Hacienda Records, L.P. v. Ruben Ramos, et a

Case: 16-41180 Document: 00514293959 Page: 1 Date Filed: 01/04/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-41180
Fifth Circuit
FILED
January 4, 2018
HACIENDA RECORDS, L.P., Lyle W. Cayce
Clerk
Plaintiff - Appellee
HACIENDA RECORDS AND RECORDING STUDIO, INCORPORATED;
LATIN AMERICAN ENTERTAINMENT, L.L.C.; RICHARD GARCIA, also
known as Rick Garcia; ROLAND GARCIA, SR.,
Counter Defendants - Appellees
v.
RUBEN RAMOS; LETICIA LETTY SALCEDO; ARTURO RENE SERRATA;
HUGO CESAR GUERRERO,
Defendants - Appellants
RUBEN GUANAJUATO,
Counter Claimant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 2:14-CV-19
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Before BARKSDALE, DENNIS, and CLEMENT, Circuit Judges.
PER CURIAM:*
Primarily at issue is whether Tejano artists Hugo Ruben Guanajuato,
Hugo Cesar Guerrero, and Arturo Rene Serrata, were properly dismissed for
lack of standing. Also at issue are Hacienda Records’ being awarded both
summary judgment against Ruben Ramos’ breach-of-contract claim and
prevailing-party status. AFFIRMED.
I.
Appellants’ claims perpetuate an ongoing copyright-ownership dispute,
the subject of numerous previous actions between Tejano recording companies
and Tejano artists represented by David Showalter, including, Guanajuato,
Guerrero, Ramos, and Serrata. Guzman v. Hacienda Records & Recording
Studio, Inc., 808 F.3d 1031 (5th Cir. 2015); Tempest Publ’g, Inc. v. Hacienda
Records & Recording Studio, Inc., 141 F. Supp. 3d 712 (S.D. Tex. 2015);
Sanchez v. Hacienda Records & Recording Studio, Inc., 42 F. Supp. 3d 845
(S.D. Tex. 2014); Guerrero v. Martinez, 2011 WL 5155831 (S.D. Tex. Oct. 27,
2011); Guajardo v. Freddie Records, Inc., 2014 WL 12605052 (S.D. Tex. Dec.
12, 2014), R. & R. adopted, 2015 WL 12791484 (S.D. Tex. Mar. 11, 2015), order
corrected, 2015 WL 12791487 (S.D. Tex. Apr. 27, 2015) (ruling Guanajuato,
Guerrero, and Serrata lacked standing due to their irrevocable assignment of
rights); Sanchez v. Freddie Records, Inc., 2011 WL 3606808 (S.D. Tex. Aug. 10,
2011).
Prior to this ongoing dispute, appellants assigned and transferred
various rights to their attorney, Showalter. Guanajuato, Guerrero, and
* Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
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Serrata, did so through two documents: assignments and special powers of
attorney. (Ramos did not execute a special power of attorney.)
The special powers of attorney used by Guanajuato, Guerrero, and
Serrata transferred to Showalter the “exclusive right to enforce any legal rights
in respect of the Works and administer any and all rights and revenue received
or recovered as a result of the Works, whether as the result of litigation or
otherwise”. Some of the disputes between the parties center on the effect of
these assignments and special powers of attorney.
This action was initiated by Showalter’s January 2014 demand letter to
Hacienda, requesting records and documents related to works of Ramos and
Serrata, and demanding Hacienda cease-and-desist for any unlicensed
exploitation of their works. In response, Hacienda sought a declaratory
judgment to resolve its ownership of various copyrights.
Counterclaims for copyright violations and breach of contract followed,
and additional parties were joined as defendants, cross-defendants, and
counter-claimants, including, Guanajuato and Guerrero. Following multiple
voluntary dismissals, the counter-claimants pursued: (1) Guanajuato’s claim
for copyright infringement and violation of the Digital Millennium Copyright
Act (DMCA); (2) Guerrero, Ramos, and Serrata’s claims for breach of contract,
breach of the duty of good faith and fair dealing, and attorney’s fees under
Texas law; (3) Guerrero and Serrata’s claims for breach of fiduciary duty; and
(4) appellants’ request for a declaratory judgment that they are entitled to
records of all revenues from the exploitation of their works.
Hacienda maintains Guanajuato, Guerrero, and Serrata (standing
appellants) lack standing, based on their earlier assignment of their rights to
pursue claims related to their works. Because standing was disputed in a
separate action pending between the parties (Guajardo), the court in this
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action took judicial notice of related documents offered as evidence in that
parallel action, Guajardo, 2015 WL 12791487, at *1.
But, the court in this action concluded collateral estoppel did not apply
because the final judgment in Guajardo had not been entered when, in this
action, the court dismissed the standing appellants. Nonetheless, for that
dismissal, the court agreed with the “reasoning and conclusions” of the
Guajardo court’s ruling on standing.
