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Gervasi v. Warner/Chappell Music, Inc.

United States District Court, M.D. Tennessee, Nashville Division

May 7, 2018

DEBORAH BUSH GERVASI, Plaintiff,
v.
WARNER/CHAPPELL MUSIC, INC. A DIVISION OF WARNER MUSIC GROUP CORP., Defendant.

          MEMORANDUM AND ORDER

          ALETA A. TRAUGER UNITED STATES DISTRICT JUDGE

         Warner/Chappell Music, Inc. (“WCM”) has filed a Partial Motion to Dismiss Third Amended Complaint (Docket No. 101), to which Deborah Bush Gervasi has filed a Response (Docket No. 103), and WCM has filed a Reply (Docket No. 104). For the reasons set out herein, WCM's motion will be granted.

         I. BACKGROUND AND PROCEDURAL HISTORY[1]

         Richard A. Whiting was an early 20th-century songwriter, known for such compositions as “On the Good Ship Lollipop” and “Hooray for Hollywood.” (Docket No. 100 ¶ 6.) In 1936, Mr. Whiting entered into a music publishing agreement with Warner Bros. Pictures. (Id. ¶ 10.) In 1938, Mr. Whiting died, leaving his intellectual property to his wife, Eleanore, and his daughters, Barbara and Margaret. (Id. ¶ 11.) In 1943, Eleanore Whiting entered into an agreement with Music Publishers Holding Corporation (“MPHC”), whereby she transferred her interest in the renewal copyrights of some of Mr. Whiting's compositions to the company in exchange for 50% of the domestic licensing receipts. (Id. ¶¶ 12-13.) Shortly thereafter, the parties amended the agreement to grant Ms. Whiting a share of international licensing for those compositions, at rates based on the rates that Mr. Whiting had accepted under certain earlier publishing contracts, including the 1936 agreement. (Id. ¶ 14.) In 1953, the parties amended the agreement again, to increase Ms. Whiting's international licensing share to 50%. (Id. ¶ 15.) Eleanore Whiting died in 1981, leaving her rights to Barbara and Margaret. (Id. ¶ 7.) Documents produced by Ms. Gervasi indicate that Eleanore died, and her estate was administered, in California. (Docket No. 91-3 at 95, 101.) Margaret Whiting died in 2011, leaving the rights that she had inherited to her daughter, Ms. Gervasi. (Docket No. 100 ¶ 29.) Documents produced by Ms. Gervasi indicate that Margaret died, and her estate was administered, in New York. (Docket No. 91-3 at 102.) WCM is the successor to Warner Bros. Pictures and MPHC with regard to the Whiting compositions. (Docket No. 100 ¶ 2.)

         In December 2006, while Ms. Gervasi was caring for her ailing mother, she reviewed the records of licensing payments that her mother had received from WCM and noticed payment variations that she could not explain, given her understanding of her mother's rights. (Id. ¶¶ 17- 18.) Ms. Gervasi and her mother, after researching the matter, came to believe that WCM had been underpaying the royalties. They informed WCM, but they mostly received either silence or resistance to their complaints. After her mother's death, Ms. Gervasi, as the heir to her mother's royalty rights, continued correspondence with WCM in an attempt to recoup the underpayments, but WCM took the position that the royalties had been calculated correctly because the relevant compositions were governed by the 1936 agreement, not any subsequent agreements. (Id. ¶¶ 23- 34.)

         On June 20, 2012, Ms. Gervasi filed her Complaint in this case. (Docket No. 1.) She filed a First Amended Complaint two days later. (Docket No. 4.) The Complaint's caption indicated that Ms. Gervasi was suing “individually and on behalf of the estate of Richard A. Whiting.” (Id. at 1.) The text of the Complaint referred to Ms. Gervasi as “the legal representative of the estate of Richard A. Whiting.” (Id. ¶ 36.) The Complaint, which pleaded claims for breach of contract, breach of the duty of good faith and fair dealing, accounting, and declaratory judgment, cited only one basis for this court's subject matter jurisdiction-diversity of the parties under 28 U.S.C. § 1332. (Id. ¶¶ 3, 34-57.)

         On December 3, 2012, WCM filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6). (Docket No. 13.) Among the arguments made by WCM was that Ms. Gervasi cannot assert claims for damages related to royalties due prior to her inheritance of her mother's rights on March 28, 2011. (Docket No. 14 at 8.) Ms. Gervasi responded that the date of her personal inheritance did not limit her period of recovery because her “claims [were] brought on behalf of both herself and the estate and therefore have no such time limitation.” (Docket No. 17 at 9 n.2.) On January 30, 2014, Senior Judge John T. Nixon granted the Motion to Dismiss in part and denied it in part.[2] (Docket No. 35.) Specifically, Judge Nixon dismissed Ms. Gervasi's good faith and fair dealing and accounting claims without prejudice but left her other claims intact. (Id. at 14.) Regarding Ms. Gervasi's claims for damages incurred prior to her mother's death, the court wrote: “[A]s Gervasi filed this suit on behalf of both herself and the Whiting estate, she is not estopped from alleging injuries suffered by her predecessors in interest occurring prior to when her interest in the estate vested on March 28, 2011.” (Id. at 9.)

