Alexander Graham-Sult v. Nicholas Clainos

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 13, 2017
• Docket: 15-17204
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 13 2017 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALEXANDER GRAHAM-SULT; No. 15-17204 DAVID GRAHAM, D.C. No. 4:10-cv-04877-CW Plaintiffs-Appellants,

v. MEMORANDUM*

NICHOLAS P. CLAINOS, an individual; BILL GRAHAM ARCHIVES LLC, DBA Wolfgang’s Vault; NORTON LLC, a limited liability company; WILLIAM E. SAGAN, an individual,

Defendants-Appellees.

ALEXANDER GRAHAM-SULT; Nos. 16-16768 DAVID GRAHAM, 16-17083

Plaintiffs-Appellants, D.C. No. 4:10-cv-04877-CW

v.

BILL GRAHAM ARCHIVES LLC, DBA Wolfgang’s Vault; NORTON LLC, a limited liability company; WILLIAM E. SAGAN, an individual,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Claudia Wilken, District Judge, Presiding

Argued and Submitted November 14, 2017 San Francisco, California

Before: RAWLINSON and BYBEE, Circuit Judges, and SMITH,** Chief District Judge.

Plaintiffs Alexander Graham-Sult and David Graham are sons of the late

rock-and-roll concert promoter Bill Graham and beneficiaries of his will. Plaintiffs

allege that certain intellectual and tangible property belonged to Graham

personally, as opposed to his companies, and thus should have passed to them after

his death. They assert various claims against Nicholas Clainos, the executor of

Graham’s estate, and against Bill Graham Archives LLC, Norton LLC, and

William E. Sagan (collectively, “the BGA Defendants”). The district court granted

** The Honorable William E. Smith, Chief United States District Judge for the District of Rhode Island, sitting by designation. 2 summary judgment for all defendants and awarded attorney’s fees to the BGA

Defendants under the Copyright Act, 17 U.S.C. § 505. We now affirm.1

I

Plaintiffs’ first claim against Clainos is for conversion of four categories of

property: (1) poster copyrights, (2) the trademark for “The Fillmore,” (3) poster

sets, and (4) posterbooks. Under California law, “[t]he basic elements of

[conversion] are (1) the plaintiff’s ownership or right to possession of personal

property; (2) the defendant’s disposition of the property in a manner that is

inconsistent with the plaintiff’s property rights; and (3) resulting damages.”

Fremont Indem. Co. v. Fremont Gen. Corp., 55 Cal. Rptr. 3d 621, 638 (Cal. Ct.

App. 2007).

With respect to the poster copyrights, plaintiffs cannot demonstrate the first

element of conversion, a right to possess the property. Because it is undisputed

Graham neither created the posters himself nor purchased the intellectual property

rights to them, the only way he could have personally owned the poster copyrights

is if he was the commissioning party under the works-for-hire doctrine. “[W]hen

one person engages another . . . to produce a work of an artistic nature, . . . the

1 We have jurisdiction under 28 U.S.C. § 1291. We review the district court’s grant of summary judgment de novo. See Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 665 (9th Cir. 2017). 3 presumption arises that the mutual intent of the parties is that the title to the

copyright shall be in the person at whose instance and expense the work is done.”

Twentieth Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d 869, 877 (9th Cir.

2005) (emphasis added). Plaintiffs raise no triable issue of fact as to whether the

posters were created at Graham’s personal instance and expense. The posters

promoted the companies’ concerts. There is no evidence Graham paid any poster

artist from personal funds.2 To the contrary, there is substantial evidence

Graham’s companies paid some poster artists and considered posters as an expense

in determining each show’s profit. Because plaintiffs cannot show that they have

any right to possess the poster copyrights, their claim for conversion of the

copyrights fails as a matter of law.3

With respect to the trademark for “The Fillmore,” plaintiffs cannot

demonstrate either a right to possess the trademark or damages. “The good will of

a trademark is an inseparable part of that mark as well as an inseparable part of the

