02/17/2009 392 MOTION Sell/Interplead Jackson Memorabilia and Master Recordings. Document filed by Jane W. Moscowitz. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Moscowitz, Jane) (Entered: 02/17/2009)
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Doc 392
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RECEIVER’S MOTION TO SELL/INTERPLEAD JACKSON MEMORABILIA AND MASTER RECORDINGS
Jane W. Moscowitz, in her capacity as court-appointed Receiver (the “Receiver”) of Universal Express, Inc., and its subsidiaries, hereby moves this Court for an order determining the disposition of the Jackson memorabilia.
INTRODUCTION
Universal Express, Inc.(“Universal”) purchased a collection of Jackson family memorabilia and certain master recordings of various Jackson family members and others (collectively, the “goods”). Some of these goods are now in the possession of the Receiver, who is paying monthly storage charges of $1500 on them.
The Receiver had earlier determined that she could not dispose of these goods because there was and is litigation pending regarding their ownership. Michael Jackson and Janet Jackson claimed some of the goods as their own in litigation in Las Vegas. Vintage Pop LLC(“Vintage”), which sold the goods to Universal Express, intervened in the Las Vegas litigation, claiming ownership of all the goods. The court there ruled against Vintage, and that matter is now on appeal. Vintage filed a declaratory judgment action in New Jersey, amending an earlier complaint to add the Receiver in her capacity as Receiver. The Receiver filed for summary judgment in the New Jersey litigation. That motion is pending.
There are now two offers to purchase the memorabilia. Vintage has made a written offer to purchase the Jackson memorabilia and recordings held by the Receiver for $50,000. (See Exhibit A, attached).[1] Acceptance of this offer would terminate the New Jersey litigation. Michael Jackson and Janet Jackson have also made an offer for the goods. Their offer is for $70,000. (See Exhibit B, attached).
[1]Vintage also seeks an assignment of whatever rights Universal may have, if any, against Michael Jackson, Janet Jackson, and Guernsey’s.
There are complications with respect to both these offers. Pursuant to the settlement Universal entered into in Las Vegas, Universal must allow Michael Jackson and Janet Jackson to reclaim the specific goods that belong to them. That reduces the value of the goods to Vintage. However, acceptance of the Jacksons’ offer will not terminate the litigation in New Jersey.
Thus, the Receiver faces liability in New Jersey if she sells the goods to the Jacksons and liability to the Jacksons if she sells all the goods to Vintage.
The Receiver requests that the Court hold a hearing at which the interested parties may appear, to determine the appropriate disposition of these goods.
FACTS
On November 21, 2006, Vintage entered into a contract to sell a collection of Jackson family memorabilia and tape recordings to Universal Express, Inc. The contract is attached as Exhibit B. The Agreement provided in pertinent part, as follows:
Mr. Altormare [sic] agrees to purchase Vintage Pop llc collection of the Jackson Family Memorabilia described in Exhibits “A” and “B” hereto (the “Collection” and all master recordings) for the total Guaranteed purchase price of Four Million Dollars $4,000,000. Mr. Altomare will give Vintage Pop llc a good faith deposit of one hundred and fifty thousand dollars ($150,000). This deposit will be made by wire transfer on or before November 22, 2006 to Vintage Pop llc’s bank account. The deposit will be deducted from the purchase price after the completed sale and or auction is finalized.
Exhibit C.
The Agreement contained various terms and conditions regarding the timing and amount of payments, proof of ownership, visual inspections, insurance and bonding, and a clause permitting the buyer to defer payment upon a challenge to ownership of the collection. The Agreement was signed by Henry Vaccaro Jr. on behalf of Vintage Pop llc and by Richard Altomare on behalf of Universal Express Inc. and/or himself.
