United States District Court, S.D. New York
PHOENIX ANCIENT ART, S.A., PETRARCH LLC a/k/a ELECTRUM, and REGULUS INTERNATIONAL CAPITAL CORP., Plaintiffs,
J. PAUL GETTY TRUST, J. PAUL GETTY MUSEUM, TIMOTHY POTTS, LIVIO RUSSO, and ARTURO RUSSO, Defendants.
OPINION AND ORDER
EDGARDO RAMOS, U.S.D.J.
Ancient Art, S.A. (“Phoenix”), Petrarch LLC A/K/A
Electrum (“Electrum”), and Regulus International
Capital Corp. (“Regulus”) bring this action
against the J. Paul Getty Trust, the J. Paul Getty Museum
(the “Getty”), and Timothy Potts (collectively,
the “Getty Defendants”), and Livio Russo and
Arturo Russo (collectively, the “Russo
Defendants”), alleging misappropriation, fraud, breach
of and interference with a contract, interference with
prospective business relationships, and conversion. Pending
before the Court are: (1) the Getty Defendants' motion to
dismiss Counts Two through Ten of the Complaint for failure
to state a claim pursuant to Federal Rule of Civil Procedure
12(b)(6), Doc. 50; and (2) the Russo Defendants' motion
to dismiss the Complaint for lack of personal jurisdiction
pursuant to Federal Rule of Civil Procedure 12(b)(2) and for
failure to state a claim, Doc. 45. For the reasons discussed
below, the Getty Defendants' motion is GRANTED in part
and DENIED in part, and the Russo Defendants' motion is
is a world-leading dealer in rare and exquisite antiquities,
and is managed by brothers Ali and Hicham Aboutaam.
Id. ¶ 4. Electrum, a New York limited liability
company, is the exclusive agent for Phoenix in the United
States. Id. ¶ 7. Plaintiffs' claims stem
from their efforts to broker the sale of the Torlonia
family's collection of approximately 620 Roman and Greek
sculptures (the “Torlonia Collection”), which is
known as one of the world's most significant collections
of classical sculptures and is valued in the billions of
dollars. See Complaint (“Compl.”)
¶¶ 43, 49. Prince Alessandro Torlonia (the
“Prince”) is responsible for the assets of the
Torlonia family, including the sculptures. Id.
¶ 42. Since the 1960s, the Torlonia family kept the
collection out of public view in its various palaces in Rome,
causing an outcry from experts who called for the collection
to be confiscated by the Italian government. Id.
¶ 45. The family long resisted government attempts to
return the collection to the public and kept the collection
out of public view. Id. ¶ 46.
point in time, the Torlonia family decided to attempt to sell
the collection, and the Russo Defendants became involved in
their efforts to find a private buyer. See Id.
¶ 48. The Russo Defendants are world-renowned ancient
coin collectors and engage in multiple high-dollar coin
auctions every year. Id. ¶ 47. The Aboutaam
family also collects ancient coins. Id. ¶ 48.
Through this mutual interest, the Russo Defendants contacted
Ali Aboutaam and told him about the Torlonia sculptures that
were available for sale. Id. Plaintiffs allege that
the Russo Defendants told Electrum that they believed that
only Electrum could find a buyer for the Torlonia Collection.
Id. ¶ 50. The Russo Defendants provided Ali
Aboutaam with an 1885 catalogue of the Torlonia sculptures.
Id. ¶ 51. The catalogue was over 130 years old,
included low-resolution black-and-white pictures and
abbreviated descriptions only, and did not provide sufficient
details regarding current status, condition, market value,
restoration, or attributions regarding chain of title for the
works of art. Id. After Hicham Aboutaam traveled to
Rome to view the sculptures and met with Livio Russo and the
Prince, Electrum immediately began working to find a buyer.
Id. ¶ 52.
in the summer of 2010, Electrum painstakingly catalogued the
Torlonia collection, took thousands of new photographs of the
sculptures, and translated supporting documents from Italian
to English to support the provenance of the collection in
order to prepare it for sale. Id. ¶ 53-54.
