Production in Peril: What Happens When You Lose a Star? by Mary Craig Calkins and Record Some of His Lines

LOS ANGELES

www.dailyjournal.com

FRIDAY, DECEMBER 13, 2013 PERSPECTIVE Production in peril: What happens when you lose a star? By Mary Craig Calkins and record some of his lines. rect physical loss of or damage to tion, “loss-payee” endorsements Daniel H. Rylaarsdam Delays also come from inju- Covered Property.” Policies must can interfere with payments. For aul Walker’s untimely death ries. Final production of “Tristan ensure coverage for both direct example, if the feature film has is a tragedy for his family, & Isolde” was put on hold for six losses and mitigation costs — the been financed, the policy might be Pfriends and the entertain- months while James Franco recu- “necessary expenses incurred to structured that loss payments go to ment community. The unexpected perated from a knee injury. “Die the extent they reduce the amount third parties in the first instance — loss also causes significant busi- Another Day” was also delayed of loss that otherwise would be not to the producer. ness issues. Universal Studios when Pierce Brosnan suffered a payable” under the policy. And Insureds should be aware of has announced that production of knee injury. The planned release they must consider coverage be- abandonment clauses. If a pro- “Fast & Furious 7” will be shut of “The Hunted” was pushed back fore a loss. ducer elects to abandon a project, down to allow the parties to recov- when Benicio Del Toro broke his the insurance company might pay er and decide what to do. With an wrist. Likewise, a television ce- Production Policies a negotiated loss amount and then estimated budget of $150 million, lebrity cannot host if she loses her Production policies are key. In seek to take ownership of the proj- the decision will also affect hun- voice. addition to the multiple coverage ect as salvage. As the outright own- dreds of millions of dollars in box Productions may lose reserved parts, many pay “Extra Expense” er, the insurer may sell the unfin- office sales. locations and incur storage costs as defined by the policy. These ished film or control the manner in The entertainment industry has for props and equipment. There payments usually are subject to which it is finished. For example, lost many working stars, such as are contractual salary commit- limitations and exclusions, and after Natalie Wood died, MGM de- John Ritter, John Candy, Bruce ments, the costs of transporting must be incurred during a “peri- cided to finish “Brainstorm” itself Lee, Heath Ledger, Brandon Lee, the cast, crew and equipment to od of restoration.” For example, when another studio responded fa- Chris Farley, Phil Hartman, Vic locations, as well as the costs of in addition to exclusions, policies vorably to MGM’s insurer’s offer Morrow and Cory Monteith — not recreating locations inside a sound can have strict notice requirements to sell the unfinished film. When to mention Michael Jackson, while stage. Stars may have scheduling that may eliminate coverage if no- Brandon Lee died filming “The preparing for his highly anticipat- conflicts if delays affect other pro- tice is delayed. Similarly, a pro- Crow,” Paramount Pictures opted ed world tour. With these deaths, ductions. The same goes for other ducer might impair coverage if a out of its agreement to release the there were delays and other un- key crewmembers. Distribution timely formal proof of loss is not film, which was eventually pur- anticipated expenses. Accord- and marketing can be delayed. filed. chased by Miramax and released. ingly, production and “essential When production does resume, Some policies contain due dili- element” insurance policies are the producer may have to reshoot gence clauses, requiring a produc- Central/Essential Element essential. scenes, rewrite parts of the script, tion company to “do and concur in Also called “key person” or When John Ritter died of an hire other actors, edit, create com- doing all things reasonably practi- “cast coverage,” this insurance is aortic dissection during the height puter-generated or digitally altered cal to avoid or diminish any loss purchased to cover losses arising of popularity of his show “8 Sim- images, or even introduce new or circumstances that give rise to a from the death, injury or extended ple Rules for Dating My Teenage characters to deal with changed loss or claim.” Those clauses allow incapacity of someone who is key Daughter,” the studio renamed the circumstances. an insurer to argue that the produc- to the production. Policies typi- show, created two new characters, Of course, the production also er failed to take steps to prevent cally are in effect during principal and changed the storyline to ad- can be abandoned. losses. photography, and cover the “actu- dress his character’s death. Bruce These policies commonly con- al and necessary loss you sustain Lee died during production of Consider Carefully tain appraisal provisions