008.

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John Cusack ("Cusack") $4.5 million to star in the film "Stopping Power" (the "Film"). FAC T 1. The Film was to be shot in Germany and begin production in or around September 2007. FAC 1, 15. Plaintiffs allege Cusack entered into three separate contracts related to the Film: (1) the Service Agreement, in which Cusack was to be paid 4.5 million dollars along with certain expenses for his acting services by Intermedia GmbH; (2) a "Future Picture Agreement," in which Cusack was to be paid a non-refundable advance of 1 million dollars in exchange for Cusack's acting services in connection with a future film production; and (3) the "Guaranty Agreement," in which Intermedia Ltd. purportedly guaranteed both the Service Agreement and the Future Picture Agreement. FAC T 15, 21, 2324. Plaintiffs allege that just as filming was set to commence and all parties had traveled to Germany, Intermedia GmbH lost its financing and production was postponed indefinitely. FAC 1.. Plaintiffs further allege, without any evidentiary support, that R Media is "the sole owner of and successor in interest to defendant Intermedia GmbH, and that R Media has assumed all obligations and liabilities of Intermedia GmbH with respect to the motion picture `Stopping Power."' FAC 10. Finally, Plaintiffs allege that R Media entered into an "Assumption Agreement" with IM Internationalmedia AG. FAC 28. Despite Plaintiffs assertions that the Indemnity Agreement between R Media and IM Internationalmedia AG was an "Assumption Agreement," in fact, the Agreement provides only that R Media shall "indemnify defendant Intermedia GmbH for `all the obligations' arising out of [the Film,] specifically including the obligations relating to Cusack." FAC 29. Plaintiffs further assert, without any legal basis, that they are "express third-party beneficiaries of the contractual indemnity obligations of R Media[.]" FAC 29. Stripped of the obfuscating language, once the allegations are unraveled and the contracting parties are identified in the context of the legal claims asserted against each entity, it is immediately apparent that Plaintiffs have no viable legal claims as to demurring Defendant R Media. Plaintiffs cannot step into the shoes of IM Internationalmedia AG and sue R Media for indemnity nor do they have any direct claims against R Media.

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III.

LEGAL STANDARD A demurrer is proper where a pleading does not state facts sufficient to constitute a cause

of action. Washington v. County of Contra Costa, 38 Cal. App. 4th 890, 895 (1995); see also Civ. Proc. Code 430.10(e). Any doubts in the complaint should be resolved against the pleader, and facts not alleged are "presumed not to exist." See C&H Foods Co. v. Hartford Ins. Co., 163 Cal. App. 3d 1055, 1062 (1984). A demurrer for uncertainty lies where, as here, there is "a doubt as to what the [pleader] means by the facts he has alleged, and it is designed to require the pleader to clarify the doubtful part by more explicit averments." 5 B. E. Witkin, California Procedure, Pleading, 928, at 387 (4th ed. 1997). "The defendant is entitled to know the basis upon which plaintiff claims he has been damaged. [Citations] This is necessary in order to enable defendant to prepare his defense." Oppenheimer v. General Cable Corp., 143 Cal. App. 2d 293, 298 (1956).

IV.

THE FIRST CAUSE OF ACTION FAILS TO STATE A CLAIM AGAINST R MEDIA. The first cause of action alleged against R Media is for breach of contract. It fails because