Plaintiffs allege that at all times they kept the contents of
their catalogue and research under reasonable security
measures. Id. ¶ 54. Over the next several
years, Electrum continued its efforts in evaluating the
Torlonia Collection, cultivating its relationships with
Italian authorities, and attempting to find a buyer.
Id. ¶ 55.
spring of 2013, Electrum invited Timothy Potts, the director
of the Getty Museum, to visit their New York gallery.
Id. ¶¶ 13, 56. The Getty Museum is the
richest museum in the world, with an endowment that exceeds
$4 billion. Id. ¶¶ 10. Electrum told Potts
that it was cataloguing a significant collection that could
be of interest to the Getty, and they discussed the
substantial work Electrum had undertaken in preparing the
collection for sale. Id. ¶ 57. At that time,
Electrum did not tell Potts that the collection involved the
Torlonia sculptures. Id. According to Plaintiffs,
Potts was excited about the collection and expressed that the
Getty would be very interested in a deal through which the
Getty could acquire an interest in it. Id. ¶
58. After Potts orally agreed to keep the opportunity in the
strictest confidence-and agreed to later document that oral
promise in writing after consulting with the Getty's
lawyers-Electrum shared that the collection was the Torlonia
sculptures and showed Potts thousands of photographs it had
taken of the collection. Id. ¶ 60-61.
12, 2013, Potts, on behalf of the Getty, signed a
Non-Disclosure and Non-Circumvention Agreement (the
“NDNCA”) with Electrum and Phoenix. Id.
¶ 62. Potts and the Getty agreed to “receive
disclosure of confidential and proprietary information from
Electrum pursuant to the terms of [that] agreement for the
purpose of evaluating a possible transaction” and
“agreed to maintain the confidentiality of the
disclosed information.” Id. ¶ 64. Potts
and the Getty also agreed to “take all reasonable
measures to protect the secrecy of and avoid disclosure or
use of the Confidential Information” and to “take
at least those measures that [the Getty] takes to protect its
own most highly confidential information.” Id.
¶ 65. Additionally, “[a]s an express prior
condition to its receipt of information” regarding the
Torlonia sculptures, Potts and the Getty agreed that they
would “not contact either directly or indirectly”
the Torlonia family or any party representing or related to
the Torlonia family regarding the Torlonia sculptures, except
exclusively through Electrum and Phoenix. Id. ¶
67. The Getty further undertook the obligation to return to
Electrum and Phoenix “all originals and copies of
Confidential Information upon request.” Id.
¶ 68. The NDNCA did not provide terms for compensation
to Phoenix and Electrum. See id.; Doc. 74, Ex. A.
November 8, 2013, Potts met with Electrum and Regulus in New
York. Id. ¶ 70. Regulus is a Delaware
corporation that agreed to participate in a cooperative
venture with Electrum to assist in the sale or transfer of
the Torlonia Collection. Id. ¶ 8. Electrum and
Regulus told Potts that Regulus could advise the Getty
regarding trade-secret deal structures for the Torlonia
Collection that would allow foreigners to purchase rights to
important cultural collections in Italy. Id. ¶
70. Throughout the first part of 2014, Plaintiffs continued
facilitating a possible transaction between the Getty and the
Torlonia family, serving as a conduit for communications,
organizing visits by Potts to Italy to view the sculptures,
and arranging meetings with Potts and members of the Torlonia
family. See id. ¶¶ 72-91. Throughout this
time, the Prince preferred to receive correspondence through
the Russo Defendants. Id. ¶ 78. Accordingly,
Electrum emailed the Russo Defendants a copy of the NDNCA no
later than April 7, 2014. Id. ¶ 83. Plaintiffs,
however, assert that the Russo Defendants and the Torlonia
family had been informed of the NDNCA prior to that date.
