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IP/Entertainment Case Law Updates

Navarone Productions, N.V. v. HSBC Gibbs Gulf Insurance Consultants Ltd., et al.

A state court rejected defendant Sony Pictures Entertainment’s motion to be discharged as a disinterested interpleader party because, although the court determined in a 2008 ruling that Sony owed plaintiff about $1,000,000, that ruling did not dispose of all claims against Sony.

The lawsuit arose from a 1976-77 distribution agreement involving plaintiff and Columbia Pictures Industries (Sony’s predecessor in interest) for the movie Force Ten From Navarone in which plaintiff was entitled to 50% of proceeds from the film after Columbia recouped certain costs. Plaintiff also entered into a guaranty of completion with Anthony Gibbs Completions (later acquired by defendant HSBC) in which Gibbs guaranteed payment of certain production cost overruns on the film. In a subsequent settlement agreement, plaintiff agreed that its proceeds from the film would be forwarded to Gibbs until Gibbs recouped its payments. However, plaintiff claimed that Gibbs engaged in fraud by convincing Columbia to assign plaintiff’s proceeds from the film to Gibbs in perpetuity, resulting in Columbia (and later Sony, as successor in interest) failing to pay plaintiff proceeds of about $1,000,000.

Because of the complexity of the claims, Sony filed an interpleader complaint to determine who was entitled to the proceeds from the film. In a 2008 ruling, the court held that Sony owed plaintiff more than $1,000,000. Before Sony released the money to plaintiff, Sony moved for an order discharging it from liability upon payment of the $1,000,000 to plaintiff. Sony also moved for summary judgment on plaintiff’s breach of contract claims against Sony, arguing that the other claims are barred by the statute of limitations since plaintiff’s claims stem from breaches in 1990. The court held that while Sony had to immediately pay a portion of the money held to plaintiff, Sony was not entitled to a discharge of liability since other claims survived against Sony. The court further declined to hold as a matter of law that plaintiff’s breach of contract claims against Sony were barred by the statute of limitations, finding that there were factual questions as to whether each time Sony refused to pay the funds to plaintiff, Sony breached its obligation and started the running of a new statute of limitations period.

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