MGM's Grip on Two Clint Eastwood Classics Challenged in Lawsuit

P.E.A. Films cites bad accounting practices as a reason to terminate contracts on classic films including "Last Tango in Paris"

The latest spaghetti western will be settled in a New York federal court after licensor P.E.A. Films filed a lawsuit that seeks to terminate Metro-Goldwyn-Meyer's contracts pertaining to The Good, The Bad and The Ugly, For a Few Dollars More and Last Tango in Paris.

PEA is the house of Italian Alberto Grimaldi, who produced the first two films starring Clint Eastwood and the last one featuring an Oscar-nominated performance from Marlon Brando.

The plaintiff is upset with MGM's "failure to send to PEA honest and accurate statements together with timely payments," according to the complaint, specifically mentioning that the defendant has asserted more than $10 million in unsupported fees and expenses.

The contracts between the two companies over the films date back to the late 1960s and early 1970s, and Grimaldi's entitlement to a share of gross receipts has triggered prior litigation.

The first lawsuit came in 1990. Three years later, the parties settled, and according to the latest lawsuit, MGM agreed then that for home video, it wouldn't "charge any distribution fees as an expense before calculation of PEA’s share of gross receipts, but could only charge certain defined expenses."

PEA sued again in 1996 with audit claims. It took another three years for the parties to reach a detente.

That wouldn't be the end of the strife because over the following decade, the two sides continued to tango with each other over audit reports and PEA's seemingly consistent belief that it was entitled to a few dollars more in profit participation. Along the way, PEA and MGM made more settlements, and now, PEA apparently has had enough.

"As can be discerned from the factual pattern above, since at least 1990, MGM has not paid the proper amounts to PEA in a timely fashion, but rather has sent to PEA statements and payments which did not truthfully reflect the amounts due to PEA," says the complaint filed by attorneys Ronald Taft and Howard Schwartz. "The delays between the time honest and accurate statements and payments were due, and the cumulative times until the 2004 Settlement, the 2007 Settlement, and the 2011 Settlement is between an astonishing 8 to 14 years."

PEA suspects MGM's method of accounting is no accident, asserting the defendant is engaged in a "'Hollywood accounting catch me if you can' process designed intentionally to keep for itself money rightfully due to PEA."

Among the claimed administrative fees that is causing objection is $1.5 million to 20th Century Fox Home Entertainment for distribution of The Good, The Bad and the Ugly and For a Few Dollars More. PEA is also upset that it can't see the agreement between MGM and HBO over Last Tango in Paris to determine whether it's been properly paid.

Asserting breaches of contract and the covenant of good faith and fair dealing with damages estimated to be at least $5 million, PEA now demands that all its rights contracts with MGM be canceled.

MGM had no comment.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

 

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