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JUL
31
2 YEARS

'Knight Rider' Producer Survives Round One in Universal Fraud Lawsuit

A judge has rejected Universal's attempt to toss Glen Larson's key claims at the initial stage.

Knight Rider David Hasselhoff - P 2012
Universal Studios/Courtesy of Getty Images

Television producer Glen Larson has jumped the first hurdle in his multimillion-dollar lawsuit against Universal over money from a string of hit shows from the 1970s and 1980s.

Larson, whose work includes Knight Rider, The Six Million Dollar Man, Magnum P.I. and Battlestar Galactica, claims that the series generated hundreds of millions of dollars for the studio yet he hasn't received any profit participation statements and "as the shows make more money for Universal, the deficit that Larson Productions must overcome continually increases."

In a detailed ruling issued this week, Los Angeles Superior Court Judge James Dunn is allowing most of Larson's claims to move forward over objections made by the studio at the initial stage.

When Larson filed the lawsuit in July 2011, Universal said it was "surprised" and that Larson hadn't notified the studio about his claims. Studio litigator Scott Edelman declined comment on the latest ruling.

In defense of the lawsuit, Universal has claimed that the statute of limitations has passed, but Dunn has decided that it is too early to rule on this issue.

The judge did address the specific causes of auction, including breach of contract, breach of implied covenant of good faith and fair dealing, accounting and fraud. He has found that Larson has sufficiently pled these allegations to survive the demurrer (motion to dismiss).

In getting there, Dunn looked at the ambiguity of Larson's agreements with Universal. The contracts allowed the studio to use "standard accounting practices" without defining that and included "catch-all" language that guided the studio to the "same practices and procedures" it normally used in dealing with gross receipts, distribution expenses and production costs.

Both sides attempted to use the ambiguous language to their advantage. For example, on the issue of whether Universal could report only 20 percent of the home video receipts, the contracts say nothing because it was not a media form available at the time.

If the issue is what's permitted versus what's not permitted, the silence of the contracts favors Larson at this stage of the litigation. "Nothing in the agreements suggest that only a percentage, rather than the entire receipts from such 'subsidiary rights,' should be taken into account," wrote the judge.

Dunn also found that Larson can go forward on his claim that Universal didn't administer the agreements in good faith, finding sufficient support in the plaintiff's allegation that Universal was "manipulating the 'order of recoupment' in such a way that it only benefits Defendants and completely frustrates and defeats Plaintiff's right to receive contingent compensation."

Universal didn't walk away empty-handed, though. The judge trimmed from the lawsuit Larson's claims of conversion, unjust enrichment and unfair business practices.

Larson is represented by Neville Johnson, Douglas Johnson and James Ryan of Johnson and Johnson in Beverly Hills.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner