Professional Documents
Culture Documents
C. COGAN, by and through the undersigned counsel, and file this Motion for Summary
I. PRELIMINARY STATEMENT
The facts of this case will demonstrate to this Court that the plaintiffs’ first amended
complaint is the culmination of a conspiracy to commit fraud that has been perpetrated upon the
shareholders and creditors of Stan Lee Media, Inc., as well as the courts of this district, since
before June of 2001. Although concealed by the plaintiffs for years, the conspiracy and the
frauds have recently come to light and will be uncovered in these proceedings, whether it be on
this motion for summary judgment or in the counterclaim that will follow disposition of motions
regarding the plaintiffs’ first amended complaint. This pending case was not prompted by any
wrongdoing on the part of the named defendants, as alleged, but is simply a last-ditch effort by
the co-conspirators to eliminate their past and any evidence of their fraud.
The defendants contend that the evidence that is presented contemporaneous with the
filing of this motion will clearly demonstrate that the plaintiffs, together with other third parties,
have conspired with one another to defraud the SLMI bankruptcy court, SLMI’s shareholders,
SLMI’s creditors, and the bankruptcy trustee. In conspiring to do so, the plaintiffs, Stan Lee and
Gill Champion, breached their fiduciary obligations as officers and representatives of SLMI
during the bankruptcy proceedings. The plaintiffs have all directly financially benefited from
their acts of conspiracy and fraud in wrongfully and unlawfully taking and using the assets of
SLMI. At all times material to this case, Stan Lee and Gill Champion have been insiders to all of
the information that will be presented to this court. At all times material hereto, these insiders,
together with other co-conspirators, raided the assets of SLMI and left it, and its shareholders
and creditors behind. In furtherance of the conspiracy, Stan Lee and Gill Champion developed
two new companies, POW! Entertainment, Inc. (hereinafter referred to as “POW!”) and QED
Productions, LLC (hereinafter referred to as “QED”). Thereafter, Stan Lee and Gill Champion
proceeded to illegally move assets of SLMI into QED and POW!, all while SLMI was under
bankruptcy protection. Even though they do not prefer to be labeled “conspirators” and will
disagree with the term “fraud” being used, it appears that the plaintiffs’ first amended complaint
2
admits all of the facts underlying these allegations. Regardless of how one characterizes or
labels what has happened, SLMI was in bankruptcy, SLMI was managed by Stan Lee and Gill
Champion, Stan Lee and Gill Champion did not like SLMI’s future, Stan Lee and Gill Champion
established new companies, and Stan Lee and Gill Champion simply transferred the assets from
SLMI to their new companies without any authority to do so. The unauthorized taking is nothing
short of theft.
In support of this motion or summary judgment, the defendants have prepared and are
presenting to this court substantial evidence in support of these allegations. The facts, as they
will be presented to this court, are completely supported by documentation, which is already of
record (1) in other judicial proceedings in this Central District of California, (2) with the State of
Delaware Division of Corporations, (3) with the State of Colorado Division of Corporations, (4)
with the United States Copyright and Trademark Office, (5) with the Securities and Exchange
Commission (hereinafter “SEC”), and (6) as otherwise supported by documents and affidavits
which are filed with this Court in support of this motion. Furthermore, the pleadings will also be
a source of information for this court to consider in making its determination on this motion. In
fact, the plaintiffs, by their very own admissions, as contained within their initial complaint and
first amended complaint, have eliminated much of the requirement that the defendants present
any evidence for this court to grant summary judgment in this case.
The Plaintiffs have filed an eight (8) count complaint against the defendants, seeking
relief based upon allegations of copyright infringement (Count I); violation of 15 U.S.C. § 1125,
Lanham Act (Count II); violation of 15 U.S.C. § 1125(d) cyber squatting (Count III); violation of
common law right of privacy (Count IV); interference with contractual relations (Count V);
3
interference with prospective economic advantage (Count VI); violation of Cal. Bus. & Prof.
Code §§ 17200 et seq., Unfair Business Practices (Count VII); and declaratory relief (Count
VIII).1
The plaintiffs allege generally that these defendants have “conspired to falsely and
The plaintiffs aver that the defendants are interfering with their rights to certain intellectual
properties, as well as Stan Lee’s name and likeness. Furthermore, in a legal maneuver that is
nothing short of astonishing, the Plaintiff, Gill Champion, who, for years, completely ignored his
fiduciary and other obligations to SLMI based upon more promising financial gain with POW!
and QED, has filed an action against the defendants in his derivative capacity on behalf of SLMI.
The plaintiffs admit in their pending complaint that (1) SLMI, by and through its
predecessor in interest, Stan Lee Entertainment, Inc., was founded in 1998 for the purpose of
acquiring those assets at issue in this pending action,3 (2) that SLMI was formed through a
reverse merger in 1999 and acquired the assets of its predecessor, Stan Lee Entertainment, Inc., 4
(3) that on February 16, 2001, SLMI filed for Chapter 11 bankruptcy protection in the United
States Bankruptcy Court, Central District of California, Case No. SV-01-11329-KL, jointly
Case”),5 (4) that the plaintiff, Stan Lee, on behalf of SLC, LLC, entered into an agreement with
SLMI, debtors-in-possession in the Bankruptcy Case, to acquire all rights to certain intellectual
properties and produced entertainment projects, including properties known as The Accuser, The
1
See generally Plaintiffs’ First Amended Complaint.
