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
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
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
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."

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