An L.A. Superior Court jury slammed independent film producer and distributor ITC Entertainment Group on Friday with an $11 million verdict.
In a case that raises interesting issues about a studio or production company’s liability for the conduct of its producers, a jury awarded $3.06 million in compensatory damages and $8 million in punitive damages to investor Ron Hunt.
Hunt claimed that executive producer L. Travis Clark took his money and failed to use it to make a movie. Both ITC and Clark were named as defendants. Hunt originally met Clark in the mid-1980s when Hunt was an extra on a television show Clark was producing.
Company claims ignorance
ITC claimed that it was unaware of Clark’s actions, did not greenlight a movie and was not responsible for his conduct. But under a legal theory of “ostensible agency,” Hunt claimed that Clark held himself out to the world as an agent of ITC.
“This verdict should cause any studio or production company to evaluate their first-look housekeeping deals to make sure that they are making clear to the outside world that this is an independent relationship,” said attorney Gerard P. Fox, who represented Hunt.
Attorneys for ITC did not return calls seeking comment.
Hunt, through his companies, Streetscenes and Crewcast, tried to get into the film business in the early 1990s by producing a Hunt script for an action feature, “Wrong Decision,” about an African American nightclub owner pursued by violent mobsters intent on recovering an incriminating book they believe he has.
During a lengthy pre-production period, Hunt believed that Clark had the power to bind ITC because of such indications as an office, letterhead and business cards.
But after a substantial investment by Hunt — approximately $1 million — he learned that Clark was using the money to “hire a staff” and “look the part of a busy ITC ‘Executive Producer.’ Unbeknownst to (Hunt), Clark was not receiving a paycheck” from ITC.
The film ultimately went into production in 1996, but Hunt severed his relation with Clark when he learned of his “malfeasance.” ITC refused to complete the film.
In the lawsuit, plaintiffs Streetscenes and Crewcast alleged claims for fraud, breach of contract and misappropriation.
ITC, formerly owned by Polygram, and now owned by British company Carlton Communications, is now primarily a film library.