2
Plaintiffs’ First Amended Complaint at p. 2, lines 14-16 (emphasis added herein).
3
Id. at ¶ 15.
4
Id. at ¶ 19.
5
Id. at ¶ 20.
4
Drifter and Stan’s Evil Clone a/k/a Evil Clone (hereinafter referred to as the “intellectual
properties”),6 and (5) that the aforementioned agreement between Stan Lee, on behalf of SLC,
LLC, and SLMI, debtor-in-possession, was approved by Order of the Court in the Bankruptcy
Case on or about April 11, 2002.7 Throughout the remainder of this motion, the April 11, 2002
Order and the agreement incorporated therein shall be referred to collectively as the “April 11,
In the initial complaint on file with this Court, the plaintiffs first alleged that “SLC, LLC”
purchased the properties at issue from the Debtors, and that “SLC, LLC” thereafter assigned all
rights to the properties to Plaintiff, QED.8 As a point of fact and of record with the State of
California Division of Corporations, “SLC, LLC” was never formed by Stan Lee. 9 The
defendants have presented for this Court’s consideration on this motion, certified copies of the
records of the State of California Division of Corporations, evidencing the fact that “SLC, LLC”
was never formed by Stan Lee, and in fact, was formed by SLMI in December of 2006 to
highlight the issue and to preempt any effort by Stan Lee to attempt to create SLC, LLC after the
fact.10
The Plaintiffs then went on in the initial complaint to allege that the assets, including The
Accuser and The Drifter, were actually sold to “SLC, LLC” (the nonexistent entity) pursuant to
the April 11, 2002 order, and that the assets were thereafter assigned by “SLC, LLC” to Plaintiff,
QED Productions, LLC (hereinafter referred to as “QED”).11 The U.S. Copyright Office records,
all of which have been provided to this Court in support of this motion for summary judgment,
6
Id. at ¶ 21.
7
Id.
8
See Plaintiff’s Complaint [Initial] at ¶ 14.
9
Certified copies of the State of California Division of Corporations records on SLC, LLC, a California limited
liability company have been submitted to this court for consideration on this motion as _____.
10
Id.
11
See Plaintiff’s Complaint [Initial] at ¶ 14.
5
clearly show that the assets being sued upon for infringement and otherwise, were never
conveyed by the Debtors to “SLC, LLC” and that the assets were never conveyed by “SLC,
LLC” to QED.12 Instead, the assets were purportedly assigned by SLMI directly to QED on
August 7, 2006.13 Notice should be taken of the fact that the conveyance is dated more than four
(4) years after the date upon which such conveyance was supposed to be effectuated to SLC,
LLC.14
In their first amended complaint, the plaintiffs have now completely changed their factual
6
those properties from SLMI, so it was decided that a different
name would be used, not a corporate name using Stan Lee’s name
or initials, such as SLC, LLC. Instead, Plaintiff QED, a wholly-
owned subsidiary of POW! [Entertainment, Inc.], acquired the
Properties from SLMI. The change of the name of the company
acquiring the assets did not change any of the terms of the
Agreement, as amended. On information and belief, the creditors
of SLMI knew of and did not object to the use of a different name
of the company acquiring the assets.”16
A. The Named Defendants And The History Of Stan Lee Media, Inc., A Colorado
Corporation
Even though the defendants have been sued individually, they are the principals of SLMI
and the only true fiduciaries of the company. At all times material hereto, the defendants have
acted in their capacity as agents and officers of SLMI and have done nothing in their individual
capacities.17 Contrary to the allegations contained within the plaintiffs’ first amended complaint,
the defendants have done nothing wrong, improper or illegal, and in fact, are the only reason
SLMI exists today.18 But for the defendants, SLMI would remain a dissolved company. 19
Regardless of their current status as shareholders of SLMI, the plaintiffs, Stan Lee and Gill
Champion, would have liked nothing better than the destruction and disappearance of SLMI and
its records. In fact, the only reason they assert a derivative action in the instant case is to further
attempt to maintain control of the entity that they hoped would have died in bankruptcy.
However, based solely upon the extraordinary efforts of these named defendants, SLMI and its
records remain intact.20 The defendants have done all things necessary and proper to save SLMI
from the abuse and neglect it had suffered at the hands of the plaintiffs.21 SLMI is currently
16
Id. at ¶ 22.
17
See Affidavit of James Nesfield.
18
Id.
19
Id.
20
Id.
21
Id.
7
being managed by the defendants in compliance with all applicable laws of the State of
Colorado.22 In order to provide both a legal and factual basis for the current management and
state of affairs of SLMI, it is necessary to provide the Court with the following information and
SLMI, was incorporated on October 13, 1998.23 On October 15, 1998, Stan Lee, assigned
everything he owned in the creative universe to SLMI and granted to SLMI the exclusive rights
to his name and likeness.24 On April 14, 1999, Stan Lee Entertainment, Inc. merged into Stan
Lee Media, Inc., a Delaware Corporation, another predecessor in interest to SLMI.25 On or about
August 12, 1999, by reverse merger with a company by the name of Boulder Capital
Opportunities, Inc., a Colorado corporation, Stan Lee Media, Inc., a Delaware corporation,
became a Colorado corporation26 and thereafter was publicly traded for a time on the New York
Stock Exchange.
B. SLMI Bankruptcy
On or about February 16, 2001, SLMI filed for bankruptcy protection pursuant to Chapter
11 in the Central District of California.27 The SLMI bankruptcy was pending between February
16, 2001 and November 14, 2006, a period of almost five (5) years and nine (9) months.28
During the entirety of the bankruptcy proceedings, Stan Lee and Junko Kobayashi were the
22
Id.
23
A certified copy of Stan Lee Entertainment, Inc.’s Delaware Certificate of Incorporation has been submitted to
this court in support of this motion as ___________.
24
A complete copy of the October 15, 1998 Assignment is referenced within the plaintiffs’ first amended complaint
and has also been filed with this court in support of this motion as _________.
25
A certified copy of Stan Lee Entertainment, Inc.’s Delaware Certificate of Merger of Stan Lee Entertainment, Inc.
into Stan Lee Media, Inc., a Delaware corporation, has been submitted to this court in support of this motion as
___________.
26
A certified copy of the State of Colorado Division of Corporations records regarding Stan Lee Media, a Colorado
Corporation and the merger with Boulder Capital Opportunities, Inc. have been submitted to this court in support of
this motion as ________.
27
Plaintiffs’ First Amended Complaint at ¶ 20.
28
See Affidavit of James Nesfield.
8
purported “representatives” and “fiduciaries” of SLMI. In fact, in the plaintiffs’ own first
amended complaint, they allege that Junko Kobayashi was appointed by SLMI’s board of
directors to serve as “the authorized representative of SLMI during the Bankruptcy Case.”29 The
importance of Stan Lee’s and Junko Kobayashi’s positioning at the gates of SLMI’s assets will
On or about November 7, 2006, the counsel of record for SLMI filed a “Notice of Non-
counsel that there were “no unencumbered assets over and above the post-petition secured debt,
which may be monetized for the benefit of creditors” and requested permission to destroy all
property, files and records of SLMI.30 On or about November 14, 2006, SLMI’s bankruptcy
petition was dismissed by verbal order of the bankruptcy judge. 31 On or about November 15,
2006, and in an emergent attempt to save the property, files and records of SLMI from imminent
destruction, the defendant, James Nesfield, after acquiring the proxies of a majority of the
shareholders of SLMI and after obtaining the authority of said majority of shareholders of SLMI,
wrote a letter to SLMI’s bankruptcy counsel asking for said counsel to turn over and not destroy
SLMI’s property, records and files.32 In addition, the defendant, James Nesfield, also filed
Amended and Restated Articles of Incorporation for SLMI, as SLMI had been dissolved since
August 1, 2002.33 On or about November 16, 2006, bankruptcy counsel for SLMI wrote back to
29
Plaintiffs’ First Amended Complaint at p. 10, ¶ 24, lines 15-16.
30
A certified copy of the SLMI bankruptcy document entitled “Notice of Non-Opposition to Dismissal of Chapter
11 Bankruptcy Cases” dated November 7, 2006 has been submitted to this court for consideration on this motion as
_______________.
31
See certified copy of document entitled “Order Dismissing Cases and Judgment for Quarterly Fees” dated
November 14, 2004 and entered on December 6, 2006. Although the date for the hearing is indicated at November
14, 2004, the actual date of the hearing was November 14, 2006. This is clearly a typographical error on the part of
the drafter. It should also be noted that the date that the document was “logged” was November 17, 2006.
Nevertheless, as other documents reflect, the bankruptcy judge dismissed the case by verbal ruling on November 14,
2006.
32
Id.
33
Id.
9
James Nesfield confirming that the bankruptcy cases had been dismissed by verbal order of the
bankruptcy judge on November 14, 2006 and assuring James Nesfield that steps were being
On November 27, 2006, proper notice of a Special Meeting of Shareholders of Stan Lee
Media, Inc. of Colorado was sent to all interested parties, with approximately 90% of the
shareholders being notified by direct mailing and the remaining shareholders being notified by
of the shareholders of SLMI was held and a majority of the shareholders appeared at the
meeting.36 During the meeting all previous actions of the defendants were ratified, officers and
directors were properly appointed and SLMI has been conducting business ever since.37
Contrary to the false statements contained in the first amended complaint, the defendants
have been acting with the best of intentions and have conducted themselves with the utmost
integrity in representing the best interests of the shareholders of SLMI.38 As of this date, SLMI
remains a global branded content creation, production and marketing company founded by pop
culture icon Stan Lee. SLMI continues to conduct business and intends to continue with its
branded characters and story franchises for entertainment, merchandising and promotional
exploitation worldwide. Built on Stan Lee's signature style, Stan Lee Media Studios will also be
a leading entertainment company featuring branded animation franchises for all media targeting
10
In proceeding to describe what happened during the SLMI bankruptcy proceedings, it is
helpful to break up the discussion into two subsections; first, what Judge Lax ordered, and
second, what actually happened. As the court will see, these are two very different things.
