Producer Must Pay Punitive Damages

A German film distributor Friday was awarded $29 million in punitive damages on top of the $77 million it was granted by a jury that found it had been bilked by a Hollywood producer who inflated his movie budgets.

The U.S. District Court jury in Santa Ana decided that producer Elie Samaha personally should pay $4 million of the punitive damages to distributor Intertainment. Samaha’s Franchise Pictures is responsible for $1 million. The damages stemmed from Intertainment’s financing of films for Franchise.

The remaining $24 million of the award was divided into separate chunks of $1.5 million each, covering 16 films to be paid by production companies Samaha organized for each movie. They included “Get Carter” and “Driven” with Sylvester Stallone, “3000 Miles to Graceland” with Kevin Costner, “The Art of War” with Wesley Snipes and “Battlefield Earth” with John Travolta.

A former dry cleaner and owner of trendy nightclubs, Samaha briefly became a top player in Hollywood, making scores of movies, most of which flopped. The films featured top Hollywood stars and were distributed by Warner Bros.

Under its film financing deal with Samaha, Intertainment had committed to pay 47% of a movie’s budget.

But Intertainment later sued Franchise Pictures and Samaha, alleging that Samaha secretly inflated budgets so Intertainment would be on the hook for most, if not all, of each movie’s cost.

On Wednesday, the jury awarded Intertainment $77 million in compensatory damages, all to be paid by Franchise Pictures.

Samaha lawyer Bill Price said his client should not have to personally pay the punitive amounts because the jury did not find he should pay compensatory damages. Price also called the verdict flawed because the jury was not allowed to hear evidence that Intertainment had a history of being involved with inflated film budgets.

But Intertainment lawyer Scott Edelman expressed confidence in the jury’s decision and in the company’s ability to collect the $106 million awarded.

The production entities, though temporary companies, have assets in the form of film rights, Edelman said. In addition, he said, Intertainment can try to recover funds from banks, insurance companies and bond firms involved with Samaha.

Intertainment initially alleged it overpaid Samaha by $115 million. That amount was partly offset by a settlement with its bank reducing its out-of-pocket costs.