throbber
FILED. NEW YORK COUNTY CLERK 04 m
`INDEX NO. 655489/2016
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`NYSCI
`3F DSCUPREMSE COURT OF THE STATEMENEIWSYEIKOMOS/Zow
`NYSCEF DOC. NO. 66
`RECEIVED NYSCEF: 04/05/2018
`NEW YORK COUNTY
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`PRESENT:
`
`HON. ANDREA MASLEY
`
`J‘s-qu-stice
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`
`
`Index Number: 655489/207167 7
`1
`I MAYOR GALLERY LTD
`VS.
`I AGNES MARTIN CATALOGUE
`SEQUENCE NUMBER : 001
`_
`DISCONTINUE
`_\.____.——_——-4
`The following papers, numbered 1 to
`, were read on this motion tolfor
`Notice of Motion/Order to Show Cause — Affidavits — Exhibits
`Answering Affidavits — Exhibits
`Replying Affidavits
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`Upon the foregoing papers, It is ordered that this motion is
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`in accordance
`much 15 decided
`g memorandum‘ 00 I
`with accompany“
`quenfie o o o a 0.
`decision in motion se
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`pART [‘(fi
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`INDEX NO.
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`MOTION DATE
`MOTION SEQ. NO.
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`I No(s).
`I No(s).
`| No(s).
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`
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`MOTION/CASEISRESPECTFULLYREFERREDTOJUSTICE
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`
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`FORTHEFOLLOWINGREASONS):
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`Dated:
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`3 /
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`
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`1. CHECK ONE: ..................-...............
`2. cnecx As APPROPRIATE
`3. CHECK IF APPROPRIATE: ................
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`
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`, J.S.C.
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`
`
`
`
`:1 CASE DISPOSED
`X NON-Fl
`
`
`
`
`
`
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`MOTION IS: E] GRANTED
`D DENIED
`.GRANTED IN PART
`OTHER
`
`
`SUBMIT ORDER
`SETTLE ORDER
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`
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`‘ FIDUCIARY APPOINTMENT
`I: DO NOT POST
`CI REFERENCE
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`NYSC.
`NYSCEF DOC. NO. 66
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`3F DOC. NO. 66
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`c«.IV«D NYSCEF: 04/05/2018
`SUPREME COURT OF THE STATE OF NEW YORK
`.COUNTY OF NEW YORK: COMMERCIAL PART 48
`
`THE MAYOR GALLERY LTD.,
`
`V
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`Plaintiff,
`
`
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`_
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`i
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`i
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`l
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`-against—
`.
`'
`‘
`THE AGNES MARTIN CATALOGUE RAISONNE LLC,
`ARNOLD GLIMCHER, TIFFANY BELL, MEMBERS
`OF THE AUTHENTIFICATION COMMITTEE OF THE
`AGNES MARTIN CATALOGUE RAISONNE, i.e.,
`John Doe or Jane Doe ##1-6,
`
`Index No.: 655489/2016
`Mot. Seq. No.: 001
`
`,
`.
`Decision and Order
`
`'
`
`Defendants.
`
`Masley, J.:
`
`Defendants, The Agnes Martin Catalogue Raisonné LLC (AMCR), Arnold
`Glimcher, Tiffany Bell, and Members of the “Authentification [sic] Committee of the
`Agnes Martin Catalogue Raisonné” (Committee), “iie., John Doe or Jane Doe Win-6,"1
`
`move, pursuant to CPLR 3211 (a) (1), (a) (3), and (a) (7), todismiss the amended
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`complaint of plaintiff, The Mayor Gallery Ltd., an international art dealer and gallerist
`
`organized under the laws of the United Kingdom.
`
`This action arises from the submission of 13 artworks to AMCR, a private non-
`
`profit organization that authenticates anchmpile-s a catalogue of works by deceased V
`artist Agnes Martin, which is periodically updated and-published online (Catalogue).
`
`Prior to the formation of AMCR in 2012, plaintiff had sold those artworks, purportedly
`
`created by Martin, to four separate private art collectors. >
`
`1 Plaintiff has learned the identities of the Committee members, denoted “John Doe or Jane Doe
`##1-6;" however, the parties stipulated that “[t]he identities of the John Doe/Jane Doe
`.
