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MCNALLY v. YARNALL

May 8, 1991

SEAN M. MCNALLY AND JANET MCNALLY, PLAINTIFFS,
v.
JAMES YARNALL AND THE METROPOLITAN MUSEUM OF ART, DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

  OPINION

Defendant the Metropolitan Museum of Art (the "Museum") has moved pursuant to Rule 56, Fed.R.Civ.P., for summary judgment of the claims brought against it by Sean and Janet McNally (the "McNallys") in their defamation action against the Museum and James Yarnall ("Yarnall"). For the reasons set forth below, the Museum's motion is granted in part and denied in part.

The Parties

The McNallys are residents of the State of New Jersey, and, for the past fourteen years, have been engaged in the purchase and sale of the works of the artist John La Farge ("La Farge"). McNally is also currently writing a book on La Farge and the history of his works. The McNallys have offered certain of their art works for sale through the Graham Gallery in New York City and at an exhibition of La Farge works sponsored by the William Vareika Fine Arts Gallery ("Vareika") in Newport, Rhode Island. In the past several years, articles in The New York Times and in The Los Angeles Times, as well as Associated Press wire service stories have mentioned or quoted McNally on the subject of stained glass and notified the public of upcoming lectures by McNally on La Farge.

Yarnall is a resident of the District of Columbia. An art historian specializing in the works of La Farge, he holds Ph.D. and M.A. degrees in art history from the University of Chicago. Yarnall also has a B.S. Equivalent Certificate of Accomplishment in computer programming from the Graduate School of the U.S. Department of Agriculture in Washington, D.C. Yarnall operates a company called Museum Systems Enterprises ("MuSE") which provides computer database services to various museums.

The Museum is a not-for-profit corporation organized under the laws of the State of New York and located in Manhattan.

Prior Proceedings

The McNallys commenced this defamation and tortious interference with business relations action in the United States District Court for the District of New Jersey on November 27, 1989. By order of April 23, 1990, the New Jersey District Court transferred the action to the Southern District of New York pursuant to 28 U.S.C. § 1406(a) in lieu of granting a motion by Yarnall, a resident of the District of Columbia, to dismiss as to him for lack of jurisdiction.

On August 2, 1990, the Museum filed its motion for summary judgment. The parties agreed to an adjournment of the motion until December 7, 1990 to accommodate the scheduling of discovery. A subsequent agreement adjourned the return date of the motion to February 11, 1991, when oral argument was heard. The motion was considered fully submitted as of that date.

The Facts

John La Farge

La Farge was an American artist who lived from 1835 to 1910. He received world renown for his stained glass work, one of several media in which the artist worked.

Yarnall's Employment

1.  The Catalogue Raisonne

In 1985, Yarnall was selected to direct the publication of The Catalogue Raisonne of the Works of John La Farge (the "Catalogue Raisonne") to be published by Yale University Press. The late Henry La Farge, grandson of the artist, had started the Catalogue Raisonne as a compendium of all of La Farge's known works. From 1983 to 1985, Yarnall had assisted Henry La Farge with the Catalogue Raisonne. Assisting Yarnall in the compilation of the Catalogue Raisonne is Catherine Voorsanger ("Voorsanger"), a graduate student at the City University of New York, where she is working on her doctoral dissertation on La Farge.

2.  The Study Center

In 1985, the Museum began work on its plan to create the Henry R. Luce Center for the Study of American Art ("the Study Center"), which opened in December, 1988. The Museum's purpose in creating the Study Center was to facilitate and encourage art historical research by compiling in a computer data base the existing information relating to the Museum's various American Wing collections. The Study Center is open to members of the public as well as to Museum personnel.

In 1985, the Museum retained Yarnall to assist the Departments of American Art in coordinating the computerization of information concerning the American Wing collections. Pursuant to the terms of the contract with Yarnall into which the Museum entered in 1985 and each succeeding year through 1989, the Museum paid Yarnall on an hourly basis for hours actually worked, as determined by Yarnall, or, in the case of the 1989 contract, at the rate of $250 a day, not to exceed $5,000 in the aggregate. The Museum did not withhold taxes or social security contributions from Yarnall's compensation, and reported his income on IRS Form 1099. Yarnall did not receive the sick leave, vacation, health insurance or other fringe benefits due other Museum employees. The contracts described Yarnall's relationship to the Museum as that of an independent contractor.

Yarnall's duties pursuant to the contract included: (1) the implementation of a computer program developed for the Museum by another computer consultant; (2) working with the curators to develop a thesaurus of cataloguing terms to be used to retrieve information entered in to the computer database; (3) the processing of amplified and corrected catalogue information.

