Paramount Pictures is facing a lawsuit from its key co-financing partner. The America's oldest existing film studio is sued by investors in Melrose 2 over the profit sharing on around 29 blockbuster movies, including the "Transformers" series, "Mission: Impossible 3", "Jackass: Number Two", "Blades of Glory" and "Dreamgirls".
Melrose 2 has filed a lawsuit in Los Angeles Superior Court on Tuesday, November 29. The company claimed to have not collected any profit from investing an estimated $375 million in 2006 for 29 movies produced by both Paramount and DreamWorks, which at that time was a subsidiary of Paramount. The films themselves grossed nearly $7 billion worlwide in ticket sales.
"This lopsided distribution of earnings comes about as a direct result of Defendants' practice of understating gross receipts, delaying payments to Merlose 2, overstating production and distribution costs and hindering Merlose 2's ability to verify the revenues and costs associated with the films it funded," so read the complaint.
Responding to the lawsuit, Paramount released a statement to slam the complaint. The studio claimed, "Paramount has complied with its obligations to Melrose 2. We are disappointed that these sophisticated investors would choose to file a lawsuit filled with hyperbole that ignores the true facts rather than seeing that process through to completion."
"While we intend to vigorously defend this lawsuit, the differences between the parties' positions are relatively modest in amount and we are confident they can be resolved in the ordinary course," so the studio added.
On the other hand, Merlose 2 insisted to continue the lawsuit. Mark Holscher, the plaintiff's attorney, told the Wall Street Journal, "We're going to aggressively pursue these claims to get Melrose 2 the share of the profits they're owed."
This is not the first time Paramount faces a lawsuit over similar case, which is also known as "Hollywood accounting". Back in 2008, Melrose 1 sued the studio over security fraud and the financing company was seeking for $30 million in damages.