Michael Keaton's Legal Victory Over 'Merry Gentleman' Affirmed

"Who can say why a critically praised movie did not make money?" asks the 7th Circuit.
Photo by Richard Shotwell/Invision/AP

Michael Keaton turned in The Merry Gentleman, his 2008 directorial debut, and that's enough for the 7th Circuit Court of Appeals.

The production company behind the film about a young woman who escapes her abusive husband and then enters a complicated relationship with a suicidal hit man aimed to recover the $5.5 million that was spent on the film. Having allegedly botched the film, Keaton was taken to court with a claim he breached his directing contract by failing to submit the film on time, threatening to boycott the Sundance Film Festival if it didn't accept his cut and failing to promote the film adequately.

The case didn't turn on the merits of the allegations, but rather the attempt by producers to demonstrate entitlement to reliance damages, meaning the $5.5 million that had been spent as if the contract with Keaton had never been formed (and the film was never made).

In December, an Illinois judge held that the producers failed to show a connection between its expenditures on the film and Keaton's alleged breaches.

On appeal, the producers argued that an affidavit by hedge fund manager Paul Duggan, who runs the production company, stating that it spent more than $5 million in reliance on the directing contract should have been enough to shift the burden to Keaton to prove the film would have lost money no matter what the director had done.

On Tuesday, 7th Circuit judge David Hamilton agreed that to recover reliance damages, a plaintiff doesn't need to show much causation, but a plaintiff does have to show at least some evidence its losses were caused by a contract breach. In most cases, a defendant repudiates a contract, walks away from a deal and the plaintiff is seeking remedy to recover expenditures. Here, however, Keaton did finish The Merry Gentleman, which was praised by critics before earning very little at the box office. And so, since he turned it in, the dispute was really about the quality of the final product, making the link between Keaton's conduct and damages less direct.

"Who can say why a critically praised movie did not make money?" asks Hamilton in his opinion (read here).

Hamilton continues by writing "no reasonable trier of fact could find that Merry Gentleman lost its entire investment of $5.5 million because Keaton failed to submit his first cut on time or failed to publicize the movie better. Merry Gentleman entered the directing contract to have Keaton deliver a finished movie, and he delivered one that showed well at Sundance and won some critical praise. The breaches by Keaton that Merry Gentleman alleges cannot reasonably be said to have rendered the investment completely worthless."

To hold otherwise, Hamilton agreed with Keaton's lawyers, would be to shift the cost of producing the film to Keaton, "giving it a windfall and placing it in a better position than it would have been in had the contract never been signed."

Keaton was represented by Michael Kump and Jeremiah Reynolds of Kinsella Weitzman, along with local counsel.

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