A California Superior Court judge threw out MGM’s entire $ 750 million damage claim against Kirk Kerkorian Wednesday, adding another chapter to an already lengthy legal battle.
The ruling comes approximately four months before attorneys for Kerkorian, MGM and Credit Lyonnais go to court to fight out what promises to be a fascinating legal battle over the sale of MGM. Kerkorian execs contend that much of the inner workings of French bank Credit Lyonnais, which they say is the party that committed fraud, will be brought out during the trial.
Both CL and MGM filed suit against Kerkorian in December 1992, alleging that he and others committed fraud in selling the studio to Giancarlo Parretti in November 1990. The two suits sought more than $ 1.25 billion in damages.
Kerkorian, in turn, filed cross-complaints against both entities. In his complaint against CL, Kerkorian charges that the bank made a number of misrepresentations in connection with the sale of MGM/UA Communications to Parretti, a CL client.
At this point, CL’s suit and Kerkorian’s cross-complaints all are moving forward. The suits are scheduled to go to trial in L.A. Superior Court on May 3.
There is also an additional affirmative relief fracas for between $ 10 million and $ 20 million that MGM has ongoing against Kerkorian.
In response to the judge’s ruling Wednesday, MGM charged that the decision did not decimate its case against Kerkorian.
“The final order of State Court Judge Roger Hubbell has not thrown out all of MGM’s claims against Kirk Kerkorian and his associates, as Kerkorian’s press release implies,” the MGM statement said. “MGM’s action still includes damages claims against the Houlihan, Lokey firm that its solvency opinion was the result of negligence and fraud. Its action still includes a declaratory judgment claim against Kerkorian and his associates that they were participants in the fraud, wereguilty of bad faith and acted in a manner that was not consistent with MGM’s best interests.”
On Kerkorian’s side, execs expressed satisfaction with the ruling.”We have felt from the beginning that MGM’s claims against Mr. Kerkorian were unfounded, and that MGM sued us solely for public relations purposes to hide wrongdoings of its owner, Credit Lyonnais,” said Alex Yemenidjian, an executive with Kerkorian’s Tracinda Corp., in a statement.
An MGM spokesman, in response to Yemenidjian’s statement, said: “If Mr. Kerkorian genuinely believes that MGM sued him solely for public relations purposes, he is being badly deluded by his advisers. We are confident the jury will not be deceived by any smoke-and-mirror tactics. The jury will hear an amazing story of how the MGM board was deprived of key information about the deal.”
Yemenidjian, though, said that the attention of the upcoming trial should be more appropriately focused on the French bank.
“We are looking forward to the trial so that we can finally show exactly what went on at Credit Lyonnais,” Yemenidjian said. “Now we know the reason why Credit Lyonnais has been insisting that all details of this suit remain confidential. There’s a lot more to this story than anyone has yet revealed, and we are finally getting to the bottom of it.”
The studio was quick to take umbrage at Yemenidjian’s statements, adding that they reveal a misguided hope.
“MGM remains convinced that Kerkorian and his associates breached their fiduciary duties to MGM, and MGM is highly confident that this additional claim for substantial money damages will be restored to its case either on appeal or if Judge Hubbell reconsiders the issue as the case progresses,” the studio statement said.