United States District Court, S.D. New York
OPINION & ORDER
A. ENGELMAYER UNITED STATES DISTRICT JUDGE.
case, now on summary judgment, involves claims of a breach of
an agreement between the renowned cartoonist Al Hirschfeld
and a gallery licensed to represent him. Plaintiff is the Al
Hirschfeld Foundation ("the Foundation"), which,
upon Hirschfeld's death in 2003, succeeded to
Hirschfeld's interests and obligations under a 2000
Settlement Agreement (the "Agreement") with
defendants Margo Feiden and the Margo Feiden Galleries, Ltd.
(singly, the "Gallery"; and together with Feiden,
the "Galleries"). The Galleries had represented
Hirschfeld during his lifetime and, governed by the
Agreement, continued that relationship with the Foundation
after his death. The Foundation, however, claims that the
Galleries have materially breached the Agreement in multiple
respects, and in 2016, took steps to terminate the Agreement.
central question in this action is whether that termination
was valid. The Foundation seeks a declaratory judgment to
that effect. It brings other claims against the Galleries,
including for copyright infringement, violations of the
Lanham Act, breach of contract, breach of fiduciary duty,
replevin, conversion, and negligence, all arising out the
Galleries' supposed disregard of or noncompliance with
obligations under the Agreement. The Galleries dispute these
claims, and counterclaim for breach of contract, breach of
the covenant of good faith, and defamation. This Court has
granted the Foundation preliminary relief-including to
safeguard original works by Hirschfeld-to protect its
interests during the litigation.
Foundation now moves for summary judgment on several claims.
The Galleries have cross moved. In this decision, the Court
limits itself to resolving the issues necessary to decide the
parties' central dispute: whether the Foundation's
termination of the Agreement was valid. For the reasons that
follow, the Court grants the Foundation's summary
judgment motion on that question, finding termination
warranted for multiple reasons.
Overview of the Hirschfeld/Feiden Business
Hirschfeld was a renowned cartoonist, famous for his
depictions of Broadway stars and other celebrities and for
his weekly cartoon in the New York Times. Margo
Feiden began selling Hirschfeld's works on consignment in
1969. Def. 56.1 ¶ 2. That relationship was formalized in
a 1974 agreement, which governed Hirschfeld's and
Feiden's business relationship through the end of the
century. Feiden is, and at all relevant times was, the
principal and owner of the Gallery. Feiden Decl. ¶ 1.
2000, Hirschfeld and Feiden agreed to settle a dispute, the
details of which are not relevant here, and to continue doing
business together. The Settlement Agreement they reached that
year has since governed Hirschfeld and Feiden's
relationship. In 2003, Hirschfeld died. The Al Hirschfeld
Foundation succeeded to his rights and obligations under the
The Types of Works at Issue
works exist and have been sold or licensed in several forms
relevant here, Originals and limited edition
lithographs: During his lifetime, Hirschfeld created
line drawings and color illustrations that were later printed
as limited-edition lithographs. Originals and limited
editions of these are still sold today. The Agreement
contains provisions governing such works. See
Agreement ¶ 2(a)(i).
Works: Some of Hirschfeld's drawings were
commissioned from him by third parties, including most
notably the New York Times. The Agreement also
covers such works, to which it refers as "Media
Commissioned Works." See Id. ¶ 2(a)(iii).
Reproductions: The Agreement also addresses photostatic
copies of the Works, to which it refers as "Photostatic
Reproductions." See Id. ¶ 2(a)(iv).
purpose licenses: The Agreement contains provisions
authorizing the parties to license third parties to use the
works for limited purposes, either for a fee or for free.
Both Hirschfeld (and later the Foundation) and the Galleries
have licensed third parties to do so. See Agreement
¶¶ 2(a)(ii), 6(h)(1), 6(h)(ii), 6(h)(iii); Rao
Decl. Ex. 2 ("Eastman Dep.") at 11. When the
Galleries facilitate a licensing or reproduction
relationship, they retain a percentage of the licensing fee.
Agreement ¶ 4(a)(ii).
A central area of dispute involves a form of reproduction
known in the art world as a "giclee." A
giclee is a "high quality photo-static
reproduction of a work of art;" that is, a high-quality
reproduction made via an inkjet printer. See Def.
56.1 ¶ 39; Pl. Counterstatement 56.1 ¶ 39; Rao.
