David Bergstein Wins Rejection of $190 Million Lawsuit
Embattled film financier Bergstein and associates had allegedly led a campaign to embroil Aramid Entertainment in a sea of shareholder suspicion.
Film executive David Bergstein has scored a victory in his ongoing feud with hedge fund manager David Molner. A New York judge has dismissed a $190 million tortious interference lawsuit that alleged Bergstein and others attempted to raise shareholder suspicions about the value of Aramid Entertainment as the investment group sought to sell its entertainment portfolio in 2010. The judge can't find a sufficient connection between Bergstein's actions and the failure of a big transaction.
Aramid and Screen Capital International filed the lawsuit last year in New York state court against Bergstein, Joseph Bianco, and several other investment groups.
Molner is the head of Screen Capital and represented Aramid, a key player in continued attempts to pursue Bergstein and his companies in bankruptcy court and in Los Angeles Superior Court for fraud and breach of contract.
In early 2010, according to the claims in the New York action, Aramid sought to sell its asset portfolio. By June of that year, the private equity firm ABRY had tendered an offer for purchase, requiring the approval of the Aramid Board and voting shareholders.
That summer, Bianco, an alleged business confederate of Bergstein, is said to have participated in discussions with Aramid shareholders wherein he claimed that Aramid's assets were overvalued and that shareholders were being defrauded. The original complaint said that he did this to "deliberately create discord within plaintiffs' relationships" as revenge for the rejection of his own proposal. An amended complaint later added that Bianco did this "to acquire Aramid's diverse and valuable portfolio of entertainment assets 'on the cheap.'"
Meanwhile, Bergstein was alleged to have made several threatening statements to Molner as well as false statements about the financial health of Aramid to the entertainment industry press. This came after Aramid led a group of creditors in forcing five of Bergstein's holding companies into involuntary bankruptcy.
Aramid and Screen Capital sued for tortious interference, prima facie tort, and willful misconduct.
Last month, a judge dismissed the claim. A full decision was released on Thursday.
The failing of the tortious interference claim comes, according to the judge, because the plaintiffs can't show causation between Bianco's actions and the failure of the ABRY deal.
The judge notes that the plaintiffs admitted that Aramid Capital Partners (TSP), the sole holder of voting shares of Aramid Entertainment, voluntarily chose not to accept ABRY's offer, and "while this choice may have been motivated by shareholder dissent, plaintiffs do not allege that any of the defendants took action which caused ABRY to withdraw the offer, or in any way made it impossible for TSP to accept the offer."
The judge also dismisses the claim of prima facie tort because it wasn't alleged that defendants were solely motivated by malice. Instead, the judge points to the amended complaint, which described an economic motivation for the defendants' actions.
Finally, the judge tosses the willful misconduct claim because the judge believes that such a claim isn't a real cause of action under New York law.
The other court battles continue. But this $190 million case is, barring an appeal, finished.