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Leftenant v. Blackmon

United States District Court, D. Nevada

September 6, 2019

NATHAN LEFTENANT, ARNETT LEFTENANT, JERYL BRIGHT and GREGORY JOHNSON, Plaintiff,
v.
LAWRENCE “LARRY” BLACKMON, Defendants.

          ORDER

          ELAYNA J. YOUCHAH UNITED STATES MAGISTRATE JUDGE

         Pending before the Court is Plaintiffs Nathan Leftenant, Arnett Leftenant, Jeryl Bright, and Gergory Johnson's Motion for Leave to Amend the Complaint (“Plaintiffs' Motion”). ECF No. 22. The Court has reviewed Plaintiffs' Motion, Defendant Lawrence Blackmon's Opposition (ECF No. 25), and Plaintiffs' Reply (ECF No. 30).

         Background

         Plaintiffs filed their original complaint on October 10, 2018, and Defendant filed his Answer and Counterclaim on January 15, 2019. On April 30, 2019 the Plaintiffs filed their instant motion seeking leave to amend their complaint, which was fully briefed on May 31, 2019. The undersigned took the bench on August 6, 2019, at which time Plaintiffs' Motion was pending.

         Plaintiffs' original complaint alleged three causes of action including tortious interference with contract, conversion, and declaratory relief. Plaintiffs' Amended Complaint seeks to add a party, Tomi Jenkins, and to revise the causes of action asserted. Specifically, Plaintiffs' Amended Complaint seeks to assert four causes of action including tortious interference with contract, breach of fiduciary duty, promissory estoppel, and declaratory relief. Plaintiffs contend that Defendant does not object to Plaintiff Tomi Jenkins being added as a plaintiff for purposes of seeking declaratory relief, but that Defendant objects to all remaining proposed amendments.

         Defendant Mr. Blackmon alleges he was “a founding member of CAMEO” thereby signaling that he was not the only founding member of this musical group. ECF No. 25 at 1:18-19 (emphasis added); see also ECF No. 30 at 2. Plaintiffs N. Leftenant, A. Leftenant, Johnson and Jenkins contend they too are founding members of CAMEO, and that Plaintiff: (i) Jenkins appeared on all 18 of CAMEO's albums as well as on its apparent current single “El Paso”; (ii) N. Leftenant “‘was considered the face of CAMEO' and appeared on more than … 16 CAMEO albums”; (iii) A. Leftenant “appeared on more than … 7 CAMEO albums; (iv) Johnson “appeared on more than … 8 CAMEO albums [and] is credited for creating the name ‘CAMEO'”; and, (v) Bright “became a featured member of CAMEO's horn section, and appeared on more than … 5 CAMEO albums…” ECF No. 23-1 ¶¶ 11-15, and 18.

         Plaintiffs allege that they, together with Defendant, “agreed” that each current and future member of CAMEO would receive an equal share of “record company advances against future royalties and royalties for records that featured their vocal performances, ” as well as an equal share of live performance income. Id. ¶ 17.[1] The alleged agreement with Plaintiff Bright was that he “would receive an equal share of the net artist advances of future royalties, royalties and net live performance income.” Id. ¶ 19. Defendant is further alleged to have served as CAMEO's producer and to have “administered and managed the recording agreements, including recording funds, organized live performances[, …] the branding activities of the band[, ] … artist advances and … [payment of] CAMEO expenses.” Id. ¶¶ 23 and 29.

         In various paragraphs of the proposed Amended Complaint, Plaintiffs allege that a number of record distributing entities had agreements with CAMEO (or Atlanta Artist Records (“AAR”), discussed below) that required the periodic payment of royalties for the benefit of the CAMEO members. Id. ¶¶ 27, 30, 35, 38, 48, 49, 58. Plaintiffs contend that each of the agreements between CAMEO and record distribution entities required CAMEO or AAR to pay advances and royalties arising from CAMEO recordings to those persons or entities entitled to such payments. Id. ¶¶ 30, 39, 50, 58.

         It is not disputed that Defendant served as CAMEO's “producer” through, inter alia, AAR, a company alleged to have been formed as a Georgia corporation sometime after August 2, 1982. Id. ¶¶ 23 and 33. AAR is said to be owned by Plaintiffs N. Leftenant and, potentially, Jenkins, as well as Defendant. Id. ¶¶ 33 and 34. AAR is also said to have done business as “Better Days Music” and “Better Nights Music” beginning in August 1982. Id. ¶ 44. Plaintiffs next state that AAR was “administratively dissolved” on June 12, 1992, due to Defendant's “failure to handle administrative matters”; but then contend the entity “continued to operate as a partnership[, ]” among Plaintiffs N. Leftenant, A. Leftenant, Bright, and Jenkins, together with Defendant, paying all CAMEO expenses from “net artist advances against royalties, ” royalties, and live performance income. Id. ¶¶ 51 and 52. At some unknown time, Plaintiffs allege that only Plaintiffs N. Leftenant and Jenkins, together with Defendant, continued to do business as a partnership under the names Atlanta Artist Records, Better Days Music, and Better Nights Music “in connection with CAMEO's recordings and musical compositions.” Id. ¶ 53.[2] CAMEO is alleged to have produced its last album in 2000, but continued to perform as CAMEO “in the years following” this release up to the present. Id. ¶¶ 57 and 60.

