VIII. YOWELL's MOTION to STRIKE PORTIONS of the AFFIDAVIT of DAVID MER- CADO Yowell Asks the Court to Strike Portions of an Af

Home , Substantial similarity

LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 913 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) VIII. YOWELL’S MOTION TO STRIKE PORTIONS OF THE LENNAR HOMES OF TEXAS SALES AFFIDAVIT OF DAVID MER- AND MARKETING, LTD., CADO Plaintiff,

Yowell asks the Court to strike portions v. of an affidavit signed by David Mercado, one of Seneca’s claims adjusters. Since PERRY HOMES, LLC, Defendant. the contents of Mercado’s affidavit do not Civil Action No. H–14–1094. affect the outcome of Yowell’s Motions, the Court finds that the portion of Yowell’s United States District Court, Motion to Strike that pertains to Merca- S.D. Texas, do’s affidavit should be denied as moot. Houston Division.

CONCLUSION Signed July 24, 2015. For the foregoing reasons, the Court Background: Owner of home design finds that Yowell is entitled to summary copyrights brought action against alleged judgment as to its claim that: (1) Seneca infringer. Alleged infringer moved for breached its duty to defend Yowell; (2) summary judgment. Seneca waived its right to control Yowell’s defense in the Schneider lawsuit; (3) Sene- Holdings: The District Court, Sim Lake, ca violated the Prompt Payment of Claims J., held that: Act; and (4) Yowell is entitled to recover (1) registration of copyrights that were reasonable and necessary attorney’s fees based on preexisting works applied to incurred in the present lawsuit up to the entire designs, including those ele- date of this Memorandum Opinion and Or- ments derived from owner’s own der. Yowell’s Motion for Partial Summary preexisting works; Judgment is denied in all other respects. Yowell’s Motion to Strike is denied. (2) fact issues precluded summary judgment for alleged infringer on issue of IT IS, THEREFORE, ORDERED whether designs were original to own- AND ADJUDGED that the Motion for er and copyrightable; Partial Summary Judgment [16] filed by the plaintiffs David Yowell Construction, (3) fact issues precluded summary judg- LLC, and David Yowell is GRANTED IN ment on issue of factual copying; PART AND DENIED IN PART. (4) size and dimensions of owner’s designs, IT IS, FURTHER, ORDERED AND the general layout of the houses, and ADJUDGED that the Motion to Strike the overall form, look, and feel of the [22] filed by the plaintiffs David Yowell houses were not protectable by copy- Construction, LLC, and David Yowell is right; DENIED. (5) owner failed to prove that alleged in- SO ORDERED AND ADJUDGED this fringer copied any protectable aspects the 28 day of July, 2015. of its plans; and (6) court would not award attorney fees to , alleged infringer. Motion granted. 914 117 FEDERAL SUPPLEMENT, 3d SERIES

1. Federal Civil Procedure O2542.1 work is established by proof that the de- The party responding to a motion for fendant’s copying was legally actionable, summary judgment must articulate the i.e., that the defendant’s work is substan- precise manner in which the submitted or tially similar to protectable aspects of the identified evidence supports his or her original. claim; when evidence exists in the summary judgment record but the nonmovant 7. Copyrights and Intellectual Property fails even to refer to it in the response to O41(1) the motion for summary judgment, that To establish ownership of a valid evidence is not properly before the district copyright, the plaintiff must prove that the court. Fed.Rules Civ.Proc.Rule 56(a), 28 material is original, that it can be copy- U.S.C.A. righted, and that he has complied with 2. Copyrights and Intellectual Property statutory formalities. O51 To establish copyright infringement, a 8. Copyrights and Intellectual Property plaintiff must prove: (1) ownership of a O83(3.5) valid copyright, and (2) copying of constit- The presumption of validity and own- uent elements of the work that are copy- ership that a certificate of registration of a rightable. copyright creates is rebuttable. 17 3. Copyrights and Intellectual Property U.S.C.A. § 410(c). O41(1) The first element of copyright in- 9. Copyrights and Intellectual Property fringement, copyright ownership, is shown O83(3.5) by: (1) proof of originality and copyright- The effect of a certificate of registra- ability in the work as a whole, and (2) tion of copyright is to place the burden of compliance with applicable statutory for- proof on the alleged infringer to disprove malities. the validity of the copyright. 17 U.S.C.A. 4. Copyrights and Intellectual Property § 410(c). O53(1) To establish the second element of 10. Copyrights and Intellectual Property copyright infringement, actionable copy- O50.10, 50.20 ing, a plaintiff must prove: (1) factual copy- A plaintiff complies with statutory for- ing, and (2) substantial similarity. malities of copyright registration by sub- 5. Copyrights and Intellectual Property mitting a complete application for registra- O83(3.1) tion, fee, and deposit to the Copyright Factual copying of a copyrighted work Office. may be established by direct evidence of copying, or it may be inferred from proof 11. Copyrights and Intellectual Property of access to the copyrighted work and O50.20 probative similarity between the two Courts may find a copyright registra- works. tion invalid if the copyright claimant will- 6. Copyrights and Intellectual Property fully misstated or failed to state a fact O53(1) that, if known, might have caused the Substantial similarity between a copy- Copyright Office to reject the copyright righted work and an allegedly infringing application. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 915 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) 12. Copyrights and Intellectual Property 17. Copyrights and Intellectual Property O50.20 O38 There must be a showing of scienter The owner of a derivative-work copy- in order to invalidate a copyright registra- right does not by virtue of that copyright tion for willfully misstating or failing to alone acquire rights in the underlying state a fact that might have caused the works, and such derivative-work copyright Copyright Office to reject the application. does not enlarge the scope, duration, own- 13. Copyrights and Intellectual Property ership, or subsistence of any copyright O50.20 protection in the preexisting material. 17 Even if an inaccuracy in a copyright U.S.C.A. § 103(b). registration application was known, the 18. Copyrights and Intellectual Property plaintiff’s failure to inform the Copyright O38 Office of given facts is without substance to the extent that the Office would have Any elements that the author of a registered the subject work even had it derivative work borrowed from the under- known those facts. lying work remain protected by the copyrights in the underlying work, and thus, 14. Copyrights and Intellectual Property even if an infringer copies underlying ma- O50.20 terial only from the derivative work, the Even if a copyright registrant owns copyright owner of the underlying material both the derivative work it seeks to regis- has a cause of action against the infringer. ter and the underlying work on which the derivative work is based, Copyright Act 19. Copyrights and Intellectual Property still requires disclosure of the fact that the O12(1) applicant seeks to register a derivative To qualify for copyright protection, a work. 17 U.S.C.A. § 409(9). work must be original to the author. 15. Copyrights and Intellectual Property 20. Copyrights and Intellectual Property O75.5 O12(1) Where the owner of a derivative work The threshold for originality of a work also owns the underlying work on which the derivative work is based, copyright for which the owner seeks copyright pro- registration of the derivative work alone is tection is low; it requires only that the sufficient to bring suit for infringement of work was independently created by the elements contained in both. 17 U.S.C.A. author, as opposed to copied from other § 411. works, and that it possesses at least some minimal degree of creativity. 16. Copyrights and Intellectual Property O75.5 21. Copyrights and Intellectual Property Registration of copyrights for house O12(1) designs that were based on preexisting Novelty is not required for a work to works applied to entire designs, including qualify for copyright protection. those elements derived from copyright owner’s own preexisting works, as re- 22. Copyrights and Intellectual Property quired for owner to bring infringement O83(1) action based on entire designs, where own- Where the defendant in a copyright er did not register any of the preexisting infringement action challenges the origi- design iterations, but did register the lat- nality of copyrighted material, the pre- est iterations. 17 U.S.C.A. § 411(a). sumption of validity will not be overcome 916 117 FEDERAL SUPPLEMENT, 3d SERIES unless the defendant offers either: (1) defendant’s access to the plaintiff’s work proof that the product was copied from before creation of the infringing work, and other works, or (2) similarly probative evi- (2) probative similarity between the two dence as to originality. works. 23. Copyrights and Intellectual Property 27. Copyrights and Intellectual Property O89(2) O83(3.1) Even assuming owner of house design copyrights was not entitled to a presump- The access element of factual copying tion of validity of the copyrights based on of a copyrighted work is satisfied if the registration of the copyrights, genuine is- person who created the allegedly infring- sues of material fact regarding whether ing work had a reasonable opportunity to owner authored the designs and the under- view the copyrighted work. lying works upon which the designs were based precluded summary judgment for 28. Copyrights and Intellectual Property alleged infringer on issue of whether the O83(3.1) designs were original to owner and copy- The probative similarity element of rightable, and thus whether copyright factual copying of a copyrighted work re- owner had a valid copyright upon which to quires a showing that the works, when bring its action against alleged infringer of compared as a whole, are adequately simi- designs. lar to establish appropriation. 24. Copyrights and Intellectual Property O53(1) 29. Copyrights and Intellectual Property To prove actionable copying a plaintiff O53(1) must make two showings: first, the plain- When comparing a copyrighted work tiff must, as a factual matter, prove that to an alleged copy as a whole, the question the defendant actually used the copyright- is not whether the whole of the defendant’s ed material to create his own work; if the work largely replicates the allegedly cop- plaintiff demonstrates factual copying, he ied work, but rather the jury must consid- must next demonstrate that the copying is er the whole of the first work, including legally actionable by showing that the al- both copyrightable and non-copyrightable legedly infringing work is substantially parts, and the whole of the second work similar to protectable elements of the in- and then compare the two works, looking fringed work. for any similarities between their constitu- 25. Copyrights and Intellectual Property ent parts. O53(1) In order to determine if an allegedly 30. Copyrights and Intellectual Property infringing work is substantially similar to O89(2) the protectable elements of an infringed Genuine issues of material fact re- work, a side-by-side comparison must be garding whether alleged infringer of copy- made between the original and the copy to right had access to allegedly copied home determine whether a layman would view designs and whether alleged copies of the two works as substantially similar. copyrighted home designs were probative- 26. Copyrights and Intellectual Property ly similar to copyrighted home designs O83(3.1) precluded summary judgment on issue of Factual copying of a copyrighted work factual copying in copyright owner’s action is generally established by proof of: (1) the against alleged infringer. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 917 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

31. Copyrights and Intellectual Property from the perspective of a layman or ordi- O53(1) nary observer. To determine whether an instance of copying is legally actionable as copyright 36. Copyrights and Intellectual Property infringement, a side-by-side comparison O89(2) must be made between the original and Typically, in a copyright infringement the copy to determine whether a layman action, the question whether two works are would view the two works as substantially substantially similar should be left to the similar. ultimate factfinder, but summary judg- 32. Copyrights and Intellectual Property ment may be appropriate if the court can O53(1) conclude, after viewing the evidence and drawing inferences in a manner most fa- To support a claim of copyright in- vorable to the nonmoving party, that no fringement, the copy must bear a substan- reasonable juror could find substantial tial similarity to the protected aspects of similarity of ideas and expression. the original work; therefore, the inquiry focuses not on every aspect of the copy- 37. Copyrights and Intellectual Property righted work, but on those aspects of the O89(2) plaintiff’s work that are protectible under Summary judgment for an alleged copyright laws and whether whatever copyright infringer is appropriate where copying took place appropriated those pro- similarity between two works concerns tected elements. only non-copyrightable elements of the 33. Copyrights and Intellectual Property plaintiff’s work. O53(1) Anyone may copy uncopyrightable el- 38. Copyrights and Intellectual Property ements in a copyrighted work without in- O12(1) fringing the copyright. The mere fact that a work is copy- 34. Copyrights and Intellectual Property righted does not mean that every element O53(1) of the work may be protected; the copy- Where a copyrighted work contains right is limited to the ‘‘expression,’’ which unprotectable elements, the first step in is those aspects of the work that display determining whether an alleged copy was the stamp of the author’s originality. substantially similar to the copyrighted See publication Words and Phras- work is to distinguish between protectable es for other judicial constructions and definitions. and unprotectable elements of the copyrighted work. 39. Copyrights and Intellectual Property 35. Copyrights and Intellectual Property O51 O53(1) Copyright infringement requires copy- Once unprotectable elements of a ing of constituent elements of the work copyrighted work are excluded, the next that are original. inquiry in determining whether the alleged copy is substantially similar to the copy- 40. Copyrights and Intellectual Property righted work is whether the allegedly in- O4.5 fringing work bears a substantial similari- No author may copyright facts or ty to the protectable aspects of the original ideas, only the expression of those facts work; this second inquiry is performed and ideas. 17 U.S.C.A. § 102(b). 918 117 FEDERAL SUPPLEMENT, 3d SERIES

41. Copyrights and Intellectual Property 46. Copyrights and Intellectual Property O4.5 O12(1) Expression of facts or ideas is protect- Copyright law is more protective of able by copyright, as long as that expres- highly original and highly expressive sion is original and not dictated by the works than it is of functional and nonfic- underlying idea. 17 U.S.C.A. § 102(b). tion works. 42. Copyrights and Intellectual Property 47. Copyrights and Intellectual Property O4.5 O53(1) When an idea can be expressed in To the extent that a work is highly very few ways, copyright law does not functional or comprised of highly standard- protect that expression, because doing so ized elements it may lie very near the line would confer a de facto monopoly over the of uncopyrightability; copyright protection idea; in such cases idea and expression are in such works is thin. said to be merged. 48. Copyrights and Intellectual Property 43. Copyrights and Intellectual Property 53(1) O12(2) O The ‘‘scenes-a-faire doctrine’’ excludes Where the quantum of originality in a from copyright protection expressions that work is slight and the resulting copyright are standard, stock or common to a partic- is thin, infringement will be established ular subject matter or are dictated by only by very close copying because the external factors, including industry de- majority of the work is unprotectable. mand and practice. 49. Copyrights and Intellectual Property See publication Words and Phras- O6 es for other judicial constructions and definitions. Because an architectural work may consist of a protectable arrangement of 44. Copyrights and Intellectual Property unprotectable elements, filtration in archi- O12(1) tectural cases cannot involve the mere Although a work may be copyrighta- elimination of individual elements; consid- ble as a whole, the scope of protection eration of architectural works as a whole is afforded that work varies in proportion to appropriate. the amount of the author’s original contribution; more similarity between an original 50. Copyrights and Intellectual Property and an alleged copy is required when less O6 protectible matter is at issue. The size and dimensions of copyright 45. Copyrights and Intellectual Property owner’s house designs, the general layout O53(1) of the houses, and the overall form, look, The scope of copyright protection is a and feel of the houses were sufficiently sliding scale that changes with the avail- constrained to be unprotectable by the ability of expressions for a given idea: if copyright, in copyright owner’s action there is a wide range of expression, then against alleged infringer of two house de- copyright protection is broad and a work signs, where developer that designs were will infringe if it is substantially similar to prepared for required the houses to be the copyrighted work, but if there is only a duplexes, constrained the square footage narrow range of expression, then copy- of the houses, required them to be two right protection is thin and a work must be stories, had specific minimum setbacks virtually identical to infringe. from the lot boundaries for the houses, and LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 919 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) required two car garages, and market con- 55. Copyrights and Intellectual Property ditions dictated large master suites with O90(2) large master bathrooms and numerous An award of attorney fees to the pre- windows. vailing party in a copyright action is the 51. Copyrights and Intellectual Property rule rather than the exception. 17 O88 U.S.C.A. § 505. Copyrightability of particular subject matter is, in all instances a matter for the 56. Copyrights and Intellectual Property judge. O90(2) 52. Copyrights and Intellectual Property Recovery of attorney fees in a copy- O88 right infringement action is not automatic; Threshold factual determinations re- attorney fees are to be awarded to prevail- garding originality or creativity of a copying parties only as a matter of the court’s righted work are for the jury. discretion. 17 U.S.C.A. § 505. 53. Copyrights and Intellectual Property 57. Copyrights and Intellectual Property O89(2) O90(2) It is proper at the summary judgment There was no compelling reason to stage of a copyright infringement action compensate alleged infringer of house de- for courts to determine, based on an appli- sign copyrights, who was awarded sum- cation of merger and scenes-a-faire to the mary judgment against copyright owner evidence in the record, what aspects of a that brought action for infringement, nor plaintiff’s designs are protectable, and to deter other parties in owner’s position, whether a defendant’s designs infringe. and thus court would not award attorney 54. Copyrights and Intellectual Property fees to alleged infringer, pursuant to its O64 discretion under the Copyright Act, where Owner of copyright for house designs many of alleged infringer’s arguments ulti- failed to prove that alleged infringer cop- mately lacked merit, owner’s claims and its ied any protectable aspects of its plans, attorney’s legal positions were neither friv- which were slight, and thus house plans olous nor objectively unreasonable, and were not infringed, where general layout there was substantial evidence of factual of the houses was constrained by the lot copying by alleged infringer. 17 U.S.C.A. size, the developer’s duplex plan, and mar- § 505. ket demands, and thus not protected by the copyright, and the plans differed significantly beyond the general layout of the spaces, such as with regard to the dimensions of the spaces, location of entryways, William David Dunn, Connor G. Shee- whether the entryways were one or two han, John David Blakley, Dunn Sheehan stories, location of porches, location of LLP, Dallas, TX, for Plaintiff. stairs, the configuration of elements within open-plan area of family room, kitchen, Paul L. Mitchell, Kathryn Elizabeth and breakfast nook, layouts of the master Boatman, Joseph Webster Golinkin, II, baths, location of secondary baths, and Andrews Kurth LLP, Houston, TX, for square footage of the houses. Defendant. 920 117 FEDERAL SUPPLEMENT, 3d SERIES

MEMORANDUM OPINION under construction in Phase I and re- AND ORDER viewed floor plans of the Burgundy and SIM LAKE, District Judge. Bordeaux obtained from Lennar’s salespeople.8 Perry submitted its plans, won Plaintiff Lennar Homes of Texas Sales the bid, and began construction. Lennar and Marketing, Ltd. (‘‘Lennar’’) brought claims that Perry’s 2249 and 2255 are in- this copyright action against Perry Homes, fringing copies of the Burgundy and Bor- LLC (‘‘Perry’’) alleging that two of Perry’s deaux. Lennar registered its designs with townhome designs infringe on Lennar’s the Copyright Office, and this litigation copyrighted works. Pending before the ensued. court is Defendant’s Motion for Summary Judgment (Docket Entry No. 22). For the II. Motion for Summary Judgment reasons stated below, Defendant’s Motion Perry has moved for summary judgment for Summary Judgment will be granted, on multiple grounds. Primarily, Perry ar- and this action will be dismissed. gues that Lennar’s copyrights in the Bur- I. Background gundy and Bordeaux designs are invalid, Lennar and Perry are competing home- that any similarity between Lennar’s de- builders. In 2013 Lennar contracted to signs and Perry’s is the fortuitous result of build townhomes in Phase I of Creekside market conditions and developer’s require- Park, a development in the Woodlands, ments, and that the elements of Lennar’s Texas.1 Lennar built two models of town- designs that Perry is alleged to have cop- homes in Phase I, the Burgundy and the ied are not protectable as a matter of law. Bordeaux.2 Each model was a modified Perry’s invalidity arguments lack merit, version of an earlier Lennar design.3 In and there is sufficient evidence in the rec- July of 2013 The Woodlands put lots in ord to raise a fact issue as to whether Phase II of Creekside Park up for bid.4 Perry copied Lennar’s plans. However, Homebuilders had two weeks to submit even assuming that Perry copied Lennar’s their bids, including proposed floor plans plans, any elements it copied were unpro- and elevations.5 Perry did not have preex- tectable as a matter of law, and Perry is isting townhome designs that fit the devel- entitled to summary judgment on Lennar’s oper’s criteria.6 Perry therefore prepared infringement claims. new designs, including the Perry 2249 and the Perry 2255, to submit with its bid.7 A. Standard of Review Five days before the bids were due, Per- Summary judgment is appropriate if the ry’s architect visited Lennar’s townhomes movant establishes that there is no genu-

1. Declaration of Sam Teuton, Exhibit 4 to ‘‘Billy’’ Shirley (‘‘Shirley Deposition’’), Exhib- Plaintiff’s Response to Defendant’s Motion for it 1 to Plaintiff’s Response, Docket Entry No. Summary Judgment (‘‘Plaintiff’s Response’’), 34–1, pp. 18–19. Docket Entry No. 34–1, p. 131 ¶ 6. 5. Shirley Deposition, Exhibit 1 to Plaintiff’s 2. Id. Response, Docket Entry No. 34–1, pp. 18–19.

