Denial motion sets the stage for an appeal
A federal court judge has denied a motion by Elie Samaha and his Franchise Pictures for a new trial, a year and a half after the producer lost a $106 million jury trial against German distributor Intertainment.
In the motion, Samaha claimed documents discovered after the verdict supported one of his claims: that Intertainment head Barry Baeres lied about the budgets of films and hyperinflated the numbers when he sold rights to subdistributors.
Baeres’ alleged fraud, Samaha’s papers argued, would have cast doubt on Baeres’ credibility and bolstered Samaha’s defense that Baeres was aware the Franchise budgets were inflated and that Baeres was in on the fraud.
The new documents came to light during discovery in the arbitration among Intertainment; Comerica, the bank that made the loans to Franchise to produce the films; Franchise; and the completion bond companies.
In denying the motion, U.S. District Court Judge Alicemarie Stotler found that given the huge volume of documents produced in the case, Intertainment’s failure to produce all documents was unintentional. She also found the new documents were not as damaging as portrayed by Franchise and did not support the contention that Intertainment knew about and encouraged the fraud.
Intertainment attorney Scott Edelman said, “With these rulings, Samaha has exhausted his efforts to get out from under the jury’s $106 million verdict for fraud against him. The case was fairly tried, and we are gratified by the result.”
The denial of the new trial motion sets the stage for an appeal.
Samaha’s attorney, Richard Schirtzer, said, “We believe the jury verdict was clear that Elie was liable for zero damages, and we expect the 9th Circuit to reinstate the jury’s verdict.”
Schirtzer was referring to the fact that, although the jury found Samaha liable for budget fraud, it apportioned all of the $77 million in compensatory damages to Franchise. Upon being told Franchise was an empty shell, the jury apportioned $4 million of the total $29 million in punitives to Samaha. Despite an order by Stotler holding Samaha liable for both the compensatory and punitive damages, Samaha’s attorneys have taken the position that he is not personally liable for any of the compensatories and that the punitives awarded against him also are void.
In June 2004, Intertainment finally presented its long-running fraud case against Franchise and Samaha to a Santa Ana, Calif., jury. The distributor claimed it had been defrauded into paying on wildly inflated budgets, so that instead of paying 47% of the budget, as the companies’ agreement called for, Intertainment ended up paying most of the costs for films such as “Get Carter” and “The Whole Nine Yards.”
Samaha’s defense, which the jury rejected, was that budgets were inflated as part of a secret oral deal with Baeres, who knew Franchise had no other source of financing and desperately wanted the films to keep up Intertainment’s stock price. Despite numerous red flags, Baeres claimed he had no knowledge and no motive to agree to the inflated budgets.