LeSea, Inc. v. Lesea Broad. Corp.

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LESEA, INC., FAMILY BROADCASTING CORPORATION and LESEA GLOBAL FEED THE HUNGRY Inc., Plaintiffs, v. LESEA BROADCASTING CORPORATION, LESTER SUMRALL, DR. JOHN W. SWAILS III, and EDWARD WASSMER, Defendants.

LESTER SUMRALL and THE LESTER SUMRALL FAMILY TRUST, Counterclaim Plaintiff and Third-Party Plaintiffs, v. LESEA, INC., FAMILY BROADCASTING CORPORATION, LESEA GLOBAL FEED THE HUNGRY, INC., LESEA BROADCASTING OF SOUTH BEND, INC., LESEA BROADCASTING OF INDIANAPOLIS, INC., LESEA BROADCASTING OF TULSA, INC., LESEA BROADCASTING OF HAWAII, INC., LESEA BROADCASTING OF ST. CROIX, INC., WORLD HARVEST BIBLE COLLEGE INDIANA CHRISTIAN UNIVERSITY, INC., STEPHEN P. SUMRALL, DAVID M. SUMRALL, ANGELA N. GRABOWSKI, ANDREW J. SUMRALL, and ADAM SUMRALL, Counterclaim Defendants and Third-Party Defendants.

No. 3:18CV914-PPS/MGG

United States District Court, N.D. Indiana, South Bend Division

August 22, 2023

OPINION AND ORDER

PHILIP P. SIMON, JUDGE UNITED STATES DISTRICT COURT

Dr Lester Frank Sumrall was a Christian missionary, evangelist pastor and author who died in 1996 after decades of far-reaching and successful ministry, during which he produced many dozens of publications and broadcasts. At the time of his death, Dr. Sumrall was a widower and the father of three children - Frank, Stephen and Peter, each of whom had children of their own (“the grandchildren”). This litigation coming more than 20 years after Dr Sumrall's passing results from disputes among the grandchildren concerning ownership and control of Dr Sumrall's assets and legacy. That legacy takes the form of three non-profit entities spawned from Dr. Sumrall's founding of the Lester Sumrall Evangelistic Association or “LeSEA.” These three entities, the original plaintiffs in this action, are LeSEA, Inc., Family Broadcasting Corporation, and LeSEA Global Feed the Hungry Inc. After nearly five years of litigation, what remains are certain claims asserted by Dr. Sumrall's oldest grandson Lester Sumrall, acting on his own behalf or as trustee of a trust representing the interests of his father, Frank. (To avoid confusion, I will refer to the grandson as “Lester” to differentiate him from his grandfather of the same name).

To say the least, this case has a tortured history. The original lawsuit brought by the LeSEA entities under the Lanham Act and on numerous other claims settled with the entry of a permanent injunction. [DE 331, 332, 334.] What remained were a slew of counterclaims filed by Lester and the Trust and which are set out in the Second Amended Counterclaim. [DE 170.] In an effort to clearly delineate what claims were still active, on January 17, 2023 I issued an order [DE 334] setting forth the claims that I believed were still pending. No one objected to my order clarifying the third-party claims and counterclaims. Here they are, in summary:

• Count I for an Accounting for Use of Dr. Sumrall's Works, brought by the Trust against the counterclaim defendants LeSEA, Inc., Family Broadcasting Corporation, and LeSEA Global Feed the Hungry, Inc., and the individual third-party defendants Stephen P. Sumrall (Lester's uncle) and David M. Sumrall, Angela Grabowski, Andrew J. Sumrall, and Adam Sumrall (all of whom are Lester's cousins).

• Count II for Copyright Infringement, by the Trust against the counterclaim defendants.

• Count IV for Tortious Interference with Expectancy, by the Trust against the counterclaim defendants and the individual third-party defendants.

• Count V for Unjust Enrichment, by the Trust against the counterclaim defendants and the individual third-party defendants.

• Count VIII for Common Law Fraud, by the Trust against the third-party defendants.

• Count X for Copyright Infringement, brought by Lester Sumrall against the counterclaim defendants.

Now before me are four motions for summary judgment challenging these remaining claims. This opinion will address the two motions which concern the five claims brought by the Trust that represents the interests of Frank Sumrall. For simplicity's sake and unless specificity requires otherwise, I will use the generic “LeSEA” to describe collectively the three related entities - LeSEA, Inc., Family Broadcasting Corporation and LeSEA Global Feed the Hungry, Inc. Unless clarified in context, the term will also encompass the individual third-party defendants.

LeSEA seeks judgment as a matter of law on the five remaining counterclaims the Trust has against them, namely Counts I, II, IV, V and VIII. This opinion will also address the Trust's affirmative motion for partial summary judgment seeking to knock out LeSEA's statute of limitations defense to Count IV, the claim for tortious interference with expectancy. To be addressed in a separate opinion are two other motions concerning Lester Sumrall's individual copyright infringement claim (Count X) relating to what is called the “Traveler” photograph.

