Jacoby, OFS Suing Each Other Over Proposed Movie Studio Megaproject

A prominent Atlanta developer's plans for a massive movie studio campus in Atlanta's northern suburbs could be in limbo as it battles a fiber optics maker in court over more than $100K in licensing fees.

In 2013, Jacoby Development Inc. pushed to transform the more-than-100-acre OFS campus in Norcross into a 5M SF, Hollywood-like megapolis that would include six soundstages, more than 75K SF of acoustically treated production space, 100K SF of office, 110K SF of workshop space, a 30-acre backlot, 300 hotel rooms, a film school, student housing, apartments and retail. A year later, Jacoby announced a partnership with Los Angeles-based MBS Media Campus to manage the studio space.

Despite those plans — the OFS campus having already been the shooting location for a number of Hollywood blockbusters, including portions of "The Hunger Games" and the $190M "Fast and Furious 7" — there has been little headway on the redevelopment.

That may be because OFS, owned by the Japanese Furukawa Co., has been locked in a Hollywood-like battle with Jacoby in Fulton County Superior Court.

Since April, Jacoby and OFS have been back-and-forth in a lawsuit over claims originally made by the fiber optics company that Jacoby failed to pay fees to use two warehouses at the OFS Norcross campus for studio clients. The fees, accrued during various times between 2015 and 2016, amounted to more than $100K that Jacoby has failed to pay, OFS claims.

OFS' initial lawsuit also indicates that Jacoby's purchase of portions of the campus may have fallen through, stating that a purchase and sale agreement between the parties expired Sept. 1, 2016.

OFS spokesperson Sherry Salyer confirmed that the company is still using portions of its campus for film production and is still listing some of the property for sale.

“OFS self-manages an active TV and film production portfolio while continuing to market a portion of the property,” Salyer wrote in an email. “We don't comment on matters of litigation with Jacoby.”

For its part, Jacoby denies the fiber optics company's charges in the original lawsuit, claiming it adhered to the agreements the two sides reached in 2013. In a counterclaim filed earlier this summer, Jacoby charges that OFS violated the terms of that purchase and sale agreement by not selling the property to Jacoby, and Jacoby is not liable for the licensing fees.

“OFS is liable to [Jacoby Development] for the damages resulting from OFS' breach of the purchase and sale agreement, including, but not limited to, refund of the $400,000 refundable earnest money [Jacoby] paid OFS to secure the purchase and sale agreement,” Jacoby's lawyers stated in the counterclaim.

Jacoby CEO Jim Jacoby declined to comment on the lawsuit. But he told Bisnow that the parties could soon reach some form of a settlement. Whether that will finally clear the way for Jacoby to break ground on the studio project, though, was unclear.

“We're working towards a resolution,” Jacoby said. “I can't really go into it right now. I would still like to do [the development], but it's a little more complicated than that.”

Film and TV production has become big business in Georgia thanks in large part to a plethora of incentives for studios. More than 300 feature films and television productions were shot in the state over a 12-month period ending on June 30, according to the Georgia Film Commission. Those productions spent $2.7B and generated some 92,000 jobs in the state.

Over the years, Georgia has seen a surge in studio developments, including Tyler Perry Studio, Pinewood Atlanta Studios and EUE/Screen Gems, as well as various smaller production facilities across the region. Other developers have announced potential projects in recent months as well.

Jacoby is no stranger to grand visions and complex developments. The firm and its CEO are perhaps best known for developing Atlantic Station, one of the city's first major mixed-use developments, which transformed a former steel factory into 138 acres of office towers, retail stores, apartments and residences in Midtown.

Jacoby has also transformed the former Ford Motor Co. plant in Hapeville into Porsche North America's headquarters, a $100M project that features a customer experience center and a test track.

Most recently, Jacoby is pushing plans to develop a multistory entertainment and marine research complex next door to the Georgia Aquarium in Downtown Atlanta called One Ocean Place.

Jacoby's Atlanta Media Campus could rival the scale of Atlantic Station and it could prove to be a big economic development catalyst for the Atlanta suburb since it encompassed more than just temporary productions. When it announced the project in 2013, Jacoby Development projected the campus would eventually generate more than 2,300 jobs.

Gwinnett County Commission Chairwoman Charlotte Nash declined to comment on the dispute “as long as there is active litigation between the two parties on this agreement.”

As Jacoby and OFS negotiated the sale, film studios expressed interest in using the facilities. That led to the agreement, according to the lawsuit, in which Jacoby would pay the licensing fee for the warehouses' use until the purchase agreement was finalized.

According to OFS, the purchase agreement was terminated in 2016 “due to [Jacoby Development]'s multiple failures in fulfilling its obligations … under the purchase agreement,” and said that any counterclaims by Jacoby are void.

But in its countersuit, Jacoby maintains the purchase and sale agreement is still active. Jacoby also maintains that it has a right to a portion of revenues generated from movie equipment rentals at the OFS site from a MBS contractor per a 2014 contract. Jacoby accuses OFS of stepping in between the agreement and taking those revenues, an accusation OFS denies, according to court documents.

“Upon information and belief, MBS3/TM now splits revenue from on- and off-site movie equipment rental on the OFS site directly with OFS,” Jacoby officials said in court filings.

OFS denied Jacoby's allegations and has since moved to have a judge dismiss them.