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United States District Court, S.D. New York

August 9, 2004.

SPANIERMAN GALLERY, Profit Sharing Plan, Plaintiff,

The opinion of the court was delivered by: THEODORE KATZ, Magistrate Judge


On June 30, 2004, by leave of the Court, Defendant Mary Merritt amended her Answers in these consolidated declaratory judgment and interpleader actions, to assert counter- and cross-claims against Spanierman Gallery, for a declaratory judgment that she possesses superior title to Arthur Wesley Dow's painting, the "Grand Canyon" ("the painting"), and, in turn, for an order requiring the return of the painting.*fn1 Plaintiff Spanierman Gallery ("Plaintiff" or "Spanierman") has moved for summary judgment on these claims, pursuant to Fed.R.Civ.P. 56, on the grounds that: (1) Merritt's claims are barred by the statute of limitations; and (2) Merritt released all claims against third parties, including Spanierman Gallery, relating to the painting, in a "Settlement Agreement" between Merritt and Timothy Fagan, executed on September 14, 1999.

The parties have consented to trial before this Court pursuant to 28 U.S.C. § 636(c). For the following reasons, Plaintiff's motion for summary judgment is denied.


  The Court recites only those facts relevant to the instant motion,*fn2 and, unless otherwise noted, the following facts are undisputed. On February 16, 1998, Merritt invited a local art and antiques dealer, Timothy Fagan, to her home to assist her in preparing to move into a smaller residence. Merritt's niece, Katra Showah, was also present. At the end of that visit, Fagan left Merritt's home with, among other items, the painting. At the center of this dispute is whether Merritt sold the painting to Fagan, as Spanierman Gallery contends, or whether Merritt, as she contends, merely permitted Fagan to take the painting for the limited purpose of having it appraised.

  Approximately three months later, in May 1998, Fagan sold the painting to Spanierman Gallery through Craftsman Auctions, in Pittsfield, Massachusetts, for $150,000. Merritt claims to have been unaware of this sale until September 1999. (Affidavit of Mary Merritt, dated Sept. 6, 2000 ("Merritt Aff."), ¶ 11, attached as Ex. A to Affirmation of Elisabeth Seieroe Maurer, Esq., dated July 20, 2004 ("Maurer Affirm.").) Merritt further claims that Fagan failed to respond to her inquiries about the painting between February 1998 and September 1999, and that she therefore sought the assistance of an attorney, John Bonee III, Esq. (See id. ¶¶ 12-13.)

  On September 14, 1999, Merritt, Showah, and her attorney, Bonee, met with Fagan and his counsel regarding the painting, at which time attorney Bonee handwrote, and Merritt and Fagan both signed, a "Settlement Agreement" ("the Agreement"), under which Fagan promised to, among other things (1) pay Merritt a total of $40,000 over time; (2) provide certain information to Merritt concerning the painting's sale, such as the auction catalogue; and (3) to assist in verifying information about the sale, including the sale price and buyer. In return, Merritt was to release any claims against Fagan, and not to pursue claims against any third party. There are factual disputes with regard to Fagan's compliance with the Agreement's terms, including whether Merritt prevented Fagan's compliance. At the meeting, and subsequent thereto. Fagan provided Merritt with some information regarding the sale of the painting, but he did not make any payments under the Agreement.

  Merritt commenced an action against Fagan in November 1999, in Connecticut state court, alleging, inter alia, conversion. In January 2000, Merritt retained her current counsel, Elisabeth Seieroe Maurer, Esq., to represent her in the Connecticut action. Upon her retention, Maurer contacted the FBI to report Merritt's loss of the painting. The FBI conducted an investigation, and seized the painting in January 2000. Ultimately, the United States Attorney's Office commenced the instant interpleader action, naming Spanierman and Merritt as Defendants.

  On August 2, 2000, Spanierman Gallery commenced the instant declaratory judgment action, claiming that it is the painting's rightful titleholder. Shortly thereafter, Merritt moved to dismiss the action, asserting, inter alia, that her claims against Fagan in the Connecticut court action would be dispositive of Spanierman's claims to the painting's title. Fagan had defaulted in the liability phase of the Connecticut action, and in May 2002, the Connecticut Superior Court for the Judicial District of Danbury entered judgment in Merritt's favor on her conversion and related claims. See Merritt v. Fagan, No. CV990337866S, 2002 WL 1331839 (Conn. Super. Ct. May 17, 2002) (unpublished opinion). In an Opinion and Order dated February 6, 2003, the Court (Swain, J.) denied Merritt's motion to dismiss, and held that the Connecticut action had no preclusive effect in this action. See Spanierman Gallery, 2003 WL 289704, at **3-5.

  A trial in this action is scheduled to commence on August 10, 2004. In the course of preparing for the trial. Spanierman made known its position that Merritt has never asserted an actual claim to the painting in either of these actions. The Court granted Merritt leave to amend her Answers to assert such claims. Plaintiff's summary judgment motion followed. The motion seeks to preclude Merritt from asserting her replevin claims on the grounds that they are barred by the statute of limitations and/or the general release provision contained in the Settlement Agreement between Fagan and Merritt.


  I. The Summary Judgment Standard

  Summary judgment is appropriate only when the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding a motion for summary judgment, the Court "must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor." Am. Cas. Co. of Reading, Pa. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994) (quoting Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993)); see also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 2110 (2000) ("Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.") (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513 (1986)); Hayut v. State Univ. of New York, 352 F.3d 733, 743 (2d Cir. 2003). The moving party must "inform[] the district court of the basis for its motion" and identify the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). If the moving party meets this burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

  A party opposing a motion for summary judgment "may not rest on the pleadings but must further set forth specific facts in the affidavits, depositions, answers to interrogatories, or admissions showing a genuine issue exists for trial." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2d Cir. 1996); see also Fed.R.Civ.P. 56(c), (e); Celotex, 477 U.S. at 324, 106 So. Ct. at 2553. "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249, 106 S.Ct. at 2511; see also Hayut, 352 F.3d at 743. The nonmoving party may not rely on conclusory allegations or speculation to create disputed factual issues. See D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir.), cert. denied, 524 U.S. 911, 118 S.Ct. 2075 (1998); Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511 (citations omitted).

