Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 1 of 37 PageID 1543
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
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`CIVIL ACTION NO.
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`3:21-CV-1924-G
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`BOBBY GOLDSTEIN PRODUCTIONS,
`INC.,
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`Plaintiff,
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`VS.
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`THOMAS L. HABEEB and ATVD, LLC
`d/b/a AMERICAN TELEVISION
`DISTRIBUTION,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the court is the plaintiff Bobby Goldstein Productions, Inc.’s (“BGP” or
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`the “plaintiff”) motion for entry of judgment. Plaintiff’s Motion for Entry of
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`Judgment (“Motion”) (docket entry 111). BGP moves for entry of final judgment
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`pursuant to Federal Rule of Civil Procedure 58 against the defendants Thomas L.
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`Habeeb (“Habeeb”) and ATVD, LLC, d/b/a American Television Distribution
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`(“ATVD”) (collectively, the “defendants”), specifically asking the court to: (1)
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`conclude that Habeeb is liable for the $390,000 damages award levied against ATVD;
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`(2) grant BGP $354,868.37 in pre-judgment interest that accrued from May 7, 2008,
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
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`CIVIL ACTION NO.
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`3:21-CV-1924-G
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`BOBBY GOLDSTEIN PRODUCTIONS,
`INC.,
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`Plaintiff,
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`VS.
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`THOMAS L. HABEEB and ATVD, LLC
`d/b/a AMERICAN TELEVISION
`DISTRIBUTION,
`
`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the court is the plaintiff Bobby Goldstein Productions, Inc.’s (“BGP” or
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`the “plaintiff”) motion for entry of judgment. Plaintiff’s Motion for Entry of
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`Judgment (“Motion”) (docket entry 111). BGP moves for entry of final judgment
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`pursuant to Federal Rule of Civil Procedure 58 against the defendants Thomas L.
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`Habeeb (“Habeeb”) and ATVD, LLC, d/b/a American Television Distribution
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`(“ATVD”) (collectively, the “defendants”), specifically asking the court to: (1)
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`conclude that Habeeb is liable for the $390,000 damages award levied against ATVD;
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`(2) grant BGP $354,868.37 in pre-judgment interest that accrued from May 7, 2008,
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 2 of 37 PageID 1544
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`through October 27, 2022, and $91.20 in pre-judgment interest for each subsequent
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`day until judgment is entered; (3) award BGP post-judgment interest; and (4) award
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`full costs, including reasonable attorney’s fees, to BGP. See id. For the reasons set
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`forth below, the motion is GRANTED. Judgment in favor of BGP for the full
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`amount of relief will be entered against both ATVD and Habeeb. This includes
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`liability for the $390,000 damages award, $366,997.97 in pre-judgment interest,
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`post-judgment interest to be determined by the district court after entry of judgment,
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`and reasonable costs and attorney’s fees.
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`I. BACKGROUND
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`For a more detailed summary of this case’s facts, see the court’s order on the
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`defendant’s motion to compel arbitration. Motion to Compel Arbitration
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`Memorandum Opinion and Order (docket entry 40). Below are the facts pertinent to
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`this motion.
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`In 1995, Robert N. Goldstein (“Goldstein”) created Cheaters and started his
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`own production company, BGP, to produce and shoot the show. Plaintiff’s Original
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`Complaint for Copyright Infringement (“Complaint”) (docket entry 1) ¶ 9. Cheaters
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`Uncensored is a show comprised of uncensored footage from Cheaters. Id. Goldstein
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`and Habeeb collaborated on Cheaters. Brief in Support of Defendants’ Motion to
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`Compel Arbitration (“Brief in Support of Motion”) (docket entry 22) at 1. Habeeb is
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`the president and managing member of ATVD, which is a Texas limited liability
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 3 of 37 PageID 1545
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`company. Joint Pretrial Order (docket entry 81) at 5. ATVD, however, forfeited its
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`corporate privileges on January 29, 2016, for failing “to file a franchise tax report
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`and/or pay franchise taxes[,]” and its “corporate privileges were not revived by the
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`Texas Secretary of State before BGP filed this lawsuit.” Id. at 6.
