America's Shrine to Music v. Johnson

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 17-2399
___________________________
National Music Museum: America’s Shrine to Music
lllllllllllllllllllllPlaintiff - Appellee
v.
Robert Johnson
lllllllllllllllllllllDefendant
Larry Moss
lllllllllllllllllllllDefendant - Appellant
____________
Appeal from United States District Court
for the District of South Dakota - Sioux Falls
____________
Submitted: June 14, 2018
Filed: September 14, 2018
____________
Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.
____________
WOLLMAN, Circuit Judge.
The subject matter of this lawsuit is a Martin D-35 guitar that Elvis Presley
played during his final tour in 1977. He dropped the guitar during a show in St.
Petersburg, Florida, and gave the damaged guitar to an audience member. Robert
Johnson, a blues guitarist and memorabilia broker, purchased the guitar in 2007. He
delivered the Martin D-35 guitar to the National Music Museum: America’s Shrine
to Music (the Museum) in Vermillion, South Dakota, in February 2013, pursuant to
a sales-donation agreement between Johnson and the Museum. Several months later,
Larry Moss contacted the Museum, claiming that he had purchased the Martin D-35
guitar from Johnson in 2008 and thus was its rightful owner.
The Museum filed suit against Johnson and Moss in South Dakota state court,
seeking a declaration that the Museum was the legal owner of the Martin D-35 guitar.
Moss removed the case to federal district court,1 which ruled in favor of the Museum.
Johnson did not answer the complaint or otherwise appear in court. On appeal, Moss
argues that because a Tennessee state court judgment declared Moss the owner of the
guitar, the doctrines of res judicata or collateral estoppel barred the Museum from
litigating the issue of ownership. He also contends that the district court erred in
entering judgment in favor of the Museum. We affirm.
I. Background
Moss began collecting celebrity autographs in 1973 and later began collecting
memorabilia. He described his collecting as “a hobby and a passion . . . not a
business.” Moss met Johnson in the early 1980s, when their shared interest in music
and memorabilia led to a friendship and a buyer-broker relationship. Moss estimated
that he purchased between fifteen and twenty items through Johnson.
During the summer of 2007, Johnson told Moss that three guitars associated
with Elvis—including the Martin D-35 guitar—might be available for $95,000. Moss
1
The Honorable Karen E. Schreier, United States District Judge for the District
of South Dakota.
-2-
expressed interest in purchasing the guitars, and Johnson began negotiating the terms
of a sale with the third-party owner. Johnson called Moss during the negotiations,
telling Moss that he was trying to negotiate a lower purchase price but that “[i]n the
meantime, you need to wire me the money.” Moss did not send money to Johnson,
however, because Johnson never told him where or how to send the money. As Moss
explained, “I never gave him the money. He never gave me any guitars. There was
no deal.”
In August 2007, Moss came across a news article featuring Johnson and the
three Elvis-associated guitars, which Johnson apparently had acquired. Although
Johnson had told Moss that the deal failed because Moss had not wired money, Moss
was not surprised that Johnson somehow had the guitars in his possession, saying,
“Whether the deal had gone south and he fixed it, . . . or whether he had done
something else to get them at some point in time, I didn’t know the details. It didn’t
make much difference.” Moss later accused Johnson of lying about the original deal.
Despite their disagreements, Moss and Johnson remained friends and Moss
remained interested in purchasing the Martin D-35 guitar. On February 12, 2008,
Johnson met with Moss to discuss a new deal. Johnson offered to sell Moss four
guitars: the Martin D-35 guitar, two additional guitars associated with Elvis, and a
guitar that Sonny Burgess, a guitarist and singer of some renown, had owned.
Johnson told Moss that the Martin D-35 guitar was being displayed at the Rock ‘n’
Soul Museum in Memphis, Tennessee, where it was on loan until January 2009.
Johnson and Moss ultimately agreed that Moss would pay Johnson $120,000
for the four guitars. The contract provided that Moss would pay Johnson $70,000 and
take immediate possession of two guitars. It further stated that Moss would pay
Johnson the remaining $50,000 upon delivery of the Martin D-35 guitar and the
Sonny Burgess guitar. Johnson promised to deliver those guitars by April 12, 2009.