  II. The Timeliness of Merritt's Claims

  Spanierman Gallery argues that the counter- and cross-claims asserted by Merritt in her June 30, 2004 Amended Answers are untimely. Plaintiff contends that, under New York choice of law rules, the Massachusetts statute of limitations governs Merritt's replevin claims, and, under Massachusetts law, the claims are barred by the governing statute of limitations. Alternatively, Plaintiff argues that the claims are untimely under the limitations periods of Connecticut and New York, as well.*fn3 (See Pl.'s Mem. of Law in Support of Pl.'s Mot. for Summ. J. on Def.'s Counterclaims and Crossclaims ("Pl.'s Mem.") at 6-14; Pl.'s Statement of Material Facts ¶ 4.) Merritt rejoins that New York law governs her replevin claims, because she first demanded that Spanierman return the painting in New York (i.e., by way of asserting her counter- and cross-claims in this action on June 30, 2004), and that her claims are timely under New York's statute of limitations. (See Def.'s Mem. in Opp'n to Pl.'s Mot. for Summ. J. ("Def.'s Mem.") at 3-4.)

  A. Choice of Law

  A federal court sitting in diversity applies the choice of law rules of the forum state in which it sits, and thus, the Court applies New York's choice of law rules. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021 (1941); Hoelzer v. City of Stamford, 933 F.2d 1131, 1135-36 (2d Cir. 1991).

  Spanierman correctly argues that, under New York's choice of law rules, "questions relating to the validity of a transfer of personal property are governed by the law of the state where the property is located at the time of the transfer." Wertheimer v. Cirker's Hayes Storage Warehouse, Inc., 2001 WL 1657237, 2001 N.Y. Slip. Op. 40445(U) (N.Y.Sup.Ct. Sept. 28, 2001) (replevin action) (citing Kunstsammlungen Zu Weimar v. Elicofon, 536 F. Supp. 829, 845-46 (E.D.N.Y. 1981) and The Greek Orthodox Patriarchate of Jerusalem v. Christie's, Inc., No. 98 Civ. 7664 (KMW), 1999 WL 673347, at *4 (S.D.N.Y. Aug. 30, 1999)); see also Wyatt v. Fulrath, 16 N.Y.2d 169, 264 N.Y.S.2d 233 (1965). Spanierman contends that the relevant transfer of title occurred in Massachusetts, where it purchased the painting, in May 1998, from Craftsman Auction, and thus, the Massachusetts statute of limitations governs Merritt's replevin claims.*fn4

  The question of which substantive law governs the replevin claims, however, differs from the question of which statute of limitations applies. In New York, "[s]tatutes of limitations are usually characterized as procedural, not substantive," and New York courts apply local procedural rules, even when applying the substantive law of another state. Wertheimer, 2001 WL 1657237 (replevin claim governed by Arizona substantive law and New York statute of limitations). "New York courts generally apply New York's statutes of limitations, even when the injury giving rise to the action occurred outside New York . . . subject to a traditional statutory exception, New York's `borrowing' statute, C.P.L.R. § 202." Stuart v. American Cyanamid Co., 158 F.3d 622, 627 (2d Cir. 1998). Under New York's "borrowing" statute, if a cause of action accrues outside of New York in favor of a non-resident, courts must apply the shorter limitations period of either the state where the cause of action accrued or New York.*fn5 See N.Y.C.P.L.R. § 202; Dugan v. Schering Corp., 86 N.Y.2d 857, 859, 635 N.Y.S.2d 164, 165 (1995); Stuart, 158 F.3d at 627; Hoelzer, 933 F.2d at 1136.

  Spanierman does not address which statute of limitations applies under New York's borrowing statute. Rather, Spanierman appears to argue that because the relevant transaction took place in Massachusetts, Merritt's replevin cause of action accrued there, and thus the Massachusetts limitations period applies. (See Pl.'s Mem. at 7.) Merritt rejoins that her cause of action accrued in New York, because she "made a demand to Spanierman Gallery — in New York, for return of the painting, which demand was refused by Spanierman Gallery in New York. Thus, New York law governs the time that Defendant Mary Merritt has to assert her counterclaims." (Def.'s Mem. at 3-4.)

  For the reasons that follow, regardless of whether the Massachusetts or New York limitations period applies, the Court concludes that Merritt's replevin claims are timely. B. Merritt's Replevin Claims are Timely

  Massachusetts and New York both have three year limitation periods for replevin claims, see, e.g., Mass. Gen. Laws ch. 260, § 2a; N.Y.C.P.L.R. § 214(3), but the accrual point for replevin claims differs between the states. In Massachusetts, replevin "claims are subject to the so-called `discovery rule,' under which a cause of action which `is based on an inherently unknowable wrong' only accrues `when the injured person knows, or in the exercise of reasonable diligence should know of the facts giving rise to the cause of action." The Republic of Turkey v. OKS Partners, 797 F. Supp. 64, 69 (D. Mass. 1992) (quoting Dinsky v. Town of Framingham, 386 Mass. 801, 803 (1982)); see also MacCleave v. Merchant, No. 010859, 2002 WL 31480307, at *2 (Mass. Super. Oct. 1, 2002) (citing Hendrickson v. Sears, 365 Mass. 83, 89-90 (1974)) ("A cause of action accrues on the happening of the event likely to put the plaintiff on notice."). Whereas, under New York law, "a cause of action for replevin against the good-faith purchaser of a stolen chattel accrues when the true owner makes demand for return of the chattel and the person in possession of the chattel refuses to return it." Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311, 317-18, 567 N.Y.S.2d 623, 626 (1991); see also Hoelzer, 933 F.2d at 1136.