As noted, Ramos did not enter into a special power of attorney assigning
Showalter the right to pursue claims related to the works, and, as also noted,
asserted, inter alia: state-law claims for breach of contract, and breach of the
duty of good faith and fair dealing. Considering the merits of Ramos’ claims,
the court, in awarding summary judgment to Hacienda, found evidence of a
1985 contract between Hacienda and Ramos, providing: Ramos would record
and deliver two albums per year for four years; Hacienda would hold “sole and
exclusive rights to all master sound records and derivatives made thereunder”;
and it was to pay Ramos $1,000 prior to the first album, and further
compensate him based on album-sale profits.
In opposition to Hacienda’s summary-judgment motion, a 9 January
2015 declaration from Ramos stated he had not received payment under this
1985 contract. The court, however, declined to consider the declaration, based
on Ramos’ contradictory deposition testimony on 13 January, only four days
after his declaration. In doing so, the court relied on sham-affidavit
jurisprudence to conclude: “Because Ramos [] provided no valid explanation
for his inability on January 13, 2015, to remember facts he swore to in his
Declaration four days before, and these contradictory statements cannot be
reconciled”, he failed to present any summary-judgment evidence for a breach
of the 1985 contract.
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Consequently, summary judgment was awarded Hacienda against
Ramos. And, the court ruled Hacienda was the “prevailing part[y]”, entitling
it to attorney’s fees and costs.
II.
Appellants claim the court erred by: dismissing the standing appellants;
awarding summary judgment to Hacienda against Ramos; and according
prevailing-party status to Hacienda. Each claim fails.
A.
Regarding whether the court erred in dismissing the three standing
appellants under Federal Rule of Civil Procedure 12(c) because of their
assignments and special powers of attorney in favor of their attorney,
Showalter, those appellants do not challenge the proposition that an assignor
loses the ability to pursue an action after transferring the “exclusive” right to
do so. Instead, they assert copyright principles, see Prather v. Neva
Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969), prevent application of the plain
meaning of their earlier-quoted transfer of the “exclusive right to enforce any
legal rights in respect of the Works”.
Hacienda counters that the copyright-specific rules provide no relief in
this instance, claiming assigning “any and all rights” should be interpreted
according to its plain meaning, depriving the standing appellants of their
ability to pursue this action. Hacienda relies on the earlier-discussed parallel
case, Guajardo, in which the court ruled the standing appellants lacked
standing, and claims they are collaterally estopped from pursuing the same
standing basis they previously litigated and lost. Guajardo, 2015 WL
12791484 (adopting magistrate judge’s recommendation, Guajardo, 2014 WL
12605052 at *3–6).
A Rule 12(c) motion is decided under the same standard as used for a
Rule 12(b)(6) motion (failure to state a claim). E.g., Guidry v. Am. Pub. Life
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Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007) (citing In re Katrina Canal Breaches
Litig., 495 F.3d 191, 205 (5th Cir. 2007)). Therefore, “[t]he court ‘accepts all
well-pleaded facts as true, viewing them in the light most favorable to the
plaintiff’”, id. (quoting In re Katrina Canal Breaches Litig., 495 F.3d at 205);
and “[t]he plaintiff must plead ‘enough facts to state a claim to relief that is
plausible on its face’”. Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570
(2007)). A Rule 12(c) motion’s being granted is reviewed de novo. Id.
1.
Addressed first is whether the standing appellants are precluded from
re-litigating the standing issue they lost in Guajardo. Dismissal based on
collateral estoppel is also reviewed de novo. E.g., Mowbray v. Cameron Cty.,
274 F.3d 269, 281 (5th Cir. 2001) (citing RecoverEdge L.P. v. Pentecost, 44 F.3d
1284, 1290 (5th Cir. 1995) abrogated on other grounds by Husky Int’l Elecs.,
Inc. v. Ritz, 136 S. Ct. 1581 (2016)). Federal law governs the preclusive effect
of a federal judgment based on collateral estoppel. RecoverEdge L.P., 44 F.3d
at 1290.
Issue preclusion or collateral estoppel prevents a party from litigating
an issue it previously “litigated and lost” in another action. Parklane Hosiery
Co., Inc. v. Shore, 439 U.S. 322, 327 (1979). The three elements of collateral
estoppel are: “(1) the issue at stake must be identical to the one involved in
the prior action; (2) the issue must have been actually litigated in the prior
action; and (3) the determination of the issue in the prior action must have
been a necessary part of the judgment in that earlier action”. RecoverEdge
L.P., 44 F.3d at 1290; see also id. at n.12 (noting a fourth requirement—“no
special circumstance that would render preclusion inappropriate or unfair”—
is applicable for offensive non-mutual collateral estoppel) (emphasis added).
Implicit in the third element of collateral estoppel is the requirement for a final
judgment; “[t]he requirement of finality applies just as strongly to collateral
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estoppel as it does to res judicata”. Int’l Union of Operating Eng’rs, Local No.
714 v. Sullivan Transfer, Inc., 650 F.2d 669, 676 (5th Cir. 1981) (quoting J.
Moore & T. Currier, 1B Moore’s Federal Practice 3777 (1980) (“The essence of
collateral estoppel by judgment is that some question or fact in dispute has
been judicially and finally determined”.)).