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`On August 18, 2021, BGP filed a complaint against Habeeb and ATVD,
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`alleging that the defendants committed direct, contributory, and vicarious copyright
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`infringement by posting videos online that contained BGP’s copyrighted material,
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`specifically from Cheaters Uncensored. See Complaint. On October 20, 2022, the
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`parties stipulated that the court, rather than the jury, should decide post-trial the
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`question of whether Habeeb is liable for any or all of ATVD’s debts based on ATVD
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`losing its corporate charter, assuming that the jury returned a verdict in favor of BGP.
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`Joint Submission Regarding the Court’s October 19, 2022 Order (docket entry 93) at
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`1-2. Furthermore, on October 27, 2022, BGP withdrew its claims that ATVD
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`committed vicarious and contributory copyright infringement. Plaintiff’s Requested
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`Edits to the Court’s [Proposed] Instructions to the Jury and Verdict Form (docket
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`entry 106) at 1. On October 27, 2022, the jury returned a verdict in favor of BGP
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`and against ATVD, awarding BGP $390,000 in statutory damages. Verdict (docket
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`entry 109) at 48-49.
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`BGP filed its motion for entry of judgment on October 31, 2022. In it, BGP
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`alleges that: (1) Habeeb is liable for the $390,000 damages award levied against
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`ATVD because it is a debt of ATVD’s that it incurred after ATVD forfeited its
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`corporate privileges and before it reinstated its corporate charter; (2) pursuant to 28
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`U.S.C. § 1961, the court should award BGP $354,868.37 in pre-judgment interest for
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`the period of May 7, 2008, through October 27, 2022, and $91.20 for each day
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`thereafter until judgment is entered, because the Copyright Act does not preclude
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`pre-judgment interest and awarding pre-judgment interest in this case furthers the
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`congressional policies of the Copyright Act; (3) pursuant to section 1961, the court
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`should award BGP post-judgment interest on the entire amount of relief sought; and
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`(4) the court should award BGP, as the prevailing party, full costs and reasonable
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`attorney’s fees. See Motion.
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`The defendants filed their response to BGP’s motion for entry of judgment on
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`November 3, 2022. In it, the defendants first contend that the court should not
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`enter judgment against Habeeb individually, because ATVD’s debt was not incurred
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`after it forfeited its corporate charter, ATVD never revived its corporate charter, and
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`copyright infringement is not a debt under Texas Tax Code § 171.255(a). Response
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`to Plaintiff’s Motion for Judgment (“Response”) (docket entry 113) at 2-7. The
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`defendants then argue that if the court determines that ATVD’s debt occurred when
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`the verdict was entered against it, pre-judgment interest should be calculated from the
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`date of the verdict. Id. at 7.*
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`In their response to BGP’s motion for entry of judgment, the defendants
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`also ask the court to: (1) set aside the jury’s finding that the defendants did not have
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`II. ANALYSIS
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`A. Habeeb is Liable for the $390,000 Award Against ATVD
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`BGP first asks the court to enter final judgment that Habeeb is liable for all or
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`part of the $390,000 award against ATVD under section 171.255(a) because the
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`award is a debt of ATVD’s that it incurred after ATVD forfeited its corporate
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`privileges and before it reinstated its corporate charter. Motion at 1. In relevant
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`part, Texas Tax Code section 171.255 states:
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`(a) If the corporate privileges of a corporation are forfeited
`for the failure to file a report or pay a tax or penalty, each
`director or officer of the corporation is liable for each debt
`of the corporation that is created or incurred in this state
`after the date on which the report, tax, or penalty is due
`and before the corporate privileges are revived. The
`liability includes liability for any tax or penalty imposed by
`this chapter on the corporation that becomes due and
`payable after the date of the forfeiture.
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`(b) The liability of a director or officer is in the same
`manner and to the same extent as if the director or officer
`were a partner and the corporation were a partnership.