During the SLMI bankruptcy, and of vital importance to the court’s decision in this case,
The Honorable Judge Kathleen T. Lax, United States Bankruptcy Court Judge, Central District
of California, San Fernando Valley Division, who was the judge presiding over the SLMI
bankruptcies, Case No. SV 01-11329 KT, jointly administered with Case No. SV 01-11331 KT,
entered an order dated April 11, 2002, which authorized the sale of certain assets of SLMI to a
company by the name of SLC, LLC.40 The assets authorized to be sold by the April 11, 2002
Order are the same assets at issue in the plaintiffs’ pending first amended complaint.
The April 11, 2002 Order was entered as a result of a motion, a supplement to the motion
and a notice of hearing, certified copies of which have all been provided to this Court for
consideration on this pending motion for summary judgment.41 As is clear from the motion, the
supplement to the motion and the notice of hearing on the motion to approve the sale of the
assets, all interested parties, as well as Judge Lax, were considering and ultimately approved the
sale of the assets to SLC, LLC, a California limited liability company. Although the April 11,
2002 Order speaks for itself, there are a few provisions worth noting. Specifically, the April 11,
2002 Order (1) authorized the agreement between Stan Lee, on behalf of “SLC, LLC”, and
40
See generally certified copy of April 11, 2002 Order by The Honorable Judge Kathleen T. Lax, United States
Bankruptcy Court Judge, Central District of California, San Fernando Valley Division, which was entitled “Order
Granting Motion for Order to Approve Sale of Assets Free and Clear of Liens” filed with this court in support of this
motion as _______.
41
See generally certified copies of “Notice of Motion and Motion for Order to Approve Sale of Assets Free and
Clear of Liens; Memorandum of Points and Authorities; Declaration of Kenneth S. Williams in Support Thereof”
dated November 27, 2001; “Notice of Hearing on Motion for Order to Approve Sale of Assets Free and Clear of
Liens dated November 27, 2001; “Supplement in Support of Motion for Order to Approve Sale of Assets Free and
Clear of Liens” dated January 21, 2002; all of which have been filed with this court in support of this motion as
_____, _____ and _____ respectively.
11
SLMI, debtor-in-possession (attached to the April 11, 2002 Order), to be consummated; (2)
authorized the sale of certain of SLMI’s assets to an entity by the name of “SLC, LLC”, which
entity was specifically represented by Stan Lee to be a California limited liability company;42 (3)
involved not only Stan Lee, on behalf of SLC, LLC, but also involved the secured creditor by the
name of Wild Brain, Inc. and the Official Committee of Unsecured Creditors; (4) not only
limited the type of assets authorized to be sold, but also specifically designated the entity to
purchase the assets; that being SLC, LLC, a California limited liability company; 43 (5) required
that the articles of organization reflect that SLC, LLC be a special purpose entity thereby
expressly restricting the business of SLC, LLC to only the exploitation of the specific assets
being sold and specifically prohibiting SLC, LLC from conducting any other business;44 (6)
prohibited SLC, LLC from assigning, conveying, encumbering, or otherwise transferring the
assets to anyone without the express written consent of SLMI;45 (7) required that any purported
assignment or transfer of the assets at issue be approved by the bankruptcy court. It is clear from
the very specific instructions contained within Judge Lax’s Order, that the requirements of Stan
Lee, on behalf of “SLC, LLC”, were not optional, and that Stan Lee did not have any authority
whatsoever to unilaterally change Judge Lax’s Order and substitute his own judgment based
It goes without saying that the purpose behind seeking approval and authorization to sell
assets during any bankruptcy is to ensure that no insider or equity holder of the debtor-in-
possession wrongfully benefits from a particular transaction to the detriment of the creditors and
the shareholders of the debtor-in-possession. In fact, in Judge Lax’s Order she specifically
references findings, which are required in any such situation, whereby she found that (1) “the
42
April 11, 2002 Order, Agreement Article 3, ¶ 3.2.
43
April 11, 2002 Order, Agreement Article 3, ¶ 3.2.
44
April 11, 2002 Order, Agreement, Article 3, ¶ 3.1.
