STEPHEN WM. SMITH, United States Magistrate Judge.
This dispute is before the court on defendants' motion for summary judgment (Dkt. 74). After consideration of the parties' submissions, argument at a hearing on September 30, 2013, and the law, the motion is granted.
Plaintiff Archie Bell is a recording artist who in 1968 had a hit song called "Tighten Up" with his group Archie Bell & The Drells. "Tighten Up" was recorded on the Ovide Records label, which subsequently sold its song catalog to Atlantic Records. Neither Ovide or Atlantic are defendants in this case.
In 1974, Bell signed a recording contract with defendant Gamble-Huff Productions, Inc. Under the contract all expenses Gamble-Huff incurred in making Bell's records would be considered advances and charged against any royalties earned by the artist. Thus, Bell would not be entitled to royalty payments until all advances were recouped by defendants. Bell alleges he signed without benefit of legal counsel and after only a few minutes to review the contract,
In his complaint, Bell asserts causes of action against defendants for breach of contract, fraud, fraudulent inducement, fraudulent concealment, misappropriation of name, image, and likeness, and breach of fiduciary duty. Bell seeks damages, as well as the equitable remedy of return of all master recordings he made with defendants.
Defendants move for summary judgment on the grounds that Bell's claims are time-barred, and that they do not owe Bell any royalties because his records were not successful and defendants have not recovered the money they spent making them.
Summary judgment is appropriate if no genuine issues of material fact exist, and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The party moving for summary judgment has the initial burden to prove there are no genuine issues of material fact for trial. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 991 (5th Cir.2001). Dispute about a material fact is "genuine" if the evidence could lead a reasonable jury to find for the nonmoving party. In re Segerstrom, 247 F.3d 218, 223 (5th Cir.2001). "An issue is material if its resolution could affect the outcome of the action." Terrebonne Parish Sch. Bd. v. Columbia Gulf Transmission Co., 290 F.3d 303, 310 (5th Cir.2002). In determining whether a genuine issue of material fact exists, the court views the evidence
Defendants contend that Bell's claims are barred by applicable statutes of limitations. There is no dispute that Texas law governs the statute of limitations analysis. See Cypress/Spanish Ft. I, L.P. v. Prof. Serv. Indus., Inc., 814 F.Supp.2d 698, 708 (N.D.Tex.2011). The general rule is that a cause of action accrues, and the statute of limitations begins to run, "when facts come into existence that authorize a claimant to seek a judicial remedy." Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 202 (Tex.2011). Determining when a cause of action accrues is normally a question of law. Id.
It is clear that the first type of breach of contract claim is time-barred. Bell made no recordings for defendants
As to the royalty claim, a breach of contract claim accrues every time a royalty payment is due but not paid. Lyle v. Jane Guinn Revocable Trust, 365 S.W.3d 341, 355 (Tex.App.-Houston [1st Dist.] 2010, pet. denied) (if the terms of an agreement call for periodic payments, a cause of action for such payments may arise at the end of each period for which payment is due). Bell filed this lawsuit on September 9, 2011. Applying the general rules above, Bell's breach of contract claim is barred as to all royalty payments due on or before September 8, 2007. But Bell argues that the general rules do not apply, and that the accrual of his cause of action was tolled by the "discovery rule" and/or defendants' fraudulent concealment of facts.
In Texas, the discovery rule is a very limited exception to limitations and is strictly construed by courts. Computer Assoc. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex.1996). The discovery rule applies only when: (1) the nature of the injury is inherently undiscoverable and (2) the evidence of the injury is objectively verifiable. Id.; Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex.2001). An "inherently undiscoverable" injury is one that by its nature is unlikely to be discovered within the prescribed limitations period, despite the plaintiff's due diligence. S.V. v. R.V., 933 S.W.2d 1, 7 (Tex. 1996). It does not matter that a particular plaintiff did not discover his particular injury within the limitations period. Wagner, 58 S.W.3d at 734. Whether an injury is inherently undiscoverable is a legal question and is determined on a categorical basis. Id. at 735.
Bell's lack of education and sophistication and his trust in defendants may explain why he did not investigate his rights under the contract sooner. But these traits do not make defendants' alleged breaches "inherently undiscoverable." The earliest royalty statement in the record, for the period ended December 31, 1988, indicates a deficit of over $240,000 and royalty income of only $3.73.
Closely related to the discovery rule is the doctrine of fraudulent concealment. Unlike the discovery rule, fraudulent concealment is an equitable doctrine that is fact-specific. Shell Oil Co. v. Ross, 356 S.W.3d 924, 927 (Tex.2011). To invoke this exception, Bell must show that the defendants "actually knew a wrong occurred, had a fixed purpose to conceal the wrong, and did conceal the wrong." Id. Even then, "[f]raudulent concealment only tolls the statute of limitations until `the fraud is discovered, or could have been discovered with reasonable diligence.'" Id. (quoting B.P. Am.