3. See id. at 129–131 ¶¶ 3–5. 6. Id. at 21.

4. See e-mail from Sue Dombos, The Wood- 7. Id. lands (July 9, 2013), Exhibit 5 to Plaintiff’s Response, Docket Entry No. 34–1, pp. 133– 8. Id. at 39–40; Perry’s Answers to Lennar’s 34; The Woodlands Lot Opportunity, Exhibit First Set of Interrogatories (‘‘Perry’s Answers 6 to Plaintiff’s Response, Docket Entry No. to Interrogatories’’), Exhibit 18 to Plaintiff’s 34–1, p. 136; Deposition of William Robert Response, Docket Entry No. 34–2, pp. 22–23. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 921 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

ine dispute about any material fact and the dence exists in the summary judgment movant is entitled to judgment as a matter record but the nonmovant fails even to of law. Fed.R.Civ.P. 56(a). Disputes refer to it in the response to the motion for about material facts are genuine ‘‘if the summary judgment, that evidence is not evidence is such that a reasonable jury properly before the district court.’’ Id. could return a verdict for the nonmoving (internal quotation marks and citation party.’’ Anderson v. Liberty Lobby, Inc., omitted). 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 In reviewing the evidence ‘‘the court L.Ed.2d 202 (1986). The moving party is must draw all reasonable inferences in fa- entitled to judgment as a matter of law if vor of the nonmoving party, and it may not ‘‘the nonmoving party has failed to make a make credibility determinations or weigh sufficient showing on an essential element the evidence.’’ Reeves v. Sanderson of her case with respect to which she has Plumbing Prods., Inc., 530 U.S. 133, 120 the burden of proof.’’ Celotex Corp. v. S.Ct. 2097, 2110, 147 L.Ed.2d 105 (2000). Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552, Factual controversies are to be resolved in 91 L.Ed.2d 265 (1986). favor of the nonmovant, ‘‘but only when A party moving for summary judgment there is an actual controversy, that is, ‘‘must ‘demonstrate the absence of a genu- when both parties have submitted evidence ine issue of material fact,’ but need not of contradictory facts.’’ Little, 37 F.3d at negate the elements of the nonmovant’s 1075. case.’’ Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc) (per B. Analysis curiam) (quoting Celotex, 106 S.Ct. at Under the Copyright Act, copyright pro- 2553). ‘‘If the moving party fails to meet tection subsists in ‘‘original works of au- this initial burden, the motion must be thorship fixed in any tangible medium of denied, regardless of the nonmovant’s re- expression.’’ 17 U.S.C. § 102(a). An ar- sponse.’’ Id. If, however, the moving par- chitectural work is an original work of ty meets this burden, ‘‘the nonmovant authorship, § 102(a)(8), and may be em- must go beyond the pleadings’’ and pro- bodied in various media including ‘‘a build- duce evidence that specific facts exist over ing, architectural plans, or drawings.’’ which there is a genuine issue for trial. § 101. The holder of a copyright in an Id. (citing Celotex, 106 S.Ct. at 2553–54). architectural work has the exclusive right The nonmovant ‘‘must do more than sim- to reproduce the work. § 106. Anyone ply show that there is some metaphysical who violates that exclusive right is an in- doubt as to the material facts.’’ Matsushi- fringer of the copyright of the author, and ta Elec. Indus. Co., Ltd. v. Zenith Radio the legal or beneficial owner of the exclu- Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, sive right is entitled to sue for infringe- 89 L.Ed.2d 538 (1986). ment. § 501(a)-(b). [1] ‘‘In order to avoid summary judg- [2–6] ‘‘To establish copyright infringement, the nonmovant must identify specific ment, a plaintiff must prove [1] ownership facts within the record that demonstrate of a valid copyright and [2] copying of the existence of a genuine issue of material constituent elements of the work that are fact.’’ CQ, Inc. v. TXU Min. Co., L.P., 565 copyrightable.’’ Engineering Dynamics, F.3d 268, 273 (5th Cir.2009). ‘‘The party Inc. v. Structural Software, Inc., 26 F.3d must also articulate the precise manner in 1335, 1340 (5th Cir.1994) supplemented, 46 which the submitted or identified evidence F.3d 408 (5th Cir.1995). The first element, supports his or her claimTTTT When evi- copyright ownership, is shown by (a) 922 117 FEDERAL SUPPLEMENT, 3d SERIES

‘‘proof of originality and copyrightability in General Universal Systems, Inc. v. Lee, the work as a whole’’ and (b) ‘‘compliance 379 F.3d 131, 141 (5th Cir.2004); see with applicable statutory formalities.’’ Id. § 410(c).9 ‘‘However, the presumption of ‘‘To establish actionable copying (i.e., the validity and ownership that a certificate of second element), a plaintiff must prove: registration creates is rebuttable.’’ Inter- [a] factual copying and [b] substantial simi- plan Architects, Inc. v. C.L. Thomas, Inc., larity.’’ Positive Black Talk Inc. v. Cash No. H–08–3181, 2010 WL 4366990, at *24 Money Records, Inc., 394 F.3d 357, 367 (S.D.Tex. Oct. 27, 2010). ‘‘The effect of (5th Cir.2004), abrogated on other grounds such a certificate is to place the burden of by Reed Elsevier, Inc. v. Muchnick, 559 proof on the alleged infringer to disprove U.S. 154, 130 S.Ct. 1237, 176 L.Ed.2d 18 the validity of the copyright.’’ Id. (inter- (2010). Factual copying may be estab- nal quotation marks and citation omitted). lished by direct evidence of copying, or it Because Perry argues that Lennar’s non- may be inferred from proof of access to compliance with statutory formalities in- the copyrighted work and ‘‘probative simi- validates Lennar’s copyright certificates, larity’’ between the two works. Id. at 368. the court will first address that issue and Substantial similarity is established by then turn to the issues of originality and proof that the defendant’s copying was copyrightability. legally actionable, i.e., that the defendant’s work is substantially similar to protectable (a) Compliance with Statutory aspects of the original. See Nola Spice Formalities Designs, L.L.C. v. Haydel Enterprises, Perry argues that Lennar’s copyright is Inc., 783 F.3d 527, 550 (5th Cir.2015). invalid because the Burgundy and Bor- deaux are derivative works—based on 1. Ownership of Valid Copyright preexisting Lennar designs—and that [7–9] ‘‘ ‘To establish ‘‘ownership,’’ the Lennar failed to disclose that fact to the plaintiff must prove that the material is Copyright Office. ‘‘Accordingly,’’ Perry original, that it can be copyrighted, and contends, ‘‘the Court should decline to en- that he has complied with statutory for- force the copyright without even looking to malities.’ ’’ Aspen Technology, Inc. v. M3 the disputed plans.’’ 10 Although its argu- Technology, Inc., 569 Fed.Appx. 259, 268 ments are difficult to disentangle, Perry’s (5th Cir.2014) (unpublished) (quoting Lak- Motion for Summary Judgment raises edreams v. Taylor, 932 F.2d 1103, 1107–08 three threshold issues: (i) whether failure (5th Cir.1991)). In order to bring an in- to disclose the derivative nature of the fringement action a party must first regis- Burgundy and Bordeaux designs invali- ter its work with the Copyright Office. 17 dates their registrations; (ii) whether the U.S.C. § 411(a). ‘‘A certificate of registra- court is required under § 411(2) to obtain tion, if timely obtained, is prima facie evi- an opinion from the Register of Copyrights dence both that a copyright is valid and as to the materiality of Lennar’s failure to that the registrant owns the copyright.’’ disclose; 11 and (iii) whether registration of

9. Once registered, ‘‘the certificate of a regis- 10. Defendant’s Motion for Summary Judg- tration made before or within five years after ment, Docket Entry No. 22, p. 16 ¶ 27. first publication of the work shall constitute 11. Sperry has not argued this issue, but as prima facie evidence of the validity of the discussed in Section B(1)(a)(ii) below, courts copyright and of the facts stated in the certifi- are required to obtain an opinion from the cate.’’ § 410(c). Copyright Office when a defendant alleges a LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 923 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) a derivative work is sufficient to bring suit and Organization for Intellectual Property on the entire design, or only those ele- Act of 2008 (the ‘‘PRO IP Act amend- ments that are new and unique to the ments’’). See Act of Oct. 13, 2008, Pub.L. derivative work. 110–403, Sec. 1(a), 122 Stat. 4256. Under (i) Lennar’s registrations appear valid. the revised statute, a certificate of regis- [10–13] ‘‘A plaintiff complies with stat- tration is sufficient to bring suit ‘‘regard- utory formalities of copyright registration less of whether [it] contains any inaccurate by submitting a complete application for information,’’ unless (1) the registrant in- registration, fee, and deposit to the Copy- cluded the inaccurate information ‘‘with right Office.’’ Interplan, 2010 WL knowledge that it was inaccurate’’ and (2) 4366990, at *24 (citing Geoscan, Inc. v. ‘‘the inaccuracy of the information, if Geotrace Technologies, Inc., 226 F.3d 387, known, would have caused the Register of 393 (5th Cir.2000)). However, ‘‘[c]ourts Copyrights to refuse registration.’’ 17 12 may find a registration invalid if the copy- U.S.C. § 411(b)(1). right claimant willfully misstated or failed Perry argues that the Burgundy and to state a fact that, if known, might have Bordeaux are derivative works as defined caused the Copyright Office to reject the in § 101 and that Lennar failed to disclose copyright application.’’ Berg v. Symons, this information to the Copyright Office. 393 F.Supp.2d 525, 542 (S.D.Tex.2005); see Section 409 prescribes the information that also Lenert v. Duck Head Apparel Co. must be included in an application for Inc., 99 F.3d 1136 (5th Cir.1996) (unpub- copyright registration. In the case of a lished). ‘‘There must be a showing of derivative work, the applicant must include ‘scienter’ in order to invalidate a copyright ‘‘an identification of any preexisting work registration.’’ Interplan, 2010 WL or works that [the derivative work] is 4366990, at *24 (citing St. Luke’s Cataract based on or incorporates, and a brief, gen- & Laser Inst., P.A. v. Sanderson, 573 F.3d eral statement of the additional material 1186, 1201 (11th Cir.2009)). ‘‘[A] party covered by the copyright claim being reg- seeking to prove fraud on the Copyright istered.’’ § 409(9). Section 6 of copyright Office bears a ‘heavy burden’ in this re- application Form VA requires applicants gard.’’ Melville B. Nimmer & David Nim- to identify any preexisting works upon mer, Nimmer on Copyright, § 7.20[B][1], which the derivative work is based and to at 7–212.4(5) (2015) (hereinafter Nimmer). describe the material that has been add- Even if the inaccuracy was known, ‘‘plain- ed.13 tiff’s failure to inform the Copyright Office The Copyright Act defines ‘‘derivative of given facts is without substance[ ] to the work’’ as ‘‘a work based upon one or more extent that the Office would have regis- preexisting works, [including any] form in tered the subject work even had it known which a work may be recast, transformed, those facts.’’ Id. or adapted.’’ § 101. ‘‘A work consisting of Congress codified this court-made stan- editorial revisions, annotations, elabora- dard as part of the Prioritizing Resources tions, or other modifications which, as a

failure to disclose information in a copyright sense, Inc. v. Becton, Dickinson and Co., 649 application. F.3d 1276, 1295 (Fed.Cir.2011).

12. An en banc majority of the Federal Circuit 13. See Form VA, Supplemental Exhibit B to has construed § 411(b)(1), albeit in dicta, as Perry’s Supplement to its Motion for Sum- requiring ‘‘ ‘but-for’ materiality’’ to invalidate mary Judgment (‘‘Perry’s Supplement’’), a federal registration of copyright. See Thera- Docket Entry No. 28–2, pp. 3, 5. 924 117 FEDERAL SUPPLEMENT, 3d SERIES

whole, represent an original work of au- added material. See id. at 539. It would thorship, is a ‘derivative work’.’’ Id. therefore appear that the quoted language According to Lennar, the Burgundy and refers to § 103, which defines the scope of Bordeaux are substantially modified ver- protection in a derivative work, not § 101, sions of pre-existing Lennar designs used which defines the term ‘‘derivative work.’’ in various forms since 1998.14 The Bur- See id. at 538 (citing § 103 and stating gundy and Bordeaux would therefore ap- that its limitations do not apply ‘‘when the pear to be derivative works as defined in author of the derivative work also has a § 101. Lennar argues that because it copyright on the underlying work’’ (em- owns the preexisting designs on which the phasis added)). Lennar cites no other au- Burgundy and Bordeaux are based, the thority for the proposition that the Bur- Burgundy and Bordeaux ‘‘are not deriva- gundy and Bordeaux are not derivative tive works under the Copyright Act.’’ 15 works as defined in § 101, and the court is 17 The court is not persuaded. The fact that not aware of any. Lennar may own the underlying material Lennar also points to cases concluding is important to the scope of Lennar’s copy- that the disclosure requirement in § 409(9) right in the Burgundy and Bordeaux de- does not apply where the registrant owns signs.16 However, it does not mean that both the underlying work and the deriva- the Burgundy and Bordeaux are not ‘‘de- tive work.18 See Frank Betz Associates, rivative works’’ as defined in § 101. Len- Inc. v. J.O. Clark Const., L.L.C., No. 3:08– nar points to no provision of the Copyright CV–00159, 2010 WL 2253541, at *11 Act that creates such an exception. Len- (M.D.Tenn. May 30, 2010) (‘‘The issue nar cites a Fourth Circuit case that is raised by § 409(9) is whether and to what factually analogous and appears, at first extent the derivative design incorporates glance, to support its position. See Chris- elements designed by someone else.’’); topher Phelps & Assocs., LLC v. Galloway, Dorchen/Martin Associates, Inc. v. Brook 492 F.3d 532, 538 (4th Cir.2007) (‘‘The of Cheboygan, Inc., No. 11–10561, 2012 Bridgeford Residence [based on plaintiff’s WL 4867608, at *5 (E.D.Mich. Oct. 15, preexisting designs] was not a derivative 2012) (‘‘Where the evidence indicates that work as defined in the Copyright Act’’). Plaintiff created derivative designs based However, the quoted language from Gallo- on its own original designs, ‘the concerns way is broader than the actual holding in that § 409(9) raises are not implicated.’ ’’ that case. Specifically, the court in Gallo- (quoting Frank Betz Associates, 2010 WL 2253541, at *11)). way held that because the plaintiff owned the underlying work, its copyright extend- [14] However, as one commentator has ed to the entire design, not just the newly observed, ‘‘courts confuse the disclosure

14. See Plaintiff’s Response, Docket Entry No. scope, duration, ownership, or subsistence of, 34, pp. 8–11. any copyright protection in the preexisting material.’’). 15. Id. at 17. 17. Furthermore, the substantial case law ad- 16. See § 103(b) (‘‘The copyright in a compila- dressing registration requirements when the tion or derivative work extends only to the owner of a derivative work also owns the material contributed by the author of such underlying material would be nonsensical if work, as distinguished from the preexisting such works were not in fact ‘‘derivative material employed in the work, and does not works.’’ See infra section II(B)(1)(a)(iii). imply any exclusive right in the preexisting material. The copyright in such work is inde- 18. Plaintiff’s Response, Docket Entry No. 34, pendent of, and does not affect or enlarge the p. 17. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 925 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) requirements of Space 6 with originality or fact. Lennar registered the Burgundy infringement issues, or worse, with both.’’ and Bordeaux designs before bringing this 5 William F. Patry, Patry on Copyright action.19 It is undisputed that Lennar did § 17:112 (2015). Even if the registrant not identify the Burgundy and Bordeaux owns both the derivative work and the as derivative works in its applications to underlying work, § 409(9) still requires the Copyright Office.20 These applications disclosure: therefore contained inaccurate informa- The Copyright Office forms and instruc- tion. tions contain no such exception, and Nevertheless, even if Lennar was re- such an exception would make no sense quired to disclose the derivative nature of from a policy standpoint. The purpose its designs—and even assuming its failure of disclosure on Space 6 is twofold: to to do so was knowing—any such failure permit the Copyright Office to deter- appears to have been immaterial. ‘‘In mine whether the new material is suffi- general, failure to disclose that the regis- cient to support the derivative registra- tered work is derivative of an earlier, un- tion, and to place on the public record a derlying work should occasion rejection of clean separation of the original, preexist- the registration certificate only if the ing work from the derivative work so claimant was for some reason ineligible to that copyright in the original work is not register the derivative work.’’ Nimmer impermissibly extended through succes- § 7.20[B][1], at 7–212.4(8)(a).21 As dis- sive registrations for undisclosed varia- cussed in the following subsection, there is tions. In fact, contrary to [cases holding sufficient evidence to raise a fact question that a common owner need not disclose as to whether Lennar owned the pre-exist- prior works], this latter policy is particu- ing works on which the Burgundy and larly undermined by a common owner. Bordeaux designs were based. Perry of- Accordingly, [such cases] should not be fers no evidence that Lennar did not au- followed. thor the underlying works and no authori- Id. ty to suggest that the Copyright Office The court concludes that the Burgundy would have refused to register the Bur- and Bordeaux designs are derivative gundy and Bordeaux designs had it known works as defined in § 101 and that § 409 that they were based in part on Lennar’s and Space 6 required disclosure of that own preexisting material.22 Therefore,

