Defendants Ingrid Hutton, Leonard Hutton Galleries, Inc. (Hutton Galleries), Magdelena Dabrowski, and Eugena Ordonez a/k/a Eugena Chu move to dismiss the complaint for failure to state a claim, CPLR 3211 (a) (7).

Background

Plaintiff, an art gallery based in Germany, is a dealer in Russian avant garde art. Defendant Hutton Galleries is located in New York City, and is plaintiff's main competitor.

Plaintiff alleges that defendants engaged in efforts to damage its reputation in the art world by falsely stating that certain works sold, traded, or presently owned by plaintiff are not authentic. Plaintiff further alleges that these accusations are part of a conspiracy to "denigrate Galerie [Gmurzynska] and monopolize both the international and New York market for Russian Avant Garde art." See Complaint ¶ 2.

In its complaint, plaintiff alleges two schemes orchestrated by Ingrid Hutton, the owner of defendant Leonard Hutton Galleries, Inc., and the other defendants to destroy plaintiff. The first scheme allegedly involves false claims made by defendant Dabrowski. On April 20, 2000, Dabrowski, while an employee of the Museum of Modern Art in New York, met with Norbert du Carrois, a collector interested in Russian Avant Garde art. At this meeting, Du Carrois allegedly inquired about a certain work which plaintiff was offering for sale. Dabrowski allegedly told du Carrois that "it is not what you want for your collection." See Complaint ¶ 42. Plaintiff alleges that Dabrowski further stated that Du Carrois should go to Hutton Galleries because that "would be where you will find what you are looking for." Id.

On October 25, 2000, Dabrowski met with du Carrois again. At this meeting, Dabrowski allegedly made the following statements: [*2]

"That an Alexander Rodchenko drawing offered for sale by Galerie for $45,000 was worthless' and that he should not buy it;" "that Krystyna Gmurzynska has no knowledge of Russian art' and is only working for the money;'" and "that Galerie was selling fake works by an artist identified as Kogan" and "that there is no such artist named Kogan and yet Galerie has made a practice of selling works attributed to this non-existent person." See Complaint ¶ 43.

On November 28, 2000, Dabrowski had another meeting with du Carrois at the Stanhope Hotel in New York City. At this meeting, du Carrois showed Dabrowski a Malevich work he was allegedly considering for purchase. Dabrowski allegedly responded "it's nothing." Id. at ¶ 45. In regard to the Malevich work, "Peasant Seen From Behind," owned by plaintiff, Dabrowski stated "this is so bad, this is not by Malevich. These drawings are made by his pupils. They had made it, on his demand, for educational purposes. No, its not by him. Look at the head. Malevich never did it; it is so bad. Look at the left hand. It is not possible. The measurements are too large. You see, he only did small drawings; he never made such a big one. The signature is not right." Id. at ¶ 47. Dabrowski continued to criticize the remainder of the Malevich drawings that du Carrois was considering purchasing from plaintiff as being "ridiculous," "fakes," "caricatures," and "like a child's drawing." Plaintiff alleges that "other statements made by Dabrowski at the November 28 meeting confirm the existence of a conspiracy between the defendants." Id. at ¶ 50.

The second scheme allegedly involved an exhibition of paintings by the German artist Kurt Schwitters at the Sprengel Museum in Germany. The exhibition was, in part, comprised of works acquired through purchases or trades with the plaintiff. Plaintiff alleges that Bengt Schwitters^[FN1], grandson of Kurt Schwitters, used the exhibition to destroy the plaintiff by causing the Sprengel Museum to publish an exhibition catalog, which claimed that some works in the collection, provided by plaintiff, were not authentic. Plaintiff further alleges that the "two strands of the conspiracy against Galerie - (a) Hutton and the defendant experts, and (b) Bengt Schwitters and the Museum - came together." See Complaint ¶ 72.

Plaintiff filed a Summons with Notice on April 5, 2001, and, on April 30, 2001, it filed a complaint, in this court, against Hutton, Hutton Galleries, Dabrowski, Ordonez, Shatskikh, and Bengt Schwitters alleging causes of action for violation of 15 U.S.C. § 1125 (a) (1) (B) (Lanham Act), tortious interference with business expectancy, defamation, and seeking a declaratory judgment. On June 6, 2001, the action was removed to the United States District Court for the Southern District of New York. In January 2002, Schwitters moved to dismiss plaintiff's claims for lack of personal jurisdiction, and the remaining defendants moved to dismiss for failure to state a claim.