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`(c) A director or officer is not liable for a debt of the
`corporation if the director or officer shows that the debt
`was created or incurred:
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`an express license to use BGP’s copyrighted material, arguing that this finding was
`against the great weight of the evidence; and (2) set aside both the court’s prior ruling
`denying the defendants’ motion to compel arbitration and the jury’s verdict in favor
`of BGP and refer the case to arbitration. Response at 7-8. “A request for a court
`order must be made by motion.” FED. R. CIV. P. 7(b)(1). Here, the defendants have
`requested court orders in their response to BGP’s motion for entry of judgment, not
`in a motion submitted with the court. The defendants, therefore, have improperly
`brought these requests, and the court does not address these issues.
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`(1) over the director’s objection; or
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`(2) without the director’s knowledge and that the
`exercise of reasonable diligence to become
`acquainted with the affairs of the corporation would
`not have revealed the intention to create the debt.
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`TEX. TAX CODE § 171.255(a)-(c).
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`What is considered a “debt” and when that “debt” was created or incurred
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`under section 171.255(a) has varied over time. Before 1987, Texas courts held “that
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`debts were considered created or incurred at the time the relevant contractual
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`obligations were incurred.” Hovel v. Batzri, 490 S.W.3d 132, 138 (Tex. App. –
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`Houston [1st Dist.] 2016, pet. denied). During this time period, however, courts
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`applied a “‘relation-back’ doctrine that allowed future liquidated debts to relate back
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`to the execution of the agreement through which damages were owed.” Id. at 139.
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`In 1987, the Texas Legislature “adopted a narrow definition of ‘debt’ within
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`the Tax Code as ‘any legally enforceable obligation measured in a certain amount of
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`money which must be performed or paid within an ascertainable period of time or on
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`demand.’” Hovel, 490 S.W.3d at 140 (quoting Act of May 30, 1987, 70th Leg., R.S.,
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`ch. 324, § 1, sec. 171.109(a)(3), 1987 TEX. Gen. Laws 1734, 1735, repealed by Act of
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`May 2, 2006, 79th Leg., 3d C.S., ch. 1, § 5, sec. 171.109(a)(3), 2006 TEX. Gen. Laws
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`1, 24 (effective January 1, 2008)). Because the Texas Legislature created a narrow
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`definition of “debt” under section 171.255(a), Texas courts began to reject the
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`“relation-back” doctrine’s application to the term “debt;” however, some courts
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`instead applied the doctrine to the phrase “created or incurred” in section
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`171.255(a). Hovel, 490 S.W.3d at 140-142. Under this method, “the debt was the
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`judgment but it was created or incurred at the time the conduct occurred or contract
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`was executed.” Id. at 143.
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`In 2008, the Texas Legislature repealed the narrower definition of what a
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`“debt” is under section 171.255. Id. at 142. Subsequently, “the ‘relation-back’
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`doctrine reemerged to avoid individual liability for pre-forfeiture acts that lead to
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`post-forfeiture judgments.” Id. Texas courts’ utilization of the “relation back”
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`doctrine “demonstrate[s] application of the rule of strict construction to protect a
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`party facing a penalty through a construction of Section 171.255 in that party’s
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`favor.” Id. at 143.
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`In this case, it is undisputed that: (1) Habeeb is the president and managing
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`member of ATVD; (2) on January 29, 2016, ATVD forfeited its corporate privileges
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`because it failed to file a franchise tax report and/or pay franchise taxes; and (3) the
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`Texas Secretary of State did not revive ATVD’s corporate privileges before BGP filed
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`the current lawsuit. Joint Pretrial Order at 5-6. The relevant issues for this motion,
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`therefore, are: (1) is the jury’s finding that ATVD committed copyright infringement
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`and its award of $390,000 in damages to BGP a “debt” under section 171.255(a); (2)
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`if it is a debt, did any of the debt occur after ATVD forfeited its corporate charter and
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`does the relation-back doctrine apply to that portion of the debt; and (3) if any or all
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`of the debt occurred after ATVD forfeited its corporate privileges, is Habeeb liable for
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`the entire $390,000 award or only a portion of it?