The doctrine of collateral estoppel “prevent[s] repetitious litigation of
what is essentially the same dispute”. Restatement (Second) of Judgments
§ 27, cmt. c. (1982). Other interests include: “conserving judicial resources, []
maintaining consistency, and [] avoiding oppression or harassment of the
adverse party”. Id. cmt. e; see also Flores v. Edinburg Consol. Indep. Sch. Dist.,
741 F.2d 773, 778 (5th Cir. 1984) (“promotion of judicial economy, prevention
of vexatious litigation, prevention of double recovery, and promotion of the
stability of decisions”) (quoting Gilbert v. Fireside Enters., Inc., 611 S.W.2d 869,
877 (Tex. Civ. App. 1980)).
No doubt, the bases for collateral estoppel would be well served by
applying the doctrine here. As discussed infra, the standing appellants have
filed multiple actions against various record companies through their attorney,
Showalter. They vigorously litigated the standing issue in Guajardo and lost.
They now assert the identical documents—the assignments and special powers
of attorney—do not deprive them of their ability to pursue this action. A court
from the same district has expended significant judicial resources to determine
this exact issue, ruling Showalter alone had standing to pursue these claims.
Guajardo, 2015 WL 12791484 at *3–6. Permitting the standing appellants to
continue this action, despite this adverse ruling, would hinder judicial
economy, spur vexatious litigation, and endanger stability of decisions. Flores,
741 F.2d at 778.
The first two elements of collateral estoppel are met. E.g., RecoverEdge
L.P., 44 F.3d at 1290. The standing issue is identical to that in Guajardo. The
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Guajardo court held the standing appellants lacked standing because of their
assignments and special powers of attorney in favor of Showalter. Further,
the standing issue was vigorously litigated in Guajardo. The parties briefed
the issue expansively, the magistrate judge made a recommendation after oral
argument, and the district court adopted that recommendation, after
considering anew the standing appellants’ assertions. Guajardo, 2015 WL
12791484 at *1.
Resolution of the third element (the decision on the issue was necessary
to the judgment), however, is complicated by the requisite finality for purposes
of collateral estoppel. There are two general approaches to the finality
requirement.
The Restatement (Second) of Judgments approach requires only an order
“sufficiently firm to be accorded conclusive effect”. Restatement (Second) of
Judgments § 13. A more rigid approach equates finality for collateral-estoppel
purposes with the final-decision requirement for purposes of appeal pursuant
to 28 U.S.C. § 1291.
Under that approach, if a decision is not appealable under 28 U.S.C.
§ 1291, it is probably not final for collateral-estoppel purposes. For example,
our court held partial summary judgment lacked the finality required for
collateral-estoppel purposes because, “[n]ot only is such an order not
appealable, but it remains within the plenary power of the district court to
revise or set aside in its sound discretion without any necessity to meet the
requirements of Fed. R. Civ. P. 60(b) [providing relief from final judgment
based on six delineated reasons]”. Avondale Shipyards, Inc. v. Insured Lloyd’s,
786 F.2d 1265, 1269 (5th Cir. 1986) (internal citation omitted).
Both of these approaches have been applied by our court. Marine Shale
Processors, Inc. v. United States Envtl. Prot. Agency, 81 F.3d 1371, 1380 n.2
(5th Cir. 1996) (noting the tension in our precedent). The court in Pye did not
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adopt the flexible approach, but cited a second circuit opinion following the
Restatement approach in holding a prior judgment did have preclusive effect,
even though the issue of compensation was not resolved. Pye v. Dep’t. of
Transp. of State of Ga., 513 F.2d 290, 292 (5th Cir. 1975) (citing Kurlan v.
Comm’r, 343 F.2d 625, 628–29 n.1 (2d Cir. 1965)).
Likewise, our court adopted the more flexible approach in Chemetron,
stating: “the final judgment requirement is relaxed in the case of collateral
estoppel”; “[f]inality in the sense of 28 U.S.C. [§] 1291 is not required for
collateral estoppel”; and “the finality requirement does not necessarily demand
the ministerial act of executing a judgment”. Chemetron Corp. v. Bus. Funds,
Inc., 682 F.2d 1149, 1190–91 (5th Cir. 1982) (internal quotations and citations
omitted). But, the panel decision in Chemetron was vacated and remanded by
the Supreme Court on different grounds. 460 U.S. 1007 (1983).
On remand, another panel of our court reinstated the collateral-estoppel
portion of the first-panel’s opinion. 718 F.2d 725, 728 (5th Cir. 1983).
Nevertheless, our court ordered rehearing en banc, therefore vacating the
second-panel opinion, id. at 730, and the parties settled before rehearing,
Cycles, Ltd. v. Navistar Fin. Corp., 37 F.3d 1088, 1090 (5th Cir. 1994).