27, 2014, Potts and the Getty requested that Plaintiffs send
them the original version of the catalogue of sculptures that
Electrum had prepared, and, relying on the Getty's
confidentiality obligations set forth in the NDNCA,
Plaintiffs did as requested. Id. ¶ 92. After
receiving the catalogue, however, Potts and the Getty
suddenly stopped communicating with Plaintiffs regarding the
Torlonia Collection. Id. ¶ 93. By February 19,
2015, the Prince became concerned by the Getty's apparent
loss of interest and stated that he was considering gifting
the collection to the Italian authorities in exchange for
tax-related benefits. Id. ¶ 94. When Plaintiffs
conveyed the Prince's concerns to Potts and the Getty,
the Getty represented that it had decided to decline the
opportunity to pursue purchasing the collection. Id.
¶ 95. The Getty claimed that applicable Italian law made
acquiring the collection unappealing. Id. ¶ 96.
According to Plaintiffs, the Getty's concerns were borne
out of past conflicts with the Italian government involving
art purchased without proper authentication of source.
Id. ¶ 97. The Getty was also concerned that the
Italian government would not allow exportation of the
sculptures, given their value to the Italian public.
Id. ¶ 98.
however, claim that they had already developed a deal
structure that would alleviate the Getty's concerns and
the political risk of a transaction. Id. ¶
99-101. In an attempt to salvage the negotiations between the
Getty and the Torlonia family, on March 5, 2015, Plaintiffs
told the Getty that they believed the potential sales price
for the sculptures had decreased. Id. ¶ 102.
Plaintiffs now estimated that the cost of the sculptures was
between $350 million and $550 million, and proposed a deal
structure involving a commission for Plaintiffs of 22% of the
purchase price. Id. ¶ 103. Stephen Clark,
general counsel for the Getty, expressed interest in
Plaintiffs' proposal and agreed to discuss it further.
Id. ¶ 104. Plaintiffs claim that by March 24,
2015, the Getty had once again expressed a lack of interest
in the Torlonia Collection and claimed that the proposal did
not make sense. Id. ¶ 105.
proposed another deal structure that would decrease political
risk to the Getty in June 2015, and Electrum met with Potts
and forwarded additional information-including regarding the
Prince's willingness to further decrease the purchase
price-in July 2015. Id. 108- 111. Shortly
thereafter, however, Potts separately met with Livio Russo
and the Prince's grandson in Los Angeles to discuss the
sale of the Torlonia Collection. Id. ¶ 113.
Plaintiffs did not learn of this meeting until well after it
had occurred. Id. ¶ 116.
assert that by the fall of 2015, all of the Defendants and
the Prince had ceased discussing the sale of the Torlonia
Collection with Plaintiffs. Id. ¶ 117. Through
the remainder of 2015 and the first half of 2016, Plaintiffs
claim that the Defendants conspired without Plaintiffs'
knowledge or involvement regarding the sale or transfer of
the sculptures to the Getty. Id. ¶ 119.
Specifically, they assert that the Getty Defendants and the
Russo Defendants met and communicated in violation of the
NDNCA in an attempt to cut Plaintiffs out of the deal so they
would not have to pay Plaintiffs a commission. Id.
March 2016, the New York Times reported that the Italian
Ministry of Culture had signed an agreement with the Torlonia
Foundation to display the Torlonia sculptures in Europe and
the United States, with the intent of “finding a new
permanent home for the collection.” Id. ¶
122-123. Salvatore Settis, a long-term former employee of the
Getty, was selected to be the historian and curator of the
exhibition. Id. ¶ 124. Plaintiffs assert that
the structure of the final agreement between the Ministry of
Culture and the Torlonia Foundation was essentially the same
as the structure Plaintiffs had proposed for a deal between
the Getty and the Torlonia Family. Id. ¶ 125,
128-133. After learning of the agreement, Plaintiffs
attempted to schedule a call with the Getty, and in response
to that request, Clark confirmed that Settis and Potts were
actively discussing the possibility of exhibiting some of the
sculptures at the Getty. Id. ¶ 127. Plaintiffs
contend that such direct communication between Clark and
Settis is a violation of the NDNCA. Id. ¶ 128.
