Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-35010/USCOURTS-ca9-13-35010-1/pdf.json

Parties Involved:
George Clinton
Appellant
Hendricks & Lewis PLLC
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

HENDRICKS & LEWIS PLLC, a

Washington professional limited

liability company,

Plaintiff-Appellee,

v.

GEORGE CLINTON, an individual,

Defendant-Appellant.

No. 13-35010

D.C. No.

2:12-cv-00841-

RSL

ORDER AND

AMENDED

OPINION

Appeal from the United States District Court

for the Western District of Washington

Robert S. Lasnik, District Judge, Presiding

Argued and Submitted

February 4, 2014—Seattle, Washington

Filed June 23, 2014

Amended August 26, 2014

Before: Raymond C. Fisher, Ronald M. Gould,

and Morgan Christen, Circuit Judges.

Order;

Opinion by Judge Christen

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2 HENDRICKS & LEWIS PLLC V. CLINTON

SUMMARY*

Copyright

The panel filed an order amending its previous opinion,

and in the amended opinion the panel affirmed the district

court’s order appointing a receiver and authorizing the sale of

master sound recording copyrights in an action between

musician George Clinton and his former law firm Hendricks

& Lewis.

Hendricks & Lewis obtained judgments against Clinton

for past-due attorneys’ fees, and moved for an order

authorizing the sale of master recordings made by Clinton to

satisfy the judgments.

The panel held that under Washington law Clinton’s

copyrights in the masters were subject to execution to satisfy

judgments made against him. The panel also held that

§ 201(e) of the federal Copyright Act did not protect Clinton

from the involuntary transfer of his copyrighted works. The

panel further held that under Washington law the district

court did not abuse its discretion by appointing a receiver to

manage or sell ownership of the copyrights. The panel held

that Clinton may raise claims of fraud on the court and

judicial estoppel for the first time on appeal, but concluded

that both claims were meritless. Finally, the panel held that

Clinton failed to raise his preemption, Erie doctrine, and due

process arguments before the district court, and, therefore,

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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HENDRICKS & LEWIS PLLC V. CLINTON 3

they would generally not be considered, and in any event they

were without merit.

COUNSEL

Eric Michael Fong (argued), Fong Law, Port Orchard,

Washington, for Plaintiff-Appellee.

Katherine Hendricks (argued), Hendricks & Lewis, Seattle,

Washington, for Defendant-Appellant.

ORDER

The Opinion filed June 23, 2014 is hereby amended. The

amended opinion is filed concurrently with this Order.

With these amendments, the panel has unanimouslyvoted

to deny the petition for rehearing. Judges Gould and Christen

have voted to deny the petition for rehearing en banc, and

Judge Fisher has so recommended. The full court has been

advised of the petition for rehearing en banc and no judge has

requested a vote on whether to rehear the matter en banc. 

Fed. R. App. P. 35.

Defendant-Appellant’s petitions for rehearing and

rehearing en banc are DENIED. No additional petitions for

rehearing or rehearing en banc will be entertained.

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4 HENDRICKS & LEWIS PLLC V. CLINTON

OPINION

CHRISTEN, Circuit Judge:

George Clinton appeals the district court’s order

appointing a receiver, assigning four master sound recording

copyrights to the receiver, and authorizing the receiver to use

the copyrights to the extent necessary to satisfy monetary

judgments a law firm obtained against him. Clinton also

raises several issues for the first time on appeal, including

fraud on the court and judicial estoppel. We have jurisdiction

under 28 U.S.C. § 1291 and we affirm.

I. FACTS

A. H&L’s Judgments Against Clinton

George Clinton is a musician, bandleader, and touring

performance artist. Hendricks & Lewis (H&L) is a law firm

that represented Clinton in various disputes from March 2005

to August 2008. H&L billed Clinton $3,341,650.32 for its

work, received $1,000,578.87 in payment, and wrote off

approximately $600,000 of the remaining balance. This left

$1,779,756.29 due. H&L initiated arbitration to secure

payment of the balance, and an arbitration panel issued an

award in favor of H&L. Clinton did not participate in the

arbitration proceedings. H&Lpetitioned the Western District

of Washington for an order confirming the arbitration award,

and, in May 2010, the district court entered judgment for

H&L against Clinton in the amount of $1,675,639.82, plus

interest. The court entered a second judgment awarding H&L

an additional $60,786.50 in attorneys’ fees and costs in July

2010.