  Spanierman argues that Merritt knew, or reasonably should have known, "by the end of 1999," that it had purchased the painting, because her niece, Katra Showah, saw the painting featured in a Spanierman Gallery advertisement, and within a few months of mid-September 1999, had told Merritt and Merritt's former attorney, "I know who bought the painting." (Pl.'s Mem. at 6; Deposition of Katra Showah, dated July 9, 2003 ("Showah Depo."), at 86-87, attached as Ex. H to Affidavit of Andrew B. Bittens, Esq., dated July 12, 2004 ("Bittens Aff.").) Merritt claims that she did not learn of the painting's whereabouts "until January 2000[,] when Showah saw an advertisement in Architectural Digest for Spanierman's auction." (Merritt Aff. ¶ 16.)

  Whether Merritt discovered in late 1999 or January 2000 that Spanierman possessed the painting is immaterial to the timeliness issue. Under Massachusetts law, based on the dates by which the parties contend Merritt discovered Spanierman's possession of the painting, Merritt had until either late 2002 or January 2003 to assert her replevin claims.

  Under New York law, Merritt's replevin claims had to be asserted within three years from the date of Spanierman's "refusal" of her demand that it relinquish its claim to the painting. As the New York courts have explained, the so-called "demand rule" is not a literal one:

A demand consists of an assertion that one is the owner of the property and that the one upon whom the demand is made has no rights in it other than allowed by the demander. By the same reasoning, a refusal need not use the specific word `refuse' so long as it clearly conveys an intent to interfere with the demander's possession or use of his property.
Feld v. Feld, 279 A.D.2d 393, 395-96, 720 N.Y.S.2d 35, 37 (1st Dep't 2001) (citations omitted). The Court rejects Merritt's specious argument that her replevin claims did not accrue until she amended her Answers, in June 2004, to include them.*fn6 The record before the Court demonstrates that Merritt made her claim to the painting known to Spanierman no later than September 2000, when she moved to dismiss this action on various grounds, including the ground that her conversion action against Fagan in the Connecticut Superior Court would "resolve the ownership of the painting, which is the basis of Spanierman's complaint herein." (Def.'s Mem. of Law in Supp. of Def.'s Mot. to Dismiss at 9.) Spanierman's response, and cross-motion for summary judgment seeking declaratory judgment with respect to its title to the painting, filed on September 27, 2000, surely "convey[ed] an intent to interfere with" Merritt's "possession or use of" the painting, and thereby activated the statute of limitations. Feld, 279 A.D.2d at 396, 720 N.Y.S.2d at 37. Thus, under the New York law, Merritt was required to bring her replevin claims by no later than September 27, 2003.

  In Spanierman Gallery, Profit Sharing Plan v. Merritt, 00 Civ. 5712, Merritt filed her Answer on June 14, 2002; in the interpleader action, United States of America v. Spanierman Gallery, PSP and Merritt, 02 Civ. 1082, Merritt filed her Answer on May 9, 2002. The Answers, however, were not amended to include Merritt's counter- and cross-claims until June 30, 2004. Under Massachusetts and New York law, this was more than three years after the replevin claim accrued. Nevertheless, because the Court concludes that Merritt's amended pleadings relate back to the original pleadings, see Fed.R.Civ.P. 15(c), they are timely.

  C. Relation Back of the Amendments

  While federal courts sitting in diversity apply state law to determine whether an action is barred by the statute of limitations, "most courts considering the issue have held that the federal rule as to relation back applies even in a diversity case, since the question of relation back . . . is properly a matter of practice and procedure that is specifically dealt with in the Federal Rules of Civil Procedure." Contemporary Mission, Inc. v. The New York Times Co., 665 F. Supp. 248, 255 (S.D.N.Y. 1987) (quotation marks and citations omitted), aff'd, 842 F.2d 612, 616 (2d Cir. 1988); see also Jewell v. Capital Cities/ABC, Inc., No. 97 Civ. 5617 (LAP), 1998 WL 702286, at *1 (S.D.N.Y. Oct. 7, 1998); cf. Schiavone v. Fortune, 477 U.S. 21, 29-30, 106 S.Ct. 2379, 2384-85 (1986) (without discussion, applying Fed.R.Civ.P. 15(c) in diversity action); Nettis v. Levitt, 241 F.3d 186, 192-93 (2d Cir. 2001) (same); Datskow v. Teledyne, Inc., 899 F.2d 1298, 1305 (2d Cir. 1990) (same).

  Pursuant to Rule 15:

An amendment of a pleading relates back to the date of the original pleading when . . . the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading . . .
Fed.R.Civ.P. 15(c)(2). The critical requirement for relation back is that the opposing party has been given adequate notice of the claim in the amendment. Here, Merritt's replevin claim clearly arises out of the same conduct, transactions, and occurrences set forth in the Complaints and her original Answers — the circumstances under which Fagan came to possess the painting. For instance, in her Answer to Spanierman's Complaint in the declaratory judgment action, Merritt asserted "that Fagan took the painting from her home with the authorization to have it appraised and then returned to her with the appraisal." (Answer ¶ 23.) Similarly, in her Answer to the interpleader action, Merritt asserted that she "is entitled to legal and actual title and possession of the" painting. (Answer, Prayer for Relief.) Moreover, as the Court reasoned in its recent Order granting Merritt leave to amend, "the factual and legal issues relating to lawful title and possession of the painting have been at the center of this litigation since its inception" and Spanierman itself has sought "a determination as to who holds proper title to the painting. (See Compl. ¶ 45.) Thus, Plaintiff cannot claim to be too surprised that Defendant seeks to lodge a formal claim to title and possession in this action." Spanierman Gallery, 2004 WL 1488118, at *1 & n. 2.

