Canilao v. City Commercial Invs.

Decision Date18 October 2022
Docket Number20-cv-08030-EMC
PartiesMONICA CANILAO, et al., Plaintiffs, v. CITY COMMERCIAL INVESTMENTS, LLC, Defendant.
CourtU.S. District Court — Northern District of California

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS DOCKET NO. 82

EDWARD M. CHEN UNITED STATES DISTRICT JUDGE

Plaintiffs Monica Canilao, Zarathustra Wesolowski, Ellery Bakaitis Jeremy Novy, Susan Greene, and Hailey Gaiser (collectively Plaintiffs) filed suit against Defendant City Commercial Investments, LLC (CCI). Docket No 81 (“FAC”). Now pending before the Court is CCI's motion to dismiss. Docket No. 82 (“MTD”).

For the following reasons, the Court GRANTS in PART and DENIES in PART CCI's Motion to Dismiss as to the VARA claim and GRANTS CCI's Motion to Dismiss as to the negligence claim.

I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background

CCI owns the building at 399 9th Street, San Francisco, CA, located in the South of Market neighborhood. FAC ¶¶ 1, 12. CCI acquired the building in 2015. FAC ¶ 14. The building was leased for use as a bar by third-party defendant Handsome Heidi, LLC (“HH”), which operated the bar under the moniker “The Stud” since 1966. FAC ¶ 12; MTD at 1. The Stud describes itself as the oldest operating “queer venue and nightlife hub” in the SOMA district that “provid[es] a safe, welcoming venue for creative expression, celebration and nightlife.” FAC ¶ 12.

Plaintiffs are six artists whose murals were installed on the exterior of The Stud. FAC ¶ 13. When CCI acquired the building in 2015, Plaintiff Jeremy Novy's mural entitled Stud Stencil, No. 1 had already been painted on one of the exterior doors, and Plaintiff Susan Greene's mural “Head First” was added shortly thereafter. FAC ¶¶ 13-14. In 2017, Monica Canilao's “Stepping Out,” Zarathustra Wesolowski's “Queer Trans Spaces,” Ellery Bakaitis' “Hand, Face, Lips and Teeth,” and Hailey Gaiser's “Eyes Wide Open” were added. FAC ¶ 13; MTD at 3. The Stud invited artists to contribute to the building's walls, curated artistic themes, and decided to install the murals. FAC ¶ 15. After all six murals had been installed, CCI communicated with the City of San Francisco, exchanging photos of the murals to argue that the murals constituted art on the building to avoid graffiti citations. FAC ¶ 15.

During the COVID-19 pandemic, financial pressures forced The Stud to shut down. FAC ¶ 18. The Stud's cooperative owners requested that CCI notify them prior to demolishing the building in order to preserve the murals. FAC ¶ 19. Plaintiffs explain that art preservation and engineering techniques have made it possible to remove artwork from cement, wood, and doors. FAC ¶¶ 20-21. On June 20, 2020, CCI began painting the building exterior white, erasing the murals. FAC ¶ 23. Plaintiffs assert that CCI's destruction of the murals conveyed a false statement that the work of Plaintiffs did not rise to the level of being worthy of preservation, violated Plaintiffs' moral rights in their works, and caused economic and property loss. FAC ¶¶ 27-29.

B. Procedural History

Plaintiffs filed their original complaint on November 13, 2020. Docket No. 1. Plaintiffs asserted (1) infringement of rights under the Visual Artists Rights Act (“VARA”), 17 U.S.C. § 106A, (2) intentional destruction of fine art under the California Art Preservation Act (“CAPA”), Cal. Code § 987, and (3) negligence. Docket No. 1. CCI filed an answer and a third-party complaint against HH. CCI filed a motion to dismiss the complaint and for judgment on the pleadings. Docket No. 51. This Court granted the motion for judgment on the pleadings but allowed Plaintiffs to amend their complaint. Docket No. 67 (“JOP Order”); Canilao v. City Com. Invs., LLC, 2022 WL 2668550 (N.D. Cal. July 11, 2022).

