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MAY
29
2 YEARS

Another Ruling Against David Bergstein Includes Judge's Warning

In denying the embattled investor's appeal to find money and assets in companies he once controlled, a District Court judge says more frivolous filings may bring financial sanctions.

David Bergstein
David Bergstein

Embattled movie investor David Bergstein has lost another of his many appeals in the bankruptcy case involving Capitol, ThinkFilm and three other movie companies – and this time the denial came with a stern warning from the judge.

On May 22, U.S. District Court Judge Philip Gutierrez denied Bergstein’s motion to reverse a lower court ruling that denied him the right to pursue litigation claims on behalf of the bankrupt companies. That original ruling was made by federal Judge Barry Russell in Los Angeles on November 8.

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Russell had denied Bergstein’s request to act on behalf of the trustee and creditors, and seek out money and assets that have disappeared from the bankrupt entities since the involuntary bankruptcy case was filed in 2010 against five companies he formerly controlled.

Bergstein’s request came after negotiations for him to take a role in the search for assets broke down with court-appointed trustee Ronald Durkin. Instead, Durkin worked out an agreement allowing David Molner of Aramid Entertainment, and his company, Screen Capital International, to act on behalf of the trustee and the creditors in the cases.

The agreement to allow Molnerl to act on behalf of the trustee was approved in early May, and is also being appealed by Bergstein.

In this latest appeals court ruling, Gutierrez quotes Russell in saying “it’s clear” that Bergstein is “out to punish these folks as much as he can.” Russell is also quoted saying: “I’m not going to allow the powers of the trustee to be used by (Bergstein), given the history of this case and the total lack of merits of the motion."

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After looking at all this, Gutierrez wrote on May 22 that Bergstein is warned “that continuing to bring frivolous motions may warrant imposition of Rule 11 sanctions.”

Rule 11 has to do with representations made to the court. Motions may not be for what the rules call “improper purposes,” such as “to harass, cause unnecessary delay, or needlessly increase the cost of litigation.”

“Applicant should be aware,” added Gutierrez in his final words in the latest order, “that the continued filing of baseless motions will result in the imposition of sanctions.”

Russell has already imposed sanctions against Bergstein and one of his attorneys, Victor Sahn, for another matter in the same case. Russell will hold a hearing in July to announce how much money that is going to cost them.

Bergsten and his attorney did not respond to a request for comment.