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Gomba Music Inc. v. Avant

United States District Court, E.D. Michigan, Southern Division

December 6, 2016

SIXTO RODRIGUEZ, Third-Party Defendant.

          R. Steven Whalen Magistrate Judge



         In the late 1960s, Plaintiff Harry Balk signed a series of contracts to manage, record, and publish music for singer/song-writer Sixto Rodriguez. These contracts gave him the exclusive rights to Rodriguez's songs. Balk claims that while under this exclusive arrangement, Rodriguez conspired with Defendant Clarence Avant to release an album called Cold Fact behind Balk's back, falsely attributing authorship of the songs to others. While the album never took off here, it became a hit in South Africa-something unknown even to Rodriguez until many decades later. When the story of the album's success became the feature of the 2012 Oscar-winning documentary Searching for Sugarman, Balk claims he suddenly realized he had been cheated, so he sued Avant to recover the money he lost out on over the years. The problem for Balk is that discovery yielded undisputed evidence that tells a different story: that he did little for Rodriguez and effectively gave up on him, abandoning their arrangement.

         Balk and Defendants have both moved for summary judgment on the issues of whether Balk has an ownership interest in the disputed songs that appeared on Cold Fact and whether his claims are timely. Third-Party Defendant Rodriguez has also moved for summary judgment on the contract claims that Defendant/Third-Party Plaintiff Interior Music Corp. filed against him. The motions are fully briefed, and the Court heard oral argument on November 21, 2016. For the reasons discussed, the Court will deny Balk's motion, grant Defendants' motion, and grant in part and deny in part Rodriguez's motion.


         This dispute centers on the rights to nine songs composed and performed by Third-Party Defendant Sixto Rodriguez. The songs appeared with several others on the 1970 album Cold Fact, a record published by Defendant Clarence Avant's publishing company, Defendant Interior Music Corp. For decades, Cold Fact did not take off in the United States. But unknown to Rodriguez, the album became a hit in South Africa-a story featured in the 2012 Oscar-winning documentary Searching for Sugarman.[1] The heart of this case is whether Plaintiff Harry Balk, another music industry professional who at one time had an exclusive arrangement with Rodriguez, has the rights to the songs that appeared on Cold Fact.


         The story starts over fifty years ago. On July 25, 1966, Sixto Rodriguez entered several agreements with entities related to Balk, including Gomba Music, Inc., Balk's publishing company, (see R. 83-5, PID 1490). First, Rodriguez agreed to make Harry Balk Enterprises his personal and exclusive manager. (R. 83-2, PID 1477.) This agreement had a four-year term and gave Balk the option to renew for another two years. (R. 83-2, PID 1477-78.) Rodriguez also entered into a two-year recording contract with Impact Records, which also had a renewal option. (R. 83-3, PID 1480-81.) Finally, Rodriguez entered the agreement critical to this case- an “exclusive writer agreement” with Gomba Music, Inc. (R. 83-4, PID 1483.) This agreement gave Gomba ownership rights to all songs written and composed by Rodriguez during the agreement's 5-year term, including the songs' copyrights. (R. 83-4, PID 1483.)

         Little resulted from the relationship between Balk and Rodriguez. For instance, the recording agreement contemplated that Impact would record a minimum of six songs during the contract's two-year term. (R. 83-3, PID 1480.) But Impact appears to have recorded only three. One of those was “Forget It”: a song for which Balk registered a copyright, listing Rodriguez as the author and Gomba as the owner. (R. 83-7, PID 1525.) Importantly, a song titled “Forget It” would later appear on Cold Fact, (R. 82-9, PID 1328), and Rodriguez testified that he has written only one song by that name, (R. 83-8, PID 1539).

         Nothing in the record indicates that anything else ever came of Balk and Rodriguez's relationship. Instead, at some point in 1967, the year after signing Rodriguez, Balk became an employee of Motown Records, (R. 83-5, PID 1493, 1509), further limiting their relationship. Balk did not renew the recording agreement when it expired in mid-1968. (R. 83-5, PID 1509.) Impact stopped releasing new records. (R. 83-5, PID 1509-10.) Moreover, Balk no longer performed under the management agreement. As he testified, once at Motown he did not manage anyone and “wouldn't even want to.” (R. 83-5, PID 1510.)

