10:31am PT by Eriq Gardner
Appeal Court Rules Fox Can Keep Financier's Investment In Film Slate
Twentieth Century Fox won't have to return an $8.6 million investment from a film financier who agreed to put up $25 million for a slate of 20 teen comedies but then couldn't come up with the full amount of cash. On Monday, a California appeals court affirmed the dismissal of a lawsuit that demanded the return of the money.
Smashing Pictures filed the lawsuit in July with claims that it had given Fox millions of dollars six years ago and had absolutely no idea what happened to the money.
The financier was only able to come up with a third of its $25 million buy-in, leaving open the question of whether Smashing should get its money back, whether the money was forfeited, or whether Fox could reallocate the money into other films.
The case was argued at state court over the summer months with both parties looking at contractual language in the co-financing deal to figure out what should happen next.
The dispute became focused on an amendment to the original contract that discussed rights and remedies in the event that Smashing couldn't make the full investment. The amendment read in part, "Until such time as Smashing has delivered to Fox the full $25,000,000 in total funding, Fox shall have the right to reallocate Smashing's investment in and among the Inventory Pictures as Fox determines, in its sole discretion."
According to the agreement, a $1 million Option Payment was forfeited, and some of the money delivered was to be allocated to several films, including Aquamarine, Idiocracy and The Ringer.
A referee, judge, and now, an appeals court, has determined that nothing in the contract requires Fox to return Smashing's money. Here's the decision.