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`1. The $390,000 Award is a “Debt”
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`The defendants argue that Habeeb cannot be liable for any of the $390,000
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`award against ATVD because copyright infringement is not a “debt” under section
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`171.255. Response at 6. The defendants assert that “[t]he jury specifically found
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`that the copyright infringement was not willful[,]” and instead the evidence
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`demonstrates that the infringement “was more akin to tort liability based on
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`negligence.” Id. Consequently, because ATVD did not commit an intentional tort
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`and directors and officers cannot be held personally liable for torts based on
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`negligence under section 171.255, Habeeb cannot be held liable for ATVD’s
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`copyright infringement. Id.
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`BGP responds by arguing that the defendants “incorrectly confuse[] ‘willful’
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`with ‘intentional,’ . . . advanc[ing] the flawed argument that the absence of willfulness
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`with respect to copyright infringement equates to copyright ‘negligence.’” Plaintiff’s
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`Reply in Support of Motion for Entry of Judgment (“Reply”) (docket entry 114) at 8.
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`Instead, BGP avers, “copyright infringement is a strict liability offense . . . not a tort
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`based on negligence.” Id. (emphasis in original). Furthermore, BGP contends that
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`“ATVD’s infringement was not unknowing or unintentional. . . . Marshall Hays
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`testified that Mr. Habeeb was responsible for authorizing” the posting of BGP’s
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`copyrighted material. Id. at 9.
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`Whether the $390,000 award is a debt under section 171.55 depends on what
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`type of tort copyright infringement is. It is undisputed that courts can conclude that
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`directors and officers are liable for judgment-debts based on contractual duties under
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`section 171.255. See, e.g., Super Ventures, Inc. v. Chaudhry, 501 S.W.3d 121, 125-26,
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`135 (Tex. App. – Fort Worth 2016, no pet.) (“The lease amendment was signed in
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`August 2009. Thus, the debt” arising from the breached lease “was created or
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`incurred in August 2009 . . . . Tariq is personally liable for the debt under section
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`171.255(a).”); Hovel, 490 S.W.3d at 134 (applying section 171.255 to a judgment-
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`debt arising from contractual claims); Viajes Gerpa, S.A. v. Fazeli, 522 S.W.3d 524,
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`535-537 (Tex. App. – Houston [14th Dist.] 2016, pet. denied) (applying section
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`171.255 to a breach of contract). It is also undisputed that although “Section
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`171.255[a] makes the directors and officers liable for the debts of a corporation
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`whose corporate privileges have been forfeited for failing to pay its franchise taxes
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`. . .[,] it does not apply to tort judgments predicated on negligence liability.”
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`Williams v. Adams, 74 S.W.3d 437, 441-42 (Tex. App. – Corpus Christi-Edinburg
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`2002, pet. denied).
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`It is unclear, however, whether section 171.255 applies to judgment-debts
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`based exclusively on non-negligent torts, as “[o]nly a few courts have addressed
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`whether section 171.255 applies to contractual strangers with only tort claims being
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`asserted[.]” Nationwide Property & Casualty Insurance Company v. Revive Manufacturing,
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`LLC, No. 02-17-00148-CV, 2018 WL 2248667, at *7 (Tex. App. – Fort Worth May
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`17, 2018, no pet.) (mem. op.) (internal quotation omitted). Furthermore, the courts
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`that have addressed the issue do not agree. See, e.g., In re Trammell, 246 S.W.3d 815,
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`822 (Tex. App. – Dallas 2008, orig. proceeding) (“[S]ection 171.255 does not apply
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`to involuntary debts like tort judgments.”); Benbow v. Al-Barnawi, No. 13-20-00131-
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`CV, 2021 WL 3556214, at *3 (Tex. App. – Corpus Christi-Edinburg Aug. 12, 2021,
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`no pet.) (mem. op.) (“[A] corporate ‘debt’ under [section] 171.255 includes liability
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`for fraud claims because, unlike a negligence claim, fraudulent conduct is
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`intentional.”); Linder v. Assured Enterprises, Inc., No. H-20-CV-1363, 2021 WL
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`5155685, at *5 (S.D. Tex. June 8, 2021) (“[I]t appears questionable whether
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`noncontractual claims, such as statutory violations and tort claims, can lead to
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`individual liability under section 171.255.”).
