Studio Sale Stalled By Unusual Lawsuit

 

   (Ryan Millsap, along with other Atlanta power brokers, for an article in Atlanta Business Chronicle)

Blackhall Studios provides everything a movie production may need. 

On their website, the studio boasts that it, "offers complete services for all types and sizes of productions – from small independent films to scripted television series to tent pole movies. The ever-expanding in-town Atlanta studio complex spans nearly 150 acres across two adjacent campuses."

It provided studio space for such blockbuster hits as Godzilla, Jumanji the Next Level, Venom, and Stephen King's Doctor Sleep. 

Its sale, earlier this year, was covered extensively, including by CNBC. 

One of Atlanta’s biggest filming hubs has been sold.

Founder Ryan Millsap announced Wednesday the sale of Blackhall Studios to Commonwealth Group, a Los Angeles-based private equity firm, for $120 million.

Blackhall, which is in the process of expanding its footprint in Georgia, also has studio projects in London and Los Angeles.

Millsap, the founder, is the sort of person one would expect to be in the middle of a successful nine figure deal. 

Millsap was featured in Atlanta Business Chronicle's (ABC) "Most Influential Atlantans" and ABC's list of "Most Admired CEO's."

An ABC article from 2020 noted. 

CEO Ryan Millsap announced plans in September to expand from 210,000 square feet to 600,000 square feet at 1415 Constitution Road SE in Atlanta, near the intersection of Bouldercrest Road and Interstate 285. So far Blackhall has nine sound stages.

Millsap opened Blackhall Studios in the spring of 2017. He has invested $75 million in the current facility, and he intends to spend another $150 million on its expansion.

The sound stages produce about $500 million to $700 million of content each year, Millsap said at the time of the expansion announcement. When the expansion is complete, that would rise to more than $1 billion a year, he said.

Even as Millsap was managing the studio and finalizing his nine figure deal, he has been hounded by a curious lawsuit with a character who would normally not be part of such a transaction. 

He is currently being sued by Martin James Schulz. Schulz is much less likely to be on the business pages than in the police blotter. 

He has at least fifteen criminal convictions, including one in Georgia in 2017, for stalking an ex-wife. 

Here is part of the transcript from his guilty plea. 

The court: DO YOU UNDERSTAND THAT YOU'RE CHARGED WITH  THE FOLLOWING OFFENSES. YOU'RE CHARGED WITH THREE COUNTS OF AGGRAVATED STALKING AS FELONIES AND YOU'RE CHARGED WITH ONE COUNT OF VIOLATION OF A PROTECTIVE OFFERED AS A MISDEMEANOR? 

Schulz: I AM.  

Schulz wound up pleading guilty to this charge; it was the latest in a life which has taken him on a criminal path that spans more than two decades. 

                                                (Part of Schulz criminal and civil history)

Schulz and Millsap initially met in 2016 and Schulz began working in a role that was akin to a property manager but by 2017, Schulz was in rehab for a drug problem. (More on Schulz in part two of this series)

In rehab, he met another shadowy figure: Arpad Busson. Busson is a financier with ties to Jeffrey Epstein and Bernie Madoff, with a knack for having relationships with beautiful celebrities. Busson has previously been linked to both Elle MacPhearson and Uma Thurman. 

Busson was previously a hedge fund manager, being tied to hedge funds like EIM Group and LUMX Asset Management. 

Busson then agreed, through a funding agreement, to fund a lawsuit that Schulz would soon file against Millsap. (More on Busson in part three of the series)

These funding agreements are not that unusual and the most famous case came when Peter Thiel funded Hulk Hogan (real name Terry Bollea against Gawker; Thiel had personal reasons to fund such a lawsuit as Gawker had previously outed him. 

Schulz would claim that he was an integral part of Blackhall Studios and that he was owed a significant portion of the profits from the sale of the studio. 

But there was a twist to his allegation. He claimed that he had an oral and not a written contract. 

Despite the sale of Blackhall being a complicated real estate transaction with everything else in writing, Schulz still argued that he had an oral agreement that entitled him to most of the profits. 

Though the lawsuit is eyebrow raising, to hear Schulz attorney, the problem is not his client but Millsap. 

Millsap Timeline by mikekvolpe on Scribd

The attorney, Eric John Taylor, states in part, "As I have stated repeatedly, the emergency nature of this issue is a direct result of Mr. Millsap's own actions and subsequent scorched earth tactics....In conclusion, it's been over three weeks since the second emergency hearing at which your client's litigation counsel told the Court that the business might fail if the lis pendente was not lifted that day. Despite those representations, the business appears to still be running. Mr. Millsap is telling the press the business is booming. In fact, it appears that Blackhall is working on expansion plans. Yet, you approached me with another purported emergency and ask my clients to give up the only thing standing between Mr. Millsap and more fraudulent transfers depriving my client of their rightful property in exchange for nothing."

Taylor did not respond to an email for comment; I reached everyone listed on the letter and received one response. 

I reached out to John Da Grossa Smith, who had been representing Millsap. He did not respond but his attorney did.

My name is Kate Whitlock. I represent John Da Grosa Smith and SMITH LLC.

 

On March 26, 2021, Judge Joseph Iannazzone granted Mr. Smith’s and SMITH LLC’s request to withdraw as counsel of record in the case of Schulz, et al v. Millsap, et al, Superior Court of Gwinnett County, Civ. Act. No. 18-A09182-11. Defendants are now represented in that pending civil action by Thomas Tate, Esq. of the law firm Andersen, Tate & Carr, P.C. (copied).

After receiving that response, I asked this follow up question, "I'm confused. Mr. Smith is a lawyer. What are you representing him on? Why would a lawyer need another lawyer to issue a statement first lawyer could figure out how to draft on his own?"

Ms. Whitlock did not respond to my follow up question.  

According to Taylor's letter, he filed the previously mentioned notice of  lis pendens on February 18, 2020. 

A lis pendens, "is an official notice to the public that a lawsuit involving a claim on a property has been filed," according to Investopedia. 

With that lis pendens filed, a sale of Blackhall Studio could not move forward as a lawsuit on the property was coming. 

In order to remove the lis pendens, Millsap agreed to pay Schulz $6.7 million. 

The parties have remained tight lipped with none of the principles agreeing to speak with me. 

This may be because there is an arbitration coming up for this lawsuit, which will be binding, later in September. 

Though it seems hard to believe that a claim based on an oral contract would win out, the case has made it this far, and so it's possible that a drug addict with a long rap sheet could be entitled to tens of millions of dollars from a successful CEO based entirely on a purported oral contract.