United States District Court, C.D. California
MARY H. HAAS, DAVIS WRIGHT TREMAINE LLP, Los Angeles, California, Attorneys for Lienholder, HENDRICKS & LEWIS PLLC.
[PROPOSED] FINDINGS AND CONCLUSIONS FOR DIVISION AND DISTRIBUTION OF SETTLEMENT FUNDS
OTIS D. WRIGHT, II, District Judge.
This matter originally came before the Court on Plaintiff George Clinton's Motion for Division and Distribution of Settlement Funds filed under seal in June 2012. (ECF No. 132.) The Court's Order on that motion, dated August 7, 2012 and filed under seal ("the 2012 Order"), divided settlement funds from the underlying action among the Internal Revenue Service ("IRS") for Clinton's alleged tax liability; Hendricks & Lewis PLLC ("H&L"), a judgment creditor of Clinton; Jeffrey P. Thennisch, Clinton's current counsel in this action; and the Allan Law Group ("ALG"), Clinton's former counsel in this and other matters. (ECF No. 149.)
On February 24, 2014, this Court received the Ninth Circuit's decision on H&L's appeal from the 2012 Order, in which the Ninth Circuit determined that Clinton had not substantiated his claimed entitlement to a portion of the settlement funds for his alleged tax liability and therefore reversed that portion of the order allocating funds to the IRS. (ECF No. 156 at 2-3.)
As to the allocation of the remainder of the settlement funds, because the Ninth Circuit could not reconcile the allocation with the priority claims of the remaining claimants (H&L, Thennisch, and ALG), it remanded for "further findings as to each claimant's entitlement to a lien on the settlement funds, if any, and the relative priority of these liens." (ECF No. 156 at 4.) The following findings and conclusions are intended to respond to the Ninth Circuit's decision remanding this matter for further proceedings.
II. FINDINGS OF FACT.
Based on the evidence presented by the respective claimants to the settlement funds in the original briefing and the proposed findings and conclusions submitted by the claimants, the Court finds the following facts.
A. Clinton's Underlying Copyright Infringement Litigation.
1. Plaintiff George Clinton, a Florida resident, initiated this action on December 10, 2010, alleging claims for copyright infringement, declaratory judgment, and injunctive relief. (ECF No. 1.)
2. Three attorneys or firms appeared on behalf of Clinton in the underlying copyright infringement action, two of which-ALG and Thennisch- claim an entitlement to a portion of the settlement funds. ALG filed Clinton's original complaint in December 2010 (ECF No. 1), but substituted out in July 2011 (ECF Nos. 46, 47). Larry Haakon Clough then substituted in as counsel for Clinton. (ECF No. 47.) On August 2, 2011, Thennisch was admitted pro hac vice to appear on behalf of Clinton and he and Clough remain counsel of record for Clinton in this action. ( See ECF No. 51.)
3. On May 14, 2012, the parties to the underlying copyright infringement action notified the Court that they had reached a settlement (ECF No. 110), and on May 31 asked the Court to approve the settlement and dismiss the action under FED. R. CIV. P. 41(a) (ECF No. 114). The Court granted the request on June 7, 2012 (ECF No. 118), and the parties filed a stipulated dismissal with prejudice of the underlying action on June 8 (ECF No. 120).
B. Claimants to the Settlement Funds.
4. On June 8, 2012, Clinton filed under seal a Motion for Division and Distribution of Settlement Funds Under Fed.R.Civ.P. 69(a) proposing an allocation of the settlement funds from his underlying copyright infringement action among Clinton for his alleged tax liability to the IRS, judgment creditor H&L, and Clinton's former and current counsel ALG and Thennisch. ( See ECF Nos. 121, 132.) Because the Ninth Circuit reversed that portion of the 2012 ...