throbber
Case 2:16-cv-00423-PM-KK Document 28 Filed 09/27/16 Page 1 of 11 PageID #: 276
`*C_ase_2:1_§:cv—OO423—PM—KK Document 28 Filed 09/27/16 Page 1 of 11 Page|D #: 276
`l~:'EGi:lVl:a_2‘
`ZN L«’3J(E CHARLES.
`
`SEP 2? 2815
`
`TONY Ft
`
`‘
`
`ORE. CLERK
`
`mam.»
`
`UNITED STATES DISTRICT COURT
`
`WESTERN DISTRICT OF LOUISIANA
`
`LAKE CHARLES DIVISION
`
`SCHUMACHER HOMES OF
`
`* CIVIL ACTION NO. 2:16-cv—00423
`
`JUDGE MINALDI
`
`*
`
`* *
`
`*7
`
`':
`
`LOUISIANA, INC., et al.,
`Plaintiffs
`
`v.
`
`R.E. WASHINGTON CONSTRUCTION
`
`* MAGISTRATE JUDGE KAY
`
`LLC, et al.,
`Defendants
`*~k*>':*i<:':>':>l<:k************4:*>':>Y:>‘:9':*9:*9:>':>':>':>':>':*:'<*-k~kkid:*4:vldnl:*9:icicieic-Jvicicv'<:l::l<*-Jn'<*:':9:ivi:9<'J:=l<:':>':i::':4:
`
`MEMORANDUM RULING
`
`Before the court is a Motion to Dismiss Plaintiffs’ Claims (Rec. Doc. 14) filed by
`
`defendants Angel and Michael Carroll (the Carrolls), an Opposition to the Motion to Dismiss
`
`Plaintiffs’ Claims (Rec. Doc. 22) filed by plaintiffs Schumacher Homes of Louisiana, Inc. and
`
`Schumacher Homes Operations, Inc. (collectively Schumacher), and a Reply (Rec. Doc. 23) filed
`
`by the Carrolls. Also before the court is a Motion to Dismiss Cross-Claims (Rec. Doc. 15) filed
`
`by the Carrolls, an opposition to the Motion to Dismiss Cross-Claims (Rec. Doc. 19) by R.E.
`
`Washington Construction, LLC and Roy Washington (collectively Washington), and a reply
`
`(Rec. Doc. 20) filed by the Carrolls. For the following reasons, the Carroll’s Motion to Dismiss
`
`Plaintiffs’ Claims (Rec. Doc. 14) will be DENIED in part and GRANTED in part. And the
`
`Carrolls’ Motion to Dismiss Cross-Claims (Rec. Doc. 15) will be DENIED in part and
`
`GRANTED in part.
`
`FACTS & PROCEDURAL HISTORY‘
`
`In 2012, the Carrolls Visited a Schumacher showroom, and shortly after, Schumacher
`
`prepared a custom home plan for the Carrolls, the Highpoint Custom Design. The Highpoint
`
`Custom Design is based on two registered copyrights owned by Schumacher: the “Homestead
`
`' All facts are based on the plaintiffs’ complaint (Rec. Doc. 1) unless otherwise noted.
`
`1
`
`

