Summit Knocks 'Twilight' Money Lawsuit Out of U.S. Court (Exclusive)
The film company, using a Winston Churchill quote, successfully convinces the judge that if the dispute is going to be tried, it should be in England.
Less than four months after the lawsuit commenced, Summit Distribution has gotten a California judge to dismiss claims that it cheated U.K. movie distributor and financier Goldcrest Film Distribution III Limited of money from the highly profitable 2008 movie Twilight.
Goldcrest claimed in its lawsuit that Summit had used "deceptive accounting practices" and had "systematically understate[d] revenues and overstate[d] its costs" on the picture. Among the plaintiff's allegations was that Summit had "secretly" used $6 million of revenue to pay retroactive bonuses to stars Kristen Stewart and Robert Pattinson, screenwriter Melissa Rosenberg and novelist Stephenie Meyer, possibly to secure their commitment for sequels.
The British company might have felt it deserved more money under a deal that entitled it to a third of net proceeds, but in response to the lawsuit, Summit brought a motion to stay or dismiss it on the basis that a series of legal agreements between the two companies included "Payment Directions," which included a jurisdiction clause that sent disputes to the U.K.
According to the defendant's motion, "Summit subscribes to the maxim of Sir Winston Churchill that 'To jaw-jaw is always better than to war-war' but, if litigation is necessary, Summit is absolutely ready and determined to proceed in London to litigate these issues without delay."
As proof of its willingness to step in the ring — in a proper forum — Summit reported that it had initiated proceedings in the High Court of Justice in London.
There, Summit figures to proceed in its own arguments that Goldcrest isn't owed more money over such events as when Summit allegedly received a $4 million signing bonus when Universal agreed to distribute Twilight and other films on home video.
In court papers, Summit said that this wasn't the traditional "Hollywood accounting" case, and that Goldcrest was wrong when describing the case as one about "deceptive accounting practices." Instead, Summit's attorney Steven Marenberg pointed to the complicated set of legal agreements governing Twilight net proceeds, and argued it was primarily a dispute regarding the interpretation of an English law contract. Goldcrest isn't owed 33.33 percent of Twilight profits, but rather 15 percent after the obligations of the Payment Directions are considered. Or so Summit believes.
In response, Goldcrest's attorney Mark Holscher argued that the Payment Directions were irrelevant because of allegations that Summit had underreported revenues and overstated costs derived from another contract called the "Sub-Distribution Deed," which didn't include a choice-of-forum clause. This document is described by the plaintiff as addressing "how Goldcrest's share of the Twilight participation is to be calculated."
But the plaintiff isn't able to get a chance to go to trial in California with word of how its auditors uncovered more than $39 million worth of errors in Twilight revenue because L.A. Superior Court judge Richard Fruin was persuaded that the lawsuit "implicates" the Payment Directives and was not merely about "calculation and account," but also about the "payment" of Goldcrest's share.
The judge issued a minute order this week dismissing the case, although we hear that the plaintiff might be showing up in court anyway tomorrow in an attempt to allow an amended complaint. This could be a long shot, but in any case, the litigation on its merits could proceed over in England, and obviously away from an American jury hearing about "Hollywood accounting."
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