Judgment Creditors Have No Right to Seize “Oscars”; Academy Gets First Refusal for $10
As the race for this year’s Academy Awards heats up in anticipation of the Oscars this weekend, one might wonder how much the little gold statue is actually worth. A recent case provides the answer. If a creditor wants to take it after getting a judgment against the winner, the answer is nothing. A contract provision requires the Academy to have the right of first refusal for the cost of just $10.
David S. Ward won an Academy Award for The Sting, one of the most iconic of all motion pictures. He won the “Oscar” for Best Story and Screenplay in 1974. When he won, he signed a contract with the Academy of Motion Picture Arts and Sciences (AMPAS) that forbids him from selling or disposing of the statue “without first offering to sell it (to AMPAS) for the sum of $10.00.”
In 2020, appellant Maira Duarte Juarez obtained a judgment against Ward for unpaid wages when she served as his housekeeper. When she and Ward attended a debtor’s examination, he disclosed that he had an Oscar, but few additional assets. After the process, she got a court order for the Oscar and several other valuable movie collectibles. She also asked the court to determine whether she had the right to sell the Oscar. She argued that since she was a “judgment creditor,” she would not be bound by any sale restrictions.
When AMPAS learned about the judgment, it intervened. The Academy argued that “Oscar” is a “copyrighted work of art” that is “unavailable to the public.” AMPAS’s bylaws mandate that “a member who received an Oscar must afford AMPAS a right of first refusal to purchase if it is to be sold or disposed of.” Since Ward signed this agreement with the Academy when he won the Best Story and Screenplay award, AMPAS informed the court that it was asserting its right to purchase the Oscar for $10.00.
Before Juarez could contest the issue, Ward returned the Oscar to the Academy and received his $10.00. She sued Ward and the Academy, arguing that the statue was hers since it is “property subject to a lien.” Judge Holly J. Fujie ruled in the Academy’s favor, and the unanimous opinion of a three-justice panel from Division Two of California’s Second District Court of Appeal affirmed her decision on February 24.
The opinion, written by Presiding Justice Elwood Lui, said, “ argued that has the right to do so.” He confirmed the validity of the contract between Ward and AMPAS and said that Juarez would have a lien on the $10.00 that was paid to Ward. He told Ward to pay her the $10.00. Lui also noted that even if Juarez received the Oscar, she would not have been legally permitted to sell it.
Juarez had appealed Fujie’s ruling, arguing that the trial court was not allowed to use summary procedure and that the Oscar was “chattel” and was bound by the “equitable servitude doctrine.” This doctrine would allow Ward, as the owner of the Oscar, to use it as he wished. Lui explained that during the debtor’s examination of her claim, AMPAS was properly allowed to intervene and that Juarez could have filed a civil suit.
Lui next reviewed Juarez’s equitable servitude arguments. She told the trial court that AMPAS’s bylaws, which restrict the sale of Oscar statues, “unreasonably destroy or impair an existing substantive right.” She said that the Academy’s contractual right of first refusal did not eliminate her lien. The opinion then explained that California enforces the doctrine of equitable servitude, although the application is most often used in cases involving real property.
Admitting this is an unusual case, Judge Lui said that precedent still requires that “restrictive covenants be applied if they are reasonable and made with proper limitations.” He wrote that “Substantial evidence supports the trial court’s conclusion that the restraint is reasonable.” He cited several of AMPAS’s arguments, including the fact that the Academy “has spent millions of dollars to promote the ‘Oscar’ so that the prestige associated with receiving an ‘Oscar’ is unparalleled by any other award of its kind.” Lui then agreed that an Oscar sold by a creditor would “diminish the honor of the achievement and the value of AMPAS’s copyrighted statuette.”
The appellate court strongly affirmed the Academy’s right to Ward’s Oscar. Now 77, Ward not only won an Academy Award for writing The Sting, but he also wrote Sleepless in Seattle and 13 other films. When he appeared during a judgment debtor examination, he said he was “virtually judgment proof” since his wages and pension had been garnished for unpaid taxes. His rags-to-riches-to-rags-again story would no doubt be material for another Best Screenplay nomination if he were to write his saga as another movie.