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Warner Bros. Fighting Lawsuit Over Universal's 'Bourne Identity' (Exclusive)

How WB missed a chance to develop a billion dollar property -- and why 14 years after giving up rights, it's still in court with a dead man.

The Bourne Identity Still Damon - H 2013
Matt Damon in "The Bourne Identity"

In the annals of Hollywood, there have been great forward-looking decisions, and then there have been poorer ones. Warner Bros.' prerogative to not make a film based on Robert Ludlum's best-selling 1980 spy novel, The Bourne Identity, certainly falls in the latter category.

Yes, Warners once had the opportunity to do a film adaptation and even held discussions with Burt Reynolds about playing the role that eventually solidified Matt Damon's stature as one of the biggest actors in town.

How the studio passed on this opportunity is a story in itself. In 1981, film rights to the Ludlum novel had been acquired by Anthony Lazzarino's Windwood/Glen Productions. Then, in a deal that gathered attention in a New York courtroom last month, this company sold those rights to Warners' predecessor, Orion Pictures, in exchange for a 3.75 percent interest and a presentation credit.

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Warners had 18 years to get a feature film off the ground, but it never did so other than a 1988 TV movie starring Richard Chamberlain. In 1999, it allowed the rights to revert back to Ludlum, who then negotiated a deal with Universal Pictures. And so in the past decade, Warners has watched from the sidelines as The Bourne Identity  and three sequels have grossed more than a billion dollars at the theatrical box office worldwide.

Not only has Warners missed out on all of that, but now comes the equally incredible fact that it is being sued over Universal's film. Even more remarkable? The lawsuit -- which claims that Lazzarino was robbed of what was due to him -- was first initiated eight years ago. Lazzarino passed away in 2012, and now his widow is seeking to revive claims that have lay dormant for five years. A long time has passed, but a New York state judge is now entertaining the possibility of allowing the lawsuit to proceed.

What follows is the obscure legal history behind The Bourne Identity.

Windwood/Glen Productions was run by two men. Lazzarino was one. His partner was named Henry Morrison.

Unfortunately, the two had a falling out in the early 1980s. As part of a 1982 settlement between the ex-partners, Lazzarino gained sole control over Windwood/Glen, and both men agreed not to "interfere or diminish" the company's rights under its deal with Orion over a possible Bourne Identity film.

At the turn of the century, after Ludlum had reclaimed rights, it was Morrison who helped the author sell those rights to Universal.

Three years after the 2002 film came, Lazzarino, representing himself in court, quietly filed a lawsuit. He probably could have benefited from better legal counsel. He filed claims against Universal, Warners and Morrison -- seemingly not knowing who to blame for letting profits from a lucrative franchise out of his fingertips. His lawsuit was premised on the allegation that his deal with Orion had given Windwood/Glen a "right to match" any sale of film rights and that Morrison had breached the agreement not to interfere.

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In 2008, a judge allowed a breach of contract claim against Morrison to survive, but otherwise dismissed all claims against the studios, ruling that Lazzarino had a legal obligation to object much sooner to the reversion of rights back to Ludlum and so the statute of limitations had run its course. However, that didn't quite finish things. At the end of the ruling, the judge wrote ominously, "Finally, plaintiff's application for a stay is granted, as there appears to be no principled reason not to grant his request."

What happened next was silence. Five years of it. Everyone probably forgot about Lazzarino, and when he died last June at the age of 88, there was nothing but a tiny obituary in a local newspaper for a man who for one brief moment in time controlled film rights to a book that has been hailed as one of the best spy thrillers ever.

Then earlier this year, like the main character of Jason Bourne who experiences amnesia and slowly remembers himself, the Lazzarino lawsuit has popped up again.

At a hearing in March, Aaron Siri, the estate's new attorney, attempted to explain to a judge that Lazzarino was in his 80s when the judge granted a stay, and was working on a new federal lawsuit he wished to file because he strongly believed that it was a matter for federal jurisdiction, but never finished it. Now, Lazzarino's widow has decided to green light an attempt to lift the stay and amend the lawsuit.

The estate's new legal theory is that under the terms of the 1981 deal, Warners owes a 3.75 percent interest and a presentation credit on any film "produced or caused to be produced by Orion." Warners' failure to do that in 2002 when Universal's film came out would allegedly be within the statute of limitations of a lawsuit initiated in 2005. Adds its legal papers: "Warner Bros. apparently chose to transfer away its rights to the film; but this did not, and could not, negate its obligations to Winwood related to the film. Under elementary New York contract law, a party cannot negate their contractual obligations by simply transferring away their contractual rights."

At a hearing March 12 before New York Superior Judge Marcy Friedman, attorneys for Warner Bros. attacked this theory.

On the merits of the claims,  attorney Marshall Beil of McGuire Woods argued that the reason Lazzarino never asserted such a claim was because it was impossible -- inconsistent with the language, intent and purpose of the 1981 contract. Lazzarino's company was due his profit participation if Orion -- not another studio -- made the film.

Bell added: "If Orion decided not to make the film because Burt Reynolds did not want to be part of it, which is in fact, what happened, or for any other reason, Winwood/Glen had two things that it could do. One is, it could take the film out of turnaround, which means basically buy it back and try to sell it to somebody else, or if Orion sold it to a third party, another studio, for example, Mr. Lazzarino had a right to match whatever Orion was getting for its rights. Neither of those happened."

The attorney representing Warner Bros. then gave Judge Friedman another -- arguably more important -- reason to deny efforts to revive the lawsuit.

"He's dead, so we can't question him," said Bell. "Who knows where any of the other parties are. There's a great deal of prejudice. Plus, he didn't do what he was supposed to do. This is not just mere lateness. This is basically sleeping on your rights."

Representing the other side, Siri referred to a 1983 appellate decision that says, "Permission to amend pleadings should be freely given ... Mere lateness is not a barrier to the amendment."

And as for Warners' supposed obligations, Siri told the judge that when the studio transferred away its rights, "they should have made provisions for Mr. Lazzarino ... They can't come back now and complain, 'Well, you know, we transferred away the valuable rights you gave us, Winwood, but since we forgot, overlooked or however you want to call it, to make an accounting for our obligations to you, it's too difficult now for us to calculate what we actually owe you.' "

A decision from Judge Friedman on whether to allow a lawsuit against one studio over another studio's film made more than a decade ago should be coming soon. We'll bet on Warner Bros. winning, but as the Bourne franchise has taught us, never count out the guy presumed dead.

Email: eriq.gardner@thr.com; Twitter: @eriqgardner