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`Adding to this case’s uniqueness is that copyright infringement is neither an
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`intentional tort nor a tort based on negligence; instead, it is a strict liability tort. See
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`Guzman v. Hacienda Records & Recording Studio, Inc., No. 6-12-CV-42, 2014 WL
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`6982331, at *5 n.9 (S.D. Tex. Dec. 9, 2014) (citing Educational Testing Service v.
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`Simon, 95 F. Supp. 2d 1081, 1087 (C.D. Cal. April 12, 1999), aff’d, 808 F.3d 1031
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`(5th Cir. 2015)). Whether a strict liability tort is a “debt” under section 171.255 is
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`an issue of first impression; however, Texas courts have laid a foundation that the
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`court can use to assess whether the defendants’ copyright infringement, as a strict
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`liability tort, is a debt under section 171.255.
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`Section 171.255 supports three public-policy goals: “first, to motivate
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`corporate officers and directors to ensure that franchise taxes are paid; second, to
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`protect those dealing with the corporation; and third, to hold those directors and
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`officers liable who have abused the corporate privilege by continuing to create and
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`incur debts” after failing to pay their franchise tax. Hovel, 490 S.W.3d at 145
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`(internal quotation omitted). Furthermore, “[t]he Texas Supreme Court has noted
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`that the purpose of section 171.255 is ‘to prevent wrongful acts of culpable officers of
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`a corporation[.]’” Ranzy v. Extra Cash of Texas, Inc., No. H-09-CV-3334, 2011 WL
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`6719881, at *11 (S.D. Tex. Dec. 21, 2011) (quoting Schwab v. Schlumberger Well
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`Surveying Corporation, 198 S.W.2d 79, 81-82 (Tex. 1946)), on reconsideration in part for
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`other reasons, No. H-09-CV-3334, 2012 WL 1015923 (S.D. Tex. Mar. 22, 2012).
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`“Because Section 171.255 is a penal statute,” however, courts “must ‘strictly
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`construe’ any ambiguity in favor of the party penalized by it.” Hovel, 490 S.W.3d at
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`136. Courts, therefore, cannot stretch section 171.255 “beyond the clear import of”
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`its language. Schwab, 198 S.W.2d at 81. This “does not mean that each individual
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`term must be read narrowly. It means that, when a statutory provision is unclear, the
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`statute is read in its entirety in a way that benefits the party facing the possibility of a
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`penalty if a fair reading permits it.” Hovel, 490 S.W.3d at 137.
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`Until 2002, whether section 171.255 applied to unintentional torts remained
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`largely unanswered. See Williams, 74 S.W.3d at 439. In coming to the conclusion
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`that section 171.255’s language “indicates that [it] was not intended to apply to
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`judgment debts predicated on negligence liability[,]” the Williams court interpreted
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`section 171.255(a) in light of section 171.255(c). Id. at 441. Interpreting the statute
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`as a whole, the court explained how corporate officers “cannot lay behind the log and
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`be immune from personal accountability on the basis of ignorance if such ignorance is
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`shown to be unreasonable. The exception, in effect, holds the decisionmakers liable
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`for debts which they exercised, or at least had the ability to exercise, some control
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`over incurring[.]” Id. at 441-42 (internal quotation omitted).
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`The Williams court continued by looking to how the Texas Supreme Court
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`interpreted section 171.255’s predecessor statute. The Texas Supreme Court found
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`that under the predecessor statute, corporate officers could be personally liable by
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`“‘consenting to and approving [] debts of the corporation where knowledge of their
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`creation is shown to have come to them in the regular course of the business of the
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`corporation . . . . They had only to disapprove and disavow the debts to avoid
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`personal liability[.]’” Williams, 74 S.W.3d at 442 (quoting First National Bank of
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`Boston v. Silberstein, 398 S.W.2d 914, 916 (Tex. 1966)).
