Christ Ctr. of Divine Philosophy v. Elam (In re Elam)

• Decision Date: 02 March 2022
• Docket Number: 21-10065-JDL,Adv. 21-1044-JDL
• Court: U.S. Bankruptcy Court — Western District of Oklahoma
• Parties: In re: Ellen V. Elam, Debtor. Christ Center of Divine Philosophy, Inc., Plaintiff, v. Ellen V. Elam Defendant

In re: Ellen V. Elam, Debtor.

Christ Center of Divine Philosophy, Inc., Plaintiff, v. Ellen V. Elam Defendant

No. 21-10065-JDL

Adv. No. 21-1044-JDL

United States Bankruptcy Court, W.D. Oklahoma

March 2, 2022

Ch. 7

OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT

Janice D. Loyd U.S. Bankruptcy Judge

I. Introduction

This is an action seeking a determination that a federal court judgment for copyright infringement which Plaintiff obtained against the above referenced Defendant and Debtor ("Elam") is a non-dischargeable debt. Plaintiff has moved for summary judgment asserting pursuant to the principles of collateral estoppel, that the factual issues determined in the Federal District Court are sufficient to fully adjudicate the non-dischargeability of the District Court judgment as a debt for "willful and malicious injury to personal property" under 11 U.S.C § 523(a)(6).^[1] Thus, Plaintiff asserts that there are no material facts in dispute and that it is entitled to judgment as a matter of law pursuant to Fed.R.Bankr.P. 7056(b).^[2]

In opposing summary judgment, Elam argues that the judgment against her was rendered by default, the issues were never litigated and that she "requests that the Bankruptcy Court give her an opportunity to show the Court that she did not willfully infringe" on Plaintiff's rights.

Before the Court for consideration are: Christ Center of Divine Philosophy, Inc.'s Motion for Summary Judgment [Adv. Doc. 18];^[3] Debtor's Response to Plaintiff's Motion For Summary Judgment [Adv. Doc. 19]; and Christ Center of Divine Philosophy, Inc.'s Reply in Support of Motion for Summary Judgment [Adv. Doc. 20]. This Opinion and Order constitutes the Findings of Fact and Conclusions of Law as required by Rule 7052.

II. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b) and 157(a) and the Order of Reference of the United States District Court for the Western District of Oklahoma as Local Rule LCvR 81.4(a). This matter seeking a determination of an objection to discharge is a core proceeding under 28 U.S.C. § 157(b)(2)(J) over which this Court has authority to enter a final judgment. Venue is proper pursuant to 28 U.S.C. § 1409(a). Furthermore, in accordance with Rules 7008 and 7012(b), Plaintiff in its Complaint and Defendant/Debtor in her Amended Answer have consented to the entry of final orders or judgment by this Bankruptcy Court.

III. Facts^[4]

1. On January 28, 2016, Plaintiff commenced a civil action against Elam for copyright infringement under the Copyright Act, 17 U.S.C. § 101 et seq., captioned "Christ Center of Divine Philosophy, Inc., an Oklahoma Corporation, Plaintiff v. Ellen Veronica Elam, Defendant," Case No. CIV-16-65-D, in the United States District Court for the Western District of Oklahoma (the "District Court") (the "District Court Action").^[5] In its sixty- five (65) Count Complaint, Plaintiff alleged that Elam had infringed upon the Plaintiff's rights in federally registered copyrighted books and sound recordings. [Adv. Doc. 18-1]. Plaintiff alleged that it owned by assignment thirty-one (31) copyrighted books or sound recordings, and that Elam published and sold three books containing its copyrighted material. Id. Plaintiff sought injunctive relief, actual damages, statutory damages and attorneys fees and costs all pursuant to the Copyright Act, 17 U.S.C. §§ 504 and 505.

2.In the District Court Action, on August 25, 2016, Elam was served with Summons and a copy of the Complaint. [District Court Action Doc. 6]. The time within which Elam was required to answer or otherwise respond to the Complaint expired on September 15, 2016. Elam failed to file an answer or otherwise respond as required.

3.On October 3, 2016, the Plaintiff moved for the entry of default by the Clerk pursuant to Rule 55 of the Federal Rules of Civil Procedure. [District Court Action Doc. 8]. The Clerk entered default against Elam on October 7, 2016. [District Court Action Doc. 9].

4.On November 22, 2016, Plaintiff filed its Motion for Default Judgment. [District Court Action Doc. 10]. On November 30, 2016, Plaintiff gave Elam Notice of the filing of its Motion for Default Judgment. [District Court Action Doc. 11].

