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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove

Sailor Music v. Walker

Citation:
Sailor Music v. Walker, Case No. 14-6012 (8th Cir. BAP August 8, 2014)
Tag(s):
Ruling:
Bankruptcy court determination that debtor's violation of federal copyright laws constituted nondischargable willful and malicious injury was affirmed.
Procedural context:
After entry of district court judgment for copyright infringement against him, the debtor filed for chapter 7 relief. The bankruptcy court ruled that the infringement claim was nondischargable under 11 U.S.C. Section 523(a)(6) as a willful and malicious injury. On appeal, the Eighth Circuit Bankruptcy Appellate Panel affirmed the decision.
Facts:
The debtor was the managing member of a company that operated a business called Twister's Iron Horse Saloon. The Saloon played music and hosted musical performances but did not hold a public performance license from the American Society of Composers, Authors and Publishers (ASCAP). When ASCAP learned that the debtor was using music which was part of the ASCAP library, it attempted to contact him to offer him a license. Over the course of three years, ASCAP attempted to contact him 44 times, whether in person, by mail, or by telephone. In addition, ASCAP sent an investigator to the premises who documented the unlicensed playing of songs. ASCAP then sent the debtor a letter regarding the violations and offered to settle. The record indicated that the debtor signed the return receipt, but he claimed that he could not recall reading the letter. Thereafter, various ASCAP members sued the debtor for copyright infringement. The debtor failed to comply with discovery and a default judgment for approximately $41,000.00 was entered against him as a sanction. The debtor then filed a chapter 7 bankruptcy petition, and the plaintiffs sought a determination that their claims were excepted from his discharge. The bankruptcy court concluded that the debtor's actions were willful and malicious and the judgment was nondischargeable under 523(a)(6). On appeal, the BAP rejected the debtor's argument that the plaintiffs needed to prove that they actually made contact with him about the infringement to prove that he had the required intent. The BAP noted that it was the debtor's duty to ensure that the company was complying with the law and that proper licenses were obtained. He "blatantly" failed to comply with the law and intentionally ignored ASCAP's efforts to contact him. His intentional invasion of the plaintiff's rights constituted an intentional injury. His violation of the statute constituted evidence of malicious intent insofar as his intention to harm the plaintiffs. He knew that the plaintiffs were entitled to be paid royalties and that he was avoiding doing so by not obtaining a license. He intended to bring about the loss suffered by the plaintiffs, and as such the judgment was affirmed.
Judge(s):
Kressel, Saladino, and Shodeen

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