19. See Certificate of Registration No. VA 1– Exhibit F to Perry’s Supplement, Docket En- 893–104, Burgundy Townhome Design, Ex- try No. 28–6, pp. 4–7. hibit A to Second Amended Complaint, Dock- et Entry No. 17–1, pp. 1–2; Supplementary 21. Other authority Lennar cites for the propo- Certificate of Registration No. VA 1–433–693, sition that its works are not derivative in fact Burgundy Townhome Design, Exhibit B to supports this narrower proposition. See Can- Second Amended Complaint, Docket Entry non Group, Inc. v. Better Bags, Inc., 250 No. 17–1, pp. 3–4; Certificate of Registration F.Supp.2d 893, 899 (S.D.Ohio 2003) (‘‘[B]e- No. VA 1–893–105, Bordeaux Townhome De- cause the copyright in a derivative work is sign, Exhibit C to Second Amended Com- independent from the copyright for preexist- plaint, Docket Entry No. 17–1, pp. 5–6; Sup- ing work, the copyright office would have plementary Certificate of Registration No. VA nevertheless granted BBI’s registration.’’). 1–433–694, Bordeaux Townhome Design, Ex- hibit D to Second Amended Complaint, Dock- et Entry No. 17–1, pp. 7–8. 22. Because Perry’s cited authorities all involve works that incorporated preexisting ma- 20. See Plaintiff’s Response, Docket Entry No. terial owned by someone other than the regis- 34, pp. 17–20; Applications, Supplemental trant, they address originality concerns not 926 117 FEDERAL SUPPLEMENT, 3d SERIES

Perry’s fraud on the Copyright Office ar- quest a response from the Register before gument appears to lack merit.23 coming to a conclusion as to the materiali- (ii) Section 411(b)(2) mandates referral ty of a particular misrepresentation.’’ De- of the materiality question to the liverMed Holdings, LLC v. Schaltenbrand, Register of Copyrights; however, 734 F.3d 616, 624 (7th Cir.2013). The the issue is moot. court’s holding was not without reserva- tion, however. ‘‘Given its obvious potential When Congress amended the Copyright for abuse, we must strongly caution both Act in 2008 to include specific grounds for courts and litigants to be wary of using invalidation of a registration in § 411(b)(1), this device in the future.’’ Id. at 625. it also added § 411(b)(2), which states: Before a court refers a case to the Copy- In any case in which inaccurate informa- right Office, the party seeking invalidation tion described under paragraph (1) is should demonstrate that ‘‘(1) the registra- alleged, the court shall request the Reg- tion application included inaccurate infor- ister of Copyrights to advise the court mation; and (2) the registrant knowingly whether the inaccurate information, if included the inaccuracy in his submission known, would have caused the Register to the Copyright Office.’’ Id. of Copyrights to refuse registration. Because the court ultimately concludes Perry has not identified—and the court that summary judgment should be granted is not aware of—any reason that the Copy- on the issue of substantial similarity, it right Office would decline to register Len- need not further address the referral is- nar’s designs had it known of their deriva- sue. Nevertheless, it would be prudent for tive nature. Nevertheless, referral of the Lennar to file supplemental registrations, issue does not appear to be discretionary. identifying the Burgundy and Bordeaux In the only appellate decision that has designs as derivative works and providing addressed § 411(b)(2) in depth, the Sev- all other information required under enth Circuit held that a court ‘‘must re- § 409(9) and the application form.

raised in this case. See Lenert, 99 F.3d at *3– 23. The knowledge and but-for causation re- *4 (‘‘[T]he omission of the work’s derivative quirements codified in § 411(b) apply only to nature deprives the Copyright Office of the invalidation with respect to ‘‘institution of opportunity fully to evaluate the application; and remedies in infringement actions under and the derivative work is protected only to [section 411] and section 412.’’ See the extent of the new material contained in § 411(b)(3); id. (‘‘[A] certificate of registra- the derivative work.’’); GB Mktg. USA Inc. v. tion satisfies the requirements of [section 411] Gerolsteiner Brunnen GmbH & Co., 782 and section 412, regardless of whether the F.Supp. 763, 774 (W.D.N.Y.1991) (‘‘The ratio- certificate contains any inaccurate informa- nale behind this rule is simple: although the tion TTT’’). Accordingly, a ‘‘tight reading’’ of court would ordinarily defer to the judgment the revised § 411 preserves prior case law of the Copyright Office when the question of applying a more liberal standard to section originality is a close one, that is impossible to 410(c), which governs the prima facie pre- do when the Copyright Office has not had a sumption of validity accorded a certificate of fair opportunity to pass on the ques- registration. Nimmer, § 7.20[B][1], at 7– tionTTTT’’); Russ Berrie & Co., Inc. v. Jerry 212.4(5) nn. 25.2, 25.3; Therasense, 649 F.3d Elsner Co., Inc., 482 F.Supp. 980, 988 at 1316 n. 4 (Bryson, J., dissenting). There- (S.D.N.Y.1980) (‘‘Where as here the question fore, with respect to the presumption of valid- of originality is a close one, a decision to ity, Perry could argue that it need only show grant or deny protection made in the first that Lennar’s omission ‘‘might’’ have caused instance by the [Copyright Office] would have the Copyright Office to reject Lennar’s appli- been highly persuasive TTT, however the cation. The court need not address the issue Copyright Office had no opportunity to pass in detail, however, as Perry has failed to satis- on plaintiff’s claim accurately presented.’’). fy even this more liberal standard. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 927 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

(iii) Registration of the Burgundy and cites no genuinely contrary authority. Bordeaux designs is sufficient to Perry argues that Lennar should ‘‘only be bring suit on elements shared with able to bring suit upon the protected ele- underlying works. ments of the derivatives; i.e., those few [15] Although copyright registration is new elements that are original to the Bur- a prerequisite to suit for infringement, gundy and Bordeaux designs and not con- copyright ownership inheres automatically tained in the prior works.’’ 26 Perry pro- at the time of creation. See ¶¶ 102(a), vides quotes that appear to support its 408(a); Harper & Row Publishers, Inc. v. position,27 but the quotes are either taken Nation Enterprises, 471 U.S. 539, 105 out of context, see 1 Howard B. Abrams, S.Ct. 2218, 2223, 85 L.Ed.2d 588 (1985); The Law of Copyright § 10:18, or dicta Nimmer §§ 716[A][1], [B][1]. Where the from a distinguishable unpublished Fourth owner of a derivative work also owns the Circuit per curiam opinion issued twenty underlying work on which the derivative years ago, see Cramer v. Crestar Finan- work is based, registration of the deriva- cial Corp., 67 F.3d 294, 1995 WL 541707 at tive work alone is sufficient to bring suit *4 (4th Cir.1995). The one Fifth Circuit for infringement of elements contained in case Perry cites is entirely reconcilable both. E.g., Galloway, 492 F.3d at 539 with the established rule. See Creations (‘‘While Phelps & Associates only regis- Unlimited, Inc. v. McCain, 112 F.3d 814, tered the Bridgeford Residence design, 816 (5th Cir.1997) (holding that district that registration satisfied the prerequisite court did not err in comparing infringing for suit under 17 U.S.C. § 411 for the work to plaintiff’s registered line drawings entire design, even though some of it was because plaintiff’s t-shirts—presumably created earlier in the form of the Bell and derivative of the registered line draw- Brown Residence design.’’); Aspen Tech., ings—were not registered). That the 569 Fed.Appx. at 269 (‘‘This position has ‘‘Copyright Act requires authors to regis- been recognized by at least five circuits ter derivative works separately from the and by district courts in two others.’’ (cita- originals,’’ 28 does not bar a common-owner tions omitted)); accord Patry § 17:89; plaintiff from suing on elements of unreg- Nimmer § 7.16[B][5][c]; see also id. at n. istered originals contained in a registered 332 (‘‘[However,] [t]he assumption is that derivative work. E.g., Murray Hill Publi- the derivative work that is registered em- cations, Inc. v. ABC Communications, bodies all the features of the underlying Inc., 264 F.3d 622, 632 (6th Cir.2001), ab- 24 work on which suit is premised.’’). rogated on other grounds by Reed Elsevi- Perry refers to this as a ‘‘bizarre ‘regis- er, Inc. v. Muchnick, 559 U.S. 154, 130 ter all the plans at once’ theory,’’ 25 but S.Ct. 1237, 176 L.Ed.2d 18 (2010) (‘‘Be-

24. Some case law suggests that disclosure of 25. Perry’s Reply in Support of Its Motion for the preexisting works may be required to pro- Summary Judgment (‘‘Perry’s Reply’’), Dock- ceed based on a single registration. See, e.g., et Entry No. 41, p. 11 ¶ 19. Oravec v. Sunny Isles Luxury Ventures, L.C., 527 F.3d 1218, 1230 (11th Cir.2008). Be- 26. Id. at 8 ¶ 13. cause Perry argues that registration of a derivative work is never sufficient to sue on the 27. See id. ¶¶ 12–13. underlying material, it has not raised this more nuanced argument. Nevertheless, it is not clear that such a rule should apply in this 28. Id. at 7 n. 10. case, and if Lennar were to file supplemental registrations, that could resolve the matter. 928 117 FEDERAL SUPPLEMENT, 3d SERIES

cause a derivative work is cumulative of Independent of the registration-as-pre- the earlier work, it is logical that the regis- condition-to-suit issue, Perry argues that tration of the derivative work would relate Lennar is barred from enforcing its copy- back to include the original work, while rights in the preexisting material simply registration of the original material would because Lennar incorporated that material not carry forward to new, derivative mate- into derivative works.34 Perry is wrong. rial.’’).29 Though unpublished, the Fifth See Galloway, 492 F.3d at 538–39 (holding Circuit’s opinion in Aspen Tech., 569 Fed. that trial court erred in instructing jury Appx. at 269, which Perry fails to cite, is that scope of common owner’s copyright on point and directly refutes Perry’s posi- consisted only of the minimal difference tion.30 between underlying and derivative designs). Perry cites no authority that [16] The president of Lennar’s Hous- would support such a rule, and, absent ton Division, Donald A. Luke, testified evidence of invalid copyright in the under- that the Burgundy and Bordeaux designs lying work, such a rule would be nonsensi- are the fourth iteration of a townhouse cal as a policy matter. Lennar independently designed and has been building for approximately fifteen [17, 18] It is true that the copyright in years.31 Lennar did not register any of a derivative work ‘‘extends only to the the preexisting design iterations. any of material contributed by the author of such the preexisting design iterations.32 How- work, as distinguished from the preexist- ever, Lennar did register the Burgundy ing material employed in the work,’’ and Bordeaux designs.33 Lennar there- § 103(b). This limitation stems from the fore has satisfied § 411(a)’s registration ‘‘fundamental principal that only that requirement with respect to the entire which is original with the copyright propri- Burgundy and Bordeaux designs, includ- etor or his assignor may be protected by ing those elements derived from Lennar’s his copyright.’’ Nimmer, 3.04[A], at 3– own preexisting works. 22.10(1).35 However, the copyright in the

29. Compare Nimmer § 7.16[B][5][b], Regis- gundy and Bordeaux are trivial, unprotecta- tration Only of Underlying Work, with id. ble changes in design.’’ (emphasis added)); § 7.16[B][5][c], Registration Only of Deriva- Defendant’s Additional Briefing on Non–Pro- tive or Collective Work. tected Elements, Docket Entry No. 72, p. 9 n. 13 (‘‘Of course, Perry contends that only those 30. After expending substantial effort review- changes made to the derivative work are even ing the relevant authorities and finding that possibly protected by copyrightTTTT’’). The they overwhelmingly support Lennar’s posi- court’s analysis of this argument overlaps sig- tion, the court views Perry’s argument as bor- nificantly with the registration issue, so much dering on frivolous. so that it may be superfluous, but given impli- 31. Oral and Videotaped Deposition of Donald cations for the substantial similarity analysis A. Luke (‘‘Luke Deposition’’), Exhibit H to below, the court will address it explicitly. Defendant’s Motion for Summary Judgment, Docket Entry No 22–1, pp. 176–82. 35. Thus, copyright in a derivative work ‘‘does not imply any exclusive right in the preexist- 32. Declaration of Robert P. Nicks, Exhibit B ing material,’’ § 103(b). That is to say, the to Plaintiff’s Motion for Protective Order, owner of a derivative-work copyright does not Docket Entry No. 26–1, p. 8 ¶ 8. by virtue of that copyright alone acquire 33. Id. at 7 ¶ 6. rights in the underlying works. Likewise, the copyright in a derivative work does not ‘‘en- 34. See Defendant’s Motion for Summary large the scope, duration, ownership, or sub- Judgment, Docket Entry No. 22, p. 16 (‘‘What sistence of, any copyright protection in the remains of Lennar’s copyrights to the Bur- preexisting material.’’ Id. ‘‘Thus, the copy- LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 929 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) derivative work ‘‘does not affect’’ the own- in their existing material. Assuming Len- ership or subsistence of copyright protec- nar is the copyright owner of the underly- tion in the preexisting material. § 103(b). ing material incorporated into the Burgun- Therefore, ‘‘[a]ny elements that the author dy and Bordeaux designs, Lennar may of the derivative work borrowed from the enforce its copyright in that underlying material against a party that copies it from underlying work TTT remain protected by the derivative designs. the copyrights in the underlying work.’’ Gamma Audio & Video, Inc. v. Ean–Chea, In a last ditch effort, Perry argues that even if Lennar is also entitled to sue on 11 F.3d 1106, 1112 (1st Cir.1993); accord elements of the underlying works, ‘‘Lennar Nimmer, § 3.05, at 3–34.30 n.2.1. Thus, has not produced any tangible evidence even if the infringer copies underlying ma- that it actually owns the original [de- terial only from the derivative work, the signs].’’ 36 Even though Donald Luke tes- copyright owner of the underlying material tified that he was personally involved in has a cause of action against the infringer. the design process over the course of fif- Montgomery v. Noga, 168 F.3d 1282, teen years and that each iteration of the 1292–93 (11th Cir.1999); accord Nimmer design was done entirely in-house,37 Perry § 3.05, at 3–34.31; cf. Richmond Homes argues that ‘‘Lennar must provide more Mgmt., Inc. v. Raintree, Inc., 66 F.3d 316 than the word of one of its employees to 38 (4th Cir.1995) (‘‘Because RHMI cannot as- create a jury question.’’ The court is not sert the [underlying] copyright, it may persuaded. Perry’s cited authority is distinguishable,39 and determining whether or claim damages based solely on the aspects not Luke’s testimony is to be credited is of the Louisa ‘distinguished from the the role of a jury. preexisting material employed in the (b) Originality and Copyrightability work.’ ’’ (emphasis added) (quoting § 103(b))). A contrary rule would frus- Perry appears to concede that if registration of the Burgundy and Bordeaux de- trate the central purposes of intellectual signs alone is sufficient to bring suit, the property law, i.e., the promotion of innova- only remaining validity issues are whether tion and the arts, because authors would Lennar in fact owns the underlying works, be deterred from creating or licensing de- i.e., whether the prior iterations were orig- rivative works for fear of losing protection inal to Lennar,40 and whether the works as

right owner of the underlying work does not 38. Perry’s Reply, Docket Entry No. 41, p. 9 as such become the copyright owner of the ¶ 15. material added in a [derivative] work incorpo- rating such underlying work.’’ Nimmer, 39. See Psihoyos v. Pearson Educ., Inc., 855 § 3.04[A], at 3–22.9 n. 4. F.Supp.2d 103, 117–18 (S.D.N.Y.2012) (granting summary judgment over non-movant’s ob- 36. Perry’s Reply, Docket Entry No. 41, pp. 9– jections because ‘‘stray testimony’’ inconsis- 10. tent with movant’s argument was merely ‘‘speculative evidence’’ insufficient to create a 37. See, e.g. Luke Deposition, Exhibit H to genuine fact issue); Corwin v. Quinonez, 858 Defendant’s Motion for Summary Judgment, F.Supp.2d 903, 911 (N.D.Ohio 2012) (holding Docket Entry No 22–1, p. 182 (‘‘Q: We’re on that conclusory allegations in plaintiff’s affi- the fourth [iteration]. A: Sure. Q: I was just davit were insufficient to create fact issue making sure I have all the iterations. A: where allegations lent no support to factual They are, but they all come from—from my— assertions in the complaint that were directly from my brain.’’); id. (‘‘Q: Okay. Were refuted by defendant’s evidence). any—any outside architects or designers involved in any of them? A: No. Q: Even the 40. Perry’s Reply, Docket Entry No. 41, pp. 9– original one? A: Even the original.’’). 10 ¶¶ 15, 18–19. 930 117 FEDERAL SUPPLEMENT, 3d SERIES

a whole are copyrightable.41 come unless the defendant offers either (1) proof that the product was copied from [19–21] ‘‘To qualify for copyright pro- other works or (2) ‘‘similarly probative evi- tection, a work must be original to the dence as to originality.’’ Masquerade author.’’ Feist Publications, Inc. v. Rural Novelty, Inc. v. Unique Industries, Inc., Telephone Service Co., Inc., 499 U.S. 340, 912 F.2d 663, 668–69 (3d Cir.1990). 111 S.Ct. 1282, 1287, 113 L.Ed.2d 358 (1991). The threshold for originality is [23] Perry presents no evidence that low. It requires only ‘‘that the work was Lennar copied the Burgundy or Bordeaux independently created by the author (as designs—or the underlying material—from opposed to copied from other works), and other works not owned by Lennar. And that it possesses at least some minimal Lennar presents unrebutted evidence that degree of creativity.’’ Id. Novelty is not all of the design work was done in-house required. Id. ‘‘[T]he requisite level of by Lennar employees. Even if due to the creativity is extremely low; even a slight unresolved registration issues in this case amount will suffice.’’ Id. ‘‘Practically Lennar were not entitled to a presumption speaking, because the degree of creativity of validity regarding the underlying works, required is so low, the originality require- Lennar has presented sufficient evidence ment amounts to ‘little more than a prohi- to raise a fact issue as to whether it au- bition of actual copying.’ ’’ Axelrod & thored them. Furthermore, apart from Cherveny Architects, P.C. v. Winmar the derivative work issues addressed Homes, No. 2:05–CV–711–ENV–ETB, above, the Copyright Office had an oppor- 2007 WL 708798, at *9 (E.D.N.Y. March 6, tunity to pass on the copyrightability of 2007) (quoting Alfred Bell & Co. v. Catalda Lennar’s designs as a whole, and it issued Fine Arts, 191 F.2d 99, 103 (2d Cir.1951)). registrations. Nevertheless, ‘‘[t]here remains a narrow Although intertwined with the issue of category of works in which the creative substantial similarity addressed below, spark is utterly lacking or so trivial as to Perry’s other arguments against originali- be virtually nonexistent.’’ Feist, 111 S.Ct. ty and copyrightability raise two distinct at 1294. For example, the Supreme Court issues: (i) whether the changes embodied in Feist held that the alphabetical arrange- in the Burgundy and Bordeaux are suffi- ment of names in a telephone directory cient to copyright those designs, and (ii) was not sufficiently original because ar- whether the designs as a whole are suffi- ranging names alphabetically is an ‘‘age- ciently original to copyright. old practice, firmly rooted in tradition and (i) Originality is not limited to dif- so commonplace that it has come to be ferences between the derivative expected as a matter of course.’’ Id. at and underlying works. 1297. Perry argues that the Burgundy and [22] Where the defendant challenges Bordeaux designs are not sufficiently origi- the originality of copyrighted material, the nal because ‘‘[t]rivial changes to a deriva- presumption of validity will not be over- tive work are not copyrightable.’’ 42 This

