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Morris v. Atchity

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


October 15, 2010

MARGARET MORRIS, PLAINTIFF,
v.
KENNETH ATCHITY; ATCHITY ENTERTAINMENT INTERNATIONAL, JOHN REID, SONIC AGE LTD., THE WRITER'S LIFELINE INC., DEFENDANTS.

The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

ORDER RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT[116]

On October 5, 2010, Defendants' Motion for Summary Judgment or, in the alternative, Partial Summary Judgment [116] came on for regular calendar before this Court.

The Court having reviewed all papers submitted pertaining to this Motion and having considered all arguments presented to the Court, NOW FINDS AND RULES AS FOLLOWS:

The Court hereby DENIES IN PART AND GRANTS IN PART Defendants' Motion for Summary Judgment, or in the alternative, Partial Summary Judgment.

Summary judgment is appropriate when the pleadings, affidavits, and other supporting papers demonstrate that there are no genuine issues of material fact, and the moving party is entitled to prevail as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When making this determination, the Court must view the record in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A "genuine" dispute is one that is supported by evidence sufficient to permit a reasonable jury to find in favor of the nonmoving party. Id. at 247-48.

Defendants first assert Summary Judgment as to all claims against Defendant John Reid on the grounds that the Court lacks personal jurisdiction. As to all Defendants, seven grounds are asserted for Summary Judgment, or in the alternative, Partial Summary Judgment: 1) As to Plaintiff's claim for Copyright Infringement, no reasonable juror could find substantial similarity between Plaintiff's Work, "Jesus Augustus: From Imperial Cult to Christianity" (hereinafter, "Work"), and the novel based on the Work, "The Ashes of Christ / The August God" (hereinafter, "Derivative Work"), 2) as to Plaintiff's claim for Breach of Implied Contract, the claim is preempted by the Copyright Act, 3) as to Plaintiff's claim for Fraud, no reasonable juror could find that Defendants acted with fraudulent intent or that Plaintiff suffered any damage as a result of any misrepresentation, 4) as to Plaintiff's claim for Interference with Prospective Economic Advantage, Plaintiff cannot establish each element of the claim as a matter of law, 5) as to Plaintiff's claim for Accounting, Plaintiff has failed to establish any basis for Defendants' liability that entitles her to such a remedy, 6) as to Plaintiff's claim for Declaratory Relief, there is no genuine issue of material fact as to Plaintiff's lack of ownership of the copyright in the Derivative Work, and 7) as to Defendants' counterclaims for Fraud on the Copyright Office, Declaratory Judgment for Non-Infringement, and Defamation against Defendant Dr. Kenneth Atchity, there are no genuine issues of material fact precluding judgment in favor of Defendants on these counterclaims.

1. Personal Jurisdiction

The exercise of personal jurisdiction over a nonresident Defendant requires the presence of two factors: 1) the forum state's laws must provide a basis for exercising personal jurisdiction, and 2) the assertion of personal jurisdiction must comport with due process. Hirsch v. Blue Cross, Blue Shield, 800 F.2d 1474, 1477 (9th Cir. 1986). The California long-arm statute permits the exercise of jurisdiction "on any basis not inconsistent with the Constitution . . . of the United States." Cal. Civ. Proc. Code § 410.10. This statute renders the state and federal limits of jurisdiction coextensive. Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). Thus, only a due process analysis is required.

Due process requires that a defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The defendant's contacts must be "such that the [defendant] should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Depending upon the nature and scope of the defendant's contacts with the forum, jurisdiction may be general or specific to the cause of action. Roth, 942 F.2d at 620 (citing Data Disc v. Sys. Tech. Assoc., 557 F.2d 1280, 1287 (9th Cir. 1977)).

The Court finds there is no genuine issue of material fact as to whether this Court has personal jurisdiction over Defendant John Reid. First, the Court finds no genuine issue of material fact exists as to whether Reid possesses sufficient minimum contacts with the state of California in order to support a finding that this Court has either general or specific jurisdiction over Reid. Second, the Court finds that Reid is not an alter-ego of Defendant Sonic Age Ltd. (hereinafter, "Sonic Age"), and accordingly personal jurisdiction over Reid cannot be supported on this alternate basis.

A. Minimum Contacts

The Court finds that Reid does not possess sufficient "minimum contacts" with California to support a finding that this Court has personal jurisdiction over Reid. Plaintiff's arguments that Reid has minimum contacts with the state stemming from his business and personal relationships are unpersuasive. Plaintiff fails to put forth sufficient evidence to show that Reid, who the Court finds has resided in and been domiciled in the United Kingdom his entire life, maintained substantial contacts with California in his individual capacity such that he could reasonably expect to be haled into Court in this state. The evidence offered by Plaintiff is insufficient to raise a triable issue of fact as to whether he possesses the constitutionally required minimum contacts with California, and accordingly this Court's personal jurisdiction over Reid cannot be supported on this basis.