45
[Agreement, Article 7, ¶ 7.9]
12
terms and conditions of the Sale Agreement is in the best interest of the Debtors and their
estates”;46 “the terms of the sale of the Assets to Buyer [SLC, LLC] are the result of good faith
and arm’s length negotiations between the Debtors, the Official Committee of Unsecured
Creditors (the “Committee”), Wild Brain and Buyer, and the Debtors have determined . . . that
the Assets should be sold to Buyer [SLC, LLC]. . . and that the consideration to be realized by
the Debtors is fair and reasonable”;47 and (3) that “Buyer [SLC, LLC] has acted, and is acting, in
good faith, and is therefore entitled to the provisions afforded to a good faith purchaser under 11
U.S.C. § 363(m).”48 Furthermore, it is clear from Judge Lax’s Order and the agreement
incorporated therein were drafted with the intent of maintaining control over the manner in
Even though Judge Lax and all of the interested parties very apparently went through
great effort to negotiate and finalize the terms and conditions of the April 11, 2002 Order, Stan
Lee, by his own admission in the plaintiffs’ first amended complaint, unilaterally and without
any authority of any kind, decided not to close on the sale of the assets to SLC, LLC. In fact,
Stan Lee admits that he never even set up SLC, LLC, even though for the approximately six
months from November of 2001 through April 11, 2002 he allowed the bankruptcy judge,
trustee, creditors and all interested parties believe that he was doing so. Furthermore, Stan Lee
went so far as to sign a document that was filed with the court in support of the proposed sale of
assets, warranting and representing that SLC, LLC was, at the time of that filing, an existing
limited liability company pursuant to the laws of the State of California. In short, there was
never any closing and never any transfer or sale of assets to SLC, LLC, as ordered. Instead, the
46
April 11, 2002 Order at p. 3, lines 5-7.
47
Id. at p. 3, lines 10-19.
48
Id. at p. 4, lines 6-8.
13
plaintiffs now allege in their first amended complaint that Stan Lee caused the assets to be
transferred to QED. Interestingly, the plaintiffs fail to provide any date or dates upon which the
purported transfers from SLMI to QED took place. The defendants are aware of only one
documented transfer by SLMI to QED, that being the fraudulent assignment of copyrights by
IV. ARGUMENT
The defendants contend that summary judgment is appropriate for a number of reasons.
First, all of the actions of the defendants with regard to the pending action have been performed
in their capacity as the authorized agents and officers of SLMI. Therefore, all of the causes of
action asserted by the plaintiffs as against these individual defendants are due to be denied on
summary judgment. Second, all of the causes of action asserted by the plaintiffs are based upon
plaintiffs’ preliminary factual assertion that they are the legal owners of the assets at issue.
Based upon the evidence presented to this court in support of this motion and based upon the fact
that the plaintiff will not be able to present any additional facts in support of their claimed
ownership of said assets, summary judgment is appropriate. Based upon the fact that the
plaintiffs’ claim of ownership originates with illegal and unauthorized actions by Stan Lee, Gill
Champion and Junko Kobayashi, there is no way that the plaintiffs can ever prove to this Court
A. The Individually Named Defendants Have Never Acted In Their Individual Capacities
And Have Always Acted Under Full Legal Authority As Duly Appointed/Elected Agents
And Officers Of SLMI
The facts as set forth herein clearly demonstrate that, at all times and in all instances
material hereto, the defendants have always acted in their capacity as duly appointed/elected
14
agents and officers of SLMI. Contrary to the plaintiffs’ allegations as contained within the first
agents and officers of SLMI was properly noticed and administered. Contrary to the plaintiffs’
allegations, the bankruptcy proceedings were not still pending when the actions taken by the
defendants were commenced. In fact, the bankruptcy cases were dismissed by verbal order of
Judge Lax on November 14, 2006. This fact is clearly supported by the letter from SLMI’s
bankruptcy attorney, David B. Golubchik. Furthermore, this fact is also clearly supported by the
face of the Order Dismissing Cases and Judgment for Quarterly Fees, bearing a date of
B. Plaintiffs Will Not Be Able To Prove That They Are The Legal Owners Of The Assets
1. Intellectual Properties
I,49 Count II,50 Count IV,51 Count V,52 Count VI,53 Count VII,54 and Count VIII.55 QED must be
able to prove that it owns the intellectual properties before it can be allowed to proceed with its
causes of action. QED’s alleged ownership of the intellectual properties originates with the
April 11, 2002 Order. The defendants have produced the April 11, 2002 Order to this Court for
consideration on this motion. There are no additional facts that could be presented by the
plaintiffs with regard to their claimed rights pursuant to the April 11, 2002 Order. This Court is
in a position to consider all of the facts that are going to be presented by the plaintiffs on this
issue of their claim of ownership in the intellectual properties at issue. Pursuant to the express
49
Plaintiffs’ First Amended Complaint at ¶ 39.
50
Id. at ¶ 51.
51
Id. at ¶ 71.
52
Id. at ¶ 78.
53
Id. at ¶ 84.
54
Id. at ¶ 99.
55
Id. at ¶¶ 104(a), 104(b), 104(c), 106 and 108.