         As for the exclusive songwriter's agreement between Gomba and Rodriguez, some compelling evidence suggests that Balk assigned the agreement to Jobete, Motown's publishing arm. In several communications in the late 1960s, Jobete asserted that it held a valid assignment from Balk. For example, in February 1969, Ralph Seltzer from Jobete wrote this to Rodriguez: “This letter is to formally notify you of the assignment to Jobete Music Company, Inc. by Gomba Music, Inc. of an exclusive writer's contract regarding your services as a writer.” (R. 83-16, PID 1715.) Nonetheless, in his deposition, Balk denied that the assignment happened. (R. 83-5, PID 1494.)

         But Balk admits that he assigned Gomba's rights to copyrighted material to Jobete. (R. 83-5, PID 1493-94.) Specifically, in December 1967, Gomba assigned to Jobete half of the rights it held to numerous compositions, including Rodriguez compositions. (R. 86-12.) In March 1971, Gomba assigned its remaining interests in those songs to Jobete. (R. 86-13.)

         Gomba effectively folded after Balk moved to Motown. Balk did not file an annual report for Gomba in 1969, leading to the state of Michigan voiding the corporation's charter by 1971. (See R. 82-4, PID 1253.)

         Balk and Rodriguez agree that no financial benefit materialized for Rodriguez under their arrangement. As Balk testified, Rodriguez “never sold anything, ” and thus it was “probably true” that Rodriguez never received any money. (R. 83-5, PID 1512.) For his part, Rodriguez testified that he never made a penny from Balk: “I got a ride in a Cadillac with him. That's all I got.” (R. 83-8, PID 1534-35.)


         At some point after Balk went to Motown in 1967, though the exclusive songwriter's agreement's term had not expired, Rodriguez ventured off on his own.

         Between October 1968 and August 1969, Rodriguez registered with the Copyright Office the nine disputed songs that would later end up in the Cold Fact album: “Inner City Blues, ” “Like Janis, ” “Jane S. Pitty, ” “Only Good for Conversation, ” “I Wonder, ” “Crucify Your Mind, ” “Sugar Man, on Prentice, ” “The Rich Folks Hoax, ” and “Establishment Blues.”[2] (R. 83-13, PID 1660-77.) Rodriguez also registered “Forget It, ” which Balk had previously registered. (Id.) The registrations identify as the claimants and authors “Sandraven, Inc., ” “Sixth Prince, Inc., ” or “Jesus Rodriguez (Jesse), ” the name of Rodriguez's brother. (Id.) The registrations do not mention Sixto.

         That was not an accident. Rodriguez testified that he formed two corporations- Sandraven in October 1968 and Sixth Prince in January 1969-because, in his words, he wanted to “protect[]” and “save” his compositions and “[t]o keep and retain ownership of my material.” (R. 83-10, PID 1584; R. 83-11, PID 1588; R. 83-8, PID 1541.) Rodriguez testified that setting up Sandraven and Sixth Prince was his idea alone and that Defendant Clarence Avant had nothing to do with it. (R. 83-8, PID 1541-42.) Avant similarly testified that he did not set up the two entities. (R. 83-12, PID 1630.)

         Before filing many of the registrations, Rodriguez began to collaborate with Mike Theodore and Dennis Coffey, two producers and musicians who ultimately led him to Clarence Avant. According to Theodore and Coffey, sometime in 1969 Theodore got a call from Rainy Moore, whom they believed to be Rodriguez's manager. (R. 83-14, PID 1686-87; R. 83-15, PID 1710.) Theodore and Coffey both say that Moore said Rodriguez was free or that Balk had released him. (R. 83-14, PID 1687; R. 83-15, PID 1710.) They also claim that Balk himself told them he thought Rodriguez was “crazy” or “nuts” and that he wanted no further involvement with him. (R. 83-14, PID 1689; R. 83-15, PID 1710.) In early 1969, Theodore and Coffey recorded a demo tape of Rodriguez and sent it to Clarence Avant, hoping he could help “get a deal.” (R. 83-14, PID 1688; R. 83-15, PID 1711.)