B. Alter-Ego

Plaintiff asserts an alternate basis for this Court's personal jurisdiction over Defendant Reid: that Reid is an alter-ego of his company, Sonic Age.

The existence of a relationship between a parent and its subsidiaries is not sufficient alone to establish personal jurisdiction over the parent on the basis of the subsidiaries' minimum contacts with the forum. See Transure, Inc. v. Marsh & McLennan, Inc., 766 F.2d 1297, 1299 (9th Cir. 1985). Nonetheless, under the alter-ego exception "if the parent and subsidiary are not really separate entities ... the local subsidiary's contacts with the forum may be imputed to the foreign parent corporation." Doe I v. Unocal Corp., 27 F.Supp.2d 1174, 1186 (9th Cir. 1998) (quotation omitted). "To satisfy [this] alter ego exception ... the plaintiff must make out a prima facie case 1) that there is such unity of interest and ownership that the separate personalities no longer exist and 2) that failure to disregard their separate identities would result in fraud or injustice." Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1134 (9th Cir. 2003). The plaintiff must show that "the parent exercises such control over the subsidiary so as to render the latter the mere instrumentality of the former." Id. (quotation omitted).

The Court finds that the underlying facts support a finding that Defendants Reid and Sonic Age are distinct and not alter-egos of one another. Plaintiff has failed to put forth any evidence or facts to support a finding that Reid is using Sonic Age solely to shield himself from personal liability or that he has taken any actions suggesting that the required unity of interest is present. Therefore, Plaintiff's arguments fail to establish that a genuine issue of material fact exists as to whether Defendants Reid and Sonic Age are alter-egos of one another.

Accordingly, Defendants' Motion for Summary Judgment as to all claims against Defendant Reid is GRANTED.

2. Copyright Infringement of the Original Work (First Cause of Action)

To establish copyright infringement, a plaintiff must prove two elements: 1) ownership of a valid copyright, and 2) copying of protected elements of the plaintiff's work. See Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

Copying may be established by showing that the works in question are "substantially similar in their protected elements" and that the infringing party had access to the copyrighted work. Metcalf v. Bochco, 294 F.3d 1069, 1072 (9th Cir. 2002).

In analyzing whether the two works are substantially similar, the court must first distinguish between the protectable and unprotectable material because a party claiming infringement may place "no reliance upon any similarity in expression resulting from unprotected elements." Apple v. Microsoft, 35 F.3d 1435, 1446 (9th Cir. 1994) (quotation omitted). Then, a two-part test is used to determine whether the two works are substantial similar: an "intrinsic" and "extrinsic" test. The extrinsic test "objectively considers whether there are substantial similarities in both ideas and expression, whereas the intrinsic test ... measure[s] expression subjectively." Id. at 1442.

Generally, "only the 'extrinsic' test is ... employed at summary judgment, as the 'intrinsic' test should generally be reserved for the ultimate finder of fact." Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1177 (2001). If a court concludes, after analyzing the objective criteria under the extrinsic test, that "reasonable minds might differ as to whether there is substantial similarity between the protected expression of ideas in two literary works, and the record supports the district court's conclusion, there is a triable issue of fact that precludes summary judgment." Shaw v. Lindheim, 919 F.2d 1353, 1361. (9th Cir. 1990). Defendants contend the two works are similar only in their use of a historical theory and the underlying facts of this theory, both of which fall outside the scope of copyright protection. See Benay v. Warner Bros. Entm't Inc., 607 F.3d 620, 624 (9th Cir. 2010) ("[H]istorical facts are ... unprotected by copyright law"); see also Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344-45 (1991) (quoting Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 559 (1985)) ("The most fundamental axiom of copyright law is that 'no author may copyright his ideas or the facts he narrates.'"). Defendants argue no reasonable juror could conclude that the Derivative Work is substantially similar to any protected expression in Plaintiff's Work.

The Court finds that genuine issues of material fact remain on this cause of action. Plaintiff puts forth sufficient evidence to rebut Defendants' claim that the two works share only a historical theory and that theory's underlying facts, and the Court finds that based on the facts presented reasonable minds might differ as to whether there are substantial similarities between the two works with respect to the protected expression of ideas contained in Plaintiff's literary work.

Accordingly, this Court DENIES Defendants' Motion for Summary Judgment as to Plaintiff's first cause of action for Copyright Infringement.

