October 03, 2012 4:47pm PT by Eriq Gardner
Paramount, John Singleton Set for 'Hustle and Flow' Trial
Trial alert! John Singleton is set to square off Oct. 15 against Paramount Pictures and MTV Films in a lawsuit that will explore the nuances of contract negotiation at the Sundance Film Festival.
In his lawsuit, Singleton alleges that Paramount reneged on a promise made at the 2005 festival to back two additional films as part of Paramount's deal to acquire the festival's breakout hit Hustle and Flow, which Singleton produced. The coming trial could feature testimony from Singleton, many lawyers and agents, as well as top industry executives including Paramount CEO Brad Grey and former Viacom chairman Tom Freston.
However, in the lead-up to this trial, Paramount has scored some victories and may be on the verge of significantly limiting a lawsuit that originally sought $20 million in damages.
Singleton and his Crunk Pictures allege that in 2005, Hustle and Flow was a hot commodity, and that he passed on a $10 million advance offered by New Line to accept a $9 million deal with Paramount. Singleton says he took the lower amount for the Craig Brewer-directed film because Paramount promised to “put” two additional features as long as their budgets didn’t exceed $3.5 million each and his producing fee wasn’t higher than 7.5 percent.
Ultimately, the two additional features didn't work out. One of those films was going to be a concert film featuring Tracy Morgan and directed by Spike Lee. The other was a Dee Ray Davis film. The parties disagree why these movies didn't happen. According to Paramount, Singleton had an obligation to deliver two pictures by a Jan. 22, 2010 deadline. Singleton says there weren't any contractual obligations that the work be completed by that date, and that Paramount really just wanted out.
On the road to trial, Los Angeles Superior Court judge Amy Hogue tossed Singelton's fraud claim because the director hadn't made sufficient allegations to support the notion that when the 2005 contract was put together, Paramount intended to trick or deceive him. And in advance of a hearing on Thursday, Hogue also has issued a tentative ruling throwing out Singelton's rescission claim.
The judge is leaning towards accepting Paramount's view that a waiver in the contract expressly limited Singleton's right to pursue any equitable remedies, including an injunction, as relief for any dispute over the contract. Paramount argues this bars Singleton from attempting to unwind the Hustle and Flow deal. On Thursday, Singleton lawyer Marty Singer will attempt to change the judge's mind by arguing that it is standard practice in the entertainment industry to expressly address rescission in a contract if that's what the parties intended. (The judge has also indicated she will dismiss Singleton's unjust enrichment claim.)
If the tentative order is adopted, a trial will be limited to Singleton's claims that Paramount has breached contract and breached an implied covenant of good faith and fair dealing.
Among the witnesses that Singleton intends to call for trial testimony are his transactional lawyers Stephen Barnes and Lawrence Kopeikin; his former agents Jeremy Barber, Richard Klubeck and Jeremy Zimmer at UTA; his current agent Philip Raskind at WME; and Tracy Morgan's agent Kevin Volchok.
Among the current and former Paramount/MTV execs who Singleton wants on the witness stand are Grey, Freston, Daniel Ferleger and Jeffrey Freedman in the business and legal affairs dept., Paramount outside counsel Robert Wyman, Lee Rosenthal, Rob Moore, Carmen Desiderio, John Lesher, Nick Meyer, Rob Friedman (now at Lionsgate) and others.
During the first phase of trial, Paramount will attempt to get a judge to interpret the contract and the understanding between the studio and Singleton. The studio, represented by litigator Richard Kendall, hopes the key piece of evidence will be written notes from Barnes purporting to show Singleton's side knew about the expectation of a deadline.
Even if the case proceeds only on the issue of whether Paramount breached a contract, Singer says, "We believe our damage claims will be worth several millions of dollars."
Singleton wants a jury to award him the additional $1 million he could have gotten from New Line, his producer and director fees, plus what he believes is the significant value of having two "puts" and more film credits to his name.
Paramount intends to dispute that Singleton is entitled to anything close to this amount. If Singleton convinces a judge and/or jury that his interpretation of the contract is correct, the studio will argue that he's only entitled to about $400,000 in director and producer fees for the two unproduced films.
According to legal papers filed by Singleton, Hustle and Flow earned more than $75 million in gross receipts, and subtracting $51 million in distribution costs and a $9 million advance to Singleton, Paramount earned about $15 million in net profits from the hit. It was by all measures a great success. However, the relationship between Paramount and the star director has now been severely strained.
UPDATE: On Thursday, the judge threw out the rescission claim and urged the parties to settle.
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