Spillane Trial Group Wins Retrial in Royalty Action for Estate of Late Sly Stone Manager

Spillane Trial Group won a July 25, 2016 Court of Appeal opinion in favor of the estate of the late Ken Roberts, former manager for Sly Stone.  The appellate court ordered retrial of Roberts’ breach of contract action against BMI for paying royalties assigned to Roberts to the wrong party.  https://www.courts.ca.gov/opinions/nonpub/B263923.PDF

Ken Roberts organized tours for Sly and the Family Stone from 1970 to 1973.  Roberts advanced considerable money to Sly.  Sly asked Roberts to return as his manager in 1976.  To repay Roberts for the money advanced, Sly executed a 1976 assignment of his performance royalties, administered by BMI, to Roberts.  Roberts and BMI also executed the 1976 assignment.

When Sly executed a new basic agreement with BMI in 1979, Sly, Roberts and BMI also executed a 1979 direction for BMI to pay Sly’s performance royalties to Roberts’ loan-out company, Majoken Inc.

Roberts and Sly parted company for the second time around 1980.  Shortly thereafter, the IRS served a multi-million dollar levy on the BMI royalties for Sly’s unpaid taxes.

In 1989 Sly became involved with manager Gerald Goldstein.  He executed a putative 1989 assignment of his royalties to a company formed by Goldstein, Even Street Productions.

Goldstein had attorneys lift the IRS lien on the performance royalties.  However, when BMI told Goldstein that the performance royalties had previously been assigned to Roberts, Goldstein formed his own company, also called Majoken Inc., and had an attorney write to BMI directing payment of the freed-up performance royalties to Goldstein’s Majoken Inc.  BMI complied.  This continued for years until Roberts found out about the mis-directed payments.

Sly Stone and Roberts both sued Goldstein and other parties, including BMI, on a variety of theories.  Roberts sued BMI for breach of contract, on the grounds that BMI had sent payments to an address that was not the one on file for Roberts’ Majoken, and that it honored a payment direction that Roberts did not sign.

During the action Sly sent requests for admission to BMI, in response to which BMI admitted that Sly, Roberts and BMI each executed the 1976 assignment and 1979 direction and that BMI agreed to perform under their terms.  However, during trial, the trial judge give a jury instruction that Roberts had to prove the 1976 assignment from Stewart to Roberts, which BMI used as an opening to introduce inflammatory deposition testimony from Stewart, over Roberts’ objection, that he supposedly did not understand the 1976 assignment.  The trial court instructed the jury that BMI’s admissions were not binding because they had not been propounded by Roberts.  The jury returned a verdict finding that Roberts did not form a contract with BMI.  Roberts moved for a new trial, arguing that BMI’s admissions were conclusive on the question of contract formation even though they were not propounded by BMI.  The trial court denied the motion.

The Court of Appeal agreed with Roberts, ruling that requests for admission are conclusive against the admitting party, even in the hands of a party who did not propound the requests.  The Court of Appeal noted that since Sly had propounded requests to admit the validity of the 1976 assignment and 1979 direction, which BMI admitted, it was not proper for the trial court to admit testimony from Sly controverting the very documents he asked BMI to admit.  The Court of Appeal concluded that the jury instructions and denial of the new trial motion were a miscarriage of justice and remanded the matter for a new trial.

Spillane Trial Group looks forward to vindicating its client’s rights at the new trial.