Skulduggery Alleged in Indy Movieland

LOS ANGELES (CN) - The indie film production company behind the Brad Pitt movie "Fury" sued its founding CEO, claiming he used its name to run his own companies using its intellectual property and relationships.

QED Holdings sued William H. Block and his solely owned companies, QED Pictures and QED International on April 1 in Federal Court. It seeks damages for trademark infringement and unfair competition.

Block and other investors formed QED International in 2012, according to the complaint. Block was CEO and director of QED Holdings for four years, until this February. The whole time, QED claims, Block was siphoning company assets and leveraging company opportunities for his own benefit.

"Instead of performing his executive responsibilities exclusively and conscientiously for QED, Block actively and surreptitiously hijacked QED's assets and siphoned QED's opportunities for his personal gain," the complaint states.

Block and the other investors sold the company for $25 million to Media Content Capital in 2012, according to the lawsuit. Media Content now owns 75 percent of plaintiff QED Holdings LLC, while Block and his partners kept 25 percent.

The plaintiff claims $22 million of the sale proceeds went immediately back into plaintiff QED Holdings. Block kept the remaining $3 million as repayment for his initial investment in the company.

Media Content has consistently declined cash distributions and instead funneled that money back into QED Holdings, plaintiff says. It claims that Block created a money pit: that the money generated from the movies QED made was not enough to cover overhead costs of the corporate structure that "Block had improvidently created."

So the that Media Content invested had to be used to cover operating expenses, instead of making more movies, the lawsuit states.

In addition to Block's $650,000 annual salary, QED says, it paid for Block to go to China to secure the intellectual property rights needed for QED to produce "Birth of the Dragon," a biopic about Bruce Lee.

But on Aug. 4, 2014, Block formed QED Pictures, a company he owns entirely, and the next day he signed an agreement with Chinese investors to contribute $10 million, cutting QED Holdings out of the loop, so he could produce the movie himself through QED Pictures, plaintiff claims.

That violated Block's agreement to assign all of his ideas to plaintiff for the length of his contract, according to the lawsuit.

And the nonparty Chinese investors thought they were dealing with plaintiff the whole time, the complaint states.

QED claims that Block pulled a similar stunt on the movie "Dirty Grandpa," which it claims it owns but never greenlighted. After the project was shelved, QED claims, Block secretly formed Grandpa Productions and DG Licensing, then unilaterally transferred ownership of the script for $1 from a company controlled by the plaintiff to DG Licensing.

Block then secured Robert DeNiro, Zac Efron and a director and began filming the movie, the lawsuit states. It claims he also secretly signed a distribution agreement between DG Licensing and Lions Gate Films.

QED Holdings demands punitive damages and an order stopping defendants from continuing work on "Dirty Grandpa" and "Birth of the Dragon."

It is represented by Steven Marenberg with Irell & Manella in Los Angeles.

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