Complaint charges fraud, breach of contract

Image Entertainment has sued Relativity Media for reneging on a 2006 homevid output deal.

The 10-year-deal called for Relativity to funnel a steady stream of theatrical fare to the homevid distrib in exchange for stock, but Relativity has yet to supply any pics. Image filed suit Monday in Los Angeles Superior Court, charging Relativity with fraud and breach of contract.

Image contends Relativity topper Ryan Kavanaugh entered into the deal expecting Image to be taken over by Lionsgate. At the time of the August 2006 pact, Image was fighting over a hostile takeover bid by Lionsgate.

The Image deal excludes pics financed or controlled by major studios and their specialty arms under slate deals. It called for Relativity to supply at least three pics in 2007 and at least seven, but as many as 20, pics in 2008.

Relativity has produced several indie projects since that pact, including “3:10 to Yuma” and “The Bank Job,” but both were distributed by Lionsgate. Lionsgate’s home entertainment arm released “3:10 to Yuma” on disc in January.

The complaint accuses Relativity of awarding homevid rights owed to Image to other concerns, including Lionsgate.

“Rather than comply with its contractual obligations to Image, Image is informed and believes that Relativity has granted distribution rights that belong to Image to other film distributors, including, upon information and belief, Lionsgate Films,” the complaint states.

Image was relying on the theatrical infusion to bolster its distribution clout. The indie outfit has a large catalog, but most of it is older theatricals or concert films. It had been trying to expand into theatrical fare on its own before inking the Relativity deal.

Relativity called the suit “frivolous and without merit,” and issued a statement suggesting it never owed Image any pics and that a 2007 settlement clarified that.

“We had and have no obligation to provide films and never did,” a rep said. “While we were hopeful that we could bind films together, unfortunately we found that most of the filmmakers we worked with felt that Image was not the right home for their films.”

Relativity also accused Image of misrepresenting its financial and distribution resources. “While Relativity’s initial agreement with Image didn’t obligate Relativity to give them the films like they’re claiming, a later settlement clarified that,” the rep said.

Image attorney Brian Lysaght of Christensen, Glaser, Fink, Jacobs, Weil & Shapiro denies any such settlement was made.

He said Relativity did make overtures to Image last year in the form of conversations about “what will it take to buy our way out of it,” but nothing every came of it.

“There was an agreement, and there was no settlement,” he said.

The attorney further noted Relativity co-founder and co-managing member Lynwood Spinks had joined Image’s board in August 2006 upon consumption of the deal, but that he stepped down that November, soon after Lionsgate’s takeover bid of Image failed.

His firm repped Michael Sitrick in an unrelated case against Kavanaugh. The judge recently ruled in Kavanaugh’s favor in that dispute.

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