Copeland v. Home Grown Music, Inc.

358 Ga.App. 743

856 S.E.2d 325

COPELAND

v.HOME GROWN MUSIC, INC.

A20A1721

Court of Appeals of Georgia.

March 5, 2021

Braden Copeland, for Appellant.

Foy R. Devine, Diane Festin LaRoss, Michael Brian Terry, Atlanta, for Appellee.

Dillard, Presiding Judge.

Braden Copeland was an early supporter and financial backer of his friend Zachry Brown's eponymously named "Zac Brown Band."¹ Indeed, he provided the band with several crucial loans in 2006 without any written agreement. But in short order, Copeland and the band's corporate identity, Home Grown Music, Inc.,² entered into an agreement memorializing the terms of their financial relationship. This agreement provided that—in exchange for his investments—Copeland would share in the band's potential future success via a percentage of the royalties from music and merchandise sales. And Copeland's faith in the Zac Brown Band was richly rewarded just a few years later when the group signed with a major record label and immediately rocketed up the country music charts with the song "Chicken Fried." Unfortunately, Copeland's relationship with the band eventually soured when he began to believe HGM was failing to pay him royalties that he was entitled to under their agreement. So, he sued HGM for breach of contract and lost. The trial court disagreed with Copeland's interpretation of the agreement, and granted summary judgment in HGM's favor. Copeland appeals, arguing that genuine issues of material fact remain as to whether he is entitled to royalties on the sales of individual recordings under the agreement. He also claims entitlement to attorney fees and prejudgment interest for HGM's failure to pay him royalties on the sales of merchandise that it acknowledged were due to him under the agreement. Finally, Copeland maintains that the trial court erred in awarding HGM litigation costs. For the reasons set forth infra , we affirm the trial court's grant of summary judgment to HGM, but partially reverse its award of costs.

Viewed in the light most favorable to Copeland (i.e. , the nonmoving party),³ the record shows that he and Brown became friends in late 2005, after meeting while Copeland was conducting due diligence for a commercial real estate transaction. As a friend and fan of the Zac Brown Band, Copeland began helping Brown fund his group in February 2006 by providing a series of loans. And by July 2007, despite having no written agreement for repayment at that time, Copeland had provided over $73,000 to assist the Zac Brown Band with expenses such as touring, hiring studio musicians and mixers, booking studio time, and recording the group's first major-label studio album—The Foundation.

As early as the previous summer, Copeland and Brown discussed converting the loans into an investment toward the band's potential future success. Specifically, rather than simply repaying the loans, Brown would grant Copeland a share in the royalties generated by sales of the band's music and merchandise. And toward that end, on August 22, 2006, Copeland drafted a letter to Brown and HGM, outlining the details of their proposed agreement. This letter agreement was revised several times over the course of a year, with assistance from HGM's attorney, and the final agreement was signed by Copeland and Brown, as president of HGM, on September 7, 2007.

The agreement was divided into two sections, with each section contemplating a rather distinct means by which the album would be distributed and sold. Specifically, the first section outlined the method by which revenue would be shared prior to the band entering into any contract with a record company. In relevant part, that section of the agreement provided:

To repay the Investments and in consideration of making the Investments, you and I agree that:

A. until you elect in your sole discretion, to enter into an exclusive recording agreement with a Record Company (as defined below), the Investments shall be repaid as follows:

i. in respect of net sales by you of records embodying the entire Album independently, i.e., sales by you directly to the consumer (such as at live shows or from your Internet website) or through a so-called "distribution" or "P&D" arrangement between Home Grown Music and a distributor (such as Caroline, RED, ADA, Fontana, Redeye, Navarre or the like) ("Independent Sales"), I will receive, payable monthly:

1. Fifty percent (50%) of the Net Receipts from such sales, up to a maximum of $5.00 per physical Record sold and up to $3.50 per digitally downloaded Record sold, payable monthly, until the total Investments are repaid in full.