The Chemetron court’s flexible approach was followed in our court’s 1994
decision in Cycles, 37 F.3d at 1090, with the rationale in the vacated Chemetron
opinion being cited for the proposition that “[j]udgments are final for purposes
of issue preclusion when fully litigated, even if not yet appealable”, id. (citing
Chemetron, 682 F.3d at 1191) (emphasis added). The Cycles court cited the
Restatement (Second) of Judgments, along with two other authoritative
sources, in adopting the more flexible approach. Id. (citing Restatement
(Second) of Judgments § 13; 18 Charles A. Wright et al., Federal Practice and
Procedure § 4434, at 321 (1981); 1B James W. Moore et al., Moore’s Federal
Practice ¶ 0.416[3.-1] (2d ed. 1993)).
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Except for Chemetron and Cycles, however, our court has interpreted the
finality requirement strictly. While our court has stopped short of requiring a
judgment be appealable to be “final” for collateral-estoppel purposes, it has
repeatedly stressed the correlation between appealability under 28 U.S.C.
§ 1291 and finality for collateral estoppel.
In Avondale, our court not only noted Chemetron had no precedential
effect, but also disagreed with the flexible interpretation of finality. Avondale,
786 F.2d at 1269–73 (disagreeing with Sherman v. Jacobson, 247 F. Supp. 261,
268–69 (S.D.N.Y. 1965)); J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d
176, 179 n.2 (5th Cir. 1996) (stating Avondale “declined to adopt this more
flexible notion of finality”). The Restatement approach, the Avondale court
admonished, “seems to render appealability almost irrelevant . . . . [and] the
result is either that nearly every interlocutory ruling will be issue
preclusive, or that it will be almost impossible to determine in advance which
will be preclusive and which not”. Avondale, 786 F.2d at 1271.
While acknowledging the Restatement’s synthesis of decisions adopting
the flexible approach, the Avondale court stated: “[T]he most prominent [of
these] decisions have involved issues that were resolved by appeal prior to final
judgment in the first action”. Id. at 1270 (internal citations omitted). Finding
no “federal appellate decision which has applied preclusion to a prior nonfinal
ruling as to which appellate review was unavailable”, the court “decline[d] to
depart from [the] previously stated rule that an order granting partial
summary judgment ‘has no res judicata or collateral estoppel effect’”. Id. at
1270, 1272 (quoting Golman v. Tesoro Drilling Corp., 700 F.2d 249, 253 (5th
Cir. 1983) (applying Texas law of collateral estoppel)).
With the exception of Cycles, our court has consistently followed the
strict approach to finality, linking the availability of appeal for the prior
decision with finality for collateral-estoppel purposes. Baros v. Tex. Mexican
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Ry. Co., 400 F.3d 228, 233 (5th Cir. 2005) (preliminary injunction not
sufficiently final); contra RecoverEdge, 44 F.3d at 1295 (stating in dicta:
“Furthermore, a final judgment is not a prerequisite for issue preclusion when
a jury has rendered a conclusive verdict”) (citing Restatement (Second) of
Judgments § 13)); Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 867–68
(5th Cir. 2000) (magistrate judge’s order not sufficiently final); Hughes v. Santa
Fe Int’l Corp., 847 F.2d 239, 242 (5th Cir. 1988) (consent judgment entered
after a jury finding not final for collateral-estoppel purposes); J.R. Clearwater,
93 F.3d at 179 n.2 (denial of class certification not sufficiently final); Winters
v. Diamond Shamrock Chem. Co., 149 F.3d 387, 395–96 (5th Cir. 1998)
(remand order under 28 U.S.C. § 1447(d) (post-removal order remanding action
to state court not reviewable) not sufficiently final); Avondale, 786 F.2d at
1269–73. The Winters court declined to invoke a bright-line rule that non-
appealable judgments lacked sufficient finality, but stressed the importance of
appellate review in resolving the issue, noting “the availability of review is of
paramount importance to the issue of preclusion”. Winters, 149 F.3d at 395–
96.
Like our precedent, the district court in this action was reluctant to apply
collateral estoppel because the judgment in Guajardo was not yet final for 28
U.S.C. § 1291 purposes when it ruled on standing. The Guajardo court
dismissed the standing appellants’ claims on 11 March 2015, Guajardo, 2015
WL 12791484, but final judgment was not entered until 28 March 2016.
In this action, the court dismissed the standing appellants’ claims on 30
September 2015, before the March 2016 Guajardo judgment. Hacienda
Records, LP v. Ramos, 2015 WL 5732558 at *4 (S.D. Tex. Sept. 30, 2015). In
doing so, although the court ruled “the doctrine of collateral estoppel does not
apply here”, “the [c]ourt nonetheless agree[d] with the reasoning and
conclusions reached [in] Guajardo”. Id.
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Because the district court relied on the reasoning in Guajardo, rather
than applying collateral estoppel, and because, in our de novo review, we also
agree with that reasoning, we need not decide whether the Guajardo dismissal
for lack of standing was sufficiently final for collateral-estoppel purposes in
this action. Instead, we turn to whether the standing appellants’ assignments
and special powers of attorney deprived them of standing.
2.