`
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`1/99” architectural work and the “Homestead House Plan” technical drawings copyrights.
`
`Schumacher provided the Carrolls access to the Highpoint Custom Design, and the Carrolls then
`
`gave the custom-made plans to Washington and an unknown draftsperson. Washington maintains
`
`that it was unaware that the plans were inspired by or created by Schumacher.2 The defendants
`
`used Schumacher’s plans to design and construct a home that is substantially similar to the
`
`Highpoint Custom Design and the two registered copyrights. In March 2016, Schumacher filed
`
`suit against the Carrolls, Washington, and an unknown draftsperson, alleging five main claims:
`
`copyright infringement of an architectural work, copyright infringement of technical drawings,
`
`unfair competition under 15 U.S.C. § 1125, conversion under Louisiana state law, and unjust
`
`enrichment under Louisiana state law.3 Washington filed an answer which included a cross-claim
`
`against the Carrolls, seeking indemnity for any liability it might incur.
`
`The Carrolls
`
`filed a Motion to Dismiss
`
`all claims
`
`alleged against
`
`them by
`
`Schumacher (Rec. Doc. 14) and a Motion to Dismiss Cross-Claims alleged against them by
`
`Washington (Rec. Doc. 15) regarding indemnity for the copyright infringement claims,
`
`the
`
`conversion claim, and the unjust enrichment claim.
`
`LAW & ANALYSIS
`
`An action can be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure
`
`if the claimant fails “to state a claim upon which relief can be granted.” Motions to dismiss are
`
`generally “viewed with disfavor and [should be] rarely granted.” Harrington v. State Farm Fire
`
`& Cas. C0., 563 F.3d 141, 147 (5th Cir. 2009) (quoting Gregson v. Zurich Am. Ins. C0,, 322
`
`F.3d 883, 885 (5th Cir. 2003)). “[The] Court construes the [claims] liberally in favor of the
`
`[claimant], and takes all facts pleaded
`
`as true.” Id. (quoting Gregsorz, 322 F.3d at 885). To
`
`2 Answer (Rec. Doc. 10), para. 74.
`3 Compl. (Rec. Doc. 1). All of the claims were filed against all defendants, except for the unfair competition claim,
`which was filed against Washington only.
`
`

`
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`survive a motion to dismiss, a claimant must plead “enough facts to state a claim to relief that is
`
`plausible on its face,” making the right to relief more than merely speculative. Bell Atl. Corp. v.
`
`Twombly, 550 U.S. 544, 555, 570 (2007). “Determining whether a complaint [or counterclaim]
`
`states a plausible claim for relief [is] a context-specific task that requires the reviewing court to
`
`draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
`
`A. Schumacher’s Copyright Claims
`
`First, the Carrolls argue that Schumacher’s copyright infringement claims should be
`
`dismissed. For the following reasons, the Motion to Dismiss the copyright claims will be denied.
`
`Before bringing a copyright infringement action, a plaintiff must register or preregister its
`
`copyright. 17 U.S.C. § 411(a). This registration requirement also applies to owner—created
`
`derivative works, which are adaptations of original copyrighted material. See Creations
`
`Unlimited, Inc. v. McCain, 112 F.3d 814, 816 (5th Cir. 1997), abrogated on other grounds by
`
`Reed Elsevier, Inc. v. Muchnic, 559 U.S. 154 (2010). Therefore, to determine whether the
`
`defendant infringed on a copyright when the action involves an unregistered derivative work, the
`
`factfinder may only compare the allegedly infringing material to the registered, copyrighted
`
`material. See id.
`
`To present a valid a copyright infringement claim, a plaintiff must allege “(l) ownership
`
`of a valid copyright and (2) unauthorized copying.” Peel & Co. v. The Rug Mkt., 238 F.3d 391,
`
`394 (5th Cir. 2001) (citing Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 790 (5th
`
`Cir. 1999); Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir.l995)). The
`
`factfinder can infer unauthorized copying from “(1) proof that the defendant had access to the
`
`copyrighted work prior to creation of the infringing work and (2) probative similarity.” Id. The
`
`copying is legally actionable, if the factfinder, after conducting a side-by-side comparison
`
`