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`In light of section 171.255’s support of public-policy, its purpose, and prior
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`case law’s interpretation of the statute, the court concludes that the $390,000 award
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`levied against ATVD based on copyright infringement, a strict liability tort, is a debt
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`under section 171.255. First, given section 171.255’s support of the three public-
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`policy goals outlined above and the nature of the statute’s purpose of preventing
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`wrongful acts of guilty corporate officers, the defendants’ actions place this case
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`squarely within the statute’s purview. Although neither party has provided evidence
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`as to whether ATVD ever paid its franchise tax report and/or paid franchise taxes
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`after losing its corporate privileges, in their Joint Pretrial Order, the parties stipulated
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`that the Texas Secretary of State had not revived ATVD’s corporate privileges before
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`BGP filed its lawsuit. Joint Pretrial Order at 6. Given that the first public-policy goal
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`is to motivate corporate officers and directors to ensure that franchise taxes are paid,
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`the defendants’ failure to pay, or prove that they have paid, franchise taxes, falls
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`squarely into section 171.255’s purpose in preventing wrongful acts of culpable
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`corporate officers.
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`Furthermore, the parties stipulated that ATVD posted BGP’s copyrighted
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`material on YouTube and Dailymotion between 2006 and 2008, that BGP’s counsel
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`sent the defendants a cease-and-desist letter on April 21, 2021, and that BGP’s
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`copyrighted material remained on the internet until approximately July 5, 2021.
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`Joint Pretrial Order at 7-8, 12. BGP, therefore, had no choice but to interact with
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`ATVD during this time period, which includes when ATVD lost its corporate charter
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`in 2016, in order to prevent the defendants from using its copyrighted material. As
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`such, the second public-policy goal that sections 171.55 supports – protecting those
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`dealing with corporations – and the statute’s purpose apply in this case, as the statute
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`would protect BGP in its dealings with ATVD. Finally, as discussed further below,
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`Habeeb abused corporate privilege by continuing to incur debts after ATVD forfeited
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`its corporate privileges, as it committed copyright infringement after 2016. The third
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`public-policy goal that section 171.255 supports – holding directors and officers liable
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`for abusing corporate privileges by creating or incurring debts after failing to pay
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`franchise taxes – and the statute’s purpose, therefore, are also applicable as they
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`would protect BGP and hold Habeeb and ATVD accountable for their abuse.
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`Along with these public-policy goals that section 171.255 supports, Texas
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`courts’ interpretation of section 171.255 indicates that the $390,000 award levied
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`against ATVD falls under the statute. In interpreting section 171.255, courts have
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`emphasized the importance of a defendant’s actions being intentional. See, e.g.,
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`Benbow, 2021 WL 3556214, at *3 (“[A] corporate ‘debt’ under [section] 171.255
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`includes liability for fraud claims because, unlike a negligence claim, fraudulent
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`conduct is intentional.”); Tryco Enterprises, Inc. v. Robinson, 390 S.W.3d 497, 518
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`(Tex. App. – Houston [1st Dist.] 2012, pet. dism’d) (Keyes, J., concurring)
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`(“[N]egligence, unlike breach of fiduciary duty or fraud, is not an intentional tort for
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`which a partner might be held liable for the acts of a partnership, as required for
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`liability under section 171.255.”); Williams, 74 S.W.3d at 441-42 (construing section
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`171.255’s to include intentional conduct but not “conduct that is merely negligent.”).
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`Furthermore, also in interpreting section 171.255, courts have underscored
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`how judgments cannot be a debt under the statute when a defendant did not act,
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`acted negligently, or had no knowledge of the corporation’s actions that led to the
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`judgment. In concluding that judgments based on negligence are not debts under
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`section 171.255, the Williams court repeatedly emphasized the importance of a
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`defendant either performing some action involved in the judgment or having
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`knowledge of the corporation’s actions that led to the judgment. Williams, 74
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`S.W.3d at 441-42. The court acknowledged that “the statute provides an exception
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`to the liability of the officer or director for debts of the corporation in section
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`171.255(c) to the effect that one will not be liable for those debts that are incurred
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`without the officer’s or directors knowledge or consent.” Id. at 441. The court
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`continued, noting that the Texas Legislature “envisioned personal liability only for
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`debts created or incurred through some sort of ‘affairs of the corporation’ about
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`which the director or officer in question had some knowledge and control.” Id. at
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`441-42 (internal quotation omitted).