As discussed supra, the standing appellants each executed two
documents bearing on standing: an assignment and a special power of
attorney, both in favor of their attorney, Showalter. The assignments gave
Showalter
a one-half undivided interest in our said cause of action and said
interest in our Works including copyrights and renewals thereof
and any claims and causes of action in the Works as well as any
and all property, money and the gross value of any benefit or
consideration of any nature that is recovered in respect of the
Works as well as royalties, [Broadcast Music Inc.] payments or
revenue from any source.
The more-expansive special powers of attorney irrevocably transferred to
Showalter an
exclusive right to enforce any legal rights in respect of the Works
and administer any and all rights and revenue received or
recovered as a result of the Works, whether as the result of
litigation or otherwise . . . includ[ing] the exclusive right to
negotiate, issue licenses, collect revenue and enforce rights in
respect of the Works.
Hacienda asserts these documents compel dismissal of the standing
appellants.
Instead of contesting the general rule that an individual who transfers
his right to sue no longer has a right to do so, the standing appellants claim
their assignments and special powers of attorney only transferred future
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claims. They cite, inter alia, our court’s opinion in Prather for the proposition
that an assignment of claims requires specific language to transfer an interest
in prior accrued claims. Prather, 410 F.2d at 700. Hacienda responds that
Prather is inapplicable because the appellants, except Guanajuato, voluntarily
dismissed their copyright claims under Rule 41(b). For the reasons that follow,
we agree the rule from Prather applies only to copyright claims under 17 U.S.C.
§§ 106 and 501, and the standing appellants, as assignors, are precluded from
suing on their state-law claims as a matter of Texas law. Advanced Nano
Coatings, Inc. v. Hanafin, 478 F. App’x 838, 843 (5th Cir. 2012) (quoting River
Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 169 (Tex. App.—Houston [1st
Dist.] 1992, writ denied), overruled on other grounds by Formosa Plastics Corp.
USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex. 1998)).
To assess Hacienda’s position, we must determine which claims were not
voluntarily dismissed when the district court dismissed the standing
appellants in September 2015, because the rule from Prather, discussed infra,
applies only to copyright claims. See Prather, 410 F.2d at 698 (the first
sentence states: “This is a copyright infringement case”). Guerrero and Serrata
dismissed, inter alia, their claims for copyright infringement and retained only
state-law claims. Guanajuato, on the other hand, dismissed all state-law
claims, but “retain[ed] his claims for copyright infringement, [and] under the
DMCA”.
a.
As stated above, as of 30 September 2015, when the court dismissed the
standing appellants’ claims, Guerrero and Serrata retained only state-law
claims. We first address whether they may pursue those claims despite their
assignments and special powers of attorney.
The general rule is that, “[u]nder Texas law, once a cause of action has
been assigned to another person, the assignor is precluded from bringing suit
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‘unless the assignor has retained some right or interest therein’”. Advanced
Nano Coatings, Inc., 478 F. App’x at 843 (quoting River Consulting, Inc., 848
S.W.2d at 169). Whether the documents transferred all rights is a matter of
contract interpretation. When interpreting contract provisions, such as the
assignments and special powers of attorney here, the court should attempt “to
give effect to the intentions of the parties”. In re Isbell Records, Inc., 586 F.3d
334, 337 (5th Cir. 2009) (citing Reliant Energy Servs., Inc. v. Enron Can. Corp.,
349 F.3d 816, 822 (5th Cir. 2003)). If unambiguous, the terms of the contract
“will be given their plain meaning and will be enforced as written”. Id.
At the commencement of this action, the standing appellants could no
longer pursue claims arising from the works because they had transferred to
Showalter the “exclusive” right to pursue them. As discussed infra, giving
Showalter the “exclusive right to enforce any legal rights in respect of the
Works” meant only Showalter could enforce those rights. Oxford Dictionary
(online version),
https://premium.oxforddictionaries.com/us/definition/american_english/exclus
ive (“Exclusive” means “Restricted or limited to the person, group, or area
concerned”). It follows, therefore, the court did not err in dismissing the state-
law claims, unless there is some specific rule which prevents application of the
plain meaning of the assignments and special powers of attorney.
As noted, instead of challenging the general rule that an assignor loses
the ability to sue after transferring his entire interest, Guerrero and Serrata
claim this court’s decision in Prather prevents application of the general rule.
Prather, 410 F.2d at 700. That decision requires more specific language in
contracts purporting to “transfer[] causes of action for prior [copyright]
infringements”. Id.
Even assuming the assignments and special powers of attorney were not
specific enough, Prather provides no aid to Guerrero and Serrata’s state-law
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claims because the rule applies only to copyright claims. An inspection of the
opinion clarifies this result, because, inter alia: the first line states “[t]his is a
copyright infringement case”; the court states the issue is “the effectiveness of
an assignment of accrued causes of action for copyright infringement”; and the
court cites authoritative sources on copyright law in crafting its rule. Id. at
698–700 (citing Horace G. Ball, The Law of Copyright and Literary Property
543 (1944)). Because Prather provides no relief from the plain meaning of the
assignments and special powers of attorney, as it relates to the state-law
claims, the court did not err in ruling the documents deprived Guerrero and
Serrata of their right to pursue those claims.
b.
