Sitrick-Kavanaugh Slugfest: Fight Over?

Portfolio.com's Sophia Banay reports:

Michael Sitrick, the L.A.-based crisis public-relations guru who's worked with Paris Hilton, Halliburton, and Don King, had a crisis of his own to spin today: The latest round in a festering legal feud with Ryan Kavanaugh, the film financier, was called against him.

In 2000, Sitrick, an acquaintance of Kavanaugh's father, invested $6.2 million in KC Capital, a Kavanaugh-managed investment fund. Sitrick claims that the investment was made with the understanding that no more than 25 percent of it could be funneled into private companies.

Instead of honoring that agreement, he says, Kavanaugh turned around and plunked all of the money into several private companies, one of which later went bankrupt.

(Kavanaugh responds by saying that there was an amendment in the deal book that allowed him to invest in public companies.)

When Sitrick sued in 2002, he was awarded a $7.7 million judgment — his original investment plus interest and lawyers' fees. In exchange for Kavanaugh's help in suing his insurance companies, Sitrick agreed not to collect on the judgment, since Kavanaugh claimed to be broke with no means of making good. But then, in September 2006, Sitrick had a change of heart and filed in an L.A. court for the $7.7 million judgment, plus interest.

"We felt we had evidence that showed [Kavanaugh] had been inaccurate in his representation" of his financial situation, Sitrick says from his L.A. office, without specifying what that evidence was.

Kavanaugh, whose recent executive-producer credits include 3:10 to Yuma, Charlie Wilson's War, and Atonement, filed a suit to stop Sitrick from collecting.

Today, Los Angeles Superior Court Judge James Chalfant found in Kavanaugh's favor, ruling that Kavanaugh had not misrepresented his assets in 2002 when he claimed he was unable to pay Sitrick the $7.7 million.

"We're obviously disappointed and intend to appeal," says Sitrick. For his part, Kavanaugh says he's "very relieved. It's a monkey off my back."

One asset that's probably not recoverable? Sitrick's relationship with Kavanaugh's father, who is the first cousin of a very close friend of Sitrick's. "We really haven't talked much" recently, Sitrick concedes.

by Sophia Banay