5.On February 10, 2017, the District Court entered its thirteen (13) page Order granting the Plaintiff's Motion for Default Judgment. [District Court Action Doc. 13]. In its Order, the Court found as follows:

The Court accepts as true Plaintiff's allegations that it owns the legal copyright to each of the publications in question. Plaintiff has provided copyright registrations of the subject material accompanied by copies of the Defendant's infringing works. See id. at Exs. 1-7. The Court, thus, concludes that Defendant is liable for these instances of copyright infringement. In making this determination, the Court also concludes that Defendant infringed these copyrights willfully. Defendant's default and her decision not to defend against these allegations are grounds for concluding that her actions were willful. See, e.g., Arista Records, Inc. v. Beker Enterprises, Inc., 298 F.Supp.2d 1310, 1313 (S.D. Fla. 2003) ("[T]his Court may infer that Defendants willfully infringed Plaintiffs' copyrights because of Defendants' default.") (collecting cases); Malletier v. Artex Creative Int'l Corp., 687 F.Supp.2d 347, 354 (S.D. N.Y. 2010) (inferring willfulness from defendants' default in trademark infringement action).

Accordingly, it is evident from the limited record before the Court that entry of default judgment against Defendant is appropriate. First, the evidence suggests that Plaintiff has suffered quantifiable harm, and that it will continue to do so absent the entry of default judgment. Plaintiff would also be denied the right to judicial resolution of the claims presented, and would be without other recourse for recovery absent the entry of default judgment. There is nothing in the record to suggest that Defendant has a triable defense as to liability; specifically, there is no evidence of a legitimate contractual dispute between the parties. Likewise, there is nothing in the record to suggest that the property at issue was unprotected by the copyright laws. ***

(Emphasis added.).

6.On February 10, 2017, Pursuant to the Clerk's entry of default and the Court's Order granting Plaintiff's Motion for Default Judgment, the District Court entered a Default Judgment for Plaintiff against Elam for statutory damages in the amount of $80, 000. [District Court Action Doc. 14].

7.On February 13, 2017, Elam, pro se, filed her Motion to Vacate and Dismiss Complaints asserting that the Default Judgment against her should be set aside and the case dismissed for "(1) fraud on the court, (2) false statement in summons; (3) inexcusable negligence of entry #7 and (4) statute of limitations passed by 10 months." [District Court Action Doc. 15]. On March 7, 2017, Elam filed a Clarification of Motion to Vacate and Dismiss Complaints in which she asserted that there had been an improper service of process and that she had a meritorious defense. [District Court Action Doc. 17]. On March 24, 2017, Elam filed her Supplement to Motion to Vacate and Dismiss Complaints again asserting improper service of process and asserting that the misspelling of her name and/or the case number "caused the Defendant to delay any future response believing the case was definitely illegal, so therefore, defendant was convinced that she was not liable for any judgment." [District Court Action Doc. 20]. On April 7, 2017, Elam filed A Letter to the Court with Additional Evidence in Regards to Improper Delivery of Summons. [District Court Action Doc. 21].

8.On May 1, 2017, the District Court entered an Order denying Defendant's Motion to Vacate and Dismiss Complaints (and associated motions) finding that Elam's arguments "lack[ed] merit" because "she has not satisfied the threshold inquiry of showing her culpable conduct did not cause the default." [District Court Action Doc. 23]. The Court further found:

Lastly, in conclusory fashion, Defendant states the copyrights at issue are invalid and Plaintiffs' claims are barred by the statute limitations. As with her other arguments, Defendant has presented no persuasive evidence in support of these contentions, and the Court finds they do not affect the validity of the default judgment obtained herein.

9.On May 15, 2017, Plaintiff filed its Motion for Attorney Fees and Costs seeking fees of $35, 351.75 and costs in the amount of $911.91 pursuant to the Copyright Act, 17 U.S.C. § 505. [District Court Action Doc. 24]. Elam did not respond to the Plaintiff's Motion for Attorneys Fees and Costs. On September 21, 2017, the Court entered its Order granting in part and denying in part the Plaintiff's motion, awarding attorney's fees in the amount of $30, 476.25 and denying the Plaintiff's request for reimbursement of costs. [District Court Action Doc. 31]. In its Order, the Court stated as follows:

Thus, based on the Court's findings in the record, Defendant deliberately and knowingly infringed upon Plaintiff's copyrights; subsequent to such infringement, Defendant forced Plaintiff to retain lawyers and to resort to the courts to enforce its proprietary interest in the copyrights. Defendant has come forward with no justification for her actions, and has no colorable grounds for defense. Accordingly, applying the foregoing factors governing attorney's fees awards, the court finds an award of fees is appropriate. (Citations omitted).

10. On July 7, 2017, Plaintiff filed two motions: a Motion for Order to Modify Injunction Based on Defendant's Willful Violation of Court's Injunction and Continuing Infringements of Plaintiff's Copyrights [District Court...