Next at issue is whether Prather allows Guanajuato to maintain his
claim for copyright infringement. As stated supra, Guanajuato was the only
appellant who had retained a copyright claim when the district court ruled in
September 2015; and, as discussed, the Prather rule applies only to copyright
claims.
The Prather court ruled: “Unless the assignment of copyright contains
language explicitly transferring causes of action for prior infringements, the
assignee cannot maintain a suit for infringements which happened before the
effective date of the assignment”. Id. at 700 (internal citation omitted).
Nevertheless, that court also ruled: “All that is required is that the contract
[of assignment] cover in no uncertain terms choses in action for past, prior,
accrued damages”. Id. (emphasis added).
While Prather requires a more specific assignment of prior copyright
infringements, this issue is still one of contract interpretation, and we apply
the same contract-interpretation principles discussed supra. The court should
attempt “to give effect to the intentions of the parties”, In re Isbell Records,
Inc., 586 F.3d at 337 (internal citation omitted); and, if unambiguous, the
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terms of the contract “will be given their plain meaning and will be enforced as
written”, and “[a] contract should be interpreted as to give meaning to all of its
terms—presuming that every provision was intended to accomplish some
purpose, and that none are deemed superfluous”, Id. (quoting Transitional
Learning Cmty. at Galveston, Inc. v. U.S. Office of Pers. Mgmt., 220 F.3d 427,
431 (5th Cir. 2000)).
At issue in Isbell Records was whether an assignment divested the
assignor of its right to pursue copyright-infringement claims. Id. The
assignment in Isbell Records contained two seemingly inconsistent clauses; the
first granted “fifty percent (50%) of [its] interest now owned or subsequently
procured in the universe-wide copyright in and to the . . . musical composition”,
and the second assigned “all of the universe-wide right, title, and interest . . .
including all claims for infringement of the copyrights whether now or
hereafter existing, for the maximum terms of copyright”. Id.
Our court ruled that the district court erred by “focusing on the phrase
‘all claims for infringement of the copyrights,’ [and] conclud[ing] that the plain
language of the contract deprives [plaintiff] of any right to pursue copyright
infringement claims”. Id. “This interpretation,” our court stated, “ignores the
language of the clause as a whole and renders the contract contradictory”. Id.
Because, when read properly, the second clause “clarifie[d] that the 50% share
[was] a full share, rather than an income, participation, royalty, or some other
limited share in the copyright”, “the district court erred when it held that
[plaintiff] lacked standing to pursue its claims”. Id. at 338.
Isbell Records is distinguishable. Instead of two clauses, the transfer at
hand contains two separate agreements for each of the standing appellants:
an assignment and a special power of attorney. Instead of “clarif[ying] that
the 50% share is a full share”, the special power of attorney gave Showalter
the “exclusive right to enforce any legal rights in respect to the Works”.
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(Emphasis added.) By signing the agreement, the standing appellants
transferred their ability to “enforce . . . and administer any and all rights and
revenue . . . includ[ing] the exclusive right to negotiate, issue licenses, collect
revenue and enforce rights in respect of the Works”. (Emphasis added.)
The plain meaning of these clauses renders the standing appellants
unable to “enforce . . . any and all rights”, which includes rights to pursue an
action for copyright, because they gave Showalter the “exclusive” ability to
enforce those rights. As the court stated in Prather, “[a]ll that is required is
that the contract [of assignment] cover in no uncertain terms choses in action
for past, prior, accrued damages”. Prather, 410 F.2d at 700 (emphasis added).
The plain meaning of the clause granting Showalter the “exclusive right to
enforce any legal rights in respect to the Works” means Showalter, not the
standing appellants, was the only person capable of enforcing all the artists’
rights in this action. (Emphasis added.)
Certainly, the standing appellants’ copyright rights are included in the
inclusive term “any and all” that Showalter alone was given the “exclusive
right to enforce”. It would be nonsensical to interpret “all rights” to mean “all
rights except those rights related to prior copyright infringements”. Therefore,
the broad and inclusive language in the assignments and special powers of
attorney, created before this action, was sufficient under Prather to deprive the
standing appellants of their ability to pursue this action. Accordingly, the
district court did not err in dismissing, for lack of standing, Guanajuato’s
copyright-infringement claim.
B.
Ramos’ challenge to the summary judgment awarded Hacienda against
his contract claims is reviewed de novo. E.g., United States v. Lawrence, 276
F.3d 193, 195 (5th Cir. 2001). Summary judgment was granted because Ramos
undermined his contract claims by repeatedly disavowing that any contract
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existed; and, even assuming one did exist, Ramos failed to offer evidence of
breach.
Summary judgment is proper where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law”. Fed. R. Civ. P. 56(a). The court considers the record as a
whole, and draws all justifiable inferences in favor of the non-movant. Smith
v. Reg’l Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016). But the non-movant
bears “the burden of demonstrating by competent summary judgment proof
that there is [a genuine dispute] of material fact warranting trial”. Lindsey v.