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HENDRICKS & LEWIS PLLC V. CLINTON 5

B. H&L’s Judgment Collection Efforts

H&L pursued a variety of judgment collection efforts,

including garnishments, levies, and liens in several districts

across the country. Clinton’s attorney declared that these

actions created a financial “stranglehold” so that Clinton

“[c]an’t pay his taxes. Can’t pay his lawyers. Now, it is

going to affect his touring and his ability to make a living at

72 years old.”

C. Ownership History of the Masters

In July 1975, Clinton, through his production company,

Thang, Inc., entered into a recording contract with Warner

Bros. Records in which Clinton agreed to make master

recordings of his performances with the group Funkadelic

(“the Masters”). Clinton had previously entered into a valid

and binding agreement with Thang to render his services as

a recording artist solely and exclusively for Thang.

The recording contract between Thang and Warner Bros.

provided that Warner Bros.:

shall own in perpetuity throughout the world

all right, title and interest in and to all the

results and proceeds of [Thang’s] and

[Clinton’s] services and performances

hereunder, including the sole and exclusive

ownership of any and all masters . . . , the

copyrights therein throughout the universe,

and the right to extend or renew such

copyrights, and [Thang] and [Clinton]

acknowledge that they shall at no time have

any right, title or interest in the foregoing.

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6 HENDRICKS & LEWIS PLLC V. CLINTON

The agreement further provided that Thang:

acknowledges and agrees that [Warner Bros.]

is and shall be the owner of all rights of

copyright in records embodying the results

and proceeds of [Clinton’s] services . . . ,

including the exclusive right to copyright

same as “sound recordings” in the name of

[Warner Bros.] to renew and extend such

copyrights (it being agreed that for this

purpose [Thang] and [Clinton] are deemed

[Warner Bros.’s] employees for hire) and to

exercise all rights of the copyright/proprietor

thereunder. To the extent, if any that [Thang]

or [Clinton] may be deemed an “author” of

such “sound recordings”, [Thang] and

[Clinton] further grant to [Warner Bros.] a

power of attorney, irrevocable and coupled

with an interest for [Thang] and [Clinton] and

in [Thang] and/or [Clinton’s] name, to apply

for and obtain and on obtaining same, to

assign to [Warner Bros.], all such renewal

copyrights.

Clinton signed a substantially similar agreement with Warner

Bros. in May 1979. Under these agreements, the Masters at

issue in this appeal—“Hardcore Jollies,” “One Nation Under

a Groove,” “Uncle Jam Wants You,” and “The Electric

Spanking of War Babies”—were created, and Warner Bros.

registered the copyrights in those recordings as “works made

for hire” in its name as author.

In August 1982, to resolve a separate dispute involving

Clinton, Warner Bros., and other parties, Clinton and Warner

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HENDRICKS & LEWIS PLLC V. CLINTON 7

Bros. entered into a settlement agreement under which

Warner Bros. agreed to “relinquish its ownership of the

Clinton Masters” at issue in this appeal, if or when Clinton

entered into an agreement with a third party to distribute and

sell records produced from the Masters. Clinton’s ownership

of the Masters was eventually confirmed through litigation in

2005 when the Central District of California issued an order

that Clinton “is the sole owner of [the Masters] and has been

the sole owner of the Masters since 1993.” Clinton

subsequently sued third parties for copyright infringement of

the Masters.

II. PROCEDURAL HISTORY

In July 2011, approximately one year after H&L secured

its judgments for past-due attorneys’ fees against Clinton,

Clinton sued H&L in the Western District of Washington

alleging various theories of legal malpractice. H&L asserted

judgment collection counterclaims and moved for an order

authorizing the sale of the Masters to satisfy the judgments it

had secured against Clinton. In April 2012, H&L initiated a

separate action in the Western District of Washington seeking

an order for a judgment debtor examination of Clinton. H&L

subsequently filed a motion in this separate action for the

appointment of a receiver and for an order directing the

assignment of the Masters to the receiver. H&L’s

counterclaims in the malpractice action were severed and

consolidated with the action initiated by H&L, which is at

issue here.1

 

1

 The district court subsequently dismissed Clinton’s legal malpractice

claims, and this court affirmed that ruling. See Clinton v. Hendricks &

Lewis PLLC, No. 12-35791, 2014 U.S. App. LEXIS 3131 (9th Cir. Feb.