R Media did not enter into any contract with Plaintiffs. Plaintiffs allegedly entered into a contract with Intermedia GmbH. FAC 116. Plaintiffs allege that Intermedia GmbH breached that contract. FAC T34. However, Plaintiffs do not and cannot allege that there was any direct contractual relationship between Plaintiffs and R Media. Nor can Plaintiffs allege that Intermedia GmbH entered into any contracts with R Media. Instead, Plaintiffs attempt to use a contract between R Media and a party not named in the FAC, IM Internationalmedia AG, to tie R Media to Intermedia GmbWs obligations. In other words, Plaintiffs allege that R Media promised to answer for the debts of Intermedia GmbH despite the fact that R Media and Intermedia GmbH have no direct contractual relationship. Quoting in pertinent part, California Civil Code Section 1624 (a), "the following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent: 6
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(2) A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in Section 2794." Here, Plaintiffs allege that R Media has promised to pay all debts and obligations of Intermedia GmbH that are or may be owed to Plaintiffs under the Service Agreement. The only writing that Plaintiffs allege to support their claim that R Media should be liable for the debts of another entity is the Indemnity Agreement, which is a contract between R Media and IM Internationalmedia AG. Plaintiffs cannot show any direct contractual relationship between R Media and Intermedia GmbH wherein R Media agreed to assume liability for any of the debts of Intermedia GmbH. Plaintiffs cannot use the Indemnity Agreement between R Media and IM Internationalmedia AG to render R Media liable for the debts of Intermedia Gmbh, an entity that was not a party to the Indemnity Agreement. Furthermore, despite Plaintiffs' assertions, the Indemnity Agreement is not an assumption agreement. Plaintiff alleges that "[p]ursuant to [the Indemnity Agreement], R Media... assumed all of Intermedia GmbH's liabilities and obligations arising out of "the Film. FAC 32. To the contrary, the terms of the Indemnity Agreement do not suggest an assumption by R Media of the liabilities and obligations arising out of the Film. Instead, R Media agrees to "indemnify [IM Internationalmedia AG] and its affiliates as necessary... with respect to the obligations arising out of the Film." FAC, Ex. 4, 113. Since the Indemnity Agreement is not an assumption agreement, and R Media is not directly liable to Plaintiffs, Plaintiffs attempt to assign liability to R Media is based on two separate legal theories: (1) Plaintiffs are third-party beneficiaries of the Indemnity Agreement and (2) R Media is the successor in interest to Intermedia GmbH. As further discussed below, neither of these theories has merit. A. Plaintiffs Are Not Third Party Beneficiaries Of The Indemnity Agreement

Plaintiff is not a party to the Indemnity Agreement, but instead claims it is a third party beneficiary of such agreement. "An indemnity provision in a contract is to be construed under the same rules governing other contracts with a view of determining the actual intent of the parties." Hillman v. Burns, 209 Cal. App. 2d. 860, 869 (1989). "If a contract is not made expressly for the benefit of a particular third person, that person cannot enforce the contract even though he or she