Plaintiffs filed their First Amended Complaint on August 10, 2022. Docket No. 81 (“FAC”). CCI now brings a motion to dismiss under Rule 12(b)(6). Docket No. 82 (“MTD”).

II. LEGAL STANDARD

A. Motion to Dismiss for Failure to State a Claim (Rule 12(b)(6))

Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A complaint that fails to meet this standard may be dismissed. See Fed.R.Civ.P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), a plaintiff's “factual allegations [in the complaint] ‘must . . . suggest that the claim has at least a plausible chance of success.' Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). The Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Levitt, 765 F.3d at 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014)). “A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the Defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

III. DISCUSSION

In its motion to dismiss, CCI argues that the First Amended Complaint fails to assert a VARA claim because the pleadings neither plausibly allege that the murals were “removable” under § 113(d)(2) nor plausibly allege that CCI consented to the non-removable mural installation through HH acting as its agent under § 113(d)(1). MTD at 5-8. Additionally, CCI argues that Plaintiffs' negligence claim fails because Plaintiffs held no property ownership rights in the murals under California fixture law. Id. at 9. The Court addresses each issue in turn.

A. Plaintiffs' VARA Claim

VARA contains specific provisions to protect visual artists' rights for artwork incorporated into a building. In full, § 113(d) states:

(1) In a case in which-
(A) a work of visual art has been incorporated in or made part of a building in such a way that removing the work from the building will cause the destruction, distortion, mutilation, or other modification of the work as described in section 106A(a)(3), and
(B) the author consented to the installation of the work in the building either before the effective date set forth in section 610(a) of the Visual Artists Rights Act of 1990, or in a written instrument executed on or after such effective date that is signed by the owner of the building and the author and that specifies that installation of the work may subject the work to destruction, distortion, mutilation, or other modification, by reason of its removal,
then the rights conferred by paragraphs (2) and (3) of section 106A(a) shall not apply.
(2) If the owner of a building wishes to remove a work of visual art which is a part of such building and which can be removed from the building without the destruction, distortion, mutilation, or other modification of the work as described in section 106A(a)(3), the author's rights under paragraphs (2) and (3) of section 106A(a) shall apply unless-
(A) the owner has made a diligent, good faith attempt without success to notify the author of the owner's intended action affecting the work of visual art, or
(B) the owner did provide such notice in writing and the person so notified failed, within 90 days after receiving such notice, either to remove the work or to pay for its removal.
For purposes of subparagraph (A), an owner shall be presumed to have made a diligent, good faith attempt to send notice if the owner sent such notice by registered mail to the author at the most recent address of the author that was recorded with the Register of Copyrights pursuant to paragraph (3). If the work is removed at the expense of the author, title to that copy of the work shall be deemed to be in the author.
(3) The Register of Copyrights shall establish a system of records whereby any author of a work of visual art that has been incorporated in or made part of a building, may record his or her identity and address with the Copyright Office. The Register shall also establish procedures under which any such author may update the information so recorded, and procedures under which owners of buildings may record with the Copyright Office evidence of their efforts to comply with this subsection.

17 U.S.C. § 113(d).[1]

This Court has previously construed § 113(d) of VARA to offer protection for artworks in two different circumstances:

To summarize, if the artwork is incorporated in such a way that removing the work from the building will cause the destruction, distortion mutilation, or other modification of the work,” then the artist's rights may be waived if the artist “consented to the installation of the work in the building . . . in a written instrument.” Id. § 113(d)(1) (emphasis added).
Alternatively, [i]f the owner of a building wishes to remove a work of visual art which is a part of such building and which can be removed from the building without the destruction, distortion, mutilation, or other modification of the work,” then the artist's rights prevail unless one of two things has occurred. Id. § 113(d)(2) (emphasis added). First, the building's owner “has made a diligent, good faith attempt
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