Judge wants $13 million set aside in ‘Fifty Shades of Grey’ case

A judge wants an Australian businesswoman to turn over more than $13 million in cash and assets to satisfy a judgment against her stemming from a royalty fight over the smutty international bestseller Fifty Shades of Grey.

State District Judge Susan McCoy on Thursday ordered Amanda Hayward, who lives in a suburb of Sydney, to surrender to a court-controlled account a $1.8 million royalty check from Random House, roughly $10,000 from two checking accounts, and other assets by May 16.

McCoy made the ruling after signing an order in January awarding Jennifer Pedroza of Arlington $13.2 million after a jury last year said Pedroza had been cheated out of her portion of the erotic novel’s earnings by Hayward, a partner in a business that originally published the book.

McCoy’s order doesn’t quite “put the case to bed” — something the judge hoped to do after signing the judgment. If Hayward’s attorneys file an anticipated appeal and post a bond with the court, she won’t have to surrender the money or assets.

“I’m satisfied with it,” said Michael Farris, Pedroza’s attorney, who asked the judge to make Hayward turn over the money after expressing concerns about what has happened to the roughly $40 million the book earned. “It puts us a little bit closer.”

Robert Kantner, one of Hayward’s attorneys, argued against the turnover order saying it was “premature” since the court had not yet ruled on their motion for a new trial. Kantner said they also were trying to arrange for an appeal bond.

In 2014, Pedroza sued Hayward, her partner with several other women in an e-publishing business called The Writer’s Coffee Shop that originally produced Fifty Shades of Grey. She alleged that she had been defrauded out of royalties that the novel and its two sequels had earned since 2011.

The Writer’s Coffee Shop started out as an online blog in 2009, but eventually published Fifty Shades of Grey by British author E.L. James, as an e-book and print-on-demand full-length book. The company also published two sequels, Fifty Shades Darker and Fifty Shades Freed.

In 2012, Random House made a deal with Hayward and James to publish the books. Pedroza has said she was not aware of the terms of the deal — Hayward had converted the Coffee Shop into a company that she alone owned — but says she was due 25 percent of the net profits.

Eventually McCoy’s order gave Pedroza $10,634,587 in royalties as well as pre-judgment interest of $888,643 and $1.7 million in attorneys fees. Since then, the judgment, excluding the attorneys fees, has earned additional interest of about $1,600 a day.

Since the jury ruled in Pedroza’s favor, Random House, which was not named in the lawsuit, has held onto the last royalty check. In court on Thursday, Farris said the check was worth $1,767,000.

In an attempt to “put our hands on approximately $13.3 million,” McCoy ordered that the check and funds in two checking accounts be placed into a court account. The court also ordered Hayward to put in her interest in two homes with an estimated value in U.S. dollars of $5 million.

To make up the balance, McCoy ordered Hayward’s attorneys to produce an accounting of other eligible assets that could be pledged to satisfy the judgment.

In an earlier court filing, Farris said Hayward had interest in a hair salon, several other homes and a sports academy, all of them bought with the royalties. He also said Hayward had an interest in a $7 million investment account into which royalties were deposited.

By turning over the money, it will be “in the safe keeping of the court,” Farris said.

McCoy has until May 14 to decide if she will grant Hayward a new trial. If she does not make a ruling, the judgment order would go into effect 30 days later. The new trial motion was filed to give Hayward’s legal team more time to prepare its eventual appeal, attorneys said.

Fort Worth attorney David Keltner, a former appeals court judge, previously said he will argue that a legal partnership never existed between the women.

This story was originally published March 10, 2016 at 5:04 PM with the headline "Judge wants $13 million set aside in ‘Fifty Shades of Grey’ case."