The opinion of the court was delivered by: Sweet, District Judge.
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
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
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.
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
Yarnall's compensation under the Schwartz grant differed from
his compensation under the Study Center contract. Under the
Schwartz grant, Yarnall was to
receive a total of $15,000 over the contract period, with
$5,000 to be paid upon the signing of the contract, $5,000 to
be paid on May 1, 1989, and the balance to be paid on
September 1, 1989. Yarnall received these amounts without
deductions for income taxes or social security contributions.
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
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
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
Vareika offered the Christie's Window for sale at his 1989
La Farge exhibition in Newport, Rhode Island at a price of
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, and
arranged to view it at the Gallery on December 5, 1988.
Schwartz asked Sharp, Frelinghuysen, Yarnall and Voorsanger
to meet him at the Gallery of Robin Graham (the "Graham
Gallery") to look at the Garland Window. Also present at the
viewing was Cameron Shay ("Shay"), vice-president of the
Gallery. Graham did not attend the viewing at the Gallery that
day. Upon arrival at the Gallery, the visitors learned that
McNally was the owner of the Garland Window.
After setting up the viewing room, Shay withdrew to the
lower floor of the Gallery. During the course of the viewing
Yarnall explained that La Farge created the Garland Window for
the house of Cornelius Vanderbilt II. He then made several
comments concerning the central area of the Garland Window.
Yarnall stated that the window exhibited some fracturing and
appeared to have been restored. He noted that some sort of
glue or epoxy had been applied to the glass in such areas. A
general discussion ensued, with the several viewers pointing
to the areas where they detected such fracturing.
Schwartz did not purchase the Garland Window.
After Schwartz's viewing of the Garland Window, McNally
asked several stained glass restorers and conservators as well
as a restoration consultant to provide Graham with an
explanation for the presence of epoxy on the Garland Window.
The restorers sent Graham several letters detailing the
process of "crizzling," the structural decomposition of glass
that occurs with the diminution of the quantity of limestone
in the glass over time. The letters stated that the
application of epoxy to "seal" the glass is a technique for
conserving glass once crizzling has set in. The restorer of
the Garland Window also wrote a letter describing its
Graham forwarded copies of the letters to Frelinghuysen, who
in turn showed them to Voorsanger. Frelinghuysen later met
with Graham to discuss the contents of the letters, at which
meeting Frelinghuysen told Graham to get in touch with Yarnall
if he had any further questions about La Farge.
In early 1990 Schwartz purchased through the Gallery,
another La Farge stained glass window owned by McNally. The
window was virtually identical to the Garland Window.
3. The Newport Exhibition
In 1989 McNally and Vareika began planning an exhibition of
La Farge works to be held in July 1989 in Newport, Rhode
Island (the "Exhibition"). Of the approximately 117 works
consigned to be sold through the Exhibition, 70 belonged to
On several occasions in the months leading up to the
exhibit, Vareika sent to Yarnall for review photographs of
many of the works that were to be included in the Exhibition.
On each occasion, Yarnall rendered an opinion, usually over
the telephone. The result of this exchange was that the works
which he told Vareika were not in his opinion the works of La
Farge were not included in the Exhibition or in catalogue
listing these items (the "Exhibition Catalogue").
At some point during this time leading up to the Exhibition,
McNally asked Vareika not to pass on to Yarnall photographs of
the remainder of the items he planned to show in the
Exhibition. Some of these works had been heretofore
undiscovered, and McNally apparently wanted to introduce them
in the book he planned to publish sometime after the
At some time early in 1989, Vareika asked Yarnall to
participate in a symposium on La Farge to be held in Newport
in conjunction with the symposium. In a letter of April 27,
1989 written on Museum stationery declining the invitation on
the grounds of the demands of his schedule. In the same
letter, he stated that he did not think that holding a
symposium in order to publicize the Exhibition was "a good
idea" on the grounds that any publicity to be gained would not
justify the cost and on the grounds that a symposium, as
opposed to a lecture series, by calling together people "who
have a history of disagreeing with each other" would not serve
adequately the goal of promoting the Exhibition.
(a) The Rooster Window
In June 1989, Vareika placed an advertisement for the
upcoming Exhibition in Art and Antiques Magazine. The ad
contained, among other items, a photo of a stained glass window
owned by the McNallys depicting a Rooster (the "Rooster
Window"). The Rooster Window was not among the photographs
previously sent to Yarnall. (Vareika dep. at 96, 98).
Whether in response to a conversation with Yarnall or in
response to information from some other source, Vareika asked
Yarnall for an opinion on the Rooster Window. Yarnall
responded that the window was not recognized by La Farge by
himself or by the Catalogue Raisonne. He told Vareika that
Henry La Farge, the first director of the Catalogue Raisonne,
had been the first person to reject the Rooster Window in
1984. Yarnall further stated that the rooster motif was
unknown in La Farge's work and that the window was probably by
Thomas Wright, La Farge's studio assistant.
Vareika then asked McNally his position on the authenticity
of the Rooster Window. McNally repeated his position based on
various factors that the Rooster Window was indeed a La Farge.
Vareika subsequently discontinued the ad and removed the
Rooster Window from the Exhibition.