Sears Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994) (internal citations
omitted).
In considering the summary-judgment record, and although the court
may not weigh the evidence or make credibility determinations, it must, of
course, decide what evidence may be considered. E.g., Christophersen v.
Allied–Signal Corp., 939 F.2d 1106, 1109 (5th Cir. 1991) (“we review the trial
court’s evidentiary rulings, which define the summary judgment record, and
we give these rulings their due deference”), abrogated on other grounds by
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). The court’s
evidentiary rulings regarding the competency of evidence are reviewed for
abuse of discretion. E.g., Guillory v. Domtar Indus. Inc., 95 F.3d 1320, 1329
(5th Cir. 1996); see also Yeager v. Bowlin, 693 F.3d 1076, 1079 (9th Cir. 2012)
(“a district court’s decision whether to apply the sham affidavit rule should be
reviewed for abuse of discretion”).
Ramos contends the court’s concluding he “failed to offer competent
summary judgment evidence that Hacienda Records breached” the contract is
incorrect. He asserts he provided ample evidence of breach, and claims some
of that evidence was improperly excluded based on the sham-affidavit rule.
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That rule provides a “party may not manufacture a dispute of fact merely
to defeat a motion for summary judgment”. Doe ex rel. Doe v. Dallas Indep.
Sch. Dist., 220 F.3d 380, 386 (5th Cir. 2000). This is because, if “a party who
has been examined at length on deposition could raise an issue of fact simply
by submitting an affidavit contradicting his own prior testimony”, “the utility
of summary judgment as a procedure for screening out sham issues of fact”
would be greatly diminished. Id. (quoting Perma Research & Dev. Co. v. Singer
Co., 410 F.2d 572, 578 (2d Cir. 1969)).
As noted supra, the district court refused to consider Ramos’ 9 January
2015 declaration “[b]ecause [he] has provided no valid explanation for his
inability [in his later deposition] on January 13, 2015, to remember facts he
swore to in his Declaration four days before, and these contradictory
statements cannot be reconciled”. Ramos contends the sham-affidavit rule
does not apply for two reasons: (1) his declaration was executed before, rather
than after, his deposition; and (2) his declaration and deposition testimony are
consistent.
First, Ramos’ suggestion that only an affidavit that comes after
testimony can be a sham is misguided. It is the competency, rather than
timing, of evidence with which the sham-affidavit rule is concerned. As the
third circuit explained, “no principle [] cabins sham affidavits to a particular
sequence . . . . Indeed, cross-examining the affiant in a later deposition seems
the better way to find the flaws in a bogus affidavit”. In re CitX Corp., Inc.,
448 F.3d 672, 679–81 (3d Cir. 2006). Therefore, so long as inconsistent
statements were “made by [Ramos] the deponent and [Ramos] the affiant”, the
court may refuse to consider his declaration as competent evidence. E.g.,
Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 43–44 (2d Cir. 2000).
Second, inconsistencies abound between Ramos’ declaration and
deposition testimony. For example, Ramos the declarant stated he never
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received the $1,000 advance promised in the contract, but Ramos the deponent
admitted he probably received the advance, although he could not remember.
Ramos the declarant stated Hacienda “never paid [him] any monies or
royalties”, but Ramos the deponent admitted he couldn’t remember whether
he had been paid.
Memories, of course, may fade over time; but, that is a far cry from
Ramos, at his deposition, being unable to recall many of the events he had
stated as fact in his declaration, just four days prior. Ramos is not entitled to
use a declaration “that impeaches, without explanation, sworn testimony” to
defeat summary judgment. S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489,
495 (5th Cir. 1996). The court did not abuse it’s discretion by not considering
the declaration in ruling on the summary-judgment motion.
Without Ramos’ January 2015 declaration, the only evidence related to
his contract claims included: (1) his September 2014 interrogatory response,
stating he was “not a party to any contracts”; (2) his December 2014
interrogatory response, stating he “disavow[ed] any such contracts”; (3) his
January 2015 deposition, in which he admitted probably receiving his advance
check and could not recall whether he had received any further payments; and
(4) the 1985 contract. As the court concluded, Ramos “failed to offer competent
summary judgment evidence supporting breach”, and “Hacienda Records is
entitled to judgment as a matter of law on Ramos’ breach of contract claim”.
C.
Appellants claim the court erred by ruling Hacienda is entitled to
attorney’s fees and costs as the “prevailing part[y] on all claims”. In
challenging that ruling, appellants assert they are the prevailing party as to
the 400 works voluntarily dismissed by Hacienda, and the accounting they
obtained through discovery.
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Although, following pleading amendments and voluntary dismissals by
the parties, Hacienda reduced its claims, it prevailed on all works considered
by the court. But, even though appellants did not prevail on any works
considered by the court, they contend they prevailed on all those works not
considered by the court, and, accordingly, claim prevailing-party status.