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`The Williams court further indicated that section 171.255 creates “liability
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`which results from and is attributable to the acts of [the defendants]. They had only
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`- 15 -
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 16 of 37 PageID 1558
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`to disapprove and disavow the debts to avoid personal liability; but having consented
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`to and approved the debts, they become personally liable therefore.” Id. (internal
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`quotation omitted). Other courts have followed the Williams court’s analysis. See
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`PACCAR Financial Corporation v. Potter, 239 S.W.3d 879, 884 (Tex. App. – Dallas
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`2007, no pet.) (concluding that directors and officers can be liable under section
`
`171.255 for “debts that could have been created with the officer or director’s knowledge,
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`approval and consent.”) (italicization in original) (internal quotation omitted);
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`Benbow, 2021 WL 3556214, at *3; In re Trammell, 246 S.W.3d at 822.
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`Texas courts’ interpretations of section 171.255 indicate that the $390,000
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`award is a debt under section 171.255. Although the judgment is not based on a
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`breach of contract or an intentional tort, ATVD’s copyright infringement and
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`Habeeb’s actions as ATVD’s president and managing member mirror case law’s
`
`interpretation of why certain judgments are debts under section 171.255. Similar to
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`the intentional nature that the courts described in Benbow, Tyrco Enterprises, and
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`Williams, here, the defendants’ actions were intentional, in the volitional sense,
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`throughout. It is undisputed that ATVD created trailers containing BGP’s
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`copyrighted material, that someone at ATVD authorized and posted the trailers
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`containing BGP’s copyrighted material on ATVD’s personally owned YouTube and
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`Dailymotion accounts, and that the trailers were available on YouTube from 2006
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`- 16 -
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`
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 17 of 37 PageID 1559
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`until approximately May 12, 2021, and on Dailymotion from 2006 through July 5,
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`2021. Joint Pretrial Order at 7-8, 12.
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`It is immaterial that the jury found ATVD’s actions were not willful, in the
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`senses that ATVD “knew that [its] actions constituted infringement of BGP’s
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`copyright(s) or that [ATVD] recklessly disregarded the possibility that [its] actions
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`infringed BGP’s copyright(s).” Verdict at 38, 44-45. The defendants’ knowledge of
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`whether they were committing copyright infringement or reckless disregard of that
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`fact is irrelevant. It is undisputed that ATVD intended to bring about the conduct
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`that caused the copyright infringement – creating the trailers with BGP’s copyrighted
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`material, uploading the trailers to ATVD’s personal YouTube and Dailymotion
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`accounts starting in 2006, and leaving the trailers online until 2021, about 15 years
`
`later. Although copyright infringement is a strict liability tort, and not an intentional
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`tort, the defendants’ actions were clearly intentional, bringing them under section
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`171.255’s purview.
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`Furthermore, just as the Williams, PACCAR Financial Corporation, and Benbow
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`courts underscored the importance of officers and directors either having been
`
`involved in the actions that led to the judgment, had knowledge or approved those
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`actions, or unreasonably ignored the corporation’s actions, here, Habeeb either
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`approved of ATVD’s uploading of the trailers containing BGP’s copyrighted material
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`or unreasonably ignored ATVD’s actions. Although the jury did not find Habeeb
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`- 17 -
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`
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 18 of 37 PageID 1560
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`vicariously liable for ATVD’s direct copyright infringement because Habeeb did not
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`profit from ATVD’s infringement, the jury did find that Habeeb either controlled
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`ATVD’s copyright infringing actions or he failed to exercise his right and ability to
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`prevent ATVD’s infringement. Verdict at 6-11. All Habeeb had to do was
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`“disapprove and disavow the debts to avoid personal liability.” Williams, 74 S.W.3d
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`at 442 (internal quotation omitted).
