Benedict Fitzgerald had sued Gibson for $10 million last February, claiming that he was deceived about the overall expense of the film's production budget, which was around $30 million – not up to $7 million, as he was allegedly told.
In his complaint, Fitzgerald had accused Gibson of engaging in a "chronic and conspiratorial pattern of deceit," adding that he agreed to a salary that was "substantially less than what he would have taken had he known the true budget of the film."
"Gibson preyed monetarily on Ben, taking advantage of his unbridled enthusiasm for the project and with full cognizance of Ben's fundamental personal and spiritual beliefs," alleged the original suit, filed in the Los Angeles Superior Court.
According to Gibson's legal team, however, the "Braveheart" star did not know intricacies of the budget for "The Passion of the Christ" and Fitzgerald had been "handsomely compensated – a very significant amount of money for any writer on any project."
For feature length films, Hollywood screenwriters initially earn an average minimum of $40,000 for a screenplay.
Fitzgerald, according to the original court documents, agreed to a "relatively small salary," a $75,000 production bonus, and another $75,000 if Gibson's project broke even at the box office. But Fitzgerald claims that only received $75,000 and that he was refused extra money when the movie became a blockbuster, grossing over $611 million worldwide.
Furthermore, the screenwriter said he had to borrow $200,000 from Gibson for expenses.
No details have been released regarding the settlement agreed upon Friday but a judge has been asked to cancel a trial scheduled for June 3.
Fitzgerald is currently working on his latest project, "Mary, Mother of Christ," which is in pre-production.
The movie, slated for an April 2010 release, will star Al Pacino as King Herod, Camilla Belle as Mary, and Jonathan Rhys Meyers as Gabriel and Lucifer.