VANCOUVER, B.C. (CN) - An investment company that says in court that it has been boxed out after helping to bankroll a lawsuit against NBC over its Hulu video service.
Ruloff Capital claims that Hulavision founder Errol Hula approached it in November 2009 for funds to develop media-distribution technology.
During the due-diligence process, Ruloff allegedly "learned that in 2006 Mr. Hula had disclosed important information regarding Hulavision's core business concept, and its only real asset to NBC Universal."
"Further, NBC had apparently breached the Confidentiality Agreement when it created 'Hulu,'" according to the complaint in British Columbia Supreme Court. "Hulavision had potential grounds for pursuing a legal claim against NBC and Hulu, LLC for substantial monetary compensation and other relief."
Ruloff says it then told Hulavision to seek out legal advice about the statute of limitations, but that Hulavision did not have the money or expertise to launch such a complex commercial lawsuit.
After referring Hulavision to a large Canadian law firm, Ruloff then agreed to help Hulavision in exchange for half the proceeds from the litigation, according to the complaint.
Though investment negotiations continued, Hulavision allegedly "refused to provide Ruloff Capital with the information reasonably necessary to conduct due diligence in a timely manner, or at all."
By late 2009, the Vancouver-based Hulavision ceased negotiations and "surreptitiously" began shopping around for an American lawyer to represent it in the NBC litigation, according to the complaint.
"Robert M. Vantress, an attorney called to the California State Bar, offered to take the case on a full contingency basis," the complaint states. "This meant that Hulavision no longer required funding from Ruloff Capital and it would be to Hulavision's economic advantage to exclude Ruloff Capital from participation in the NBC litigation."
Since March 2010, a few weeks before Hulavision sued NBC, Ruloff Capital claims it was kept in the dark about the process until it retained its own lawyer, attorney Darryl Snider, in California "to protect its interests in the NBC Litigation that had been delayed by Hulavision's inactivity."
After a back-and-forth between the parties' California-based lawyers, the pair agreed to work together on the NBC suit in May 2011, according to the complaint. But shortly after, "Mr. Vantress virtually disappeared from the NBC Litigation," Ruloff says.
To fix Hulavision's delays in the case, Snider then allegedly spent much time and effort to restart the NBC litigation.
Neither Vantress nor Snider are parties to the lawsuit. Ruloff says it refused a demand from Vantress for higher fees, and that Vantress then ordered Snider off the case. Snider allegedly walked away from the suit since he was unable to keep Ruloff informed about its progress.
"Hulavision continues to actively block the efforts of Ruloff Capital to stay informed of and participate in the NBC Litigation," the complaint states.
Ruloff is represented by Robin McFee of Sugden, McFee & Roos in Vancouver.