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`Moreover, even if Habeeb did not personally upload or approve the videos, he
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`cannot escape liability for what appears to be unreasonable ignorance. Parts of BGP’s
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`copyrighted material were on ATVD’s personal online accounts for 15 years, during
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`which Habeeb was ATVD’s president and managing member. Habeeb did not have
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`to have personally participated in uploading the videos to be personally liable, see In
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`re Trammell, 246 S.W.3d at 822, and he “cannot lay behind the log and be immune
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`from personal accountability on the basis of ignorance if such ignorance is shown to
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`be unreasonable[,]” Williams, 74 S.W.3d at 441 (internal quotation omitted).
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`As such, the court concludes that the $390,000 damages award levied against
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`ATVD for copyright infringement is a debt under section 171.255. Although
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`copyright infringement is a strict liability tort, analyzing this case’s facts in light of
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`section 171.255’s support of the three public-policy goals outlined above, the
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`statute’s purpose, and prior courts’ interpretations of the statute indicates that the
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`defendants’ actions fall squarely under the statute.
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`- 18 -
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`
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 19 of 37 PageID 1561
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`2. Part of ATVD’s Debt Occurred After it Forfeited its Corporate Charter and the
`Relation-Back Doctrine Does Not Apply to Any of the Debt
`
`The defendants next argue that even if the $390,000 award is a debt under
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`section 171.255, the debt was incurred before ATVD forfeited its corporate
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`privileges. The defendants note that under section 171.255 the debt “must be
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`incurred after the date on which the report, tax, or penalty is due[,]” and the debt in
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`this case “was incurred in 2005 and 2006[,]” before ATVD forfeited its corporate
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`privileges. Response at 3. The defendants argue that “Texas courts have held that a
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`debt is incurred when the tortious conduct, injury, or the breach of contract occurred
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`and, therefore, the director or officer is not individually liable under section
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`171.255(a).” Id. (cleaned up). The defendants contend that Texas courts have also
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`concluded that post-forfeiture breaches or judgments relate back to pre-forfeiture
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`actions and that in this case, “there is no dispute that the acts complained of in this
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`lawsuit arose in 2005 and 2006, well before the 2016 forfeiture of ATVD’s corporate
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`privileges.” Id. at 3-4.
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`BGP argues that there are three reasons why ATVD became liable for a debt
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`after it forfeited its corporate privileges. First, BGP avers that contrary to the
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`defendants “assum[ing] that ATVD’s infringement occurred only in 2005 and 2006,
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`. . . copyright infringement is an ongoing tort.” Reply at 3. BGP points out that the
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`Supreme Court has held “that the separate-accrual rule” applies to the copyright
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`statute of limitations, meaning that “when a defendant commits successive [copyright
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`- 19 -
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`
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`Case 3:21-cv-01924-G Document 124 Filed 03/09/23 Page 20 of 37 PageID 1562
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`infringement] violations, the statute of limitations runs separately from each
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`violation. Each time an infringing work is reproduced or distributed, the infringer
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`commits a new wrong. Each wrong gives rise to a discrete ‘claim’ that ‘accrue[s]’ at
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`the time the wrong occurs.” Id. (quoting Petrella v. Metro-Goldwyn-Mayer, Inc., 572
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`U.S. 663, 671 (2014)).
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`According to BGP, it is undisputed that the videos remained on ATVD’s
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`YouTube and Dailymotion accounts until 2021, that evidence at trial showed that
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`there were over 2.6 million views of BGP’s copyrighted material before ATVD
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`removed the videos from the internet, and that Scott Ricamore created copies of
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`BGP’s copyrighted material in 2021, through screen shots and recordings, on behalf
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`of ATVD. Reply at 3-4. ATVD, therefore, committed distinct counts of copyright
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`infringement each time it reproduced or distributed BGP’s copyrighted material,
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`which continued to occur after ATVD forfeited its corporate privileges in 2016. Id.
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`Next, BGP argues that ATVD’s debt occurred after it fo
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