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Fight Over Sherman Hemsley's Residuals Still Raging After Eight Years

In 2005, two men bought the right to collect the bankrupt actor's residual income, but have been quarreling with each other ever since.

DEATHS: Sherman Hemsley
Sherman Hemsley

Sherman Hemsley might finally be buried, but a long-running dispute over who is entitled to the late actor's residuals survives and was the subject of a ruling on Monday by a California appeals court.

The actor best known for playing George Jefferson on All in the Family and The Jeffersons, died of lung cancer at the age of 74 in July 2012. But Hemsley wasn't put in the ground until November thanks to a bizarre estate dispute arising from the emergence of a man who claimed to be Hemsley's brother. Yes, it took four months to bury Sherman Hemsley.

Meanwhile, a controversy has been raging for eight years and counting between two individuals, William Little and David Pullman, who bought Hemsley's residual income when the actor suffered financial difficulties in the latter part of his life and needed to pay debts. In 2005, the two entered into an agreement with each other whereby Pullman paid $42,500 to Little and each would have 50 percent of Hemsley's residuals.

STORY: Burying Sherman Hemsley Complicated by Will Dispute

Soon after, Little sued Pullman, alleging first that the agreement was illegal and seeking its rescission and later that the agreement was fine but the joint venture needed dissolution. In the time since, the two men have danced in and out of court. On the sidelines is SAG-AFTRA, which holds onto residuals instead of disbursing them when there exists a dispute over ownership.

The original agreement between Little and Pullman included an arbitration clause, and when Little first sued in 2005, Pullman attempted to bring the dispute into arbitration.

In 2007, a settlement agreement was reached that required Little to return the $42,500 and dismiss the lawsuit in exchange for Pullman's release of "right, title and interest in and to the Sherman Hemsley residuals."

But the following year, Pullman is said to have informed SAG that he was claiming $10,000 in Hemsley residuals and demanded that SAG not release it to Little. Pullman told SAG there was "no settlement whatsoever."

STORY: 'Jeffersons' Star Sherman Hemsley Remembered by Friends at Funeral

So as a result, Little filed a second lawsuit against Pullman in 2008 for breach of contract and fraud, which prompted Pullman to again attempt to bring the matter into arbitration. Pullman pointed to the arbitration clause in the original agreement. Little pointed to the settlement agreement, which did not have an arbitration clause. The judge agreed with Little, and in 2011, a California appeals court affirmed that the settlement had ended the effectiveness of the original agreement's arbitration provision.

But that didn't end matters, because six weeks after the appellate ruling, Pullman sent a notice of rescission of the settlement agreement, citing failure of consideration and fraud in the inducement, and attempting to "tender" a return of the $42,500.

Pullman didn't simply give Little the money. Instead, he made a check available for pickup at his company's and attorney's office. Pullman then filed a cross-complaint for breach of contract over pre-settlement residual money and sought to affirm the rescission of the settlement agreement. Pullman also claimed that Little had committed tax fraud, among other allegations.

And then again, for the third time, Pullman demanded arbitration, arguing his rescission of the settlement agreement reinstated the original agreement, along with its arbitration provision. Pullman also stated he tried to send Little a check for $42,500 but Little rejected it, informing his adversary that he didn't see it as payment.

STORY: Sherman Hemsley, 'Jeffersons' Star, Dies at 74

Long story short, this controversy made it to the California appeals court again, and on Monday, Judge Victoria Chaney largely gave Little the victory by determining that that the dispute wasn't ripe for arbitration at this juncture.

The judge says that making the $42,500 available for pick-up wasn't enough, that it was conditional on Little's acceptance and that Little rejected the check, as he was entitled to do. "Because Pullman failed to restore to Little the $42,500 he had received as part of the Settlement Agreement, his rescission of that agreement was ineffective," writes the judge.

A unilateral rescission can't compel Little to arbitrate the dispute, Judge Chaney adds. It's up to the trial court to determine whether the rescission is justified and the lower court judge has discretion on whether to hear the complaint first or determine an entitlement to rescission in the context of a motion to compel arbitration. Pointing ahead, the judge says "if at some point the trial court determines that Pullman completed the rescission and was justified in doing so and is entitled to some relief, it may then determine the merits of other issues raised by the parties but not yet addressed in substance, including whether the Original Agreement includes a valid agreement to arbitrate and whether Pullman has waived the right to seek arbitration."

Hemsley spent ten years as George Jefferson on The Jeffersons. At this rate, the fight over George Jefferson's money should surpass that amount of time.

E-mail: Eriq.Gardner@THR.com
Twitter: @eriqgardner