The director has withdrawn from the $26 million production after negotiations with financier Ronald Tutor broke down.
THR has learned that Russell was not happy that producers Doug Wick and Lucy Fisher of Red Wagon Prods. were being squeezed to cut their fees in half.
The movie is about a small-town waitress who is shot in the head by a nail gun and later goes to Washington to fight for better health care; there, she meets a clueless congressman, and a romance develops.
"This has been a painful process for me," Russell told THR on Tuesday. "The multiple production delays and stoppages, which were caused by David Bergstein and preceded Ron Tutor's direct involvement with me, have now spanned two years, and the circumstances under which the film would now be completed are much different on several fundamental levels than when we embarked several years ago. I, unfortunately, am no longer involved in the project and cannot call it 'my' film. I wish Ron Tutor well."
Added Tutor, "So we're going to go ahead probably with 'Nailed' and try to hire another director and finish it."