20, 2014).

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8 HENDRICKS & LEWIS PLLC V. CLINTON

In November 2012, the district court found that “[d]espite

numerous efforts to enforce [the subject] judgments in this

and other district[s], plaintiff has recovered less than

$340,000.” The district court appointed a receiver in an order

specifying that the receiver:

shall have all of the rights, powers, duties, and

authority vested in him under [applicable

Washington law], including but not limited to

authority and control over the Funkadelic

master sound recordings “Hardcore Jollies,”

“One Nation Under a Groove,” “Uncle Jam

Wants You,” and “The Electric Spanking of

War Babies,” in order to maximize the value

of the sound recordings for the benefit of the

parties and to make whole the judgment

creditor, [H&L]. Receiver shall, to the

greatest extent possible, maximize the income

stream from the Funkadelic master sound

recordings without selling or otherwise

permanently disposing of the copyrights. 

Ideally, the Receiver will utilize the copyright

and sound recordings over a one or two year

period to satisfy the judgments and pay the

expenses of the receivership before returning

the copyrights and master sound recordings to

[Clinton]. Notwithstanding the Court’s

preference for returning the recordings and

copyrights to [Clinton] after his debts are

satisfied, the Receiver has the authority to sell

or permanently dispose of any or all of the

master sound recordings.

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HENDRICKS & LEWIS PLLC V. CLINTON 9

(Emphasis added). The district court also ordered that it

would have to pre-approve any sale of the Masters.2

In entering its order, the district court considered the text

and legislative history of Copyright Act § 201(e), which

protects individual authors from the involuntary transfer of

their copyrights. The district court ruled that Clinton was not

entitled to § 201(e) protection because he “is either an

assignee of the original author or he has previously

transferred the copyrights voluntarily.” The district court

noted that the initial agreements between Warner Bros. and

Clinton, and between Warner Bros. and Thang, specifically

granted the copyrights in the sound recordings to Warner

Bros. The court concluded that Warner Bros. was the original

“author” of the Masters under both the Copyright Act and the

parties’ contract, and that Clinton was not eligible for

protection under § 201(e) of the Copyright Act. The district

court reasoned that Clinton, who obtained ownership of the

Masters in 1993, is an assignee, not the author for purposes

of the Act. In the alternative, the court reasoned that even if

it found Clinton was the original author, he voluntarily

transferred the copyrights to Warner Bros., thus making

himself ineligible for protection under § 201(e). Finally, the

district court concluded that the Masters recording

copyrights, like any other species of non-exempt personal

property, are subject to judicial sale or assignment to satisfy

a judgment.

Clinton appeals.

2 Neither of the parties challenged the qualifications of the courtappointed receiver.

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10 HENDRICKS & LEWIS PLLC V. CLINTON

III. DISCUSSION

“We review de novo the district court’s interpretations of

the Copyright Act.” Rossi v. Motion Picture Ass’n of Am.

Inc., 391 F.3d 1000, 1002–03 (9th Cir. 2004). The

appointment of a receiver is reviewed for abuse of discretion. 

See Cameron v. Groveland Improvement Co., 54 P. 1128,

1128 (Wash. 1898); King Cnty. Dep’t of Cmty. & Human

Servs. v. Nw. Defenders Ass’n, 75 P.3d 583, 586 (Wash. Ct.

App. 2003). “Because a court invokes judicial estoppel at its

discretion, we review the application of judicial estoppel to

the particular facts of a case for abuse of discretion.” 

Johnson v. Oregon, 141 F.3d 1361, 1364 (9th Cir. 1998).

A. Clinton’s Copyrights in the Masters are Subject to

Execution to Satisfy Judgments Entered Against

Him.

Federal Rule of Civil Procedure 69(a) governs execution

proceedings. It provides:

[t]he procedure on execution—and in

proceedings supplementary to and in aid of a

judgment or execution—must accord with the

procedure of the state where the court is

located, but a federal statute governs to the

extent it applies.

