Fox lawsuit wonders why studios ever buy insurance

By Eriq Gardner

Fox Entertainment wants to know if there's really any point in taking out insurance on a movie.

The company has filed a fascinating lawsuit against Fireman's Fund Insurance Company, saying the insurer sold Fox coverage that was "illusory" and "deprived Fox of the benefits of the insurance that it had purchased."

This action stems from the making of the 2003 film "Hide and Seek." Filming was delayed after star Robert De Niro was diagnosed with prostate cancer. Fox put in a claim for reimbursement, and FFIC agreed to pay out more than $1.8 million to cover Fox's projected loss.

Then it gets tricky.

FFIC sued De Niro for reimbursement, claiming the actor made false statements to the insurance carrier about his health.

But De Niro had it in his own contract with Fox that the studio would indemnify the actor for claims made against him related to the film. So De Niro filed his own lawsuit against Fox.

Let's recap: Fox puts in a claim against FFIC, which sues De Niro, who sues Fox, which is now suing FFIC!

A district court threw out FFIC's claims against De Niro on summary judgement, but Fox is still on the hook for the actor's legal bills. Naturally, Fox is wondering whether there was any point to purchasing insurance in the first place if the studio would have to fork over $470,000 to defend De Niro against FDIC.

Alleging breach of contract, tortious breach of the implied covenant of good faith and fear dealing, and fraud, Fox now demands FFIC repay it. Read the complaint. Maybe the movie business needs a public option too?