         Plaintiffs alleged that they “have never received their representative share of periodic payment of royalties” from any of the companies that distributed CAMEO's music. Id. ¶ 61. Plaintiffs allege Defendant received payment of royalties due AAR, but did not distribute those royalties to the Plaintiffs as required. Id. ¶ 62. Plaintiffs also admit that “[n]o taxes were withheld from any CAMEO distributions of net profits and no w-2's [sic] were issued to Plaintiffs.” Id. ¶ 42.

         In addition to the royalties and royalty advances paid by various distributors, Plaintiffs alleges that, as CAMEO “featured artists, ” they each entered into membership agreements with SoundExchange, a national royalty collection society that apparently collects and distributes digital performance royalties to recording artists and owners of music. Id. ¶¶ 70-75. Plaintiffs also allege they entered into membership agreements with AARC. Id. ¶ 97. Plaintiffs contend that Defendant had knowledge of Plaintiffs' agreements with both AARC and SoundExchange. Id. ¶ 100. While Plaintiffs allege that “featured artists” receive quarterly payments from SoundExchange and AARC upon entering into a membership agreement, in or around 2010, Defendant is alleged to have started collecting royalties from SoundExchange “acting as Plaintiffs' agent.” Id. ¶¶ 76, 82, and 83. Plaintiffs do not state whether Defendant's role as agent was approved or unapproved; nevertheless, Plaintiffs state that Defendant represented to SoundExchange that he would pay Plaintiffs their share of royalties as featured artists. Id. ¶ 84. The same allegation is not made as to AARC. Defendant is alleged to have collected over $103, 000 of Plaintiffs' SoundExchange royalties that he never distributed, and that Defendant never paid them their share of royalties received from AARC either. Id. ¶¶ 85-86.

         After an apparent failed attempt at mediation, that would have been paid for by SoundExchange, this lawsuit was filed by Plaintiffs. Id. ¶¶ 92-93.

         Discussion

         The Court has broad discretion to grant an amendment to a complaint and may freely do so, “when justice so requires.” Fed.R.Civ.P. 15(a)(2). Denial of a leave to amend may be justified, however, if the proposed amendment will cause undue delay, undue prejudice to the opposing party, a request to amend is made in bad faith, a party has repeatedly failed to cure deficiencies, or the amendment would be futile. Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522, 533 (9th Cir. 2008). Here, Defendant's opposition to Plaintiffs' proposed amended complaint is based solely on futility. ECF No. 25 at 1:12. The Court considers each of Defendant's arguments below.

         Plaintiffs' Proposed Tortious Inference with Contractual Relations Claim

         Plaintiffs' tortious interference claim is based on their membership agreements with SoundExchange and AAR, about which Defendant was aware, and which agreements must have preceded the time in 2010 when Defendant is alleged to have begun collecting royalties on behalf of Plaintiffs as their agent. ECF No. 23-1 ¶¶ 75, 83, 97, and 100. Plaintiffs claim that Defendant is wrongfully interfering with Plaintiffs' “contractual rights to receive royalties by claiming that he is solely entitled to” the SoundExchange and AARC royalties. Id. at 101. Further, Plaintiffs allege that their claims for royalties includes $103, 005.30 in royalties already paid to Defendant by SoundExchange and the supposed $200, 000 in royalties SoundExchange “is holding” for CAMEO as of March 2018. Id. ¶¶ 85 and 95.[3] Plaintiffs do not allege that AARC is holding any royalties for CAMEO.

         In order to state an intentional interference with contract claim under Nevada law, a plaintiff must plead that there is a valid and existing contract about which the defendant is aware, the defendant's intent to disrupt or interfere with that contract, actual disruption or interference, and damages. Local Ad Link, Inc. v. AdzZoo, LLC, No. 2:09-cv-01564, 2009 WL 10694069 *12 (D. Nev., December 15, 2009) citing Sutherland v. Gross, 772 P.2d 1287, 1290 (Nev. 1990). The statute of limitations on an intentional interference with contract claim is three years. NRS 11.190(3)(c), Stalk v. Mushkin, 199 P.3d 18, 20 (Nev. 1990).

         Defendant contends that Plaintiffs fail to plead that Defendant's alleged activities actually disrupted their membership agreements with SoundExchange or AARC, do not identify a particular contract provision that was breached or any breach of contract by SoundExchange or AARC, and that Plaintiffs have not alleged that either SoundExchange or AARC failed to pay them royalties. Finally, Defendant contends that ...


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