3. Breach of Implied Contract (Seventh Cause of Action)

The Ninth Circuit has incorporated a two prong test to determine whether a state law claim is preempted by the Copyright Act, 17 U.S.C. § 301. First, the work at issue must fall within the subject matter of copyright. See Del Madera Props. v. Rhodes & Gardner, Inc., 820 F.2d 973, 976 (9th Cir. 1987), overruled on other grounds recognized by Downing v. Abercrombie & Fitch, 265 F.3d 994, 1003 (9th Cir. 2001). Second, the state law claim must be "equivalent to any of the exclusive rights within the general scope of copyright as specified by Section 106 [of the Copyright Act]." Id.

Defendants contend Plaintiff's state law claim for breach of implied contract meets this two prong test and is preempted by the Copyright Act because Plaintiff's claim asserts rights based on her Work, which falls within the subject matter of copyright, and is only seeking to protect her exclusive rights to use and authorize use of the Work.

Defendants fail to present sufficient evidence to support this argument, and the Court finds that genuine issues of material fact still remain as to whether Plaintiff's claim meets the two prong test for preemption.

Specifically, Defendants fail to show that no genuine issues of material fact remain as to whether Plaintiff's claim is based on the submission of her idea to Defendants, which is not protected by copyright, or if the claim is instead asserting rights based on her copyright protected Work. See Grosso v. Miramax Film Corp., 383 F.3d 965, 968 (9th Cir. 2004), amended 400 F.3d 965 (9th Cir. 2005), cert denied 126 S.Ct. 261 (2005).

Moreover, genuine issues of material fact remain regarding whether Plaintiff's state law claim meets the second test for preemption. Plaintiff presents sufficient evidence to raise a triable issue of fact regarding whether her claim seeks to protect her right to use and authorize use of the Work or if it instead involves the submission of her idea to Defendants with the expectation of compensation, and therefore alleges an "extra element" that aims to protect rights qualitatively different from those protected by the Copyright Act. See id. (holding that a state cause of action is not preempted by the Copyright Act if it "alleges an 'extra element' that changes the nature of the action").

Accordingly, as Defendants' have failed to demonstrate that no genuine issues of material fact remain regarding whether Plaintiff's state law breach of implied contract claim is preempted by the Copyright Act, Defendants' Motion for Summary Judgment on this cause of action is DENIED.

4. Fraud (Eighth Cause of Action)

To state a claim for fraud, a plaintiff must allege: 1) misrepresentation, 2) knowledge of its falsity, 3) intent to defraud, 4) justifiable reliance, and 5) damages. See Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1005 (9th Cir. 2003).

Plaintiff argues that Defendants made multiple misrepresentations by telling Plaintiff they would work on her behalf without revealing their true intentions of moving ahead on a new deal without her, and points to later events as proof that these statements were fraudulent.

The Court finds that Plaintiff fails to present affirmative evidence to support a finding that Defendants made these alleged statements with an intent to defraud Plaintiff at the time that they were made. Plaintiff's allegations that the end result proves the statements were fraudulent is insufficient to raise a triable issue of fact regarding Defendants' intent, as mere nonperformance of a promise is insufficient to show intent to defraud and "affirmative evidence of [this intent] is necessary to avoid summary judgment." Fanucchi & Limi Farms v. United Agri Products, 414 F.3d 1075, 1088 (9th Cir. 2005); see also Conrad v. Bank of America, 53 Cal. Rptr. 2d 336 ("[I]n order to support a claim of fraud based upon the alleged failure to perform a promise, it must be shown that the promisor did not intend to perform at the time the promise was made.").

Accordingly, Defendants have shown that no genuine issue of material fact exists as to the elements of Plaintiff's claim for fraud, specifically as to whether Defendants' possessed the requisite fraudulent intent at the time the alleged statements were made. Defendants' Motion for Summary Judgment as to Plaintiff's eighth cause of action for Fraud is hereby GRANTED.

5. Intentional Interference with Prospective Economic Advantage (Ninth Cause of Action)

The elements of a cause of action for intentional interference with prospective economic advantage are:

1) an economic relationship between the plaintiff and another, containing a probable future economic benefit or advantage to plaintiff, 2) defendant's knowledge of the existence of the relationship, 3) defendant's intentional conduct was designed to interfere with or disrupt the relationship, 4) defendant's intentional conduct was wrongful by some legal measure other than the fact of interference itself, 5) actual disruption of the relationship, and 6) damage to the plaintiff as a result of defendant's acts. See Marin Tug & Barge, Inc. v. Westport Petroleum, Inc., 271 F.3d 825, 831 (9th Cir. 2001) (citing Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 392-393).