  The Court therefore holds that Merritt's amendments relate back to her original Answers, and thus, her replevin claims are timely under both the Massachusetts and New York statutes of limitations. The Massachusetts limitations period expired at some point between late 2002 and January 2003. The New York statute of limitations expired at the end of September 2003. The Answer in the declaratory judgment action, 00 Civ. 5712, was filed on June 14, 2002, and the Answer in the interpleader action, 02 Civ. 1082 was filed on May 9, 2002.

  Accordingly, Plaintiff is not entitled to summary judgment on statute of limitations grounds.

  III. The Agreement

  On September 14, 1999, Merritt, her niece Katra Showah, and her attorney, John Bonee III, Esq., met with Timothy Fagan and his attorney in an effort to settle their dispute regarding the painting. (See, e.g., Merritt Aff. ¶ 14.) After a full day of negotiations, Merritt's attorney wrote, and Merritt and Fagan both signed, the following Agreement:

Settlement Agreement
Timothy Fagan of Newtown Connecticut and Mary Merritt of Danbury Connecticut hereby agree as follows —
1) Timothy Fagan shall pay Mary Merritt —
10,000 on or by 10/15/99 and 30,000 in quarterly installments w/o interest beginning January 1, 2000 ending October 1, 2003, being a total of $40,000.
2) Timothy Fagan shall give a second mortgage and promissory note both with customary statutory provisions on 12 Georgia Hill Road for $30,000 to Mary Merritt.
3) Upon signing this agreement Timothy Fagan shall immediately reveal the Auction Catalogue of the painting of Mary Merritt of the Grand Canyon which sold for $150,000 and will cooperate in all respects with respect to verification of buyer, artist, date and price of sale, $15,000 payment to auction house and amount paid to advisor of $10,000.
4) Timothy Fagan will deliver to Katra Showah the "Butler's Secretary" and the "Boot Scraps." 5) Mary Merritt to provide a General Release to Timothy Fagan for all claims upon receipt of partial payment and delivery of Note and Mortgage.
6) If verification information regarding the painting is true, Mary Merritt will not pursue claims against any other third party for it.
So agreed this 14th day of September, 1999.
s/ s/ Timothy Fagan Mary Merritt
  (Agreement, attached as Ex. 1 to Maurer Affirm. & Ex. E to Bittens Aff.)

  Plaintiff argues that it is entitled to summary judgment on Merritt's replevin claims because Merritt has "effectively settled any claims to title of the painting she might have had" by entering this Agreement. (Bittens Aff. ¶ 15.) Plaintiff contends that the Agreement: (1) "had the effect of finally clearing title to Mr. Fagan so that subsequent title holders would not be burdened by [Merritt's] future claims of title," and (2) released Merritt's claims against "any third parties." (Pl.'s Mem. at 15.) Plaintiff further argues that, even if Fagan failed to make payment under the Agreement, he did provide the required information about the sale of the painting and, thus, Spanierman is entitled to enforce the severable provision of the Agreement in which Merritt agreed not to pursue claims for the painting against third parties.

  Merritt responds that she and Fagan never reached a "meeting of the minds" and thus a binding agreement never came into existence. Alternatively, Merritt argues that Fagan failed to discharge his obligations under the Agreement, and thus, there was never an accord and satisfaction. Merritt further contends that Spanierman is barred from litigating issues relating to the Agreement because a Connecticut court concluded that the Agreement was not binding. Given a second opportunity by the Court to respond to Spanierman's arguments with respect to the Agreement, Merritt now argues that she is excused from performance by Fagan's failure to make payments under the Agreement and to provide her with the promised verification information, and, in any event, that the Agreement is indivisible. (See Letter from Elisabeth Seieroe Maurer, Esq., to Magistrate Judge Katz, dated Aug. 5, 2004 ("Maurer Ltr."), at 1-5.) Finally, Merritt contends that Spanierman is not an intended third party beneficiary of the Agreement. (See id. at 5-7.)

  A. Collateral Estoppel, Res Judicata, & The Rooker-Feldman Doctrine

  As a threshold matter, the Court considers whether the Connecticut trial court's determination that the Agreement was not binding, because there was no mutual assent or meeting of the minds, should be accorded preclusive effect. See Merritt v. Fagan, No. CV990337866S, 2002 WL 1331839, at *6 (Conn. Super. Ct. May 17, 2002), aff'd, 78 Conn. App. 590 (2003). Earlier in this litigation, Merritt moved to dismiss Spanierman's claims based on res judicata, collateral estoppel, and/or the Rooker-Feldman doctrine, on the ground that the Connecticut Superior Court for the Judicial District of Danbury rendered a decision in her favor on her conversion and other claims against Fagan. See id. The Court (Swain, J.) held that none of these doctrines applied because (1) the Connecticut trial court's judgment was rendered on default, and (2) Spanierman was not a party to the litigation, and was not in privity with Fagan. See Spanierman Gallery, 2003 WL 289704, at **3-5.

  Judge Swain's Opinion and Order is fully applicable to Spanierman's recently-asserted claims under the Agreement, and therefore, neither res judicata, collateral estoppel, nor the Rooker-Feldman doctrine bar Spanierman from asserting the Agreement's general release provision as an affirmative defense to Merritt's replevin claims.

  The doctrine of res judicata, or claim preclusion, prevents parties or their privies from relitigating issues that were, or could have been, raised in an action between them where a final judgment on the merits has been reached.*fn7 See, e.g., Efthimiou v. Smith, 268 Conn. 499, 506 (2004); Carnemolla v. Walsh, 75 Conn. App. 319, 327 (Conn. App. Ct. 2003).

  "Collateral estoppel, or issue preclusion, . . . prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties" or their privies. R&R Pool & Patio, Inc. v. Zoning Bd. of Appeals of the Town of Ridgefield, 257 Conn. 456, 466 (2001) (quoting Virgo v. Lyons, 209 Conn. 497, 501 (1988)) (internal quotation marks omitted). For collateral estoppel to apply, the issue "must have been fully and fairly litigated in the first action[,] . . . actually decided and the decision must have been necessary to the judgment. . . ." Id. (internal quotation marks and citations omitted).

