Co. only allowed to pursue breach of contract
Artisan Entertainment has lost its fraud case against financier Peter Hoffman and Heath Insurance Broking that stemmed from an insurance-backed film finance deal that went south.In a decision handed down March 18, L.A. Superior Court Judge Frances Rothschild said that Artisan failed to prove any fraud or conspiracy between Hoffman and the insurance company. She granted summary judgments for both Hoffman and Heath. The judge did not grant summary judgments for Royal & Sun Alliance Insurance but cleared it of fraud charges. Artisan will be allowed to pursue only a breach of contract suit against the company. The judgments end a case that began nearly two years ago, when Artisan alleged that Hoffman proposed a means for the company to finance eight pictures by obtaining cash-flow insurance as security for a Chase loan. The result was a complex $163 million financing arrangement with Chase in October 1999. At the same time, Artisan made a deal with Royal & Sun to provide cash-flow insurance for each pic. That month, Artisan obtained financing for the first two pics in the pool, “Stir of Echoes” and “The Ninth Gate.” The insurance company refused to insure the remaining pics, however, and Chase then refused to release the financing. As a result, Artisan was forced to use other assets and lines of credit to pay for already-produced films and halt new production. The decision was anticipated. In September 2001, Judge Rothschild rejected the fraud case on grounds that the suit failed to show that the defendants intended to defraud Artisan (Daily Variety, Sept. 10, 2001). Artisan’s attorneys later filed an amended suit.