Plaintiffs also assert that various individuals have
confirmed that the Getty violated the NDNCA throughout the
time it was negotiating a potential deal through Plaintiffs.
Id. ¶ 130- 136.
27, 2016, Arturo Russo met with Plaintiffs and told them that
they should “forget” about any compensation
regarding the Torlonia Collection because the Getty and the
Torlonia Family were in direct contact. Id. ¶
137. According to Plaintiffs, the Getty has denied that
Plaintiffs are entitled to any compensation and has refused
to return Plaintiffs' confidential information, in
particular the catalogue and photographs of the Torlonia
sculptures prepared by Electrum. Id. ¶ 139.
January 12, 2017, Plaintiffs brought this action alleging the
following claims: (1) breach of contract (against the Getty
only); (2) breach of third-party beneficiary contract
(against the Getty only); (3) breach of the implied covenant
of good faith and fair dealing (against the Getty only); (4)
tortious interference with contract (against Potts and the
Russo Defendants only); (5) intentional interference with an
advantageous business relationship; (6) fraud; (7) unjust
enrichment; (8) unfair competition; (9) conversion; and (10)
violation of the Defend Trade Secrets Act
(“DTSA”). On May 4, 2017, the Getty Defendants
moved to dismiss Counts Two through Ten on the ground that
Plaintiffs' tort and quasi-contractual claims are
duplicative of their breach of contract claim and that they
otherwise fail on the merits. Doc. 50. The Russo Defendants
also moved to dismiss, contending that the Court lacks
personal jurisdiction over them and that Plaintiffs'
claims against them fail on the merits. Doc. 45.
5, 2015, the Court granted Plaintiffs' request for
limited jurisdictional discovery with respect to the Russo
Defendants. Doc. 81, 20:14-15. Jurisdictional discovery has
demonstrated that the Russo Defendants are shareholders in
two ancient coin-related companies-Numismatica Ars Classica
Ltd. (“NAC”) and Numismatica Ars Classica AG
(“NAC AG”)-that make substantial sales to New
York residents. Doc. 94 at 9. Livio and Arturo each own 20%
in NAC and 17% and 28.5% respectively in NAC AG. Doc. 94, Ex.
1 at 39:7-23. Additionally, Arturo draws a salary of at least
£40, 000 from NAC AG. Id. at 46:1-21.
Rule 12(b)(2) Motion to Dismiss: Lack of Personal
plaintiff opposing a motion to dismiss under Rule 12(b)(2)
for lack of personal jurisdiction has the burden of
establishing that the court has jurisdiction over the
defendant.” BHC Interim Funding, LP v. Bracewell
& Patterson, LLP, No. 02 Civ. 4695 (LTS) (HBP), 2003
WL 21467544, at *1 (S.D.N.Y. June 25, 2003) (citing Bank
Brussels Lambert v. Fiddler Gonzalez & Rodriguez,
171 F.3d 779, 784 (2d Cir. 1999)). To meet this burden, the
plaintiff must plead facts sufficient for a prima facie
showing of jurisdiction. Whitaker v. Am. Telecasting,
Inc., 261 F.3d 196, 208 (2d Cir. 2001). The court
construes all of the plaintiff's allegations as true and
resolves all doubts in its favor. Casville Invs., Ltd. v.
Kates, No. 12 Civ. 6968 (RA), 2013 WL 3465816, at *3
(S.D.N.Y. July 8, 2013) (citing Porina v. Marward
Shipping Co., 521 F.3d 122, 126 (2d Cir. 2008);
Martinez v. Bloomberg LP, 883 F.Supp.2d 511, 513
(S.D.N.Y. 2012)). “However, a plaintiff may not rely on
conclusory statements without any supporting facts, as such
allegations would lack the factual specificity necessary to
confer jurisdiction.” Art Assure Ltd., LLC v.
Artmentum GmbH, No. 14 Civ. 3756 (LGS), 2014 WL 5757545,
at *2 (S.D.N.Y. Nov. 4, 2014) (internal quotation marks and
citations omitted). As stated, courts may rely on additional
materials outside the pleading when ruling on 12(b)(2)
motions. John Hancock Prop. & Cas. Ins. Co. v.
