Client Has ‘Poor’ Excuse to Dodge Legal Bills

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When Elie Samaha reportedly purchased the iconic Grauman’s Chinese Theatre in 2011, it symbolized a comeback for a man whose previous foray into the film business had imploded amid bankruptcy and fraud allegations.

But depending on whom you ask – and when you ask – Samaha is either at the helm of a growing empire of entertainment properties, nightclubs and restaurants, or a still-ruined pauper who doesn’t have a penny to his name.

The question is at the heart of a dispute between Samaha and his former law firm, downtown L.A. litigation powerhouse Quinn Emanuel Urquhart & Sullivan, which has been chasing him for a decade over unpaid bills.

The firm recently obtained court orders entitling it to any money he would receive from his ownership in about 40 companies, including the Chinese movie theaters as well as the Roxbury and Supperclub nightclubs. Last year, the firm even had sheriff’s deputies seize wine bottles, artworks and framed photos at his home.

The problem is that it’s not clear what Samaha actually owns. In media interviews and press releases, he touts ownership of several entities, but he has denied stakes in those same companies in court.

“Mr. Samaha has claimed in court that he’s lost everything and doesn’t have any assets available to pay this judgment. We think that is not correct,” said Beverly Johnson, an outside attorney representing Quinn Emanuel. “He has not paid us, not even a penny.”

The fight dates back to Quinn Emanuel’s representation of Samaha in several lawsuits beginning at least 10 years ago. It has been trying to get him to pay since 2004. Two years ago, a judge ordered Samaha to pay $421,000, but he still hasn’t.

“The history of this is remarkable to me,” said Randy Miller, an attorney who reviewed the case for the Business Journal. “They continued to make accommodations for the client. … Now, 10 years later, they’re still fighting with this guy to collect money.”

Samaha has been represented by attorneys Warren Hodges Jr. and Daniel Weintraub in the Quinn Emanuel case, and neither he nor his attorneys returned repeated requests for comment.

Samaha was once a fast-rising dealmaker in Hollywood. The Lebanese-born businessman moved to Los Angeles in the early 1980s, starting a successful dry-cleaning business and partnering to buy nightclubs, including the famed Roxbury on Sunset. He met his now ex-wife, actress Tia Carrere, at the Roxbury, and he began making movies starring her, jumpstarting a career in film financing.

He found a niche backing pet projects of stars that were unwanted by other studios. The strategy enabled him to produce star vehicles cheaply. Some were hits, such as the Bruce Willis film “The Whole Nine Yards,” but he also was responsible for a string of bombs including John Travolta’s “Battlefield Earth” and Sylvester Stallone’s “Get Carter.” The misses led to finger-pointing between Samaha and a partner, German film distributor Intertainment, which sued him and his company, Franchise Pictures, for fraud in 2000.

A jury found Samaha and his company liable for breach of contract and fraud. It found that he sent inflated budgets to be paid by Intertainment (for example, Franchise said the budget for “Get Carter” was $64 million when it was actually $45 million). It awarded Intertainment $122 million, and Franchise filed for bankruptcy. Samaha settled the case for $3 million, capping what the Hollywood Reporter would later call “one of the biggest Hollywood blow-ups of all time.”

Quinn Emanuel represented Samaha in his losing battle against Intertainment. According to its lawsuit against Samaha, he failed to meet his obligations to the firm in June 2004. In order to convince the firm to continue representing him, Samaha allegedly signed an unconditional personal guaranty with Quinn Emanuel, agreeing to prompt payment of $500,000 within 30 days of demand.

In 2004, he paid $150,000, leaving a balance of $350,000. Despite the debt, Quinn Emanuel kept providing him legal services for years.

In 2005, it represented him in further legal actions involving Intertainment, racking up an additional $125,000 in legal fees, according to the firm’s complaint. In 2007, the firm again demanded payment, without success. Nevertheless, in 2008, it agreed to provide legal services in yet another case. It also agreed to reduce the amount he owed to $160,000, as long as he made monthly payments of $5,000 for 32 straight months. But he allegedly only made one $5,000 payment. As late as November 2010, he was allegedly still making and breaking promises to pay the firm back.

In April 2011, it was reported that Samaha had bought Grauman’s Chinese Theatre with producer Donald Kushner, and had also taken the long-term lease of the adjacent Mann Chinese 6 Theatre as part of the deal. Quinn Emanuel sued five months later. Samaha did not contest, and a judge entered a default judgment that he owed $421,000, an amount that including interest now exceeds a half-million dollars.

Miller, the attorney who reviewed the case, said that he was surprised by how many chances Quinn Emanuel gave.

“They should have cut this guy loose years and years ago. Instead they took on new cases. I look at that from a risk management perspective and think that is a huge set of misjudgments,” he said. “That to me was very unusual.”

According to court documents, Samaha has told Quinn Emanuel that he does not in fact own the Chinese theaters, nor dozens of other companies the firm has connected him to.

Several news outlets have reported him to be the owner of the Chinese theaters, and he himself has suggested as much on multiple occasions. A 2012 press release announcing that Chinese electronics company TCL Corp. had bought the naming rights of Grauman’s Chinese Theatre described him as co-chairman, and a statement attributed to Samaha and Kushner suggested they were the owners.

“The milestone relationship between TCL and the Chinese Theatre will allow us to do many of the upgrades and preservation projects we earmarked from day one of ownership,” the statement read.

In an interview last year with MTV Lebanon, he also suggested he was the owner, saying, “I speak for what I have done and what I have accomplished. Owning the Chinese Theatre in Hollywood could speak for itself.”

The law firm has further alleged that he has interests in dozens of companies, including the Roxbury, Hollywood nightclub Supperclub and Desert Hot Springs resort Two Bunch Palms. He has claimed in court that he does not own them or has been vague about what interests he might have in them. Quinn Emanuel says he has transferred his property to his sister, who is paying his bills and handling his financial affairs.

Steve Markoff, a minority investor in and a partner in Two Bunch Palms and other Samaha business ventures, said he was unconcerned about the developments. He declined to discuss which businesses he owned with Samaha.

“Not only am I not familiar with it, I don’t want to be involved,” Markoff said. “If anything Elie does personally adversely affects us, it adversely affects us. If it positively affects us, it positively affects us.”

For his part, Samaha said in court that he was “never an owner” of the Chinese Theatre. He also said he had no money other than a Bank of America checking account holding close to nothing and a joint account held with an ex-wife in Switzerland containing less than $5,000.

“I have no assets to satisfy the judgment against me,” he stated in a declaration.

Quinn Emanuel received an order to seize property at Samaha’s Sherman Oaks home last year. The Los Angeles County Sheriff’s Department carried out the raid in July, taking some 1,600 bottles of wine and liquor, vases and paintings, and photographs of Samaha with celebrities and presidents. Johnson said most of the property is being held by the Sheriff’s Department for future auction. The department unit that handled the case declined to comment.

In December, Quinn Emanuel obtained the third in a series of court orders that allow them to tap Samaha’s interests in various companies.

The law firm has moved to receive financial information from the companies it believes Samaha owns, now that it has the power to seize whatever money Samaha might receive as a result of ownership.

Theoretically, it could take further steps, including seizing the ownership interests themselves and taking other personal property.

Samaha, for his part, might not have anything to turn over.

“We have other options,” Johnson said.

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