41. See generally Defendant’s Motion for Sum- will address originality for validity purposes mary Judgment, Docket Entry No. 22, pp. 17– separately from scope of protection for sub- 25 (‘‘Lennar Cannot Own Layouts Dictated by stantial similarity purposes. Functional Necessity’’). Perry’s originality arguments are intertwined with its arguments 42. Defendant’s Motion for Summary Judg- about the scope of Lennar’s protection in the ment, Docket Entry No. 22, p. 6 ¶ 3. Burgundy and Bordeaux designs. The court LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 931 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) argument is a red herring. Perry persists process.’’ 45 Perry argues that ‘‘[s]ince in relying on the entirely unsupported those elements cannot be copyrighted, proposition that Lennar’s enforceable Lennar has no copyright on its designs for copyright in the Burgundy and Bordeaux the Burgundy and Bordeaux.’’ 46 The sub- is limited to the differences between those stance of Perry’s arguments on this point, designs and their immediate predecessors. however, addresses only the scope of Len- For the reasons discussed at length above, nar’s copyright for substantial similarity this is incorrect. Furthermore, Perry’s purposes.47 To the extent Perry argues argument defies common sense. If, as that the Burgundy and Bordeaux designs Perry argues, the changes embodied in the are not original or copyrightable because Burgundy and Bordeaux designs are too the layouts were dictated by functional insignificant to distinguish those designs demands, Perry does not cite a single case from the underlying works,43 then what finding a copyright invalid on these Lennar has copyrighted are the underlying grounds. Furthermore, Perry stresses works themselves. Making all reasonable elsewhere that there are ‘‘no fewer than 65 inferences in favor of Lennar, the court substantive differences’’ between Lennar’s assumes that Lennar authored the under- design and Perry’s, rendering them ‘‘pro- lying works on which the Burgundy and foundly different’’ from one another.48 Bordeaux designs are based, and the prop- Perry states that ‘‘[w]hile the designers of er inquiry is whether the designs as a Perry’s and Lennar’s townhouses had al- whole are sufficiently original to be accord- most no flexibility when it came [to] the ed copyright protection. layout of the major features, they did have (ii) Despite any limitations imposed by discretion with regard to the details.’’ 49 If market demands or development that is the case, then the 65 highlighted criteria, there is sufficient evidence differences are 65 ways in which Lennar’s to raise a fact question on originali- designs are original despite the constraints ty and copyrightability of the works imposed. Perry has failed to rebut the as a whole. presumption of validity of Lennar’s de- Apart from its derivative-work related signs. Even if Lennar were not entitled to arguments, Perry raises no other explicit a presumption of validity, Perry has failed objections to the originality and copyright- to make a sufficient showing on summary ability of Lennar’s plans for validity pur- judgment, as there is ample evidence in poses.44 Nevertheless, Perry argues the record to create a fact issue on origi- obliquely that ‘‘the designs represented nality. Cf. Danze & Davis Architects, Inc. the only way to design a townhouse that v. Legend Classic Homes, Ltd., No. H–10– both met market expectations and com- 0216, 2011 WL 2940671, at *5 (S.D.Tex. plied with the Creekside and The Wood- July 19, 2011) (granting partial summary lands’ rules governing the construction judgment to plaintiff on validity despite

43. See id. at 16–17. 45. Defendant’s Motion for Summary Judg- ment, Docket Entry No. 22, pp. 17–18 ¶ 31. 44. See, e.g., id. at 17 ¶ 31 (‘‘Putting aside 46. Id. at 25 ¶ 48. Lennar’s copyright problemsTTTT’’); Perry’s Reply, Docket Entry No. 41, p. 10 ¶ 16 47. See id. at 18–25. (‘‘Based on the above, Lennar has not and cannot make out the prima facie case of copy- 48. Id. at 7 ¶ 6, 10 ¶ 13. right ownershipTTTT’’). 49. Id. at 10 ¶ 13. 932 117 FEDERAL SUPPLEMENT, 3d SERIES

similar arguments from defendant); KB who created the allegedly infringing work Home v. Antares Homes, Ltd., No. 3–04– had a reasonable opportunity to view the CV–1031–L, 2007 WL 1893370, at *7 copyrighted work. The second element— (N.D.Tex. June 28, 2007) (same); Axelrod probative similarity—requires a showing & Cherveny, 2007 WL 708798, at *11 that the works, when compared as a whole, (same). are adequately similar to establish appropriation.’’ Id. 2. Copying [29] When comparing works ‘‘as a [24, 25] To prove actionable copying a whole,’’ the question is not whether ‘‘the plaintiff must make two showings. ‘‘First, whole of the defendant’s work largely re- the plaintiff must, as a factual matter, plicates the allegedly copied work,’’ but prove that the defendant actually used the rather ‘‘the jury must consider the whole copyrighted material to create his own of the first work (including both copyright- work.’’ General Universal Systems, Inc. able and non-copyrightable parts) and the v. Lee, 379 F.3d 131, 141 (5th Cir.2004) whole of the second work and then com- (internal quotation marks and citation pare the two works, looking for any simi- omitted). ‘‘If the plaintiff demonstrates larities between their constituent parts.’’ factual copying, he must next demonstrate Positive Black Talk, 394 F.3d at 370–71. that the copying is legally actionable by showing that the allegedly infringing work [30] Perry does not explicitly address is substantially similar to protectable ele- factual copying in its briefing apart from a ments of the infringed work.50 A side-by- single sentence in the summary of its ar- side comparison must be made between gument.51 There is sufficient evidence to the original and the copy to determine create a fact issue on this element. It is whether a layman would view the two undisputed that Perry’s employees had ac- works as ‘substantially similar.’ ’’ Id. cess to Lennar’s designs. While Perry was preparing its bid for Phase II of (a) Factual Copying Creekside Park, a Perry employee contact- [26–28] Factual copying is generally ed Lennar’s salespeople and obtained floor established by proof of (1) the defendant’s plans of the Burgundy and Bordeaux.52 access to the plaintiff’s work before cre- Those plans were circulated to Perry’s ar- ation of the infringing work and (2) proba- chitect, who, the same day, also visited and tive similarity between the two works. photographed Lennar’s townhomes under Gen. Universal, 379 F.3d at 141–42. ‘‘The construction.53 During discovery Perry access element is satisfied if the person averred that its completed a draft of the

50. As between ‘‘protectable’’ and ‘‘protecti- sition, and the remainder of its briefing ad- ble,’’ the court prefers the former, and it uses dresses only substantial similarity and validi- the latter only to maintain accurate quota- ty-related arguments. tions. 52. E.g., Shirley Deposition, Exhibit 1 to Plain- 51. See Defendant’s Motion for Summary tiff’s Response, Docket Entry No. 34–1, pp. Judgment, Docket Entry No. 22, p. 12 ¶ 16 68–71. (‘‘[T]he evidence unequivocally demonstrates that [Perry’s architect] drew (by hand) Perry’s 53. E.g., Deposition of Charles Dickson (‘‘Dick- allegedly infringing designs onto ‘butter pa- son Deposition’’), Exhibit 7 to Plaintiff’s Re- per’ using an architect’s scale before he ever sponse, Docket Entry No. 34–1, pp. 67–68; laid eyes on the designs of the Burgundy and Perry’s Answers to Interrogatories, Exhibit 18 Bordeaux townhouses.’’). Perry does not cite to Plaintiff’s Response, Docket Entry No. 34– any record evidence in support of this propo- 2, pp. 22–23. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 933 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

Perry designs on paper prior to reviewing exists between the protected elements of a Lennar’s plans.54 At his deposition Per- work and another work.’’). Therefore, ry’s architect could not recall when he ‘‘[t]he inquiry focuses not on every aspect finished his paper drawings, but he be- of the copyrighted work, but on those as- lieved it was the same afternoon he visited pects of the plaintiff’s work [that] are pro- Lennar’s townhomes and received Len- tectible under copyright laws and whether nar’s plans by e-mail.55 The credibility of whatever copying took place appropriated Perry’s evidence is a jury a question. As those [protected] elements.’’ T–Peg, Inc. to ‘‘probative similarity,’’ a cursory review v. Vermont Timber Works, Inc., 459 F.3d of the Lennar and Perry floor plans re- 97, 112 (1st Cir.2006) (internal quotation veals numerous similarities in layout and marks and citations omitted). ‘‘[A]nyone 56 arrangement. There is sufficient evi- may copy uncopyrightable elements in a dence in the record to create a triable copyrighted work.’’ Eng’g Dynamics, 26 issue on factual copying. F.3d at 1347. Given these limitations, ‘‘where the copyrighted work contains un- (b) Substantial Similarity protectable elements, the first step is to [31–35] ‘‘Not all copying, however, is distinguish between protectable and un- copyright infringement.’’ Feist, 111 S.Ct. protectable elements of the copyrighted at 1289. ‘‘To determine whether an in- work.’’ Nola Spice, 783 F.3d at 550.57 stance of copying is legally actionable, a Once unprotectable elements are excluded, side-by-side comparison must be made be- ‘‘the next inquiry is whether the allegedly tween the original and the copy to deter- infringing work bears a substantial simi- mine whether a layman would view the two larity to the protectable aspects of the works as ‘substantially similar.’ ’’ Positive original work.’’ Id. This second inquiry is Black Talk, 394 F.3d at 374 (internal quo- performed from the perspective of a lay- tation marks and citation omitted). ‘‘To man or ordinary observer. Id. support a claim of copyright infringement, the copy must bear a substantial similarity [36, 37] ‘‘Typically, the question wheth- to the protected aspects of the original.’’ er two works are substantially similar Peel & Co., Inc. v. The Rug Market, 238 should be left to the ultimate factfinder, F.3d 391, 398 (5th Cir.2001) (emphasis but summary judgment may be appropri- added); see also Zalewski v. Cicero Build- ate if the court can conclude, after viewing er Dev., Inc., 754 F.3d 95, 101 (2d Cir.2014) the evidence and drawing inferences in a (‘‘For clarity, the term ‘substantial similar- manner most favorable to the nonmoving ity’ is properly reserved for similarity that party, that no reasonable juror could find

54. Perry’s Answers to Interrogatories, Exhibit 57. See also Peel & Co., 238 F.3d at 398 (re- 18 to Plaintiff’s Response, Docket Entry No. versing summary judgment where evidence 34–2, pp. 24–25. raised fact issues on, inter alia, protectability of constituent elements of plaintiff’s work); 55. See Dickson Deposition, Exhibit 7 to Plain- Kepner–Tregoe, Inc. v. Leadership Software, tiff’s Response, Docket Entry No. 34–1, pp. Inc., 12 F.3d 527, 533–34 (5th Cir.1994) (‘‘To 154–55. determine the scope of copyright protection 56. Copies of the relevant plans are attached in a close case, a court may have to filter out to this Memorandum Opinion and Order as ideas, processes, facts, idea/expression merg- an appendix. See also Dickson Deposition, ers, and other unprotectable elements of Exhibit 7 to Plaintiff’s Response, Docket En- plaintiff’s copyrighted materials to ascertain try No. 34–1, pp. 182–84 (reviewing similari- whether the defendant infringed protectable ties between the plans). elements of those materials.’’). 934 117 FEDERAL SUPPLEMENT, 3d SERIES substantial similarity of ideas and expres- of spaces and elements in the design, but sion.’’ Gen. Universal, 379 F.3d at 142 does not include individual standard fea- (internal quotation marks and citation tures.’’ 17 U.S.C. § 101. This excludes omitted). Summary judgment is also ap- from protection ‘‘[s]tandard configurations propriate where ‘‘similarity between two of spaces,’’ 37 C.F.R. § 202.11(d)(2), as works concerns only non-copyrightable ele- well as ‘‘common windows, doors, and oth- ments of the plaintiff’s work.’’ Herzog v. er staple building components,’’ H.R.Rep. Castle Rock Entm’t, 193 F.3d 1241, 1247 No. 101–735, reprinted in 1990 (11th Cir.1999) (quoted with approval by U.S.C.C.A.N. 6935, 6949. However, indi- Gen. Universal, 379 F.3d at 142 n. 142); vidual features that ‘‘reflect the architect’s see Kepner–Tregoe, 12 F.3d at 533 (‘‘Thus, creativity’’ are not excluded. Id. if we conclude that [defendant] only copied unprotectable elements of [plaintiff’s] ma- [40–43] More generally, limitations im- terials, we must reverse the district court’s posed by traditional copyright doctrines— judgment [in favor of plaintiff].’’). such as idea/expression dichotomy and Summary judgment therefore is appro- sc`enes-a-faire` —apply to architectural priate if—after filtering out unprotectable works as well. Zalewski, 754 F.3d at 105. elements of Lennar’s designs—(1) no rea- No author may copyright facts or ideas, sonable jury could find substantial simi- only the expression of those facts and larity between the remaining protectable ideas. Feist, 111 S.Ct. at 1290; see 17 elements of Lennar’s designs and Perry’s U.S.C. § 102(b).58 Such expression is pro- designs, or (2) there are no remaining tectable, ‘‘as long as that expression is similarities between the designs. original and not dictated by the underlying (i) Not all aspects of a copyrighted idea.’’ Nola Spice, 783 F.3d at 551. ‘‘The work are protectable; copyright guiding consideration in drawing the line only protects the constituent ele- between an idea and its expression is the ments of a work that are original to preservation of the balance between com- the author. petition and protection reflected in the pat- [38, 39] ‘‘The mere fact that a work is ent and copyright laws.’’ Kern River Gas copyrighted does not mean that every el- Transmission Co. v. Coastal Corp., 899 ement of the work may be protected.’’ F.2d 1458, 1463 (5th Cir.1990) (internal Feist, 111 S.Ct. at 1289. ‘‘ ‘The copy- quotation marks, alteration, and citation right is limited to those aspects of the omitted). Therefore, ‘‘when an idea can be work—termed ‘‘expression’’—that display expressed in very few ways, copyright law the stamp of the author’s originality.’ ’’ does not protect that expression, because Kepner–Tregoe, 12 F.3d at 533 (quoting doing so would confer a de facto monopoly Harper & Row, 105 S.Ct. at 2224). In- over the idea. In such cases idea and fringement therefore requires ‘‘copying of expression are said to be merged.’’ Kep- constituent elements of the work that are ner–Tregoe, 12 F.3d at 533. Similarly, the original.’’ Feist, 111 S.Ct. at 1296. sc`enes-a-faire` doctrine excludes from pro- Under the Copyright Act, an architec- tection ‘‘expressions that are standard, tural work ‘‘includes the overall form as stock or common to a particular subject well as the arrangement and composition matter or are dictated by external factors,’’

58. Section 102(b) states: ‘‘In no case does cept, principle, or discovery, regardless of the copyright protection for an original work of form in which it is described, explained, illus- authorship extend to any idea, procedure, trated, or embodied in such work.’’ process, system, method of operation, con- LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 935 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) including ‘‘industry demand and practice.’’ that are expression not required by the Eng’g Dynamics, 26 F.3d at 1344, 1347.59 idea.’’ Yankee Candle Co., Inc. v. Bridge- water Candle Co., LLC, 259 F.3d 25, 36 (ii) The degree of similarity required to (1st Cir.2001) (internal quotation marks infringe depends on the amount of and citation omitted). the author’s original contribution to a particular work. [46–48] Similarly, ‘‘[t]he law is more protective of highly original and highly [44, 45] Although a work may be copy- expressive works than it is of functional rightable as a whole, the scope of protec- and nonfiction works.’’ Eng’g Dynamics, tion afforded that work varies in propor- 26 F.3d at 1348. To the extent that a tion to the amount of the author’s original contribution. ‘‘Many copyrights represent work is ‘‘highly functional’’ or comprised of significant creative effort, and are there- ‘‘highly standardized’’ elements it ‘‘may lie fore reasonably robust, whereas others re- very near the line of uncopyrightability.’’ flect only scant creativity.’’ Nimmer, See id. Copyright protection in such § 13.03[A][4], at 13–66.2. ‘‘More similarity works is thin. See id. n. 15. ‘‘Where the is required when less protectible matter is quantum of originality is slight and the at issue.’’ Id. Thus, ‘‘the scope of copy- resulting copyright is ‘thin,’ infringement right protection [is] a sliding scale that will be established only by very close copy- changes with the availability of expressions ing because the majority of the work is for a given idea.’’ Eng’g Dynamics, 26 unprotectable.’’ Beaudin v. Ben & Jerry’s F.3d at 1348 (citing Lotus Dev. Corp. v. Homemade, Inc., 95 F.3d 1, 2 (2d Cir. Borland Int’l, Inc., 831 F.Supp. 202, 209 1996). (D.Mass.1993)). The same range of originality is present If there’s a wide range of expression (for in architectural works: ‘‘Some architectur- example, there are gazillions of ways to al designs, like that of a single-room log make an aliens-attack movie), then copy- cabin, will consist solely of standard fea- right protection is ‘‘broad’’ and a work tures arranged in standard ways; others, will infringe if it’s ‘‘substantially similar’’ like the Guggenheim, will include standard to the copyrighted work. If there’s only features, but also present something en- a narrow range of expression (for exam- tirely new. Architecture, in this regard, is ple, there are only so many ways to like every art form.’’ Zalewski, 754 F.3d paint a red bouncy ball on blank canvas), at 103–04. then copyright protection is ‘‘thin’’ and a work must be ‘‘virtually identical’’ to Perry argues that a heightened standard infringe. of similarity should apply in all architec- Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d tural cases. Perry cites the Eleventh Cir- 904, 913–14 (9th Cir.2010). ‘‘This height- cuit’s decision in Intervest for the proposi- ened showing is necessary because, as idea tion that ‘‘architectural works are entitled and expression merge, fewer and fewer to ‘the least, narrowest or ‘thinnest’ pro- aspects of a work embody a unique and tection.’ ’’ 60 See Intervest Const., Inc. v. creative expression of the idea; a copy- Canterbury Estate Homes, 554 F.3d 914, right holder must then prove substantial 921 (11th Cir.2008). The court in Intervest similarity to those few aspects of the work reached this conclusion by likening archi-