On November 22, 2006, Universal Express wired $150,000 to Plaintiff. Universal made no further payments to Vintage Pop llc. Universal Express, Inc. entered into a consignment agreement in December 2006 with an auction house, Barlan Enterprises,Ltd. d/b/ a/ Guernsey’s (“Guernsey’s”), under which Guernsey’s was to auction at least a portion of the goods. The auction was scheduled for May 30 and 31, 2007 in Las Vegas, Nevada.
In April 2007, Michael Jackson filed suit in the District Court for Clark County, Nevada against Universal and Guernsey’s to prevent the auction from going forward. Mr. Jackson claimed ownership of numerous items which were to be auctioned. Janet Jackson intervened in the litigation, also claiming ownership of some personal items.
Universal and the Jacksons entered into settlement negotiations. Universal made an agreement with the Jacksons under which the auction was allowed to go forward but without certain designated personal items of the Jacksons. Eventually, due to Universal’s conduct, the court took possession of those items.
The auction, which was held on May 30 and 31, 2007, in Las Vegas, realized only a gross amount of approximately $750,000, according to business records of Universal. That sum all went to Guernsey’s under the terms of its contract with Universal. After the auction, Universal reneged on its settlement with Michael Jackson and Janet Jackson and refused to permit the Court to turn the designated items over to them.
On August 31, 2007, this Court placed Universal in Receivership and appointed Jane W. Moscowitz Receiver. The Receiver took over Universal and its books and records on September 7, 2007.
The Receiver sought to and eventually consummated the settlement that Universal had reneged on in the Nevada litigation. On or about February 15, 2008, the parties submitted a stipulation and consent order to the Nevada Court seeking the release of the items being held by that court to Michael Jackson and Janet Jackson.
The essence of the settlement between the Jacksons and Universal was that the Jacksons were to receive certain designated items of personal property from the goods
On or about February 21, 2008, Henry Vaccaro, Henry Vaccaro, Jr. Vintage Associates, LLC and Vintage Pop LLC (collectively, the “Vintage Interveners”) filed a complaint in intervention and opposition in the Nevada litigation asserting an ownership interest in the items held by the court and opposing their return to the Jacksons. The Vintage Interveners claimed that the initial sale to Universal had been conditional; since Universal had failed to pay, the Vintage Interveners claimed, ownership reverted to them On August 20, 2008, the Nevada court ruled against the Vintage Interveners. That matter is now on appeal, although Janet Jackson and Michael Jackson have received the goods held by the Nevada court.
On or about August 11, 2008, Vintage amended a complaint it had pending in state court in New Jersey, naming the Receiver in addition to Universal. That suit seeks a declaration that the goods belong to Vintage. Universal and the Receiver have filed a motion for summary judgment, which is pending. The New Jersey judge took the summary judgment motion off the calendar when Vintage said it would make an offer.
The goods are found in three locations. There are goods in Nevada that were not sold at the auction and goods sold at the auction but not paid for. The Receiver also found that there are goods, which she believes are those which were deemed not good enough to take to the auction, at a storage facility in New York City. Also, the Receiver is in possession of tape recordings which she learned Altomare had in his possession and which this Court ordered him to turn over to the Receiver. See Order of January 11, 2008. The Receiver is paying monthly storage costs of $ 1500 on all these items. Inventories of the goods are attached as Composite Exhibit D.
The Receiver sought to have the goods appraised. The cheapest estimate for an appraisal was $13,000 plus costs.
MEMORANDUM OF LAW
A district court has broad powers and wide discretion to determine the appropriate relief in an equity receivership. See SEC v. Elliott, 953 F.2d 1560, 1566 (11th Cir. 1992); SEC v. Safety Finance Service, Inc., 674 F.2d 368, 372 (5th Cir. 1982); SEC v. Lincoln Thrift Ass’n, 577 F.2d 600, 609 (9th Cir. 1978). A district court’s determination will not be disturbed absent a
showing of an abuse of discretion. See Elliott, 953 F.2d at 1569-70; see also SEC v. Arkansas Loan & Thrift Corp., 427 F.2d 1171, 1172 (8th Cir. 1972).