15
language of the April 11, 2002 Order, it is clear that QED, POW!, Stan Lee or Gill Champion are
The plaintiffs have also attempted to convince this Court that it is perfectly acceptable for
Stan Lee to have made a change to Judge Lax’s Order by attempting to sell and convey the
intellectual properties to another entity of theirs because “[t]here was no operational difference
between the two [SLC, LLC & QED]; that is, what SLC, LLC was intended to be, as compared
with what QED was intended to be, other than a difference in the name of the two companies.” 56
The defendants contend that Stan Lee had no authority to modify anything in Judge Lax’s Order,
and that if he wanted to modify anything in the April 11, 2002 Order he needed to obtain court
approval, as well as approval from all interested parties. In failing to do so, Stan Lee’s actions
are no different than some third party stealing the assets from SLMI during the bankruptcy
proceedings.
Even putting aside for a moment the contempt of Stan Lee in disregarding Judge Lax’s
Order and doing whatever he felt like doing at the time, the reason provided by the plaintiffs for
his decision also reveals more frauds upon the bankruptcy court. Specifically, the plaintiffs
contend that the reason Stan Lee ignored Judge Lax’s Order was because he “did not want his
name or persona to be directly associated with the company that would be purchasing those
properties from SLMI.”57 Such a statement is the complete opposite of the reasons cited by Stan
Lee in obtaining approval from the bankruptcy court for the sale in the first place. Specifically,
on page twelve (12) of the “Notice of Motion and Motion for Order to Approve Sale of Assets
Free and Clear of Liens; Memorandum of Points and Authorities; Declaration of Kenneth S.
Williams in Support Thereof” [Bankruptcy Case] dated November 27, 2001, it is stated:
56
Plaintiffs’ First Amended Complaint at p. 9, ¶ 23, lines 24-26.
57
Id. at p. 9, ¶ 22, lines 10-11.
16
“Based on the Debtors’ unsuccessful marketing efforts and the
importance of Stan Lee’s personal involvement in the
productions, it was evident that the highest and best use for the
estates’ assets would be through the exploitation of such assets
by Stan Lee. Accordingly, the Debtors engaged in negotiations
with Stan Lee, who was represented by independent counsel,
regarding the development and exploitation of the Creative Assets.
The Creditors’ Committee was also involved in such negotiations
and assisted the Debtors in obtaining a result which is much more
favorable for the estate than originally proposed by Stan Lee. . . .
Based upon extensive negotiations among the Debtors, the
Committee and Stan Lee, which spanned approximately two (2)
months, the parties reached an agreement, the salient terms of
which the Debtors understand are acceptable to the Committee.”58
Therefore, throughout the negotiations and hearings before the bankruptcy court in 2002,
Stan Lee stood by while Judge Lax authorized the sale of assets of SLMI to SLC, LLC,
specifically so that the assets could derive their full potential from the affiliation with Stan Lee’s
name. The order was executed on April 11, 2002 and the closing on the sale was to take place
within ten (10) days of the date of the order. If what the plaintiffs are alleging is true, at some
point in time during those ten (10) days following the April 11, 2002 Order, Stan Lee completely
changed his mind about being affiliated with the assets, unilaterally made the decision to ignore
Judge Lax’s Order, and decided to convey the assets, not to SLC, LLC, but to convey them to an
entity that he had conveniently established some six (6) months earlier. Again, aside from the
contempt, which is admitted by the Plaintiffs, the facts, as alleged do nothing to help the
plaintiffs, but instead simply reveal more of the fraud upon Judge Lax.
In making any determination as to the issues in this case, it is also very important to look
into the timeline of events, as they transpired in preparation for the sale of assets:
58
A certified copy of the SLMI bankruptcy filing entitled “Notice of Motion and Motion for Order to Approve Sale
of Assets Free and Clear of Liens; Memorandum of Points and Authorities; Declaration of Kenneth S. Williams in
Support Thereof” dated November 27, 2001 has been submitted to this court for consideration on this motion as
_______.
17
Gill Champion works with Stan Lee on commencing 06/2001
the work for the formation of POW! Entertainment, Inc.
The certified copy of the Certificate of Formation of QED has been filed with this Court
in support of this motion. It is clear that QED was formed on November 8, 2001 with the initial
member of the limited liability company being Stan Lee, an individual. This is important in that
QED was formed before any agreement was ever signed, any motion was ever filed and any
order was ever entered. Furthermore, there is no limitation language contained within the
Certificate of Formation, as was specifically required by Judge Lax to be a condition of the sale
of assets. It is also clear from the present operations of QED and will not be disputed by the
plaintiffs, that QED is involved in business operations which far exceed the limited business
18
In an effort to demonstrate the metamorphosis that took place while the SLMI
Bankruptcy Case was still pending, the defendants present the following for this court’s
consideration:
Stan Lee Chief Creative Officer & Chief Creative Officer &
Chairman Chairman
Gill Champion Chief Operating Officer President & Chief Operating
Officer
Junko Kobayashi Controller Chief Financial Officer
Without an ounce of concern for the contemptuous acts of Stan Lee, Gill Champion and
Junko Kobayashi, not to mention the complete disregard of their respective fiduciary obligations
to the existing shareholders of SLMI, plaintiff, POW!, published and continues to publish on
19
It is clear from the information publicized by Plaintiff, POW!, that the conspiracy to
commit certain frauds through the use of the Bankruptcy Case and against both the creditors and
shareholders of SLMI originated well before the first motion seeking the sale of assets had ever
been signed. Furthermore, it is clear from the sequence of events that the perpetrators of the
frauds, Stan Lee, Gill Champion and Junko Kobayashi, to name a few, saw that SLMI was in
bankruptcy, established another company of their own, and simply attempted to move valuable
assets of SLMI out from under the bankruptcy judge, the debtors, the creditors, the shareholders,
the trustees and all other interested parties. There is absolutely no other way to look at this set of
facts.
