Wayne Newton probably won't be using his private jet much

By Eriq Gardner

Wayne Newton is being sued by a billionaire friend.

 

Ollen Bruton Smith claims in Nevada district court that he guaranteed a $3.75 million bank loan to Mr. Las Vegas so the singer could refinance his debt. According to the complaint, the loan was secured on a 38-acre property in Las Vegas and a $2 million private jet, both owned by Newton.

Smith, owner and CEO of Nascar track parent Speedway Motorsports and one of the top billionaires in the world, according to Forbes, says he's been unable to collect repayment from Newton, who has failed to "sell personal assets to pay off" the defaulted loan.

Newton has been hounded in court by others in recent years, including by a former employee who operated that above-mentioned jet for him and tried to have the singer's wages garnished. The troubles led MGM to act as an intervener in court before booking the singer to perform -- and also led Newton to abandon the now infamous jet at a Michigan airport.

 

And yes, even the airport went after him for $60,000 for having to move the jet.

Judge slaps Sumner Redstone in Midway Games bankruptcy

By Eriq Gardner

U.S. Bankruptcy Court Judge Kevin Gross has just dismissed claims that Sumner Redstone, as well as other former directors of Midway Games, breached their duty to stakeholders and engaged in fraudulent transfers of Midway's assets.

But Gross wasn't very kind to the Viacom topper, who was Midway's controlling shareholder until he sold his stake in the company for $100,000.

"The decision is not an endorsement of any of the defendants' actions," Gross wrote in his ruling. "The defendants oversaw the ruin of a once highly successful company, only to hide behind the protective skirt of Delaware law, which the court is bound to apply."

Sly Stone claims ex-manager cost him $80 million

By Eriq Gardner

It's not uncommon for a musicians to accuse their managers of cheating them out of money, but few complaints come close to the scope of allegations made by funk and soul pioneer Sly Stone against ex-manager Gerald Goldstein on Thursday in Los Angeles Superior Court.

According to the complaint, Stone alleges that Goldstein diverted about $80 million in royalties, leaving him "to live hand to mouth, at times homeless and dependent on social security payments."

Stone says that in 1989, he signed what he believed to be a standard management agreement, but the document was allegedly a contract allowing Goldstein to take over all the rights to collect his royalties. For the next 20 years, the musician says he was told there were little or no royalties due and that the IRS had placed liens and levies on his income.

Yari bankruptcy: the sequel

By Eriq Gardner

Film impresario Bob Yari continues to have problems steering his production company after his "Crash" won a best picture Oscar in 2006. 

Yesterday, the company filed for Chapter 11 bankruptcy in the midst of a legal battle with talent agency UTA over commissions from the 2006 comedy, "Dave Chappelle's Block Party," produced by Yari. Papers were filed under the name Persik Productions, a holding company.

"It won't affect our production going forward," he told THR's Gregg Kilday. "It's just a reorganization of the existing library that will isolate obligations from our past library."

In an IFTA arbitration with the agency, the arbitrator ordered Yari to put $350,679.06 into escrow pending the outcome of the case upon worries that a possible bankrupty might impede any future collection. Last week a judge ordered that a receiver be appointed to look after the company's finances. Yari responded by putting the company into bankruptcy.

Yari has already gone the Chapter 11 route once, having put the releasing arm of his company into bankruptcy back in December 2008.

Yari is also on the hook for $127,994.59 in fines to his creditors in his old bankruptcy case because he failed to comply with court orders to produce documents, according to court records. When Yari tried to file an opposition to produce these documents, he was rejected because court papers weren't filed in a timely fashion.

Earlier in the month, the releasing arm of the Yari Film Group filed an appeal to a Los Angeles district court to overturn the bankruptcy court's order, which gave him 90 days from November 23 to pay the $127,994.59 sum.

Filing for bankruptcy doesn't seem to have helped Yari out much previously. Hopefully he has better luck this time.

Arbitrator denies $11 million distributor claim on Spike Lee's 'St. Anna'

By Eriq Gardner

A recent arbitration decision illustrates how big-name directors like Spike Lee can often find themselves in tough spots.

After finishing shooting of his 2008 film "Miracle at St. Anna," Lee had a difficult choice to make. 

Producers had obtained an $11 million loan from Fortis Mediacom to finance the film. Another company, Film Finances Inc. issued a guarantee on that loan that the film would be completed and delivered to the international distributor TF1 International according to certain criteria, including a running time of less than 2 hours and a requirement that the film be based on an approved screenplay.