  In essence, the Rooker-Feldman doctrine provides that the lower federal courts lack "subject matter jurisdiction over cases that effectively seek review of judgments of state courts. . . ." Moccio v. New York State Office of Court Admin., 95 F.3d 195, 197 (2d Cir. 1996); see also Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303 (1983); Bridgewater Operating Corp. v. Feldstein, 346 F.3d 27, 29-30 (2d Cir. 2003); Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998). The Rooker-Feldman doctrine bars federal courts from considering claims that are "inextricably intertwined" with a prior state court determination. Hachamovitch, 159 F.3d at 694 (citing Feldman, 460 U.S. at 482 n. 16, 103 S.Ct. at 1315 n. 16). A claim is "inextricably intertwined with the state court judgment if the federal claim succeeds only to the extent that the state court wrongly decided the issues before it." Id. at 694-95 (quoting Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 25, 107 S.Ct. 1519, 1533 (1987) (Marshall, J., concurring)). The Second Circuit has also interpreted "inextricably intertwined" to mean, "at a minimum, that where a federal [party] had an opportunity to litigate a claim in a state proceeding . . . subsequent litigation of the claim will be barred under the Rooker-Feldman doctrine if it would be barred under the principles of preclusion." Moccio, 95 F.3d at 199-200; see also Hachamovitch, 159 F.3d at 695.

  As Judge Swain explained in denying Defendant's Motion to Dismiss, "[a]n issue is not actually litigated if there has been a default. Thus, the Connecticut decision was not actually litigated for purposes of preclusion and the related consideration of application of the Rooker-Feldman doctrine." Spanierman Gallery, 2003 WL 289704, at *3 (citing Willard v. Travelers Ins. Co., 247 Conn. 331, 332 (1998)). Moreover, the trial court's conclusions concerning the Agreement were not necessary to its ultimate decision regarding Fagan's liability for conversion and violation of the Connecticut Unfair Trade Practices Act — i.e., those findings appear to be dicta — and thus could not have preclusive effect or implicate the Rooker-Feldman doctrine. See, e.g., R&R Pool & Patio, 257 Conn. at 466 ("An issue is necessarily determined if, in the absence of a determination of the issue, the judgment could not have been validly rendered. . . . If an issue has been determined, but the judgment is not dependent upon the determination of the issue, the parties may relitigate the issue in a subsequent action.") (quotation marks and citations omitted).

  Furthermore, Judge Swain also determined that there is no privity between Spanierman Gallery and Fagan for collateral estoppel or res judicata purposes, see Spanierman Gallery, 2003 WL 289704, at *3, and that conclusion remains the law of the case.

  For the foregoing reasons, the Connecticut state court decision does not preclude Plaintiff from asserting claims under the Agreement.

  B. Is the Agreement a Valid Contract?

  Merritt contends that the Agreement is not binding because there was no mutual assent, and she points to post-Agreement discussions between Merritt's then-attorney and Fagan's attorney which indicate that they "were on the verge of an agreement," but "do not . . . have an agreement." (Def.'s Mem. at 6 (quoting Letter from Donald A. Mitchell, Esq., dated Nov. 19, 1999, attached as Ex. 18 to Maurer Affirm.); see also Letter from John L. Bonee III, Esq., dated Oct. 21, 1999 (asking Fagan's attorney, "Do we have an agreement on the $40,000 or not? Is your client willing to accept a release from Mary Merritt plus a copy of the appraisal or not? Please answer these questions by Friday, or as we have stated previously, we shall have to seek the remedies to which we are entitled"), attached as Ex. 17 to Maurer Affirm.).

  1. Applicable Law

  As discussed, the Court looks to New York choice of law rules to determine what law to apply to the parties' substantive claims. See Klaxon Co., 313 U.S. at 496-97, 61 S.Ct. at 1021-22. In contract cases, New York courts "apply a `center of gravity' or `grouping of contacts' approach" to decide choice of law questions, under which "courts may consider a spectrum of significant contacts, including the place of contracting, the places of negotiation and performance, the location of the subject matter, and the domicile or place of business of the contracting parties." Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1539 (2d Cir. 1997) (citing In re Allstate Ins. Co. & Stolarz, 81 N.Y.2d 219, 227, 597 N.Y.S.2d 904, 908 (1993)). The significant contacts in this case were all in Connecticut. Merritt and Fagan were both Connecticut domiciliaries, and Fagan's business was located there. The Agreement was negotiated and executed in Connecticut, and concerned events that transpired in Connecticut. Further, the Agreement contemplated performance in Connecticut. Accordingly, the Court applies Connecticut contract law.

  2. Application of Connecticut Law

  "Settlement agreements are contracts and must therefore be construed according to general principles of contract law." Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481, 484 (2d Cir. 1999); see also MacDonald v. Dragone Classic Motor Cars, No. 395CV499(JBA), 2003 WL 22056626, at *6 (D. Conn. Apr. 29, 2003) ("once reached, a settlement agreement constitutes a contract that is binding and conclusive"). "To form a valid and binding contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between the parties. . . . If the minds of the parties have not truly met, no enforceable contract exists." L&R Realty v. Connecticut Nat'l Bank, 53 Conn. App. 524, 534-35 (Conn. App. Ct. 1999); see also Sicaras v. City of Hartford, 44 Conn. App. 771, 784 (Conn. App. Ct. 1997) ("Meeting of the minds . . . refers to fundamental misunderstandings between the parties as to what are the essential elements or subjects of the contract. It refers to the terms of the contract, not to the power of one party to execute a contract. . . ."). Courts look to objective manifestations of mutual assent, and not to the parties' subjective intentions. See Chambers v. Manning, 169 F.R.D. 5, 7 (D. Conn. 1996) ("Mutual assent is determined from the parties' acts and words, not from their subjective intentions."); see also Sever v. Glickman, 298 F. Supp.2d 267, 272 & n. 1 (D. Conn. 2004) ("Generally, courts look to the basic elements of the offer and the acceptance to determine whether there is an objective meeting of the minds sufficient to give rise to a binding and enforceable contract.") (applying New York law, but noting that "there appears to be no substantive distinction between New York and Connecticut law as it relates" to contract formation).

