Don Murphy, Lorraine Dille Williams, Robert Nichols Flint Dille, & Team Angry Filmworks, Inc. v. Bernstein (In re Dille Family Trust)
| Decision Date | 20 February 2019 |
| Docket Number | Bankr No. 17-24771-JAD |
| Citation | 598 B.R. 179 |
| Parties | IN RE: DILLE FAMILY TRUST, Debtor. Don Murphy, Lorraine Dille Williams, Robert Nichols Flint Dille, and Team Angry Filmworks, Inc., Movants, v. Robert S. Bernstein, Chapter 11 Trustee, Louise A. Geer, Esquire, Nowlan Family Trust, and Dille Family Trust, Respondents. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Donald R. Calaiaro, Michael Kaminski, Calaiaro Valencik, Pittsburgh, PA, for Debtor.
Robert S. Bernstein, Bernstein-Burkley, P.C., Pittsburgh, PA, pro se.
Nicholas D. Krawec, Mark A. Lindsay, Bernstein-Burkley, P.C., Pittsburgh, PA, for Trustee.
The matter before the Court is an Expedited Joint Motion to Dismiss the Chapter 11 Case for Cause (the "Motion to Dismiss") filed by Don Murphy, Lorraine Dille Williams, Robert Nichols Flint Dille, and Team Angry Filmworks, Inc.
Pursuant to the Motion to Dismiss, the movants make a number of contentions including the claim that the Dille Family Trust is not a "business trust" and is therefore ineligible to be a debtor in bankruptcy pursuant to 11 U.S.C. § 109(d).
Objections have been lodged against the Motion to Dismiss by: Robert S. Bernstein in his capacity as Chapter 11 Trustee, Louise A. Geer (who is the non-bankruptcy trustee of the Dille Family Trust), the putative debtor Dille Family Trust, and the Nowlan Family Trust. These parties contend that the debtor is a "business trust" and, as such, the debtor is eligible for relief.
The Motion to Dismiss is a core proceeding over which this Court has the requisite subject matter jurisdiction and authority to enter a final judgment. See 28 U.S.C. §§ 157(a), 157(b)(1), 157(b)(2)(A), 157(b)(2)(O), and 1334(b). For the reasons that are set forth below, the Court concludes that the Dille Family Trust is not a "business trust" and that this bankruptcy case must be dismissed.
This case is a saga. After much litigation before the United States Patent & Trademark Office's Trademark Trial and Appeal Board, the United States District Court for the Central District of California, the United States District Court for the Eastern District of Pennsylvania, and the United States District Court for the Western District of Pennsylvania, the legal controversies concerning the Dille Family Trust found itself on this Court's docket when the Dille Family Trust filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code on November 28, 2017.
Since the Dille Family Trust was in the throes of litigation when it sought bankruptcy protection, its adversaries went on the offensive in this bankruptcy case and sought either relief from the automatic stay to complete the non-bankruptcy litigation that was consuming the debtor, and/or dismissal of this bankruptcy case alleging a myriad of "cause" including allegations to the effect that: (1) the Dille Family Trust is an ordinary trust and not a "business trust" thereby rendering it ineligible for bankruptcy relief, and (2) this bankruptcy case was not filed in "good faith" since it was allegedly filed as a litigation tactic to forestall ongoing litigation.1
By way of background, the Dille Family Trust purports or alleges that it owns copyrights, trademarks and other intellectual property rights relative to the fictional comic character known as the 25th century space explorer "Buck Rogers" (also known as "Anthony Rogers").
The intellectual property rights claimed by the Dille Family Trust include the rights relating to a novella entitled Armageddon 2419 A.D. , where the character "Anthony Rogers" first appeared. This novella was allegedly written by Phillip Francis Nowlan in 1928 or 1929 while he was under contract with either John F. Dille or his companies (John F. Dille Co., National News Service and/or National News Syndicate).2 Alternatively, it has been contended in pleadings that the character "Anthony Rogers" or "Buck Rogers" was created by Dille and not by Nowlan.
These circumstances led to a dispute between Nowlan and Dille as to rights to the intellectual property. However, it appears that in 1942, Mr. Nowlan's estate released and assigned such rights and interests in the "Buck Rogers" and "Buck Rogers in the 25th Century" intellectual property to Dille. Thereafter, and through the years that followed, these intellectual property rights were transferred between members of the Dille family (including Robert C. Dille, who is the son of John F. Dille) or to companies owned by them.