Texas law controls the award of fees in this instance, Mathis v. Exxon
Corp., 302 F.3d 448, 461 (5th Cir. 2002), and provides for an award of
reasonable fees in contract actions, id. at 462 (citing Tex. Civ. Prac. & Rem.
Code Ann. § 38.001). This fees award is mandatory for the prevailing party in
a breach-of-contract action, who presents proof of reasonable fees. DP Sols.,
Inc. v. Rollins, Inc., 353 F.3d 421, 433 (5th Cir. 2003) (citing Mathis, 302 F.3d
at 462).
A fees award is reviewed for abuse of discretion. Studiengesellschaft
Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 131 (5th Cir. 1983) (citing
Kinnear-Weed Corp. v. Humble Oil & Ref. Co., 441 F.2d 631 (5th Cir.), cert.
denied, 404 U.S. 941 (1971)). And, the award may be justified even when a
party did not prevail on every issue. Id. (citing United States v. Mitchell, 580
F.2d 789, 793 (5th Cir. 1978); 10 C. Wright et al., Federal Practice and
Procedure § 2667 at 180–81)). Moreover, prevailing-party status is not
conferred through a party’s voluntary dismissal without prejudice. Alief Indep.
Sch. Dist. v. C.C. ex rel. Kenneth C., 655 F.3d 412, 418 (5th Cir. 2011).
(Contrary to the position taken in the concurring opinion, the overarching issue
for all settled claims involved contract disputes; state law applies because the
fees were awarded for breach of contract; the prevailing-party status was
decided under state law because Texas awards attorney’s fees to the party
prevailing on a contract claim; and the standard of review for the decision on
prevailing-party status is inconsistent, with some Texas courts using abuse of
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discretion, and others, de novo. N. Star Water Logic, LLC v. Ecolotron, Inc.,
486 S.W.3d 102, 105 (Tex. App. 2016).)
Conversely, an enforceable judgment on the merits will confer
prevailing-party status. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of
Health & Human Res., 532 U.S. 598, 604 (2001). Accordingly, a court does not
abuse its discretion in awarding fees to the “prevailing party [who] obtains
judgment on even a fraction of the claims advanced”. Mitchell, 580 F.2d at 793.
The court entered a final judgment in favor of Hacienda, and the earlier
voluntary dismissals without prejudice did not confer prevailing-party status
on appellants. Alief Indep. Sch. Dist., 655 F.3d at 418. Therefore, because the
party receiving the favorable judgment is appropriately considered the
“prevailing party”, the court did not abuse its discretion in according Hacienda
prevailing-party status. Republic Tobacco Co. v. N. Atl. Trading Co. Inc., 481
F.3d 442, 446 (7th Cir. 2007).
III.
For the foregoing reasons, the judgment is AFFIRMED.
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JAMES L. DENNIS, Circuit Judge, concurring in the judgment:
Although I agree with the majority opinion’s conclusion that the district
court’s judgment should be affirmed, I respectfully disagree in part with the
rationale for that conclusion, assign substitute reasons, and concur in the
judgment.
As the majority opinion states, the judgment in Guajardo v. Freddie
Records, Inc., No. H-10-cv-2024, 2015 WL 12791484 (S.D. Tex. Mar. 11, 2015),
was not final at the time of the district court’s order dismissing some of the
appellants for lack of standing. It is undisputed, however, that Guajardo
subsequently became final and appealable well before this appeal. The
appellants, in fact, actually appealed Guajardo before ultimately moving to
dismiss that appeal. Even under the “more rigid approach” that the majority
opinion endorses, then, Guajardo is now a final judgment with preclusive
effect. See United States v. Munsingwear, Inc., 340 U.S. 36, 39–41 (1950)
(holding that the final judgment of a district court retains preclusive effect
after appeal when that appeal is dismissed without vacating the judgment
below). Accordingly, because the issue at stake in the instant appeal is
identical to that in Guajardo, it was actually litigated in that case, and its
determination was a necessary part of Guajardo’s now-final judgment, I would
hold that the appellants are collaterally estopped from asserting standing and
decline to reach the merits of the issue. See RecoverEdge L.P. v. Pentecost, 44
F.3d 1284, 1290 (5th Cir. 1995).
Additionally, though I concur in affirming the district court’s prevailing-
party determination, I disagree with the majority opinion’s conclusion that
state law governs this question. Because appellants apparently dispute the
assessment of prevailing-party status for the appellees’ copyright claims, not
any contract claims, federal law should apply to our review. Cf. Mathis v.
Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002) (“A fee award is governed by the
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same law that serves as the rule of decision for the substantive issues in the
case.”). Further, though the majority opinion correctly states that an award of
fees is generally reviewed for an abuse of discretion, “whether a party is a
prevailing party ‘is a legal question subject to de novo review.’” El Paso Indep.
Sch. Dist. v. Richard R., 591 F.3d 417, 422–23 (5th Cir. 2009) (quoting Bailey
v. Mississippi, 407 F.3d 684, 687 (5th Cir. 2005)). Applying this standard, I
conclude that the district court did not err in according prevailing-party status
to the appellees for substantially the reasons stated by the majority opinion.
24