From the Fort Worth Star-Telegram:
A state district judge wants $10 million in cash or investments to be set aside for a potential award after a Tarrant County jury ruled earlier this year that an Arlington woman was cheated out of royalties from the blockbuster novel Fifty Shades of Grey.
. . . .
A Tarrant County jury in February ruled that Hayward defrauded Pedroza out of the financial windfall created by the erotic New York Times bestseller which also inspired a movie by the same name.
. . . .
Pedroza sued Hayward last year, contending that she conned her out of her rightful partnership interests in advances and royalties.
Pedroza and Hayward, who lived in Dural, a Sydney suburb, were partners in The Writer’s Coffee Shop, which started out as an online blog in 2009, along with Waxahachie resident Jennifer McGuire. Visitors to the fan-based website discussed books and wrote “fan fiction” stories.
McGuire did design work for the blog, Pedroza uploaded contributors’ writing, and Hayward worked with the authors, court records show. Later, Christa Beebe, another Arlington resident, joined and helped with marketing and distribution.
By 2010, Pedroza and Hayward had the Coffee House operating as a publishing house. And in 2011 it published Fifty Shades of Grey, a romance novel by E.L. James, a British author, as an e-book and print-on-demand full-length book.
The company published the sequels, Fifty Shades Darker and Fifty Shades Freed, in 2011 and 2012. The Fifty Shades of Grey trilogy became an online sensation, selling 250,000 copies through e-book and print-on-demand, with another 20,000 print copies.
In 2012, Random House made a deal with Hayward and James to publish the books. Pedroza received a one-time payment of $100,000 after the Random House contract was signed, but she was never told of the full terms of the transaction. Random House was not named in the lawsuit.
The lawsuit acknowledges that the two Texans — Pedroza and McGuire — and Hayward never signed a prepared partnership agreement. But in 2011, The Writer’s Coffee Shop filed a partnership income tax return, naming Pedroza as a general partner, it says.
Pedroza contended in her suit that Hayward in 2012 secretly converted the Coffee Shop into a company she alone owned. The jury determined that there was a partnership between the women. Beebe settled her claims in December in a confidential agreement.
Link to the rest at Fort Worth Star-Telegram and thanks to Suzan for the tip.
As a general proposition, if two or more people start and operate a business together, the presumption will be that they have created a partnership unless they have an agreement signed by everyone to the contrary. The presumption can be rebutted, but the individual(s) who don’t want a court to find that a partnership existed have the burden of proving the business was something other than a partnership, that a person was an employee, for example, and not a partner.
Absent evidence to the contrary, all persons who are partners are entitled to a share of partnership profits.
When there’s no partnership agreement, the way the business was run, who was paid how much, statements the parties made about the business, emails, tax returns, etc., will be used to determine who is entitled to what percentage of partnership profits. The default presumption is that partners will divide partnership profits equally.
Partnership agreements can be very simple documents. However, without such an agreement, signed by everyone, resolving disputes over who gets the money can be very expensive.