Thompkins v. Lil' Joe Records, Inc., 05-10143.

• Decision Date: 05 February 2007
• Docket Number: No. 05-10143.,05-10143.
• Citation: 476 F.3d 1294
• Parties: Jeffrey J. THOMPKINS, Plaintiff-Counter-Defendant-Appellant, v. LIL' JOE RECORDS, INC., Lil' Joe Wein Music, Inc., Joseph Weinberger, John Doe, individuals and corporations, Defendants-Counter-Claimant-Appellees, Navarre Corporation, Third-Party Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

476 F.3d 1294

Jeffrey J. THOMPKINS, Plaintiff-Counter-Defendant-Appellant, v. LIL' JOE RECORDS, INC., Lil' Joe Wein Music, Inc., Joseph Weinberger, John Doe, individuals and corporations, Defendants-Counter-Claimant-Appellees, Navarre Corporation, Third-Party Defendant.

No. 05-10143.

United States Court of Appeals, Eleventh Circuit.

February 5, 2007.

David Wm. Boone, Law Offices of David Wm. Boone, P.C., Terry Dale Jackson, Law Office of Terry D. Jackson, Atlanta, GA, for Thompkins.

Maureen G. Pearcy, Ronald L. Kammer, Hinshaw & Culbertson, LLP, Miami, FL, David H. Levitt, Hinshaw & Culbertson, LLP, Chicago, IL, for Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT and KRAVITCH, Circuit Judges, and LAWSON,^* District Judge.

TJOFLAT, Circuit Judge:

This appeal requires us to consider what happens when a debtor-in-possession in a Chapter 11 bankruptcy case, who negotiated the purchase of copyrights prior to the bankruptcy proceeding, later uses the bankruptcy code to reject those contracts that transferred ownership of the copyrights to the debtor. Our resolution of that question determines the outcome of much of this suit by a rap artist who created the works giving rise to the copyrights in question. The artist sold copyrights in his works to a music recording company in exchange for a recording contract that entitled the artist to future royalties. The recording company later went bankrupt, becoming the debtor-in-possession. In confirming the debtor's reorganization plan, the bankruptcy court ordered that all of the debtor's contracts with the artist be rejected under the bankruptcy code and the copyrights sold to a rival recording company and its owner, two of the defendants in the instant case.

Years later, the artist sued the defendants, alleging that they did not actually gain ownership of the copyrights through the bankruptcy, or if they did, they now owe him royalties. Based on that premise, the artist asserts numerous claims sounding in federal and state law. The district court granted summary judgment in favor of the defendants on all claims, and for the reasons set forth below, we affirm.

I.

The pertinent facts span a period of seventeen years. We recount first the history of the artist's business dealings with the debtor-in-possession, then the bankruptcy court's administration of the debtor's reorganization, and finally the proceedings leading to this appeal.

A.

Jeffrey J. Thompkins ("Thompkins") is a rap artist who performs individually under the name "JT Money." As teenagers in the late 1980s, Thompkins and a partner were discovered at a Miami talent show by a member of the somewhat notorious South Florida-based rap group 2 Live Crew. Another member of 2 Live Crew, Luther Campbell ("Campbell"), owned a number of variously named record labels and was in the business of developing new artists. In May 1989, Campbell signed Thompkins to an Exclusive Recording Agreement (the "1989 Agreement" or "Agreement") with a predecessor company to Campbell's Luke Records, Inc. ("Luke Records").¹ Under the 1989 Agreement, Thompkins would record albums under the group name "Poison Clan."²

The Agreement covered a contract period of five years. Under its terms, Thompkins was required to record and deliver master recordings ("masters") for production and release by Luke Records. Luke Records was given "exclusive, unlimited and perpetual rights throughout the world" to the copyrights "in sound recordings (as distinguished from the musical compositions embodied thereon) recorded by ARTIST during the Term." Thompkins also granted Luke Records a license for "[a]ll musical compositions or material recorded pursuant to this Agreement which are written or composed . . . or which are owned or controlled, directly or indirectly, in whole or in part, by ARTIST and/or . . . any producer of the masters subject hereto."³ In exchange for its ownership of the sound recording copyrights and its license to exploit the musical compositions, Luke Records agreed to pay Thompkins royalties according to specified rates. The Agreement obligated Luke Records generally to "commercially release each LP [album] recorded and delivered" by Thompkins under certain conditions, but specified:

[Thompkins] acknowledges that the sale of records is speculative and agrees that the judgment of [Luke Records] with regard to any matter affecting the sale, distribution or exploitation of such records shall be binding and conclusive upon [Thompkins]. Except [for the general provision requiring Luke Records to release completed albums], nothing contained in this Agreement shall obligate [Luke Records] to make, sell, license, or distribute records manufactured from masters delivered hereunder.