  Whether a contract has been formed "is ultimately a question of the intention of the parties." Otto Contracting Co. v. S. Schinella & Son, Inc., 179 Conn. 704, 709 (1980). Ordinarily, the trier-of-fact decides questions of contract interpretation, including questions of the parties' intent. See, e.g., Short v. Connecticut Bank & Trust Co., 60 Conn. App. 362, 367 (Conn. App. Ct. 2000). "[W]here there is definitive contract language," however, "the determination of what the parties intended by their contractual commitments is a question of law." Levine v. Massey, 232 Conn. 272, 277-78 (1995) (quotation marks and citation omitted); see also Gateway Co. v. DiNoia, 232 Conn. 223, 232 (1995) ("Although ordinarily the question of contractual intent presents a question of fact for the ultimate fact finder, where the language is clear and unambiguous it becomes a question of law for the court") (citations omitted). "The question is not what intention existed in the minds of the parties but what intention is expressed in the language used," Leonard Concrete Pipe Co. v. C.W. Blakeslee & Sons, Inc., 178 Conn. 594, 598 (1979), and if "the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." F&W Welding Serv., Inc. v. ADL Contracting Corp., 217 Conn. 507, 517 (1991). Here, the Agreement is "definite and certain as to its terms and requirements." L&R Realty, 53 Conn. App. at 535; see also Levine, 232 Conn. at 279 ("The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity.") (quotation marks and citation omitted); Sicaras, 44 Conn. App. at 784 & n. 9 (finding mutual assent and defining ambiguity as "[d]uplicity, indistinctness, or uncertainty of meaning of an expression used in a written instrument. . . . Language in contract is `ambiguous' when it is reasonably capable of being understood in more than one sense") (citations omitted). Indeed, Merritt does not claim that the terms of the Agreement are indefinite, incomplete, or ambiguous, nor does she point to any specific aspect of the Agreement as indicative of a lack of mutual assent, or the presence of confusion or mistake. Moreover, Merritt acknowledges that she read and understood the Agreement, discussed it with her attorney, and that she signed it in the absence of duress. Cf. Petrosino v. Westland Properties, Inc., No. CV00378729S, 2003 WL 21958435, at *2 (Conn. Super. Ct. July 23, 2003) (unpublished opinion)*fn8 (plaintiff signed the agreement, but attested that he was not permitted to read it before signing it, and did not have an attorney, thus creating genuine issue of material fact as to mutual assent); SKC Palm Holdings v. Gottlieb Family, No. CV980078029, 2001 WL 204189, at *2 (Conn. Super. Ct. Feb. 13, 2001) (unpublished opinion) (finding on summary judgment that there was no mutual assent where the contract was not signed and lacked an essential term).

  Merritt merely points to post-Agreement discussions between Merritt's and Fagan's attorneys to indicate that they were "still negotiating the terms of the settlement." (Def.'s Mem. at 6.) The post-Agreement discussions to which Merritt refers merely indicate that Merritt and Fagan experienced a change of heart with respect to the settlement terms, but do not address the issue of whether a contract was formed. See MacDonald, 2003 WL 22056626, at *6 ("the parties are bound to the terms of the contract even if a party has a change of heart between the time of the agreement to the terms of the settlement and the time it is reduced to writing"); cf. D'Andrea Bros. Realty v. Planning & Zoning Comm'n of the Town of Greenwich, No. D.N.CV93 0128894, 1994 WL 75826, at *5 (Conn. Super. Ct. Mar. 3, 1994) (unpublished opinion) ("Plaintiff claims that the subsequent conduct of the parties is strong presumptive evidence of their intention as to construction but offers the Court no authority for this assertion. However, this claim can be disposed of by the application of the rule that parol evidence is not to be examined when the parties' intention can be determined from the agreement itself. The parties subsequent actions would more properly be evaluated in a court's examination of whether a modification of [the agreement] was consummated.") (quoting Welch v. Arthur A. Fogarty, Inc., 157 Conn. 538, 547 (1969)).

  Thus, the Court concludes as a matter of law that the Agreement is a valid contract.*fn9 However, for the reasons discussed below, the Court cannot conclude as a matter of law that the third party waiver provision in the Agreement may be enforced by Spanierman.

  C. Is Spanierman a Third Party Beneficiary of the Agreement?

  Spanierman argues that it is a third party beneficiary of the Agreement and is therefore entitled to enforce the Agreement's general release as to third parties to defeat Merritt's replevin claims.

  "It is well settled that one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract." Tomlinson v. Bd. of Educ. of City of Bristol, 226 Conn. 704, 718 (1993) (quotation marks and citations omitted). Whether Spanierman is an intended third party beneficiary of the Agreement may be decided on summary judgment as a matter of law. See Delacroix v. Lublin Graphics, Inc., 993 F. Supp. 74, 83-84 (D. Conn. 1997); Gazo v. City of Stamford, 255 Conn. 245, 262 (2001); Gateway Co., 232 Conn. at 232.