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would receive some benefit from the performance of the contract ." Diamond Woodworks, Inc. v. Argonaut Ins. Co., 109 Cal. App. 4th 1020, 1040 (2003) (emphasis added; internal quotes omitted). Plaintiffs allege that the "agreement by R Media ... to indemnity the Intermedia Parties for obligations relating to John Cusack was intended to directly benefit Plaintiffs" (FAC 46), and base that allegation on the fact that Cusack's name appears in the Indemnity Agreement. However, "[t]he fact that [a third party] is incidentally named in the contract, or that the contract, if carried out according to its terms, would inure to his benefit, is not sufficient to entitle him to demand its fulfillment. It must appear to have been the intention of the parties to secure to him personally the benefit of its provisions." Walters v. Calderon, 25 Cal. App. 3d 863, 871 (1972) (emphasis in original). See also Ascherman v. General Reinsurance Corp., 183 Cal. App. 2d 307, 311 (1986) ("For a third party to qualify as a beneficiary under a contract, the contracting parties must have intended to benefit the third party , and their intent must appear from the terms of the contract"). "A third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on the contracting parties' intent to benefit him." Murphy v. Allstate Ins. Co., 17 Cal. 3d 937, 944 (1976). The Indemnity Agreement, although it mentions Plaintiff John Cusack by name, was not intended to benefit Plaintiffs . Instead, it is a standard indemnity agreement in which R Media agrees to indemnify IM Internationalmedia AG as well as its affiliates for all of the obligations arising out of the Film. See FAC, Ex. 4, p. 113. The promises in the Indemnity Agreement are not made for the benefit of Plaintiffs; Plaintiff John Cusack was named only as an example of the possible outstanding obligations related to the Film which would be covered by the Indemnity Agreement. Plaintiffs are not express third party beneficiaries, nor would they directly benefit from the Indemnity Agreement. The only party that would benefit from the Indemnity Agreement is IM Internationalmedia AG, who could look to R Media for indemnity in the event it or one of its affiliates is found liable for an obligation covered by the Indemnity Agreement. R Media is not liable directly to Plaintiffs . Instead, if Plaintiffs secure a judgment against IM Internationalmedia AG or its affiliates, that entity, not Plaintiffs, can seek indemnity from R Media, assuming that the 8
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judgment is covered by the Indemnity Agreement. Because Plaintiffs are not third party beneficiaries to the Indemnity Agreement, they have no claim against R Media based on the Indemnity Agreement. B. R Media Is Not The Successor In Interest To Intermedia GmbH With Respect To Intermedia GmbH ' s Liabilities to Plaintiff. Plaintiffs allege that R Media is the successor in interest to Intermedia GmbH. FAC 10. The Indemnity Agreement provides that R Media "shall acquire... 100% ownership of [Intermedia GmbH]." FAC, Ex. 4, IB. However, "the general rule is `where one corporation sells or transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the former[.] "' McClellan v. Northridge Park Townhome Owners Association, Inc., 89 Cal. App. 4th 746, 707 (2001). The exceptions to that general rule are "(1) the purchaser expressly or impliedly agrees to an assumption of the liabilities; (2) the transaction amounts to a consolidation or merger of the two corporations; (3) the purchasing corporation is merely a continuation of the selling corporation; or (4) the transaction is entered into fradulently to escape liability for debts." Id. None of those exceptions are applicable to this case. Although Plaintiffs repeatedly state that R Media agreed to assume the liabilities of Intermedia GmbH, as stated above, that is not accurate. The Indemnity Agreement does not provide for the assumption of any liabilities by R Media. Instead, the Indemnity Agreement provides that R Media will indemnify certain entities for liabilities associated with the Film. R Media specifically did not assume any liabilities related to the Film nor did it agree to defend any Intermedia entity against claims related to the Film. R Media only agreed to indemnify IM Internationalmedia AG and its affiliates for certain obligations. In other words, if IM Internationalmedia AG and/or its affiliates were found liable to a third party, IM Internationalmedia AG and/or its affiliaties could look to R Media for indemnification.

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V.

PLAINTIFFS FOURTH CAUSE OF ACTION FAILS BECAUSE PLAINTIFFS ARE NOT, AS A MATTER OF LAW, THIRD PARTY BENEFICIARIES OF THE CONTRACT BETWEEN R MEDIA AND IM INTERNATIONALMEDIA AG. The fourth cause of action is for express contractual indemnity. Plaintiff is not a party to

the Indemnity Agreement, but claims it is a third party beneficiary of such agreement.

As stated

above, "[a] third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on the contracting parties' intent to benefit him." Murphy, 17 Cal. 3d at 944. See also Ascherman, 183

Cal. App. 2d at 311 ("For a third party to qualify as a beneficiary under a contract, the contracting parties must have intended to benefit the third party, and their intent must appear from the terms of the contract"). Contrary to Plaintiffs' allegations, the Indemnity Agreement was not made for the benefit of Plaintiffs; Plaintiff John Cusack was named as an example of the possible outstanding obligations related to the Film which would be covered by the Indemnity Agreement, not as an intended beneficiary. Furthermore, as with all other indemnity agreements , R Media is not liable to the indemnitee "until the indemnitee suffers actual loss by being compelled to pay [a] claim." Hillman, 209 Cal. App. 3d at 869. See also Civil Code 2778. If Plaintiffs secure a judgment against IM Internationalmedia AG or its affiliates , that entity, not Plaintiffs, can seek indemnity from R Media, assuming that the judgment is covered by the Indemnity Agreement. Plaintiffs have no claim for indemnity from R Media based on the Indemnity Agreement to which it is neither a party nor a third party beneficiary. For the foregoing reasons, the fourth cause of action must fail.