In addition to the 1989 Agreement, the validity of which neither party disputes on appeal, the record contains a number of other documents that appear to be contracts between Thompkins and various parties. Several of these suggest that, after the 1989 Agreement was signed, Thompkins in fact signed away to Luke Records all or part of his copyrights in the musical compositions embodied on his albums.⁴ Among these documents is an addendum to the 1989 Agreement, dated February 1992 (the "1992 Addendum" or "Addendum"), transferring to Luke Records "an undivided 50% of the publishing interest, in all compositions of [Thompkins] including without limitation, the copyrights therein and all renewal and or [sic] extensions throughout the world." In exchange, the Addendum recites that Thompkins is to receive, among other things, cash advances for each album and the entire royalty to which Poison Clan was entitled under the 1989 Agreement regardless of any future addition of other members to the group. Thompkins signed the Addendum, which also has an unsigned blank for a signature on behalf of Luke Records "By: Luther R. Campbell, President."

Other documents pertain to Thompkins's work as a "sideman" on certain compositions and recordings created by Campbell, who performed as a solo artist in addition to performing with 2 Live Crew and managing his music production business. These one-paragraph letter agreements ("the Sideman Agreements") set forth Thompkins's compensation for his contributions to certain of Campbell's solo works.⁵ In slightly different language, each of the Sideman Agreements provides that the specified royalty rate and/or lump sum payment represents Thompkins's payment in full for his services on the listed songs and that he "will receive no other royalties" or "no other monies." The Sideman Agreements do not explicitly reference the ownership of any copyrights in those works.

From 1989 through 1994 (the year in which the 1989 Agreement expired by its terms), Thompkins recorded three albums as Poison Clan: 2 Low Life Muthas, Poisonous Mentality, and Rufftown Behavior. Luke Records distributed each of these.

B.

On March 28, 1995, Luke Records became the subject of an involuntary Chapter 7 bankruptcy petition filed by its creditors in the U.S. Bankruptcy Court for the Southern District of Florida. That June, Campbell individually filed a voluntary Chapter 11 bankruptcy petition, and Luke Records moved to convert its Chapter 7 case into one under Chapter 11. The bankruptcy court granted Luke Records' motion on June 14, 1995 and jointly administered the Luke Records and Campbell bankruptcies.⁶

On November 22, 1995, Thompkins filed a proof of claim in the Luke Records bankruptcy for an unspecified amount owed to Poison Clan based on "Services performed" and "Royalties Due—Record & Copywright [sic]" from the period "1989 to 1994." In deposition testimony taken in the course of the instant case, Thompkins admitted that the address he listed on the proof of claim form was his residence at the time and that he did, in fact, receive notices at that address regarding the bankruptcy case.⁷

The bankruptcy cases continued throughout the following months, and by mid-February 1996, Luke Records, Campbell individually, and the Official Unsecured Creditors' Committee in the Luke Records bankruptcy had tentatively agreed upon a Joint Plan of Reorganization (the "Joint Plan" or "Plan") for the two debtors. The Joint Plan provided for the classification and treatment of all claims in both bankruptcies, specifying that after confirmation by the bankruptcy court, "all of the provisions of this Plan, including all appendices and other exhibits hereto, shall be binding on the Debtor, the Estate, all Creditors, and all other entities who are affected (or whose interests are affected) in any manner by the Plan." A Letter of Intent annexed as "Exhibit A" to the Joint Plan specified the proposed terms of the Plan's execution.

Under the Letter of Intent, the various Luke Records entities (including Luke Records, Inc., Pac Jam, and Campbell individually) proposed to convey a number of specified assets to Lil' Joe Records, Inc. and its owner, Joseph Weinberger ("Weinberger"). The assets were to be transferred "free and clear of any and all liens, claims, encumbrances, charges, setoffs or recoupments of any kind, except as noted hereinbelow." The assets to be conveyed included "[a]ll worldwide rights to the masters . . . owned or controlled by Luther Campbell or Luke Records" and "[a]ll worldwide copyrights and/or publishing interests held by Luther Campbell, Luke Records, Inc., or Pac Jam Publishing," except with regard to certain other artists not at issue here. Under the agreement, Campbell and Pac Jam would "receive no royalties, whether as artist, producer, writer, publisher, or in any other capacity, on any of the masters or compositions being sold." In exchange, Lil' Joe Records, Inc. and Weinberger agreed to pay a total of $800,000 to the two bankruptcy estates.

The Joint Plan and Letter of Intent also provided for the disposition of executory contracts to which Campbell or Luke Records were parties. The...