The defendants have submitted to this Court the records of the U.S. Copyright Office
regarding the purported transfers of the copyrights for The Accuser and The Drifter. Junko
Kobayashi is currently the Chief Financial Officer for POW! Not unlike all of the other
principals and fiduciaries of SLMI at the time the Bankruptcy Case was pending, Ms. Kobayashi
secured an executive position with the newly formed companies of POW! and QED. In fact, she,
like the others, secured her position while she was purportedly acting in the capacity as agent and
fiduciary of SLMI. As a result, Ms. Kobayashi was purportedly acting as fiduciary and agent of
SLMI during the Bankruptcy Case, while also acting as the Chief Financial Officer for POW!,
the new parent company of QED. To interject even more conflicts of interest, it was Ms.
Kobayashi herself who signed the Assignment of Copyrights purportedly “on behalf of” SLMI
(as “Assignor”) directly to QED (as “Assignee”) even though Ms. Kobayashi was fully aware of
the content of Judge Lax’s order, the fact that she knew the assets were to be sold to SLC, LLC
and not to QED, and even though she knew that the sale of assets was to take place more than
20
Ironically, Gill Champion, a newly added plaintiff, who is purporting now to act on
behalf of SLMI in a derivative action against the defendants, was the person who signed the
invalid assignments on behalf of QED, as Assignee. Like Ms. Kobayashi, the plaintiff, Gill
Champion, knew everything that was going on with the Bankruptcy Case and the April 11, 2002
Order and sale of assets agreement, as Gill Champion was the Chief Operating Office (COO) of
On page six (6) of the Agreement specifically warranted and represented to Judge Lax
that “Purchaser [SLC, LLC] is a duly formed limited liability company organized under the laws
hypothetical and anticipatory context suggested by the plaintiffs’ counsel. Instead, Stan Lee
specifically represented and warranted to Judge Lax that SLC, LLC had already been formed and
was in existence as of the date of his signing of the Agreement, January 20, 2002.
In yet another attempt by the plaintiffs to convince this court of facts which simply are
not true, the plaintiffs attempt to state that they have fully complied with all of the provisions,
terms and conditions of Judge Lax’s Order. Aside from authoring a sale of assets to one
particular entity—SLC, LLC, Judge Lax’s April 11, 2002 Order also contemplated payments that
were to be made first to the secured creditor in Wild Brain and thereafter to SLMI, the debtor-in-
possession. The plaintiffs allege in their first amended complaint that QED has “complied with
all of the terms of the Asset Purchase Agreement and Bankruptcy Court order of April 2002,
approving the terms of the Agreement.” Although we already know that there are countless
factual flaws with such a statement, yet another is that QED has paid absolutely zero to Wild
Brain, as the secured creditor and zero to SLMI, as was specifically required, in great detail, by
Judge Lax. Therefore, even if this Court were to find that somehow Judge Lax’s April 11, 2002
21
allowed the parties to simply substitute in whatever terms they felt were convenient to them at
the time, the allegation that QED has somehow “complied with all of the terms” in place of SLC,
LLC, is a completely false statement, unsupported by any evidence of any kind whatsoever.
To the extent that QED and/or POW! may attempt to rely upon the purported assignment
of copyrights executed by Junko Kobayashi dated July 31, 2006, such assignments were
executed and recorded without any authority of the bankruptcy court in the Bankruptcy Case. As
the plaintiffs allege in their first amended complaint, Junko Kobayashi was the appointed
representative for SLMI during the bankruptcy proceedings, Junko Kobayashi had full
knowledge of everything that was transpiring, including the April 11, 2002 Order. What the
plaintiffs fail to point out in their initial or first amended complaint is that, while the bankruptcy
proceedings for SLMI were pending, Stan Lee offered Ms. Kobayashi a position as Chief
Financial Officer of POW! Entertainment, Inc., the parent company of QED Productions, LLC.
As a result, Junko Kobayashi had legal and fiduciary obligations to SLMI, the bankruptcy court,
the bankruptcy trustee, the creditors committee and the shareholders of SLMI. As the
Bankruptcy Case was pending through the hearing on November 14, 2006, Junko Kobayashi had
absolutely no authority, and in fact, was well aware of the April 11, 2002 Order, which
specifically authorized only one form of sale and transfer of assets; that being from SLMI to
SLC, LLC, a California corporation. Furthermore, the recipient of the purported assignment,
Plaintiff, Gill Champion, on behalf of QED, had the same knowledge as Junko Kobayashi.
