August 09, 2013 4:15am PT by Eriq Gardner
Jon Favreau's 'Chef' Cooks Up Financing Lawsuit
If the recipe for a successful co-financed film calls for trust between the moneymen, something has gone wrong on Jon Favreau's Chef, a comedy starring Sofia Vergara, Dustin Hoffman, Robert Downey Jr., John Leguizamo, Scarlett Johansson and Amy Sedaris.
On Wednesday, a judge issued an injunction against Providence Films and its president, Xavier Mitchell, from accessing funds from a joint account and spending money already withdrawn from an escrowed account that contained money for the picture about a chef who loses his job and starts up a food truck.
The development comes after Sous Chef Llc., a subsidiary of Aldamisa Entertainment, filed a fraud lawsuit against Providence earlier in the week.
According to the complaint that was lodged in L.A. Superior Court, Sous Chef and Providence entered into an agreement together where each was to contribute $3 million to the production of Chef, for a total of $6 million.
Sous Chef had already put up $2.5 million by that time, leaving the company with another $500,000 to go to meet its commitment. On July 10, Sous Chef says it agreed to advance Providence $200,000, reducing the amount it would contribute to the escrow to $2.8 million.
"The parties agreed the 'production funds' would be placed in an escrow account and would be distributed to an 'account of Sous Chef' to fund the production," says the lawsuit. "The parties agreed that the funds would not be distributed from the escrow account until both parties passed 'compliance' with Rabobank, the bank processing the wire transfers, and Chicago Title received confirmation of 'compliance.'"
An attorney for Providence (who hasn't responded to a request for comment) is said to have e-mailed "a purported confirmation of a wire transfer of $2,800,000 to the Escrow Account" on July 10, but what Sous Chef didn't know at the time was that the money never showed up.
Mitchell then instructed an escrowee agent to transfer $297,175 from the escrow account into two other accounts, "neither of which was the Production Account or an account controlled by Sous Chef," says the lawsuit.
Later, Sous Chef says it got assurances from Providence's attorney that disbursements would be made and that compliance would be passed. But the money didn't come.
This caused other problems.
Philip Elway, general counsel of Aldamisa, wanted Chicago Title to transfer $1.8 million into the production account but was informed that money couldn't be taken from the escrowed account because "Chicago Title had not received a $2,800,000 wire from Providence."
That's when Elway demanded return of Sous Chef's $500,000 deposit and learned about the prior $297,175 withdrawal.
The lawsuit states, "To date, Providence has not deposited any money into the Escrow Account, nor has it returned any of Sous Chef’s deposit that Chicago Title improperly transferred at Mitchell’s request."
Providence and Mitchell -- neither has responded yet to a request for comment -- are being sued for fraud and conversion. Chicago Title is being sued for breach of written contract.
The complaint also speaks about some other unrelated lawsuit happening, where Mitchell allegedly "orchestrated a fraud that resulted in an escrow officer wiring $500,000 to Mitchell’s account. As part of the fraud, Mitchell arranged to have an imposter pose as a 93-year-old man (who was hospitalized at the time) and sign escrow."