-3-
Johnson took the Martin D-35 guitar from the Rock ‘n’ Soul Museum in late
2008. Moss saw that the guitar was no longer on display when he visited the museum
in early 2009. When Johnson did not deliver the guitar to Moss by April 12, 2009,
Moss did not ask Johnson to deliver the guitar, he did not initiate a lawsuit to enforce
the contract, and he did not tender the $50,000 that was due upon delivery of the
Martin D-35 and the Sonny Burgess guitars.
A few months later, Moss noticed that the Martin D-35 guitar was being
auctioned online. He contacted the auction house, which did not respond to his
request that it be removed from auction. The guitar did not sell, and Moss did not
respond to Johnson’s December 2009 and June 2010 emails about the Martin D-35
guitar.
In July 2010, Johnson proposed that he and Moss enter into a partnership on
the Martin D-35 guitar and two other guitars. Moss replied, “No thanks!” Days later,
Johnson notified Moss that the Martin D-35 was being used as collateral and would
be available to Moss only if Moss made a cash offer. Moss replied, “I’m screwed on
the $70,000 that I paid you towards this whole Elvis guitar deal to begin with . . . .”
Johnson quickly responded with the message, “PLEASE DO NOT CONTACT ME
AGAIN.”
In November 2010, Johnson contacted the Museum to discuss a possible
donation of the Martin D-35 guitar to the Museum. The parties entered into a sales-
donation agreement on February 6, 2013. Under the terms of the agreement, the
Museum paid Johnson $250,000 for a Gibson Korina Explorer guitar that had been
owned by John Entwistle of the musical group The Who. Johnson agreed to donate
to the Museum certain memorabilia, including the Martin D-35 guitar. Johnson
delivered the guitar to the Museum on or before February 6, 2013. Moss emailed the
Museum in December 2013, claiming that he owned the Martin D-35 guitar.
-4-
Moss and Johnson’s relationship deteriorated. In January 2014, Johnson filed
suit against Moss in the Chancery Court of Shelby County, Tennessee, alleging
claims of libel and defamation. In his February 13, 2014, counterclaim, Moss sought
specific performance under the February 12, 2008, contract, alleging that “Johnson
never made delivery” of the Martin D-35 guitar, that Moss was “ready, willing, and
able to consummate the purchase of the remaining collectible guitars,” and that
specific performance was required because the Martin D-35 and the Sonny Burgess
guitars were “one-of-a-kind collectible guitars.” In January 2015, the Tennessee
court ruled in favor of Moss, concluding that he was entitled to specific performance
on his contract with Johnson. The court declared that Moss held “legal and equitable
title to the Martin D-35 guitar . . . relating back to the date of contracting, February
12, 2008.”
The Museum was not a party to the Tennessee litigation, and the South Dakota
federal district court ruled that the Tennessee judgment did not preclude the
Museum’s declaratory judgment action. Following a bench trial, the court found that
“Moss never acquired title to the Martin D-35” and that the Museum “is the owner
of the Martin D-35.” D. Ct. Order of Jan. 23, 2017, at 11.
II. Discussion
Moss argues that the federal district court should have given preclusive effect
to the Tennessee state court’s judgment. Had the federal district court done so, it
would have been bound by the determination that Moss—not the Museum—was the
rightful owner of the Martin D-35 guitar, and it would have concluded that Johnson
did not own the guitar when he purportedly donated it to the Museum.
“Under the Full Faith and Credit Act, 28 U.S.C. § 1738, federal courts must
‘give the same preclusive effect to state court judgments that those judgments would
be given in the courts of the State from which the judgments emerged.’” Edwards v.
-5-
City of Jonesboro, 645 F.3d 1014, 1019 (8th Cir. 2011) (quoting Kremer v. Chem.
Constr. Corp., 456 U.S. 461, 466 (1982)). We review de novo the district court’s
application of Tennessee preclusion law. Id. (standard of review); see Wong v. Minn.
Dep’t of Human Servs., 820 F.3d 922, 933 (8th Cir. 2016) (reviewing de novo the
question whether res judicata or collateral estoppel applies).
Under Tennessee law, res judicata bars parties and their privies from litigating
“the same cause of action with respect to all issues which were or could have been
litigated in the former suit.” Hooker v. Haslam, 393 S.W.3d 156, 165 n.6 (Tenn.