Universale Reinsurance Co., No. 91 Civ. 3644 (CES), 1992
WL 26765, at *1 n.1 (S.D.N.Y. Feb. 5, 1992); Darby
Trading Inc. v. Shell Intern. Trading and Shipping Co.
Ltd., 568 F.Supp.2d 329, 334 (S.D.N.Y. 2008). When the
Court is confronted by a motion raising a combination of Rule
12(b) defenses, it will pass on the jurisdictional issues
before considering whether a claim was stated by the
complaint. See Darby Trading, 568 F.Supp.2d at 335;
Yellow Page Sols. Inc. v. Bell Atl. Yellow Pages
Co., No. 00 Civ. 5663 (MM), 2001 WL 1468168, at *3
(citing Rationis Enter., Inc. v. AEP/Borden Indus.,
261 F.3d 264, 267-68 (2d Cir.2001)).
Rule 12(b)(6) Motion to Dismiss: General Legal
Rule 12(b)(6), a complaint may be dismissed for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). When ruling on a
motion to dismiss pursuant to Rule 12(b)(6), the Court must
accept all factual allegations in the complaint as true and
draw all reasonable inferences in the plaintiff's favor.
Koch v. Christie's Int'l PLC, 699 F.3d 141,
145 (2d Cir. 2012). However, the Court is not required to
credit “mere conclusory statements” or
“[t]hreadbare recitals of the elements of a cause of
action.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter . . . to
‘state a claim to relief that is plausible on its
face.'” Id. (quoting Twombly, 550
U.S. at 570). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). If the plaintiff has not
“nudged [his] claims across the line from conceivable
to plausible, [the] complaint must be dismissed.”
Twombly, 550 U.S. at 570.
Claims against the Getty Defendants
Getty Defendants seek dismissal of Plaintiffs' tort
claims on the ground that they are duplicative of their
breach of contract claim. Getty Defendants' Memorandum in
Support of Motion to Dismiss (“Getty Defs.'
Mem.”) at 10. The Getty Defendants also contend that
Plaintiffs' tort claims fail on the merits. Id.
New York law, “a simple breach of contract is not to be
considered a tort unless a legal duty independent of the
contract itself has been violated.” Negrete v.
Citibank, N.A., 187 F.Supp.3d 454, 471 (S.D.N.Y. 2016)
(quoting Clark-Fitzpatrick, Inc. v. Long Island R.
Co., 70 N.Y.2d 382, 389 (1987)). This legal duty
“must spring from circumstances extraneous to, and not
constituting elements of, the contract, although it may be
connected with and dependent upon the contract.”
Clark-Fitzpatrick, 70 N.Y.2d at 389. If an
independent duty exists, “a plaintiff may maintain both
tort and contract claims arising out of the same allegedly
wrongful conduct.” Bayerische Landesbank, New York
Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 58 (2d
Cir. 2012). “If, however, the basis of a party's
claim is a breach of solely contractual obligations, such
that the plaintiff is merely seeking to obtain the benefit of
the contractual bargain through an action in tort, the claim
is precluded as duplicative.” Id.
contend that their tort claims are not duplicative because
the Getty Defendants engaged in wrongful conduct beyond
breaching the NDNCA. Plaintiffs' Memorandum of Law in
Opposition to the Getty Defendants' Motion to Dismiss
(referred to as “Pls.' Mem.” in section IV.A.
of this opinion) at 8. Plaintiffs' argument is premised
on the theory that the Getty Defendants misappropriated
Plaintiffs' services, benefits, and property by falsely
representing that they intended to compensate Plaintiffs for
facilitating a transaction involving the Torlonia Collection.
Id. Because the NDNCA did not address compensation
for facilitating a deal, Plaintiffs contend that the parties
created legal relationships that, though related to the
NDNCA, imposed legal duties that arose outside the NDNCA, and
that the Getty Defendants violated those duties. Id.
The Court addresses Plaintiffs' tort claims in turn.