  Under Connecticut law,

[t]he ultimate test to be applied [in determining whether a person has a right of action as a third party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third party [beneficiary] and . . . that intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties.
Knapp v. New Haven Road Constr. Co., 150 Conn. 321, 325 (1963) (quotation marks and citations omitted); see also Dow & Condon, Inc. v. Brookfield Devel. Corp., 266 Conn. 572, 580 (2003) (quoting Knapp, 150 Conn. at 325). So long as the parties to the contract intend for the promisor to assume a direct obligation toward the third party, the third party beneficiary need not be identified by name in the contract. See, e.g., Gateway Co., 232 Conn. at 231-32; see also Dow & Condon, Inc., 266 Conn. at 581 ("[E]ach party to a contract is entitled to know the scope of his or her obligations thereunder. That necessarily includes the range of potential third persons who may enforce the terms of the contract. Rooting the range of potential third parties in the intention of both parties, rather than in the intent of just one of the parties, is a sensible way of minimizing the risk that a contracting party will be held liable to one whom he neither knew, nor legitimately could be held to know, would ultimately be his contract obligee.").

  Here, it is apparent that the "third party" against whom Merritt promised not to bring claims was the painting's purchaser. Merritt's argument that the scope of her obligation was not clearly defined because she did not know the purchaser's identity at the time is unavailing. Although Merritt may not have known the identity of the gallery at the time she and Fagan entered the Agreement, it is clear that she was aware that the painting had been purchased at auction. (See Agreement ¶ 3.) The information that she sought from Fagan pertained to the buyer, date, and price of sale, and thus, it is apparent that, in promising to "not pursue claims against any other third party for" the painting "[i]f the verification information regarding the painting [turned out to be] true," Merritt and Fagan intended that she would not pursue claims against the purchaser, i.e., Spanierman. Furthermore, considering the Agreement's surrounding circumstances, it is apparent that the general release provision was intended to eliminate Fagan's potential liability to the subsequent purchaser, by eliminating the possibility of Merritt pursuing claims against the subsequent purchaser. See Huertas v. East River Housing Corp., 992 F.2d 1263, 1266-67 (2d Cir. 1993) ("Settlement agreements are to be discerned within the four corners of the agreement," but courts may look to "the circumstances surrounding a settlement agreement's formation . . . when construing it for enforcement purposes."). Thus, it is abundantly clear that Merritt and Fagan intended that Merritt would be bound by the general release provision with respect to whatever claims she might have brought against the painting's purchaser. That Fagan would also benefit from this general release does not militate against the conclusion that Merritt undertook an obligation to the third party purchaser.

  The Court therefore concludes as a matter of law that Spanierman Gallery is an intended third party beneficiary of the Agreement.

  D. Did the Agreement Clear Title in Favor of Fagan?

  Spanierman contends that the Agreement "effectuate[d] a transfer of title to Mr. Fagan by virtue of the `second' sale of the painting to Mr. Fagan. . . ." (Bittens Aff. ¶ 16; see also Pl.'s Mem. at 15.) The argument assumes too much, specifically, that Merritt sold the painting to Fagan in February 1998. Indeed, as both parties agree, whether Merritt sold the painting to Fagan is to be decided by the jury at the upcoming trial. Moreover, Spanierman has offered no case law support for the dubious proposition that Merritt transferred title to the painting by way of entering this Agreement. In fact, the Agreement specifically states that Merritt would waive her claims against Fagan only after she received her first payment. (See Agreement ¶¶ 1, 5.) This condition appears to be premised on Merritt's contention that the painting was rightfully hers. Therefore, the Agreement itself contradicts Spanierman's assertion that Merritt transferred title of the painting to Fagan by executing the Agreement.

  For these reasons, Spanierman is not entitled to summary judgment on the grounds that the Agreement effectuated a title-clearing sale.

  E. Is the Agreement Whole or Divisible?

  The parties do not dispute that Fagan failed to make any payments under the Agreement, although they disagree on the reasons why Fagan failed to perform. However, Spanierman has proffered evidence that Fagan provided Merritt with "verification information" described in the Agreement, and argues that the Agreement is a divisible contract, under which Fagan's provision of this information was separate consideration for Merritt's promise to not pursue claims against third parties. (See Pl.'s Mem. at 20; Reply at 11-13.) Initially, Merritt had asserted no argument, and presented no relevant contract law, in response to Spanierman's contention that Fagan's non-performance with respect to payment is irrelevant to her obligations under the Agreement to waive claims against third parties. At the request of the Court, over Plaintiff's objection, on August 5, 2004, Merritt submitted a letter arguing for the first time that the Agreement is indivisible because it does not contain corresponding pairs of part performances, and because Fagan's provision of verification information, standing alone, was not an "agreed equivalent" of Merritt's promise to forego claims against third parties. (See Maurer Ltr. at 1-4.) Merritt further argues that, while Fagan provided her with certain information about the painting's sale, he never told her the name of the purchaser.

  Spanierman asks the Court to decide as a matter of law that the Agreement is severable, and thus, that Fagan's failure to tender payment to Merritt is irrelevant to Merritt's obligation to release her claims against the gallery. Under Connecticut law:

A contract is divisible where by its terms, [1] performance of each party is divided into two or more parts, and [2] the number of parts due from each party is the same, and [3] the performance of each part by one party is the agreed exchange for a corresponding part by the other party.
Kunian v. Dev. Corp. of Am., 165 Conn. 300, 309 (1973) (quoting Restatement 1 Contracts § 266) (installment contract). They key inquiry is "whether the contract's parts and its consideration are common to each other or independent of one another." Venture Partners, Ltd. v. Synapse Techs. Inc., 42 Conn. App. 109, 118 (Conn. App. Ct. 1996) (quotation marks and citations omitted) ("The duties imposed on the plaintiff and the consideration the plaintiff would receive in return under part two [of the contract] are independent from the duties and consideration found under part four [of the contract]."). Connecticut courts also apply the Restatement's criteria for determining whether a contract is divisible:
If the performances to be exchanged under an exchange of promises can be apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents, a party's performance of his part of such a pair has the same effect on the other's duties to render performance of the agreed equivalent as it would have if only that pair of performances had been promised.
Carmel Homes, Inc. v. Bednar, No. CV990079393S, 2001 WL 1249810, at *2 (Conn. Super. Ct. Oct. 1, 2001) (quoting 2 Restatement (Second) § 240) (unpublished opinion).

