Settlement discussions held in 38 Studios case
An attorney for the Rhode Island economic development agency suing over its failed investment in Curt Schilling's video game company said he's had settlement discussions in the case and that the General Assembly should pass a new bill designed to encourage out-of-court resolutions.
Lawyer Max Wistow on Tuesday described "general discussions" about settling the 38 Studios lawsuit but wouldn't say with which defendants or provide other specifics.
"There's been enough discussion to make it clearly worthwhile to have the legislation passed," he said.
The Economic Development Corp., which has been renamed the Rhode Island Commerce Corp., approved a $75 million loan guarantee for Schilling's startup in 2010. The agency sued the former Red Sox pitcher and 13 others after the company went bankrupt last year, claiming the EDC board was misled into signing off on the transaction.
The legislation designed to encourage possible settlements was introduced this month in the General Assembly at the behest of Gov. Lincoln Chafee. The bill, which would apply only to the 38 Studios case, would shield any party that settles with the EDC from a lawsuit filed by a co-defendant over damages that co-defendant is ultimately found liable for.
In addition to Schilling, defendants include former EDC Executive Director Keith Stokes and Deputy Director Michael Saul; officials at 38 Studios; two law firms that worked with the EDC; a financial adviser for the state; and Wells Fargo Securities and Barclays Capital, investment banks hired by the EDC to assist in issuing bonds for the deal. They have denied the charges.
The suit seeks repayment of the bonds and triple damages.
The bill's Senate sponsor, Judiciary Chairman Michael McCaffrey, D-Warwick, said a similar legal mechanism was used to encourage settlements in the litigation stemming from the 2003 West Warwick nightclub fire and the state's banking crisis in the early 1990s.
"I submitted this legislation at the request of the governor to encourage settlements in the 38 Studios litigation," he said in a recent statement. "This proven legal strategy has been successful at providing an incentive in two other high profile cases in Rhode Island."
Chafee spokeswoman Christine Hunsinger would not comment when asked if settlement talks were under way, saying only the governor is "interested in recapturing the money the state is on the line for."
The bill has been introduced in both chambers and is set to be reviewed by the House and Senate judiciary committees.
Sarah Heaton Concannon, a lawyer for Schilling, told The Associated Press last week she had recently obtained new documents that contradict the lawsuit's allegations, which she has called baseless all along. She said she intends to litigate the case "to the fullest."
Attorneys for Stokes and Saul did not return messages seeking comment.