Fed. R. Civ. P. 69(a)(1). We therefore look to Washington

law, which generally allows money judgments to be enforced

by execution: “All property, real and personal, of the

judgment debtor that is not exempted by law is liable to

execution.” Wash. Rev. Code § 6.17.090. Washington law

does not specifically address whether copyrights, like other

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HENDRICKS & LEWIS PLLC V. CLINTON 11

types of property, are subject to sale or assignment in order to

satisfy a judgment, but federal law establishes that copyrights

are alienable. 17 U.S.C. § 201(d)(1) provides that “[t]he

ownership of a copyright may be transferred in whole or in

part by any means of conveyance or by operation of law.”

We know of no federal statutory law directly addressing

whether copyrights are subject to execution to satisfy a

judgment. Both H&L and the district court relied on federal

common law, specifically Ager v. Murray, 105 U.S. 126

(1881). The Ager court ruled that if a patent holder refused

to assign his patent to satisfy a judgment entered against him,

the trustee was authorized to execute the assignment on his

behalf. Id. at 132. Though Agerinvolved a patent rather than

a copyright, the district court’s analogy to patent law is rooted

in our case law. Our court has said that where copyright case

law is lacking, “it is appropriate to look for guidance to patent

law ‘because of the historic kinship between patent law and

copyright law.’” Harris v. Emus Records Corp., 734 F.2d

1329, 1333 (9th Cir. 1984) (quoting Sony Corp. of Am. v.

Universal City Studios, Inc., 464 U.S. 417, 439 (1984)). 

Indeed, Ager itself discusses patents and copyrights in

tandem. See 105 U.S. at 127–28 (“[T]he provisions of the

patent and copyright acts, securing a sole and exclusive right

to the patentee, do not exonerate the right and property . . .

from liability to be subjected by suitable judicial proceedings

to the payment of his debts.”). The authority cited by the

district court is helpful, but Rule 69 requires that state law

controls execution proceedings absent express statutory

authority, not federal common law. See Fed. R. Civ. P.

69(a)(1).

Our court confronted an analogous issue in Office Depot,

Inc. v. Zuccarini, 596 F.3d 696 (9th Cir. 2010), where we

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12 HENDRICKS & LEWIS PLLC V. CLINTON

considered whether internet domain names are subject to

execution in California. Consistent with Rule 69, in Office

Depot our court first looked to California law because there

is no specific federal statute addressing whether domain

names may be the subject of judgment execution efforts. 

Because California law permits writs of execution against

intangible assets generally, and because domain names are

intangible personal property, we held that internet domain

names are subject to execution in California. Id. at 701–02.

Here, Rule 69 required that the district court look to

Washington law in the absence of a federal statute addressing

whether copyrights may be subject to execution procedures,

and Washington law provides that “all property, real and

personal,” is subject to execution. Johnson v. Dahlquist,

225 P. 817, 818 (Wash. 1924). This rule, known as the

“Johnson rule,” was first articulated when a previous version

of Wash. Rev. Code § 6.17.090 was in effect, but, subject to

narrow exceptions that are not applicable here, Washington

courts continue to follow it. See MP Med. Inc. v. Wegman,

213 P.3d 931, 935–36 (Wash. Ct. App. 2009). As Ager

recognizes, copyrights, like patents, are a form of intangible

personal property. 105 U.S. at 129–30. Therefore, unless an

exception or exemption applies, Washington law permits

H&L to execute against Clinton’s copyrights in the Masters.

Clinton challenges the district court’s reliance on

Washington’s admittedlybroad and general execution statutes

and the district court’s analogy to patent law. He argues that

§ 201(e) of the Copyright Act precludes H&L’s execution

efforts. For the first time on appeal, he also argues that

§ 304(c) of the Copyright Act prohibits execution against his

copyrights because he enjoys the inalienable right to

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HENDRICKS & LEWIS PLLC V. CLINTON 13

terminate the assignment of his copyrights to Warner Bros.3

As discussed below, both arguments fail.

B. Copyright Act § 201(e) Does Not Protect Clinton

from the Involuntary Transfer of His Copyrighted

Works.

Clinton argues that § 201(e) of the Copyright Act protects

the subject copyrights from H&L’s judgment collection

efforts. Neither the statute’s plain text nor its legislative

history supports Clinton’s argument.

We begin with the statutory language. Section 201(e)

provides:

When an individual author’s ownership of a

copyright, or of any of the exclusive rights

under a copyright, has not previously been

transferred voluntarily by that individual

author, no action by any governmental body

or other official or organization purporting to

seize, expropriate, transfer, or exercise rights

of ownership with respect to the copyright, or

any of the exclusive rights under a copyright,

shall be given effect under this title, except as

provided under title 11.

17 U.S.C. § 201(e) (emphases added). A leading authority on

copyright law explains:

3

17 U.S.C. § 304(c) sets out the conditions under which transfers and

licenses to copyrights are subject to termination.

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14 HENDRICKS & LEWIS PLLC V. CLINTON

The stated purpose of this prohibition was to

“protect foreign authors against laws and

decrees purporting to divest them of their

rights under the United States copyright

statute, and would protect authors within the

foreign country who choose to resist such

covert pressures.” More particularly it was

feared that the Soviet Union, by its accession

to the Universal Copyright Convention on

February 27, 1973, would be enabled to

enforce censorship in the United States of the

works of its dissident authors through the

device of seizing the ownership of such

works, and then by enforcing the American

copyright therein, enjoin any public

distribution within the United States.

3 Melville B. Nimmer & David Nimmer, Nimmer on

Copyright § 10.4 (footnote omitted). The legislative history

of § 201(e) explains that “[t]he purpose of this subsection is

to reaffirm the basic principle that the United States copyright

of an individual author shall be secured to that author, and

cannot be taken away by any involuntary transfer.” H.R.

Rep. 94-1476, at 123 (1976), reprinted in 1976 U.S.C.C.A.N.

5659, 5739.4

4 The statute permits court ordered transfers to pay off creditors in Title

11 bankruptcy proceedings. Neither party argues that this affects the

outcome of the appeal, but it is consistent with our general ruling that, at

least in circumstances where special exemptions or protections do not

apply, copyrights are intangible property subject to judgment collection

efforts.

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HENDRICKS & LEWIS PLLC V. CLINTON 15

The parties dispute whether Clinton, Thang, or Warner

Bros. was the “author” of the Masters within the meaning of

the Copyright Act. If the Masters were “works made for

hire” under 17 U.S.C. § 101,5then Warner Bros. would be the

author of the works, not Clinton. See 17 U.S.C. § 201(b) (“In

the case of a work made for hire, the employer or other

person for whom the work was prepared is considered the

author for purposes of [the Copyright Act], and, unless the

parties have expressly agreed otherwise in a written

instrument signed by them, owns all of the rights comprised

in the copyright.”). If Warner Bros. is the author of the

Masters, the protection afforded by § 201(e) is plainly

unavailable to Clinton.

We need not resolve the authorship dispute here,

however, because § 201(e) is of no help to Clinton whether or

not he is the author of the Masters. Section 201(e) protection

does not apply where a copyright was previously “transferred

voluntarily by that individual author.” There is no question

that Clinton transferred any interest that he had in the Masters

 

5

 The Copyright Act defines a work made for hire as:

(1) a work prepared by an employee within the scope of

his or her employment; or

(2) a work specially ordered or commissioned for use as

a contribution to a collective work, as a part of a motion

picture or other audiovisual work, as a translation, as a

supplementary work, as a compilation, as an

instructional text, as a test, as answer material for a test,

or as an atlas, if the parties expressly agree in a written

instrument signed by them that the work shall be

considered a work made for hire.

17 U.S.C. § 101.

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16 HENDRICKS & LEWIS PLLC V. CLINTON

to Warner Bros., and, as part of a settlement arising from

unrelated litigation, Warner Bros. subsequently agreed to

transfer ownership back to Clinton. These voluntarytransfers

are a sufficient basis for rejecting Clinton’s argument that he

enjoys § 201(e) protection as the author of the master sound

recordings.

Relying on the contention that § 201(e) must be read in

harmony with the termination provisions of § 304(c) of the

Copyright Act, Clinton also argues that his voluntary transfer

of the Masters was an unenforceable legal fiction. We

understand this argument to be that these provisions enable

authors to reclaim transferred copyrights, without limitation,

to protect them from unequal bargaining positions caused by

the impossibility of determining a work’s value until it has

been exploited. Clinton implies that the termination

provisions in § 304 should be applied to void his original

agreement to transfer his copyrights to Warner Bros.

We decline to consider Clinton’s § 304 argument, which

he raised for the first time in his motion for reconsideration

of the district court’s order appointing a receiver. “A party

does not properly preserve an issue for appeal by raising it for

the first time in a motion for reconsideration.” SelfRealization Fellowship Church v. Ananda Church of SelfRealization, 59 F.3d 902, 912 (9th Cir. 1995). The district

court ruled that the motion for reconsideration was untimely,

and it never considered the merits of the inalienable

termination rights argument. Clinton does not argue that the

district court abused its discretion in so ruling, and he

identifies no exceptional circumstances that warrant our

consideration of his argument for the first time on appeal. 

See Gieg v. DDR, Inc., 407 F.3d 1038, 1046 n.10 (9th Cir.

2005) (“An appellate court will not consider arguments not

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HENDRICKS & LEWIS PLLC V. CLINTON 17

first raised before the district court unless there are

exceptional circumstances.”).

C. The District Court Did Not Abuse Its Discretion

by Appointing a Receiver to Manage or Sell

Ownership of These Copyrights.

Federal Rule of Civil Procedure 66 governs the

appointment of receivers in federal court. We acknowledged

in Office Depot that the federal rules qualify as federal

statutes for purposes of Rule 69(a). 596 F.3d at 701. While

Rule 66 prevails over state law to the extent it applies, it does

not provide a different standard for the appointment of a

receiver than the one found under Washington law. 

Therefore, we consider Washington law when reviewing the

district court’s order appointing a receiver.

The Washington Act Relating to Receiverships conveys

broad authority to judges to appoint receivers. A receiver

may be appointed if the court “determines that the

appointment of a receiver is reasonably necessary and that

other available remedies either are not available or are

inadequate.” Wash. Rev. Code § 7.60.025(1). This statute

provides that a receiver may be appointed, in relevant part:

“[a]fter judgment, in order to give effect to the judgment,” id.

§ 7.60.025(1)(c); “[t]o the extent that property is not exempt

from execution, at the instance of a judgment creditor either

before or after the issuance of any execution, to preserve or

protect it, or prevent its transfer,” id. § 7.60.025(1)(e); upon

attachment of personal property “when the court determines

that the nature of the property or the exigency of the case

otherwise provides cause for the appointment of a receiver,”

id. § 7.60.025(1)(g); and “as may be provided for by law, or

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18 HENDRICKS & LEWIS PLLC V. CLINTON

when, in the discretion of the court, it may be necessary to

secure ample justice to the parties,” id. § 7.60.025(1)(nn).

Washington appellate courts have acknowledged that trial

courts have broad discretion to appoint receivers, but this

discretion “should be exercised with caution in view of all the

facts and circumstances of the particular case.” Nw.

Defenders Ass’n, 75 P.3d at 586; see MONY Life Ins. Co. v.

Cissne Family L.L.C., 148 P.3d 1065, 1067 (Wash. Ct. App.

2006) (“A trial court abuses its discretion when its decision

is manifestly unreasonable, or exercised on untenable

grounds, or for untenable reasons.” (internal quotation marks

and citation omitted)). The district court cited § 7.60

generally, and found that “[a] receivership is necessary to

ensure justice to the parties and to preserve [the Masters] for

the benefit of the parties and to make whole the judgment

creditor,” H&L. Without citing authority, Clinton argues that

the district court’s “generic, conclusory” statement that a

receivership is necessary was inadequate, and that the court

was required make specific findings to justify appointing a

receiver. This argument is not persuasive.

The record shows that the district court heard the parties’

arguments and was fully aware of Clinton’s claim that the

sale of the Masters would be a hardship for him. It

recognized that H&L had valid judgments against Clinton,

and that H&L had only recovered a portion of Clinton’s total

debt. The district court was concerned that Clinton would not

be able to satisfy this debt in a reasonable amount of time. It

also knew that Clinton needed some income to support

himself. The court’s clear goal was to have a receiver

manage these assets so that Clinton could satisfy the

judgment and have control of the assets returned to him, if

possible. It was well aware that the parties had discussed

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HENDRICKS & LEWIS PLLC V. CLINTON 19

various proposals allowing them to share the royalties

generated by the Masters, but that after years of fighting over

the debt in multiple fora, they had failed to come to such an

agreement. In short, the district court balanced the equities,

and did not abuse its discretion in determining that appointing

a receiver was “necessary to secure ample justice to the

parties.” Wash. Rev. Code § 7.60.025(1)(nn).6

D. Clinton May Raise Claims of Fraud on the Court

and Judicial Estoppel for the First Time on

Appeal, But Both Claims are Meritless.

1. Fraud on the Court

Clinton argues for the first time on appeal that H&L

perpetrated fraud on the district court. H&L argues that

because this issue was not raised below, it should not be

considered on appeal, citing Weisman v. Charles E. Smith

Mgmt., Inc., 829 F.2d 511, 514 (4th Cir. 1987) (“We believe

that the district court is the proper forum to determine in the

first instance whether there is sufficient basis to overturn the

judgments on the grounds raised. That court is in the best

position to decide whether any fraud was perpetrated upon it

or other untoward action occurred . . . .”).

“Courts have inherent equity power to vacate judgments

obtained by fraud.” United States v. Estate of Stonehill,

660 F.3d 415, 443 (9th Cir. 2011) (citing Chambers v.

NASCO, Inc., 501 U.S. 32, 44 (1991)); see also Dixon v.

Comm’r, 316 F.3d 1041, 1046 (9th Cir. 2003) (“Courts

6 We express no view as to whether a receiver will remain necessary if

other income streams, not contemplated at the time the district court

appointed a receiver, become available to satisfy H&L’s judgment.

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20 HENDRICKS & LEWIS PLLC V. CLINTON

possess the inherent power to vacate or amend a judgment

obtained by fraud on the court.”). We have held that “[w]hen

we conclude that the integrity of the judicial process has been

harmed . . . and the fraud rises to the level of ‘an

unconscionable plan or scheme which is designed to

improperly influence the court in its decisions,’ we not only

can act, we should.” Dixon, 316 F.3d at 1046 (quoting

England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960)).

Though we are free to consider this argument for the first

time on appeal, Clinton’s claim that H&L perpetrated an

“unconscionable scheme” is without merit. Clinton first

alleges that H&L “fabricated an image” that Clinton refused

to pay his debts. He cites H&L’s statement to the district

court that “Clinton has not voluntarily paid any amounts

due,” and attempts to rebut it by noting that “in fact, Mr.

Clinton voluntarily paid $106,453.” But Clinton fails to

mention that H&L had to serve separate levies on entities that

were believed to owe Clinton royalties in order to satisfy this

much of its judgment. These payments were not “voluntary,”

and Clinton’s accusation to the contrary is unsupported.

Clinton also argues that H&L’s alleged

misrepresentations were “intentional” and “designed to

defraud the court by painting an image of hopelessness and

utter failure in its attempt to get paid.” This argument is

belied by the record. H&L repeatedly described its judgment

collection efforts in detail to the district court, including

successes, failures, and inconclusive outcomes. For instance,

H&L filed a status report with the district court in which it

spent eighteen pages detailing its various judgment collection

efforts and summarizing the amount of money it had

recovered as of the date of the report. In his reply brief for

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HENDRICKS & LEWIS PLLC V. CLINTON 21

this appeal, Clinton admits that H&L’s “accounting is

correct.”

Clinton also argues that H&L falsely represented to the

district court that Clinton refused to negotiate. Clinton seems

to rely on H&L’s assertion that “Clinton refused to engage in

such discussions” from 2008 until H&L sought arbitration on

the debt, and H&L’s representation that Clinton “refus[ed] to

participate” in the arbitration proceedings. This argument is

unpersuasive because Clinton did not participate in the

arbitration proceedings, and it is unclear how an alleged

failure to negotiate before arbitration is relevant now.

Finally, Clinton argues that H&L did not convey accurate

information to the district court when, at oral argument on

H&L’s motion to authorize sale of the Masters, H&L’s

attorney responded to the court’s question about whether the

Masters were also at issue in related California proceedings. 