Lee initially made "St. Anna" with a running time of 2 hours 40 minutes, meaning he could deliver it to TF1 in violation of the time limit or he could cut the film's length and risk the gripe that the film didn't match the approved screenplay. A no-win situation.

Lee cut the film — and TF1 refused to pay because the film was no longer based on the approved screenplay.

The action kicked off litigation between the financier and the completion bond guarantor. Film Finances argued in an IFTA arbitration that it had satisfied its obligations to complete the film. Fortis said it didn't and attempted to recover $11 million.

An arbitrator in the case has ruled in favor of Film Finances, denying the $11 million claim and awarding attorneys fees.

"We are pleased with the award," said Garry Gans, a partner at Quinn Emanuel who represented Film Finances. "It vindicates not only Film Finances, but also Spike Lee's right to make a film reflecting his vision of a significant historical event."

'Dukes of Hazzard' suit lives to fight in South Dakota

By Eriq Gardner

When we last checked in on the long-running legal saga over "Dukes of Hazards" profits, a California federal court dismissed a bank's attempts to collect 6.5% of gross receipts from Warner Bros. over the TV show and spinoffs.

The writer of the TV series, Guy Waldron, had assigned his rights to a charitable trust, and the First National Bank in Sioux Falls brought the lawsuit as a trustee. The court dismissed the complaint for lack of jurisdiction because the judge found the South Dakota trust was subject to potential control by Waldron, a resident of California, and federal courts are reserved for disputes from parties of different states.

A procedural obstacle like this, however, isn't enough to keep Warners' nemesis Marc Toberoff down for long. For the last few months, Toberoff have been fighting to reinstate the case.

In July, the Waldons executed a relinquishment of rights in the charitable trust. That didn't work. In August, the same California federal court ruled it wasn't satisfied that this was an enforceable modification to the trust agreement. 

So the plaintiffs went to a South Dakota circuit court to petition for a modification of the trust agreement. In October, the plaintiffs successfully got the South Dakota court to accept jurisdiction and modify the agreement so that Waldons could relinquish a financial interest in the trust.

Having made these moves, First National Bank is once again going after Warner Bros for millions of dollars in unpaid profits on claims of breach of contract, fraud, and unjust enrichment.

Warners has strenuously denied liability.

Business manager vs. lawyer in Black Eyed Peas spat

By Eriq Gardner

Talent reps know it's not unusual for managers, lawyers, publicists and agents to develop rivalries amongst each other. But what happens when the bickering reaches extreme levels?

Witness a new lawsuit filed by Sean Michael Larkin, president and founder of Larkin Business Management. Last week in Los Angles Superior Court, Larkin filed a $5 million defamation claim against Helen Yu, a California lawyer who represents some of the performers in a "successful, world-famous music group" he manages.

The complaint doesn't specifically identify the band, but we've got reason to believe he's talking about the Black Eyed Peas.

Larkin acknowledges that through an inadvertent oversight, he did not timely file tax returns for the band. Yu allegedly used this opportunity to pounce. 

"Yu hatched an underhanded, deliberate and malicious scheme to ruin Larkin's reputation and poach his clients through lies, misrepresentations and falsehoods," says the complaint.

Larkin accuses Lu of anonymously sending two letters — one to the president of the music group's record label and the other to a key financial advisor for the label's president — that stated that Larkin lied and stole from his clients, overcharged commissions, made phony accounting, shredded documents, cooked the books and ran a "Madoff-like ponzi scheme."

The letters triggered a record label investigation, which Larkin says revealed no improprieties. Now represented by Skip Miller at Miller Barondess, Larkin is demanding at least $5 million in libel damages.

Beck sues label for control of mid-90s album

By Eriq Gardner

Beck has always had a taste for multiple genres of music, and he's just as polymorphous as a businessman, releasing three albums back in 1994 on three different labels and making oral agreements for album rights.

This kind of informality has a way of catching up with entertainers. According to a new lawsuit filed in U.S. District Court in Los Angeles, Beck Hansen has had trouble gaining control of his 1994 album "Stereopathetic Soulmanure."

In 1993, the rocker made an "oral agreement" with Flipside Records. Beck allowed the label to sell this album in return for 50 percent of profits and an accounting on a semi-annual basis.

Now Beck says he was stiffed. 