requiring by reason of a Covered Person be- “Game of Death”; the studio later Productions must purchase the insured to go through cost- ing prevented from commencing, used a stand-in. Tragically, Lee’s broad policies that will cover ex- ly appraisal procedures before a continuing or completing an as- son Brandon also died during tra expense for “the actual and loss is paid. Methodologies can signed duty or role in an ‘Insured production — while filming “The necessary loss sustained as Extra be questioned, and insurers can Production.’” Crow”; the studio digitally altered Expense due to the interruption, unilaterally attempt to reduce a Productions should extend cov- a stunt performer’s body for later postponement or cancellation of claim based on after-the-fact and erage at both ends if possible — scenes. Sir Alec Guinness appar- an ‘Insured Production.’” Whether erroneous assumptions. Policies for both pre- and post-production ently was digitally added to in- in stand-alone policies or in multi- also can require insureds to sub- issues. Some policies bar coverage corporate Obi-Wan Kanobi into a part motion picture and televi- mit to examinations under oath. for certain conduct or conditions, “Star Wars” scene. Heath Ledger sion producers portfolio policies, California courts have held that if such as illness, pregnancy, disease, died during the editing of “The productions need to cover losses an insured unreasonably refuses, drug use, hazardous stunts or other Dark Knight” before he could re- that are “the direct result of di- they could lose coverage. In addi- high-risk activities. Insurers often seek representations and warran- icies are created equal. One policy It has reinsurers, regulators and Her practice focuses on insurance ties about the kinds of dangerous might provide vastly greater cov- shareholders to which it must re- for policyholders with a special activities in which the star will erage for a small additional pre- port. Making sure that the insur- emphasis on entertainment and (or will not) participate, both on mium. Knowledgeable coverage er has what it needs for a claim business related losses. She is the and off the screen. Most require counsel working with good en- can ensure interim payments and former national chair of the Amer- medical certificates, disclosures tertainment brokers can highlight greater recovery. ican Bar Association Section of and examinations by a physician, problematic policy language, or Push back. Finally, and most Litigation’s Insurance Coverage and questions about disclosures — suggest alternatives that provide importantly: remember to push Committee, and may be reached past health or substance abuse is- better coverage. It is too late to back and support your coverage at mcalkins@kilpatricktownsend. sues can lead to disputes and even modify policy language after a position through knowledgeable com. rescission claims. loss. counsel. Under California law, am- Keep good records. Recovery of biguities are construed against the Daniel H. Rylaarsdam is counsel Event Cancellation losses from an unexpected death insurer and in favor of coverage. at Kilpatrick Townsend & Stock- Finally, productions also should or injury can be time consuming In addition, if a party would have ton LLP in its Los Angeles office, consider event cancellation or and contentious. Production com- reasonably expected coverage, the and specializes in insurance re- nonappearance insurance. The panies should keep all budgets, law will allow those arguments to covery for corporate entities and policies should be enhanced where invoices, documents confirming avoid an unwarranted loss. individual insureds. He may be possible to cover unavoidable de- extra expenses, and any other cat- With the death or injury of any reached at drylaarsdam@kilpat- lays caused by death, accident or egories of loss that might be cov- actor, there are serious financial ricktownsend.com. injury of key performers (such as ered. If an insured does not request ramifications for those directly when “oops,” Britney Spears suf- coverage and support those losses, involved with that actor. Insur- fered a knee injury). The failure a producer might not recover full ance products and good counsel to negotiate beneficial coverage benefits. can protect studios and production and ensure accurate pre-purchase Give early notice and share sup- companies from losses, and pro- disclosures can lead to protracted portive information with insurers. vide a source of funds when extra coverage litigation. Providing early notice of claims, expenses are incurred. documentation and communicat- Takeaways ing regularly with an insurer can Mary Craig Calkins is a partner MARY CRAIG DANIEL H. CALKINS RYLAARSDAM Negotiate broad coverage be- help pave the way for a covered at Kilpatrick Townsend & Stock- Kilpatrick Townsend Kilpatrick Townsend fore a loss. Not all production pol- claim. An insurer is a business. ton LLP in its Los Angeles office. & Stockton LLP & Stockton LLP