`
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`between the original and the copy, determines that a layman would consider the works
`
`“substantially similar.” Ia’. This comparison can be made in a 12(b)(6) Motion to Dismiss if both
`
`the original and the copy are submitted with the pleadings. Randolph v. Dimension Films, 634 F.
`
`Supp. 2d 779, 787 (S.D. Tex. 2009) (citing several cases including, Taylor v. IBM, 54 F. App'x
`
`794 (5th Cir. 2002)).
`
`Here, Schumacher sufficiently alleged that its infringed copyrights are registered. Based
`
`on the complaint, the Highpoint Custom Design4 created for the Carrolls by Schumacher is a
`
`nonregistered derivative of Schumacher’s registered “Homestead 1/99”5 architectural work and
`
`“Homestead House Plan”6 technical drawings. Therefore, the allegedly copied blueprints created
`
`by the defendants must be compared to the registered “Homestead 1/99” architectural work and
`
`“Homestead House Plan”7 technical drawings and cannot be compared with the Highpoint
`
`Custom Design. See Creations Unlimitea’, Inc., 112 F.3d at 816. While the Carrolls contend that
`
`the Highpoint Custom Design is too different from the registered copyrights to be a derivative
`
`work,8 this highly factual question cannot properly be resolved during a motion to dismiss where
`
`the court must take all facts pleaded as true. See Harrington, 563 F.3d at 147. Furthermore,
`
`whether the custom design was a derivative work is largely irrelevant to Schumacher’s copyright
`
`claims because the alleged unauthorized copies must be compared to the registered copyrights
`
`and not the Highpoint Custom Design. See Creations Unlimited, Inc., 112 F .3d at 816.
`
`Schumacher also sufficiently alleged copyright infringement claims—that (1) it is the
`
`owner of the copyrights and (2) the defendants copied them without authorization. See Peel &
`
`Co., 238 F.3d at 394. Based on the complaint, Schumacher is the owner of valid copyrights to the
`
`4 (Rec. Doc. 1-4).
`5 (Rec. Doc. 1-2).
`6 (Rec. Doc. 1-3).
`7 (Rec. Doc. 1-3).
`8 Memo. in Support (Rec. Doc. 14-1), pp. 8-10.
`
`

`
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`“Homestead 1/99” architectural work and “Homestead House Plan” technical drawings.9 The
`
`complaint also alleges that the defendants copied these designs when they developed the
`
`blueprints for the Carrolls’ new home because the defendants had access to the copyrights
`
`through the Highpoint Custom Design and the home has substantial similarities to Schumacher’s
`
`registered copyrighted designs. 10 See id. In a l2(b)(6) Motion, the court must take these facts
`
`pleaded as true. Harrington, 563 F.3d at 147. Furthermore, the court carmot complete a side—by-
`
`side comparison of the original designs and the allegedly copied design because the allegedly
`
`copied designs are not included in the pleadings.” Therefore, the Carrolls’ Motion to Dismiss
`
`the copyright infringement claims will be denied.
`
`B. Schumacher’s State Law Claims
`
`Second, the Carrolls argue that Schumacher’s state law claims of conversion and unjust
`
`enrichment should be dismissed because (1) federal copyright laws preempts the claims and (2)
`
`Schumacher failed to allege facts that support the claims. For the following reasons, the Motion
`
`to Dismiss the conversion claim will be denied and the Motion to Dismiss the unjust enrichment
`
`claim will be granted.
`
`1. Preemption
`
`Regarding the Carrolls’ preemption argument, “[t]he Copyright Act expressly preempts
`
`all causes of action falling within its scope, with a few exceptions.” Daboub v. Gibbons, 42 F.3d
`
`285, 288 (5th Cir. 1995). A cause of action is preempted if ( 1) it falls “within the subject matter
`
`of copyright” and (2) “it protects rights that are ‘equivalent’ to any of the exclusive rights of a
`
`federal copyright.” Id. at 289. A state conversion claim that is based on the interference of
`
`9 See Compl. (Rec. Doc. 1), para. 16-17.
`'0 See Compl. (Rec. Doc. 1), para. 21-26.
`“ The complaint does include external pictures of the Carrolls’ finished house, but because this is not the complete
`copy, the pictures cannot be used for a side—by—side comparison. Exhibit Photos (Rec. Doc. 1-5).
`
`5
`
`

