June 11, 2014 9:33am PT by Eriq Gardner
Miramax Settles Saul Zaentz's $20 Million 'English Patient’ Lawsuit (Exclusive)
On the eve of the trial, Miramax and The Saul Zaentz Company have resolved a $20 million lawsuit over profit sharing on The English Patient. The settlement puts an end to a fight that has been simmering since the 162-minute film was awarded top prize at the 1996 Academy Awards.
The film was produced by Saul Zaentz, who acquired rights to Michael Ondaatje's Booker Prize-winning novel. Starring Ralph Fiennes, the picture was originally slated to be distributed by Twentieth Century Fox before creative differences arose over casting decisions. As a result, Fox pulled back as Zaentz scrambled for production financing.
In 1995, Harvey Weinstein's Miramax stepped up and made a deal. The details of this arrangement would later be the subject of litigation.
A year after the film came out and made some $230 million worldwide in theaters and another $75 million in home video sales, Zaentz told The Hollywood Reporter, "Have I been paid all the money Miramax owes me? No, but these things take time. Am I nervous about being paid? Talk to me in January after I've seen the fourth-quarter statement."
It would take many more years before the dispute wound up in court, thanks to an incontestability clause that specified Zaentz had 36 months to challenge a participation statement and then tolling agreements between the parties.
The first lawsuit came in 2006, but two years later the parties stipulated to a dismissal and a further tolling of claims.
Eventually, in September 2011, Zaentz sued Miramax and then-owner Disney, claiming, "To this day, despite the great success of the film, [Zaentz] has not even received from Miramax payment sufficient to recoup [Zaentz's] costs of producing The English Patient."
Part of this lawsuit, filed by Brian Wolf at Lavely & Singer, was an examination of the 1995 agreement. To get the movie rolling, Zaentz said his company put up $15.75 million of its own money and deferred compensation. In return, Zaentz argued that Miramax had agreed to meaningfully consult on distribution, establish a joint venture between the two companies, and share in the profits and losses. The producer also maintained that a key to the negotiation on The English Patient was a better net-profits definition than a typical deal, though Miramax disputed that the "net profits rider" had become a part of the contract.
The parties also argued over features typical in a so-called "Hollywood accounting" case: Zaentz claimed that Miramax shouldn't have deducted $17.5 million of theatrical advertising expenses, because the money also benefited the home entertainment release of the film. Zaentz said that Miramax had charged late fees on residuals and made licensing agreements at substandard rates to affiliated companies. Zaentz even brought up $2 million that Miramax had deducted for congratulating itself in connection to the Academy Awards, Golden Globes and other awards ceremonies. Zaentz's complaint alleged an overall conspiracy "to keep the picture in a paper loss position so that no matter how much money The English Patient earned, Miramax and Disney would reap all of the profits" while Zaentz would never share in its success.
In an attempt to defeat the lawsuit, Miramax attorney Martin Katz at Sheppard Mullin raised statute of limitations arguments as well as summary adjudication of whether the parties really formed a joint venture and included a favorable net-profits definition for the producer. In February, the judge decided these were triable issues. The parties were scheduled to make their arguments at a trial beginning on June 30.
But on Monday, the parties informed the judge that the matter had been settled. The terms haven't been made public.
The dispute outlasted Zaentz, who died this past January.