The Second Circuit has described the requirements for interpleader as follows: Under Rule 22, interpleader is proper if the party requesting it “is or may be exposed to double or multiple liability.” Fed. R. Civ. P. 22(1). Rooted in equity,
interpleader is a handy tool to protect a stakeholder from multiple liability and the vexation of defending multiple claims to the same fund. See generally Texas v. Florida, 306 U.S. 398, 406-08, 83 L. Ed. 817, 59 S. Ct. 563 (1939); 7 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure §§§§
1702, 1704, at 493-97, 500-03 (2d ed. 1986) [hereinafter Wright & Miller]. Accordingly, what triggers interpleader is “a real and reasonable fear of double liability or vexatious, conflicting claims . . . .” Indianapolis Colts v. Mayor of Baltimore, 741 F.2d 954, 957 (7th Cir. 1984) (collecting citations), cert. denied,
470 U.S. 1052, 84 L. Ed. 2d 817, 105 S. Ct. 1753 (1985). Washington Electric Coop., Inc. v. Paterson, Walke & Pratt, P.C., 985 F.2d 677, 679 (2d Cir. 1993).
Here, the Receiver has spent months trying to determine how to unwind all the Jackson litigation and to dispose of the Jackson goods. Finally, when she thought that there was a resolution, the complications set out above make the situation impossible to resolve without the assistance of the Court. That is, if the Receiver accepts the Jacksons’ offer of $70,000, the New Jersey litigation is not resolved. However, she cannot accept the Vintage Offer because she cannot deliver the whole collection to Vintage. The Receiver seeks only to achieve the best result possible for the estate.
This Court must in any event approve the sale of these goods. The sale of personalty by a Receiver is governed by 28 U.S.C. § 2004, which states, “Any personalty sold under any order or decree of any court of the United States shall be sold in accordance with section 2001 of this title, unless the court orders otherwise.” (emphasis added.) Section 2001(b) requires, among other things, that, before confirming a private sale, the Court should obtain three appraisals from disinterested persons and should publish the terms of the sale in newspapers of general circulation. 28 U.S.C. § 2001(b). The Receiver requests that the Court waive the appraisal and the publication requirement.
There is no controlling law regarding waiving the requirements of § 2001(b). One of the few courts to address the issue ruled that the statutory scheme expresses a “preferential course to be followed in connection with a authorized sale of property and that the district court should not order otherwise except under extraordinary circumstances.” Tanzer v. Huffines, 412 F.2d 221, 222 (3d Cir. 1969). How the court proceeds is still reviewed under an abuse of discretion standard. Id.
The goods other than the digital recordings have been tested and rejected in the court of public opinion. All these goods either were sold at auction but not paid for, didn’t even sell, or
weren’t good enough to be taken to the auction. The digital recordings are not from famous artists (see inventory attached as Exhibit D). There are also complicated copyright issues which
make the value of these recordings dubious.
The Receiver’s bank account is under $40,000 at this point, and the cost of an appraisal, $13,000 plus costs, is too high to be justified under the circumstances. An appraiser would have to inspect goods in Nevada, New York and Florida, making just the costs run into the thousands of dollars. Similarly, the cost of newspaper advertising and the administration of any resulting
offers is also unwarranted. These circumstances are certainly sufficient to permit the Court to waive the requirements of the statute.
WHEREFORE, the Receiver respectfully requests that the Court determine the appropriate disposition of these goods.
Respectfully submitted,
MOSCOWITZ & MOSCOWITZ, P.A.
1111 Brickell Ave., Suite 2050
Miami, Florida 33131
Telephone: (305) 379-8300
Facsimile: (305) 379-4404
Attorneys for Jane W. Moscowitz, Receiver
By: s/Jane W. Moscowitz
JANE W. MOSCOWITZ, ESQ.
Florida Bar No. 586498
Jmoscowitz@mmmpa.com |