`defendants shall remain Attorneys' Eyes Only” until five business days after this, motion to
`dismiss (Mot. Seq. No. 001)Is decided, and/or five days after any appeal from this decision is
`concluded (NYSCEF Doc. No.23 [stipulation, so ordered 12/20/2016, Ding, J. ]; see also Doc.
`No. 22 [confidentiality stipulation so ordered 12/20/2016, Oing, J. D.
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`Index No.: 655489/2016; Mot Seq. No.: 001
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`After AMCR was founded, the collectors each submitted their purchased ;
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`artworks to AMCR to be included in the Catalogue, but AMCR declined after examining
`
`the works and the collectors’ accompanying applications. After AMCR declined to
`include one particular work—a painting entitled Day and Night—plaintiff refunded its V
`
`. purchaser, retook possession of the work, and resubmitted the painting to AMCR, which
`
`again declined to include the artwork in the Catalogue.
`In sum, plaintiff refunded two of
`the collectors and accepted the return of two works; the two remaining collectors
`
`retained possession of their respective 11 artworks, but plaintiff alleges that it has
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`agreed to refund those collectors if it dees not prevail in this action.
`
`Background
`
`The following allegations are taken from the amended- complaint, except as
`othen/vise noted.
`
`A “catalogue raisonné” is a collection of a specific artist’s artworksthat have
`been authenticated by some designated person or group, and which often takes the
`
`form of a continuouSly-updated, published compilation that identifies and records (i.e.,
`
`photographically) the accepted works of the artist (see plaintiffs amended complaint
`
`[compl.]1m 2-3).
`
`Martin was an‘abstract expressionist and minimalist artist whose artworks
`“regularly sell at auction and worldwide for hundreds 'of thousands to millions of dollars"
`(see id. 1111 1, 7). The amended complaint challenges, among other things, the policies
`
`and procedures of AMCR, which created and maintains the Catalogue, a digitally-
`
`published compilation of Martin’s paintings and works on paper, and the Committee,
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`which authenticates‘and compiles those works for inclusion in the Catalogue.
`According to plaintiff, Christie’s and Sotheby’s—“the two dominate [sic] auction houses
`
`in the United States and the world"—recognize the Catalogue “as the definitive
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`compilation of authentic artworks of Agnes Martin;” thus, plaintiff alleges that the
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`Committee‘s decision. to not include a work in the Catalogue is “recognized in the
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`worldwide marketplace as a conclusive statement to the public that the artwork is a ‘
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`fake,” and such works are rendered “worthless" and unsaleable (id. 1111 16-18).
`The Parties -
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`Plaintiff is an international art dealer and gallerist that sells works of art at auction
`
`and in private sales (id. 11 6).
`
`Its principal is James Mayor. ‘
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`According to plaintiff, individual defendant Glimcher is ‘A‘the primary if not the
`exclusive owner and manager and Chairman” of the Pace Callery (Pace), “a leading .
`
`.
`
`.
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`international art dealer and gallery” (id. 11 9), the founding member of AMCR, as well as
`the founder, and current member of, the Committee (see id. 1111 6-8, 13). Pace and
`Glimcher "claim that they have represented Agnes Martin .
`.
`. from 1975 to the present,"
`
`and presently represent her estate (id. 11 10). AMCR is a New’York company formed in
`
`November 2012, eight years after Martin’s death, to authenticate Martin’s paintings and
`works on paper and to compile and-maintain the Catalogue (see id.‘1111 7, 13).
`Individual
`defendant Bell is the editor ofthe Catalogue and a member of the Committee. Plaintiff
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`alleges that the four remaining members of the Committee—whose identities are kept
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`secret from the public—were revealed to plaintiff only through-documents produced in
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`this action (id. 11 14).2
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`2 As the court dismisses plaintiff’s claims as against the four misnamed defendants, it need not'
`reveal their identities in- this decision.
`_
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`
`
`Submissions to the Catalogue
`
`Plaintiff alleges that “collectors have no choice but tolsubmit their Agnes Martin
`
`artworks to defendants for vetting," and “[c]ollectors are required" to complete a “non-
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`negotiable" “Examination Agreement” (Agreement) for each work submitted (id. 1] 19).
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`After reviewing the submitted work, “[t]he defendants then take only one of two actions:
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`they either accept or reject the artwork for inclusion in the [Catalogue]," and the collector
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`is notified of the decision by a t‘cursory form letter, without any explanation of any kind”
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`(id. 11 20). Plaintiff alleges that “defendants also refuse to answer .