On June 30, 2008, he sent a written notice terminating Flipside's rights to "Stereopathetic Soulmanure." Flipside stopped selling the album. But another distributor, Revolver USA, allegedly didn't.

According to the complaint, Flipside had "an obvious and direct financial interest in" Revolver and "induced, caused, or materially contributed to such infringing contract."

In September, Beck sent a letter demanding Revolver destroy all remaining inventory and return the master, DAT, and other materials to him. 

Unsuccessful in that effort, he is now suing both companies for copyright infringement and breach of oral contract. He's pursuing damages and wants all remaining copies of the album impounded.

Beck is repped by Howard King and Seth Miller at LA's King Holmes Paterno & Berliner.

Class action claims Redstone inflated CBS

By Eriq Gardner

Class action lawsuits are a dime a dozen. Almost any major corporate transaction or announcement will trigger a filing thanks to the incentives that plaintiffs lawyers have in bringing these cases.

But a new class action filed in New York federal court against CBS and members of its corporate board caught our attention.

Lead plaintiff Curt Hatcher is claiming that CBS cooked its books in order to help topper Sumner Redstone avoid payments on a loan. Allegedly, Redstone borrowed $1.6 billion with the contingency that he'd make multimillion-dollar payments on the loan if CBS stock fell below a certain price. To avoid that outcome, in 2008 CBS purportedly ignored drops in goodwill assets like FCC licenses when calculating its assets, inflated its worth by $14 billion and touted its "strong" and "pristine" balance sheet.

Later that year, CBS announced a $14 billion write-down of goodwill and other assets hurt by the economic turmoil, sending shares of the stock down 20 percent.

Hatcher's lawsuit demands damages, restitution and an order requiring CBS to reform corporate governance and board oversight.

Tolkien settlement: More than $100 million

By Matthew Belloni and Eriq Gardner

Today's resolution of the litigation between New Line Cinema and the estate of author J.R.R. Tolkien (right) over “The Lord of the Rings” trilogy is shaping up as one of the biggest profit participation settlements in Hollywood history.

Two independent sources with knowledge of the deal pegged the value to the Tolkiens and co-plaintiff Harper Collins at well over $100 million.

Reps for the Tolkien estate and New Line parent Warner Bros. would not comment on the terms, citing a confidentiality agreement.

“We deeply value the contributions of the Tolkien novels to the success of our films and are pleased to have put this litigation behind us,” said Alan Horn, president and chief operating officer of Warner Bros. Entertainment.

The settlement heads off a scheduled October trial between heirs of the “Rings” author and New Line, which released film adaptations in 2001-2003. The trilogy grossed $3 billion in worldwide theatrical boxoffice, plus an estimated $3 billion from DVD, TV licensing and merchandise sales.

The deal also paves the way for Warner Bros. and MGM to move forward with two planned films based on Tolkien’s “The Hobbit,” which will be executive produced by “Rings” director Peter Jackson and directed by Guillermo del Toro.

The Tolkiens sued New Line in February 2008 claiming the family trust was paid only $62,500 for the right to make the three films and was owed 7.5 percent of gross receipts. The family initially sought $150 million but that figure was revised upward to $220 million during the litigation.  

The suit echoed similar cases brought against New Line by Jackson and “Rings” producer Saul Zaentz. Those cases settled for more than $20 million apiece after both Jackson and Zaentz publicly feuded with former New Line co-topper Bob Shaye. Warners inherited the Tolkien litigation when New Line was absorbed in March 2008.

A major beneficiary of Tuesday’s settlement is the Tolkien Trust, the U.K.-based charity controlled by the family. “The Trustees regret that legal action was necessary, but are glad that this dispute has been settled on satisfactory terms that will allow the Tolkien Trust properly to pursue its charitable objectives,” trustee Christopher Tolkien said in a statement.

Tolkien lead attorney Bonnie Eskenazi said the family felt “vindicated and satisfied” with the settlement. 

The nine-figure deal resolves a potentially disastrous situation for Warners and MGM on “Hobbit.” The Tolkiens argued in the litigation that New Line’s failure to pay profits was a material breach of contract, which, if proven, would allow the family to terminate a grant of rights. A hearing on that key issue was scheduled for next week.

“The Trustees acknowledge that New Line may now proceed with its proposed films of ‘The Hobbit,’ ” Christopher Tolkien said.  

Jackson was also eager to move forward with the project. At Comic-Con in July, he told fans that he was close to delivering a script for the project, with budgeting and casting soon to follow.