Alleging fraud and breach of contract among other charges, an early backer of Relativity Media is suing the company over an investment in a major co-financing arrangement with Sony Pictures.
In a suit filed in Los Angeles Superior Court Wednesday, investment group Aramid Entertainment Fund is accusing Relativity of allowing fellow defendant Fortress Investment Group to fraudulently buy into a Relativity-arranged slate deal at Sony.
Plaintiff is seeking restitution and damages of at least $44 million.
Relativity reps did not immediately respond to a request for comment.
The floridly written suit opens by claiming this is “one of the greatest heist stories ever told in the movie business.” In its allegations of wrongdoing, the suit takes particular aim at Relativity topper Ryan Kavanaugh.
Aramid’s grievances arise from an investment it made in Beverly I, a slate financing deal that Relativity arranged at Sony in 2007. The suit claims that Relativity at the time touted the deal as “a great equalizer between slate investors and the studios, enlisting Citibank to help solicit financiers for the $555 million arrangement.”
Those financiers eventually included Aramid, an investment company led by chairman and co-founder David Molner that has backed entertainment content since 2006.
Company alleges that in 2010, Fortress approached Aramid about purchasing some of its entertainment assets, including its piece of the Beverly I deal. Fortress eventually passed, and Aramid claims in court docs that the hedge fund used “confidential information” about Aramid’s investments to buy out Citi’s position in the Relativity deal at a discounted price.
According to the suit, Fortress also negotiated an early termination of the slate arrangement, something that Aramid claims made its investment worthless. The company further asserts that Fortress wouldn’t have been able to take out Citi without the help of Relativity, which Aramid says earned $14.5 million for its cooperation.
Films mentioned in the lawsuit include Sony’s “Anonymous,” “21 Jump Street” and the upcoming Adam Sandler pic “I Hate You Dad,” which has since been retitled “That’s My Boy.”
Suit alleges that Relativity grew too big too fast, saying that the company’s unprofitable acquisitions of Rogue Pictures and Overture Films led to a massive overhead its finances couldn’t sustain.
The players in Wednesday’s suit read like a legal game of six degrees of separation.
Molner has spent two years battling financier David Bergstein in Federal bankruptcy court over investments in a web of Bergstein-led film companies. That web eventually tangled Fortress, which also tried to recover money from the Bergstein shingles. And those companies had various affiliations to sometime Bergstein business partner Ron Tutor, who helped lead a group of investors in their successful purchase of Miramax from Disney in 2010.
Bergstein also helped advise Tutor during that bid, which pitted Tutor’s investment group against rival bidders Bob and Harvey Weinstein. Fortress backed the Weinsteins in that bid, along with recent Relativity investor Ron Burkle. Wednesday’s suit says that Fortress cited its work on the Miramax bid as one reason why it could not purchase Aramid’s entertainment assets.