Magi XXI, Inc. v. Stato Della Città Del Vaticano

• Decision Date: 24 August 2011
• Docket Number: No. 07–CV–2898 (RRM)(JMA).,07–CV–2898 (RRM)(JMA).
• Citation: 818 F.Supp.2d 597
• Parties: MAGI XXI, INC., Plaintiff, v. STATO DELLA CITTÀ DEL VATICANO a/k/a the Holy See, Gerald P. Colapinto, and Second Renaissance, LLC, Defendants.
• Court: U.S. District Court — Eastern District of New York

818 F.Supp.2d 597

MAGI XXI, INC., Plaintiff,

v.STATO DELLA CITTÀ DEL VATICANO a/k/a the Holy See, Gerald P. Colapinto, and Second Renaissance, LLC, Defendants.

No. 07–CV–2898 (RRM)(JMA).

United States District Court, E.D. New York.

Aug. 24, 2011.

Bernard Kobroff, Goetz Fitzpatrick LLP, Sheldon J. Fleishman, Sheldon J. Fleishman, New York, NY, for Plaintiff.

Frank Thomas Spano, Hogan & Hartson LLP, David Dunn, Hogan Lovells U.S. LLP, New York, NY, Jeffrey S. Lena, Law Offices of Jeffrey S. Lena, Berkeley, CA, Nicole Civita, Hogan Lovells U.S. LLP, Los Angeles, CA, for Defendants.

MEMORANDUM & ORDER

ROSLYNN R. MAUSKOPF, District Judge.

Plaintiff Magi XXI, Inc. (f/k/a E–21 Inc.) (“plaintiff”) brings this action against defendants Gerald Colapinto (“Colapinto”), Second Renaissance, LLC (“SRLLC”) and Stato della Città del Vaticano a/k/a The Holy See (the “Vatican State”), alleging, inter alia, fraud, negligence, breach of contract, unjust enrichment, and conversion in connection with the defendants' alleged failure to provide access to artwork, artifacts, manuscripts, and other items in the Vatican Library's collection. Plaintiff asserts jurisdiction pursuant to 28 U.S.C. §§ 1330, 1331, 1332, and 1367.

The Vatican State has filed separate motions to dismiss the amended complaint for (1) improper venue based on forum selection clauses contained in sublicense agreements or, alternatively, for forum non conveniens, and (2) lack of subject matter jurisdiction. (Doc. Nos. 92, 104.) Plaintiff opposes both motions. ¹ Plaintiff and defendants Colapinto and SRLLC have also filed a joint, unopposed motion to vacate this Court's August 21, 2008 Order compelling arbitration. (Doc. Nos. 82, 100.) For the reasons stated below, the Vatican State's motion to dismiss on the basis of the forum selection clauses is GRANTED, and the joint motion to vacate the Court's prior Order compelling Plaintiff and defendants SRLLC and Colapinto to arbitrate in the Vatican is also GRANTED.

BACKGROUND ²

Plaintiff is a New York corporation with its principal place of business in Long Beach, New York. (Am. Compl. (Doc. No. 12) ¶ 1.) The Vatican State is the territory over which the Holy See exercises sovereign dominion, and is recognized under international law as a juridical person distinct from the Holy See.³ ( Id. ¶ 2; Decl. of Paolo Cavana in Supp. of Mot. to Dismiss, executed Jan. 11, 2010 (“First Cavana Decl.”) (Doc. No. 95) ¶¶ 26–34.) The Holy See is the governmental and spiritual head of the Roman Catholic Church and, in the person of the Pope, is the sovereign of the Vatican State, recognized by over 150 states as a sovereign government. (First Cavana Decl. ¶ ¶ 28, 30.) Former defendant Ufficio Vendita Pubblicazioni e Riproduzioni dei Musei Vaticani (“UVPR”), or the Office of Sales of Publications and Reproductions of the Vatican Museum, is alleged to be an agency or instrumentality of the Holy See. (Am. Compl. ¶ 3.) Dr. Francesco Riccardi was allegedly at all relevant times the Administrative Manager of UVPR. ( Id. ¶ 3.) Former defendant Biblioteca Apostolica Vatican (“BAV”), or the Vatican Library, is also alleged to be an agency or instrumentality of the Holy See. ( Id. ¶ 4.) ⁴ Defendant SRLLC is a California limited liability company that has its principal place of business in Corona, California. ( Id. ¶ 5.) Defendant Gerald Colapinto, the President and managing member of SRLLC, is also a resident of California. ( Id. ¶ 6.)

UVPR has the authority to enter into contracts with third parties for the commercial exploitation of the artwork and artifacts in the Vatican Library (the “Vatican Library Collection”). ( Id. ¶ 21.) On or about May 22, 2000, UVPR and SRLLC entered into a Master License Agreement granting SRLLC the rights to produce and market specific lines of products and services based on reproductions and adaptations inspired by items in the Vatican Library Collection and, subject to certain conditions, to sublicense those rights. ( Id. ¶ 24.) For example, the Master License Agreement prohibits SRLLC from entering into sublicense agreements unless (1) UVPR approves the sublicense agreement in writing and (2) the sublicensee “agrees to be bound by the terms and conditions of [the Master License Agreement].” (Decl. of Jeffrey S. Lena in Supp. of Mot. to Dismiss, executed Jan. 11, 2010 (“Lena Decl.”) (Doc. No. 94), Ex. A (“Master License Agreement”) ¶ 8.) The Master License Agreement also provides that SRLLC will pay a ten percent royalty fee to UVPR based on all revenues received by SRLLC from sublicensees purchasing sublicenses from SRLLC. (Am. Compl. ¶ 25.) Finally, the Master License Agreement also contains a forum selection clause requiring that “[a]ny disagreements between [UVPR] and [SRLLC] shall be resolved exclusively in the Sovereign State of Vatican City” and that such disputes “shall be governed by the laws of the Sovereign State of Vatican City.” (Master License Agreement ¶ 13.)

