Hacienda Records, L.P. v. Ramos
| Decision Date | 04 January 2018 |
| Docket Number | No. 16-41180,16-41180 |
| Parties | HACIENDA RECORDS, L.P., Plaintiff - Appellee HACIENDA RECORDS AND RECORDING STUDIO, INCORPORATED; LATIN AMERICAN ENTERTAINMENT, L.L.C.; RICHARD GARCIA, also known as Rick Garcia; ROLAND GARCIA, SR., Counter Defendants - Appellees v. RUBEN RAMOS; LETICIA LETTY SALCEDO; ARTURO RENE SERRATA; HUGO CESAR GUERRERO, Defendants - Appellants RUBEN GUANAJUATO, Counter Claimant - Appellant |
| Court | U.S. Court of Appeals — Fifth Circuit |
Appeal from the United States District Court for the Southern District of Texas
Before BARKSDALE, DENNIS, and CLEMENT, Circuit Judges.
*
Primarily at issue is whether Tejano artists Hugo Ruben Guanajuato, Hugo Cesar Guerrero, and Arturo Rene Serrata, were properly dismissed for lack of standing. Also at issue are Hacienda Records' being awarded both summary judgment against Ruben Ramos' breach-of-contract claim and prevailing-party status. AFFIRMED.
Appellants' claims perpetuate an ongoing copyright-ownership dispute, the subject of numerous previous actions between Tejano recording companies and Tejano artists represented by David Showalter, including, Guanajuato, Guerrero, Ramos, and Serrata. Guzman v. Hacienda Records & Recording Studio, Inc., 808 F.3d 1031 (5th Cir. 2015); Tempest Publ'g, Inc. v. Hacienda Records & Recording Studio, Inc., 141 F. Supp. 3d 712 (S.D. Tex. 2015); Sanchez v. Hacienda Records & Recording Studio, Inc., 42 F. Supp. 3d 845 (S.D. Tex. 2014); Guerrero v. Martinez, 2011 WL 5155831 (S.D. Tex. Oct. 27, 2011); Guajardo v. Freddie Records, Inc., 2014 WL 12605052 (S.D. Tex. Dec. 12, 2014), R. & R. adopted, 2015 WL 12791484 (S.D. Tex. Mar. 11, 2015), order corrected, 2015 WL 12791487 (S.D. Tex. Apr. 27, 2015) (); Sanchez v. Freddie Records, Inc., 2011 WL 3606808 (S.D. Tex. Aug. 10, 2011).
Prior to this ongoing dispute, appellants assigned and transferred various rights to their attorney, Showalter. Guanajuato, Guerrero, andSerrata, did so through two documents: assignments and special powers of attorney. (Ramos did not execute a special power of attorney.)
The special powers of attorney used by Guanajuato, Guerrero, and Serrata transferred to Showalter the "exclusive right to enforce any legal rights in respect of the Works and administer any and all rights and revenue received or recovered as a result of the Works, whether as the result of litigation or otherwise". Some of the disputes between the parties center on the effect of these assignments and special powers of attorney.
This action was initiated by Showalter's January 2014 demand letter to Hacienda, requesting records and documents related to works of Ramos and Serrata, and demanding Hacienda cease-and-desist for any unlicensed exploitation of their works. In response, Hacienda sought a declaratory judgment to resolve its ownership of various copyrights.
Counterclaims for copyright violations and breach of contract followed, and additional parties were joined as defendants, cross-defendants, and counter-claimants, including, Guanajuato and Guerrero. Following multiple voluntary dismissals, the counter-claimants pursued: (1) Guanajuato's claim for copyright infringement and violation of the Digital Millennium Copyright Act (DMCA); (2) Guerrero, Ramos, and Serrata's claims for breach of contract, breach of the duty of good faith and fair dealing, and attorney's fees under Texas law; (3) Guerrero and Serrata's claims for breach of fiduciary duty; and (4) appellants' request for a declaratory judgment that they are entitled to records of all revenues from the exploitation of their works.
Hacienda maintains Guanajuato, Guerrero, and Serrata (standing appellants) lack standing, based on their earlier assignment of their rights to pursue claims related to their works. Because standing was disputed in a separate action pending between the parties (Guajardo), the court in thisaction took judicial notice of related documents offered as evidence in that parallel action, Guajardo, 2015 WL 12791487, at *1.
But, the court in this action concluded collateral estoppel did not apply because the final judgment in Guajardo had not been entered when, in this action, the court dismissed the standing appellants. Nonetheless, for that dismissal, the court agreed with the "reasoning and conclusions" of the Guajardo court's ruling on standing.
