'Conjuring' Dispute Will Be Handled in Arbitration

'The Conjuring'

Ignition created this domestic one-sheet for The Conjuring.

Ever since The Conjuring came out, it's been the subject of a spooky legal dispute. The film grossed $318 million worldwide, and with sequels both released and forthcoming, Tony DeRosa-Grund's Evergreen Media Group has put up quite a fight over contingent compensation and the scope of rights. Now, thanks to a new decision by a Texas federal judge, the next round will take place in arbitration.

DeRosa-Grund has asserted many claims in his litigation campaign against Warner Bros. and its subsidiary New Line. He alleges the studio has breached agreements, denied him proper producer credit on the sequels, interfered with his exclusive agreement with real-life paranormal investigator Lorraine Warren, intentionally interfered with a deal his company was making with Lionsgate for a Conjuring television series, made false representations to him, published defamatory statements about his business, and much more.

U.S. District Judge Lee Rosenthal isn't going to address the claims. At least not at the moment.

In an opinion released on Tuesday, the judge examines the Quitclaim Agreement, where New Line bought DeRosa-Grund's rights to certain case files and Warren's life rights. The judge also looks at a Producer Loanout Agreement. Both contracts had arbitration clauses that sent disputes to JAMS.

DeRosa-Grund argued the arbitration clauses were unilaterally imposed and procedurally or substantively unconscionable.

The judge doesn't accept this.

"DeRosa-Grund, represented by several experienced lawyers, negotiated the contract with New Line over four months," the judge writes. "The parties exchanged several different versions, resulting in some changes favorable to DeRosa-Grund and some more favorable to New Line."

Technically, the judge is letting the arbitrator decide, but the judge says even if he were to make the decision, "the result is to find the clauses enforceable. The delegation clauses are not unconscionable."

The plaintiff also argued that some of his claims were beyond the scope of the arbitration clauses. Again, the Texas judge defers to the arbitrator for the official judgment, but thinks the various claims — even the tortious interference, fraud and defamation ones — are sufficiently related to the agreements "that they fall within the broad arbitration provisions."

An attempt to at least hold Warner Bros. — if not New Line — to litigation fared no better.

If the arbitrator reaches a different conclusion, the judge has dismissed the complaint without prejudice, opening the possibility that it could be refiled. But more than likely, the claims will now be adjudicated at JAMS.

According to Judge Rosenthal's opinion, Warner Bros. first initiated arbitration in June 2013 against DeRosa-Grund, claiming he had breached agreements by filing for "Conjuring" trademark applications, registering titles with the MPAA and entering into an agreement with Lionsgate. DeRosa-Grund then asserted counterclaims, but later did not respond to New Line's deposition demands.

DeRosa-Grund also brought a racketeering lawsuit against New Line, then withdrew it. The dismissal happened without prejudice, meaning it could be refiled as well. However, at the moment, the controversy gets a bit more quiet behind closed doors.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner