Museum Boutique Intercontinental, Ltd. v. Picasso
1995 WL 340051, 886 F. Supp. 1155, 1995 U.S. Dist. LEXIS 7751 (1995)
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Rule of Law:
Under New York law, a claim for tortious interference with contract requires that the defendant's actions induced a third party to either breach the contract or render performance impossible; merely making performance more difficult or expensive is insufficient. Additionally, under French law governing an 'indivisión', only the court-appointed administrator may be sued for acts of administration, not individual heirs.
Facts:
- Upon Pablo Picasso's death in 1973, the reproduction rights to his artwork became the joint property of his heirs under a French legal structure known as an 'indivisión successorale' (indivisión).
- A French court appointed Claude Picasso as the Administrator of the indivisión to manage and exploit these reproduction rights.
- Museum Boutique Intercontinental, LTD. ('MBI') was a corporation that had acquired licenses to create and sell derivative works based on Picasso's art.
- MBI held valid licensing agreements with two Japanese companies, Mitsukoshi and INFAS, for the sale of its derivative works.
- Paloma Picasso, an heir but not the administrator, allegedly told Mitsukoshi and INFAS that MBI lacked the legal right to grant them licenses for the Picasso works.
- Paloma's statements did not cause Mitsukoshi or INFAS to breach their contracts, but they caused the companies to 'lose faith' and seek 'continuous reassurance' from MBI, making the contracts more difficult and expensive for MBI to maintain.
- MBI, not the Japanese companies, ultimately terminated the contracts with Mitsukoshi and INFAS.
Procedural Posture:
- Plaintiff Museum Boutique Intercontinental, LTD. (MBI) initially filed suit against Defendants in New York Supreme Court, a state trial court.
- Defendants removed the action to the U.S. District Court for the Southern District of New York.
- MBI filed a First Amended Complaint, which the Defendants moved to dismiss.
- The court granted MBI leave to file a Second Amended Complaint.
- Defendant Paloma Picasso filed a motion to dismiss all counts against her in the Second Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6).
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Issue:
Does a defendant's conduct that makes a plaintiff's contract with a third party more difficult and expensive to perform, but does not induce a breach or render performance impossible, constitute tortious interference with contractual relations under New York law?
Opinions:
Majority - Scheindlin, District Judge.
No, a defendant's conduct that makes a plaintiff's contract with a third party more difficult or expensive does not constitute tortious interference with contractual relations if it does not induce a breach or render performance impossible. To state a claim for tortious interference with contract under New York law, a plaintiff must allege: 1) a valid contract, 2) the defendant's knowledge of the contract, 3) the defendant's intentional inducement of the third party to breach the contract or otherwise render performance impossible, and 4) damages. MBI failed to allege the third element. While MBI claimed Paloma's statements made performance 'more difficult' and 'lessened each party's enjoyment,' this does not rise to the level of making performance impossible. The New York Court of Appeals in Kronos, Inc. clarified that if there is no breach by the third party, the defendant’s interference must be so severe as to make performance impossible. As MBI itself terminated the contracts and performance was never rendered impossible, the claim fails. Furthermore, all other counts against Paloma are dismissed because they relate to administrative acts of the Picasso estate. The court determined that French law governs her authority to be sued as an heir. Under French law, the court-appointed administrator of an indivisión is the sole representative in litigation related to the property's management, meaning individual heirs cannot be sued in that capacity.
Analysis:
This decision clarifies the high threshold required to sustain a claim for tortious interference with contractual relations in New York. It reinforces the principle that mere disruption or increased difficulty in performing a contract is not actionable; the interference must be the direct cause of a breach or make performance impossible. The ruling narrows the scope of the tort, protecting parties from liability for communications that may complicate, but do not destroy, a contractual relationship. The opinion also offers a significant analysis of Fed. R. Civ. P. 17(b), distinguishing between a party's 'capacity' to be sued (governed by forum law) and their 'authority' (governed by the law creating their legal status), a key distinction for cases involving foreign entities.