2 Even as to the eight posters that (according to plaintiffs) were published before Graham began operating as a business, plaintiffs have not raised a triable issue of fact as to whether the posters were created at Graham’s expense. 3 The parties dispute the number of poster copyrights at issue in this appeal and, hence, the number of posters registered within five years of publication and entitled to presumptive validity under 17 U.S.C. § 410. The dispute is immaterial because plaintiffs have not raised a triable issue of fact as to whether any poster was created at Graham’s expense. Any presumption to which plaintiffs may be entitled under § 410 is rebutted. 4 business which owns the mark.” 3 MCCARTHY ON TRADEMARKS AND UNFAIR

COMPETITION § 18:2 (5th ed.). Accordingly, “[t]he law is well settled that there

are no rights in a trademark alone and that no rights can be transferred apart from

the business with which the mark has been associated.” E. & J. Gallo Winery v.

Gallo Cattle Co., 967 F.2d 1280, 1289 (9th Cir. 1992); see also 15 U.S.C. § 1060

(a mark is “assignable with the goodwill of the business in which the mark is

used”). Even if Graham had personally owned the trademark for “The Fillmore” at

his death, that trademark would necessarily have been included in the sale of Bill

Graham Enterprises, Inc. (“BGE”) to the company’s key employees. Plaintiffs

received compensation for their shares of BGE as part of that sale.4 They possess

no right to the trademark today, nor could they have suffered any damage in this

regard.

Similarly, plaintiffs can show neither a right to possess the poster sets nor

any damage stemming therefrom. Graham’s companies paid for the posters to be

printed, considered the posters as an expense in determining each show’s profit,

paid to store, maintain, and insure the poster archives, and staffed the archives with

their employees. The poster sets were undoubtedly included in the sale of BGE to

4 Plaintiffs do not dispute that, “[a]fter Graham’s death, the Trademark always remained tethered to and associated with the business.” 5 the company’s key employees, and as noted above, plaintiffs were compensated for

that sale. The sale agreement granted plaintiffs a right of first refusal with respect

to any offer to purchase the archives, which they twice declined to exercise. Later,

plaintiffs were given the opportunity to retrieve Graham’s personal property from

the archives and left the posters where they were. There can be no genuine dispute

that Graham’s companies owned the posters sets and, as with the trademark for

“The Fillmore,” plaintiffs cannot have suffered any damage in this regard.

As for the posterbooks, we agree with the district court that there remains a

genuine dispute as to whether the posterbooks belonged to Graham personally. We

also agree, however, that plaintiffs have produced no evidence of the second

element of conversion, namely, a wrongful disposition of the posterbooks. “Not

every failure to deliver property to the rightful owner constitutes a conversion.”

Spates v. Dameron Hosp. Assn., 7 Cal. Rptr. 3d 597, 609 (2003). “To establish a

conversion, it is incumbent upon the plaintiff to show an intention or purpose to

convert the goods and to exercise ownership over them, or to prevent the owner

from taking possession of the property.” Id. “The act of removing personal

property from one place to another, without an assertion of ownership or

preventing the owner from exercising all rights of ownership in such personal

property, is not enough to constitute conversion.” Id. Here, there is no indication

6 that Clainos wrongfully disposed of the posterbooks. He did not even know of

their existence until the early 2000s, at which point he gave plaintiffs the

opportunity to retrieve their father’s personal property from the archives. Plaintiffs

do not dispute they had access to all areas of the archives. Although they claim

they did not actually learn of the posterbooks’ existence until much later, they

cannot show that Clainos made any wrongful disposition of this property.

Finally, plaintiffs’ conversion claim based on the poster sets and

posterbooks fails for the independent reason that it is barred by res judicata.

“California’s Probate Code provides that the final order of the probate court

generally discharges the personal representative from all claims by heirs ‘based

upon any act or omission directly authorized, approved, or confirmed in the

judgment or order.’” Graham-Sult v. Clainos, 756 F.3d 724, 745–46 (9th Cir.

2014) (quoting Cal. Prob. Code § 7250(a)). “However, the final order does not

have this effect if the order is ‘obtained by fraud or conspiracy or by

misrepresentation contained in the petition or account or in the judgment as to any

material fact.’” Id. at 746 (quoting Cal. Prob. Code § 7250(c)). In the prior appeal

in this litigation, we held that plaintiffs’ allegations that Clainos concealed the

disputed tangible property would, if proven, defeat any res judicata defense. Id.