59. The specific application of these doctrines 60. Defendant’s Motion for Summary Judg- to architectural works is discussed in subsec- ment, Docket Entry No. 22, p. 26 ¶ 52. tion iii, below. 936 117 FEDERAL SUPPLEMENT, 3d SERIES tectural works to compilations, see id., tent with general copyright principles and which, following the Supreme Court’s opin- Fifth Circuit precedent. ion in Feist, are entitled to only thin pro- The scope of protection for Lennar’s tection, 111 S.Ct. at 1289. However, Con- works, and the level of similarity required gress anticipated this argument when it for infringement, will depend on the amended the Copyright Act to include ar- amount of Lennar’s original contribution to chitectural works, and it rejected any those works. After applying ‘‘standard heightened standard of similarity: ‘copyrightability filters,’ such as sc`enes-a-` [D]eterminations of infringement of ar- faire,’’ the ‘‘court will determine whether chitectural works are to be made accord- the [potentially] thin copyright [Lennar] ing to the same standard applicable to may enjoy has been infringed.’’ See Eng’g all other forms of protected subject mat- Dynamics, 26 F.3d at 1348 n. 15. ter. The references in the definition of ‘‘architectural work’’ to ‘‘overall form,’’ (iii) Filtration is compatible with and to the nonprotectibility of ‘‘individu- architectural works being al standard features’’ are not intended to protectable ‘‘as a whole.’’ indicate that a higher standard of simi- Lennar argues that what is protectable, larity is required to prove infringement and what Perry infringed, is ‘‘the layout of of an architectural work, or that the its floor plans as a ‘protectible whole,’ in- scope of protection of architectural cluding as to the selection, arrangement, works is limited to verbatim or near- and integration of elements and spaces, as verbatim copying. These definitional well as their overall form, look, concept, provisions are intended merely to give and feel.’’ 61 Lennar argues that ‘‘[b]e- the courts some guidance regarding the cause [its] layouts are protectable as a nature of the protected matter. The whole and in overall concept and feel, re- extent of protection is to be made on an gardless of the protectability of the compo- ad hoc basis. nents, the Court’s substantial similarity H.R.Rep. No. 101–735, reprinted in 1990 analysis does not require the ‘filtering out’ U.S.C.C.A.N. 6935, 6952 (emphasis added). of purportedly unprotectable elements.’’ 62 ‘‘Intervest contravenes Congress’ intent by treating architectural works differently That architectural works are protectable than other works and failing to determine ‘‘as a whole’’ is supported by the text of what in architecture—beyond mere ar- the Copyright Act and the legislative histo- rangement—is copyrightable.’’ Zalewski, ry. See § 101 (‘‘[An architectural work] 754 F.3d at 104. The ‘‘real issue’’ is ‘‘to includes the overall form as well as the determine what in [the work] originated arrangement and composition of spaces with the author and what did not.’’ Id. and elements in the design.’’); H.R.Rep. Where the author’s original contribution is No. 101–735, reprinted in 1990 ‘‘slight,’’ his copyright may be ‘‘very thin,’’ U.S.C.C.A.N. 6935, 6949 (‘‘[C]reativity in id. at 107, but this is a function of the architecture frequently takes the form of a author’s minimal contributions to the de- selection, coordination, or arrangement of sign at issue, not of architectural works in unprotectible elements into an original, general, see id. This approach is consis- protectible whole.’’).

61. Plaintiff’s Supplemental Brief on Substan- 62. Id. at 6. Specifically, ‘‘Lennar does not tial Similarity, Docket Entry No. 75, p. 8. seek protection, nor allege infringement, of any individual standard features, elements, or spaces within its designs.’’ Id. at 8. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 937 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

Lennar cites several district court cases Lennar also points to some district court finding substantial similarity in architec- cases that have eschewed a filtration anal- tural works based solely on a comparison ysis when dealing with architectural 64 of the plans as a whole.63 However, the works. However, the procedural posture courts’ finding of ‘‘substantial similarity’’ in and/or issues addressed in those cases differ from the motion under consideration. those cases is conclusory, and in some Furthermore, as with Lennar’s other au- instances collapses probative similarity and thorities, it does not appear that those substantial similarity into a single analysis. courts considered the types of constraints That is not the law in this circuit. More at issue in this case. importantly, however, there is no indica- What Lennar’s argument highlights, tion in those cases that the courts consid- however, is the tension between ‘‘filtra- ered scope of protection or protectability tion’’ on the one hand, and two related of particular elements. Therefore, those concepts on the other: (1) some courts’ cases are not particularly useful in ad- consideration of ‘‘total concept and feel’’ in dressing Perry’s arguments. their substantial similarity analysis,65 and

63. See Cornerstone Home Builders, Inc. v. tectable whole); Frank Betz Associates, Inc. v. McAllister, 303 F.Supp.2d 1317, 1321 Signature Homes, Inc., No. 3:06–0911, 2010 (M.D.Fla.2004) (concluding that Defendant’s WL 1373268, at *5 (M.D.Tenn. Mar. 29, 2010) home infringed the look and feel of plaintiff’s (denying defendant’s motion for summary design despite several notable changes); judgment on ‘‘functionality’’ because ‘‘[a]l- Wood v. B L Bldg. Co., No. H–03–713, 2004 though comprised of functional elements, the WL 5866352, at *9 (S.D.Tex. June 22, 2004) Betz designs [as a whole] do not rise to the (‘‘Although the plans have minor differences- level of functionality such that copyright pro- such as the size of certain rooms and the tection cannot be extended to them’’); Dor- configuration of the breakfast nook area—the chen/Martin Associates, Inc. v. Brook of Boyne rest of the plans are essentially identical.’’); City, Inc., No. 13–CV–10588, 2013 WL Richmond Homes Mgmt., Inc. v. Raintree, 5348627, at *7 (E.D.Mich. Sept. 24, 2013) Inc., 862 F.Supp. 1517, 1527 (W.D.Va.1994), (holding that, in response to interrogatories, aff’d in part, rev’d in part on other grounds, 66 plaintiff ‘‘is not required to state each and F.3d 316 (4th Cir.1995) (finding substantial every original element because it is asserting similarity where ‘‘interior layouts [were] near- that the overall arrangement of the functional ly identical except for minor differences in spaces is protected’’); Design Basics, L.L.C. v. dimension’’); Ronald Mayotte & Associates v. DeShano Companies, Inc., 10–14419, 2012 MGC Bldg. Co., 885 F.Supp. 148 (E.D.Mich. WL 4321313, at *6 (E.D.Mich. Sept. 21, 2012) 1994) (same). Notably, Mayotte implies that (denying defendant’s motion for summary were the plans at issue more constrained, the judgment on originality because ‘‘architectur- similarities might not be actionable: ‘‘Unlike al plans, as a whole, can constitute an origi- the log-cabin houses in Howard, supra, whose nal work’’) unavoidable 90–degree angles severely limited how they could be designed, the large subur- 65. The Second Circuit provides a detailed de- ban houses at issue here share striking but scription in Tufenkian Import/Export Ventures, avoidable resemblances.’’ Id. (emphasis add- Inc. v. Einstein Moomjy Inc., 338 F.3d 127, ed). The court’s emphasis on ‘‘avoidable’’ 134 (2d Cir.2003). resemblances, however, might signal a focus on factual copying. Essentially, the total-concept-and-feel locu- tion functions as a reminder that, while the 64. See Frank Betz Assocs., Inc. v. J.O. Clark infringement analysis must begin by dissect- Const., L.L.C., No. 3:08–CV–159, 2010 WL ing the copyrighted work into its compo- 4628203, at *1 (M.D.Tenn. Nov. 5, 2010) (de- nent parts in order to clarify precisely what nying defendant’s motion for separate trials is not original, infringement analysis is not on protectability of individual elements simply a matter of ascertaining similarity (bench trial) and infringement (jury trial) be- between components viewed in isolation. cause jury would still consider overall ar- For the defendant may infringe on the rangement of unprotectable elements as pro- plaintiff’s work not only through literal 938 117 FEDERAL SUPPLEMENT, 3d SERIES

(2) the protectability of architectural works to the designs at issue, the court found ‘‘as a whole.’’ that ‘‘[t]he size, shape, and placement of The D.C. Circuit’s opinion in Sturdza v. [the defendant’s] wind-towers, parapets, United Arab Emirates highlights this ten- and pointed domes TTT give his building a sion. See 281 F.3d 1287 (D.C.Cir.2002). contour virtually identical to [the plain- Sturdza involved a design competition for tiff’s,] [c]ontributing to the similarity in a ‘‘multi-use facility expressing the rich- overall look and feel.’’ Id. at 1299. A jury ness and variety of traditional Arab mo- might therefore find that the designs were tifs.’’ Id. at 1292. The plaintiff accused substantially similar. Id. the defendant of copying her submission; Notably, however, this court finds no the district court granted summary judg- indication in the Sturdza opinion that the ment for the defendant. The district court D.C. Circuit considered any arguments first ‘‘filtered out’’ those elements of the similar to Perry’s in this case. The de- plaintiff’s design it viewed as unprotecta- signs at issue in Sturdza were large multi- ble ideas: domes, wind-towers, parapets, use complexes, and the only restraints arches, and decorative patterns. Id. at identified pertained to individual features 1297. Then, proceeding item by item, the typical in Arab architecture, not the over- court compared how the concepts of all arrangement of those features. domes, wind-towers, etc., were expressed The Second Circuit’s opinion in Zalewski in the two designs. At the level of protect- is more on point, and it demonstrates how able expression, it concluded, the designs were decidedly different. Id. at 1297. filtration is compatible with consideration That is to say, the general use of domes, of the overall layout of an architectural wind-towers, etc., was not itself protecta- work. The plaintiff in Zalewski alleged ble, and the specific domes, wind-towers, that the defendants ‘‘copied the overall etc., that were used differed between the size, shape, and silhouette of his designs as two designs. well as the placement of rooms, windows, doors, closets, stairs, and other architec- On appeal, the D.C. Circuit reversed. tural features.’’ 754 F.3d at 99. The dis- The court agreed that the first step in the trict court granted summary judgment for analysis is to exclude unprotectable ele- the defendants, and the plaintiff appealed. ments such as ideas and sc`enes-a-faire.` Id. at 1296. However, it stated that ‘‘[t]he In affirming the district court’s ruling, substantial similarity determination re- the Second Circuit explained how the quires comparison not only of the two merger and sc`enes-a-faire` doctrines should works’ individual elements in isolation, but apply to architectural works. First, regu- also of their ‘overall look and feel.’ ’’ Id. lations and other external factors may nar- (citing Boisson v. Banian, Ltd, 273 F.3d row the range of design options such that 262, 272 (2d Cir.2001)). ‘‘Considering the only a limited number of designs are work- works as a whole is particularly important able. See id. at 105. Therefore, ‘‘[a]ny because protectible expression may arise design elements attributable to building through the ways in which artists combine codes, topography, structures that already even unprotectible elements.’’ Id. Turning exist on the construction site, or engineer-

copying of a portion of it, but also by par- Courts sometimes also refer to this as ‘‘overall roting properties that are apparent only look and feel.’’ See, e.g., Stromback v. New when numerous aesthetic decisions embod- Line Cinema, 384 F.3d 283, 297 (6th Cir. ied in the plaintiff’s work of art TTT are 2004). considered in relation to one another. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 939 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

ing necessity TTT get no protection.’’ Id. ‘‘slight’’—and the corresponding scope of Second, sc`enes-a-faire` in architecture in- protection in his work—‘‘thin.’’ Because cludes standard house designs and market that scope was thin, ‘‘only very close copy- expectations. See id. at 105–06. There- ing would have taken whatever actually fore, ‘‘[d]esign features used by all archi- belonged to Plaintiff.’’ Id. The defen- tects, because of consumer demand, also dants’ designs, which shared the plaintiff’s get no protection.’’ Id. at 105. ‘‘general layout’’ but differed in the ‘‘ex- The court then applied these principles act’’ placement, size, and arrangement of to the layout and arrangement of the individual elements, ‘‘copied only the un- plaintiff’s house and made several relevant protected elements of [the plaintiff’s] de- determinations: (a) ‘‘[T]he overall foot- signs.’’ Id. at 106–07. Therefore the de- print of the house and the size of the fendants’ designs did not infringe, and rooms are ‘design parameters’ dictated by summary judgment was appropriate.66 consumer preferences and the lot the [49] The court is not persuaded that it house will occupy, not the architect’’; (b) the ‘‘general layout’’ and the ‘‘location, size, should—or, in light of Nola Spice, can— and general design’’ of individual elements forego some form of filtration analysis in were attributable to the house’s ‘‘colonial this case. Nevertheless, the court is mind- archetype’’; and (c) ‘‘[t]here are only so ful that because an architectural work may many ways to arrange four bedrooms up- consist of a protectable arrangement of stairs and a kitchen, dining room, living unprotectable elements, filtration in archi- room, and study downstairs.’’ See id. at tectural cases cannot involve the mere 107. elimination of individual elements.67 How- The court concluded that ‘‘although ever, unlike in Sturdza, where the court there is certainly something of Plaintiff’s found potential infringement of the overall own expression in his work, as long as arrangement despite the defendant’s chal- Plaintiff adhered to a pre-existing style his lenge to individual elements, Lennar’s original contribution was slight—his copy- overall arrangement of spaces is itself an right very thin.’’ Id. That is, by applying element Perry challenges as being unpro- the sc`enes-a-faire` and merger doctrines to tectable. Put another way, even consider- the plaintiff’s overall design, the court in ing the overall look and feel of Lennar’s Zalewski identified those aspects that plans—the ‘‘protectable whole’’—that over- were determined by external factors—the all look and feel is primarily a function of house’s ‘‘general layout’’—the amount of design choices Perry contends are unpro- the author’s original contribution— tectable. As in Zalewski, the court can

66. The plans at issue in Zalewski were not tive history, consideration of works ‘‘as a published with the opinion. Notably, howev- whole’’ is clearly appropriate in architectural er, the court in Zalewski stated that it agreed cases. See also Eng’g Dynamics, Inc. v. Struc- with the outcome in Intervest—no infringe- tural Software, Inc., 46 F.3d 408, 410 (5th ment—just not the reasoning. See Zalewski, Cir.1995) (‘‘[S]ubstantial similarity may be 754 F.3d at 103. A cursory glance at the measured by comparing the products as a plans at issue in Intervest reveals just how whole.’’); Eng’g Dynamics, 26 F.3d at 1348 n. similar a copy may be without infringing a 15 thin copyright. See 554 F.3d at 922. (‘‘After applying other more standard ‘copy- 67. The Fifth Circuit has not expressly adopted rightability filters,’ such as scenes a faire, the total-concept-and-feel test. But see Posi- the district court will determine whether tive Black Talk, 394 F.3d at 373–74. Never- the thin copyright EDI may enjoy has been theless, in light of statutory text and legisla- infringed.’’). 940 117 FEDERAL SUPPLEMENT, 3d SERIES

filter out those aspects of Lennar’s overall that because of the tight constraints of the designs that were influenced by external Woodlands Development Criteria and mar- factors and determine the scope of protec- ket demands, there were a limited number tion in Lennar’s plans. Therefore, a filtra- of ways to arrange the plans at issue in tion analysis is not only required, it is also this case. Therefore, Perry argues, Len- entirely compatible with an analysis of nar’s overall arrangement should get no Lennar’s designs as a ‘‘protectable whole.’’ protection. Otherwise, Lennar would have a monopoly on marketable designs in the 68 (iv) Application to the plans at issue. Woodlands. Lennar argues in its briefing, Perry has conducted an exhaustive—and and its expert opines in his report, that persuasive—analysis of each of the individ- there were numerous ways to arrange ual elements of Lennar’s designs that it these elements and still comply with the contends are not protected.69 Ultimately, Development Criteria and market de- however, ‘‘Lennar does not seek protec- mands. The primary conclusion Lennar tion, nor allege infringement of, any indi- and its expert appear to draw from this vidual standard features, elements, or premise, however, is that Perry’s architect spaces within its designs.’’ 70 Lennar only was not so constrained that the similarity claims protection for and infringement of of the designs was inevitable, i.e., this was ‘‘the overall layout of the plans as a ‘pro- no accident. Compelling as that argument 71 tectible whole.’ ’’ Therefore, the court’s may be with respect to factual copying, analysis will focus on those aspects of Len- that is not the issue here.73 At issue is nar’s overall arrangement that are proper- whether Lennar’s designer was sufficiently 72 ly excluded from consideration. constrained that aspects of Lennar’s plans Before proceeding further, however, a are unprotectable for purposes of estab- key distinction between Perry’s and Len- lishing substantial similarity. The rele- nar’s arguments is relevant. Perry argues vant constraints need not be absolute.

