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MAR
12
3 YEARS

Judge: Ronald Tutor Can't Escape Lawsuit Against David Bergstein Companies (Exclusive)

Tutor attempted to argue that Aramid had failed to sufficiently show how he was tied to ongoing David Bergstein mess.

Ron Tutor and David Bergstein
Getty Images

Ronald Tutor, a construction tycoon and Miramax co-owner, can't escape messy litigation emanating from his days working with former business partner David Bergstein, the embattled film financier. A Los Angeles Superior Court judge has tentatively denied his argument that he was personally uninvolved in transactions that prompted Aramid Entertainment Fund to seek redress for tens of millions of dollars in loans and transactions made over films including Love Ranch, The Edge of Love, Black Water Transit, The Good, Incendiary and Bad Meat.

Aramid filed the $17 million lawsuit in May 2010 against Tutor, Bergstein and a number of their companies. The case was moved from an LA Superior Court to the federal level, where a jury trial was scheduled to commence before the parties were on the verge of a settlement that was believed to be worth $10 million.

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As part of the settlement, some parties were dismissed from the case. However, Aramid's lawyers later told a judge that all of the parties couldn't agree on the scope of the agreement, whether the deal would only cover certain claims or be more widely encompassing.

The case was sent back to a LA Superior Court, where it has been on track for a future trial at a still-to-be determined date.

Meanwhile, Tutor filed a demurrer that sought to dismiss allegations against him on the grounds that the plaintiffs hadn't alleged specific facts about him in regards to the disputed transactions.

In response, Aramid and other plaintiffs argued that Bergstein and Tutor had created numerous shell companies as conduits for their personal business and that they had failed to maintain an arm's length relationship with these corporate entities. The purpose of creating these entities, they argued, was to defraud their investors. Aramid also said that it wasn't required to prove their 'alter ego allegations" at the demurrer stage.

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A judge has tentatively agreed with this argument, ruling that "contrary to Tutor’s characterization, there are sufficient facts alleged" in Aramid's amended complaint to continue claims against Tutor.

The judge is giving 20 days for Tutor to file an Answer.

This lawsuit is separate from what's going on in bankruptcy court as creditors and Hollywood talent guilds seek recovery of up to $120 million in assets from Bergstein and his companies.

In that case, the creditors allege that shell companies were set up to fraudulently hide and transfer money. Tutor is the largest creditor with $145 million in claims, but the other creditors assert that he was an insider who owned and was involved in the Bergstein companies. The creditors' believe that Tutor shouldn't be treated as one of them.

"While the full scope of Tutor’s involvement in the improper transactions...has not emerged in quite the detail as Bergstein’s has,” said the creditors in their filing, “to the extent Tutor received or otherwise benefited from the improper diversion and use of loan proceeds and the transfer of the Debtors’ assets (or allowed this to happen when he could have prevented it), Tutor also would be subject to claims for fraud, negligence, conversion, unjust enrichment and possibly receipt of fraudulent transfers, accounting, and rescission.”

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner