Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_03-cv-00169/USCOURTS-azd-2_03-cv-00169-1/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

HUMPHREYS AND PARTNERS

ARCHITECTS, L.P., 

Plaintiff, 

vs.

GEORGE F. TIBSHERANY, INC., et al.,

Defendants. 

AND RELATED CASES

__________________________________

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CIV 03-0169-PHX-SMM

MEMORANDUM OF DECISION AND

ORDER

Pending before the Court, inter alia, is Tegan Defendants' Motion for Partial

Summary Judgment, filed on April 12, 2006. [Doc. No. 291] Plaintiff responded to the

Motion on May 15, 2006, and Tegan Defendants filed their Reply on May 23, 2006. [Doc.

Nos. 333, 339] After considering the parties' arguments, the Court issues the following

Memorandum of Decision and Order. Because the Court concludes that oral argument would

not be helpful, the Court makes it ruling without hearing oral argument.

BACKGROUND

This is an architectural copyright case. Plaintiff Humphreys and Partners Architects

("HPA") alleges that one of HPA's designs was copied by Defendant George F. Tibsherany,

Inc. ("Tibsherany"), and that Tibsherany used those copied designs to eventually design three

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

The defendants associated with Cambria are no longer parties to this action, and the

defendants associated with Arrowhead Lodge are parties to a related case, CV04-2994-PHXSMM. Thus, the remaining defendants in this matter are the Tibsherany Defendants and the

Augusta Ranch-related Defendants. 

- 2 -

subsequent infringing projects: Cambria, Arrowhead Lodge, and the Villas at Augusta

Ranch.1

Tibsherany initially worked with Defendants American West Communities ("AWC")

and Andrew Welch ("Welch") to design a project that became known as the Villas at Augusta

Ranch ("Augusta Ranch"). Later, AWC allegedly assigned its rights to Tegan Communities

("Tegan"). (Defs.' SOF at ¶ 7.) Welch was an officer of both AWC and Tegan. (Welch Dep.

104:5-21.) AWC received $20,000-$25,000 in property management fees from Tegan. (Id.

at 32:9-14.) Welch is owed a salary from Tegan, and Tegan also owes Welch for loans made

by Welch to Tegan. (Defs.' SOF at ¶ 9.) Tegan sold Augusta Ranch in 2005. (Id. at ¶ 10.)

In 2003, Plaintiff brought suit in this Court against Tibsherany, AWC, Welch, Tegan,

and others. In March 2006, the Court allowed Plaintiff to amend its Complaint due to the

sale of Augusta Ranch [Doc. No. 279], and Plaintiff did so, adding numerous defendants who

were involved in the sale of Augusta Ranch. [Doc. No. 283] On April 12, 2006, AWC,

Welch, and Tegan (collectively, for purposes of this Motion only, "Defendants") moved for

partial summary judgment. In their Reply to HPA's Response, Defendants narrowed its

Motion to the issue of vicarious infringement and to AWC and Welch.

Jurisdiction over this action is proper under 28 U.S.C. § 1331, because the matter in

controversy arises under federal copyright law, 17 U.S.C. § 101 et seq. Venue is proper

under 28 U.S.C. § 1391(b).

STANDARD OF REVIEW

Upon motion at any time, a party defending against a claim may move for "partial

summary judgment," that is, "summary judgment in the party's favor as to . . . any part

thereof." FED.R.CIV. P. 56(b). A court must grant summary judgment if the pleadings and

supporting documents, viewed in the light most favorable to the nonmoving party, "show that

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law." FED. R. CIV. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S.

317, 322-23 (1986); Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.

1994). Substantive law determines which facts are material. See Anderson v. Liberty

Lobby, 477 U.S. 242, 248 (1986); see also Jesinger, 24 F.3d at 1130. "Only disputes over

facts that might affect the outcome of the suit under the governing law will properly preclude

the entry of summary judgment." Anderson, 477 U.S. at 248. The dispute must also be

genuine, that is, the evidence must be "such that a reasonable jury could return a verdict for

the nonmoving party." Id.; see Jesinger, 24 F.3d at 1130.

A principal purpose of summary judgment is "to isolate and dispose of factually

unsupported claims." Celotex, 477 U.S. at 323-24. Summary judgment is appropriate

against a party who "fails to make a showing sufficient to establish the existence of an

element essential to that party's case, and on which that party will bear the burden of proof

at trial." Id. at 322; see also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.

1994). The moving party need not disprove matters on which the opponent has the burden

of proof at trial. See Celotex, 477 U.S. at 317. The party opposing summary judgment "may

not rest upon the mere allegations or denials of [the party's] pleadings, but . . . must set forth

specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e); see

Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585-88 (1986); Brinson v. Linda

Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995).

DISCUSSION

As a preliminary matter, the Court reiterates the scope of the pending Motion. As

discussed, supra, this Motion for Partial Summary Judgment applies only to Welch and

AWC, not to Tegan. Additionally, this Motion deals only with the claim of vicarious

infringement as to Welch and AWC; direct infringement is not at issue in this Motion. 

There are three theories of liability for copyright infringement: direct, contributory,

and vicarious. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). In order to be

liable for vicarious infringement, a defendant must have "derived a direct financial benefit

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

from the infringement and had the right and ability to supervise the infringing activity." Id.

at 1078. Notably, the vicarious infringer need not know that he is infringing. MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 125 S.Ct. 2764, 2776 n.9 (2005). The Court

addresses the two prongs of vicarious infringement, commencing with the right and ability

to supervise the infringing activity.

Right and ability to control infringing activity

First, Plaintiff must show that AWC and Welch had "the right and ability to supervise

the infringing activity." Id. This prong is met if a defendant "decline[s] to exercise a right

to stop or limit" the infringing activity. Metro-Goldwyn-Mayer Studios Inc., 125 S.Ct. at

2776. The Court considers each Defendant separately.

a. AWC

AWC was the entity that first worked with Tibsherany to design the Augusta Ranch

project. Nevertheless, Defendants contend that AWC lacked the right and ability to control

the infringing activity because, inter alia, it later assigned its rights to Tegan. (Reply at 5.)

Defendants cite Welch's deposition as the source for their assertion that the rights were

assigned. (Defs.' SOF at ¶ 7.) However, Welch's deposition testimony was that he could not

recall whether a written assignment was executed. (Welch Dep. 24:9-12.) At the deposition,

reference was made to an interrogatory response that indicated the rights were assigned, and

Welch subsequently testified that Tegan received nothing of value for any assignment. (Id.

at 24:4-15.)

Defendants further maintain that HPA does not dispute that AWC assigned its rights

to Tegan for no consideration. (Defs.' Reply re: Pl.'s SOF at 3.) The Court, however,

disagrees with Defendants' contention. In HPA's Statement of Facts in Opposition to

Defendants' Motion, Plaintiff states as follows: "Although defendants claim that American

West Communities assigned unspecified rights to Tegan, there is no written evidence of such

an assignment. Welch[,] as Tegan's corporate representative, testified that Tegan gave

nothing of value for any assignment and that he did not recall that there was an assignment."

(Pl.'s SOF at ¶ 12.) It is therefore evident to the Court from Plaintiff's statement above that

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Additionally, the Court notes that the assignment of rights affects AWC's ability to

derive financial benefit from the financial activity. Thus, a genuine issue of material fact

exists as to the second prong of Plaintiff's vicarious infringement claim as to AWC, and

summary judgment is not warranted. 

- 5 -

Plaintiff does not make a concession as characterized by Defendants; rather, Plaintiff simply

acknowledges that Defendants claim the rights were assigned for no consideration.

Thus, the parties do not agree on whether AWC assigned its rights to Tegan. If AWC

did indeed assign its rights, then it likely lost its ability to stop the infringing activity.

However, it is not clear what rights, if any, were assigned. Further, the Court notes a

handwritten modification, the circumstances surrounding which are not totally clear, made

to the contract between Tibsherany and AWC. On the contract, AWC's name is crossed out

and "Tegan Communities Inc." is written just above. (Ex. 2 to Defs.' SOF, Ex. 1 to Pl.'s

SOF.) The Court therefore concludes that genuine issues of material fact exist regarding

AWC's ability to control or supervise the infringing activity. Consequently, summary

judgment is not appropriate as to AWC.2

b. Welch

Defendants argue that Welch lacked the ability to supervise or control the infringing

activity that occurred when Tibsherany copied HPA's designs in the first project. (Mot. at

15.) However, Defendants' definition of the infringing activity is overly narrow. Defendants

accept as fact, for the purposes of this Motion, that the first project was an unauthorized copy

of HPA's design and that the Augusta Ranch project was a "modified version[] of [the first]

HPA design." (Id. at 3.) Therefore, taking that fact as true, the Augusta Ranch project was

(for purposes of this Motion) also an infringing activity, and there at least exists a genuine

issue of material fact as to whether Welch, as officer of the company who contracted with

Tibsherany, the copying infringer, had the ability to terminate the contract and therefore stop

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

The Court further notes that if it were assumed that Welch did indeed possess the

ability to control or supervise the infringing activity, Plaintiff could establish the second

prong of the vicarious infringement test and survive summary judgment. Even if the Court

adopts Defendants' argument, arguendo, that Welch's salary does not constitute a direct

financial benefit, Welch derives a direct financial benefit through Tegan's repayment of loans

made by Welch to Tegan. To the Court's knowledge, no federal court has dealt with the issue

of whether a creditor, lender, mortgagee, debtee, or other individual who is owed money by

an entity is considered to derive a direct financial benefit in the vicarious infringement

context. However, it is axiomatic that Welch would have a direct financial benefit as a

creditor. Repayment of the monies lent by Welch to Tegan depends on the financial success

of Tegan. Thus, summary judgment in favor of Defendants as to Welch would not be

warranted. 

- 6 -

the infringing activity. Consequently, the Court concludes that summary judgment as to

Welch is not appropriate.3

CONCLUSION

 Because genuine issues of material fact exist as to Plaintiff's vicarious infringement

claims, summary judgment may not be granted. See Anderson, 477 U.S. at 248.

Accordingly, 

IT IS ORDERED that Tegan Defendants' Motion for Partial Summary Judgment

[Doc. No. 291] is DENIED.

DATED this 7th day of July, 2006.

Case 2:03-cv-00169-SMM Document 355 Filed 07/07/06 Page 6 of 6