Relativity’s Ryan Kavanaugh Gets Lender’s $110M Fraud Lawsuit Dismissed

Ryan Kavanaugh
Associated Press

A New York Supreme Court judge has dimissed a fraud lawsuit against Relativity Media’s Ryan Kavanaugh and after finding a lack of evidence to proceed. RKA Film Financing had sought $110 million in damages from investments with the studio that failed to pan out.

Judge Carlos Ramos dismessed the suit with prejudice, meaning it can’t be refiled.

RKA is the Colbeck Capital-backed entity that in 2014 helped to finance five Relativity films; Kavanaugh also kicked in $10 million. RKA had alleged that the studio inappropriately used the cash for corporate purposes.

“RKA alleges that Defendants’ communications, unique knowledge and special expertise were used to gain RKA’s trust, which imposed a duty for Defendants to impart correction information on RKA,” Ramos wrote in granting the motion to dismiss (read it here). “Defendants allege that theirs was an arm’s-length transaction that never created a special or privity-like relationship with RKA. RKA has failed to show it had a special relationship with Defendants.”

The suit had revived allegations RKA made at the U.S. Bankruptcy Court after Relativity filed for Chapter 11 protection in July 2015. In 2014 RKA put up $81 million to help finance five Relativity films. But the suit claimed the company later discovered that the cash “was always intended” to pay salaries and corporate expenses, bail out other investors, and “provide Relativity a lifeline to continue operations and attract more unwitting investors.”

“It is very comforting to see the legal system work in a fair and equitable manner,” a Relativity spokesperson said in a statement. “Less than 2 percent of motions to dismiss are granted, showing that not only was the case wrongful, but that it also had absolutely no merit whatsoever.”

This is the case that initially included Treasury Secretary Steve Mnuchin as a defendant, when was just a nominee for the Cabinet post. The New York State Supreme Court dismissed him from the case back in June.

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