`
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`intangible property is preempted by the Copyright Act, but a conversion claim based on the
`
`interference of tangible property is not. See Carson v. Dynegy, Inc., 344 F.3d 446, 456-57 (5th
`
`Cir. 2003). A conversion claim based on the defendant not returning physical plans and drawings
`
`is not preempted because the plaintiff has been physically deprived of its property. See
`
`McConley v. Boise Bldg. Sols. Mfg, L.L.C., No. CIV.A. 05-1006-A, 2006 WL 709599, at *5
`
`(W.D. La. Mar. 21, 2006). On the other hand, generally “unjust enrichment claims are
`
`qualitatively equivalent to a cause of action for copyright infringement and are preempted by the
`
`Copyright Act,” unless the claims are based on a breach of contract or a fiduciary duty. Id.
`
`(citing Dorsey v. Money Mack Music, Inc., 304 F. Supp. 2d 858, 865 (E.D. La. 2003); Asunto v.
`
`Shoup, 132 F. Supp. 2d 445, 453 (E.D. La. 2000)).
`
`Here, the Copyright Act does not preempt Schumacher’s conversion claim because the
`
`claim is based on the plaintiffs physical deprivation of the Highpoint Custom Design, and the
`
`complaint adequately alleges that the defendants possessed documents with the design.” The
`
`Carrolls contend that the complaint is inadequate because it does not use the language that
`
`Schumacher gave the Carrolls the Highpoint Custom Design.” However, the complaint alleges
`
`that the Carrolls “had access to
`
`the Highpoint Custom Design and that Schumacher
`
`5:14
`
`“provide
`
`dnl5
`
`them with the design. In a motion to dismiss, the court must construe the complaint
`
`liberally in favor of the plaintiff, and therefore, these allegations are sufficient to allege a
`
`conversion of physical property.
`
`12 Compl. (Rec. Doc. 1), para. 62-65.
`‘3 Reply (Rec. Doc. 23), pp. 7-8.
`14 Compl. (Rec. Doc. 1), para. 21.
`15 Compl. (Rec. Doc. 1), para. 61.
`
`

`
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`However, Schumacher’s unjust enrichment claim is preempted by the Copyright Act
`
`because the claim is based on the Carrolls
`
`use of Schumacher Homes’ copyrighted works,
`
`3“
`
`9716
`
`and is not based on a contractual or fiduciary breach. See McConley, 2006 WL 709599, at *5
`
`(citing Dorsey, 304 F. Supp. 2d at 865; Asunto, 132 F. Supp. 2d at 453).
`
`2. Failure to state a claim.
`
`Second, regarding the Carrolls’ argument that Schumacher did not allege facts sufficient
`
`to support its state law claims, the court analyzes only Schumacher’s conversion claim, because
`
`the unjust enrichment claim is preempted. Under Louisiana law, a conversion is “[1] an act in
`
`derogation of the plaintiffs possessory rights, and any wrongful exercise or assumption of
`
`authority over another's goods, [2] depriving him of the possession, [3] permanently or for an
`
`indefinite time.” Labbe v. Premier Bank, 618 So. 2d 45, 46 (La. App. 3 Cir. 1993). The Carrolls
`
`contend that Schumacher failed to plead that they had physical possession over any documents.
`
`However, as previously discussed, Schumacher’s allegations are sufficient to allege that the
`
`Carrolls had possession of its physical property.” Therefore, Schumacher pleaded facts that
`
`support a conversion claim.
`
`C. Washington ’s Indemnification Claimfor Copyright Infringement
`
`The Carrolls argue in their Motion to Dismiss Cross-Claims that Washington cannot
`
`bring an indemnity claim for copyright infringement because no such right is provided for by the
`
`Copyright Act. “A defendant liable under a federal statute has a right to contribution or
`
`indemnification from another who has also violated the statute only if such right arises (1)
`
`through the affirmative creation of a right of action by Congress, either expressly or implicitly,
`
`or (2) Via the power of the courts to formulate federal law.” Envtl. Conservation Org. v. Bagwell,
`
`16 Compl. (Rec. Doc. 1), para. 67.
`17 See Compl. (Rec. Doc. 1), para. 21, 61.
`
`

