Thursday, August 24, 2006
Producer’s Ex-Wife Gets Second Shot at Allegedly Concealed Assets
By a MetNews Staff Writer
The former wife of a music producer who claimed valuable rights in the works of the late Jimi Hendrix is entitled to a new trial on her claim that her ex-husband concealed community assets in their divorce proceedings, and to shift the burden of proof to the ex-husband, this district’s Court of Appeal has ruled.
Div. Three Tuesday reversed a ruling by Los Angeles Superior Court Judge Marjorie Steinberg, who held that Arteena Rubenstein failed to prove that any interests her husband may have had in the Hendrix properties had more than the minimal value assigned to those rights in the original proceedings more than a decade ago.
Presiding Justice Joan Dempsey Klein, writing for the Court of Appeal, suggested that Steinberg’s “haste to dispose of the matter” may have led the court to prematurely conclude the case and avoid addressing a key issue.
That issue, the presiding justice said, was the readily apparent inconsistency between the husband’s position in the divorce case—that his years of work producing materials based on Hendrix’s music yielded him virtually nothing of tangible value—and a settlement agreement in other litigation that strongly suggested otherwise.
That agreement came in a suit by James A. “Al” Hendrix, the “acid rock” musician’s father and only heir. It established that Alan Douglas Rubenstein—known professionally as Alan Douglas—clearly breached his fiduciary obligation to” Arteena Rubenstein “by concealing from her his claimed interest in the Hendrix Properties,” Klein wrote in an unpublished opinion.
Klein explained that in 1986—10 years after the parties were married and two years after they separated—Douglas filed a petition seeking to end the marriage. He claimed that there were no community assets and said his only Hendrix-related asset was an interest in the Alan Douglas Corporation worth $1,000.
Arteena Rubenstein responded, based on information and belief, that her husband possessed the ownership rights to the music of Jimi Hendrix and George Clinton and that she was entitled to a community property share. Hendrix, whose electrified blues-rock has remained popular over the years, died of drug-related causes in London in 1970 at the age of 27.
His work inspired Microsoft Corp. co-founder Paul Allen to found the Experience Music Project, a Frank Gehry-designed museum and theater in Seattle, where Hendrix was born. Allen also loaned Al Hendrix the money to litigate his claim to his son’s creative works in federal court in Seattle.
The 1997 settlement of that suit gave Al Hendrix an unspecified sum of money in lieu of past royalties and all rights to the music going forward, but required him to pay certain sums over time to other parties.
Among other things, the agreement required a group of defendants, including Douglas and the Alan Douglas Company, to convey “all of their right, title, claims and interests in and to the Hendrix Properties and any portion or element thereof.”
Following that settlement, Arteena Rubenstein, whose claim to a community property share of her husband’s interest in the Hendrix properties was rejected after a 45-minute trial in 1992, moved to reopen her divorce proceedings.
She cited her husband’s answer and counterclaim in the Seattle case, in which he said that his “monumental efforts over a period of 20 years have been the lifeblood of the continued success and popularity of Jimi Hendrix music;” that his “proprietary rights in Jimi’s recordings have contributed to perpetuate the music;” that he “produced new recordings, enhanced the technical quality of the entire catalogue, acquired audio/visual and other materials for the production of music videos and the creation of original artwork, promoted Jimi’s image and provided new and unique marketing tools to keep Jimi’s music alive;” and that he was “the owner of common law and statutory copyrights and other property rights in and to all sound recordings of Jimi Hendrix” that he produced, as well as the owner of “packaging and promotional materials for album covers, merchandising and other items for” those recordings.
Arteena Rubenstein estimated that her ex-husband’s interests were worth in excess of $15 million and said he committed perjury by signing a community property declaration valuing them at $1,000.
Her action to reopen the proceedings was originally rejected on statute of limitations grounds, but the Court of Appeal reversed in Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, holding that the action was timely because it was brought within a year of the date that Arteena Rubenstein discovered, or should have discovered, the facts upon which her claim of fraud or perjury was based.
On remand, Judge Veronica McBeth—who has since retired—ruled that the husband had perjured himself and ordered the previous judgment vacated in part. She directed a new trial to consider the community property issues, including the question of whether Arteena Rubenstein was entitled to 100 percent of the undisclosed assets, as provided for by statute where assets are willfully concealed.
Steinberg then tried the case over three days in 2004. She granted Douglas’ motion for judgment at the close of the plaintiff’s evidence, under Code of Civil Procedure Sec. 631.8, but ordered him to pay $250,000 in attorney fees for the entirety of the proceedings subsequent to the original trial.
Klein, however, said the ruling was inconsistent with the settlement of the Seattle litigation, rejecting the husband’s claim that his position in federal court was merely a “novel theory formulated by his attorney.”
The presiding justice noted that the settlement agreement, while averring that the group of defendants including Douglas and his company owned or claimed valuable rights that they were giving up, required another group of defendants, including Hendrix estate attorney Leo Branton, to “execute Quit-Claim Disclaimers in the form of Exhibit J hereto disclaiming any interest in the Hendrix Properties and quitclaiming to [Al Hendrix’s] Company any interest which may exist.”
The “marked contrast” between those provisions, Klein said, shows that the parties “recognized that Alan actually held rights in the Hendrix Properties” and “was not merely asserting claims to those rights.”
The trial judge further erred, Klein said, in failing to value the relevant assets as of the date of the 1992 trial and in failing to shift the burden of proof to the ex-husband, based on his breach of fiduciary duty and his superior knowledge of the relevant facts.
“If, as Alan contends, he walked away from the Seattle litigation, and from his life’s work, with nothing more than the right to produce a record album and a documentary film, Alan uniquely knows why,” the presiding justice wrote.
Attorneys on appeal were Alexander Lebecki for the ex-wife and Lawrence Segal for the ex-husband.
The case is Rubenstein v. Rubenstein, B182723.
Copyright 2006, Metropolitan News Company