On August 16, 1979, the Dille Family Trust was created. On that same date, it has been alleged that "Buck Rogers" and related trademark rights were conveyed to the Dille Family Trust. Approximately a year later copyrights were also alleged to have been assigned to the Dille Family Trust. Other assignments to the Dille Family Trust have also occurred, but the record in that regard is not fully developed. Inasmuch as this description is for background purposes, the specifics of various intellectual property assignments are not outcome determinative to the instant matter before this Court.
For reasons that are unknown to the Court, certain registrations of the "Buck Rogers" trademark were cancelled in 2011. Notwithstanding the cancellation, the Dille Family Trust contended that it continued to use the trademarks in commerce. In fact, the Dille Family Trust contended that in 2009 it had filed applications with the United States Patent & Trademark Office relative to certain marks and classes of use.
In January of 2008, the Nowlan Family Trust filed an application with the United States Patent & Trademark Office seeking registration of the "Buck Rogers" mark based upon an intent to use. The Dille Family Trust opposed the application, and in 2015 the opposition was overruled by the Trademark Trial & Appeal Board because the Dille Family Trust could not "demonstrate its proprietary interest in the asserted mark." See Dille Family Tr. v. Nowlan Family Tr., 2015 WL 6121770 at *8 (T.T.A.B., September 25, 2015). The Dille Family Trust then filed suit against the Nowlan Family Trust in the Eastern District of Pennsylvania seeking to overturn the decision of the Trademark Trial & Appeal Board.
While this matter was making its way through the federal court system, Team Angry Filmworks, Inc. filed suit against the Dille Family Trust and its trustee, Louise A. Geer, in the United States District Court for the Central District of California.3
Team Angry Filmworks is a film production company owned by Don Murphy. According to the lawsuit filed by Team Angry Filmworks against Dille Family Trust and Ms. Geer, Mr. Don Murphy is a See Team Angry Filmworks, Inc. v. Geer, 214 F.Supp.3d 432, 436 (W.D. Pa. 2016).
The lawsuit filed by Team Angry Filmworks was ultimately transferred to the Western District of Pennsylvania because the non-bankruptcy trustee for the Dille Family Trust, Louise A. Geer, resides in New Castle, Pa.
The gravamen of the Western District litigation is a claim by Team Angry Filmworks that "Buck Rogers" and Armageddon 2419 A.D. entered the public domain in the United States in 1956. The claim by Team Angry Filmworks also includes a contention that these marks or works entered the public domain worldwide in 2010.
The lawsuit also alleges that Team Angry Filmworks received various threats and/or demands by counsel for the Dille Family Trust, Mr. Daniel Herman (who is also the spouse of Louise A. Geer), which included various copyright infringement claims.4
As such, the litigation commenced by Team Angry Filmworks included causes of action seeking a declaration that the marks and works are in the public domain and that the same may be used by Team Angry Filmworks as part of its commercial ventures and film productions. The Western District litigation also sought injunctive relief enjoining the Dille Family Trust and Ms. Geer from interfering with Team Angry Filmworks use of the "Buck Rogers" and Armageddon 2419 A.D. intellectual property in Team Angry's projects, and attorneys fees and costs pursuant to 17 U.S.C. § 505.
The Dille Family Trust's litigation against the Nowlan Family Trust in the Eastern District progressed to the point in which the case was ready for trial. In fact, trial was scheduled to begin on February 5, 2018. The litigation against Team Angry Filmworks in the Western District also progressed past the pleadings stage and entered into the discovery phase. Efforts at mediation also failed, and the case proceeded.
With the trial looming in the Eastern District, it appears that the Dille Family Trust's ability to fund payment of the fees and expenses of its legal counsel ended. Apparently, the beneficiaries of the Dille Family Trust are the surviving children of Robert C. Dille (i.e., Robert Nichols Flint Dille and Lorraine Dille Williams). The latter, Lorraine Dille Williams, was lending the trust monies enabling the Dille Family Trust to mount its litigation efforts, despite the fact that the trust on its own was not generating enough income to pay for such expenses. However, Lorraine Dille Williams ultimately ceased funding the litigation citing, among other things, alleged irregularities by either Ms. Geer or Mr. Herman, or their firm Geer and Herman, P.C. and other related entities.
Without funding for the litigation, the Dille Family Trust filed for Chapter 11 relief on November 28, 2017. The effect of the filing was that all litigation was stayed and, instead, the parties sharpened their litigation arrows before this Court.
By way of example, upon the filing of this bankruptcy case, the Dille Family...
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