Based upon the foregoing, the purported transfer of the intellectual properties from a
debtor-in-possession, while the Bankruptcy Case was still pending, without any authority to do
so, is an involuntary and unauthorized transfer. Involuntary transfers of assets, particularly those
59
Plaintiffs’ First Amended Complaint at ¶ 24.
22
which are effectuated by persons having full knowledge of a judge’s order to the contrary, are
governed by 11 U.S.C. § 362, which specifically states that the filing of a bankruptcy petition, as
in the case of SLMI, “operates as a stay, . . . , of—any act to obtain possession of property of the
estate or of property from the estate or to exercise control over property of the estate.”
Involuntary transfers of assets in violation of 11 U.S.C. § 362 are void ab initio. Therefore, as a
matter of law, the defendants contend that any purported assignment is void from its inception
and had no legal effect whatsoever. As a result, SLMI continues to own and hold all rights,
interest and copyrights in and to the intellectual properties at issue, and the plaintiffs have
As the plaintiffs are unable to present any additional facts to this Court sufficient to
establish their purported ownership of the rights to the intellectual properties and the right to use
the name and likeness of Stan Lee, the entirety of the plaintiffs’ case should be dismissed on
summary judgment.
Plaintiffs’ purported rights to use the name and likeness of Stan Lee are also based
entirely upon the April 11, 2002 Order. Once again, the Plaintiffs’ alleged right to use the name
and likeness of Stan Lee to the exclusion of SLMI are material allegations in Count I, 60 Count
II,61 Count IV,62 Count V,63 Count VI,64 Count VII,65 and Count VIII.66
Pursuant to the October 15, 1998 Assignment from Stan Lee to SLMI, Stan Lee
conveyed, assigned and sold to SLMI the exclusive right to use the name and likeness of Stan
60
Plaintiffs’ First Amended Complaint at ¶ 39.
61
Id. at ¶ 51.
62
Id. at ¶ 71.
63
Id. at ¶ 78.
64
Id. at ¶ 84.
65
Id. at ¶ 99.
66
Id. at ¶¶ 104(a), 104(b), 104(c), 106 and 108.
23
Lee.67 Stan Lee has received adequate consideration for this and other assignments described in
the October 15, 1998 Assignment.68 The plaintiffs allege that somehow the April 11, 2002 Order
stripped from SLMI the rights to use the name and likeness of Stan Lee.69 The defendants
continue to contend that the April 11, 2002 Order and agreement are void in light of the totality
of the circumstances already discussed herein. However, even if this Court were to consider the
April 11, 2002 Order on the issue of Stan Lee’s name and likeness, it is clear from the April 11,
2002 Order that there is nothing which divests SLMI of its rights to use the name and likeness of
Stan Lee.70 In fact, the April 11, 2002 Order specifically reserves until SLMI all rights and
assets not specifically authorized to be assigned and/or conveyed.71 As the issue of Stan Lee’s
name and likeness are not addressed in the April 11, 2002 Order, as a matter of law, SLMI
continues to retain ownership of the rights to use the name and likeness of Stan Lee. All of the
defendants actions with regard to the name and likeness of Stan Lee have been have been taken
as authorized agents, officers and directors of SLMI.72 As set forth herein, SLMI has the
absolute contractual right to continue to use the name and likeness of Stan Lee pursuant to the
express provisions of the October 15, 1998 Assignment and the claims against the defendants in
this regard are ripe for summary judgment. Furthermore, as all of the allegations regarding the
defendants’ use of the Stan Lee name and likeness have been undertaken in their capacity as
agents of SLMI and not in their individual capacities,73 the defendants are entitled to summary
67
See October 15, 1998 Assignment at 4(a), which states, in pertinent part, as follows: “I [Stan Lee] assign, convey
and grant to the Company [Stan Lee Entertainment, Inc.] forever, all right, title and interest I may have or control,
now or in the future, in the following: . . . my name and likeness.”
68
See generally October 15, 1998 Assignment.
69
Plaintiffs’ First Amended Complaint at ¶¶ 71 and 73.
70
See generally April 11, 2002 Order.
71
April 11, 2002 Order [Asset Purchase Agreement dated October 23, 2001] at ¶ 1.2.9.
72
Affidavit of James Nesfield.
73
Id.
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V. CONCLUSION
WHEREFORE, the defendants respectfully request that this Court grant summary
By: __________________________________________
Pierce O’Donnell, Esq.
Jack G. Cairl, Esq.
550 South Hope Street, Suite 1000
Los Angeles, California 90071
Telephone (213) 532-2000
Facsimile (213) 532-2020
Attorneys for Defendants
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing was sent by United
States Mail to John H. Lavely, Esq., at Lavely & Singer, Professional Corporation, 2049 Century
Park East, Suite 2400, Los Angeles, California 90067-2906 on this ____ day of April 2007.
By: __________________________________________
Pierce O’Donnell, Esq.
Jack G. Cairl, Esq.
550 South Hope Street, Suite 1000
Los Angeles, California 90071
Telephone (213) 532-2000
Facsimile (213) 532-2020
Attorneys for Plaintiffs
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