The jury retired yesterdayin the Intertainment vs Franchise lawsuit which has become one of the longestand most high-profile spats in the history of the international film business.
The nine largely retiredand/or unemployed jurors from Orange County, California will now attempt tofind the truth among the arcane intricacies of loan documents and letters ofcredit from international banks, an output agreement thrown together in theCarlton Hotel five years ago during the insanity of the Cannes film market andthe finest points of film completion guaranty agreements, not to mention theworkings of the long-gone Neuer Markt.
On Thursday, in a Santa Ana,California federal courtroom, Franchise Pictures CEO Elie Samaha andIntertainment Licensing CEO Rudiger "Barry" Baeres and the best legal gunsmoney can buy finally had to shut up and watch as, after closing argumentsconcluded, the jury left the courtroom to begin deliberations inIntertainment's $100 million budget-pumping fraud lawsuit against Franchise.
As a going-away present,these jurors were treated to one last round of mudslinging by Intertainmentlawyer Scott Edelman and Franchise lawyer William Price.
"Elie Samaha saw theambition and desire in Barry Baeres, and milked it for all it was worth," saidEdelman in his closing argument. "Then [Samaha] had the nerve to say he wasblackmailed by my client into this alleged oral agreement."
Samaha has alleged that hehad an unwritten deal with Baeres to pump the budgets on Franchise films thatBaeres had agreed to pay a percentage of; this in order to supposedly coverFranchise's bank production loans that were under-collateralised due to lack ofterritory pre-sales.
Baeres, as Samaha's storywent, could not reveal the truth to his Intertainment shareholders because itwould have revealed that Baeres' business plan had no profit margins.
In his closing argument,Edelman said that Samaha's explanation of the oral agreement was anything butcoherent. "Samaha said that the fraud was so obvious, Barry should have known,"said Edelman. "But Franchise didn't need any alleged oral agreement to cheat.Cheating is Franchise's mo."
In the 7000 items entered asevidence in the three-and-a-half year litigation, there is indeed little, ifany, written evidence that Baeres had ever agreed with Samaha to pump thebudgets on the Franchise films.
On the other hand, Samaha'slawyer Price began his closing argument by quoting Sony Pictures Classicsco-founder Tom Bernard from a 2000 newspaper article on the then-fledglinglegal spat.
"There is no way thatIntertainment was cheated out of all this money unless one of its own was in onthe fraud or if Intertainment totally abandoned all the checks and balancesthat independent film companies are supposed to have," Bernard said in thearticle.
For over three years, Baereshas stuck to an explanation that one Franchise lawyer termed "the morondefense."
Price told the jury that inthe 18 months Baeres obligated Intertainment to pay over $200 million inproduction costs for Franchise films, Baeres' claim that he was cheated out ofthe money could have only occurred by what Price termed "the worst kept secretin the world."
According to Baeres and hislawyers, Baeres was denied access to Franchise's loan documentation, completionbond documents, and weekly production cost reports - any of which would haveshown the true costs that Franchise was expending on the films - by aconspiracy hatched by Samaha.
The conspiracy, according toBaeres' trial testimony, grew to include Franchise lender Imperial Bank, twobond companies, and even Intertainment's own Hypo Bank, which was theunderwriter of Intertainment's 1999 Neuer Markt IPO.
Betting that a jury wouldnot buy Baeres' conspiracy theory, Samaha has spent millions of dollars inlegal fees, gone through two teams of lawyers, and spurned numerous settlementoffers that would have excused him from the litigation in exchange fortestifying against Imperial Bank (now Comerica Bank) loan officers MorganRector and Jared Underwood in Intertainment's upcoming arbitration against thebank.
Comerica is trying torecover $72 million in unpaid minimum guarantee cash payments fromIntertainment. Baeres is suing the bank for $100 million in fraud claims.
In an interview withScreendaily a day after he completed six hours on the witness stand, formerIntertainment co-managing director David Williamson said that the jury'sbiggest challenge will be "understanding how incomprehensible it is that Barrydidn't know about the multiple budgets that Franchise had on the films."
Williamson's testimonyagainst Baeres was the most dramatic of the six-week trial. He and Baeres hadgrown Intertainment from a three-man office in 1993 to a company whose marketcapitalization peaked at $137m in 1999. Williamson, who was kicked out ofIntertainment by Baeres shortly after the Franchise litigation began, wasblamed by Baeres for the Franchise fiasco, according to numerous Intertainmentsources.
He began meeting withFranchise lawyers a year ago. Though his testimony was often contradictory onthe stand in regards to how responsible Baeres should have been in determiningthe alleged fraud, Williamson told Screen that his turning point in believingthat Baeres was not telling all that the CEO knew about the budget fraud waswhen Williamson learned that Beares knew all along that Samaha was somehowfinancing $50 million films without any advances from a US distributor.
"The explanation that Barrytold the jury - that he believed Samaha was financing the gap by using taxcredits - is just gibberish."
After a day off on Friday,the jury resumes deliberations on Monday. According to federal civil trial rules,the jury must vote unanimously for Intertainment to prevail in its fraud,breach of contract and RICO claims, or for Franchise to win its claim forunpaid legal fees against Intertainment.