The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
The defendant Capitolo di San Pietro in Vaticano ("Capitolo")
has moved under Rule 56, Fed.R. Civ. P., for partial summary
judgment on its counterclaims against plaintiff Bangkok Crafts
Corporation ("BCC"). Upon the following findings and conclusions,
the motion is granted and the August 2000 agreement is declared
void, the 1996 license properly terminated, and alternatively
expired before its renewal.
BCC initiated this action against Capitolo in the Supreme Court
of the State of New York, County of New York, and it was removed
by Capitolo to this Court on January 2, 2003.
BCC alleged that Capitolo vacated a license
agreement dated August 28, 2000 (the "2000 license
and February 8, 1996 one "1996 License"). Discovery proceed in
the instant motion was filed on October 20, 2003 and heard
and marked fully submitted on February 11, 2004. The Facts
The facts are set forth in the Local Rule 56.1 Statement of
Capitolo and in the opposing affidavit of John Loata ("Loata")
and are not disputed except as noted.
Capitolo is the chapter or clergy of St. Peter's Basilica in
the Vatican City; its between 30 and 40 members are all priests
in the Catholic Church, appointed by the Pope. From among the
members, five Camerlenghi, or administrators, are appointed. The
Camerlenghi are responsible for administering the day-to-day
affairs of Capitolo, subject to the ultimate authority of the
Capitolo members themselves.
The Capitolo owns numerous valuable and unique works of art
predominantly crosses, chalices, communion trays, and other
pieces used in religious services, as well as commemorative medal
coins the "Works"). In 1996, the Capitolo's chief chancellor, or
Camerlengo Maggiore, Monsignor Michele Basso ("Basso"), was
approached by Loata on behalf of BCC regarding a license to
manufacture and sell reproductions of the Works. On February 8,
1996, Loata and Basso executed a Promessa Di Contratto (the
"Promessa"), written in Italian, setting forth the terms of the
arrangement for BCC to manufacture and sell reproductions of the
Works. A few months later, on May 8, 1996, Loata and Basso
executed an English language license agreement (including the handwritten "amendments" thereto) (the "1996 License") under
which Capitolo granted to BCC an exclusive right and license,
effective is of February 8, 1996, to manufacture and sell
reproductions of the Works ("Reproductions").
The 1996 License required BCC to pay royalties to Capitolo
equal to five percent of all net sales of the Reproductions on a
quarterly basis within 30 days after the end of each quarter
and be accompanied by a certified sales report. This
typed amendment to Section 6 also permitted BCC to enter into
sublicenses with unaffiliated parties, and obligated BCC to pay
royalties to Capitolo equal to five percent of the fees BCC
receives from its sublicensees.
BCC provided no accounting for sales, and no royalty payments
at all during the first 15 months that the 1996 License is in
effect. After counsel for Capitolo wrote to BCC on
or about May 2, 1997 demanding the required
royalty payments and certified sales
reports BCC produced its first sales statement to
Capitolo. The sales report from BCC was not
Between July 22, 1997 and July 12, 1998, BCC failed
to make timely payments and accounting was
provided no royalty payments or certified sales
reports for during this one-year period. On
August 5, 1998, BCC produced its next accounting, purporting
to proffer December 19, 1997 through July 12, 1998
covering a seven-month period and omitted any report for seven months May 9, 1997
through December 18, 1997. BCC did not report or pay royalties
for the missing seven months. BCC also failed to make the $2,500
royalty payment until October 9, 1998.
After the August 1998 report and October 1998 payment, BCC did
not send another royalty payment or certified statement of sales
to Capitolo until July 9, 1999. This royalty payment and sales
report covered only the seven-month period from November 1, 1998
through May 31, 1999. BCC did not provide royalty payments and
did not account for the three-month period between August 1, 1998
and October 31, 1998.
On October 6, 1999, BCC submitted a royalty payment and
certified sales report to Capitolo covering the period from June
1, 1999 through September 30, 1999. On or about February 9, 2000,
BCC submitted a royalty payment and sales report covering the
period from October 1, 1999 through December 31, 1999.
BCC has not submitted any royalty payments or certified sales
reports to Capitolo since its February 9, 2000 report, and BCC
has not provided any royalty payments or reports covering any
period since December 31, 1999.
The 1996 License provides: "BCC will fax to Monsr. a copy of
all reproductions for review and will provide a sample of the reproduction thereafter." The 1996 License also prohibits BCC
from "employ[ing] any promotional or advertising material in the
sale of the Reproductions that is unethical, immoral or offensive
to good taste and which is not consonant with moral and religious
BCC has not submitted any sublicensed reproductions or related
advertising material to Capitolo for the required review.
The initial term of the 1996 License was for five years,
commencing on February 8, 1996, and renewable for another
five-year term at BCC's election. Section 9 of the 1996 License
The term of this Agreement shall continue in effect
for a period of 5 years from the date first above
written, and shall be renewable at the election of
BCC, for an additional period of 5 years.
License § 9.
Capitolo's counsel wrote to BCC's counsel on September 3,
1998 stating expressly that Capitolo's
contractual relationship with BCC would conclude at the
expiration it the original five-year term on February 7, 2001.
During meetings between Loata and Capitolo's representative,
Commendative Angela Sironi ("Sironi") on
May 20, and 21, 2000, Sironi again informed Loata of Capitolo's
refusal to renew or extend the 1996 License because of Capitolo's
complete dissatisfaction with BCC's performance under
the 1996 License. Following this meeting, counsel for Capitolo wrote to
BCC on July 27, 2000, once again stating Capitolo's refusal to
extend or renew the 1996 License beyond its original five-year
According to BCC, on August 28, 2000 it obtained Capitolo's
agreement to a new, vastly expanded license agreement with a term
renewable at BCC's election for up to 45 years (the "2000
License"), executed on Capitolo's behalf by Cardinal Virgilio
Noè (Archpriest of the Capitolo) ("Noè") and Monsignor Giuseppe
Bordin (then Camerlengo Maggiore) ("Bordin"). On or about October
16, 2000, Capitolo received a letter from counsel for a BCC
sublicensee, Maxx International, Inc. ("Maxx"), requesting
Capitolo's confirmation of the 2000 License. Noè and Bordin deny
any prior knowledge of the existence ...