Capitol Records Settles Lawsuit Over Ownership of Album Art : Courts: The company is given keys to the treasure, and two people involved in removing the cache from the Pantages Theatre’s basement will split $100,000. Another case is pending.

Keys to a storage room containing thousands of boxes of original album cover art were turned over to Capitol Records officials Monday, concluding a lawsuit over whether the material was legally taken from the record company after it had been abandoned.

An attorney for two leading members of the group that orchestrated removal of the cache from the basement of the Pantages Theatre in Hollywood said the pair will split a $100,000 payment by Capitol under terms of the settlement, which avoids a lengthy trial to decide ownership of the material.

Meanwhile, a North Hollywood man who brought the missing artwork to the attention of executives at Pantages and Capitol was left with nothing under terms of the settlement. He said he will continue to press a lawsuit for a share of the $100,000.

The convoluted case revolved around 3,000 “flats”--similar in size to pizza boxes--that contain photographs, letters and record-cover designs for Capitol recordings going back nearly 50 years, including works by the Beatles, Frank Sinatra, Jimi Hendrix, the Beach Boys and hundreds of other artists.

The material could be worth $1 million to $5 million, according to court documents, and had been stored in the basement of the Pantages in space rented by Capitol between 1969 and 1989. When Capitol vacated the storage area, the artwork flats were inadvertently left behind, court records said.

Kim Foster, a former Pantages employee, and James Engle, a former employee of a limousine service with offices at the theater, arranged with three friends to take the boxes on a Saturday morning in January, 1991. Foster and Engle said the boxes were about to be thrown out by Pantages because the unlocked room they were left in was re-rented.

But when the two had a falling out with David Pro, a North Hollywood man who helped them take the boxes, Pro went to Pantages managers and inquired whether the boxes actually were to have been thrown out. The theater responded by suing Foster and Engle and three of their associates, claiming that the artwork was not abandoned and was taken illegally.

Capitol joined the lawsuit, claiming that it still owned the material.

A trial had been expected to begin this month in Los Angeles Superior Court, but the case was settled, with Capitol getting the material back in return for paying Foster and Engle $100,000, said B. Daniel Lynch, an attorney for the two.

He said Foster and Engle agreed to the settlement because they had no documentary evidence proving that the artwork was headed for the trash, a claim they still maintain. He said keys to a storage room in an undisclosed location where the artwork was kept were turned over to Capitol executives Monday.

“We turned over the keys and everything so they could get in,” Lynch said.

“It is settled and the property is being returned to Capitol,” added Joseph Farrell, an attorney for the record company, who declined to discuss the money paid or other details of the settlement. “We are glad to get it back.”

Three others named in the Capitol suit were dismissed as defendants under terms of the settlement and get no share of the money, Lynch said.

But Pro said he is continuing to press a Superior Court lawsuit that claims he is entitled to a share of any money Foster and Engle make from the artwork. A trial has not been scheduled in that case.

“They made out like bandits,” Pro said of Foster and Engle. “I’m stuck with nothing except attorneys’ fees. I am still going through with it.”