68. Copies of the relevant plans are attached 72. Relevant or not, however, the Court is to this opinion as an appendix. persuaded by Perry’s arguments as to the individual elements it claims are unprotecta- 69. See Defendant’s Additional Briefing on ble. Further, in its late-filed brief, Lennar Non–Protected Elements, Docket Entry No. appears to argue that even if the elements are 72, pp. 9–18. individually unprotected, the ‘‘expression or 70. Plaintiff’s Supplemental Brief on Substan- expressive combination’’ of those elements is tial Similarity, Docket Entry No. 75, p. 3. itself protected. See Docket Entry No. 84, p. 10 & n. 25. As discussed below, notwith- 71. Id.; see also id. at 5 (‘‘Because Lennar standing Perry’s incorporation of many of the does not allege infringement of any individual same individual elements in the same general components of its designs, but rather its floor layout, the expression of those individual ele- plan layouts as a ‘protectible whole,’ the ments, and the precise details of their layout, Court need not consider the protectibility of differ significantly between Lennar’s and Per- any individual elements via a filtration analy- ry’s designs. Whatever copyright protection sis.’’); Lennar’s Motion for Leave and Re- sponse to Perry’s Supplemental Brief, Docket Lennar has in the expression or expressive Entry No. 84, pp. 10–11 (‘‘In the present case, combination of those individual elements has even if individual elements of the plans (e.g., not been infringed. the doors, windows, bedrooms, stairs) are TTT not individually protectible, the manner in 73. To the extent that alternative design op- which they are selected, arranged, and ex- tions are relevant to the substantial similarity pressed as a whole is protectible and must be inquiry as well, the court considers them be- compared.’’). low. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 941 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

They need only narrow the range of avail- mands and consumer preferences that may able expression such that protecting cer- have influenced Plaintiff’s design include tain aspects of Lennar’s works would spacious master suite; numerous windows grant Lennar an impermissible monopoly in the master suite; large master bath- 74 on designs that meet those constraints. room; and separate shower and tub in the The Woodlands Development Criteria master bathroom.’’ 83 contain the following provisions relevant to Most relevant, however, is the deposi- the layout of the Burgundy and Bor- tion testimony of Lennar’s designer, who deaux: 75 conceded each of the following points re- 1 Houses shall be a duplex product,76 garding constraints on designs like the between 1800 and 2200 square feet,77 Burgundy and Bordeaux: 84 not to exceed two stories.78 1 1 Typical lot sizes for single family at- A lot of the layout of a home is dictat- 85 tached duplex units are 358 x 908, ed by the lot size. The size of a lot with minimum setbacks of 208 in the influences the total number of bed- front, 58 on the side, and 158 in the rooms, how large the den is, whether rear.79 The sum total of all hard sur- there is a separate sitting room, faces—i.e., the building pad, driveway, whether there is a separate kitchen, garage, and patios—shall not exceed and features can be constrained as the 70% of the total lot.80 lot size gets smaller.86 1 The front elevation of each residence 1 An average double garage door is 16– must face the street,81 and it must feet wide, meaning the garage as a include a garage for at least two cars, whole is about 20–feet wide. On a 35– 82 also facing the street. foot wide lot with a 5–foot setback that In its response to Perry’s interrogato- leaves 10 feet, laterally, in which to ries, Lennar stated that ‘‘[m]arket deposition the front door to the house.87

74. See, e.g., Kepner–Tregoe, 12 F.3d at 533 80. Id. at 3. (‘‘[W]hen an idea can be expressed in very few ways, copyright law does not protect that 81. Id. at 4. expression, because doing so would confer a de facto monopoly over the idea.’’); Kern Riv- 82. Id. at 7. er Gas, 899 F.2d at 1463 (‘‘The guiding consideration in drawing the line between an 83. Plaintiff’s Response to Defendant’s Second idea and its expression is the preservation of Set of Interrogatories, Exhibit F to Defen- the balance between competition and protec- dant’s Additional Briefing on Non–Protected tion reflected in the patent and copyright Elements, Docket Entry No. 72–6, p. 3. laws.’’ (internal quotation marks, alteration, 84. See and citation omitted)). Oral and Videotaped Deposition of Sam Teuton (‘‘Teuton Deposition’’), Exhibit B to Defendant’s Additional Briefing on Non- 75. Development Criteria, Exhibit C to Defen- protected Elements, Docket Entry No 72–2. dant’s Additional Briefing on Non–Protected Nearly all of these propositions were offered Elements, Docket Entry No. 72–3. to Mr. Teuton by Perry’s attorney. Mr. Teu- ton’s agreement with each, however, was 76. Id. at 2. clear and unequivocal.

77. Id. at 4. 85. Id. at 12–13.

78. Id. 86. Id. at 6.

79. Id. at 1, 3. 87. Id. at 9–10. 942 117 FEDERAL SUPPLEMENT, 3d SERIES

1 Behind the front door is going to be a 1 If the plan has a secondary bathroom hallway. Inside, there has to be a servicing the secondary bedrooms, the kitchen somewhere.88 In a two-story secondary bathroom needs to be in townhome, there is a consumer prefer- reasonable proximity to the secondary ence to have the kitchen as well as the bedrooms.96 primary living area on the first floor. Despite Perry’s heavy reliance on Len- If the kitchen is on the first floor, any nar’s designer’s deposition testimony, Len- breakfast area has to be on the first nar does not address that testimony in 89 floor as well. The breakfast area is either its Brief on Substantial Similarity or 90 typically adjacent to the kitchen. its Response to Perry’s Supplemental 1 It is uncommon that the downstairs Brief. Lennar instead relies on the report bathroom opens into the kitchen.91 of its expert, and on numerous plans by Most people don’t want the bathroom Lennar, Perry, and third-party builders, in the kitchen or the den, so it really that either (a) do not conform to the mar- has to go in the hallway.92 ket constraints alleged by Perry or (b) 1 Buyers of new construction homes to- employ different layouts despite having lot day demand a fairly luxurious and sizes and square footage roughly equiva- large master bathroom. Buyers ex- lent to the plans at issue in this case.97 pect the master bath to be physically Lennar’s expert opines that ‘‘there is no connected to the master bedroom. basis for the contention that development The master bedroom must have mas- guidelines or market preferences would ter closets.93 necessarily lead to constricted design pos- 1 Bedrooms need windows. Because sibilities.’’ 98 As discussed above, however, duplex plans have a common wall on the thrust of Lennar’s expert report is that which there can be no windows, bed- Perry’s architect was not so constrained in rooms must be positioned along one of his design that he inadvertently drew the the three exterior walls.94 Secondary same plans as Lennar.99 This is distin- bedrooms therefore can only go in the guishable from the key issue here, whether front left, front right, back left, or Lennar’s designer was so constrained in back right side the plan. No bedroom his general layout that either (a) it was not can go in the middle of the shared original to him, or (b) what choices he did wall.95 have were so limited that they cannot be

88. Id. at 10. 97. See Plaintiff’s Supplemental Brief on Sub- stantial Similarity, Docket Entry No. 75, pp. 89. Id. at 18. 11–17.

90. Id. at 11. 98. Report on Design Originality and Similari- ty, Exhibit 39–B to Plaintiff’s Response, Dock- 91. Id. et Entry No. 34–9, p. 13. 99. See, e.g., id. at 14 (‘‘[G]iven the existence of 92. Id. at 11–12. several other home designs and their illustrat- ed congruence with the Creekside home pa- 93. Id. at 4. rameters, there is no compelling support or credence to the suggestion that the works in 94. Id. at 5. question here are similar due to development guidelines or market preferences.’’ (emphasis 95. Id. at 16–17. added)); id. at 13 (‘‘[S]uch market preferences could have easily been adopted post hoc 96. Id. at 4. after the copyright issue arose.’’). LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 943 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015) protected by copyright. Lennar’s design- rangement and composition of spaces and er conceded in his deposition that the gen- elements,’’ and (3) ‘‘[t]he overall form, look eral layouts of the Burgundy and Bor- and feel.’’ 102 deaux were significantly constrained by [50] As demonstrated by the evidence the lot size and market demands. While above, the size and dimensions of Lennar’s the court does not agree with Perry’s con- plans were primarily determined by the lot tention that Lennar’s layouts were ‘‘the size and market conditions. Whether size only way’’ to comply with external con- and dimensions are copyrightable at all is 100 straints, Lennar’s options were limited, unclear, but they certainly are not protect- and its layouts represent some of only a able in this case. Similarly, the evidence few that would be both marketable and shows that the general layout of Lennar’s compliant with the Development Crite- plans—i.e., the positioning of rooms and 101 ria. Lennar’s evidence of design alter- spaces relative to one another—was suffi- natives, while relevant to factual copying, ciently constrained to be unprotectable. is not dispositive of the protectability issue Nevertheless, the evidence does not sug- for purposes of substantial similarity. gest that the precise arrangement and In response to Perry’s interrogatories, composition of spaces and elements—i.e., Lennar claimed that the following ele- the exact placement, size, and arrangements of the Burgundy and Bordeaux ment of individual features—was signifi- plans are protected by copyright: (1) cantly pre-determined. It may therefore ‘‘[t]he size and dimensions,’’ (2) ‘‘[t]he ar- be protectable.103 However, to the extent

100. See Defendant’s Motion for Summary footprint of the house and the size of the Judgment, Docket Entry No. 22, pp. 17–18 rooms are ‘design parameters’ dictated by ¶ 31. consumer preferences and the lot the house will occupy, not the architect.’’). 101. The Director of Lennar’s Houston division, Donald A. Luke, testified that the Wood- 102. Plaintiff’s Response to Defendant’s First lands designed the home sites in Phase I Set of Interrogatories, Exhibit A to Defen- based on the immediate predecessors of the dant’s Additional Briefing on Non–Protected Burgundy and Bordeaux, the Village Builder Elements, Docket Entry No. 72–1, pp. 3–4. Villas. Luke Deposition, Docket Entry No. 34–1, pp. 116–18. The Villas appear to have 103. However, the ‘‘selection’’ of individual el- had the same footprint and general layout as ements—at least those visible in the floor the Burgundy and Bordeaux. Docket Entry plans and discussed in the briefs—is unpro- No. 17, p. 4 ¶ 17. Neither party has ad- tectable in this case. Lennar argues that Per- dressed the legal implications of this fact. If ry takes the inclusion of a breakfast nook, true, however, it would suggest that Lennar’s patio, two-story entryway, etc., as a given, but designs were not constrained by the Develop- that Perry and other builders often forgo ment Criteria per se, but instead by the foot- these features. Plaintiff’s Supplemental Brief print and square footage Lennar itself chose on Substantial Similarity, Docket Entry No. to use. In the end, whether the Development 75, pp. 12–13, 14–15. This argument is a Criteria are based on Lennar’s plans or Len- non-starter. While it might be relevant to nar’s plans are based on the Development factual copying, it is irrelevant to whether Criteria is a distinction without a difference. Lennar’s inclusion of these features is protect- The constraints of building an 1800–2200 able. Lennar does not argue that patios, square foot, 30–foot wide, two-story duplex breakfast nooks, or two-story entries are ele- with an attached two-car garage are the same ments original to Lennar, or even that the whether they are externally mandated or self- combination of those elements is original to imposed. See Zalewski, 754 F.3d at 107 (‘‘So Lennar. None of these elements is particular- long as Plaintiff adhered to a pre-existing ly unique, and Lennar cannot have a monopo- style his original contribution was slight—his ly on their use, even in combination with one copyright very thin.’’); id. at 6 (‘‘[T]he overall another. 944 117 FEDERAL SUPPLEMENT, 3d SERIES that the ‘‘overall form, look and feel’’ of open-plan family room, kitchen, and break- Lennar’s plans is a function of the general fast/morning area; and a covered patio.105 layout, it too is unprotectable. Each of these elements is in the same Because the available arrangements for general location in each plan. However, Lennar’s designs were so limited, Lennar’s beyond the general layout of these spaces, original contributions were slight, and its the plans differ significantly: First, none copyright is thin. Because Lennar’s copy- of the dimensions of these spaces—where right is thin, only near verbatim copying identified—are the same, and the overall by Perry would infringe. Nevertheless, square footage of each plan is different. such an analysis can be hard to apply, Second, the configuration of elements since even verbatim copying must still ap- within these spaces differs between the propriate protected elements to be legally plans. Starting with the entryway, Len- actionable.104 A more precise formulation nar’s door is on the right side of the porch, is to say that for Perry’s plans to infringe, and upon entering one encounters a five- they must be substantially similar to what- foot wide hallway running along the side of ever protectable elements remain after the staircase, which ascends from the rear Lennar’s general layouts are excluded. of the house toward the front. Perry’s Under either formulation, however, if the 2249 has the door in the middle of the only similarities between the parties’ plans porch, and upon entering one encounters pertain to unprotected elements—i.e., the an open area at the base of the stairway, general layout—then Perry has not copied which ascends from the front of the house any protectable material, its plans do not toward the rear. The entryway in each infringe, and summary judgment is appro- plan contains an area that is two stories priate. tall, but because the stairways are re- Comparing Lennar’s Burgundy to Per- versed, the location and shape of the area ry’s 2249—Beginning with the first floor, open to the second floor differs in each both designs share the following: a two plan. Both plans have a half bath under car garage with a porte-cochere; a front the stairs, but in different locations. Len- porch and front door; a front foyer and nar’s plan has no door from the front hall hallway with stairs and a half bath; an into the garage; Perry’s does.

104. An extreme example: If 95% of a work is first floor of each Burgundy plan appears unprotectable, then verbatim copying of that identical, with minor variations in the listed 95% would not infringe, even if it constitutes dimensions of the kitchen, garage, and porch. near-verbatim copying of the entire work. The only notable differences between the second floors of each Burgundy plan appear to 105. In support of its Supplemental Brief on be in the precise shape and dimensions of the Substantial Similarity, Docket Entry No. 75, master bedroom, whether it has a balcony, Lennar has attached as exhibits comparisons and whether the windows extend out from the of the Lennar and Perry plans—one for the front of the room or are flush with the exteri- Burgundy and one for the Bordeaux—ex- or wall. Lennar’s briefing and infringement cerpted from Lennar’s expert’s report. See allegations do not distinguish between the Exhibits A and B (filed under seal); see also different versions of the Burgundy. The com- Docket Entry No. 34–9, pp. 21, 34 (filed with parison provided in Lennar’s expert report expert’s report). However, there appear to be appears to be between the Perry 2249 and the at least four distinct versions of the Lennar Burgundy 2291G. See Docket Entry No. 34– Burgundy: the 2291A, 2291C, 2291E, and 9, p. 21. Even comparing Perry’s 2249 to the 2291G. See Exhibits to Second Amended three other Burgundy plans in Lennar’s Sec- Complaint, Docket Entry No. 17–1, pp. 10–13 ond Amended Complaint, the court’s conclu- (providing floor plans of each model). The sions are the same. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 945 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

The open-plan area at the rear of each walk-in closets are in the same place, but model is L-shaped, with the family room, they are configured differently, and Per- kitchen, and breakfast/morning area in the ry’s are interconnected, whereas Lennar’s same location. However, not only are the each have only one door. The closets in dimensions of these spaces different, the the secondary bedrooms are different, as configuration of elements within these is the placement of the doors. The sec- spaces differs as well. Lennar’s kitchen ondary baths are configured the same, but has a doorway to the garage at the front they are in different places. If Perry’s and a single counter along the right-side 2249 copies anything from Lennar’s Bur- wall. Perry’s plan has a larger L-shaped gundy, it is the unprotected general layout. counter, no door to the garage, and a Comparing Lennar’s Bordeaux to Per- closet, pantry, range, and (what appears to ry’s 2255—Most notably, Perry’s 2255 is at be) refrigerator in different locations from least 400 square feet larger than either those in the Lennar plan. The breakfast 106 or morning area in each plan is an open version of the Bordeaux. Nevertheless, box with windows and a door to the cov- the two plans contain most of the same ered patio, but the doorways are different, rooms and spaces in similar locations. Be- and Lennar’s patio is flush with the rear of yond that, however, even aspects of the the house while Perry’s extends out into general layouts differ: Beginning on the the yard. first floor, Lennar’s front porch and entryway are recessed about ten or fifteen feet Moving to the second floor, each plan has a ‘‘library’’ or ‘‘game room,’’ master toward the middle of the plan; Perry’s bedroom, master bath, walk-in closet, utili- porch is nearly flush with the front of the ty room, two secondary bedrooms, and a garage. Because of this, Lennar’s entry- secondary bath, all in the same general way is shallow, with only a bathroom along location. However, beyond the general the inside wall; Perry’s is deeper, and in layout of these spaces, the plans again addition to a bathroom has a closet and a differ significantly: Lennar’s stairs lead to doorway into the garage. Lennar’s entry- a wrap-around hallway over the foyer, way is one floor tall; Perry’s is open to the whereas Perry’s stairs face the other di- floor above. Both plans have the stairway rection and lead directly into the library. behind the garage, but otherwise the con- The entrance to the master bedroom is in figuration of the family room, kitchen, a different place in each plan, and while morning area, and covered patio are the each master bedroom is connected to the same as they were in the Burgundy and master bath, the layouts of the master 2249, discussed above, including nearly all baths differ, and Perry’s master bath has of the differences highlighted between an extra closet. The utility rooms and those plans.

106. The comparison of the Bordeaux and versions of the Bordeaux, the 2271H and 2255 plans provided with Lennar’s supple- 2271F. The first floor of each appears identi- mental briefing, and attached to its expert cal, with minor variations in the dimensions report, see Docket Entry No. 34–9, p. 34, has of the garage. The only notable differences in thick-lined boxes superimposed over individu- the second floors are that the 2271F has a al areas. These boxes do not appear in the balcony over the front porch and the second plans attached to Lennar’s Second Amended and third bedrooms are smaller, front to Complaint, Docket Entry No. 17–1, pp. 14–16, back, by two feet and one foot, respectively. and they obscure the precise layouts of the The court’s conclusions are the same regard- two plans. The court has relied on the plans less of which Bordeaux model is compared to in Lennar’s Second Amended Complaint. As Perry’s 2255. with the Burgundy, there are at least two 946 117 FEDERAL SUPPLEMENT, 3d SERIES

Moving to the second floor, Lennar’s Nimmer § 12.10[B], at 12–192; see Pivot plan has no library; Perry’s does. Len- Point Intern., Inc. v. Charlene Products, nar’s master bedroom has a balcony flush Inc., 932 F.Supp. 220, 225 (N.D.Ill.1996) with the rear of the building; Perry’s mas- (Easterbrook, J., sitting by designation) ter bedroom has no balcony, protrudes (‘‘Whether mannequin heads in general, or from the rear of the building, and is a these mannequin heads in particular, are different shape overall. The master baths copyrightable is a question of law, which are both in the top right corner, but they the court will decide (perhaps in response are arranged differently. Both master to dispositive motions soon to be filed). A baths are connected to an L-shaped walk- jury has nothing to do with this subject.’’). in closet, but Perry’s L-shaped closet is However, ‘‘the question of originality usu- more elongated, and it connects to the ally is viewed as an issue of fact.’’ Noga, utility room. Lennar’s utility room abuts 168 F.3d at 1291 n. 14; accord Nimmer the staircase; Perry has the secondary § 12.12, at 12–217; but see Feist, 111 S.Ct. bath in that location. Both plans have two at 1297 (concluding that alphabetical or- secondary bedrooms over the garage, but ganization of telephone listings is ‘‘an age- the closets are different, with Lennar’s old practice, firmly rooted in tradition’’ and protruding into the room and Perry’s flush with the wall. It is questionable whether therefore unoriginal as a matter of law). even the general layouts of these two plans Not surprisingly, there is some split of are substantially similar. The Perry 2255 authority on whether copyrightability design does not contain any protected ele- ‘‘when it depends (as it usually does) on ments of the Lennar Bordeaux. originality’’ is for the judge or the jury. (v) Summary judgment is appropriate. Gaiman v. McFarlane, 360 F.3d 644, 648 (7th Cir.2004).109 Nevertheless, ‘‘authority Perry argues that ‘‘[i]t is Lennar’s bur- TTT supports the view that to the extent den to prove as a matter of law that specif- that the defendant challenges the quan- ic elements of its townhouses are protected tum of plaintiff’s originality or creativity by copyright,’’ and that factual determinations in this regard are to be made by the as a matter of law, or urges other such court.107 Lennar argues that sc`enes-a-` legal challenges to copyright subsistence, faire and merger are affirmative defenses these matters should be resolved solely by on which Perry bares the burden of proof, the judge.’’ Nimmer, § 12.10[B][2], at 12– and that in this case the application of each 194. ‘‘But threshold factual determina- doctrine raises fact questions for the tions in this regard, of course, are for the jury.108 jury.’’ Id. [51, 52] With respect to Perry’s argu- [53] As to Lennar’s argument, the law ments, the law is less than clear. Copy- is also unsettled. See Oracle America, rightability of particular subject matter is, Inc. v. Google Inc., 750 F.3d 1339, 1358 ‘‘in all instances’’ a matter for the judge. (Fed.Cir.2014); see generally Nimmer