Pursuant to the contract, Yarnall was to confer weekly to review his progress with Lewis Sharp ("Sharp"), curator and the administrator of the American Wing as well as with Doreen Burke, associate curator of American Painting and Sculpture.

The Museum selected Yarnall for the Study Center project in part on the basis of his previous experience as coordinator of a similar database at the Office of Research Support of the National Museum of American Art, part of the Smithsonian Institution.

While working on the Study Center project, Yarnall set his own hours, commuting to the Museum from his home in Washington, D.C. for a two day stint each week. He also worked on the project at home. The Museum provided him with an office and telephone, as well as with the use of Museum stationery.

3.  The Schwartz Grant

On January 25, 1989, Yarnall entered into another relationship with the Museum, that of a "Richard J. Schwartz Research Associate." Mr. and Mrs. Richard J. Schwartz (the "Schwartzes") are collectors of art and benefactors of the Museum. During the previous year, the Schwartzes provided the Museum with a $60,000 research grant for the purpose of enabling Yarnall and Voorsanger to continue their work on Volume II of the Catalogue Raisonne. At the Schwartzes' request, none of the funds was allocated to cover the Museum's overhead or other administrative expenses.

Most of the terms of the contract were identical to the terms of Yarnall's Study Center contracts, with the exception that Yarnall's work under the Schwartz grant was described as follows:

  During the contract period, it is expected that
  you will research the murals of John La Farge
  executed between 1875 and 1910, as well as
  stained glass executed between 1886 and 1910.
  This research is in preparation for your
  contribution to the Catalogue Raisonne of the
  Work of John La Farge, to be published by Yale
  University Press, which will be dedicated to La
  Farge's work in all media.

In a letter of January 25, 1990, the Museum renewed its contract with Yarnall relating to the Schwartz Grant for a further six month period ending June 30, 1990. Pursuant to the renewal, Yarnall received $5,000 upon signing and $5,000 on May 1, 1990, without deductions for taxes or social security contributions.

Yarnall's Alleged Statements

1.  The Moon Window

In early 1988, Richard J. Schwartz ("Schwartz") told the Museum that he was interested in acquiring a stained glass window by La Farge. Alice Frelinghuysen ("Frelinghuysen"), the associate curator in the Museum's department of American Decorative Arts, asked Yarnall if he knew about any La Farge windows on the market, and Yarnall responded that such a window (the "Moon Window") by La Farge was for sale. Frelinghuysen relayed this information to Schwartz.

Schwartz asked Frelinghuysen and Sharp to attend a viewing of the Moon Window at the Museum. The Museum often accommodates such requests from benefactors to review works of art, but it is the Museum's policy not to render an opinion involving a valuation of such works.

Present at the viewing in the office of John K. Howat ("Howat"), the Lawrence A. Fleischman Chairman of the Departments of American Art, were Schwartz, Frelinghuysen, Sharp, as well as Yarnall and Voorsanger, whom Sharp and Frelinghuysen had invited to attend. Lawrence J. Zinsi ("Zinsi"), the owner of the window, and Vincent Mancuso ("Mancuso"), Zinsi's agent, waited in another room during the viewing.

During the viewing, there was a general discussion of the Moon Window, although Schwartz did not ask any one present for an opinion on the monetary value of the work. Yarnall stated his belief that based on a drawing of the window with which he was familiar, La Farge designed the window in the 1880's.

After the viewing, Schwartz conferred separately with Zinsi and Mancuso concerning the window's price. Schwartz did not talk about the price with Yarnall or with any one else except Zinsi. Schwartz subsequently bought the Moon Window for his personal collection for $165,000.

Some time before Schwartz's purchase of the Moon Window, McNally had an opportunity to view the window. McNally expressed the opinion that while the Moon Window was designed by La Farge, it is unlikely that La Farge himself executed the design. Based on this opinion, McNally valued the Moon Window at approximately $20,000.

Shortly after Schwartz's purchase of the Moon Window, a supposed "companion window" to the Moon Window sold at auction at Christie's for $14,200 (the "Christie's Window").

McNally believed that the Christie's Window was likely the companion to the Moon Window, based on dating, motif and execution.

Vareika offered the Christie's Window for sale at his 1989 La Farge exhibition in Newport, Rhode Island at a price of $150,000.

2.  The Garland Window

In late November, 1988, McNally consigned for sale to the Graham Gallery (the "Gallery") in Manhattan a stained glass window by La Farge known as "Garland of Fruit and Flowers" (the "Garland Window"). The asking price for the Garland Window was $150,000.

In early December 1988, Robin Graham ("Graham"), president and co-owner of the Gallery, contacted the Schwartzes and told them that the Garland Window was available for sale. The Schwartzes expressed interest in the Garland Window, ...


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