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`.
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`. reasonable
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`inquiries from the owners of rejected artworks who[] .
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`.
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`. seek an opportunity for rebuttal
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`and detailed information" (id. 11 21). However, nothing in the Agreements requires
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`AMCR, or any defendant, to provide such opportunities orinformation (see 9.9.
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`plaintiff’s exhibits B, D, E, F, G).
`
`t
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`1. Levy’s and plaintiff's submissions of Day and Night
`
`'
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`Plaintiff alleges that it sold a painting, Day and Night, to private collector Jack
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`Levy for $2.9'million in September 2010. On May 1, 2014, Levy submitted the work to
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`AMCR with a completed Agreement. Levy was informed by AMCR, via “Notification
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`Letter,” dated September 25, 2014, that Day and Night would not be included in the
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`Catalogue (compl. 111] 22-25; plaintiff’s exhibit [ex.] D). Plaintiff thereafter refunded the
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`sale price and sales tax to Levy, and accepted the return of the painting.
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`On May 14, 2015, Plaintiff submitted its own Agreement—which corrected “a
`
`number of important errors” made by Levy—to AMCR for Day and Night, along with
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`additional documents supporting the work's exhibition history, photographs of Martin
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`with the work, and radiocarbon test results for its canvas; plaintiff did not, however,
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`
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`resubmit the painting itself, allegedly because Bell told plaintiff’s principal, Mayor, that it
`was “unnecessary" (co'mpl. 1] 28-31; ex. B). Plaintiff was advised, by Notification Letter
`
`dated October 21, 2015,that Day and Nightwould not be included in the Catalogue.
`Plaintiff also received a letter, addressed to plaintiffs principal, Mayor, and-dated
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`October 22, 2015, from defendants' law firm that stated that: “[o]ther submitted works
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`referencing [plaintiff] in their provenance raised material legal concerns;" and “advised
`n n
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`that you will be held responsible for compensatory and punitive damages
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`[i]f you bear
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`personal responsibility for the nature of these works and their questionable provenance"
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`(see ex. B).
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`2. Kolodny, Shainwald, and Labouchere’s submissions I
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`Plaintiff sold a work on paper, Untitled, to Patricia and Frank Kolodny in 2009,
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`who gifted the work to their daughter, Johnanna Kolodny (Kolodny). Kolodny submitted
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`Untitled with her Agreement to AMCR on August 15, 2015, and was informed by
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`Notification Letter, dated November 24, 2015, that the work would not be included in the
`Catalogue. Kolodny ”decided to retain ownership of Untitled, but only until and if
`[plaintiff] established that it was authentic and marketable" (compl. 1111 34—39; ex. E).
`In December 2012, plaintiff sold a work on paper, 'The Invisible, to Sybil
`Shainwald for $180,000. Shainwald‘submitted that work and an Agreement to AMCR
`on August 15, 2015, andwas informed by' Notification Letter, dated November 24, 2015,
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`that the work would not be included in the Catalogue. Shainwald returned The Invisible
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`to plaintiff, and was refunded the purchase price (compl. 111140-45; ex. F).
`Plaintiff sold 10 paintings to Pierre de Labouchere in March and October 2013 for
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`a € 3,250,000, “currently converting to $3,625,000." Labouchére submitted those
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`works, With 10 “identical” Agreements, to AMCR on October 13, 2014, and was notified
`that the works would not be included in the Catalogue by Notification Letters dated
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`November 24, 2015'. He “decided to retain ownership .
`
`.
`
`. only until and if [plaintiff]
`
`established that [they] were authentic and marketable" (compl. 1”] 46-51; ex. G).
`
`‘ Plaintiff alleges that, in each instance, “defendants’ refusal to approve" each of
`the above works in the Catalogue “had as its purpose and was in substance and effect
`
`a declaration by defendants to [Levy, plaintiff, Kolodny, Shainwald, and-Labouchere,
`respectively,] and the marketplace that the artwork[s are] fake, rendering [the works]
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`worthless” (compl. 111126, 33, 38,145, 51).
`The Amended Complaint .