         Avant apparently liked what he heard and thus tried to sign Rodriguez, but evidence suggests that Avant recognized that Balk's contracts with Rodriguez (and their resulting exclusive relationship) were a potential obstacle to finalizing a deal. In April 1969, Rodriguez's then-attorney, Robert McCall, sent Avant copies of Rodriguez's three contracts with Balk's companies along with a copy of Jobete's February 1969 notice of assignment. (R. 83-17, PID 1717.) McCall wrote the following to Avant:

Although one single was recorded under the IMPACT agreement in the summer of 1967, no monies were ever received by Mr. Rodriguez. This contract has expired on its face since no options were picked up.
Pursuant to the writer's contract with Gomba Music, Inc., the songs “Slip-away” and “You'd like to admit it, ” which comprised the above mentioned single, may have been processed by GOMBA but I have no evidence in this regard. In any event, Mr. Rodriguez has received no compensation in the form of royalties or otherwise as a result of the writer's contract.
Regarding the management contract, no bookings were made nor has any compensation been received.
Please advise me of your attorneys' opinion of the contracts and of your decision.

(R. 83-17, PID 1717.)

         Avant responded that his attorneys had concluded the agreements were “worthless” and that McCall should “write Mr. Balk and Jobete Music and tell them [Rodriguez] is not going to honor the assignment that was made to Jobete Music because the contracts are dormant.” (R. 83-18, PID 1719.) Avant suggested taking a “strong stand with Motown and Harry Balk.” (Id.) He added, “I want Sixto to record for Venture [Avant's record company], therefore, I am willing to take my chances. . . . But first I think you should definitely write all parties concerned and state your clients [sic] position.” (Id.)

         McCall took that advice. In May 1969, Rodriguez signed a “Notice of Breach and Recission, ” which was on McCall's letterhead and addressed to Harry Balk, Gomba, and Harry Balk Enterprises.[3] (R. 83-19, PID 1723.) The notice stated that Rodriguez considered the management and exclusive writer's agreements breached on the grounds of “non-performance and/or impossibility” and that Rodriguez would therefore not recognize the “alleged assignments” of the exclusive songwriter's agreement. (Id.)

         Around a week later, Seltzer responded on behalf of Jobete:

Mr. Balk has shown me the affidavit he received from you in the mail recently. This affidavit is purely and simply a self-service document; and as I am sure your attorney can advise you, is of no force and effect whatsoever. Further, this document in no way can affect any rights which this Company may have to your exclusive service as a songwriter.
As you know, we hold a valid assignment of a contract relating to your exclusive songwriting services.

(R. 83-20, PID 1725.)

         McCall forwarded Seltzer's letter to Avant, who replied, “I will proceed by just asking for a recording contract. For your information, I requested a one year contract with two one year options. I will, at some later date, speak with Ralph Seltzer regarding the exclusive songwriters contract, hoping to work something out.” (R. 83-21, PID 1727.) Avant also wrote that Theodore “plans to start recording sometime in the very near future.” (Id.)


         Cold Fact was recorded in the summer of 1969. (R. 83-14, PID 1704.) In February 1970, through a series of individual contracts, Rodriguez assigned to Interior Music Corp., Avant's publishing company, the rights to each of the disputed songs that would later appear on the album (the copyrights of which had been registered to Jesus Rodriguez, Sandraven, or Sixth Prince). (R. 82-12.) On March 2, 1970, Rodriguez entered a recording agreement with Sussex Records, Avant's record company, and a songwriter agreement with Interior. (R. 83-23; R. 83-24.) Under that songwriter's agreement, Rodriguez assigned Interior rights to his compositions and warranted that he could “vest in [Interior] all the rights herein set forth, free and clear of any and all claims, rights and obligations.” (R. 83-24, PID 1748, 1752.)