VI.

THE FIFTH CAUSE OF ACTION IS IMPERMISSIBLY UNCERTAIN. The "Intermedia Parties " are defined in the FAC as "[d]efendants Intermedia Film Equities

USA and Intermedia Film Equities Ltd., as well as IM Stopping Power GmbH [.]" FAC 1 (2:67). Plaintiffs do not include R Media in their definition of which entities constitute the "Intermedia Parties." 10
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Plaintiffs' fifth cause of action does not specifically name R Media as a defendant in the heading. The heading for the fifth cause of action reads "Breach of Covenant of Good Faith and Fair Dealing Against Intermedia Parties[.]" FAC (15:24-26). The allegations of the fifth cause of action contradict the heading and suggest that Plaintiffs may be seeking to impose liability against R Media as to this cause of action. Plaintiffs allege "defendant R Media has purportedly assumed all obligations and liabilities of defendant Intermedia GmbH in connection with the Service Agreement and, accordingly, is responsible for paying Plaintiffs all amounts due and owing under the Service Agreement. By virtue of R Media's failure and refusal to pay the amounts due and owing to Plaintiffs under the Service Agreement, it has failed and refused to honor the implied covenant to act in good faith in dealing with Plaintiffs and ignoring Plaintiffs' rights thereunder. For purposes of this cause of action and hereafter `Defendants' refers jointly and collectively to the Intermedia Parties and R. Media." FAC 55 (16:12-19). Because the allegations as written in the fifth cause of action fail to define with certainty who the alleged liable parties are and who Plaintiffs wish to name as defendants, the fifth cause of action is impermissibly uncertain. Even if Plaintiffs were to allege this claim against R Media, it would fail. "The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract. Without a contractual underpinning, there is no independent claim for breach of the implied covenant." Fireman's Fund Insurance Co. v. Maryland Casualty Co., 21 Cal. App. 4th 1586, 1599 (1994) (internal citations omitted). As there is no such "contractual underpinning" in this case, Plaintiffs claim for the breach of implied covenant of good faith and fair dealing must fail. H

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VII.

CONCLUSION R Media respectfully submits that its demurrers should be sustained, without leave to

amend, and that R Media should be dismissed from this lawsuit.

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MITCHELL SILBERBERG & KNUPP LLP Lucia E. Coyoca Nahla B. Raj an

By: Nahla B. Raja Attorneys for ndant R MEDIA ACQUI S, LLC

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PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the county of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is Mitchell Silberberg & Knupp LLP, 11377 West Olympic Boulevard, Los Angeles, California 90064-1683. On November 4, 2008, I served a copy of the foregoing document(s) described as NOTICE OF HEARING ON DEMURRERS AND DEMURRERS TO FIRST AMENDED COMPLAINT BY DEFENDANT R MEDIA ACQUISITIONS, LLC; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS on the interested parties in this action at their last known address as set forth below by taking the action described below:

8 9 10 11 12 13 14 15 Martin D. Singer, Esq. Brian G. Wolf, Esq. Matthew E. Panagiotis, Esq. Lavely & Singer, P.C. 2049 Century Park East Suite 2400 Los Angeles, CA 90067-2906 Telephone: (310) 556-3501 Facsimile: (310) 556-3615 John A. Strain, Esq. Law Offices of John A . Strain 1611 South Catalina Avenue Suite 212 Redondo Beach, CA 90277 Telephone : (310) 944-3670 Facsimile : (310) 944-9714

0 BY PLACING FOR COLLECTION AND MAILING: I placed the above-mentioned

16 17 18 19 20 21 22 23 24 25 I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed on November 4, 2008, at Los Angeles, California.
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document(s) in sealed envelope(s) addressed as set forth above, and placed the envelope(s) for collection and mailing following ordinary business practices. I am readily familiar with the firm's practice for collection and processing of correspondence for mailing with the United States Postal Service. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at 11377 West Olympic Boulevard, Los Angeles, California 90064-1683 in the ordinary course of business.

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