(2005) Tags: Fox
SMASHING PICTURES, LLC v. TWENTIETH CENTURY FOX FILM CORPORATION
In July 2005, Smashing and Fox executed a written Co-Financing/Co-Producing & First Look Agreement. The Agreement was a seven-year deal in which Smashing and Fox were to co-finance a slate of up to 20 teen-oriented films, four of which were existing Fox films, referred to in the Agreement as the `Inventory Pictures.’ Smashing was represented by Michael Barnes during the Agreement’s negotiations.
Smashing was to initially invest $15 million in the Inventory Pictures by wiring to Fox a $1 million `Option Payment’ and a $14 million `Inventory Picture Payment.’ The Inventory Picture Payment was to have represented Smashing’s initial equity investment in the films, as set forth in Schedule 1. Upon making these payments, paragraph 5 of the Agreement provided that Smashing would have the option to invest another $10 million in the Inventory Pictures, for a total investment of $25 million. The full $25 million was to be received by December 15, 2005.
As of December, 2005, Smashing had only paid Fox a total of $8,118,151. Accordingly, on or about December 20, 2005, the parties executed Amendment No. 2 of the Agreement. Amendment No. 2 provided that Smashing would have until March 31, 2006 to pay Fox $16,881,849 — the balance remaining on the full $25 million investment contemplated in the Agreement.
Smashing subsequently paid an additional $500,000; however, it never paid the full $25 million. Smashing ultimately requested that Fox return its $8,618,151 initial payment. Fox refused.
With the monies currently delivered to Fox, Fox shall, after deducting the Option Payment off the top, allocate the remaining funds among the Inventory Pictures as follows:” $3,303,000 was allocated to “Aquamarine;” $2,541,000 was allocated to “Idiocracy;” and $1,274,000 was allocated to “The Ringer.”
The legal question at issue in this lawsuit is this: What is the proper disposition of the over $8 million which Smashing gave to Fox in partial performance of its obligations under the written agreement between the parties?