107. Defendant’s Additional Briefing on Non– 1998) (‘‘[W]e treat the question of whether Protected Elements, Docket Entry No. 72, pp. particular elements of a work demonstrate 7–8. sufficient originality and creativity to warrant copyright protection as a question for the 108. Plaintiff’s Supplemental Brief on Sub- factfinder.’’), with Gaiman, 360 F.3d at 648 stantial Similarity, Docket Entry NO. 75, p. (‘‘[C]opyrightability is always an issue of 10. law.’’). 109. Compare Matthew Bender & Co., Inc. v. West Pub. Co., 158 F.3d 674, 681 (2d Cir. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 947 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

§§ 13.03[B][3], [B][4]. Nevertheless, as Experts (Docket Entry No. 30) is moot Nola Spice, Zalewski, and other appellate and will be denied. Perry’s pending Mo- opinions cited above demonstrate, regard- tion to Exclude the Testimony of Plaintiff’s less of which party bears the burden, it Designated Expert Leonard R. Bachman would appear proper at the summary judg- (Docket Entry No. 40) is also moot. The ment stage for courts to determine, based court generally reserves judgment on the on an application of merger and sc`enes-a-` admissibility of expert testimony until tri- faire to the evidence in the record, what al. Without ruling on the admissibility of aspects of a plaintiff’s designs are protect- Mr. Bachman’s testimony, the court con- able, and whether a defendant’s designs cludes that even if that testimony were infringe. admissible, it would not change the out- [54] If Perry copied anything, it was come in this case. the general layouts of Lennar’s designs. IV. Attorney’s Fees Even if protectability of those layouts is an The Copyright Act gives courts discre- issue on which Perry has the burden, and tion to award reasonable attorney’s fees to even assuming that it is a factual matter a prevailing party. See § 505. Although for the jury to decide, and taking as cor- Perry has not moved to recover attorney’s rect Lennar’s expert’s opinion that there fees, it has sought them in its answer.110 were numerous ways to lay out those plans The court will therefore address the issue that complied with the Development Crite- now so as to avoid any unnecessary motion ria, the testimony of Lennar’s designer— practice. along with the holdings in analogous cases—is sufficient to show that Lennar’s [55, 56] Generally, an award of attor- designs were so constrained by the lot size, ney’s fees to the prevailing party in a duplex plan, and market demands, that copyright action ‘‘is the rule rather than Lennar’s general layouts are unprotectable the exception.’’ Virgin Records Am., Inc. as a matter of law. Lennar cannot prove v. Thompson, 512 F.3d 724, 726 (5th Cir. that Perry copied any protectable aspects 2008) (internal quotation marks and cita- of its plans, and summary judgment on tion omitted). ‘‘Nevertheless, recovery of Lennar’s claims is appropriate. attorney’s fees is not automatic.’’ Id. ‘‘[A]ttorney’s fees are to be awarded to III. Other Pending Motions prevailing parties only as a matter of the Although Lennar filed its Motion for court’s discretion.’’ Fogerty v. Fantasy, Leave and Response to Perry’s Supple- Inc., 510 U.S. 517, 114 S.Ct. 1023, 1033, mental Brief (Docket Entry No. 84) two 127 L.Ed.2d 455 (1994). There is no pre- weeks after the deadline for supplemental cise rule or formula that a district court briefing, the court will grant that motion. must apply in determining whether to While this opinion does not thoroughly ref- award attorney’s fees. Id. at 1034. How- erence Lennar’s brief, the court has con- ever, the Supreme Court has identified a sidered it, and it does not change the non-exclusive list of factors that may be court’s conclusions. considered: ‘‘frivolousness, motivation, ob- Because the court will grant Perry’s Mo- jective unreasonableness (both in the fac- tion for Summary Judgment, Perry’s tual and in the legal components of a case) pending Motion to Strike Attorneys’ Fees and the need in particular circumstances

110. See Defendant’s Original Answer to Plain- try No. 18, p. 7. tiff’s Second Amended Complaint, Docket En- 948 117 FEDERAL SUPPLEMENT, 3d SERIES

to advance considerations of compensation copying by Perry, penalizing Lennar would and deterrence.’’ Id. at n. 19 (internal not promote the purposes of the copyright quotation marks and citation omitted). act. Each party will therefore be respon- Fifth Circuit precedent also suggests con- sible for its own costs, including attorney’s sideration of whether an award of attor- fees. ney’s fees would generally ‘‘promote[ ] the purposes of the Copyright Act.’’ See Hunn V. Conclusions and Order v. Dan Wilson Homes, Inc., 789 F.3d 573, The court concludes that any similarities 589 (5th Cir.2015). between Lennar’s copyrighted designs and Perry’s allegedly infringing designs per- [57] Two points should be abundantly tain to unprotectable elements of Lennar’s clear from the length and complexity of designs. Perry’s Motion for Summary this opinion and the court’s request for Judgment (Docket Entry No. 22) is there- additional briefing from the parties: (1) fore GRANTED, and this action will be Lennar’s claims involve multiple areas of dismissed with prejudice. For the reasons unsettled law, and the outcome was by no stated above, Lennar’s Motion for Leave means determinable ex ante. (2) Many of and Response to Perry’s Supplemental Perry’s arguments ultimately lacked merit. Brief (Docket Entry No. 84) is GRANT- Lennar’s claims and its attorneys’ legal ED, and Perry’s Motion to Strike Attor- positions were neither frivolous nor objec- neys’ Fees Experts (Docket Entry No. 30) tively unreasonable, and the court sees no and Motion to Exclude the Testimony of compelling reason to compensate Perry or Plaintiff’s Designated Expert Leonard R. deter other parties in Lennar’s position. Bachman (Docket Entry No. 40) are DE- Furthermore, given the close nature of the NIED AS MOOT.111 factual and legal questions at issue in this case and the substantial evidence of factual APPENDIX

111. The court has allowed the parties ex- presented, it is not impossible that some ar- traordinary leeway in submitting lengthy guments were overlooked, the parties should briefs and other written materials in connec- assume that failure to expressly address a tion with the pending motion. As the length particular argument in this Memorandum of this Memorandum Opinion and Order in- Opinion and Order reflects the court’s judg- dicates, the court has expended considerable ment that the argument lacked sufficient time reading these papers and performing a merit to warrant discussion. Accordingly, significant amount of independent research the court strongly discourages the parties to be as fully informed as possible when ad- from seeking reconsideration based on argu- dressing the parties’ arguments. While, be- ments they have previously raised or that cause of the sheer volume of information they could have raised. LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 949 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

APPENDIX—Continued 950 117 FEDERAL SUPPLEMENT, 3d SERIES

APPENDIX—Continued LENNAR HOMES OF TEXAS SALES & MKTG. v. PERRY HOMES 951 Cite as 117 F.Supp.3d 913 (S.D.Tex. 2015)

APPENDIX—Continued 952 117 FEDERAL SUPPLEMENT, 3d SERIES

APPENDIX—Continued DEUTSCHE BANK NAT’L TRUST CO. v. BURKE 953 Cite as 117 F.Supp.3d 953 (S.D.Tex. 2015)

signee’s home equity loan foreclosure case, , where borrowers produced copy of unindorsed note that did not contain stamp

block, and assignee failed to provide any proof of authentication at trial, withdrew DEUTSCHE BANK NAT’L TRUST CO., its exhibit, and instead entered borrowers’ as Trustee of the Residential Asset note into evidence. Securitization Trust 2007–A8, Mort- gage Pass–Through Certificates, Ser- 2. Mortgages O239 ies 2007–H under the Pooling Servic- Under Texas law, purported assign- ing Agreement dated June 2007, ment of deed of trust from ‘‘Mortgage Plaintiff, Electronic Registration System (MERS), v. as nominee for the lender, its successors John BURKE and Joanna and assigns’’ was void and invalid, where Burke, Defendants. lender did not exist when assignment was Civil Action No. 4:11–cv–01658. signed, lender’s successor had ceased existence before assignment and all of its as- United States District Court, sets were sold, and there was no evidence S.D. Texas, that MERS was nominee or agent of any Houston Division. successor or assign of original lender. Signed July 31, 2015. Background: Purported assignee of deed 3. Assignments O31 of trust brought action against mortgagors Under Texas law, ‘‘assignment’’ is seeking declaration that it was vested with manifestation by owner of right to transfer all title and interest in property and order such right to assignee. authorizing it to proceed with foreclosure. See publication Words and Phras- After entry of judgment in mortgagors’ es for other judicial constructions and definitions. favor, 92 F.Supp.3d 601, 2015 WL 1143171, assignee moved to alter or amend judg- 4. Assignments O1 ment. Under Texas law, existing right is Holdings: The District Court, Stephen precondition for valid assignment. Wm. Smith, United States Magistrate Judge, held that: 5. Assignments O90 (1) document that purported to be note Under Texas law, assignee stands in containing undated stamp block in- assignor’s shoes, but acquires no greater dorsed in blank by original lender was right than assignor possessed. not admissible, and 6. Assignments O1 (2) purported assignment was void and in- Under Texas law, assignment cannot valid. be made by dead man; it is transfer by Motion denied. one existing party to another existing party of some valuable interest. 1. Mortgages O461 Under Texas law, document that pur- 7. Principal and Agent O19 ported to be note containing undated Texas law does not presume agency, stamp block indorsed in blank by original and party who alleges it has burden of lender was not admissible in alleged as- proving it. 954 117 FEDERAL SUPPLEMENT, 3d SERIES

8. Principal and Agent O1 Mark Daniel Hopkins, Hopkins Law, Under Texas law, ‘‘agent’’ is one who PLLC, Austin, TX, for Plaintiff. consents to control of another, where prin- Joanna Burke, Kingwood, TX, pro se. cipal manifests consent that agent shall act for principal. See publication Words and Phras- MEMORANDUM AND ORDER es for other judicial constructions and definitions. STEPHEN WM SMITH, United States Magistrate Judge. 9. Principal and Agent O1 Under Texas law, party claiming Before the court is plaintiff Deutsche agency must prove that principal has (1) Bank National Trust Company’s Rule right to assign agent’s task and (2) right to 59(e) motion to alter or amend the court’s control means and details by which agent judgment in this home equity loan foreclo- will accomplish task. sure case. (Dkt. 84). A hearing on this motion was held on June 29, 2015, and 10. Assignments O137 Deutsche Bank was given an opportunity Under Texas law, proof of assignment to file a supplemental brief. (Dkt. 90). may be by testimony as well as by docu- Deutsche Bank asks the court to vacate its mentation. March 13, 2015 final declaratory judgment 11. Mortgages O429 in favor of the Burkes. (Dkt. 77). Under Texas law, party seeking to That judgment was based on findings foreclose on home equity loan bears bur- and conclusions that Deutsche Bank had den to demonstrate its authority to prose- failed to prove chain of title back to the cute foreclosure, and when entity seeking original lender, now defunct. The sole to foreclose was not party to original proof on which the bank relied—a purport- transaction, then that entity must be able ed assignment from ‘‘MERS as nominee to trace its right to foreclose back to origi- for the lender, its successors and as- nal mortgagee. signs’’—was held void, because the assign- 12. Contracts O147(2) or did not exist when the document was Under Texas law, court’s primary signed. Deutsche Bank’s motion raises duty in construing written contract is to five arguments, which will be considered in ascertain parties’ true intention as ex- turn. The motion is denied. pressed in language of document itself. 13. Deeds O12, 26 1. Holder of the Note Under Texas law, in order to convey [1] Deutsche Bank’s first argument is by grant, party possessing right must be based on a misrepresentation of the trial grantor, and use apt and proper words to record. Deutsche Bank claims that it in- convey to grantee, and merely signing and troduced into evidence the Burke note in- sealing and acknowledging instrument in dorsed in blank by the original lender (In- which another person is grantor, is not dyMac Bank), thereby establishing its sufficient. right to foreclose as holder of the Note. (Dkt. 84, at 4). This claim is baseless, because, as the trial transcript makes clear, the only version of the Note success- Coury Matthews Jacocks, Barrett Daffin fully introduced by Deutsche Bank at trial Frappier Turner Engel LLP, Addison, TX, contained no indorsement of any kind. DEUTSCHE BANK NAT’L TRUST CO. v. BURKE 955 Cite as 117 F.Supp.3d 953 (S.D.Tex. 2015)

It is true that a version of the Note THE COURT: Well, you didn’t ask originally offered by Deutsche Bank as her about your Exhibits 3 and 4. MR. Plaintiff’s Exhibit 3 contained an undated JACOCKS: Exhibit 3 was the note stamp block below the borrower’s signa- and I did ask her several questions— ture, which reads ‘‘Pay to the Order Of [left blank] Without Recourse IndyMac THE COURT: About that document? Bank, F.S.B.’’ and is signed by ‘‘Cathy I didn’t hear you say anything about Powers Vice President.’’ (Dkt. 69, at 30). Plaintiff’s Exhibit 3 or Plaintiff’s Exhibit At trial, the defendants vigorously object- 4, and that’s what I’m concerned about. ed to this document (as well as others) on MR. JACOCKS: Okay. lack of authentication grounds. Tr. 6–12, THE COURT: Because I know we have 29–30. The Burkes argued that the stamp overlap, but when you talk about one set of block containing the Cathy Powers signa- exhibits and ask questions about that, and ture was not a part of the Note as original- now you’re moving to introduce another ly executed, and instead offered a copy of set of exhibits, I’m afraid that’s going to the unindorsed Note as one of their own confuse the record, because I’m confused exhibits, Defendants’ Exhibit 11. Prior to taking testimony, the Court sustained the at this point. defendants’ authenticity objections to all of MR. JACOCKS: I’ll unconfuse it. Deutsche Bank’s exhibits other than Ex- I’ll offer their Defendant’s Exhibit 4 into hibits 1 and 2, which were certified copies evidence, as well as their copies of the of the Home Equity Security Instrument note into evidence— and the Assignment, respectively. Tr. 34 THE COURT: Okay. (‘‘Your Exhibit 1 and 2 are admitted. But MR. JACOCKS:—as Exhibit 3 is for your other exhibits, the ones that are not the note. And if there are multiple cop- authenticated at this point are not.’’). ies the next number will be 4. And the Thus, from the very beginning of trial, acceleration is also part of what Deutsche Bank’s counsel was on notice they’re—they’ve sought to have admit- that if it wanted to introduce its version of the Note indorsed in blank, some proof of ted into evidence. authentication would be necessary.1 THE COURT: All right. So your Deutsche Bank never offered such proof Plaintiff’s Exhibit 3 is where, what ex- at trial; in fact it called no witnesses of its hibit number for the defendants? own, aside from the Burkes themselves. MR. JACOCKS: I need the binder At the close of the Bank’s counsel’s exami- back. nation of Joanna Burke, the following ex- THE COURT: Okay, go ahead. change occurred with the Court: MR. JACOCKS: The note is in plain- MR. JACOCKS: Okay. I don’t have tiff’s binder and it’s Exhibit—Defen- any further questions for her. I offer dant’s Exhibit No. 11. my copy of the note and my copy of the Notice of Acceleration that was sent to THE COURT: All right. Joanna Burke at the property address MR. JACOCKS: And again, the only into evidence as Exhibits 2 and 3—I objection I have to that entire—to that mean 3 and 4. entire offering to them is that last page.

1. Actually, Deutsche Bank should have antici- this very ground. Deutsche Bank Nat’l Trust pated this issue well before trial, because its Co. v. Burke, No. 4:11–cv–01658, 2014 WL motion for summary judgment was denied on 4649879 (S.D.Tex. Sept. 16, 2014). 956 117 FEDERAL SUPPLEMENT, 3d SERIES

THE COURT: The last sheet, I un- jecting that challenge, the Fifth Circuit derstand. Okay. So it’s in—okay. So explained: your Plaintiff’s Exhibit 3 is that portion Although Cornerstone had ceased to ex- of Defendant’s Exhibit 11 that consists ist at the time of the assignment, the of the note dated May 21, 2007? Deed of Trust explicitly contemplates MR. JACOCKS: That’s correct. MERS’s continuing to act as nominee * * * for Cornerstone’s ‘‘successors and as- THE COURT: TTT Plaintiff’s Exhibit signs.’’ It is undisputed that Corner- 3 is admitted. stone Corporation endorsed the Note to Tr. 45–48 (emphasis added). Wells Fargo [prior to Cornerstone’s de- In other words, the bank’s counsel with- mise]. At that point, MERS became a drew its original Exhibit 3—i.e., the Note nominee for Wells Fargo. MERS thus with the blank indorsement—and substi- continued to have the authority to assign tuted in its place a revised Exhibit 3 taken its rights under the Deed of Trust. from Defendants’ Exhibit 11—i.e., the 755 F.3d at 750.3 Note minus any indorsement. This ab- [2] Thus, the critical fact in L’Amo- sence of documentary proof mirrors the reaux was the prior indorsement of the lack of any testimonial evidence of holder note to Wells Fargo. Based on that earli- status. Given its utter failure of proof, er transaction, Wells Fargo became Cor- Deutsche Bank’s continuing assertion of a nerstone’s ‘‘assign,’’ and MERS thereby right to foreclose as holder of the Note is acquired the authority to act as nominee not just groundless, it is frivolous. On this for that entity in transferring the Deed of trial record the current holder of the Trust. In this case, however, that critical Burke Note remains a mystery.2 element is missing. As shown above, Deutsche Bank introduced no proof what- 2. The L’Amoreaux Decision ever of a prior transaction by which it In its second argument, Deutsche Bank acquired any rights in the Note. Absent relies upon the Fifth Circuit’s recent fore- such proof, L’Amoreaux is not controlling. closure decision in L’Amoreaux v. Wells Here MERS was acting on behalf of a Fargo Bank, N.A., 755 F.3d 748 (5th Cir. defunct entity (IndyMac Bank), and its 2014). In that case the homeowner chal- purported assignment was therefore void lenged the validity of a deed of trust as- and invalid under the Texas common law signment from MERS to Wells Fargo, on of assignments, as explained below. the grounds that MERS was purporting to act as a nominee only for the original [3–6] An assignment is a manifestation lender (Cornerstone), which had ceased to by the owner of a right to transfer such exist at the time of the assignment. Re- right to the assignee. Hermann Hosp. v.