`
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`
`No. 4:03CV-807-Y, 2005 WL 2465003, at *3 (N.D. Tex. Sept. 30, 2005) (quoting Mags, Inc. v.
`
`US. Dist. Ct. for the D. ofNev., 934 F.2d 209, 212 (9th Cir.1991)). While neither the Supreme
`
`Court nor this circuit have definitively stated whether a defendant has a right to indemnify under
`
`the Copyright Act, “numerous other courts have held that no such right exists.” Crispin v.
`
`Christian Audigier, Inc., 839 F. Supp. 2d 1086, 1099—100 (C.D. Cal. 2011). See also Gaines v.
`
`Fusari, No. CIV. 2:11-04433 WJM, 2013 WL 1934664, at *1 (D.N.J. May 8, 2013) (“[N]either
`
`federal statutory law nor federal common law provide causes of action for indemnification or
`
`contribution in Copyright Act cases”); Frank Betz Associates, Inc. v. Signature Homes, Inc., No.
`
`CIV.A. 3206-0911, 2009 WL 2151304, at *3 (M.D. Tenn. July 13, 2009) (“It is generally, if not
`
`entirely, accepted that there is no common law right of indemnification under the Copyright
`
`Act”); Elektra Entm't Grp. Inc. v. Santangelo, No. 06 CIV 11520 SCR MDF, 2008 WL 461536,
`
`at *2 (S.D.N.Y. Feb. 15, 2008) (“[Because] no such rights exist under either the Copyright Act or
`
`federal common law. . .Defendants cannot proceed with their proposed third-party claim of
`
`indemnification and/or contribution for copyright infringement”); Pure Country Weavers, Inc. v.
`
`Bristar, Inc., 410 F. Supp. 2d 439, 448 (W.D.N.C. 2006) (“[N]o right of indemnification was
`
`affirrnatively created (either expressly or implicitly) by Congress in the Copyright Act, and
`
`this is not one of the ‘limited situations’ in which the Court should formulate federal common
`
`law to create such a right.”). However, courts have held that indemnification claims can be
`
`asserted under state statutes, if the statute under which it is asserted is not preempted by the
`
`Copyright Act. See Frank Betz Associates, Inc., 2009 WL 2151304, at *4; Pure Country
`
`Weavers, 410 F.Supp.2d at 448—49. For example in Pure Country Weavers, Inc. v. Bristar, Inc.,
`
`the defendants brought third party indemnification claims based on a violation of a Georgia
`
`statute that gave a warranty against infringement. 410 F. Supp. 2d at 448-49. The court allowed
`
`

`
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`
`the claim after it determined that the Georgia statute creating the right was not preempted by the
`
`Copyright Act. Id. at 449.
`
`Washington argues that its indemnification claim based on its potential liability under the
`
`Copyright Act is a state law claim. 18 However, the right to indemnify for liability under a federal
`
`statue must arise out of that statute or through federal common law. Envtl. Conservation Org. ,
`
`2005 WL 2465003, at *3 (citing Mags., Inc., 934 F.2d at 212). A state law indemnification claim
`
`must be based on a state statute that is not preempted by the Copyright Act. See Frank Betz
`
`Associates, Inc., 2009 WL 2151304, at *4; Pure Country Weavers, 410 F.Supp.2d at 448-49.
`
`Washington presented no argument that its claim for indemnification for the copyright
`
`infringement claims was based on a state statute that would not be preempted by the Copyright
`
`Act.” Therefore, this court follows the reasoning of numerous other courts that have addressed
`
`this question and finds that because there is no right to indemnification under the Copyright Act,
`
`Washington’s indemnification claim for copyright infringement will be dismissed.
`
`D. Washington ’s Indemnification Claimfor Conversion and Unjust Enrichment
`
`Finally, the Carrolls argue that Washington’s indemnification claims for the state law
`
`claims of conversion and unjust enrichment should be dismissed. As an initial matter, the court
`
`will dismiss the indemnification claim for unjust enrichment because as previously discussed the
`
`unjust enrichment claim brought by Schumacher is preempted by the Copyright Act. However,
`
`Washington’s indemnification claim for conversion will not be dismissed.
`
`“Louisiana law allows claims for tort indemnity only when the third-party plaintiffs
`
`negligence is passive or its fault is only technical or theoretical.” Threlkeld v. Haskins Law Firm,
`
`922 F.2d 265, 267 (5th Cir. 1991). An indemnity claim should not be dismissed if “[t]here is [a]
`
`18 Opposition (Rec. Doc. 19).
`19 See Opposition (Rec. Doc. 19).
`
`

