Lawsuit Aims to Halt Warner Bros.' 'The Conjuring' Sequels (Exclusive)

'The Conjuring'

James Wan's R-rated horror title, featuring Vera Farmiga and Patrick Wilson, scared up an impressive opening weekend take in July from the U.S. moviegoing audience. The $20 million film, which received generally positive reviews, ultimately grossed more than $315 million worldwide. 

With about $318 million in worldwide box office, Warner Bros' The Conjuring spooked many moviegoers last year. Naturally, the studio wants a sequel and has targeted Oct. 23, 2015, as the date for the follow-up about two paranormal investigators who come to the aid of a family living in a haunted house. On Friday, however, Tony DeRosa-Grund's Evergreen Media Group, which licensed rights to the first film, filed a lawsuit to stop it. The fate of a blockbuster franchise is now in the hands of a Texas judge.

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The Conjuring came out last July despite the fact that the two sides were fighting over trademarks. Evergreen Media held rights over the case files of real-life paranormal investigators Ed and Lorraine Warren before licensing a movie version to Warner Bros. The licensor then made a second deal with Lionsgate for a Conjuring TV series, which prompted a battle over the prospect of an entertainment property with the same title. The dispute was first handled by the U.S. Trademark Office before moving to arbitration to consider the question of whether an "option quitclaim agreement" signed four years ago reserved for Evergreen Media the rights for a TV series.

In reaction to the latest lawsuit, Warner Bros. says it is procedurally improper. (Full comment below.)

In the new complaint (read here), Evergreen Media says Warner Bros.' New Line was only granted rights on a "very limited, selection of the Case Files – i.e., less than one percent (1%) of the total number of Case Files – and the Warrens’ life stories, in exchange for a purchase price for each theatrical production or use of those select Case Files as well as a crediting and employing Mr. DeRosa-Grund as producer."

The plaintiff claims that Warners "now seek to reap all of the profits from The Conjuring while denying their financial obligations" by "failing to pay for the underlying rights and stealing those rights to make additional films, both theatrical films covered by the agreements as well as direct-to-video films that are not covered by the agreements."

The lawsuit says that New Line is developing a film titled Annabelle, based on another Warren case file, as well as The Conjuring 2.

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DeRosa-Grund is upset by an alleged refusal for payment and credit over these film projects and is demanding that a Texas judge intervene to establish that the studio has stolen the underlying properties and order an injunction against further exploitation. He also says he is due big money from last year's horror blockbuster, alleging that his producer agreement entitled him to 5 percent of gross profits.

As for the TV show, the lawsuit updates the situation by saying that last July, Lionsgate informed Evergreen Media that it would not go forward with production as it wasn't prepared to defend a legal dispute before rights were cleared up.

The lawsuit alleges that Warner Bros. has committed a breach of contract, a breach of the implied covenant of good faith and fair dealing, tortious interference, fraud in the inducement, promissory estoppel and conversion. Further, Warner Bros. is said to be in violation of section 43(a) of the Lanham Act by failing to submit Mr. DeRosa-Grund’s story and treatment to the WGA for the purposes of a “Story by” credit and associated separated rights. Besides a declaratory judgment establishing rights, the plaintiffs demand damages including the studio's profits and revenue.

DeRosa-Grund is represented by attorney Sanford Dow.

Warner Bros. believes that the plaintiff is making an end-run around the proper path of adjudication. A spokesperson tells The Hollywood Reporter, "New Line has been and is vigorously defending itself against these spurious claims in a binding arbitration proceeding in Los Angeles, and therefore the Texas filing is both procedurally and substantively improper."

Twitter: @eriqgardner