The 43-year-old actor filed the lawsuit in LA County Superior Court claiming producer Todd Moyer hired him to star in "The Legend of William Tell 3D" early last year and the shoot was to begin in October 2011, reported TMZ online.
Fraser claims that he avoided several lucrative jobs for the project, which is reportedly still in pre-production due to financing issues.
The "George of the Jungle" star is demanding USD 2.25 million payout, insisting he is entitled to the sum whether the film shoots or not. He has also asked for additional damages, taking the amount to USD 3 million.
However, Moyer is stunned by the legal action and said that the project has not been dumped.
"This is the first I have heard of this lawsuit. As we told Mr Fraser's reps, we are ready, willing and able to make the movie for the September 3rd start date. Julius Nasso and I have the movie fully financed," he said.
"Unfortunately, Mr Fraser does not seem to be interested in making the movie as a 2D film as the producers intend to do. This is not a contractual decision Mr Fraser has the ability to make," Moyer added.