Museum Boutique Intercontinental v. Picasso, 886 F. Supp. 1155

DISTRICT COURT of S.D.N.Y.

1995

Chapter

22

Title

Competitive Torts

Page

869

Topic

Interference With Business Expectations

Quick Notes

The tort of intentional interference with contractual relations requires the plaintiff to allege and prove that the defendant induced or otherwise caused a third party to breach a contract with the plaintiff.

Book Name

Torts Cases, Problems, And Exercises.  Weaver, Third Edition.  ISBN:  978-1-4224-7220-0.

Issue

o         Whether a plaintiff must allege that defendant's actions induced the third party to somehow render performance impossible?  Yes.

Procedure

Trial

o         Granted Motion to Dismiss

Appellant

o         Motion To Dismiss Granted

Facts

Discussion

Reasoning

Rules

Pl MBI

Df Picasso

Party Description

o         MBI is a New York corporation which creates and licenses artistic designs incorporating images from famous works of art, including works by Pablo Picasso.

o         Paloma Picasso is the daughter and one of the heirs of Pablo Picasso.

Agreement to exploit

o         In 1976, After Picassos death, the heirs and SPANDEM entered into an agreement to grant SPADEM the right to admitters, manager and exploit the Picasso name.

Claude became administrator

o         In 1989, a French court appointed Claude Picasso Administrator of the Indivision in order to facilitate the management of the reproduction rights.

In 1980, MBI Allegedly acquired exclusive licenses

o         Immediate subject of dispute.

o         10 years of dispute, threatened litigation, and negotiated settlements in connection with the exploitation of reproductive rights.

MBI Brought Suit

o         Count Seven claims the defendants tortuously interfered with MBI's contractual relations and is the only count which contains claims against Paloma in her personal capacity.

MBI Alleges valid licences

o         Had vlid license agreements with the Japanese companies Mitsukoshi INFAS

o         To sell MBI derivative works and reproductions of Picasso works of art.

MBI Alleges Df - falsely advised Mitsukoshi and INFAS

o         MBI also claims that SPADEM, Claude and Paloma Picasso had actual knowledge of these agreements.

o          The Df - falsely advised Mitsukoshi and INFAS that MBI had no right to license or sell MBI derivative works of art in order to induce a breach of the licensing agreements.

MBI Alleges Paloma to have falsely advised

o         Mitsukoshi and INFAS that they had acquired rights from MBI "who actually has no power to grant them," and that Paloma "continued to make such statements up until MBI was coerced and induced into terminating [its contracts with Mitsukoshi and INFAS] in 1993.

o         This made performance more difficult and lessened each partys enjoyment of the contract.

o         As a result, Mitsukoshi and INFAS lost faith and sought continuous reassurance

MBI Alleges that Claude and Paloma drove MBI to seek the Global Licensing Agreement

o         Which subsequently cause MBI to terminate its contracts with Mitsukoshi and INFAS.

Failure to State A claim for tortious interference

To state a claim for tortious interference with contract, a plaintiff must allege four elements:

1.   Existence of a valid contract between the plaintiff and a third party;

2.   Defendant's knowledge of the contract;

3.   Defendant's intentional inducement of the third party to breach the contract or otherwise render performance impossible; and

4.   Damages to plaintiff.

Courts Response Clearly alleges, but intentional inducement is less clear

o         MBI's proposed Count Seven clearly alleges the existence of valid contracts, and damages to MBI.

o         However, it is less clear if the third element [intentional inducement] was sufficiently established.

Courts Response MBI does not allege breach

o         MBI does not allege that Paloma induced either Mitsukoshi or INFAS to breach their respective contracts with MBI.

o         Rather, MBI terminated the contracts with Mitsukoshi and INFAS after Paloma's statements to Mitsukoshi and INFAS made the performance of the contracts "more difficult and lessened each party's enjoyment of the contract."

o         Since Paloma did not allege a breach, she has not stated a claim!!!

Other Courts The Pl does not have to allege a breach

o         A Pl does not have to allege a breach of the underlying contract in order to state a claim for tortious interference with contractual relations.

o         In order to make out a claim for tortious interference with contract, a plaintiff must prove defendant interfered with the performance of the contract without justification.

(The Heart of the Rule)

New York Court of Appeals Recent Pronouncement

o         The "tort of inducement of breach of contract, now more broadly known as interference with contractual relations," requires a plaintiff to prove that the defendant intentionally induced the third party to breach or otherwise render performance impossible.

o         An allegation of breach is not an absolute prerequisite for the tort, in most cases "improper intentional interference [will] generally [be] evidenced by a tortfeasor inducinga third party not to perform his contractual obligations to plaintiff."

Rule

o         If the third party has not breached the contract, however, a plaintiff must allege that defendant's actions induced the third party to somehow render performance impossible.

Courts Response lessening each partys enjoyment

o         Lessening each party's enjoyment is not an allegation that Mitsukoshi or INFAS rendered performance impossible or even that the contracts became commercially impracticable.

o         The fact that Mitsukoshi and INFAS "lost faith in MBI and sought continuous reassurance" and "Mitsukoshi was forced to fly two million dollars of its prototypes to New York for a product review" is not burdensome enough to constitute improper interference.

Motion To Dismiss Granted

Rules

To state a claim for tortious interference with contract, a plaintiff must allege four elements:

1.       Existence of a valid contract between the plaintiff and a third party;

2.       Defendant's knowledge of the contract;

3.       Defendant's intentional inducement of the third party to breach the contract or otherwise render performance impossible; and

4.       Damages to plaintiff.

New York Court of Appeals Recent Pronouncement

o         The "tort of inducement of breach of contract, now more broadly known as interference with contractual relations," requires a plaintiff to prove that the defendant intentionally induced the third party to breach or otherwise render performance impossible.

o         An allegation of breach is not an absolute prerequisite for the tort, in most cases "improper intentional interference [will] generally [be] evidenced by a tortfeasor inducinga third party not to perform his contractual obligations to plaintiff."

Rule

o         If the third party has not breached the contract, however, a plaintiff must allege that defendant's actions induced the third party to somehow render performance impossible.

Class Notes