(CN) - An investor in the film "Before the Devil Knows You're Dead" must arbitrate his $85 million fraud case against film financier David Bergstein, a federal judge ruled.
The complaint in Trenton, N.J., says Bergstein had asked Paul Parmar for a $10 million loan for the film, which starred nonparty Philip Seymour Hoffman, in September 2006.
Bergstein broke promises to repay the loan "in full with interest and fees in less than nine months," Parmar claims.
Parmar says he loaned Bergstein and his firms more than $65 million through 2008 to acquire film libraries, use as working capital, and produce movies like "Black Water Transit," starring Laurence Fishburne, and "Love Ranch," starring Helen Mirren and Joe Pesci.
Bergstein's acquisitions included the famous De Lane Lea Studios in London, as well as the Sheridan Square U.K.-based music company, according to the complaint.
Parmar "Bergstein started refusing to take [his] calls" as the repayment deadlines fell in late 2007 or early 2008.
In short, Bergstein did what "he typically does to investors and lenders in these circumstances, i.e. Bergstein 'went dark,'" the complaint states.
Bergstein allegedly warned that he would file for bankruptcy unless Parmar accepted less than the more than $80 million he owed. Parmar says Bergstein was to repay $24 million with help from someone identified only as "Simon" over an 18-month period.
But Bergstein allegedly later asked to lower that amount to $18 million.
Parmar says he was in default on payments for aircrafts and houses in which he had over $5 million in equity, and that Bergstein compelled took advantage of this to compel the "unconscionable reduction."
A purchase-and-sale deal Parmar allegedly struck gave with Bergstein and others the assets of Parmar's medical billing company, MdTablet, in exchange for a scheduled payment plan of $2.2 million.
Parmar claims that when Pineboard Holdings came in to take the $4 million in equipment it obtained through the sale, it also took his and Grange Consulting Group's servers, hoping that they would contain recordings of meetings in which Bergstein revealed "notorious schemes."
Pineboard, Robert Silverman and seven others are named as defendants to Grange and Parmar's 2013 fraud complaint against Bergstein.
U.S. District Judge Peter Sheridan found Monday that the arbitration clause applies to Bergstein and Silverman.
The judge did, however, disagree with Bergstein and Silverman that a provision in their agreement bars Parmar's fraud claims, which "go far beyond the MdTablet transaction," according to the ruling.
"Without a specific reference to the loans within the release, no one could reasonably construe the release to bar all of these allegations, especially when the release is nestled into the amended purchase agreement which concerns the sale of the assets of MdTablet to Pineboard," the ruling states.
As to the tort claim, which the defendants say fails because any contracts were terminated a month before the incident, upon the closing of the agreement, Sheridan noted that "Grange remained employed during the time in which the computers were seized."
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