  "The singleness or apportionability of the consideration rendered is a principal test in judging severability, and if the consideration is not expressly or by necessary implication apportioned, the contract will be construed as entire." Timely Prods., Inc. v. Costanzo, 465 F. Supp. 91, 97 n. 6 (D. Conn. 1979) (citing Haller Testing Labs., Inc. v. A. Lurie, Inc., 24 Conn. Sup. 1, 3-4 (Conn. Cir. Ct. 1962)); see also Hartford-Connecticut Trust Co. v. Cambell, 111 A. 864, 867 (1920) (where "substantial parts of the agreement are interdependent and common to each other" the contract is not divisible).

  In deciding whether "a contract shall be treated as severable or as an entirety the intention of the parties will control and . . this intention must be determined by a fair construction of the terms and provisions of the contract itself." Haller Testing Labs., 24 Conn. Sup. at 3. The intent of the parties "is determined from the language used interpreted in light of the situation of the parties and the circumstances connected with the transaction." Short, 60 Conn. App. at 367 (quotation marks and citations omitted). Yet, "[t]he circumstances surrounding the making of the contract, the purposes which the parties sought to accomplish and their motives cannot prove an intent contrary to the plain meaning of the language used." Sturman v. Socha, 191 Conn. 1, 12 (1983).

  Courts have observed that determining severability is a difficult task, see, e.g., Haller Testing Labs. Inc., 24 Conn. Sup. at 3, and this case confirms that difficulty. Here, the Agreement literally pairs Merritt's promise to not pursue claims against third parties with Fagan's providing truthful information about the painting (see Agreement ¶¶ 3, 6), and pairs Merritt's promise to release claims against Fagan with Fagan's rendering partial payment and security for future payments. (See id. ¶¶ 1-2, 5.) Thus, the Court reject's Merritt's argument that the performances were not divided into corresponding parts. (See Maurer Ltr. at 3-4.)

  Nevertheless, while the Agreement clearly imposes two separate duties on Fagan in exchange for two corresponding separate promises from Merritt, the Court is unable to conclude as a matter of law that the parties intended Fagan's payments and provision of information about the painting to be truly independent forms of consideration. Merritt argues that the forms of consideration are inter-related, "because the value of that [verification] information is nothing unless it is joined with the condition precedent of payment and security from Fagan." (Maurer Ltr. at 4.) Evidence proffered by Spanierman, however, strongly suggests that Merritt highly valued the information regarding the painting and, indeed, that obtaining the information was the driving force behind her entering the Agreement. (See Hearing Testimony of Mary Merritt ("Merritt Test."), attached as Ex. A to Affirmation of Andrew B. Bittens, dated Aug. 5, 2004.)*fn10

  Yet, that the provision of information about the painting to Merritt was of value, does not answer the question of whether receipt of that information alone, in the absence of Fagan's payment for the painting, was the only consideration sought for Merritt's giving up her claim to the painting. The Court does not intend to suggest that it was not, and there are plausible arguments which can be made to support the proposition. For example, the real value to Merritt of information about the painting, including the identity of the painter, the fact of its sale, and sale price, may have been to assure that Fagan's representations, and the premise for the monetary settlement they negotiated, were accurate. If Fagan's representations were found to be inaccurate, Merritt would have been free to repudiate the monetary portion of the Agreement. Although Merritt might have been prepared to forego claiming the painting, she would retain her right to assert claims against Fagan for, for example, conversion, and confirmation of the value of the painting would be of value in establishing her damages. In fact, Merritt pursued precisely that course in the Connecticut courts.

  By contrast, however, Merritt may be able to demonstrate that the real value of the information was to permit her to seek return of the painting should Fagan have breached his obligations under the Agreement, specifically the payment of monetary consideration. Indeed, Merritt may argue and demonstrate that the whole premise of her willingness to resolve all claims to the painting was Fagan's payment of $40,000, assuming that what he represented the value of the painting to be was confirmed.*fn11

  Although the language of the Agreement surely suggests two independent exchanges of obligations, the Court cannot conclude as a matter of law that they are not inter-related. As further example, one can question whether, had Fagan failed to provide the verification information, Merritt would still have been obligated to proceed with accepting payment of $40,000, and to waive her claims against Fagan. Based on Spanierman's construction of the Agreement, the answer would be in the affirmative, since the corresponding obligation for Fagan's provision of the information was simply Merritt's waiver of claims against third parties. Yet, this construction does strain logic.

  In short, the Court is unable to conclude, as a matter of law, that Fagan's performance with respect to partial payment and delivery of a note and mortgage is severable from his obligation to immediately reveal the auction catalogue and cooperate in verifying information about the painting. These are all matters which turn on the parties' intent, and are thus for the jury to resolve. See, e.g., Levine, 232 Conn. at 277; Carmel Homes, Inc., 2001 WL 1249810, at **2-3 (evidence presented at trial and supplemental evidentiary hearing on question of parties' intent, at the time of contract, with respect to contract divisibility).

  Finally, even assuming the provisions of the Agreement were severable, there is a factual dispute as to whether Fagan complied with his obligation to provide information about the sale of the painting, since Merritt claims that he never identified the purchaser. Spanierman responds that, at the time, Fagan did not know the purchaser, and therefore, he did not breach his obligation to assist Merritt with verification of the sale information. Spanierman asserts that Fagan provided all of the information required of him, and that Merritt failed to verify the information provided to her.*fn12 These factual disputes cannot be resolved by the Court.


  For the foregoing reasons, Plaintiff's motion for summary judgment is denied in its entirety.

  First, Merritt's claims are not barred by the statute of limitations.

  Second, while the Court concludes that the Agreement is a valid contract to which Spanierman Gallery is a third party beneficiary, the Court cannot conclude as a matter of law that the Agreement precludes Merritt's claims against Spanierman Gallery.

  The trial of this action will commence on August 10, 2004.


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