Weinsteins Sue Warner Bros. - Wall Street Journal

Dec. 11, 2013 5:09 p.m. ET

Just days before the latest "Hobbit" movie hits theaters on Friday, it has landed in court.

Independent movie moguls Harvey and Bob Weinstein, along with their former company Miramax LLC, sued Time Warner Inc. TWX -0.29% Time Warner Inc. U.S.: NYSE ^$66.42 -0.19 -0.29% Dec. 11, 2013 4:00 pm Volume (Delayed 15m) : 4.98M AFTER HOURS ^$66.35 -0.07 -0.11% Dec. 11, 2013 7:59 pm Volume (Delayed 15m): 109,602 P/E Ratio 16.08 Market Cap $60.26 Billion Dividend Yield 1.73% Rev. per Employee $864,529 12/11/13 Weinsteins Sue Warner Bros. Ov... 11/27/13 One Benefit of a Time Warner C... 11/26/13 Hollywood Presses Anti-Piracy ... More quote details and news » 's Warner Bros. late Tuesday for a share of the proceeds from the coming second and third "Hobbit" movies. In a breach-of-contract claim filed in New York Supreme Court, the plaintiffs seek more than $75 million in damages, money Warner Bros. says it doesn't owe.

J.R.R. Tolkien's classic fantasy novel, along with the follow-up trilogy "The Lord of the Rings," was originally developed by Miramax, the studio that the Weinstein brothers ran before founding Weinstein Co.

In 1998, Miramax agreed to sell its big-screen rights for Mr. Tolkien's books to New Line Cinema, which is now part of Warner Bros., for $11.8 million, along with 5% of the movies' gross receipts. Miramax later agreed to give half of its gross participation to Bob and Harvey Weinstein.

Warner Bros. paid Miramax and the Weinsteins about $90 million for the "Lord of the Rings" movies and $25 million for the first "Hobbit," according to a person familiar with the details.

The dispute centers on wording in the contract that says the Weinsteins and Miramax are owed gross participation on the "first motion picture" based on each book, but not on "remakes." The contract, filed in court, doesn't specifically address situations in which one book is split into multiple films.

"They agreed to be paid only on the first motion picture based on 'The Hobbit,' " a spokesman for Warner Bros. said. "And that's all they're owed."

Miramax and the Weinsteins claim in their suit that the "Hobbit" movies are essentially one motion picture split into three. Warner Bros. "has effectively taken the absurd position that the second and third installments of the film are remakes and that Plaintiffs are therefore not entitled to contingent compensation," according to the complaint.

With the two sides already privately disagreeing over the issue, Warner Bros. late last month filed for arbitration, said people familiar with the matter. The studio is expected to argue that the contract mandates that this dispute be handled in arbitration and not in court, according to a person familiar with the details.

However, Miramax's attorney claimed in a letter to the arbitrator that the dispute isn't covered by the arbitration agreement.

Write to Ben Fritz at ben.fritz@wsj.com