         Cold Fact was released that month. Theodore and Coffey produced the album, which was released on Avant's label, Sussex Records. (R. 83-14, PID 1690.) Rodriguez performed the album's 12 songs. (R. 83-14, PID 1690; R. 83-26.) Two songs were credited to Gary Harvey, Mike Theodore, and Dennis Coffey. (R. 83-26.) The 10 other songs were the ones that Rodriguez had previously registered copyrights for, attributing authorship to Sandraven, Sixth Prince, or Jesus Rodriguez. And similar to those registrations, the album credited the 10 songs to either Sixth Prince or Jesus Rodriguez. (R. 83-26.) None were credited to Sixto. (Id.)

         Rodriguez testified that the decision to credit the songs to Jesus Rodriguez and Sixth Prince was his decision, that he did it to “protect[] my material, ” and that Avant had nothing to do with it. (R. 83-8, PID 1553.) Similarly, Avant testified that he did not know who made that decision but that he was not involved in it. (R. 83-12, PID 1623-27.) According to Theodore, Avant's involvement was limited to “suppl[ying] the money, ” and Avant never came to any of the recording sessions. (R. 83-14, PID 1690.)

         Balk testified that he was aware that Rodriguez had performed Cold Fact and knew of the album's release in 1970, describing it as “common knowledge” and saying “you had to be deaf not to know that it was.” (R. 83-5, PID 1498, 1519.) But according to Balk, “Mike Theodore told me that Sixto Rodriguez didn't write all those songs, his brother, Jesus wrote them. I had no reason not to believe him.” (R. 83-5, PID 1498.) So at the time, Balk did nothing further to investigate whether Sixto, in addition to performing the songs, was their true author. (R. 83-5, PID 1520.) Contrary to Balk's account, Theodore says that he did not know Rodriguez's first name and did not know who wrote the songs, but he assumed that Rodriguez did. (R. 83-14, PID 1691.) Coffey likewise avers that they referred to Rodriguez by his last name during the recording, he did not even know Rodriguez's first name, and thought Jesus may have been his first name. (R. 83-14, PID 1691; R. 83-15, PID 1712.)

         While Balk did nothing to pursue his potential claim, Jobete, which repeatedly claimed to have been the assignee of Gomba's contract with Rodriguez, sent a telegram to Avant dated April 3, 1970: “WE HAVE CURRENT VALID EXCLUSIVE WRITERS' AGREEMENT WITH SIXTO RODRIGUEZ. ALL SONGS PARTIALLY OR WHOLLY CREATED BY HIM ARE OURS FOR PUBLISHING[.]” (R. 83-32, PID 1932.) The record suggests that no one ever followed up though-at least not until Balk filed this lawsuit close to a half-century later.

         Balk claims that when Searching for Sugarman was released in 2012, he learned for the first time that Sixto Rodriguez was the composer of the Cold Fact songs. Believing he was the owner of the songs as a result of the exclusive songwriter's agreement, he filed this suit.


         Balk sued Avant and Interior on May 2, 2014. (R. 1.) His operative second amended complaint has four counts. (R. 39.) Count I asserts a claim of fraud on the copyright office. (R. 39, PID 620.) Count II asserts a claim for a declaratory judgment that Balk owns the rights to the disputed compositions. (R. 39, PID 622.) Count III asserts a claim for “fraudulent concealment/tortious interference with contract and fraud.” (Id.) Finally, while there is no Count IV, Count V asserts a claim of copyright infringement. (R. 39, PID 624.)

         Interior has also filed a third-party complaint against Rodriguez, which asserts two counts. (R. 11.) Count I is a claim that Rodriguez breached his songwriter's agreement with Interior by warranting and representing that he could assign rights to the Cold Fact compositions “free and clear of any and all claims, rights and obligations whatsoever.” (R. 11, PID 44-45.) Count II is a claim ...

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