Image Claims Relativity Breached Distribution Contract

Posted by Eriq Gardner

Home video distributor Image Entertainment has filed suit against Ryan Kavanaugh's Relativity Media for failing to live up to an exclusive 10-year distribution contract.

According to the complaint filed in Los Angeles Superior Court, the two parties signed an agreement in 2006 whereby Relativity was required to provide Image with "a minimum of three motion picture in 2007, and a minimum of seven pictures...during each calendar year thereafter."

Image, represented by Brian Lysaght at Christensen Glaser Fink Jacobs, is seeking compensatory, punititve and exemplary damages.

Marty Singer, who represents Relativity ("3:10 to Yuma," "The Bank Job"), told the LA Times that the suit is "ridiculous and without merit," saying the two sides reached a settlement last year. "Even prior to the settlement, our initial agreement with Image did not obligate us to give them the films they are claiming," Singer said.

Relativity helped kick off a dealmaking revolution nearly five years ago by being one of the first new Hollywood firms to finance wide-scale slate production by attracting Wall Street financing. Ancillary royalties like home video distribution have been one of the most prized assets for investment bankers looking to get into the game. However, in recent months, the return on Wall Street investments, including the Relativity deals, have come into question.