2. At oral argument on this motion, the Bank’s readily available chain-of-title evidence from counsel asserted that the Note was registered the MERS registry is therefore especially tell- on the MERS system, which electronically ing. If those records supported the Bank’s tracks note transfers among MERS-member claim, they presumably would (and should) banks and entities, and that any interested have been presented to this Court long ago. party could log on to the MERS website to determine which entity owns the note. See 3. In a footnote, the Court observed that ‘‘the Harris County v. MERSCORP Inc., 791 F.3d assignment of the Note independently provid- 545, 548–50 (5th Cir.2015) (describing MERS ed authority for Wells Fargo to foreclose.’’ tracking system for note assignments). 755 F.3d at 750 n. 1. Deutsche Bank’s failure to offer any such DEUTSCHE BANK NAT’L TRUST CO. v. BURKE 957 Cite as 117 F.Supp.3d 953 (S.D.Tex. 2015)

Liberty Life Assur. Co., 696 S.W.2d 37, 44 that time. According to the FDIC notice (Tex.App.—Houston [14th Dist.] 1985). admitted as Plaintiff’s Exhibit 6, ‘‘On An existing right is a precondition for a March 19, 2009, IndyMac Federal was valid assignment. Pain Control Institute, placed in receivership and substantially all Inc. v. GEICO Gen. Ins. Co., 447 S.W.3d of its assets were sold.’’ (Id. at p. 4) To 893, 899 (Tex.App.—Dallas 2014). An as- whom those assets were sold, and whether signee ‘‘stands in the shoes’’ of the assign- the Burke Note was among those assets, or but acquires no greater right than the are matters of sheer speculation on this assignor possessed. John H. Carney & record.5 See Priesmeyer v. Pacific South- Assocs. v. Texas Prop. & Cas. Ins. Guar. west Bank, F.S.B., 917 S.W.2d 937, 940 Ass’n, 354 S.W.3d 843, 850 (Tex.App.— (Tex.App.—Austin 1996) (refusing to pre- Austin 2011). An assignment cannot be sume that note once held by failed bank made by a dead man; it is a transfer by was among unspecified assets transferred one existing party to another existing par- to FSLIC and then to new bank). For all ty of some valuable interest. Pool v. this record shows, there was no existing Sneed, 173 S.W.2d 768, 775 (Tex.Civ. ‘‘successor’’ to IndyMac Bank at the time App.—Amarillo 1943). of the 2011 assignment. These common law principles pose an That leaves only the question of Indy- insurmountable barrier for Deutsche Bank Mac Bank ‘‘assigns.’’ Logically, there are on this record. There is simply no proof only two possibilities here, neither of of an existing assignor with an existing which are any help to Deutsche Bank: right in the property capable of being as- either there was no assignee, in which case signed in 2011. It is undisputed that Indy- the 2011 assignment is necessarily void for Mac Bank had been ‘‘dead’’ since 2008, reasons already given; or, there was an several years prior to the 2011 assignment. assignee, in which case there is necessarily (P. Ex. 6, at p. 1). Thus, any post-mortem another, prior assignment not found in this transaction by that entity would be a nulli- record. In other words, the 2011 assign- 4 ty under Pool v. Sneed. ment would merely be the last link in a Deutsche Bank fares no better under chain of title consisting of at least two (and the ‘‘successors and assigns’’ clause. The possibly more) links. If indeed there is only apparent ‘‘successor’’ to IndyMac such a gap in the chain of ‘‘assigns,’’ Bank was IndyMac Federal Bank, but that Deutsche Bank’s claim fails under Texas entity was likewise shuttered in March assignment law. See e.g. Pain Control 2009, nearly two years before the 2011 Institute, Inc. v. GEICO, 447 S.W.3d at assignment. (P. Ex. 6). Even had that 899 (an existing right in the assignor is a entity survived to 2011, substantially all of precondition for a valid assignment); its assets had already been disposed of by Leavings v. Mills, 175 S.W.3d 301, 310

4. The court recognizes that this conclusion See Miller v. Homecomings Financial, LLC, may be in tension with some federal district 881 F.Supp.2d 825, 831 (S.D.Tex.2012). court cases cited in the bank’s motion. Such cases are not binding precedent, unlike the 5. Elsewhere the FDIC notice states that all Texas appellate decisions cited above. More- deposits of IndyMac Federal were transferred over, federal trial court opinions lack persua- to OneWest Bank FSB. But the record is sive power in a diversity case governed by silent whether OneWest bought any other as- substantive state law, unless they directly en- sets of IndyMac Bank, in particular the Burke gage and distinguish contrary state court Note or Deed of Trust. (P. Ex. 6, at p. 1). No precedent. For these reasons, this court re- party to this litigation has claimed that OneW- spectfully declines to consider them in depth. est was a ‘‘successor’’ to the lender. 958 117 FEDERAL SUPPLEMENT, 3d SERIES

(Tex.App.—Houston [1st Dist.] 2004) (par- App.—El Paso 1998); Schultz v. Ru- ty seeking to enforce note must show ‘‘un- ral/Metro Corp., 956 S.W.2d 757, 760 (Tex. broken chain of assignments’’ to the origi- App.—Houston [14th Dist.] 1997). nal mortgagee); Jernigan v. Bank One, In the specific context of trespass to try Texas, N.A., 803 S.W.2d 774, 777 (Tex. title suits, Texas courts have long held that App.—Houston [14th Dist.] 1991) (‘‘possi- a party has no authority to execute a deed bility of an intermediate transfer’’ pre- or contract on behalf of unnamed ‘‘heirs’’ cludes judgment as a matter of law con- or other parties not specifically named in cerning bank’s capacity to sue on note). the instrument. See Baldwin v. Gold- [7] Although not specifically raised or frank, 88 Tex. 249, 31 S.W. 1064, 1067 discussed in L’Amoreaux, there is yet an- (1895) (upholding exclusion of deed where other fatal flaw in Deutsche Bank’s proof ‘‘names of heirs for whom [the attorney-in- under Texas law. Even if some entity had fact] purported to act appeared neither in been shown to be a ‘‘successor or assign’’ the body nor the signature to the instru- to the original lender, nothing in this rec- ment’’); Stephens v. House, 257 S.W. 585, ord proves that MERS was a nominee or 591 (Tex.Civ.App.—Galveston 1923) (ad- agent 6 for that particular entity. As the ministrator of estate not authorized to bind Texas Supreme Court has said, ‘‘Texas law unnamed heirs, despite recitation in con- does not presume agency, and the party tract that administrator acted ‘‘for myself who alleges it has the burden of proving and the heirs to the estate of the aforesaid it.’’ IRA Resources, Inc. v. Griego, 221 Mary Owens’’); see also Thompson v. S.W.3d 592, 597 (Tex.2007), citing Buchoz Houston Oil Co., 37 F.2d 687, 689 (5th v. Klein, 143 Tex. 284, 184 S.W.2d 271, 271 Cir.1930) (conveyance ineffective to pass (1944). title as to parties not named either in the [8, 9] Under Texas law, an agent is one body of the instrument or under signature who consents to the control of another, the of grantor acting under power of attorney, principal, where the principal manifests citing Baldwin ). consent that the agent shall act for the Here, Deutsche Bank claims that MERS principal. First Nat’l Acceptance Co. v. executed the 2011 assignment as agent for Bishop, 187 S.W.3d 710, 714 (Tex.App.— the lender’s ‘‘successors and assigns.’’ Corpus Christi 2006). The party claiming (See Dkt. 84, at 7).7 Therefore it was agency must prove the principal has (1) Deutsche Bank’s burden under Texas law the right to assign the agent’s task and (2) to prove the existence of that princi- the right to control the means and details pal/agency relationship in 2011. Under by which the agent will accomplish the the precedents cited above, the mere ref- task. Laredo Medical Group v. Lightner, erence to IndyMac Bank’s ‘‘successors or 153 S.W.3d 70, 72 (Tex.App.—San Antonio assigns’’ is insufficient, because it fails to 2004); Lyons v. Lindsey Morden Claims specify the names of those persons or enti- Mgmt., Inc., 985 S.W.2d 86, 90 (Tex. ties (assuming they even existed). Nor

6. In legal terms, a ‘‘nominee’’ is a kind of SCORP Inc., 791 F.3d 545, 558–59 (5th Cir. agent. See BLACK’S LAW DICTIONARY 1211 (10th 2015). ed. 2014) (‘‘A person designated to act in place of another, usu. in a very limited way’’). 7. Deutsche Bank also contends that MERS The Fifth Circuit has used the terms ‘‘nomi- executed the 2011 assignment on its own be- nee’’ and ‘‘agent’’ interchangeably when de- half as ‘‘beneficiary’’ under the Deed of Trust. scribing MERS authority under typical deed This argument is considered and rejected in of trust language. Harris County v. MER- part 5, below. DEUTSCHE BANK NAT’L TRUST CO. v. BURKE 959 Cite as 117 F.Supp.3d 953 (S.D.Tex. 2015) has Deutsche Bank submitted any extrin- record assignments of deeds of trust when sic evidence which might identify MERS’s the interests in related promissory notes principal. From other cases the court are transferred). might take notice that MERS acts as [10] Texas law is clear that chain-of- ‘‘common agent’’ for its member mortgage title need not be proven by official recor- lenders. See Harris County v. MER- dation. Proof of assignment may be by SCORP Inc., 791 F.3d 545 (5th Cir.2015). But that is no help here, because nothing testimony as well as by documentation. in the record negates the possibility that Priesmeyer v. Pac. Sw. Bank, F.S.B., 917 the rights to the Burke Note and/or Deed S.W.2d 937, 939 (Tex.App.—Austin 1996). of Trust were transferred to a non-mem- Nevertheless, some proof is required, and ber of MERS, with whom MERS has no Deutsche Bank has offered none-beyond, principal/agent relationship. that is, a single problematic assignment that is ineffective for the various reasons In sum, L’Amoreaux does not under- explained here. mine this court’s judgment in favor of the Burkes because (1) there is no record evi- 4. Standing to Challenge Assignment dence of a prior assignment of the lender’s interest in the Note or Deed of Trust, (2) Deutsche Bank asserts that the Burkes there is no record evidence that any pur- have no standing to challenge the 2011 ported assignor existed at the time of the assignment, citing Reinagel v. Deutsche 2011 assignment; and (3) there is no rec- Bank Nat’l Trust Co., 735 F.3d 220 (5th ord evidence of a principal/agency relation- Cir.2013). But Reinagel expressly recog- ship between MERS and any ‘‘successor or nized that Texas courts have long followed assign’’ of the lender when the assignment the majority rule that a homeowner is was executed. allowed ‘‘to challenge the chain of assignments by which a party claims a right to 3. No Recording Requirement for As- forecloseTTTT’’ Id. at 224. It is true that in signments Texas an obligor cannot defend against an Deutsche Bank’s third argument is a red assignee’s efforts to enforce the obligation herring. Nothing in the Court’s findings on a ground that merely renders the as- and conclusions suggests or assumes that signment ‘‘voidable at the election of the under Texas law an assignment of a deed assignor,’’ such as a fraudulent signature of trust must be recorded in the local by an unauthorized corporate agent. Id. county clerk’s office to be effective. Many at 225. The problem here is not a voidable Texas intermediate appellate courts may defect that a defrauded assignor might be cited for the proposition that an assign- choose to disregard—it is the absence of a ment need not be recorded in order to valid assignor (i.e. a real entity owning the bind the parties to that instrument. See right to be assigned) in the first place. Cf. e.g., Roper v. CitiMortgage, Inc., No. 03– L’Amoreaux v. Wells Fargo Bank, N.A., 11–00887–CV, 2013 WL 6465637 (Tex. 755 F.3d 748, 750 (5th Cir.2014) (consider- App.—Austin 2013); Denson v. First Bank ing homeowner’s challenge to validity of & Trust of Cleveland, 728 S.W.2d 876, 877 MERS assignment on its merits, implicitly (Tex.App.—Beaumont 1987); see also rejecting bank’s ‘‘voidable’’ argument). Harris County v. MERSCORP Inc., 791 F.3d 545 (5th Cir.2015) (making an ‘‘Erie [11] Indeed, it is misleading to charac- guess’’ that the Texas Supreme Court terize this as a question of defendants’ would interpret Texas Local Government ‘‘standing,’’ as though the Burkes were Code § 192.007 as imposing no duty to asserting an affirmative defense on which 960 117 FEDERAL SUPPLEMENT, 3d SERIES

they bore the burden of proof. Texas law ment, the name of the assignor, ‘‘Mortgage is clear that a party seeking to foreclose on Electronic Registration Systems, Inc.’’ ap- a home equity loan bears the burden to pears three (3) times—in the body of the demonstrate its authority to prosecute the assignment, above the signature line, and foreclosure. See, e.g., Tex.R. Civ. P. Rule in the corporate acknowledgement. Each 736.1(d)(3)(B) (petition must describe ‘‘the time, MERS’s name is immediately fol- authority of the party seeking foreclo- lowed by the phrase ‘‘as nominee for’’ the sure’’); Rule 736.6 (‘‘the petitioner has the lender, IndyMac Bank, its successor and burden to prove by affidavits on file or assigns. P. Ex. 2. Nowhere does this doc- evidence presented the grounds for grant- ument hint that MERS intended to convey ing the order [allowing foreclosure]’’). its own rights,8 or that it was acting as When the entity seeking to foreclose was principal rather than as agent for other not party to the original transaction, then entities. that entity must be able to trace its right [13] to foreclose back to the original mortgag- Moreover, in the context of real ee. See e.g. Leavings v. Mills, 175 S.W.3d estate transactions, Texas has long fol- 301, 310 (Tex.App.—Houston [1st Dist.] lowed the common law rule that ‘‘in order 2004) (party seeking to enforce note must to convey by grant, the party possessing show ‘‘unbroken chain of assignments’’ to the right must be the grantor, and use apt the original mortgagee); Miller v. Home- and proper words to convey to the grantee, comings Financial, LLC, 881 F.Supp.2d and merely signing and sealing and ac- 825, 829 (S.D.Tex.2012) (citing cases). knowledging an instrument in which another person is grantor, is not sufficient.’’ Given its failure to offer any chain of Agric. Bank v. Rice, 45 U.S. 225, 4 How. title proof other than the facially invalid 225, 242, 11 L.Ed. 949 (1846). Applying 2011 assignment, Deutsche Bank has not this rule in an early case, the Texas Su- shown that it is a real party in interest preme Court declared as ‘‘wholly inopera- here. Deutsche Bank was a stranger to tive’’ a deed signed by a spouse who was the original transaction between the not named as grantor in the body of the Burkes and their lender in 2007, and, on this trial record, Deutsche Bank remains a deed. Stone v. Sledge, 87 Tex. 49, 26 S.W. stranger to this day. 1068, 1069 (1894). The bank’s position here is less compelling than that rejected 5. The Dual Capacity Argument in Stone, because ‘‘MERS as beneficiary’’ [12] In its supplemental brief, appears neither in the signature line nor in Deutsche Bank asserts that MERS was the body of the 2011 assignment. also acting in its own behalf as ‘‘beneficia- Later Texas case law clarified that ry’’ under the Deed of Trust when it exe- ‘‘[w]hile the premises of the deed must cuted the 2011 assignment. A court’s pri- disclose certainly who the grantors are, mary duty in construing a written contract TTT [t]he requirement of the rule is met if, is to ascertain the true intention of the from the deed in its entirety, enough is parties as expressed in the language of the shown from which, by the aid of extrinsic document itself. Coker v. Coker, 650 evidence, the names of the grantors can be S.W.2d 391, 393 (Tex.1983). In this docu- made certain.’’ Texas Pac. Coal & Oil Co.

8. For purposes of this motion only, the court MERS had contractual authority under its assumes without deciding (1) that MERS was member agreements to make assignments in not required to act solely as nominee for the its own name, and not merely ‘‘as nominee’’ lender under the Deed of Trust, and (2) that for its member entities. U.S. EX REL. GRIFFITH v. CONN 961 Cite as 117 F.Supp.3d 961 (E.D.Ky. 2015)

v. Patton, 238 S.W. 202 (Tex.Comm.1922), holder of the Note.’’ (Dkt. 90, at 7). No quoting Creosoted Wood Block Paving Co. authority or excuse is offered for this v. McKay, 211 S.W. 822, 824 (Tex.Civ. breathtakingly late request. Even assum- App.—Dallas 1919) (internal quote marks ing such evidence exists, Deutsche Bank omitted). Deutsche Bank presented no does not pretend that it is ‘‘newly discover- such extrinsic evidence at trial. The sole ed’’, nor that the bank was excusably igno- evidence is the assignment itself, drafted rant about it until after trial despite using 9 by Deutsche Bank’s law firm, which re- due diligence to discover it. See 11 peatedly declares that MERS was acting WRIGHT, MILLER & KANE, FEDERAL PRACTICE in a single, representative capacity—‘‘as AND PROCEDURE § 2808 (2012). After four nominee for the lender, its successor and years of litigation, including court-ordered assigns.’’ mediation and trial on the merits, the time Words matter, especially in real estate for such a deus ex machina maneuver has transactions. See Univ. Sav. Ass’n v. long since passed. The Burkes are enti- Springwoods Shopping Ctr., 644 S.W.2d tled to the finality of judgment that our 705, 706 (Tex.1982) (‘‘the terms set out in a judicial process is intended to provide. deed of trust must be strictly followed’’); The bank’s request for a do-over is denied. see also Mathis v. DCR Mortg. III Sub I, L.L.C., 389 S.W.3d 494, 507 (Tex.App.—El Paso, 2012) (‘‘The rules of interpretation that apply to contracts also apply to notes , and deeds of trust.’’). Based on the words of the 2011 assignment, MERS was no more acting on its own behalf than was the bank’s own law firm. UNITED STATES of America, ex rel. Jennifer L. GRIFFITH and Sarah 6. Conclusion Carver, Plaintiffs, Given its day in court, Deutsche Bank was content to risk its entire claim on a v. single problematic document. For reasons Eric C. CONN, et al., Defendants. explained above, that gambit failed. Civil No. 11–157–ART. Long-established Texas common law principles of agency, assignment, real proper- United States District Court, ty, and contract interpretation apply to all E.D. Kentucky, litigants, banks included. Deutsche Southern Division, Bank’s motion to alter or amend the judg- at Pikeville. ment must therefore be denied.10 There remains one additional matter. Signed July 27, 2015. In the last sentence on the last page of its Background: Relators, who were former last brief to this court, Deutsche Bank employees of Social Security Administra- asks to reopen the trial record to provide tion (SSA), filed qui tam action under ‘‘the wet ink original of the Note or testi- False Claims Act (FCA) against attorney, mony affirming Deutsche Bank’s status as alleging he had conspired with an adminis-

9. The firm’s name appears in the upper left- 10. However, the court will issue amended hand corner of the document. P. Ex. 2. findings and conclusions to better comport with the record evidence, as well as an amended final judgment.