A claimant filed UCC-1 financial statements alleging that a corporation owed damages pursuant to a Self-Executing Security Agreement (the agreement), which granted the claimant a security interest in “all property” if the corporation ever used the claimant’s copyright without permission. The corporation claimed it never entered into an agreement with the claimant and was unaware of its existence. The corporation proceeded to sue the claimant seeking “declaratory and injunctive relief, violation of California Commercial Code § 9509 and Business and Professions Code § 17200, and defamation.” The corporation then sought summary judgment on both claims; the court first reviewed whether the agreement entitled the claimant to damages and second, whether the financing statements constituted defamation.
In Am. Heritage Rys., Inc. v. Hirou, No. 3:24-cv-1802-CAB-JLB, 2025 WL 3124340, 2025 U.S. Dist. LEXIS 220306 (S.D. Cal. Nov. 7, 2025) (opinion not yet released for publication), the court granted summary judgment to the corporation and allowed the corporation to recover on its defamation claim. First, the court held that the claimant could not hold a copyright as to his business or personal name as a matter of law. See Gannon v. Tucknott Miller, No. 1:05-CV-00168 TS, 2006 WL 1793581, 2006 U.S. Dist. LEXIS 44585 at *2 (N.D. Ind. 2006). Next, the court found that the claimant presented no evidence that the corporation had entered into any agreement. Furthermore, the court held that a self-executing security agreement that was unilateral was invalid as a matter of law for lack of mutual assent. First Nat. Mortg. Co. v. Fed. Realty Inv. Tr., 631 F.3d 1058, 1065 (9th Cir. 2011); see also United States v. Rodriguez Ramirez, 291 F. Supp. 2d 266, 269 (S.D.N.Y. 2003). Therefore, the court found there was no agreement and no valid financing statement. For the defamation claim, the court held that defamation requires: “(1) a publication that is (2) false, (3) defamatory, (4) unprivileged, and (5) has a natural tendency to injure or that causes special damage.” Taus v. Loftus, 151 P.3d 1185, 1209 (Cal. 2007). Regarding the first two prongs, the court found that the invalid financing statement constituted a false publication. The financing statement also satisfied the third prong because the court found the financing statements falsely alleged outstanding debts and copyright violations, which would harm the corporation’s reputation. ZL Techs., Inc. v. Does 1-7, 13 Cal. App. 5th 603, 623 (Cal. App. 2017) (“A corporation can be libeled by statements which injure its business reputation[.]”). Under the fourth prong, the claimant alleged the filings qualified as privileged under Cal. Civil Code § 47(c); however, the court dismissed this argument because the corporation never had entered into a security agreement, thus the parties did not have a relationship. Lastly, the court found that the financing statements satisfied the fifth prong because the statements alleged millions in debts, which constituted a “natural tendency to injure.” See Taus, 151 P.3d at 1209. The claimant also argued that the First Amendment protected his filings. However, the court held that he made his filings with actual malice or reckless disregard for the truth which is classified as defamation. Thus, the First Amendment could not protect defamation. See USA Techs., Inc. v. Doe, 713 F. Supp. 2d 901, 906 (N.D. Cal. 2010). Accordingly, the court awarded the corporation presumed general damages, or damages assumed to exist because of the defamation, because the claimant displayed a reckless disregard for the truth. Although the claimant filed a motion to strike the corporation’s reply brief, the court dismissed the motion because the corporation had timely filed its papers. Therefore, the district court granted the corporation’s summary judgment motion and awarded it presumed general damages
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