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Collins v. Del Castro

United States District Court, D. Maryland, Southern Division

August 2, 2019

GRACE COLLINS, et al., Plaintiffs,
RICHARD RIONDA DEL CASTRO, et al., Defendants.


          GEORGE J. HAZEL United States District Judge

         Plaintiff Grace Collins alleges breach of contract and fraudulent inducement claims against Defendants.[1] Pending before the Court is Defendants' Motion to Dismiss or Motion to Transfer. ECF No. 9. No. hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the foregoing reasons, Defendants' Motion to Transfer will be granted.

         I. BACKGROUND[2]

         On December 9, 2016, Plaintiff Grace Collins agreed to loan Defendant Hannibal Production Inc. (Hannibal) $245, 000. ECF No. 1-1 at 25. According to the loan agreement, in consideration for Hannibal's receipt of the $245, 000 principal loan amount, Hannibal was to pay Collins “a one-time interest payment” of $31, 850.00 on December 5, 2017. Id. at 26. The loan agreement also obligated Hannibal to pay back the loan's principal on December 5, 2017. Id.

         Defendant Richard Rionda Del Castro was Hannibal's President and negotiated the loan agreement on Hannibal's behalf. ECF No. 1-1 at 2; ECF No. 1-8 at 3. Specifically, Del Castro flew to Collins's home in Maryland, which Collins shared with her mother, to discuss the loan agreement's terms on December 8, 2017. ECF No. 1-1 at 2; ECF No. 1-8 at 3. Although she did not have knowledge of his reputation at the time that she made the loan, Collins alleges that Del Castro came to Maryland “to get money where people didn't know his reputation” because his contacts in Los Angeles who knew “his reputation” would be weary of lending him or his production company money. ECF No. 1-1 at 17.

         Before Del Castro met Collins in Maryland, Collins explained that she was interested in making a bridge loan that would accrue interest quickly and expand funds designated for her mother's health care costs. ECF No. 1-8 ¶¶ 3, 13. Collins's mother Duk Sun Lyu has Alzheimer's Disease, among other health issues, and her health care costs are estimated to be $100, 000 per year. Id. ¶ 15.

         Del Castro told Collins that the loan would serve as “the very first seed capital to kick start the acquisition of the rights to produce” the film, Speed Kills, and that Collins' loan would be repaid before any other obligations connected to the film. Id. ¶ 13; see also ECF No. 1-1 at 25. He explained that the loan agreement was a “simple straight forward bridge loan agreement” and that she would be repaid after bank funding was acquired to finance the movie and no later than December 5, 2017. ECF No. 1-8 ¶ 11. Collins was not under the impression that repayment of her loan was contingent upon Hannibal finishing production or distributing the film. Id. ¶ 2. On December 7, 2016, before the parties signed the loan agreement, Collins wired Hannibal $10, 000 from a bank account in Maryland in both her and her mother's name. ECF No. 1-1 at 40. It is not clear if Collins had a guarantee that this $10, 000 would be returned to her if the parties did not agree to the broader loan deal. See ECF No. 1-1; ECF No. 1-8.

         Collins and Del Castro signed the loan agreement at the Gaylord Hotel in Maryland two days later on December 9, 2016. ECF No. 1-1 at 31; ECF No. 19 at 6.[3] Patricia Rionda Del Castro, Hannibal's Secretary, and Timothy Cavanaugh, an Executive Producer were also signatories. Id.

         On her way to meet Del Castro to sign the contract, Collins spoke to her lawyer who told her that she should speak to a contracts or entertainment lawyer based in Los Angeles. ECF No. 1-1 at 13. However, Plaintiff felt obligated to sign the loan agreement because Del Castro had come to Maryland from California. Id. at 14. Plaintiff had also already wired Hannibal $10, 000 of the loan principal, ECF No. 1-1 at 40, and it is not clear that the lawyer she spoke to had knowledge of this transfer. Collins met Del Castro at 11:00am and Del Castro had a 1:00pm flight. ECF No. 1-1 at 13. They went over only paragraphs 2 and 4 of the loan agreement together. Id. These paragraphs describe the interest arrangement and the payback date. Id. They discussed that if the loan was repaid prior to the payback date in approximately June 2017 rather than December 2017, they might mutually agree to reduce the interest rate to a flat 6%. Id. Plaintiff wired the remaining principal loan amount from a Bank of America located in Maryland on December 13, 2016. ECF No. 1-1 at 41. Collins and her mother's names both appear on the account. Id.

         Hannibal did not pay Collins the principal loan amount or interest when it came due on December 5, 2017. See ECF No. 1-8 ¶ 3. Del Castro treated the loan as if repayment was contingent upon the film's complete production and distribution. ECF No. 1-8 ¶ 2. He also invoked the contract's “Force Majeure” clause, which reads:

Neither party hereto shall be deemed in default of its obligations hereunder if the business operations of HPI [i.e. Hannibal Production, Inc.] are delayed, or become impossible or impractical, by reason of any cause beyond HPI's reasonable control including, without limitation, war, strike, accident, act of God, civil unrest, epidemic, death, illness, or act or order of any governmental authority (such causes collectively referred to herein as a “Force Majeure Event”). Each party acknowledges the risk that payment of the Interest may be delayed due to a Force Majeure Event. In the event any portion or all of the above are delayed due to a Force Majeure Event, HPI shall use its best efforts to resume the payment of any sums due within a reasonable time after the Force Majeure Event has ended. Both parties shall be responsible for their own costs and expenses in connection with any such Force Majeure Event.

ECF No. 1-1 at 30-31. According to Del Castro, Hurricane Maria prevented Hannibal from abiding by the terms of the loan agreement. ECF No. 1-8 at 3. At the time the parties signed the loan agreement, Puerto Rico was a tentative production location. ECF No. 1-1 at 25. Collins alleges that all filming had been completed a few months before Hurricane Maria hit Puerto Rico and that post-production editing was always scheduled to be accomplished in California. ECF No. 1-8 ¶ 5. In any case, Collins alleges that repayment of her loan was not contingent on the film's production schedule. ECF No. 1-8 ¶ 2.

         Collins alleges that Del Castro lied about the Hurricane's impact on the film because he never intended for Hannibal to repay the loan. ECF No. 1-1 ¶ 6; ECF No. 1-8 ¶ 11. According to Collins, before Del Castro flew to Maryland to convince her to sign the loan agreement, he knew that she was in the vulnerable financial position of seeking to stretch her mother's healthcare funds and with this in mind he wrote “a premeditated fraudulent contract” with loopholes “designed to take advantage” of her inability to spend money recovering the investment. Id. In Collins's words, Del Castro “premediated tricking my mom out of her money before he even came to my home as he could see many loopholes in the contract he knowing [sic] that I personally had no money that if we went to court . . . I would run out of money.” ECF No. 1-1 at 17. The loan agreement includes an arbitration clause, which states:

Any dispute, controversy or claim arising out of or relating to the enforcement, interpretation or alleged breach of this agreement, including without limitation tort claims and arbitrability issues, shall be submitted to and resolved by binding arbitration in Los Angeles, California before one neutral arbitrator with substantial experience in entertainment industry matters appointed by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and ...

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