Undisputed Facts

In 1957, Dr. Lester Sumrall, a Christian missionary, founded LeSEA, Inc., formerly known as the Lester Sumrall Evangelistic Association, Inc. [DE 362 at ¶1.] As set forth in LeSEA's Articles of Incorporation, signed by Dr Sumrall, LeSEA's purpose was to “teach and propagate the Holy Bible and Christian Worship” by, among other things, “publish[ing] all types of Christian literature for sale, subscription and for free distribution, all profits to revert to [LeSEA].” [Id. at ¶2; DE 337-2 at 2-3.] Until his death in 1996, Dr. Sumrall authored numerous written works (“the Works”). [DE 362 at ¶3.]

Dr. Sumrall wrote in his office on LeSEA's premises and in a parsonage owned by LeSEA. He also wrote during his extensive travels for missionary and charitable purposes, and was seen writing book ideas on napkins, when traveling in cars, and while staying in hotel rooms around the world. [DE 362 at ¶4; DE 369 at ¶151.]

Under some publishing agreements, Dr. Sumrall directed the publishers to register the copyright in the subject work to LeSEA and to pay royalties to LeSEA. [DE 362 at ¶6.] Under other agreements, Dr. Sumrall directed that the publisher pay all royalties to LeSEA but was either silent with respect to copyright registration instructions or specified personal ownership. [Id. at ¶7.] Still other publishing agreements included instructions that royalties be paid to Dr. Sumrall and that the publisher file copyright applications in Dr. Sumrall's name or were silent on the point. [Id. at ¶8.] Works that were not subject to publishing agreements were published by LeSEA's in-house publishing division under Dr. Sumrall's direction, and corresponding copyrights were sometimes registered to LeSEA, sometimes registered to Dr. Sumrall, and sometimes not registered at all. [Id. at ¶9.] LeSEA also published books by many other authors. [DE 369 at ¶109.]

Of the Works at issue in this matter, 23 were registered with the United States Copyright Office to LeSEA. [DE 362 at ¶10.]^[1] Another 45 Works were registered personally to Dr. Sumrall, although the registrations of two of those Works have expired. [Id. at ¶¶11, 12.] The remaining Works, more than 250 in number (as identified by the Trust in Exhibit A to its Second Amended Counterclaim) are unregistered. [Id. at ¶14; DE 170 at ¶26; DE 170-1.]

Dr. Sumrall and LeSEA did not have a signed employment agreement or a work-for-hire agreement. [DE 369 at ¶99.] On his tax returns from 1969 to 1993, Dr. Sumrall identified himself as a 1099 sole proprietor and/or independent contractor for tax purposes. [DE 369 at ¶100.]

Some publishing agreements executed by Dr. Sumrall directed royalties to be paid to him personally, but later contracts for the same titles executed after Dr. Sumrall's death directed royalties to be paid to LeSEA. [DE 369 at ¶80; .DE 363-7.] No undisputed evidence has been presented to establish that LeSEA received 100% of the royalties for Dr. Sumrall's publications, regardless of the instructions in the publishing contracts. What the evidence does establish is that even if a publishing contract provided that royalties would be paid to Dr. Sumrall, the publisher at times would send a royalty check made payable to LeSEA. [DE 337-3, DE 337-4.] There is also evidence that, when he received a royalty check payable to him personally, Dr. Sumrall would sometimes opt to endorse the check over to one of his ministries. [DE 364-16.] But there is also evidence that Dr. Sumrall's personal secretary would sometimes take royalty checks to Dr. Sumrall's bank for deposit into his personal account. [DE 364-15 at 12-13.] Dr. Sumrall preached that he gave all of his assets to the ministry and owned nothing, applying all royalty checks he received to feed the hungry. [DE 362 at ¶19.]

Dr. Sumrall purchased his home but then donated it to LeSEA and continued to live in it as a parsonage. [DE 369 at ¶159; DE 362 at ¶20.] LeSEA owned the automobile Dr. Sumrall drove. [DE 362 at ¶20.] For a time, Dr. Sumrall was paid a salary, but for at least the last 10 years of his life he did not receive a salary but was given the proceeds of free will or “love” offerings collected at LeSEA's Christian Center Church twice a year (around his birthday and Christmas). [DE 362 at ¶21; DE 369 at ¶160.]

In 1972, Dr. Sumrall founded Family Broadcasting Corporation to broadcast “family inspirational programming,” a mix of family-friendly sitcoms and Christian teaching programs. [DE 362 at ¶23; DE 337 at ¶13.] FBC produced the Dr. Sumrall Teaching Series, an original weekly television program featuring Dr. Sumrall delivering sermons. The production was overseen by grandson Peter Sumrall, an FBC employee. [DE 362 at ¶24.] Each video episode was produced and owned by FBC, utilizing a production crew of 5 to 6 FBC employees. [Id. at ¶25.]

Dr. Sumrall described FBC as follows:

We

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