Del Madera Properties v. Rhodes and Gardner, Inc.

• Decision Date: 23 June 1987
• Docket Number: Nos. 85-2581,85-2687,s. 85-2581
• Citation: 820 F.2d 973
• Parties: 1987 Copr.L.Dec. P 26,105, 3 U.S.P.Q.2d 1283 DEL MADERA PROPERTIES, a Joint Venture, Leonard Cahn, an individual, and John Rupp, an individual, Plaintiffs-Appellants/Cross-Appellees, v. RHODES AND GARDNER, INC., a California corporation; Dean A. Rhodes, an individual; the Bank of the Orient, a corporation; TBA Corporation, a California corporation; Balfour Financial Corporation, a California corporation; and Tiburon Peaks, a Limited Partnership, Defendants-Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 973

820 F.2d 973

1987 Copr.L.Dec. P 26,105, 3 U.S.P.Q.2d 1283

DEL MADERA PROPERTIES, a Joint Venture, Leonard Cahn, an individual, and John Rupp, an individual Plaintiffs-Appellants/Cross-Appellees, v. RHODES AND GARDNER, INC., a California corporation; Dean A Rhodes, an individual; the Bank of the Orient, a corporation; TBA Corporation, a California corporation Balfour Financial Corporation, a California corporation and Tiburon Peaks, a Limited Partnership, Defendants-Appellees/Cross-Appellants.

Nos. 85-2581, 85-2687.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 11, 1987.

Order and Opinion June 23, 1987.

William C. Milks, III, San Francisco, Cal., for plaintiffs-appellants/cross-appellees.

Aaron M. Peck, Los Angeles, Cal., Martin Kresse, Robert Yorio, David B. Leichenger, Lora J. Thielbar, San Francisco, Cal., for defendants-appellees/cross-appellants.

Appeal from the United States District Court for the Northern District of California.

Before SCHROEDER, WIGGINS and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge:

Del Madera Properties, a joint venture, and its members, Leonard Cahn and John Rupp (Del Madera), brought this action for copyright infringement, unfair competition, and unjust enrichment against Rhodes and Gardner, Inc., Dean A. Rhodes, The Bank of the Orient, TBA Corporation, Balfour Financial Corporation, and Tiburon Peaks (defendants). Del Madera alleges that the defendants misappropriated its time and effort and used a copyrighted Tentative Map, prepared at Del Madera's expense, to develop land previously owned by Del Madera Properties. After three days of trial, but before Del Madera rested its case, the district court dismissed Del Madera's claims for unfair competition and unjust enrichment. The jury returned a special verdict on the copyright claim. It found that although Del Madera had obtained a valid copyright in the Tentative Map, the defendants had not infringed that copyright. 637 F.Supp. 262.

Del Madera appeals from the order dismissing its unfair competition and unjust enrichment claims. It also contends the district court's jury instructions were erroneous, and appeals that portion of the judgment determining that the defendants had not infringed its copyright. The defendants cross-appeal from the portion of the judgment determining that Del Madera's copyright is valid. The defendants contend they should be awarded attorney fees, both for the trial and on appeal. We have jurisdiction under 28 U.S.C. Sec. 1291, and we affirm.

FACTS

In 1979, plaintiff Leonard Cahn acquired property in Tiburon, California for development as a subdivision. Notes secured by deeds of trust on the property were executed by Cahn on behalf of plaintiff Del Madera Properties, a joint venture. Del Madera began to develop the property. Defendant Rhodes and Gardner, Inc., an engineering firm, and Bachen, Arrigoni and Ross, an architectural firm, were hired to prepare plans and maps. McCart Associates was hired as a planning consultant. A master plan was prepared at Del Madera's request and at its expense. The plan reflected the proposed placement of lots, roads and open spaces. It was submitted to the Town of Tiburon in April 1980, and approved in April 1981. A Tentative Map, based on the approved master plan, was approved by the Town of Tiburon in August 1981.

Del Madera Properties defaulted on the notes secured by deeds of trust on the property and filed a Chapter 11 bankruptcy proceeding. In 1983 the Bank of the Orient and Balfour Financial Corporation, holders of one of the notes, completed foreclosure and became the owners of the property. The Bank and Balfour then hired the same consultants who had previously provided services to Del Madera, and developed the property according to the Tentative Map.

About a month after the Bank and Balfour completed their foreclosure, in June 1983, Del Madera Properties registered a claim of copyright to the Tentative Map. The registration listed Cahn as the author of the work. In April 1984, E. Bruce Ross, of Bachen, Arrigoni and Ross, the original general architect for the project, registered a copyright in the Tentative Map and assigned his copyright rights to Del Madera Properties. Del Madera claims the defendants infringed its copyright by using the Tentative Map to develop the property. Del Madera also claims that the defendants misappropriated the time and effort Del Madera expended to create the Tentative Map, that the defendants benefited from Del Madera's effort in obtaining approval of the subdivision, and that defendants have been unjustly enriched.

