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Home , Cabbage Alley, Leo Nocentelli, Marshall Sehorn, The Meters

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JOSEPH MODELISTE, * NO. 2007-CA-0297 GEORGE PORTER, JR., LEO NOCENTELLI, ARTHUR * COURT OF APPEAL LANNON NEVILLE, JR., INDIVIDUALLY , AND AS THE * FOURTH CIRCUIT RECORDING AND PERFORMING GROUP * STATE OF LOUISIANA KNOWN AS "THE METERS" * * * * * * * VERSUS

MARSHALL ESTUS SEHORN, A/K/A MARSHALL SEHORN, ALLEN TOUSSAINT, RHINELANDER MUSIC, INC., SANSU ENTERPRISES, INC., MARSHALL E. SEHORN, PRODUCTIONS, INC., JEFFERSON JAZZ, INC., SOUTHERN SWAMP MUSIC, INC., SANSU RECORDS, ET AL.

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 84-9262, DIVISION “E-7” HONORABLE MADELEINE LANDRIEU * * * * * * JUDGE MICHAEL E. KIRBY * * * * * *

(Court composed of Judge Michael K. Kirby, Judge Max N. Tobias Jr., and Judge Roland L. Belsome)

BELSOME, J., CONCURS IN THE RESULT

J. SCOTT LOEB MONTGOMERY BARNETT BROWN READ HAMMOND & MINTZ, L.L.P. 200 GREENLEAVES BOULEVARD SUITE 1 MANDEVILLE, LA 70448 COUNSEL FOR PLAINTIFF/APPELLANT(JOSEPH MODELISTE)

EDGAR D. GANKENDORFF ERIC R. G. BELIN PROVOSTY & GANKENDORFF, LLC 650 POYDRAS STREET SUITE 2700 NEW ORLEANS, LA 70130 COUNSEL FOR DEFENDANTS/APPELLEES (RHINO ENTERTAINMENT, INC. AND R & B MUSIC, L.L.C.)

REVERSED AND REMANDED

Plaintiff, Joseph Modeliste, appeals the granting of defendants’ peremptory

exception of no cause of action and peremptory exception of prescription of the

defendants, Rhino Entertainment Company and R&B Music, L.L.C.

(“Rhino/R&B.”). We reverse.

Joseph Modeliste, plaintiff, is one of the four founding members of the local musical recording and performing group known professionally as “The Meters.”

The other three original founding members of The Meters are Leo Nocentelli,

Arthur L. Neville and George Porter, Jr. On or around December 20, 1971,

Messrs. Modeliste, Nocentelli, Neville, and Porter entered into separate songwriter contracts with Rhinelander Music, Inc. (“Rhinelander”), a company owned by now-bankrupt defendant, Marshall E. Sehorn (“Sehorn”), whereby they each assigned one hundred percent (100%) of their rights and interests in the music they had participated in writing or composing as The Meters to Rhinelander, thereby entering into a new contract (hereinafter referred to as the “Songwriter

Agreement”). Additionally, plaintiff’s petition alleges on or around this date, each

member of The Meters entered into a contract with Rhinelander (hereinafter referred to as the “Recording Agreement”) wherein they agreed to render their

services as musicians for a period of five years to Rhinelander in connection with

performing and making several master recordings for the production of

phonograph records. The Recording Agreement provided for the assignment by

plaintiff, Nocentelli, Neville, and Porter to Rhinelander of all their rights, titles,

and interests in and to the master recordings. In return for these assignments, the

members were to receive “substantial royalties”. It is alleged that Sehorn was the

sole owner of Rhinelander, a New York corporation. As best as we can determine

from the damaged appellate record, we find that Sehorn was residing in New

Orleans during the relevant time period. 1

Plaintiff further alleges in his petition that on or around May 7, 1974, the

parties collectively agreed to modify the earlier Songwriter Agreement. Under

these later contracts of amendment, the parties agreed that the rights and interests

in the music composed from that day forward would be owned fifty percent (50%)

by Rhinelander and fifty percent (50%) by plaintiff, Nocentelli, Neville, and Porter

jointly doing business as Cabbage Alley Music. As with the previous contracts,

the members were to receive “substantial royalties”. Plaintiff alleges that the

contract entitled him to 12.5% of the 24 songs written after the May 7, 1974

modification of the December 20, 1971 Songwriter Agreement. These 24 songs

are referred to as the Cabbage Alley Catalog.

