StudioCanal claims shady accounting in partnership that yielded "O Brother, Where Art Thou?" and dozens of others
Universal is being sued by a partner who claims that the company stiffed it on revenues generated from Working Title Films.
In a complaint filed Thursday in Los Angeles Superior Court, StudioCanal claims that Universal failed to honor its fiduciary duty to StudioCanal "for tens of millions of dollars and likely much more."
According to the suit, StudioCanal and Universal formed a joint venture in 1999 to fund Working Title Movies, forging a partnership that yielded 44 films, including "About a Boy," "Billy Elliot," "Frost Nixon" and "O Brother, Where Art Thou?" (pictured)
Under the agreement, the suit says, "Each partner assumed the duty to report and pay to the other partner the total revenue minus authorized expenses for each assigned territory and media."
However, StudioCanal says, the successful relationship took a turn south in October, when StudioCanal conducted an audit of the expenses that Universal managed, finding a number of irregularities.
According to the suit, the audit — which covered just six of the 44 pictures to be made under the joint venture — showed that Universal hid and kept benefits from off-balance-sheet financial arrangements, and failed to report or underreported ancillary revenues from sources such as music publishing.
A spokesman for Universal has not yet responded to TheWrap's request for comment.
The suit says that StudioCanal executives visited Universal late last year, and Universal said that it would set things straight. Instead, StudioCanal says, Universal has stopped issuing accounting statements and payments.
Alleging breach of fiduciary duty, constructive fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing, StudioCanal is seeking actual and compensatory damages, punitive damages, suit costs and attorneys' fees from Universal Studios and NBC Universal.
Pamela Chelin contributed to this report.
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