Decl. Ex. 5 ("Snow Dep.") at 100. The Agreement
does not contain any provisions addressing giclees
as such. As reviewed below, the parties take different
positions as to whether the Galleries have the right to sell
giclees of Hirschfeld's works.
Central Terms of the Agreement
Agreement's central terms, as relevant here, are as
and licensing: The Agreement authorizes the Galleries to
serve as the Foundation's "exclusive representative,
" Agreement ¶ 2(a), for the sale of up to 250
original Hirschfeld works on a consignment basis,
id. ¶ 2(a)(i); for the licensing of
reproductions of certain Hirschfeld works, id.
¶ 2(a)(ii); for the sale on consignment of certain
"Media Commissioned Works"-that is, works that were
previously commissioned by third parties, id.¶
2(a)(iii); and for the sale of photostatic reproductions of
Hirschfeld's work, id. ¶ 2(a)(iv). The
Agreement also authorizes the Galleries to produce new,
limited-edition prints of Hirschfeld's work, subject to
several limitations. Agreement ¶ 3(c). The Galleries are
authorized to produce up to 18 series of limited-edition
prints per year of 100 to 550 prints per edition.
The Agreement entitles the Galleries to certain fees,
depending on the type of work sold: for the sale of Consigned
Works, the Galleries receive 50% of the sale price,
id. 4(a)(i); for the licensing of a reproduction,
20% of the licensing fee, id. ¶ 4(a)(ii); for
arranging the creation of new Media Commissioned Works, 15%
of the sales price of such works, id. ¶
4(a)(iii); for the sale of photostatic reproductions, 36.5%
of the sale price, id. ¶ 4(a)(iv); and for the
sale of limited-edition prints as authorized by ¶ 3(c),
100%, minus certain fees for the Foundation, id.
Foundation's retained rights: Although the Galleries
are thus authorized to sell and, in certain instances,
reproduce, Hirschfeld's work, the Agreement provides that
the Foundation "retain[s] all rights in the Works not
expressly granted to [the Galleries] in this Settlement
Agreement." Id. ¶ 6(h). The Agreement
describes the Foundation's retained rights as including,
but not limited to, "sole proprietorship of copyright,
trademark, privacy, publicity and related rights in the Works
and in Hirschfeld's name, likeness and signature, subject
to [the Galleries'] right... to use Hirschfeld's
name, likeness (including self-portraits), biographical
material and to reproduce Works in connection with [the
Galleries'] promotion, advertising and marketing in
furtherance of [the Galleries'] rights under this
Settlement Agreement." Id.
The Agreement sets out provisions governing its termination.
See Id. ¶ 11. The Agreement "shall
terminate" 90 days after "written notice by [the
Foundation] to [the Galleries] of termination by [the
Foundation] for Cause which remains uncured for a period of
thirty (30) days following such notice." Id.
¶ 11 (a). "Cause, " in turn, is defined to
include a "material breach" of several of the
paragraphs of the Agreement. Id. ¶ 1 l(b)(i).
As relevant here, these include Paragraph 5, which imposes
requirements governing the Galleries' operations, and
Paragraph 6, which governs the relationship of the parties,
including the copyright rights retained by the Foundation.
Procedural History of This Litigation
The Foundation's Complaint and Motion for Emergency
6, 2016, the Foundation initiated this action, filing,
initially under seal, both a complaint and a motion for
emergency relief. See Dkt. 1, 6.
brief, the Complaint alleged a series of escalating breaches
by Feiden and the Gallery over the preceding months. Among
other things, it alleged that Hirschfeld's works were
being mishandled; that the Gallery space itself was poorly
maintained and disorganized so as not to comply with the
requirements of the Agreement; and that the Gallery staff
also did not meet the qualifications required by the
Agreement. Id. ¶¶ 34-40. The Complaint
also alleged that Feiden and the Galleries had refused to
return to the Foundation certain Hirschfeld works consigned
to the Galleries. Id. ¶¶ 41-50. Finally,
the Complaint alleged that the Galleries had infringed the
Foundation's copyright rights by making various
unauthorized reproductions, including of two Hirschfeld
works, "Carol Burnett" and "Bob Hope, "
for use by Time Life without the Foundation's permission.
Id. ¶¶ 51-63.