1 The physical appellate record in this matter was severely mildewed from water damage suffered from Hurricane Katrina making it difficult to review. That is, some parts of the appellate record are illegible due to water damage.

The petition alleges Sehorn/Rhinelander materially breached the 1971 and

1974 Songwriter Agreement and Recording Agreement because it never paid

royalties to plaintiff, Nocentelli, Neville or Porter.

The 1971 and 1974 Songwriter and Recording Agreements were formally

terminated by written agreement dated April 19, 1978.

In June 1984, the original members of The Meters commenced the instant action seeking recovery of unpaid royalties, as well as any additional remedies to which they would have been entitled as a matter of law.2

It is alleged on or around November 12, 1989, Nocentelli, Neville, and

Porter entered into a settlement and administration agreement with all of the then

named defendants. Plaintiff was not a party to this agreement, did not participate

in its negotiation, and continued to seek the judicial enforcement of his rights. The

petition alleges that although several parties continue to profit from his music, to

date plaintiff has yet to receive royalty payments in accordance with the 1971 and

1974 Songwriter and Recording Agreements.

On June 21, 1996, during the pendency of this suit, as a part of Sehorn’s and

Rhinelander’s bankruptcy proceedings, Rhino/R&B entered into an Asset Purchase

Agreement (APA) with the bankrupts wherein Rhinelander sold all of its rights

under the 1971 and 1974 contracts to Rhino/R&B for the sum of six-hundred and

twenty-five thousand dollars ($625,000). Moreover it is alleged that the APA

2 We note that federal law such as 17 U.S.C. 101, et seq. ,relative to copyright, may be implicated in the resolution of the matters alleged. Nevertheless, since our sole task is to review exceptions of prescription and no cause of action on state law grounds, we need not address the merits of the underlying copyright issues.

between Rhinelander and Rhino/R&B notified Rhino/R&B of the instant litigation, by means of clauses contained therein.

On September 21, 1998, plaintiff filed another supplemental and amending

petition to include Rhino/R&B as defendants to this suit.

DISCUSSION

The trial court granted Rhine/R&B’s two peremptory exceptions, namely

exceptions of prescription and no cause of action. Appellate review of the record following a hearing on exceptions of prescription is governed by the manifest error standard when evidence has been introduced at the hearing. In the absence of evidence, the exception of prescription must be decided on the facts alleged in the petition, which are accepted as true. Cichirillo v. Avondale Industries, Inc., 2004-

2894, p. 5 (La. 11/29/05), 917 So.2d 424, 428. The exception of no cause of action

is reviewed de novo based upon the four-corners of the plaintiff’s petitions. An

appellate court can notice the exception of no cause of action on its own motion.

La. C.C.P. art. 927B. Since this court finds no evidence introduced to support the

exception of prescription,3 we conduct a de novo review of the petition, accepting the pleaded facts as true.

We note at the outset, that the Louisiana Civil Code art. 461, classifies the

thing that is in dispute, i.e. the intellectual property rights to the songs, as an

incorporeal movable.4

3 We again note that due to the water-damaged and mildewed state of the record, there are some parts that are illegible. 4 The common law refers to such intellectual property as an intangible personal property.

PRESCRIPTION

The resolution of the prescription issue hinges upon the issue of whether or

not Rhino/R&B were in good faith when they acquired the rights to the music

formerly owned by Rhinelander/Sehorn. La. C.C. art. 3490, states:

One who has possessed a movable as owner, in good faith, under an act sufficient to transfer ownership, and without interruption for three years, acquires ownership by prescription. [Emphasis added.]