On remand, plaintiffs failed to raise any triable issue of fact in this regard, and we

7 now find that res judicata applies to plaintiffs’ conversion claim based on the

poster sets and posterbooks.

II

Plaintiffs’ second claim against Clainos is for breach of fiduciary duty.

Under California law, “[t]he elements of a cause of action for breach of fiduciary

duty are: (1) the existence of a fiduciary duty; (2) the breach of that duty; and

(3) damage proximately caused by that breach.” Mosier v. S. Cal. Physicians Ins.

Exch., 74 Cal. Rptr. 2d 550, 565 (Cal. Ct. App. 1998). Here, plaintiffs cannot

prove Clainos breached any fiduciary duty. Even if it were true that Graham

owned the disputed property, there is still no genuine dispute as to whether Clainos

knew or should have known as much. Nor is there any genuine dispute regarding

whether Clainos was reasonable in relying on Richard Greene’s legal

determination that BGE owned the copyrights, trademark, and concert

memorabilia. The district court correctly granted summary judgment on the breach

of fiduciary duty claim.

III

Plaintiffs’ claims against the BGA Defendants fail for the same reasons

discussed above in connection with the conversion claim against Clainos. In

addition, plaintiffs’ claims against the BGA Defendants fail for the independent

8 reason that the BGA Defendants were innocent purchasers of the disputed

property. “California . . . recognize[s] an innocent purchaser defense.” CRS

Recovery, Inc. v. Laxton, 600 F.3d 1138, 1145 (9th Cir. 2010). “As a general rule,

an innocent purchaser for value and without actual or constructive notice that his or

her vendor has secured the goods by a fraudulent purchase is not liable for

conversion.” Id.

In the prior appeal in this litigation, we declined to affirm dismissal of

plaintiffs’ claims against the BGA Defendants because plaintiffs had alleged Sagan

knew of prior fraudulent transfers of the disputed property, and taken as true, that

allegation would defeat an innocent purchaser defense. Graham-Sult, 756 F.3d at

749 n.21. Plaintiffs have not raised sufficient evidence to support their allegation

that Sagan, or any other BGA Defendant, knew of any defect in title. Nor can

plaintiffs show that title in the disputed property was void. We therefore agree

with the district court that the BGA Defendants were innocent purchasers and were

entitled to summary judgment on plaintiffs’ conversion, copyright infringement,

and declaratory relief claims on this basis.

IV

Plaintiffs appeal the district court’s award of attorney’s fees and costs to the

BGA Defendants. Under the Copyright Act of 1976, a court has discretion to

9 award reasonable attorney’s fees and costs to the prevailing party. 17 U.S.C.

§ 505. The court considers the following factors: degree of success obtained,

objective unreasonableness of the claims, frivolousness, motivation, the purposes

of the Copyright Act, and whether the chilling effect of awarding attorney’s fees

may be too great or impose an inequitable burden on an impecunious plaintiff.

Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 675 (9th Cir. 2017). These

factors are not exclusive and need not all be met. Id.

We review an award of fees and costs for abuse of discretion. Fantasy, Inc.

v. Fogerty, 94 F.3d 553, 556 (9th Cir. 1996). Given the complete success obtained

by the BGA Defendants, the objective unreasonableness of plaintiffs’ claims

against them, and the purposes of the Copyright Act, the district court did not

abuse its discretion in determining an award of fees and costs was appropriate here.

Nor the did the district court abuse its discretion in calculating the award. We

therefore affirm the district court in this regard.

Lastly, the BGA Defendants request attorney’s fees and costs for this appeal

pursuant to § 505. For the same reasons given above, we award reasonable

attorney’s fees and costs on appeal to the BGA Defendants.

***

10 For the foregoing reasons, the orders of the district court are AFFIRMED.

The BGA Defendants shall recover reasonable attorney’s fees and costs incurred

on appeal, and the case is referred to the appellate commissioner for determination

of an amount.

11 FILED Graham-Sult v. Clainos, Case Nos. 15-17204, 16-16768, and 16-17083 DEC 13 2017 Rawlinson, Circuit Judge, concurring: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS I concur in the result.