As noted, Ramos did not enter into a special power of attorney assigning Showalter the right to pursue claims related to the works, and, as also noted, asserted, inter alia: state-law claims for breach of contract, and breach of the duty of good faith and fair dealing. Considering the merits of Ramos' claims, the court, in awarding summary judgment to Hacienda, found evidence of a 1985 contract between Hacienda and Ramos, providing: Ramos would record and deliver two albums per year for four years; Hacienda would hold "sole and exclusive rights to all master sound records and derivatives made thereunder"; and it was to pay Ramos $1,000 prior to the first album, and further compensate him based on album-sale profits.
In opposition to Hacienda's summary-judgment motion, a 9 January 2015 declaration from Ramos stated he had not received payment under this 1985 contract. The court, however, declined to consider the declaration, based on Ramos' contradictory deposition testimony on 13 January, only four days after his declaration. In doing so, the court relied on sham-affidavit jurisprudence to conclude: "Because Ramos [] provided no valid explanation for his inability on January 13, 2015, to remember facts he swore to in his Declaration four days before, and these contradictory statements cannot be reconciled", he failed to present any summary-judgment evidence for a breach of the 1985 contract.
Consequently, summary judgment was awarded Hacienda against Ramos. And, the court ruled Hacienda was the "prevailing part[y]", entitling it to attorney's fees and costs.
Appellants claim the court erred by: dismissing the standing appellants; awarding summary judgment to Hacienda against Ramos; and according prevailing-party status to Hacienda. Each claim fails.
Regarding whether the court erred in dismissing the three standing appellants under Federal Rule of Civil Procedure 12(c) because of their assignments and special powers of attorney in favor of their attorney, Showalter, those appellants do not challenge the proposition that an assignor loses the ability to pursue an action after transferring the "exclusive" right to do so. Instead, they assert copyright principles, see Prather v. Neva Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969), prevent application of the plain meaning of their earlier-quoted transfer of the "exclusive right to enforce any legal rights in respect of the Works".
Hacienda counters that the copyright-specific rules provide no relief in this instance, claiming assigning "any and all rights" should be interpreted according to its plain meaning, depriving the standing appellants of their ability to pursue this action. Hacienda relies on the earlier-discussed parallel case, Guajardo, in which the court ruled the standing appellants lacked standing, and claims they are collaterally estopped from pursuing the same standing basis they previously litigated and lost. Guajardo, 2015 WL 12791484 ().
A Rule 12(c) motion is decided under the same standard as used for a Rule 12(b)(6) motion (failure to state a claim). E.g., Guidry v. Am. Pub. Life
Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007) (citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)). Therefore, "[t]he court 'accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff'", id. (quoting In re Katrina Canal Breaches Litig., 495 F.3d at 205); and "[t]he plaintiff must plead 'enough facts to state a claim to relief that is plausible on its face'". Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). A Rule 12(c) motion's being granted is reviewed de novo. Id.
Addressed first is whether the standing appellants are precluded from re-litigating the standing issue they lost in Guajardo. Dismissal based on collateral estoppel is also reviewed de novo. E.g., Mowbray v. Cameron Cty., 274 F.3d 269, 281 (5th Cir. 2001) (citing RecoverEdge L.P. v. Pentecost, 44 F.3d 1284, 1290 (5th Cir. 1995) abrogated on other grounds by Husky Int'l Elecs., Inc. v. Ritz, 136 S. Ct. 1581 (2016)). Federal law governs the preclusive effect of a federal judgment based on collateral estoppel. RecoverEdge L.P., 44 F.3d at 1290.
Issue preclusion or collateral estoppel prevents a party from litigating an issue it previously "litigated and lost" in another action. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 327 (1979). The three elements of collateral estoppel are: "(1) the issue at stake must be identical to the one involved in the prior action; (2) the issue must have been actually litigated in the prior action; and (3) the determination of the issue in the prior action must have been a necessary part of the judgment in that earlier action". RecoverEdge L.P., 44 F.3d at 1290; see also id. at n.12 () (emphasis added). Implicit in the third element of collateral estoppel is the requirement for a final judgment; "[t]he requirement of finality applies just as strongly to collateralestoppel as it does to res judicata". Int'l Union of Operating Eng'rs, Local No. 714 v. Sullivan Transfer, Inc., 650 F.2d 669, 676 (5th Cir. 1981) (...
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