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Counsel Concerns

By ALM Staff | Law Journal Newsletters |
September 28, 2006

Malpractice Claims and Supplemental Jurisdiction

The U.S. District Court for the Eastern District of Pennsylvania decided it has supplemental jurisdiction over a legal malpractice claim included in a suit over renewal rights to the 1970s hit 'Disco Inferno.' Dimensional Music Publishing LLC v. Kersey, 05-6437. 'Disco Inferno' had been included in Dimensional's $42.8 million purchase of the majority of the catalog of DreamWorks Music Publishing, a successor-in-interest to the original publisher to which 'Inferno' co-writer Ron Kersey had assigned his 50% share of the song. Dimensional Music filed suit for a declaratory judgment that it owned the renewal rights to Kersey's share. The district court decided that the renewal rights will vest in Dimensional, if Kersey's original 1977 assignment of the song rights is found valid.

In its complaint, Dimensional also named as defendants the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Dimensional alleges that if the district court ultimately finds Dimensional doesn't own the renewal rights, the finding will be due to 'the direct and proximate result of professional negligence-legal malpractice' by Paul Weiss. According to the complaint, Dimensional agreed to finance entities that wanted to buy the DreamWorks songs and that retained Paul Weiss to conduct a due diligence of copyright ownership of the catalog. That DreamWorks deal fell through, but Dimensional later completed the purchase and said it retained Paul Weiss to finish the due-diligence investigation. Dimensional further charges that Paul Weiss advised Dimensional that the DreamWorks purchaser would have exclusive ownership of 'Disco Inferno' until 2033. For its part, Paul Weiss, which wasn't involved in the closing of the DreamWorks deal, insists the asset-purchase agreement drafted by DreamWorks' lawyers contained no representations of exactly what DreamWorks's copyright interests were in the catalog songs.

The district court found supplemental jurisdiction over Dimensional's malpractice claim by noting: 'To prove plaintiff's case within the case against defendant Paul Weiss, plaintiff will be required to prove all the same facts as in its case against the Kersey defendants. ' Moreover, even if plaintiff wins its suit against the Kersey defendants and establishes that it owns 100% of the renewal rights in the Composition, it would have the right to proceed against defendant Paul Weiss to recover the legal expenses in pursuing its claim against the Kersey defendants. ' In this case, it is beyond dispute that the Court has jurisdiction over plaintiff's underlying copyright action, and plaintiff's theory of recovery in their legal malpractice action is integrally related to their copyright action.'

The court then explained that 'plaintiff's Complaint asserts a relationship [with Paul Weiss] that, if not rising to the level of an attorney-client relationship, was at least a relationship of privity.' But the court granted Paul Weiss's motion to stay the legal-malpractice claim, adding that: 'Paul Weiss is required to participate in all discovery in plaintiff's case against the Kersey defendants which relates to its potential malpractice liability.'

Malpractice Claims and Supplemental Jurisdiction

The U.S. District Court for the Eastern District of Pennsylvania decided it has supplemental jurisdiction over a legal malpractice claim included in a suit over renewal rights to the 1970s hit 'Disco Inferno.' Dimensional Music Publishing LLC v. Kersey, 05-6437. 'Disco Inferno' had been included in Dimensional's $42.8 million purchase of the majority of the catalog of DreamWorks Music Publishing, a successor-in-interest to the original publisher to which 'Inferno' co-writer Ron Kersey had assigned his 50% share of the song. Dimensional Music filed suit for a declaratory judgment that it owned the renewal rights to Kersey's share. The district court decided that the renewal rights will vest in Dimensional, if Kersey's original 1977 assignment of the song rights is found valid.

In its complaint, Dimensional also named as defendants the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Dimensional alleges that if the district court ultimately finds Dimensional doesn't own the renewal rights, the finding will be due to 'the direct and proximate result of professional negligence-legal malpractice' by Paul Weiss. According to the complaint, Dimensional agreed to finance entities that wanted to buy the DreamWorks songs and that retained Paul Weiss to conduct a due diligence of copyright ownership of the catalog. That DreamWorks deal fell through, but Dimensional later completed the purchase and said it retained Paul Weiss to finish the due-diligence investigation. Dimensional further charges that Paul Weiss advised Dimensional that the DreamWorks purchaser would have exclusive ownership of 'Disco Inferno' until 2033. For its part, Paul Weiss, which wasn't involved in the closing of the DreamWorks deal, insists the asset-purchase agreement drafted by DreamWorks' lawyers contained no representations of exactly what DreamWorks's copyright interests were in the catalog songs.

The district court found supplemental jurisdiction over Dimensional's malpractice claim by noting: 'To prove plaintiff's case within the case against defendant Paul Weiss, plaintiff will be required to prove all the same facts as in its case against the Kersey defendants. ' Moreover, even if plaintiff wins its suit against the Kersey defendants and establishes that it owns 100% of the renewal rights in the Composition, it would have the right to proceed against defendant Paul Weiss to recover the legal expenses in pursuing its claim against the Kersey defendants. ' In this case, it is beyond dispute that the Court has jurisdiction over plaintiff's underlying copyright action, and plaintiff's theory of recovery in their legal malpractice action is integrally related to their copyright action.'

The court then explained that 'plaintiff's Complaint asserts a relationship [with Paul Weiss] that, if not rising to the level of an attorney-client relationship, was at least a relationship of privity.' But the court granted Paul Weiss's motion to stay the legal-malpractice claim, adding that: 'Paul Weiss is required to participate in all discovery in plaintiff's case against the Kersey defendants which relates to its potential malpractice liability.'

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