`Following the above events, plaintiff’s attorney repeatedly sent communications
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`to defendants’ attorneys requesting, among other things: the identity of the person who
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`signed the Notification Letters on behalf of AMCR; the names and curriculum vitae of
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`each Committee member; the “steps and} procedures" followed by AMCR and the
`Committee in rejecting the works; the “detailed reasons” the works were rejected from
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`the Catalogue; copies of “any and all documents that were relied upon in connection
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`with each re]ection;" a copy of AMCR‘s operating agreement; and an opportunity for
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`Mayor, “and perhaps others with relevant information, .
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`.
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`. to fully examine and respond
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`to the [] requested. documents and facts“ (ex. H; see compl. 1“] 52—65). Those requests
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`were ignored. V.
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`On October' 17, 2016, plaintiff commenced this action by filing a summons and
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`complaint, and filed an amended complaint on January 9, 2017. The amended '
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`‘
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`complaint contains seven causes of action: (1) product disparagement "for all thirteen
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`NYSCI
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`artworks" (compl. 1111 66-75); '(2) tortious interference with contract “for allthirteen
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`artworks” (id. 1111 76—81); (3) tortious interference with prospective business relations “for
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`all thirteen artworks” (id. 1111 82-88); (4) negligent misrepresentation “for all thirteen
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`artworks" (id. 1111 89-95); (5) gross negligence and breach of contract for “all thirteen
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`artworks” (id. 1111 96-102); (6) breach of implied duty ongood faith and fair dealing as to .
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`plaintiff‘s resubmission of Day and Night (id. 1111 103-110); and (7) violation of General
`Business Law (GBL) § 349 (id. 1111111-112).
`V
`
`'Plaintiff seeks damages in the amount of $7,233,438, the total value of the 13
`
`artworks it sold, and the amount plaintiff has already, or “must be," refunded to the four
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`collectors; plaintiff also seeks an injunction enjoining defendants to answer the inquiries
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`posed by plaintiff‘s attorney’s letters, or enjoining defendants from engaging in the
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`allegedly deceptive business practices (id. at 26).
`
`'
`
`Defendants now move to dismiss the amended complaint pursuant to CPLR
`
`3211 (a) (1), (a) (3), and (a) (7), and seek'legal fees, costs, and expenses for the
`defense of this action, as provided under the Agreement plaintiff entered with AMCR
`when it resubmitted Day and Night (Plaintiff’s Agreement).‘
`
`Discussion
`
`“On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a
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`liberal construction.
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`[The court] accept[s] the facts as alleged in the complaint as true,
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`[and] accord[s] plaintiff[] the benefit of every possible favorable inference” (Leon v
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`Martinez, 84 NY2d 83, 87—88 [1994] [citation omitted]). However, bare legal
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`conclusions and “factual claims which are either inherently incredible or flatly
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`contradicted by documentary evidence” are not “accorded their most favorable
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`intendment” (Summit Solomon & Feldesman v Lacher, 212 AD2d 487, 487 [1 st Dept
`
`1995]).
`
`Part I: Threshold and Preliminam Matters
`
`1. Standing, generally
`
`Defendants contend that plaintiff lacks standing to raise claims challenging the
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`Agreements entered into by the four collectors (Collectors’ Agreements) or the rejection
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`of the collectors’ submissions because plaintiff was neither a party to, nor a third-party
`
`beneficiary of, the Collectors’ Agreements.
`
`Plaintiff responds that its first, second, third, fourth, fifth, and seventh claims
`
`sound in tort, “wholly independently from the [Plaintiff’s] Agreement,” and “arise from
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`defendants’ duties in the marketplace of Agnes Martin artworks and to the public at-
`
`large [sic], which includes plaintiff.” However, plaintiff’s seventh cause of action alleges
`
`a violation of GBL § 349, a statutory claim that is separately addressed in Part II, below.
`
`The parties’ arguments are misguided.
`
`“Whether a person seeking relief is a proper party to request an
`adjudication is an aspect ofjusticiability which, when challenged, must be
`considered at the outset of anylitigation. Standing is a threshold
`determination, resting in part on policy considerations, that a [party] should
`be allowed access to the courts to adjudicate the merits of a particular
`dispute that satisfies the other justiciability criteria. That an issue may be
`one of ‘vital public Concern' does not entitle a party to standing.
`[A]
`litigant must establish its standingIn order to seek judicial review” (Society
`of Plastics lndus., Inc. v County of Suffolk, 77 NY2d 761, 769 [1991]
`[citations omitted]).
