Movie Investors Sue Over 'One of the Greatest Box Office Flops of All Time

How two financial institutions put up nearly

$22 million on a vampire spoof that wasn't

really a vampire spoof and walked away with

$100,000.

Any lawsuit that opens by touting a "staggering"

fraud on "one of the greatest box office flops of all

time" has quite a bit of work to do to live up to such

damning words. The investors now suing over the

2009 film Transylmania believe they can make a

strong case in describing the horrors.

Forget the fact that of the thousands of films rated

for critical consensus by Rotten Tomatoes, less

than 10 have a score of "0." Transylmania is one of

them. And never mind the fact that when the film

opened on 1007 screens in 2009, it had a per screen

average of $262 according to Box Office Mojo,

which is said to be the worst performance for any

wide release ever recorded.

The real question is how is it possible that sane

individuals would loan nearly $22 million to the

producers of this dud? Witness a lawsuit filed on on

Monday in Los Angeles Superior Court.

The plaintiffs in the case are Third Eye Capital

Corporation and Strative Capital.

The investors are suing various defendants

including Hill & Brand Productions and the directing

team of David Hillenbrand and Scott Hillenbrand.

According to the complaint, the Hillenbrands began

soliciting the plaintiffs to finance the print and

advertising costs of Transylmania (aka Dorm Date

3) in 2009. The film was described to them as the

first "vampire spoof" in the marketplace that would

be successful because of the mania surrounding

Twilight. The movie was also held out as poking fun

at True Blood, Van Helsing, Dracula and Young

Frankenstein.

But the plaintiffs suggest that the film wasn't really

a spoof at all -- that it was just a marketing ploy,

perhaps one to suck cash.

The Hillenbrands allegedly represented that they

had financed the film themselves with an equity

base of $5 million. They purportedly came to the

negotiating table with market research by Nielsen

National Research Group showing audience reviews

that were better than that of a studio film with a

major star. The brothers also supposedly spoke

how the top entertainment law firm of Mitchell,

Silberberg and Knupp was already "closing" initial

P&A, that they were in negotiations with Paramount

for library titles (including previous Dorm Date

films), that ancillary markets like pay-per-view and

video-on-demand were being worked out, that there

might be more than $3 million in foreign sales, and

that they had assembled a team at First Circle

Releasing who would be capable of doing their own

domestic distribution for a small "flat" fee instead

of a percentage of gross.

Sound too good to be true?

The plaintiffs say they bought into this and, in July

2009, after a meeting in Toronto, agreed to a loan

agreement of $11,745,000 to finance P&A, plus an

optional $2 million increase, in return for movie

revenues going to pay the loan, plus interest and

fees, with the library titles being used as collateral.

Then, allegedly came the requests for more money.

In September 2009, the Hillenbrands asked for an

additional $2 million, citing competition from

another film (Armored), media buy opportunities,

and the possibility of "huge" network

endorsements.

More requests came, allegedly tied with a focus on

the film's "awareness levels." The filmmakers are

said to have wanted to achieve a 75 percent

awareness level and spoke about plans to have a

trailer used on the Zombieland DVD and a "more

strategic deal" with Sony Home Entertainment.

That November, the parties allegedly agreed to an

Omnibus Amendment, which provided for a $6

million increase in the loan commitment.

In total, during the final six months of 2009, the

plaintiffs say they advanced $21,745,000.

The film came out and was savaged by critics. Mike

Hale of the New York Times wrote that it was

"destined to spend a short and painful life in

theatres and then join the ranks of the DVD and

late-night-cable undead." Steven Hyden of The

Onion said that "Transylmania is such a colossal

comedic misfire that it makes the execrable Scary

Movie films look like masterworks of Preston

Sturges-esque genius by comparison."

The film made less than $400,000 at the box office

whereafter the plaintiffs notified the Hillenbrands

they were in default due to the material adverse

change in their financial standing. The borrowers

are said to have resisted, saying that the film would

have been successful if the lenders had put up

more P&A funds. The lenders got a mere $100,000

on their $22 million investment and say their

efforts to do an accounting investigation were

frustrated by the hold-back of documents.

Still, the accounting firm hired to do the autopsy of

this disaster allegedly turned up evidence of fraud,

including that some of the money from the P&A

loan went to pay personal credit card bills, traffic

tickets, and to friends, family and the Hillenbrands

themselves as "loan repayments."

The complaint provides no explicit word of whether

the plaintiffs actually saw the film before they

agreed to put up more than $22 million. But there's

a strong indication that they hadn't. For example,

the lawsuit says:

"Ultimately, Lender learned that the Film was not a

'vampire spoof' poking fun at Twilight or True

Blood. Despite all of the representations provided

to the contrary, the Film had nothing to do with

Twilight or True Blood. As such, all of the

projections and financial analyses regarding

Twilight and past spoof films were pointless."

Might the plaintiffs deserve some blame for not

taking a couple hours to actually confirm this for

themselves before putting up the money?

Regardless, the plaintiffs are now suing for breach

of contract, fraud, negligent misrepresentation and

are seeking nearly $22 million in damages and

want personal property, compensatory damages

and legal fees. They are represented by Ronald

Sittler at Blank Rome.

Kim Swartz, an attorney at Mitchell Silberberg

representing the Hillenbrands, gave us the

following statement in response:

"This is a completely meritless lawsuit. The

plaintiffs saw the finished film numerous time

before they chose to invest. In any event, David

and Scott Hillenbrand and their team of top

professionals did everything they could to try to get

their investors a return o ntheir investment, even to

the Hillenbrands' own financial detriment, and, as

stated in the Complaint, in spite of the plaintiffs'

failure to provide the agreedup P&A funds in a

timely manner. The Hillenbrands look forward to

having the plaintiffs' completely meritless claims

dismissed and to prosecuting their own claims."