Complaint sought declaratory, injunctive, and monetary
relief. Id. at 16-19. As to declaratory relief, the
Galleries sought declaratory judgments that (1) the Galleries
had infringed its copyright rights; and (2) the Foundation
had a superior possessory interest over the works that the
Galleries refused to return. Id. at 16. As to
injunctive relief, the Foundation sought to enjoin the
Galleries from reproducing and selling unauthorized works,
id. at 16-17; from representing that the
unauthorized works had been endorsed or authorized by the
Foundation, id. at 17; and from hiding or disposing
of any Hirschfeld works in the Galleries' possession,
id. The Foundation sought damages for the
Galleries' copyright infringement and for violations of
the Lanham Act. Id. The Foundation relatedly sought
an order compelling an accounting of the Galleries'
profits from the sale of infringing works, requiring those
profits be held in trust, and authorizing the seizing and
impounding of infringing works. Id. at 18.
Foundation also sought a temporary restraining order and,
ultimately, a permanent injunction, seizing and impounding
several works in the Galleries' possession and barring
the Galleries from selling, licensing, or reproducing works.
Id. at 19.
The Ex Parte Hearing
7, 2016, the Court held an emergency, ex parte
hearing on the Foundation's request for a preliminary
injunction. See Dkt. 23 (transcript). At that
hearing, counsel for the Foundation elaborated on the
Foundation's basis for claiming risk to Hirschfeld works
in the custody of the Galleries. Counsel explained that the
Galleries had refused to return 35 original works that the
Foundation believed were in their possession, see
Id. at 4, 29-32, and, based on the observations of an
investigator, had been mistreating other Hirschfeld works in
their possession, id. at 4-5; see also Id.
at 22-24. Counsel explained the Foundation's position
that, as to works consigned to the Galleries, the Foundation
had an unconditional right to request the return of any work
and have the work returned within 10 days. Id. at
32-33. Counsel further explained the basis for the
Foundation's claims that the Galleries were selling
unauthorized giclee prints of Hirschfeld works
entitled "Bob Hope" and "Annie Hall, "
id. at 10-12, and were misrepresenting the
exclusivity rights granted them under the Agreement,
id. at 12-15. Counsel explained that the Foundation
planned to issue a termination notice to the Galleries, but
had not yet done so out of concern that, absent the
protection of a court order, the notice might provoke the
Galleries to take action injurious to the artwork and/or the
Foundation's rights. See Id. at 2-3, 6-9, 18-20.
close of the ex parte hearing, the Court issued an
order to show cause that granted the Foundation temporary
relief and scheduled an emergency hearing, Dkt. 14, while
unsealing the record, Dkt. 3. The Court's order directed
the Galleries to deliver to the Court on Friday, July 10,
2016, 34 works whose return the Foundation had requested, as
well as the Bob Hope and Annie Hall giclees. See
Dkt. 14 at 3-4. The order further required the Galleries to
produce "an accounting identifying, work-by-work, the
precise location and whereabouts of each of the Original
Works listed" on an attached exhibit. Id. at
4-5. The Court also ordered that the Galleries show cause why
a temporary restraining order and preliminary injunction
should not issue barring them from (a) producing and selling
giclee or photostatic reproductions for which the
Agreement does not authorize them; (b) holding themselves out
as authorized distributors of such unauthorized works; and
(c) selling, hiding, or destroying any Hirschfeld works in
the Galleries' possession. Id. at 1-2.
The Foundation's June 2016 Notice of Termination
on June 7, 2016, the Foundation served a notice of
termination (dated June 6, 2016) on the Galleries.
See Kaplan Deck, Ex. 3 (the "Termination
Notice"); Pl. 56.1 ¶ 7; see also Dkt. 44
at 74. The Termination Notice claimed numerous material
breaches of the Settlement Agreement. Specifically, the
Foundation asserted that:
• The Galleries failed to maintain gallery space similar
in quality to the space the Galleries had previously
maintained at 699 Madison Avenue, in violation of paragraph
5(b) of the Agreement;
• The Galleries failed to maintain adequate fire and
theft insurance for the Hirschfeld works in their possession,
in violation of paragraph 5(f) of the Agreement;
• The Galleries failed to employ a person knowledgeable
in the arts at the gallery, in violation of paragraph 5(g) of
• The Galleries failed to comply with the
Foundation's reasonable requests in furtherance of its
rights under the Agreement, in violation of paragraph 5(i) of
• The Galleries failed to return works consigned to them
by the Foundation, in violation of paragraphs 6(a) and 6(e)
of the Agreement; and
• The Galleries violated the Foundation's copyright
rights by making reproductions of Hirschfeld works, in
violation of paragraph 6(h)(i).