Defendants have shown no genuine issue of material fact exists as to Defendants' liability on this cause of action. Plaintiff has failed to present facts to raise a triable issue of fact regarding whether she had a prospective economic relationship that was intentionally interfered with by Defendants.

Plaintiff argues in her Opposition that Defendants interfered with two prospective economic relationships:

1) plans to promote and pitch Plaintiff's Work to the top executive editors at each of the major publishing houses with whom Defendant Atchity allegedly had professional contacts, and 2) an offer to option Plaintiff's film rights that was allegedly made by filmmaker Brian Flemming.

However, Defendants successfully show that no genuine issue of material fact exists as to whether Plaintiff had a potential economic relationship with either the top editors or Brian Flemming. Plaintiff does not present evidence of existing contracts or any type of existing economic relationship, and thus fails to raise a triable issue of fact as to whether she had a relationship with these third parties that contained a probable future economic benefit or advantage. See Herman v. United Broth. of Carpenters & Joiners of Am., Local Union No. 971, 60 F.3d 1375, 1386 (9th Cir. 1995) (holding that plaintiff "cannot survive summary judgment on her [intentional interference with prospective] economic advantage claim because she has failed to allege any facts tending to show she had a prospective contractual relationship with a third party").

Moreover, the Court finds there is an absence of evidence that Defendants intentionally took any action that interfered with the alleged relationships. Plaintiff's allegations, that Defendants knew about these potential relationships and took action to cut her out of any potential business deals, are purely speculative and lack supporting evidence sufficient to create a genuine issue of fact.

As such, Plaintiff's arguments cannot support a finding that Defendants intentionally interfered with any of Plaintiff's alleged prospective economic relationship. No genuine issue of material fact exists as to this claim, and Defendants' Motion for Summary Judgment on this cause of action is hereby GRANTED.

6. Accounting (Eleventh Cause of Action)

The right to an accounting is dependent on the validity of the underlying claims for relief. See Duggal v. G.E. Capital Comm'cns Servs., Inc., 81 Cal. App. 4th 81, 95 (2000). Because the Court has DENIED Summary Judgment on two of the four preceding causes of action, this Court DENIES Defendants' Motion for Summary Judgment on the eleventh cause of action for Accounting.

7. Declaratory Relief (Twelfth Cause of Action)

The Court DENIES Defendants' Motion for Summary Judgment on the twelfth cause of action for Declaratory Relief. A genuine issue of material fact remains as to the respective rights of the parties in the Derivative Work, as the Court has DENIED Defendants' Motion for Summary Judgment on Plaintiff's first cause of action for copyright infringement.

8. Defendants' Counterclaims

Defendants finally move for Summary Judgment on the three counterclaims: 1) Fraud on the Copyright Office, 2) Declaratory Judgment for Non-Infringement, and 3) Defendant Atchity's counterclaim for Defamation.

A. Fraud on the Copyright Office

With regard to Defendants' Motion for Summary Judgment on the counterclaim for Fraud on the Copyright Office, the Court DENIES Summary Judgment. The Court finds that Defendants do not satisfy their burden of showing there is no genuine issue of material fact as to whether Plaintiff had the required intent to defraud the Copyright Office at the time she filed her copyright pre-registration application that stated she was both the author and copyright holder to the Derivative Work. Plaintiff raises a triable issue of fact as to whether she filed this application in a good faith belief that she owned the rights to the Derivative Work at the time, and accordingly Defendants' Motion is DENIED.

B. Declaratory Judgment

As the Court has DENIED Defendants' Motion for Summary Judgment on Plaintiff's first cause of action for Copyright Infringement, the Court also DENIES Defendants' Motion for Summary Judgment on the Counterclaim for Declaratory Judgment for Non-Infringement.

C. Defamation

Defamation under California law "involves the intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency to injure or which causes special damage." Smith v. Maldonado, 72 Cal. App. 4th 637, 645 (1999).

The Court finds that genuine issues of material fact still exist as to whether Plaintiff's statement in the application for pre-registration with the Copyright Office constitutes defamation per se, as Plaintiff has raised a triable issue of fact regarding the truth of the statement. See Raghavan v. Boeing Co., 133 Cal. App. 4th 1120, 1132 (2005) (noting that in all cases of alleged defamation, "the truth of the offensive statements ... is a complete defense against civil liability, regardless of bad faith or malicious purpose").

Therefore, this Court DENIES Defendants' Motion for Summary Judgment on Defendant Atchity's counterclaim for Defamation.

IT IS SO ORDERED.

20101015

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