There is no evidence here that defendants undertook to conceal from Bell that he was owed royalties. The record indicates that defendants regularly provided Bell with statements showing the negative balance on his royalty account. The Texas Supreme Court ruled in Shell Oil that "the fraudulent concealment doctrine does not apply to extend limitations as a matter of law when the royalty underpayments could have been discovered from readily accessible and publicly available information before the limitations period expired." 356 S.W.3d at 925. While there is no evidence in this case that the information regarding the amount of royalties due to Bell was publicly available, the court nonetheless finds inescapable the conclusion that Bell could have discovered his alleged injury years ago with reasonable diligence.
In sum, the general statute of limitations rules governing a breach of contract cause of action apply in this case. Bell's breach of contract cause of action is time-barred as to any claims for royalties due on or before September 8, 2007. Bell's breach of contract claim regarding royalties due after that date is timely, and will be considered on the merits.
Setting aside the issue of whether any defendant meets the definition a fiduciary, the court concludes, as discussed above, that reasonable minds could not disagree that Bell could have discovered his alleged injury long ago through the exercise of reasonable diligence. By his own admissions, Bell either never received royalties, or stopped receiving them many years ago. The record establishes that defendants made it clear to Bell many years ago that they did not intend to pay him any royalties until they recouped advances.
The substantive law of New York applies to the merits analysis pursuant to the choice of law provision of the 1974 contract. Dkt. 46-1, ¶ 25. As an initial matter, the court holds that Bell cannot assert a breach of contract claim against non-contracting parties. M. Paladino, Inc. v. Lucchese & Son Contr. Corp., 247 A.D.2d 515, 669 N.Y.S.2d 318, 319 (2d Dept.1998). Gamble-Huff Productions, Inc. signed the contract, and shortly thereafter, in December 1975, assigned its rights to Assorted Music, Inc.
The essential elements of a breach of contract claim are the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of the contract, and resulting damages. Morpheus Capital Advisors LLC v. UBS AG, 105 A.D.3d 145, 962 N.Y.S.2d 82, 86 (1st Dept.2013). Defendants contend that Bell has waived any breach of contract claim by failing to object within 6 months of receiving his royalty statements, and alternatively that Assorted Music has properly accounted for Bell's royalties.
Dkt. 46-1, ¶ 9(b).
Bell does not specifically address defendants' waiver argument, but appears to argue (without expressly saying so) that paragraph 9 of the contract should not be enforced because the contract is unconscionable. Bell further contends that fact questions about the amount of royalties due prohibit summary judgment.
The facts surrounding the execution of the contract are disputed. Memories on all sides have faded. But even if it is true that Bell traveled to Philadelphia and met alone with Gamble and Huff who put the contract in front of him only briefly and told him to sign it, it does not follow that he had no "meaningful choice." There is no evidence he was pressured to sign it immediately or told not to read it nor to consult with an attorney. Moreover, there is nothing per se unconscionable about the 6-month objection period, and Bell does not argue otherwise. The provision is unambiguous. And while other provisions in the contract might be complicated, this one is not. The court cannot rewrite the clear terms of the contract under the guise of interpretation. Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 750 N.Y.S.2d 565, 780 N.E.2d 166, 170-71 (2002).
There is a potential fact question as to whether Bell timely objected to royalty statements post-September 2007. Bell's counsel did send multiple letters beginning in January 2008 indicating that Bell was investigating his royalty rights. Those letters could liberally be construed as objections to the royalty statements sent to Bell. However, even if there is a factual dispute regarding Bell's compliance with the contractual objection period, it does not defeat summary judgment because Bell cannot create a genuine issue of material fact as to defendants' lack of recoupment of over $240,000 in advances.
Bell's summary judgment affidavit states that he never received cash advances from defendants.
Bell argues that he must be entitled to money because in 2007 Assorted licensed their entire catalogue of master recordings, including those by Archie Bell & The Drells, to Sony for a lump sum advance of
Bell further argues that there is a fact issue in this case because defendants cannot account for the difference between their current representation that they are still owed approximately $230,000, and Gamble's deposition testimony that they spent over $800,000 making his records.
The court concludes that defendants are entitled to summary judgment on the merits of Bell's breach of contract claim.
For the reasons discussed above, defendants' motion for summary judgment (Dkt. 74) is granted as to all of Plaintiff's claims.
The court will enter a separate final judgment.