May 13, 2011 8:00am PT by Matthew Belloni
Now It's War: Relativity Demands $20 Million from Weinstein Co. for Botching 'Nine' Release (Exclusive)
The legal battle between film heavyweights Harvey Weinstein and Ryan Kavanaugh is getting downright nasty.
Kavanaugh’s independent studio Relativity Media on Thursday responded in court to the Weinstein Co.’s lawsuit over distribution rights to the planned remake of The Crow. As you’ll recall, Harvey and Co. sued April 20 claiming Relativity was violating a contract to allow TWC to release the still-in-development remake of the 1994 action fantasy, which is set to star Bradley Cooper and be directed by Juan Carlos Fresnadillo.
The motion to compel arbitration, a copy of which was obtained by THR, seeks to move the case to a private arbitrator at the JAMS dispute resolution company.
But more interesting: The motion includes a copy of Relativity’s arbitration demand, a blistering document that accuses the Weinsteins of “egregious and deceitful actions” in mishandling the release of the 2009 Relativity-financed bomb Nine and asks for more than $20 million in damages.
Relativity claims it was fraudulently induced into sinking $20 million into the Rob Marshall-directed musical -- which is said to have cost more than $115 million to make and market but grossed less than $20 million domestic -- based on TWC’s misrepresentations that it had the financial wherewithal to back the P&A and maketing spend required to successfully release the film. “In fact, it is now believed that TWC never had the financial capability to fully fund Nine’s P&A budget,” the arbitation demand states.
Relativity also claims TWC violated its deal by failing to allow any creative input into the picture and missing its planned Thanksgiving release date “due to its own internal production mismanagement.” Instead, TWC released the film on Christmas Day opposite another Relativity-backed film, It’s Complicated, targeted to the same audience. Worse, Relativity argues, TWC has refused to allow a full audit of the books and records of the film.
“Not only did TWC botch the Nine release and distribution, TWC has refused to pay Relativity the money owed to it under the agreements with the parties,” the arbitration demand states.
For that reason, Relativity believes TWC doesn't have the $70 million required to release The Crow and has thus repudiated a deal that would have given Weinstein rights to the film. Relativity then reveals the crux of the dispute between the two studios:
Under the parties' agreements (assuming TWC were not in breach) TWC would have the right of first refusal to distribute The Crow, but would be required to guaranty at least $70 million in P&A expenses and foreign distribution. Based on the information available to it, Relativity does not believe that TWC has the ability to meet those obligations. Accordingly, Relativity has demanded that TWC provide reasonable assurances of its ability to perform. TWC has ignored those demands. TWC has thereby repudiated the parties’ agreements, and Relativity is under no obligation to allow TWC to ruin yet another movie.”
Relativity is asking the arbitrator to rescind the Nine deal that gives rise to TWC’s Crow rights and award it $20 million plus interest for its lost investment in the film.
"If TWC were to distribute The Crow, Relativity would be facing a disaster worse than the Nine debacle, and Relativity could suffer mass financial losses and severe, irreparable reputational harm,” the arbitration demand concludes.
"This claim is absolute hogwash," TWC attorney Bert Fields tells us. "The Weinsteins are well financed, everybody in the business knows that." Fields vows to "expose" Relativity's business practices. "There are all kinds of things we're going to explore at trial," he says, declining to be more specific.
The demand asserts causes of action for fraudulent inducement, breach of contract, breach of the duty of good faith and fair dealing, repudiation, accounting, unfair business practices and declaratory judgment. It was filed by Relativity attorneys Carol Genis, Francis Higgins and Abram Moore of Chicago’s K&L Gates and Thomas Weiss and Hyrum Hunt of LA’s Weiss & Hunt.