PHILADELPHIA - The U.S. District Court for the Eastern District of Pennsylvania has dismissed a lawsuit against the director of Mediacast, a film distributing company.
In the ruling on Dec. 19, the district court said British documentary filmmaker Exhibition on Screen Ltd. failed to state a claim against defendant Derek Pew.
“EOS has failed to state a cause of action against Pew for breach of trust,” the opinion stated. “Pew was not a trustee of the trust created to hold EOS’s share of theater receipts.”
According to the opinion, EOS produces documentary films about famous artists, then presents the films through distributors who arrange showings with theaters. The district court said EOS and Mediacast entered into a distributorship agreement on Nov. 1, 2016, agreeing that Mediacast would contract with theaters to screen the films and generate box office receipts.
“From the box office receipts, each theater retained its share and remitted the balance to Mediacast,” the opinion stated. “From that amount, Mediacast deducted its share and costs, yielding ‘Net Receipts.’ The agreement provided that the net receipts were to be ‘held in trust for EOS.’”
According to the opinion, EOS alleged that it didn’t receive any payments, books, or records of the films before Mediacast closed its business in January 2018.
On July 30, 2018, EOS filed a lawsuit against Pew, in his individual capacity, for breach of trust, alleging that Pew was a managing director, officer, executive and member of Mediacast, the district court said.
The complaint, according to the district court, states that “Pew personally negotiated and executed” the EOS agreement on behalf of Mediacast and that Pew had “ultimate control of Mediacast’s financial and accounting affairs.”
“EOS claims Pew breached his fiduciary duties of care and maintenance of the funds ‘held on trust for EOS’ when he closed the company without remitting any net receipts,” the opinion stated.
Pew argues that he cannot be held personally liable for the actions and obligations of Mediacast, and he had no trustee or fiduciary relationship with EOS.
“Even though the agreement created a trust with EOS as beneficiary, EOS has not stated a cause of action against Pew for a breach of the trust,” the opinion stated. “The complaint does not allege that Pew agreed to serve as the trustee or personally assume any duties.”
According to the opinion, it was Mediacast, not Pew, who agreed to hold the receipts in trust for EOS.
“Although Pew signed the agreement, he did so ‘for and on behalf’ of Mediacast,” the opinion stated. “Because Pew unambiguously signed on behalf of Mediacast, he is not personally liable.”
According to the district court, EOS argues that by accepting delivery of the monies to be held in trust by his notations on receipts, Pew “accepted” his status as trustee.
“Not only is this argument contradicted by the allegations in the complaint, it is legally wanting,” the opinion stated. “Noting receipt of funds, a ministerial act, does not make Pew a trustee.”
The district court allowed EOS to file an amended complaint.
“If it elects to do so, EOS must state with particularity the facts upon which it relies to show that Pew, in his personal capacity, is liable,” the opinion stated.