In order for Rhino/R&B to take advantage of acquisitive prescription under these

facts, their argument must overcome two obstacles. First, since intellectual

property is incorporeal/intangible, proof of adverse possession of such a movable

is not as easy as in the case of a corporeal/tangible movable, where one clearly can

possess the entirety of its finite matter. This is because two claimants of the same

intellectual property rights can exercise those rights at the same time. Second,

plaintiff’s petition questions the good faith of Rhino/R&B, because the APA

recognized some limitations and specifically acknowledged this current pending

litigation.

Finally, it can be argued that even if Rhino/R&B were found to be in good faith, the three-year period did not accrue. The APA transaction occurred in June of 1996, and plaintiff amended his petition to include Rhino/R&B as defendants in

September of 1998, approximately nine months short of the three-year prescriptive period. While one might debate Rhino/R&B’s good faith, there can be no such argument concerning the prior possessor, Mr. Sehorn’s company, Rhinelander.

Therefore, Rhino/R&B cannot tack time from Mr. Sehorn’s company to meet the requisite three-year period.

Accordingly, accepting the pleadings as true, we find the trial court erred in granting Rhino/R&B’s exception of prescription.

NO CAUSE OF ACTION

When dealing with corporeal movables the nature of the problem in this case

can be summarized thus:

The rules of law governing the transfer of ownership of movables arise out of a conflict between two competing interests: the security of ownership and the security of transaction. This conflict is created by two opposing legal principles. The first is the rule codified in article 2279 of the French Civil Code which states that ‘la possession vaut titre’ (with respect to movables possession is considered equivalent to title). This rule promotes the security of transaction by protecting those who acquire possession of a movable in good faith from one they believe had the ability to transfer its ownership. The opposing principle is the common law rule ‘nemo dat quod non habet’ (no one can transfer a greater right than he himself has). Louisiana Civil Code article 2452 expresses this principle by providing that the sale of a thing belonging to another is null. This rule affords protection to the security of ownership by recognizing the rights of the dispossessed owner in the movable.

The conflict between these two legal principles arises in situations whereby, for one of several reasons, be it loss, theft, a vice of consent or misplaced confidence, the owner of a movable, X, is dispossessed of it by a second person, Y, who purports to transfer its ownership to a third person, Z. Both X and Z claim ownership of the movable and seek protection from Y's misconduct. X seeks security of ownership; Z seeks security of transaction. [footnotes omitted]

Tanya Ann Ibieta Ory, The Transfer of Movables, 47 La.L.Rev. 841, 841-42,

(1987).

Nevertheless, we must note that in the case of incorporeal rights, possession is not a concept that offers much aid, due to the fact that possession of an idea, or songs as in this case, can be ubiquitous. Therefore, it can be argued that in the case of an incorporeal/intangible right, that is easily divided, the concept of possession in determining ownership carries less weight, and we must look to title with greater emphasis. Stated another way, the security of transaction must accede to the security of ownership as regards incorporeal/intangible rights. Federal law lends credence to this principle in 17 U.S.C.A. § 202, which makes the following distinction:

Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object.

Moreover, 17 U.S.C.A. §203-205, address similar issues regarding intellectual property.

Be that as it may, we need not address that here because we accept as true plaintiff’s allegations that Rhinelander did not live up to its contractual obligations by failing to accurately and timely report to petitioners and provide them royalty statements and/or checks properly due them. The exception of no cause of action addresses itself only to the sufficiency in law of the petition as supplemented and

amended. La. C.C.P. art. 927; Kennedy v. Perry Timber Co., 219 La. 264, 271, 52

So.2d 847, 849, and its progeny. Thus, for purposes of the exception, the agreement between Rhinelander and plaintiff was breached. La. C.C. art. 526, the action for revendication, gives plaintiff a cause of action, to-wit:

The owner of a thing is entitled to recover it from anyone who possesses or detains it without right and to obtain judgment recognizing his ownership and ordering delivery of the thing to him.

Moreover, plaintiff’s petition alleges ownership interests as well as bad faith on the part of Rhino/R&B in stating that the APA and its surrounding circumstances put Rhino/R&B on notice of this lawsuit and dispute over ownership rights concerning the songs. Therefore, the granting of the exception of no cause of action was improper.

For the aforementioned reasons, we reverse and remand for further

proceedings in accord with this opinion.

REVERSED AND REMANDED