Notice at 1-2.
general terms, the Termination Notice also asserted that the
Galleries had "prioritized short-term financial gain,
disregarding both the Foundation's legal rights and the
extensive harm [the Galleries'] unlawful actions have
caused, and will continue to cause, to Hirschfeld's name
and artistic legacy." Id. at 2. In light of
those breaches, the Termination Notice concluded, the
Foundations had "no choice but [to] sever its
relationship" with the Galleries. Id.
Termination Notice gave the Galleries an effective
termination date of September 6, 2016, meaning that if the
asserted breaches were not were cured within 30 days of the
notice, the Agreement would be terminated on September 6,
2016. Id. at 1.
The Show Cause Hearing and the Preliminary
10, 2016, the Court held a hearing on the order to show
cause. See Dkts. 18, 44. At that hearing, the
Galleries produced 33 original works in their possession.
See Dkt. 44 at 12. The Galleries also produced to
the Court a giclee copy of the Bob Hope drawing.
See Id. at 13- 14. After reviewing those works, the
Foundation conceded that three of the 33 rightly belonged to
the Galleries, id. at 14-15, and one of the works
sought was already in the Foundation's possession,
id. at 16. The Foundation was allowed to take
possession of the works, including the giclee copies
of the Bob Hope work, on the condition that it not sell any
of the works during the pendency of the litigation.
Id. at 17-20. The Court ordered the Galleries not to
make further copies of the Bob Hope work. Id. at
24-25. As to the Annie Hall work, the Galleries represented
to the Court that they no longer had any copies of that work,
in giclee or other form. Id. at 30.
Court also considered the parties' arguments as to
whether the Agreement authorizes the Galleries to make
giclee prints. On a preliminary basis, the Court
concluded, based on its assessment of the Agreement and its
examination of a photostatic and a giclee
reproduction of a Hirschfeld work, that "it is more
likely than not that the word 'photostat, ' the word
that appears in the agreement, was not intended to embrace a
giclee." Id. at 48. The Court found it likely
that the Foundation would prevail on the merits on that
the hearing, the Court entered a preliminary injunction. Dkt.
18; see Dkt. 44 at 66. Applying the familiar
preliminary injunction factors, see, e.g.,
Harper Collins Publishers, LLC v. Gawker Media, LLC,
721 F.Supp.2d 303, 305-306 (S.D.N.Y. 2010), the Court found
that the Foundation had demonstrated a likelihood of success
on the merits with respect to both its claim that the
printing and sale of the Bob Hope and Annie Hall
giclees infringed the Foundation's copyright,
id. at 68-70, and its claim to replevin with respect
to the 30 works the Galleries had presented in Court,
id. at 70-71. Absent an injunction, the Court found,
the Foundation was likely to suffer irreparable harm from the
Galleries' making of unauthorized giclee
reproductions and from the Galleries' refusal to turn
over the 30 works as to which the Foundation claimed a
superior possessory right. Id. at 72. The Court
further found that the balance of hardships tipped decidedly
in the Foundation's favor with respect to injunctive
relief as the Court fashioned it, and that such relief was
consistent with the public interest. Id. at 72-73.
The preliminary injunction barred the Galleries from selling
unauthorized works, holding themselves out as sellers of
unauthorized works, and destroying any Hirschfeld works in
their possession. See Dkt. 18.
The Amended Complaint and the Galleries' Answer
26, 2016, the Foundation filed an amended complaint, the
operative complaint today. Dkt. 42. It added allegations
regarding the Galleries' mishandling of works and
improper gallery space, see Id. at 8-10; failure to
maintain adequate insurance on the works, id. at
11-12; unresponsiveness to the Foundation's requests to
have works returned, id. at 12-21; unauthorized sale
of giclee prints and unauthorized licensing deals,
id. at 23-26; failures to comply with the
Agreement's recordkeeping requirements, id. at
26-29; and violations of the Lanham Act, id. at
29-30. It also sought additional declaratory relief,
including to the effect that (a) the Galleries had violated
their fiduciary duties to the Foundation; (b) the Galleries
were in material breach of the ...