...

ii after the Investments are repaid in full, in respect of net sales by you of records embodying the entire Album, or individual recordings from the Album, i.e., individual downloads of recordings from the Album, by Independent Sales, I will receive, on a prospective basis, payable monthly: (1) $.20 (twenty cents) per record sold, whether in the form of physical record or digitally downloaded record, embodying the entire Album; and (2) $.015 (one-and-one-half cents) per download sold of an individual recording from the album.

The second section contemplated the band entering into a contract with a record company and, in relevant part, provided:

B. in the event that you elect to enter into a recording agreement with a Record Company:

i. the outstanding balance, if any, of the Investments shall, unless otherwise agreed by you and me in writing, be repaid to me as follows:

1. one hundred percent (100%) of the outstanding balance of the Recording Investment will, unless otherwise agreed by me, be reimbursed from the "recording fund" or "recording budget" payable by the Record Company;

...

ii. in respect of net sales by you of records embodying the entire Album via a third party record label (i.e., other than you) (a "Record Company"), you will pay me, or cause me to be paid, a royalty (the "Override Royalty") on net sales of full-priced top line records embodying the Album by the Record Label through normal retail channels in the United States in the amount of two percent (2.0%) of SRLP (or an equivalent royalty in "pennies" where your royalty is calculated as a percentage of wholesale price or published price to dealers). The Override Royalty on other sales (including foreign sales) will be reduced (but not escalated), adjusted and paid in the same proportion, and at the same times, as is your basic "all in" royalty. The Override Royalty will not be payable until all recoupable recording costs (as such term is defined in the agreement with the Record Company) incurred in connection with the Album have been recouped by you at the net artist rate (i.e., your basic "all in" royalty less the royalties payable to producers, mixers and me) and thereafter the Override Royalty will be payable on a prospective basis only....

Thereafter, both parties performed according to the first section of the agreement. But on October 23, 2008, HGM entered into an exclusive recording agreement with Atlantic Recording Corporation. Additionally, by this time, the band's first album—The Foundation —was well on its way to becoming an enormous artistic and financial success. Indeed, under the September 2007 agreement with HGM, Copeland has received over $800,000 in royalty payments.

Nevertheless, in the summer of 2009, Copeland noticed that he did not appear to be receiving royalty payments for downloads or sales of individual recordings, and so he contacted HGM's accountant to inquire about such payments. The accountant—who had his own firm and was not an HGM employee—indicated to Copeland that inquires were being made to Atlantic, but did not otherwise answer Copeland's question. Then, on February 1, 2010, Copeland received an accounting statement and payment from Atlantic that did not include payment for individual recordings. This prompted Copeland to contact Brown, who responded that he should, again, contact HGM's accountant. He did so, but received no response. Copeland followed up on February 28, 2010, and this time the accountant responded that he was working on the situation. But after hearing nothing for over a month, Copeland again followed up with the accountant on April 19, 2010, but this inquiry also went unanswered. Unbeknownst to Copeland, several months earlier an Atlantic representative emailed HGM's attorney to ask whether Copeland was supposed to be paid for single-track downloads, and the attorney responded: "Album only. Thanks."

Over the next four years, Copeland continued receiving royalty payments, but in March 2014, he discovered that he had not received the two most recent quarterly payments for merchandise sales. So, on March 22, 2014, Copeland emailed HGM's accountant, who responded that he was no longer working with HGM because the company had moved its accounting in-house. And although the now-former accountant copied his response and Copeland's original email to the in-house accountant at HGM, Copeland initially received no response. Consequently, in April 2014, Copeland hired legal counsel; and one month later, his counsel sent HGM a demand letter for payment of the merchandise royalties, as well as a draft complaint. This time HGM did respond. Acknowledging that the merchandise royalties owed for the three most recent quarters had been overlooked due to a transition to in-house accounting, HGM provided Copeland's counsel with sales statements for the relevant quarters and offered to pay the amounts due to him under those statements. Additionally, HGM offered Copeland access to its sales records and proposed that once an agreement was reached as to the exact amount owed, Copeland would sign a release and receive the payment; but Copeland's counsel balked at signing a release.

On June 23, 2014, Copeland filed a complaint against HGM for breach of contract, seeking unpaid royalties for sales on individual recordings/songs and merchandise, attorney fees, and prejudgment interest. HGM filed an answer, and...