`
`Generally, a party has standing to pursue tort claims when it has been actually
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`aggrieved; that is, absent an injury, there is no controversy to be adjudicated by the
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`court (see Siegel, NY Prac § 136 at 232—233 [4th ed 2005]; see Kronos, Inc. v AVX
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`Corp., 81 ‘NY2d 90, 94 [1993] [“[A]s a general proposition, a tort cause of action cannot
`
`accrue until an injury is sustained."]). To have standing to enforce or challenge a
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`contract, on the other hand, a plaintiff must be a party to, or a third-party beneficiary of,
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`the agreement at issue (see generally Carrieri v Kim, 2014 WL 5342524 [Sup Ct, NY
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`County 2014). Further, “a simple breach of contract is not to be considered a tort
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`unless a legal duty independent of the contract itself has been violated" (OP Sols., Inc. v
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`Crowell & Moring, LLP, 72 AD3d 622, 622 [1st Dept 2010], quoting Clark-Fitzpatrick,
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`Inc. v Long Is. RR. Co., 70 NY2d 382, 389 [1987]).
`
`Plaintiff’s standing to raise its tort claims necessarily depends on its allegations of
`
`injury. Plaintiff alleges as to each of its claims that it was injured by the Notification
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`Letters, and the impliCit publication of the 13 works’ inauthenticity by defendants, “in the
`
`amount of $7,233,438 — the total amount paid by and that has already been or must be
`refunded to [all four collectors]” (see e.g. coran. [[1] 71-72, 74). However, only two of
`
`the collectors—Levy and Shainwald (Rescinded Collectors)—actua|ly ”rescinded" their
`contracts and received refunds from plaintiff (see compl. 111] 27, 45). Neither Kolodny
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`nor Labouchére demanded or received a refund for their purchased works (id. [[1] 34,
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`46). Accordingly, no injury to plaintiff has accrued with regard to the Kolodny or
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`Labouchére artworks, and, thus, it does not yet have standing to raise tort claims as to ,
`those transactions.
`
`Furthermore, plaintiff’s only allegation of injury that is not wholly tied to contract
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`rescission and refunds is its vague, unsupported allegation that defendants interfered
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`with plaintiff's “profitable business relationship[s]” with the four collectors (compl. 1H] 82—
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`88). Plaintiff does not, however, allege that those collectors, or any other customers,
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`ceased doing business with it (see id.).
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`In fact, in the paragraphs supporting the tortious
`
`interference with prospective business relations claim, plaintiff alleges that it was
`
`damaged in the amount of $7,233,438—the total value of refunds it has, or which “must
`be," paid to the four collectors (see id). For each of its tort claims, plaintiff alleges only
`damages it sustained by rescinding, orpotentially rescinding in the future, its past
`contracts with the four collectors.
`
`Inasmuch as plaintiff has any standing to raise tort claims, that standing extends
`
`to only its accrued injuries relating to the Rescinded Collectors; thus, plaintiff’s first,
`
`second, third, and fourth causes of action are dismissed to the extent that they pertain
`to plaintiffs contracts with,» and works sold to, Kolodny and Labouchere.3
`
`‘
`
`2. The individual defendants
`Defendants contend that each‘vof plaintiff’s seven claims must be dismissed as
`againstthe individual defendants because the amended complaint does not allege that
`the individual defendants acted outside of the scope of their employment or sought a
`personal benefit in connection with the alleged acts or omissions.
`
`Plaintiff responds that piercing the corporate veil to reach the individual
`defendants is proper because each individual defendant, as a member of the
`Committee, may be held personally liable for participating in the commission of the torts,.
`even if the tortious acts or omissions were committed in furtherance of AMCR. Plaintiff
`
`also-argues that the facts “relevant to piercing the corporate veil are within the exclusive
`knowledge and control of defendants;” thus, dismissing those defendants should be
`considered ”only after issue is joined and discovery completed.”
`
`3 The same reasoning applies to the tort prong of plaintiff’s fifth cause of action, a hybrid claim
`alleging gross negligence and breach of contract, which is addressed in Part II, below.
