Morgan Art Found. Ltd. v. Brannan

• Decision Date: 28 January 2020
• Docket Number: 18-CV-8231 (AT) (BCM)
• Parties: MORGAN ART FOUNDATION LIMITED, et al., Plaintiffs, v. JAMES W. BRANNAN, as personal representative of the Estate of Robert Indiana, Defendant.
• Court: U.S. District Court — Southern District of New York

MORGAN ART FOUNDATION LIMITED, et al., Plaintiffs, v. JAMES W. BRANNAN,

as personal representative of the Estate of Robert Indiana, Defendant.

18-CV-8231 (AT) (BCM)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 28, 2020

OPINION AND ORDER

BARBARA MOSES, United States Magistrate Judge.

Robert Indiana, a renowned American artist best known to the general public for his iconic "LOVE" images and sculptures, lived quietly in Vinalhaven, Maine for decades before his death, at age 89, on May 19, 2018. His estate, however, quickly became embroiled in competing claims concerning ownership of the late artist's works, rights to the associated intellectual property, and control of Indiana's artistic legacy. This action is one of two - both pending in this district - filed against James W. Brannan, the personal representative of the Estate of Robert Indiana (the Estate) by Morgan Art Foundation Limited (MAF or Morgan), a Bahamas limited liability company that claims to own the rights to much of Indiana's artistic output; Simon Salama-Caro, a New York resident who describes himself as Indiana's long-time "agent in the art market" and an "advisor" to MAF; and Shearbrook (US) LLC, Figure 5 Art LLC, and RI Catalogue Raisonne LLC, which are New York limited liability companies affiliated with MAF and/or Salama-Caro (collectively, the New York LLCs).

In their First Amended Complaint, filed September 13, 2018, plaintiffs assert twelve causes of action against the Estate, all arising directly or indirectly out of a series of agreements (the Agreements) that Indiana entered into with MAF and/or Salama-Caro in the late 1990s and early 2000s, and that plaintiffs seek to enforce, including contracts authorizing MAF to manufacture, market, and sell new versions or reproductions of certain Robert Indiana images and sculptures and authorizing Salama-Caro to prepare a catalogue raisonné of the artist's "complete oeuvre." FAC (Dkt. No. 14) ¶¶ 89-189. In its Amended Answer, Defenses, and Counterclaims (Counterclaims), filed on May 29, 2019, the Estate asserts that the Agreements have all been terminated, and therefore that plaintiffs have no further right to promote or sell Indiana's art. Additionally, the Estate alleges that Salama-Caro breached the fiduciary duties that he personally owed to Indiana as his agent in the art market. Counterclaims (Dkt. No. 52) ¶¶ 232, 275.

The First Counterclaim seeks declaratory and injunctive relief against MAF and Salama-Caro, including (a) a declaration that the Agreements all terminated upon Indiana's death, or in the alternative, upon the Estate's written notice of termination, dated May 9, 2019, and (b) an injunction prohibiting MAF, Salama-Cara, and related persons or entities from reproducing, producing, promoting, marketing, or selling "works in Indiana's name." Counterclaims ¶¶ 261-73. The Second Counterclaim seeks damages and related remedies for breach of fiduciary duty against Salama-Caro. Id. ¶¶ 274-83. The Third Counterclaim seeks damages and related remedies for aiding and abetting breach of fiduciary duty against MAF and the New York LLCs. Id. ¶¶ 284-92. The Fourth Counterclaim seeks an equitable accounting from MAF and Salama-Caro "with respect to all money and property transferred to or from Morgan, Salama-Caro, or [the New York LLCs] in connection with all their purchases, sales or transfers of works produced pursuant to the Agreements." Id. ¶¶ 293-96.

Now before the Court is plaintiffs' motion (Dkt. No. 54) to dismiss the Estate's Counterclaims pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiffs principally argue, based on the language of the Agreements, that they did not terminate at Indiana's death, that none of the breaches alleged by the Estate were material, and that Salama-Caro owed no fiduciary duty to Indiana. Byconsent of the parties pursuant to 18 U.S.C. § 636(c)(1), the motion was referred to me for decision. (Dkt. No. 59.) For the reasons set forth below, it will be granted in part and denied in part.

I. BACKGROUND

The history of the parties' relationship spans more than two decades. This Opinion and Order summarizes only the background necessary to resolve the instant motion, assuming "all well-pleaded factual allegations to be true[.]" A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC, 131 F. Supp. 3d 196, 203 (S.D.N.Y. 2015) (quoting Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011)).

Robert Indiana was "a world-renowned American artist, famous for iconic works such as the LOVE and HOPE word sculptures." Counterclaims ¶ 221. Though Indiana achieved "global fame" in the 1960s and 1970s, he encountered "financial difficulties" in the following decades, and "lived in seclusion" on the island of Vinalhaven, 15 miles off the coast of Maine. Id. ¶¶ 221, 233.

