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Paramount Pictures Resolves Lawsuit by Movie Investment Fund

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Jan. 15 (Bloomberg) -- Viacom Inc.’s Paramount Pictures reached a settlement Melrose Investors 2 LP, a movie financing fund that sued claiming it hadn’t received any returns from its $375 million investment in movies including “Transformers.”

“The dispute was satisfactorily resolved,” Robert Lawson, a Paramount spokesman, said yesterday in an e-mailed statement.

Mark Holscher, the investors’ lawyer, said in an e-mail that the owners of Melrose 2 are private-equity funds and that Vine Alternative Investment Group managed the fund. He declined to comment on the settlement, saying it was confidential, other than to confirm it was “satisfactorily resolved.”

The investors sued Paramount in 2011, alleging that the studio overreported the production and the distribution costs of the movies co-financed by Melrose 2 and underreported the revenue. The 29 movies that Melrose 2 co-funded include “Mission Impossible 2,” “Transformers,” “Transformers 2,” and “Flags of Our Fathers,” according to the complaint.

The Melrose 2-backed films grossed about $7 billion and Paramount received $600 million in distribution fees alone from them, the investors said in the Nov. 29, 2011, complaint filed in California state court in Los Angeles.

The case is Melrose Investors 2 v. Paramount Pictures, BC474310, California Superior Court, Los Angeles County.

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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