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`index No.: 655489/2016; Mot. Seq. No;: 001
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`Limited Liability bompany Law § 610 states that “[a] member of a limited liability
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`company is not a proper party to proceedings by oragainst a limited liability company,
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`except where the object is to enfbrce a member's right against or liability to the limited
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`liability company." Recognizing “the essential distinction between a corporation and
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`those individuals who administer its affairs, and that sound public policy restricts the
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`imposition of liability'on corporate officers and directors for the acts of the corporation,”
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`,
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`‘
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`the First Department employs an “enhanced pleading requirement" for tort claims
`allegedly committed by corporate officers (Petkanas v Kooyman, 303 AD2d 303, 305 _,
`[1st Dept 2003]).
`I
`Accordingly, a plaintiffs pleadings must contain “particularized .
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`. allegations
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`.
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`that the acts of the defendant corporate officers which resulted in the tortious [conduct]
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`either were beyond the Scope. of their employment or, if not, were motivated by their
`personal gain, as distinguished from gain-for the corporatiOn" (id.).
`In that context,
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`“personal gain" means‘that “the challenged acts were undertaken ‘with malice and were
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`calculated to impair the plaintiff‘s business for the personal profit of the [individual]
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`' defendant’ " (id., quoting Joan Hansen & Co., Inc‘ -v Eveflasf World's Boxing
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`Headquarters Corp., 296 AD2d 103, 110 [1st Dept 20021; see also Hoag v Chancellor,
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`Inc., 246 ADZd 224, 230 [1st Dept 1998] [an individual corporate officer/director “is
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`liable when he acts for his personal, rather than the corporate interests."]).
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`- Here, plaintiff’s amended complaint contains only general, conclusory allegations ’
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`that the individual defendants participated in the claimed Itortious acts; there are no
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`specific allegations that the individual defendants committed any specific tortious act or
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`omission. Plaintiff also does not allege particularized facts that demonstrate that the
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`individual defendants benefited from the alleged torts. Accordingly, plaintiff’s pleadings
`are insufficient with respect to its claims against the individual defendants. Further,
`absent privity between plaintiff and those parties, plaintiff lacks standingto pursue its
`sixth cause of action—a breach of contract claim relating to Plaintiff’s Agreement with
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`AMCR—against the individual defendants (see e.g. Albstein v E/any Contr. Corp., 30
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`AD3d 210 [1st Dept 2006]). For those reasons, the first through sixth claims are
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`dismissed as‘ against the individual defendants.
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`3. Whether the Agreement(s) preclude plaintiff’s claims, generally
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`Defendants claim that all of plaintiff‘s claims are barred by the waiver provisions
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`contained in all 14 Agreements. Plaintiff responds that its claims are not precluded
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`because the Agreements are unenforceable, and that the Collectors’ Agreements do not
`apply because plaintiff was not a party to those contracts.
`Plaintiffs Agreement is the only one of the 14 total Agreements that was
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`submitted by plaintiff to AMCR. Plaintiff is neither a party to, nor an intended beneficiary
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`of, the 13 Collectors’ Agreements; thus, the Collectors’ Agreements do not bar plaintiff’s
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`claims. Plaintiff’s Agreement pertains to only plaintiffs submission of Day and'Night,
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`and does not bar plaintiff's claims as to any of the other 13 submissionsto AMCR.4
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`4 The extent to which the claims-waiver provision in Plaintiff’s Agreement is enforceable is not
`addressed in‘ this decision as the court finds, as discussed in Part II, below, that plaintiff does
`not adequately allege the neCessary elements of its claims relating to its own, as opposed to
`Levy’s, submission of Day and Night.
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`INDEX NO. 655489/2016
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`FILED: NEW YORK COUNTY CLERK 04/05/2018 10:00 AM
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`FILED. NEW YORK COUNTY CLERK 04m
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`Index No.: 655489l2016; Mot. Seq No.: 001
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`Part II: Plaintiffs Seven Causes of Action
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`1. First cause of action for product disparagement
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`Defendants contend that plaintiff fails to' establish the necessary elements of a
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`product disparagement claim. Plaintiff responds that the elements are adequately
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`pleaded.
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`“[P]roduct disparagement is an action to recover for words orrconduct which tend
`to disparage or negatively reflect upon the condition, value, or quality of a product or
`property, and .
