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Brown v. Mitchell-Innes & Nash

April 24, 2009

NATHANIEL T. BROWN, AS TRUSTEE OF DECA TRUST, PLAINTIFF,
v.
MITCHELL-INNES & NASH, INC., DAVID NASH, INDIVIDUALLY, ADOLF WÜRTH GMBH & CO. KG, AND WÜRTH INTERNATIONAL AG, DEFENDANTS.



The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge

DOCUMENT ELECTRONICALLY FILED UNITED STATES DISTRICT COURT DOC #: _________________

OPINION & ORDER

This case involves a dispute over ownership of the painting "Mystery of the Beach," created by the Norwegian expressionist Edvard Munch in 1892. Deca Trust, the Plaintiff, owned the painting from May 2004 until it was sold in May 2006 to Defendants Adolf Würth GmbH & Co. KG ("Würth KG") and Würth International AG (together with Würth KG, the "Würth Entities" or "Defendants") through Mitchell-Innes & Nash, Inc. ("MIN"), an art dealer in New York City. Plaintiff seeks the return of the painting from the Würth Entities and also brings claims for illegal conversion and for a declaratory judgment naming Deca Trust as the rightful owner.*fn1 The Würth Entities move to dismiss the claims for lack of personal jurisdiction and for failure to state a claim under Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the Court denies the Defendants' 12(b)(2) motion to dismiss for want of jurisdiction; but grants the 12(b)(6) motion for failure to state a claim upon which relief can be granted.

BACKGROUND

I. Factual Allegations*fn2

In June 2001, a group called ArtColl Trust purchased "Mystery of the Beach" ("the painting") from a European seller. On May 26, 2004, ArtColl Trust assigned the painting to Deca Trust, and on the same day Deca Trust and MIN entered into a consignment agreement. (See First Amended Complaint ("Am. Compl.") ¶¶ 11, 13.) Deca Trust, through its trustee Nathaniel T. Brown, is based in Washington State. MIN is based in New York City. MIN's obligations under the agreement were to take possession of the painting for the purpose of making and receiving offers on its sale. (Id. ¶ 13.)

The consignment agreement stated that MIN had to obtain Deca Trust's written consent before removing the painting from MIN's New York premises. (Id. ¶ 16; Ex. B ¶ 3.3.) The agreement also stated that MIN did not have authority to sell the painting without Deca Trust's approval. (Id. ¶ 18; Ex. B ¶ 9.1.) The agreement limited MIN to selling the painting for a gross price of not less than $7 million. MIN was permitted to sell the painting for less, provided that Deca Trust received at least $6 million in net sales proceeds after MIN took its commission. (Id. ¶ 19; Ex. B ¶ 1.1.) Deca Trust and MIN added an amendment to their consignment agreement on December 20, 2006, to allow the painting to be loaned to the Museum of Modern Art ("MoMA") for a Munch exhibition from January 30, 2006 through May 26, 2006. (Id. ¶ 16; Ex. B at "Amendment 2 to Consignment Agreement.")*fn3

The Würth Entities are based in Germany and Switzerland. The Amended Complaint states that Würth KG owns a museum called Museum Würth, and that the Würth Entities acquire more than 1,000 paintings a year and earn income from the public display of their painting collections. (Id. ¶¶ 4, 5, 27.) According to the Amended Complaint, in early 2006 an art consultant and dealer named Christoph Graf Douglas contacted Sylvia Weber, the curator for Museum Würth, to tell her that "Mystery of the Beach" was for sale. (Id. ¶ 28.) Douglas had allegedly consulted with the Würth Entities for many years about their art collection and possible acquisitions, and Plaintiff attempts to classify Douglas as an agent of the Würth Entities (see id. ¶ 22), though Defendants dispute this characterization. Crucial to Plaintiff's claims here, Douglas is allegedly also a co-owner of a separate art-consulting business in New York with Nash, MIN's director. (Id. ¶ 21.) The Amended Complaint also alleges that the Würth Entities and MIN had worked together on art sales and purchases on previous occasions. (Id. ¶¶ 23-26.)

In response to Douglas' call about "Mystery of the Beach," Weber allegedly told Douglas to contact MIN and have MIN contact her. (Id. ¶ 29.) A MIN employee named Lucy Dew then contacted Weber in February 2006 and sent a photo-an Ektachrome-of the painting to Weber. (Id. ¶¶ 30, 32.) The Amended Complaint states that the Defendants "instructed one of their agents to view the Painting in New York" in connection with their interest in purchasing the painting. (Id. ¶ 31.)

On April 7, 2006, a Würth Museum representative e-mailed Dew and asked whether the painting was still available. (Id. ¶ 34; Ex. L.) At some point between April 7 and May 18, Weber allegedly phoned MIN and asked MIN to ship the painting to Germany. The painting returned to MIN from the MoMA exhibit on May 12, 2006, and MIN shipped it to Germany on May 18. (Id. ¶¶ 36-38.) Before the painting was shipped, MIN and the Defendants allegedly agreed on a purchase price of $6.5 million. Despite the clear language of the consignment agreement, MIN never notified Deca Trust of its dealings with the Würth Entities or that it had shipped the painting to Germany. (Id. ¶ 38.)

Sometime between May 24 and May 31, Weber telephoned MIN and said that the Würth Entities would purchase the painting. Over the next several weeks Defendants and MIN discussed how the painting would be invoiced, and on June 14, 2006, Würth International wired $6.5 million to MIN's account at First Republic Bank in New York City. (Id. ¶¶ 40-46.)

Once the sale was complete, MIN finally advised Deca Trust of the Defendants' interest in and subsequent purchase of the painting. MIN director Nash allegedly contacted Tara Coram, Senior Curator for Deca Trust, on June 21, 2006, and said that he had a prospective buyer for the painting for $6.5 million. Nash asked that he be able to retain a commission that would leave Deca Trust with only $5.85 in net proceeds. On July 6, 2006, after Deca Trust rejected Nash's proposal, Nash told Coram that he had already sold the painting for $6.5 million, and Nash informed Coram that he was no longer in possession of the painting. (Id. ¶¶ 48-54.) At Deca Trust's request, Nash sent a letter to Defendants requesting return of the painting and cancellation of the sale, but Defendants refused. (Id. ¶¶ 55-57; Ex. G, F.)

II. Procedural History

Plaintiff first filed a complaint on September 9, 2006, naming only MIN and Nash. Plaintiff took limited depositions in the case, including depositions of some of the parties in Germany. On December 9, 2007, the Court granted Plaintiff's motion to amend the complaint and add the Defendants to the case. Plaintiff, MIN, and Nash stipulated to MIN and Nash's dismissal from the case on May 6, 2008. In September 2008 Defendants filed a motion to dismiss the Amended Complaint, and the Court held oral arguments on the motion on April 17, 2009.

DISCUSSION

I. Personal ...


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