DISCUSSION

A. Summary Dismissal of Claims for Unfair Competition and Unjust Enrichment

1. Standard of Review

The defendants' motion to dismiss the unfair competition and unjust enrichment claims was originally framed as a Rule 12(b)(6) motion to dismiss for failure to state a claim. After three days of trial, the district court denied this motion. Because it appears the district court considered matters outside the pleadings in ruling on the motion, the motion is treated as a motion for summary judgment under Rule 56. A grant of summary judgment is reviewed de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986). In reviewing a summary judgment, we must view the evidence in the light most favorable to the non-moving party (Del Madera) and draw all possible inferences in its favor. Id.

The district court's interpretation of state law is reviewed de novo. In re McLinn, 739 F.2d 1395, 1397 (9th Cir.1984) (en banc).

2. Preemption

Del Madera argues that its federal copyright claim did not preempt its state law claims for unfair competition and unjust enrichment, and that the district court erred in dismissing these claims on this ground.

Section 301 of the Copyright Act ¹ establishes a two-part test for preemption. First, the Tentative Map and all work supporting it "must come within the 'subject matter of copyright' as defined in Sections 102 and 103 of the Copyright Act. Second, the rights granted under state law must be 'equivalent to any of the exclusive rights within the general scope of copyright as specified by Section 106 [of the Copyright Act].' " Harper & Row, Publishers, Inc. v. Nation Enterprises, 501 F.Supp. 848, 850 (S.D.N.Y.1980), aff'd, 723 F.2d 195 (2d Cir.1983), rev'd on other grounds, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).

a. Subject Matter of Copyright

Del Madera claims that the defendants misappropriated (1) the Tentative Map itself, (2) supporting documents, and (3) time and effort Del Madera spent in creating the map and supporting documents and in seeking approval of the subdivision. The Tentative Map itself falls within the category of pictorial, graphic, and sculptural works. ² See United States v. Hamilton, 583 F.2d 448 (9th Cir.1978) (maps fall within the subject matter of copyright). Supporting documents such as the vegetation plan and the covenants, conditions and restrictions are copyrightable subject matter under section 102 (maps and literary works). ³

Effort expended to create the Tentative Map and supporting documents is effort expended to create tangible works of authorship. As such, this effort is within the scope of copyright protection. See Mayer v. Josiah Wedgwood & Sons, Ltd. 601 F.Supp. 1523, 1535 (S.D.N.Y.1985) (misappropriation of author's talent and effort in creating a work "is precisely the type of misconduct the copyright laws are designed to guard against"). Effort expended to obtain subdivision approval, however, is not effort expended to create a tangible work of authorship. As such, it is not copyrightable subject matter, and it is not subject to preemption under the Copyright Act. ⁴

b. Equivalent Rights

To satisfy the "equivalent rights" part of the preemption test, Del Madera's unfair competition and unjust enrichment claims which are predicated upon the defendants' alleged misappropriation of the Tentative Map and supporting documents must be equivalent to rights within the general scope of copyright as specified by section 106 of the Copyright Act. Section 106 provides a copyright owner with the exclusive rights of reproduction, preparation of derivative works, distribution, and display. 17 U.S.C. Sec. 106. To survive preemption, the state cause of action must protect rights which are qualitatively different from the copyright rights. Harper & Row, 501 F.Supp. at 852. The state claim must have an "extra element" which changes the nature of the action. Mayer, 601 F.Supp. at 1535.

(1) Unfair Competition

Del Madera's unfair competition claim, as it pertains to the alleged misappropriation of time and effort in creating the Tentative Map and supporting documents, is based upon an alleged breach of fiduciary duty by Martha McCart. Originally, the Del Madera joint venture consisted of Cahn, Rupp, and McCart Associates (Jim Lombard and Martha McCart). McCart Associates later withdrew from the Del Madera joint venture. Martha McCart was then hired by defendant Bank of the Orient to provide services in the development of the Tiburon property. Del Madera argues that when McCart provided services to the defendants which enabled them to develop the property using documents and information she acquired while a joint venturer in the Del Madera joint venture, she breached her fiduciary duty to Del Madera, a breach which the defendants allegedly induced.

This argument, however, does not add any "extra element" which changes the nature of the action. The argument is constructed upon the premise that the documents and information McCart furnished to the defendants belonged to Del Madera and were misappropriated by the defendants. Del Madera's ownership of this material, and the alleged misappropriation by the defendants, are part and parcel of the copyright claim. Thus, Del Madera's unfair competition claim for misappropriation of its time and effort expended in producing the...