On or about July 18, 2001, plaintiff entered into seven sublicense agreements with SRLLC, entitling plaintiff to access artwork and related items needed to market candles, chocolate, confections, flowers, gift bags, stamps, wrapping paper, and fundraising materials bearing reproductions of images from the Vatican Library Collection, as well as the name, logo, and seal of the Vatican Library collection. (Am. Compl. ¶ 26.) As required by the Master License Agreement, Dr. Francesco Riccardi approved each sublicense agreement and signed an approval form on behalf of UVPR and the Vatican State. ( Id. ¶¶ 25–26.) Each sublicense agreement provides that “UVPR is not a party to this Agreement.” ( See, e.g., Aff. of Claire Mahr in Opp'n to Mot. to Dismiss, executed May 12, 2010 (“Mahr Aff.”) (Doc. No. 99), Ex. Q (“Sublicense Agreement (Stamps)”) ¶ 9.) The sublicense agreements also contain supremacy provisions under which the terms of the Master License Agreement control if there is a conflict between agreements. (Lena Decl. Exs. B–H ¶¶ 2, 7(b).)

Plaintiff alleges that SRLLC, Colapinto, and the Vatican State failed to provide access to commercially useable and commercial grade images in the Vatican Library Collection, and that they made numerous misrepresentations concerning, among other things, the strength of their relationship with Vatican officials and the amount of access that plaintiff would have to artwork and other items in the Vatican Library Collection. (Am. Compl. ¶¶ 27–32.) Plaintiff also alleges that the Vatican State knew about these false and inaccurate misrepresentations prior to approving the seven sublicense agreements. ( Id. ¶ 28.) Although the Master License Agreement provides that the relationship between UVPR and SRLLC was “strictly that of principal and independent contractor,” plaintiff alleges that SRLLC and Colapinto acted as agents for the Vatican State in the course of breaching the sublicense agreements, making misrepresentations, and committing fraudulent acts. ( Id. ¶ 37; Master License Agreement ¶ 9.)

The sublicense agreements contain mandatory forum selection clauses, providing that:

Any disagreements between SRLLC and SUBLICENSEE shall be resolved exclusively in the Sovereign State of Vatican City. SRLLC and SUBLICENSEE each hereby consents to jurisdiction in the Sovereign State of Vatican City. All disputes relating to this Agreement between SRLLC and SUBLICENSEE shall be governed by the laws of the Sovereign State of Vatican City, and SRLLC and SUBLICENSEE each hereby consents thereto. All proceedings shall be conducted in the English language.

(Lena Decl. Exs. B–H ¶ 13(a).) Both the Master License Agreement and each of the sublicense agreements contain identical arbitration clauses, permitting any party to compel binding arbitration in the Vatican. ( Id. Exs. B–H ¶ 13(b); Master License Agreement ¶ 13.2.)

Plaintiff commenced this action on July 17, 2007, and filed an amended complaint on October 29, 2007. (Doc. Nos. 1, 12.) On August 21, 2008, the Court granted the joint motion of Colapinto and SRLLC to compel arbitration in the Vatican State. (Doc. No. 51.) ⁵ The parties opted to abandon the arbitration proceedings, however, because of unexpected costs associated with arbitration in the Vatican State. (Doc. No. 60.) On September 3, 2009, plaintiff and defendant SRLLC asked the Court to vacate its Order compelling arbitration. ( Id.) At a status conference on October 15, 2009, the Court vacated the stay of proceedings against all three defendants. (Doc. No. 61.) The Court also ordered the parties to submit briefs on the following motions: (1) plaintiff and defendant SRLLC's joint motion to vacate the Court's August 21, 2008 Order compelling arbitration, and (2) the Vatican State's motions to dismiss based on (a) subject matter jurisdiction and (b) the forum selection clauses and/or forum non conveniens. ( Id.)

On July 14, 2010, plaintiff and defendant SRLLC filed a joint motion to vacate the Court's Order compelling arbitration in the Vatican. (Doc. Nos. 82, 100.) On October 12, 2010, the Vatican State filed separate motions to dismiss based on (1) subject matter jurisdiction and (2) the forum selection clauses and/or forum non conveniens. (Doc. Nos. 92, 104.)

DISCUSSION

The Second Circuit gives “substantial deference” to forum selection clauses, especially when “ ‘the choice of [a] forum was made in an arm's-length negotiation by experienced and sophisticated businessmen.’ ” New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24, 29 (2d Cir.1997) (quoting M/S Bremen v. Zapata Off–Shore Co. (“The Bremen”), 407 U.S. 1, 12, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (“in the light of present-day commercial realities and expanding international trade ... [a] forum clause should control absent a strong showing that it should be set aside”)). Forum selection clauses have “ ‘the salutary effect of dispelling any confusion about where suits arising from the contract must be brought and defended, sparing...