`
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`
`foreseeable combination of findings, Viewing the allegations of the pleadings
`
`in the light most
`
`favorable to [the party seeking indemnity], that could result in [that party] being cast in judgment
`
`for mere technical or passive fault.” Id. at 267-68. Because “issues of fault, intent, negligence,
`
`knowledge or ignorance, and/or good faith are not involved in actions for tortious conversion,” a
`
`defendant may be liable for conversion without knowing that the property belonged to another.
`
`Hagberg v. Manuel, 525 So. 2d 19, 22 (La. Ct. App. 1988) (citing Lincecum v. Smith, 287 So.2d
`
`625 (La.App. 3rd Cir.l973), writ refused, 290 So.2d 904 (La.1974)).
`
`In its answer Washington alleges that it had no knowledge that the plans furnished to it
`
`by the Carrolls were inspired or created by Schumacher.” Based on this theory, Washington
`
`could still be technically liable for the tort of conversion because its knowledge is irrelevant, but
`
`Washington’s liability would be entirely caused by the negligent or intentional acts of the
`
`Carrolls. Therefore, Washington’s indemnity claim for conversion should not be dismissed
`
`because the facts alleged could result in Washington being liable for conversion based
`
`principally on the negligent or intentional acts of the Carrolls. See Threlkela’, 922 F.2d at 267.
`
`CONCLUSION
`
`In conclusion, Schumacher has sufficiently pleaded facts to support its copyright
`
`infringement claims based on its registered copyrights. Schumacher also pleaded facts to support
`
`its state law conversion claim, a claim that is not preempted by federal copyright law. Therefore,
`
`the Carrolls’ Motion to Dismiss Plaintiffs’ Claims (Rec. Doc. 14) will be DENIED regarding the
`
`copyright infringement claims and the conversion claim. However, Schumacher’s unjust
`
`enrichment claim is preempted by federal copyright law, and the Carrolls’ Motion to Dismiss
`
`Plaintiffs’ Claims (Rec. Doc. 14). will be GRANTED regarding the unjust enrichment claim.
`
`Additionally, Washington has sufficiently pleaded facts to support an indemnification claim for
`
`2° Answer (Rec. Doc. 10), para. 74-80.
`
`10
`
`

`
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`
`conversion, and the Carrolls’ Motion to Dismiss Cross-Claims (Rec. Doc. 15) will be DENIED
`
`in regard to that indemnification claim. Washington’s indemnification claim for copyright
`
`infringement will be dismissed because no such right exists under the Copyright Act, and its
`
`indemnification claim for unjust enrichment will be dismissed because Schumacher’s unjust
`
`enrichment claim is preempted. Therefore, the Carrolls’ Motion to Dismiss Cross-Claims (Rec.
`
`Doc. 15) will be GRANTED regarding the indemnification claims for copyright infringement
`
`and unjust enrichment.
`
`Lake Charles, Louisiana, thimday of
`, 2016.
`
`
`UNITED STATES DISTRICT JUDGE
`
`ll

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