Clinton quotes H&L’s attorney as telling the district court

that “[t]here is nothing that relates to the same property [in

the California proceedings] . . . . While [the Masters] weren’t

part of the motion [in the California proceedings], I’m not

sure theywere ever even mentioned except in the very limited

context that is referred to in the briefs.” The language

Clinton quotes is a selective representation of the exchange

between H&L’s counsel and the district court. A more

complete reading of the transcript shows that H&L’s counsel

explained that the royalty streams at issue in California do not

pertain to the Masters but to other works. She also explained

that the California action did not involve transfer of

copyrights. We find no merit to the argument that H&L

perpetrated a fraud on the court.

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22 HENDRICKS & LEWIS PLLC V. CLINTON

2. Judicial Estoppel

Clinton also argues that the district court improperly

allowed H&L to take a position inconsistent with arguments

it made in the California proceedings regarding its knowledge

of Clinton’s assets and his willingness to pay the judgments

against him. H&L correctly notes that Clinton raises a

different judicial estoppel theory on appeal than he did in the

district court, but a “court invokes judicial estoppel at its

discretion” and we consider Clinton’s argument on appeal.7

Yanez v. United States, 989 F.2d 323, 326 (9th Cir. 1993).

The Supreme Court observed in New Hampshire v.

Maine, 532 U.S. 742, 743 (2001), that “[c]ourts have

recognized that the circumstances under which judicial

estoppel may appropriately be invoked are not reducible to

any general formulation,” and that “[a]dditional

considerations may inform the doctrine’s application in

specific factual contexts.” The Court listed the following

factors for consideration:

First, a party’s later position must be clearly

inconsistent with its earlier position. Second,

courts regularly inquire whether the party has

succeeded in persuading a court to accept that

party’s earlier position, so that judicial

acceptance of an inconsistent position in a

7

In the district court, Clinton argued that H&L previously relied on

California law regarding obligations flowing from prior attorney/client

relationships and that, in the Washington action, H&L relied on

Washington law. On appeal, Clinton’s judicial estoppel argument is based

on H&L’s alleged change of position regarding its knowledge ofClinton’s

assets and his willingness to satisfy H&L’s judgments.

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HENDRICKS & LEWIS PLLC V. CLINTON 23

later proceeding would create the perception

that either the first or the second court was

misled. Third, courts ask whether the party

seeking to assert an inconsistent position

would derive an unfair advantage or impose

unfair detriment on the opposing party if not

estopped.

Id.

Clinton’s argument does not satisfy the first New

Hampshire factor; he has not shown that H&L took clearly

inconsistent positions with respect to its knowledge of

Clinton’s assets. H&L never asserted, as Clinton suggests,

that it has “no idea or way of knowing what Mr. Clinton’s

assets” are. H&L’s statement that it lacks knowledge and

information to identify “other assets” and “continues to

search for assets and possible avenues of collection” is

consistent with its assertion that it “proceeded against known

assets but continues to search for ‘other’ assets.”

E. Clinton Failed to Raise His Preemption, Erie

Doctrine, and Due Process Arguments in the

District Court.

On appeal, Clinton’s brief suggests a preemption

argument, an argument based on the Erie doctrine, and an

alleged due process violation. As we have observed, an

appellate court generally “will not consider arguments not

first raised before the district court unless there are

exceptional circumstances.” Gieg, 407 F.3d at 1046 n.10. 

Clinton did not argue that there are exceptional circumstances

for considering these issues, but in any case we find them to

be without merit.

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24 HENDRICKS & LEWIS PLLC V. CLINTON

Clinton claimed at oral argument before our court that he

raised a preemption argument in opposition to H&L’s motion

for sale of the copyrights. The brief to which Clinton refers

only makes a general reference to the U.S. Constitution’s

Supremacy Clause. Clinton conceded at oral argument that

he did not raise his Erie argument in the district court. On

appeal, this part of his brief urges our court to certify to the

Washington state supreme court the question whether a

copyright is subject to execution to satisfy a judgment, but he

cites no authority for the implied contention that we are

obligated to certify this question. In re Complaint of McLinn,

744 F.2d 677, 681 (9th Cir. 1984) (“Use of certification rests

in the sound discretion of this court.”). Clinton did not raise

his due process argument before the district court. In any

case, this portion of his appellate brief merely repeats his

contention that the district court abused its discretion by

appointing a receiver. We have already rejected this

argument.

CONCLUSION

The district court’s order appointing a receiver and

authorizing the sale of copyrights is AFFIRMED.

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