The Louisiana Economic Development department is fighting two lawsuits seeking $91 million from the state agency over tax credits related to its film production incentive program.
The state sought an injunction July 31 in the U.S. Bankruptcy Court in New Orleans against Jackson, Mississippi-based Element Pictures LLC to stop the two lawsuits filed in Civil District Court for Orleans Parish, records show.
Element Pictures alleges it was cut out of a bankruptcy court settlement deal between the now-defunct Louisiana Institute of Film Technology, known as LIFT, and Louisiana Economic Development over tax credits. Element Pictures, which says it was a part-owner of LIFT, has a film production office in New Orleans. The company claimed in the two lawsuits that it should be awarded $91 million in damages from the state.
Element never filed an objection to the proposed settlement agreement in the bankruptcy proceeding, nor was the state aware the company had a stake in LIFT, wrote Ryan French, of Taylor Porter Brooks & Philips LLP, attorneys working on behalf of the state. "They stayed silent, and one year later, they opted to sue the LED in court for agreeing to the settlement agreement," he wrote in court documents.
Louisiana Economic Development officials said the agency's bankruptcy court filing reflects its position in the dispute and declined further comment. Attorneys for Element Pictures did not respond to requests for comment.
LIFT, which assisted as an investor or production company on numerous films in the state, at one time was the most prolific single user of the state’s film tax credit program meant to attract movie productions to locations in Louisiana. FBI agents raided LIFT in New Orleans in 2007 after a two-year investigation into corruption of the state's film tax credit program. Ultimately, one of LIFT's leaders pleaded guilty to bribery of a state official, who had helped the business get tax credits and also pleaded guilty.
The state said in court documents that an agreement dating back to 2004 governed how and when LED would approve tax credits to be earned by LIFT and its investors. As early as 2008, it became clear that LED and LIFT held differing views of the agreement, the state claims. The ongoing dispute eventually prompted a series of arbitrations between LED and LIFT in 2008, 2010 and 2014, the state claims.
During that period in 2011, LIFT filed Chapter 11 bankruptcy and sought to leverage tax credits approved by the state to pay off its debts. The state settled with LIFT during arbitration and agreed to transfer $6.4 million in tax credits so LIFT could pay debts to film production companies.
But Element Pictures, which said it had a 1.5% interest in LIFT, was not included in the settlement agreement and seeks to recoup tax credits it claims it is eligible to receive.
Element Pictures claims that it invested $250 million in motion pictures filmed in Louisiana between 2012 and 2015 and was promised an undisclosed amount of tax credits for eligible expenses through an agreement with LIFT.