`. .rthe elements of a product disparagement which must be proven are;
`(1) falsity of the statement; (2) publication to a third person; (3) malice (express or
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`implied);.and (4) special damages” (Thorne vAIexander & Louisa Calder Found, 70
`AD3d 88, 105 [1st Dept 2009] [alteration in original], lv denied 15 NY3d 703 [2010],
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`quoting 44 NY Jur 2d, Defamation & Privacy § 273).
`‘
`Preliminyarily, plaintiff’s standing to raise its product disparagement claim against
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`AMCR depends upon plaintiff's allegations of special damages resulting from AMCR’s
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`malicious publication to a third person of a false statement.
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`In support .of this claim,
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`plaintiff alleges the following harm: “Solely because of the [false statements published to
`the general public via] the Notification Letters, Kolodny, Shainwald, and Labouchere
`sought recission of their contracts under which they agreed to purchase the artworks;”
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`plaintiff, “solely because of the Notification Letter, cannot again offer Day anvaight for
`sale;" and plaintiff “was damaged by defendants’ product disparagement in the amount
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`of $7,233,438 — the total amount paid by and that has already been or must be refunded
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`to [all four collectors]” (compl. 111] 71—72, 74).
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`Setting aside the Kolodny and Labouchére transactions, which were not
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`rescinded or refunded, the only special damages plaintiff alleges are the refund
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`amounts paid to the two Rescinded Collectors. Plaintiff, thus, has standing, tenuously,
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`to raise its product disparagement claim as against AMCR in relation to the two
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`rescinded sale contracts. Nonetheless, plaintiff does not sufficiently plead this claim.
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`Even accepting as true plaintiff’s allegations that the Notification Letters constituted
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`false statements published to the general public,5 plaintiff has not met its burden of
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`pleading malice.
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`In opposition to this motion, plaintiff argues that “[s]pecific allegations”
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`establishing malice are contained in paragraphs 69 and 98 of the amended complaint:
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`. [the false] statements [of inauthenticity] were made without a full
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`“69. .
`and careful examination of the facts relating to authenticity and without
`providing- indeed refusing to provide- information and documents
`explaining and supporting the decision. Nor did defendants give [plaintiff],
`Kolodny, Shainwald and Labouchére an opportunity to review and rebut
`any documents or information relied upon by defendants in connection
`with their decisions. In substance, defendants conducted their vetting
`peremptorily and dictatorially much like a Star Chamber- without
`disclosing their identities or their policies, practices and procedures and
`without disclosing the evidence supporting orjustifying their decisions and
`without affording The Mayor Gallery, Kolodny, Shainwald and Labouchere
`an opportunity to review, respond or dispute their conclusions.
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`70. The statements made in the Notification Letters were therefore made
`with ‘malice,’ i.e., willfully and with a reckless disregard for whether the
`statements were true or false.
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`5 As to the falsity element, plaintiff alleges that the artworks are authentic, but does not allege
`any facts supporting that conclusion. As to the element of publication to a third person, the law
`is not settled: the First Department has discussed, but not answered, a similar question of
`whether a catalogue raisonné’s silent rejection of an artwork from inclusion in its catalogue can
`effectively constitute a false statement published to a third person (see Theme, 70 AD3d 88).
`In
`dicta unrelated to its holding, the First Department noted: “as some commentators have
`suggested, as a practical matter, the denial of authentication is arguably indistinguishable from
`a direct assertion of inauthenticity" (id. at 106).
`In any event, the First Department ultimately
`affirmed the trial court’s dismissal of the product disparagement claim as time barred (id. 106-
`107). Here, the court declines to needlessly answer those questions.
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`INDEX NO. 655489/2016
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`NYSC.
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`Index No.. 555489/2016; Mot. Seq. No.2 001
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`98. Defendants had a duty to perform-a—nd represented to the plaintiff and
`the public at—large, expressly or by implication, that they would perform -
`all tasks necessary and appropriate to determine whether the thirteen
`artworks were authentic. See, 6. 9., “Examination Agreement," for Day and
`Night, Exhibit “B" hereto 2 and 5, under thch defendants admit the
`importance of conducting a careful physical examination of the artworks
`(rather than relying on photographs) consulting other experts and
`obtaining scientific verifications, e. 9. taking tests of paint samples.
`Defendants intentionally failed to perform such tasksIn connection with all
`thirteen artworks [sic]. “
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`.
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`These allegations are speculative, unsupported, and contradicted by other facts
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`in the amended complaint. The only instance in which AMCR did not review an artwor

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