Joe Alper Collection LLC, et al v. Beram, et al

Filing 41

ORDER - that this case is dismissed for lack of subject matter jurisdiction. The Clerk is directed to terminate this action. Signed by Judge David G Campbell on 5/7/2014. (KMG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Joe Alper Photo Collection LLC, et al.,
Plaintiffs,

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ORDER

v.

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No. CV-14-00202-PHX-DGC

Tony Beram, et al.,

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Defendants.

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The Court issued an order on April 9, 2014, requiring the parties to submit

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memoranda addressing the Court’s subject matter jurisdiction. Doc. 31. The Court has

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reviewed the parties’ submissions (Docs. 33, 34, 35), and concludes that it does not have

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subject matter jurisdiction over this case.

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I.

Background.

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Plaintiffs are The Joe Alper Collection, LLC (the “Alper Collection”) and Edward

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Elbers, who is alleged to be the sole member of the Alper Collection. Doc. 1, ¶¶ 6-7.

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Defendant George Alper formerly held a 50% interest in the Alper Collection. Id., ¶ 18.

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In August 2006, Defendant Tony Beram is alleged to have loaned George Alper

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approximately $65,000 in exchange for a purported security interest in photographs of

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Bob Dylan (the “Dylan images”). Id., ¶¶ 48, 52. Plaintiffs allege that the Dylan images

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are, and always have been, property of the Alper Collection and that George was not

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authorized to transfer or grant a security interest in the Dylan images. Id., ¶¶ 46, 55.

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George Alper filed for bankruptcy protection in early 2009 (id., ¶ 58), and his case was

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reopened in 2013 to deal with his ownership interest in the Alper Collection and the debt

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owed to Tony Beram (id., ¶¶ 59-61). Beram filed a proof of claim asserting a secured

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claim in the amount of $63,947.84 and an unsecured claim in the amount of $62,697.95.

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Id., ¶ 65. The bankruptcy trustee held a sale of George Alper’s 50% interest in the Alper

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Collection, which was purchased by Elbers for $25,000. Id., ¶ 70. Elbers now alleges

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that Tony Beram has filed an amended proof of claim in the bankruptcy proceeding

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claiming a security interest in the Dylan images. Id., ¶ 73.

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Plaintiffs claim that George and Tony have converted the Dylan images, which

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they allege are worth at least $50,000. Id., ¶ 112. Plaintiffs also claim that they will be

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damaged in the amount of $25,000 (the amount paid by Elbers for George’s 50% interest

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in the Alber Collection) unless George and Tony are estopped from changing their

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positions with respect to the ownership of the Dylan images. Id., ¶ 170. Finally,

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Plaintiffs allege that they are entitled to attorneys’ fees pursuant to A.R.S. § 12-341.01

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for claims arising out of contract. Id., ¶¶ 126, 134.

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II.

Diversity Jurisdiction.

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“The party asserting jurisdiction has the burden of proving all jurisdictional facts.”

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Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990) (citing McNutt

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v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)); see Fenton v. Freedman,

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748 F.2d 1358, 1359, n.1 (9th Cir. 1994). The Court has diversity jurisdiction over cases

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between citizens of different states involving claims greater than $75,000 pursuant to 28

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U.S.C. § 1332.

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Plaintiffs’ have alleged damages in the amount of $50,000 for the conversion of

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the Dylan images and $25,000 for the 50% ownership interest in the Alper Collection

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purchased in the bankruptcy trustee’s sale. Plaintiffs also allege, however, that they

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believed that the Dylan images were owned by the Alper Collection at the time of the

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bankruptcy sale. Doc. 1, ¶¶ 162-62. As a result, the $25,000 paid for George Alper’s

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interest would necessarily have included 50% of the value of the Dylan images.

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Plaintiffs cannot include the value of the Dylan images twice in their calculations in order

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to meet the amount in controversy requirement. Moreover, Plaintiffs have not alleged

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any estimate of the attorneys’ fees to which they would be entitled in this action. As a

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result, the Court cannot conclude that Plaintiffs have demonstrated that the amount in

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controversy exceeds $75,000.

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III.

Federal Question Jurisdiction.

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The Court has subject matter jurisdiction over cases involving federal questions

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pursuant to 28 U.S.C. § 1331. Plaintiffs assert that the Declaratory Judgment Act, 28

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U.S.C. § 2201, forms the basis of their claims. Doc. 33 at 2. The Declaratory Judgment

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Act provides that “[i]n a case of actual controversy within its jurisdiction,” the Court

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“may declare the rights and other legal relations of any interested party seeking such

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declaration[.]”

28 U.S.C. § 2201(a).

Plaintiffs must accordingly demonstrate the

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existence of an actual controversy within the Court’s jurisdiction.

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Plaintiffs contend that “there clearly exists a substantial controversy as to the

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ownership of the copyright interests in the [Dylan images], which requires judicial

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intervention at this time.” Doc. 33 at 3. Under Ninth Circuit law, however, “it is well

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established that just because a case involves a copyright does not mean that federal

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subject matter jurisdiction exists.” Scholastic Entm’t, Inc. v. Fox Entm’t Grp, 336 F.3d

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982, 985 (9th Cir. 2003). In cases involving copyright claims, a district court is required

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“to exercise jurisdiction if (1) the complaint asks for a remedy expressly granted by the

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Copyright Act; (2) the complaint requires an interpretation of the Copyright Act; or

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(3) federal principles should control the claims.” Id. at 986 (citing T.B. Harms Co. v.

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Eliscu, 339 F.2d 823 (2d Cir. 1964)).

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Plaintiffs claim that both sides are asking the Court to interpret the Copyright Act,

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“including the statutory requirement of a writing to transfer a copyright as opposed to

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possession, in determining whether legal transfers were effectuated as a matter of law.”

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Doc. 33 at 4.

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interpretation of the Copyright Act and that ownership of the Dylan images is the only

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issue presented by this case. Docs. 34, 35. The Court agrees. Plaintiffs’ complaint does

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not ask the Court to interpret the Copyright Act. Rather, it asks the Court to hold that the

Defendants contend that Plaintiffs’ complaint does not require an

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Alper Collection is the sole owner of the Dylan images and that Tony Beram does not

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have a valid security interest in the images. Doc. 1 at 12. A dispute over ownership of a

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copyright, without more, does not provide a basis for federal question jurisdiction. See

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Scholastic Entm’t, Inc., 336 F.3d at 986.

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IT IS ORDERED that this case is dismissed for lack of subject matter
jurisdiction. The Clerk is directed to terminate this action.
Dated this 7th day of May, 2014.

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