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In re Herrera-Edwards

United States District Court, M.D. Florida, Tampa Division

November 1, 2017



          Charlene Edwards Honeywell United States District Judge

         BEFORE THE COURT are Bambi Herrera-Edwards' consolidated bankruptcy appeals from a final judgment and order denying her motion for a new trial.

         After the death of her husband, Edwards began receiving substantial income from his music copyrights pursuant to the terms of a 1997 settlement agreement. By 2012, Edwards' financial difficulties prompted her to file a Chapter 11 bankruptcy petition. Apparently no longer satisfied with the terms of her settlement, Edwards attempted to re-write its terms in bankruptcy court by (1) acquiring administration rights to the copyrights, (2) obtaining a share of her late husband's royalty income, and (3) eliminating a perpetual 5% management fee.

         After a six-day trial, the bankruptcy court held that the 1997 settlement agreement was controlling as written and denied Edwards' claims. For the reasons that follow, the Court will affirm the bankruptcy court's decision.

         I. Factual Background[1]

         Bambi Herrera-Edwards (“Edwards”), was once married to Bernard Edwards, a well-known guitarist, songwriter, and producer, who co-founded the funk and disco band Chic with Nile Rodgers. Mr. Edwards and Mr. Rodgers authored and performed many popular songs, including “We Are Family” and “Le Freak.” Mr. Edwards employed Wallace Franson and Defendant-Appellee Jess S. Morgan & Co., Inc. (“JSM”) to manage his business and financial affairs. Mr. Edwards and Mr. Franson orally agreed that JSM would take a perpetual 5% fee of Mr. Edwards' gross income.

         Mr. Edwards died on April 18, 1996. He was survived by Bambi Edwards, his ex-wife Alexis Edwards, and his six children. Mr. Edwards' estate was submitted for probate in Westport, Connecticut. Franson was appointed as executor.

         During the probate proceedings, Edwards was represented by two lawyers from the law firm Ryan, Ryan, Johnson, McCaghey & Deluca, LLP. Edwards agreed to pay the firm a perpetual fee of 10% on all amounts exceeding $1.2 million in the event of a settlement.

         Edwards asserted a $10 million tort claim against the estate in federal court, as well as claims in the probate case for a spousal share and for ownership of a home in Westport. Doc. 10-316. The probate court allowed Edwards' claim for a spousal share, but denied Edwards' claim to ownership of the home. Doc. 10-6 at 3-4.

         While those rulings were on appeal, and while the federal case was still pending, Edwards attended a mediation with Franson and some of Mr. Edwards' children. At the conclusion of the mediation, the parties in attendance signed a handwritten stipulation (“the July 9th Stipulation”).

         In relevant part, the July 9th Stipulation stated:

Bambi Edwards shall be assigned full and complete ownership and interest in 37-1/2% of all royalties and other payments received from the copyrights and other such interests owned by Bernard Edwards at the time of his death, and shall be paid such royalties within 30 days after receipt by Jess S. Morgan & Company of such sums.

         Doc. 10-121 at 2 (emphasis added). Edwards relies on the reference to “royalties” to support her claim for a portion of Mr. Edwards' royalty income.

         In the July 9th Stipulation, the parties agreed that they would execute additional documents “as are necessary to effectuate the terms and conditions of this Stipulation.” Id. at 3. Accordingly, a draft settlement agreement was circulated on July 16, 1997. That same day, Franson's attorney, Richard Pober, submitted to the probate court an Application for Approval of Compromise Claim (“the Application”) which outlined the terms of the settlement. However, the Application did not mention royalties and instead provided:

The estate agrees that Bambi Edwards shall receive a participation in the income stream of the copyrights to be received by the estate in the percentage of 37 ½ percent, net after all expenses.

Doc. 10-324 at 2 (emphasis added). The Application also stated that the parties would enter into a standard co-publishing agreement, that Franson would act as publisher of the copyrights, that Franson would have full and complete administration rights, and that Edwards and Alexis Edwards would have no administration rights whatsoever. Id.

         During settlement negotiations, Edwards was represented by Ronald St. Onge, an intellectual property attorney, who billed time on her case on July 29th and July 30th. On July 30, 1997, Edwards, Franson, Alexis Edwards, and the six children executed a settlement agreement (“the Settlement Agreement”). Relevant here, the Settlement Agreement stated:

Bambi Edwards agrees to accept and the estate agrees to take any and all steps necessary to assign a 37½ percent participation in the income stream from the copyrights owned by Bernard Edwards Estate on the date of Bernard Edward's [sic] death after payment of all costs, expenses and debt related to the copyrights. The participation share of the income stream would be on a net basis after all estate, income and other taxes and the administrative expenses of the estate have been paid.

         Doc. 10-342 at 3 (emphasis added). The Settlement Agreement included a similar provision in favor of Alexis Edwards, except her share in the income stream was 12½ percent. Id. at 4. The Settlement Agreement did not reference royalties.

         The Settlement Agreement further provided that the parties would enter into a standard co-publishing agreement. Consistent with the terms proposed in the Application, the Settlement Agreement specified that Edwards and Alexis Edwards would have no administration rights to the copyrights:

The co-publishing agreement will provide that (a) the executor of the estate will act as publisher of the copyrights and will have full and complete administration rights therein; (b) the executor will have the absolute right and ability to assign such administration rights to any person or entity, including but not limited to the trust for the children of Bernard Edwards; (c) Bambi Edwards and Alexis Edwards will be co-publishers, and will have no administrative rights whatsoever regarding the copyrights; and (d) all costs of administering the copyrights will be deducted “off-the-top” in determining revenue earned by the copyrights. The estate will file with the U.S. Copyright Office and other necessary entities such documents as are necessary to effectuate the transfer of the ownership interest, and costs of same shall be paid by the estate.

Doc. 10-342 at 4-5 (emphasis added). A separate paragraph stated:

Bambi Edwards shall have the right to assign or sell her income stream only to any third party. Bambi Edwards acknowledges that she has no administration rights in the copyrights and that any third party would be subject to all terms and conditions as set forth in this agreement.

Id. (emphasis added). Finally, the Settlement Agreement approved a 5% fee to JSM as follows:

All parties agree and approve the claim by Jess S. Morgan & Co. for a 5% fee on all deferred income and other income received by the estate of Bernard Edwards from copyrights as a debt of the decedent.

Id. at 6.

         The Settlement Agreement was signed by all parties, including Edwards, Franson, Alexis Edwards, each of Mr. Edwards' adult children, and the guardian for Mr. Edwards' youngest child, Leah Edwards, who was then a minor. The parties simultaneously executed mutual general releases, which covered:

any, and all manner of . . . covenants, contracts, controversies, agreements, promises . . . EXCEPT FOR THE TERMS, CONDITIONS AND CONSIDERATION CONTAINED IN THE STIPULATION OF SETTLEMENT DATED JULY 30, 1997, WHICH REMAINS IN FULL FORCE AND EFFECT.

         Doc. 11-89 at 2.

         On August 21, 1997, Edwards, Alexis Edwards, and the estate executed a Co-Publishing Agreement, as contemplated by the Application and the Settlement Agreement. The Co-Publishing Agreement provided that Edwards and Alexis ...

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