         Litigation continued, and, on April 11, 2016, Ms. Gervasi filed a Motion for Leave to Amend the First Amended Complaint. (Docket No. 61.) Her proposed Second Amended Complaint still purported to be filed by Ms. Gervasi both in her individual capacity and on behalf of Richard A. Whiting's estate. (Docket No. 61-1 at 1, ¶¶ 28, 49.) On January 30, 2017, this court granted Ms. Gervasi leave to amend in part, holding that some of her claims for royalties prior to either June 20, 2008 or April 11, 2012, depending on the composition, were time-barred, but that other claims could proceed, for the time being, without a temporal limitation, because Ms. Gervasi might be able to show that those claims were timely under the discovery rule. (Docket No. 70 at 14.)

         On October 16, 2017, WCM filed a Motion to Dismiss for Lack of Subject-Matter Jurisdiction. (Docket No. 84.) For the first time, WCM noted that, at the time of his death, Richard A. Whiting was, like WCM, a citizen of California for jurisdictional purposes, bringing the court's diversity jurisdiction into question. (Id. at 1.) In Response, Ms. Gervasi argued that, despite her several prior statements to the contrary, she is not the representative of Richard A. Whiting's estate in any formal sense, but only in the sense that she is suing to vindicate the rights of his heirs. (Docket No. 87 at 1-2.) While WCM's Motion to Dismiss was pending, Ms. Gervasi filed a Motion for Leave to File Surreply and to File a Third Amended Complaint, in which she sought leave to amend her complaint to clarify that she is not seeking to assert any claims as a formal legal representative of the Whiting estate. (Docket No. 91.) Ms. Gervasi also sought, for the first time, to assert federal question jurisdiction. (Docket No. 91-4 ¶ 4.)

         On February 5, 2018, the court entered a Memorandum and Order granting Ms. Gervasi's motion in part, denying it in part, and denying WCM's motion as moot. (Docket No. 98.) The court held that Ms. Gervasi's assertion of federal question jurisdiction would be futile, but permitted her to amend her complaint to make clear that she is not asserting claims on behalf of the estate of Richard Whiting. (Id. at 15-16.) On February 19, 2018, Ms. Gervasi, consistently with the direction of the court, filed a Third Amended Complaint that does not purport to assert any rights on behalf of Richard Whiting's, or any other, estate. (Docket No. 100.)

         On March 5, 2018, WCM filed a Partial Motion to Dismiss Third Amended Complaint, seeking the dismissal of all claims that accrued prior to Margaret Whiting's death on March 28, 2011, on the ground that Ms. Gervasi has no right to assert those claims because “[o]nly a lawfully appointed representative of the estate of Margaret Whiting could sue for causes of action that accrued during her lifetime.” (Docket No. 101 at 1.) “Similarly, ” WCM argued, “only a lawfully appointed representative of the estate of [Eleanore Whiting] could sue for causes of action that accrued during her lifetime.” (Id.) In response, Ms. Gervasi argues that, under the laws of the states in which her mother and grandmother's estates were administered, an heir may assert a decedent's cause of action in her personal capacity upon that cause of action passing from the estate of the decedent to the heir. (Docket No. 103 at 2.)

         II. LEGAL STANDARD

         “Rule 12(b)(1) motions to dismiss . . . generally come in two varieties: a facial attack or a factual attack.” Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007) (citing Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). When a Rule 12(b)(1) motion contests subject matter jurisdiction factually, the court must weigh the evidence in order to determine whether it has the power to hear the case, without presuming the challenged allegations in the complaint to be true. Id.; DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004). When the facts are disputed in this way, “[t]he district court has broad discretion to consider affidavits, documents outside the complaint, and to even conduct a limited evidentiary hearing if necessary, ” without converting the motion into one for summary judgment. Cooley v. United States, 791 F.Supp. 1294, 1298 (E.D. Tenn. 1992), aff'd sub nom. Myers v. United States, 17 F.3d 890 (6th Cir. 1994); see also Gentek, 491 F.3d at 330. It is then the plaintiff's burden to show that jurisdiction is appropriate. DLX, 381 F.3d at 516. If a Rule 12(b)(1) motion challenges subject matter jurisdiction based on the face of the complaint, to the contrary, the plaintiff's burden is “not onerous, ” and the plaintiff need only demonstrate that the complaint alleges a “substantial” federal claim, meaning that prior decisions do not inescapably render the claim frivolous. Musson Theatrical Inc. v. Fed. Express Corp., 89 F.3d 1244, 1248 (6th Cir. 1996). A court evaluating this sort of facial attack to the assertion of subject matter jurisdiction must consider the allegations of fact in the complaint to be true. Gentek, 491 F.3d at 330. Thus, “the plaintiff can survive the motion by showing any arguable basis in law for the claim made.” Musson Theatrical, 89 F.3d at 1248.

         III. ...


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