In the 1990s, Salama-Caro traveled to Vinalhaven for "several meetings with Indiana," Counterclaims ¶ 234, during which he "develop[ed] a relationship of trust and confidence" with the artist and became his "agent in the art market." Id. ¶¶ 232, 234. In that role, Salama-Caro "represented Indiana personally" for the remainder of the artist's life. Id. ¶¶ 232, 256.¹ In addition,Salama-Caro "persuaded Indiana to sign" the Agreements now at issue, which "purported to give away Indiana's rights to his life's work" to MAF. Id. ¶ 234.²

1. The April 1999 Agreement and the Signature Agreement

In April 1999, Indiana and MAF (acting through Myles Stott, whose signature line does not include any title), executed a letter-agreement (the April 1999 Agreement) in which the artist transferred and assigned to MAF "all of my trademarks, copyrights and other rights that I now have or may hereafter acquire, including the right to sue for past infringement, in and to the LOVE, AHAVA (in Hebrew letters), AMOR, Numbers and YALE Images." Counterclaims ¶ 235; April 1999 Ag. (Dkt. No. 56-1) at 1.³ In addition, Indiana transferred and assigned his rights in and to "any and all paintings, sculptures, constructions and other art work" (also called Images) that previously appeared in one of two catalogues: "the 1998 Catalogue of my art work prepared for my 1958-1998 Retrospective Exhibition at Museum of Modern and Contemporary Art in Nice, France, and/or . . . the Catalogue Raisonné, 1951-1991, of my prints published by the Susan Sheehan Gallery, New York, except for the image of the LOVE postage stamp as illustrated on page 50." Id. The April 1999 Agreement also provides:

The foregoing transfer and assignment to Morgan includes the exclusive right throughout the world in perpetuity to reproduce, promote and sell the Images in such forms and sizes, singularly or in any combination, in such manner, at suchtime, for such price and subject to such terms and conditions as Morgan in its sole discretion shall determine.

Id. In exchange, MAF agreed to pay Indiana 50% of the net income (after deduction of enumerated expenses) derived from MAF's sale of Images. Id. In addition, MAF agreed to "furnish an accounting to [Indiana], on a quarterannual basis, which accounting shall itemize the income received, the expenses incurred and the payments made to [Indiana] in connection with the sale or sales of the Images." Id. The April 1999 Agreement further provides:

During my lifetime, each proposed project involving the Images which shall be addressed directly to me, shall be forwarded promptly by me to Simon Salama-Caro ("Salama-Caro"), for review, discussion, and recommendation. Thereafter, Morgan shall negotiate and, enter into an agreement with respect to each such project on such terms and conditions as Morgan shall determine.

Id. The contract goes on to discuss the role of Salama-Caro:

It is understood and agreed that Salama-Caro is acting on behalf of and as representative for Morgan. If Salama-Caro can no longer act as such representative or shall resign, his designated successor shall be appointed by Morgan and such successor shall act in his place and stead, and I shall be duly advised of such appointment.

Id. at 1-2. The April 1999 Agreement is governed by New York law, id. at 2, and states that it is "binding upon and shall inure to the benefit of the undersigned, and their respective successors, assigns, heirs, next of kin and representatives." Id.

"Shortly" after signing the April 1999 Agreement, Counterclaims ¶ 240, Indiana signed a document (the Signature Agreement) granting MAF the "exclusive right" to "inscribe or set forth my signature and the copyright date on all reproductions of each Image reproduced by Morgan as authorized by the [April 1999] Agreement." Signature Ag. (Dkt. No. 56-6) at 1.

2. The Sculpture Agreement

In December 1999, Indiana and MAF (acting through Stott) executed another letter-agreement (the Sculpture Agreement), in which Indiana granted to MAF "the exclusive right, inperpetuity, to produce and fabricate the LOVE sculptures, the AHAVA sculptures, the AMOR sculptures, the Numbers sculptures (One, Two, Three, Four, Five, Six, Seven, Eight, Nine, Zero), the ART sculptures and the 2000 sculptures (the 'Sculptures')," in specified colors, dimensions and edition sizes. Counterclaims ¶ 242; Sculpture Ag. (Dkt. No. 56-2) at 1. The Sculpture Agreement continues:

Morgan shall have the exclusive right throughout the world, in perpetuity, to promote and sell the Sculptures in such manner, at such time, for such price and subject to such terms and conditions as Morgan in its sole discretion shall determine . . . In consideration of the foregoing, Morgan hereby covenants and agrees to pay a sum equal to 20% of the receipts by Morgan from the sale of the sculptures. In addition to the foregoing, Morgan shall furnish an accounting to me, on an annual basis.

Id. at 1-2.⁴ Like the April 1999 Agreement, the Sculpture Agreement recites the parties' understanding and agreement that:

. . . Simon Salama-Caro has and shall continue to act on behalf of and as representative of Morgan. If Simon Salama-Caro can no longer act as

...