2012) (emphasis omitted) (quoting Young v. Barrow, 130 S.W.3d 59, 64 (Tenn. Ct.
App. 2003)). Collateral estoppel “bars the same parties or their privies from
relitigating in a later proceeding legal or factual issues that were actually raised and
necessarily determined in an earlier proceeding.” Mullins v. State, 294 S.W.3d 529,
534 (Tenn. 2009). It is undisputed that the Museum was not a party to the Tennessee
action.2 Accordingly, for the Museum to be barred from litigating the question of
ownership of the Martin D-35 guitar, it must have been in privity with Johnson.
Ordinarily, to be in privity with a party to a lawsuit and thus be bound by a
judgment against that party, “a person . . . must acquire his interest in the transaction
after commencement of the action or rendition of the judgment.” Indus. Credit Co.
v. Berg, 388 F.2d 835, 841 (8th Cir. 1968). If the person’s interest attached before
litigation commenced, “he is not, absent other circumstances establishing a privity
relationship, regarded as in privity with his assignor so as to be affected by a
judgment against the latter with respect to that judgment.” Id. By the time the
Tennessee litigation commenced in 2014, Johnson had already delivered the Martin
2
To the extent Moss argues that the Museum was required to intervene as a
party in the Tennessee litigation, we disagree. See Black Clawson Co. v. Kroenert
Corp., 245 F.3d 759, 764 (8th Cir. 2001) (explaining that a party against whom res
judicata is asserted is not “required to intervene voluntarily in a separate pending suit
merely because it is permissible to do so”).
-6-
D-35 guitar to the Museum pursuant to the sales-donation agreement. Johnson and
the Museum thus were not in privity when the Tennessee state court issued its
judgment against Johnson. We conclude that the Museum is not bound by the
Tennessee judgment and that the federal district court properly reached the merits of
the present case.
In so concluding, we find inapposite Moss’s argument that the Tennessee
judgment was retroactive and vested title in Moss as of February 12, 2008. The
Tennessee judgment against Johnson does not establish privity between Johnson and
the Museum. To hold otherwise would merely enforce the Tennessee judgment
against the Museum, without any inquiry into whether the Museum and Johnson were
in privity when the Tennessee court ruled against Johnson. See Postal Tel. Cable Co.
v. City of Newport, 247 U.S. 464, 475 (1918) (“[N]othing which the grantor can do
or suffer after he has parted with the title can affect rights previously vested in the
grantee, for there is no longer privity between them.”).
Turning to the merits of the federal lawsuit, Moss argues that title to the Martin
D-35 guitar passed to him when he entered into the contract with Johnson on
February 12, 2008. Moss claims that constructive delivery of the guitar was sufficient
to pass title because the guitar was on display at the Rock ‘n’ Soul Museum and Moss
assured Johnson that he would allow it to remain there.
Under Tennessee law, “[u]nless otherwise explicitly agreed title passes to the
buyer at the time and place at which the seller completes performance with reference
to the physical delivery of the goods.” Tenn. Code Ann. § 47-2-401(2). “[W]here
delivery is to be made without moving the goods,” however, title passes at the time
of contracting “[i]f the goods [have been] identified and no documents of title are to
be delivered.” Id. § 47-2-401(3)(B).
-7-
The February 12, 2008, contract between Moss and Johnson provided that
Moss would pay $50,000 “upon delivery” of the Martin D-35 and the Sonny Burgess
guitars. The contract further stated that “Johnson guarantees that he will deliver to
Moss both items . . . on or before April 12, 2009; and Moss guarantees that he will
pay the balance of $50,000 when that delivery occurs.” Even assuming that Moss
verbally agreed to the Martin D-35 guitar’s continued display at the Rock ‘n’ Soul
Museum, the contract itself required physical delivery of the guitar. Nothing in the
contract indicated that delivery was to be made without physically moving the guitar.
Because Johnson never delivered the Martin D-35 guitar to Moss, Moss never
acquired title to it. Accordingly, we uphold the district court’s determination that
Johnson had title to the Martin D-35 guitar when he transferred the guitar to the
Museum and that the Museum owns the Martin D-35 guitar.
The judgment is affirmed.
_____________________
-8-