(b) The Letter of August 4
On August 4, Yarnall wrote a letter to McNally on Catalogue
Raisonne stationery which, along with accompanying documents,
discussed the Rooster Window. The letter, which was not
published to any one except McNally and Mary La Farge, the
wife of the late Henry La Farge, reads in pertinent part:
After Mary [La Farge] returns from the
Adirondacks next week, she is going to write for
elucidation on the works you own that are in
Vareika's show, following upon earlier
conversation with you. Surprisingly, many of
these are not known to the catalogue raisonne,
and not all of them seem to be by La Farge.
(c) The Hollyhocks Window
The invitation to the Exhibition depicted a stained glass
window owned by the McNally's known as the "Morgan Hollyhocks"
(the "Hollyhocks Window"). The picture of the Hollyhock Window
was captioned in the invitation as "Window originally from the
J. Pierpont Morgan House, New York, New York."
In a telephone conversation shortly after Vareika issued the
invitations, Yarnall told Vareika that in the opinion of the
Catalogue Raisonne and in his opinion, there was no certainty
that the window featured in the invitation was originally from
the J. Pierpont Morgan House. He stated that his opinion was
in part based on the fact that Henry La Farge had made a
similar determination regarding the Hollyhocks Window in 1984,
which communication Henry La Farge communicated to McNally in
writing, as well as his knowledge of the provenance of the
Yarnall also stated that he had recently discovered another
Hollyhocks Window and that he had good reason to believe that
the newly discovered window was the window that had belonged
to J. Pierpont Morgan. At Yarnall's deposition, he stated that
he found out later that what he thought was the "real"
Hollyhocks Window turned out to be a modern copy.
The parties dispute whether Vareika had solicited Yarnall's
opinion on the Hollyhocks Window.
(d) The Letter of August 19
On August 19, 1989, Yarnall wrote Vareika a letter, on
Museum stationery, in connection with the Exhibition
Catalogue. The letter states, in pertinent part:
It has taken me some time to assess your
catalogue, and my assessment is rather negative.
The catalogue is filled with misinformation and
There are at least 20 (and perhaps more) works in
the exhibition that simply aren't by La Farge.
This is not news to you. I told you about many of
these over the phone, and you said they would be
listed as from La Farge's circle rather than
from his hand. I also note for the record that
you misinformed me about the provenance of these
pictures and this does make a difference.
Initially, you told me that they all come from
Heinigke/Leuchs — Heinigke of course being a
recorded collector of lost La Farge portfolios from
which such things might have come. Your catalogue,
however, states that they came from the Thomas
Wright House, quite a different story.
Since the early 1970's works owned by Thomas
Wright at the time of his death have been
recognized as largely by Thomas Wright — quite
logically. Henry La Farge rejected a slew of works
similar to those in the show that turned up in
Thomas Wright's house at Montclair. Wright was a
prolific artist, and did work quite independently
from La Farge. I am in fact convinced that Sean
[McNally] has the largest holdings of works by
Thomas Wright in existence, but these do not belong
in a La Farge show without clear qualification.
In any case, the following works are not at
present considered to be by John La Farge:
[Catalogue] Nos. 32, 44, 47, 49, 50, 51, 57, 58,
59, 66, 68, 69, 71, 72, 78, 83, 87 and 108. It's
remotely possible that further study may admit
one or two of these to La Farge's work, but it's
certain that the vast majority will in the future
be identified by us as the work of Thomas Wright
or other La Farge assistants. We will be in touch
with Sean [McNally] to tell him that these works
are not by La Farge, and that they should not be
represented as such in the future unless
something major changes. On top of this, there
are three works you say came from Wright
(cat[alog] nos. 38, 47, and 84) that we know came
from La Farge Estate Sale/Heinigke/Leuchs. It
appears that Sean has the history of many works
that he owns muddled, rendering anything that he
says about them suspect.
. . . I simply fail to comprehend how that
purported Garth James portrait got into the
catalogue and exhibition without my knowing about
it. I don't know if this is by La Farge or not,
but the purpose of your tying up my phone and
filling my mailbox with material that required
immediate response was to assure that every
object in the show was passed on by the catalogue
[raisonne]. In view of how things turned out, I
feel badly used.
. . . To avoid future problems, I will require of
you the same thing that I require of everybody
else: publishable 8 x 10 BW photos and complete,
reliable provenance. All opinions will be
rendered in writing so that there will be no
James L. Yarnall
Richard J. Schwartz
La Farge Stained Glass Project
La Farge Catalogue Raisonne
I. McNally's Allegations
McNally's defamation and tortious interference with business
relations complaint is based on the following allegations: (1)
that a rivalry between McNally and Yarnall had developed over
the years: (2) that Yarnall's alleged valuation of the Moon
Window at a price significantly above McNally's alleged
valuation of the same window and above the price that an
allegedly similar window received fanned this rivalry; (3)
that at the viewing of the Garland Window, Yarnall stated that
the window was not an "important work by La Farge, that it
contained a significant amount of glass that was not original
to the window, that it was obvious the window had been
irreparably damaged and the glass badly shattered due to its
having been dropped, and that it had been poorly restored";
(4) that Yarnall allegedly stated that the Garland Window was
not worth $150,000; (5) with regard to the Exhibition, that
Yarnall stated that the Rooster Window "was not recognized as
a La Farge by either defendant Yarnall or the Catalogue
Raisonne," that Yarnall made other false deprecating
statements concerning the restoration of the Rooster Window,