On March 13, 2003, District Judge Berman dismissed plaintiff's claims against Schwitters [*3]for lack of personal jurisdiction. See Galerie Gmurzynska v Hutton, 257 F Supp 2d 621 (SD NY 2003). Judge Berman also dismissed plaintiff's complaint in its entirety against the remaining defendants. Id. However, he declined to resolve plaintiff's state law claims of tortious interference with business expectancy and defamation; he ruled that the plaintiff may pursue those claims in this court. Id. The Second Circuit affirmed. See Gmurzynska v Hutton, 355 F3d 206 (2nd Cir 2003).

On July 6, 2004, plaintiff commenced this action. The complaint alleges causes of action for tortious interference with potential business relations, defamation, and seeks a declaratory judgment. Defendants Hutton, Hutton Galleries, Dabrowski, and Ordonez now move to dismiss the complaint for failure to state a claim.

Discussion

Defendants argue that plaintiff is collaterally estopped from alleging conspiracy as a basis to link all defendants on any of its claims because the federal courts previously held that the assertions in the complaint were conclusory and insufficient to allege a conspiracy. The doctrine of collateral estoppel precludes a party from " relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party.'" Pinnacle Consultants, Ltd. V Leucadia National Corporation, 94 NY2d 426, 431-432 (2000)(quoting Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 (1999)). Here, the federal court only addressed the issue of conspiracy in regard to the claimed violation of the Lanham Act, and not the state law claims of tortious interference and defamation. Thus, plaintiff is not collaterally estopped from raising the issue of conspiracy in regard to these two underlying torts.

Defendants further argue that, if the doctrine of collateral estoppel does not apply, plaintiff's allegations of a conspiracy are still insufficient under New York law. "While there is no cognizable action for a civil conspiracy, a plaintiff may plead conspiracy in order to connect the actions of the individual defendants with an actionable underlying tort and establish that those acts flow from a common scheme or plan." American Preferred Prescription, Inc. v Health Mgmt., 252 AD2d 414, 416 (1st Dept 1998). However, the plaintiff must sufficiently allege an actionable underlying tort to support the conspiracy allegations. Id.

In its first cause of action, plaintiff asserts that defendants tortiously interfered with plaintiff's relations with prospective customers. To prevail on a claim for tortious interference with business relations under New York law, a party must allege that "(1) it had a business relationship with a third party; (2) the defendant knew of that relationship and intentionally interfered with it; (3) the defendant acted solely out of malice, or used dishonest, unfair, or [wrongful] means; and (4) the defendant's interference caused injury to the relationship." State Street Bank and Trust Co. v Innervisiones Errazuriz Limitada, 374 F3d 158, 171 (2nd Cir 2004) (applying New York law).

In its complaint, plaintiff alleges that du Carrois, during meetings with defendant Dabrowski, inquired about certain works being sold by plaintiff, which du Carrois had viewed. Plaintiff also alleges that another unnamed collector also called Dabrowski for an opinion on drawings that plaintiff had presented to him for sale. At the pleading stage, these allegations are enough to show the existence of a potential business relationship.

However, tortious interference with potential business relations also "requires an allegation that plaintiff would have entered into an economic relationship but for defendant's [*4]wrongful conduct." Vigoda v DCA Productions Plus, Inc., 293 AD2d 265, 266-267 (1st Dept 2002). Plaintiff has not alleged sufficient facts to support this claim. Plaintiff only alleges that du Carrois and the unnamed collector viewed works being sold by plaintiff. Plaintiff has not pleaded sufficient facts to indicate that du Carrois and the other collector were in even preliminary steps to purchase the works. Thus, there is insufficient allegation that the plaintiff was damaged by the alleged tortious interference. The cause of action for tortious interference with potential business relations is dismissed.

In its second cause of action, plaintiff alleges that defendants, through defendant Dabrowski made false and defamatory statements about plaintiff. In order to state a cause of action for defamation, plaintiff must allege "a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se." Dillon v City of New York, 261 AD2d 34, 38 (1st Dept 1999). Further, CPLR 3016 (a) requires that in a defamation action, the particular words complained of ... be set forth in the complaint.'" Id. (quoting CPLR 3016) "The complaint also must allege the time, place and manner of the false statement and specify to whom it was made." Id.

Plaintiff has successfully pleaded a cause of action for defamation against defendant Dabrowski. Plaintiff alleges false statements about the plaintiff, made by Dabrowski, to a third person, Du Carrois, which plaintiff alleges caused injury to its reputation. Plaintiff has set forth the particular words complained of, in the complaint. The complaint further alleges the time, place, and manner of the false statements, and to whom they were made.

Although defendants argue that Dabrowski's statements to du Carrois constitute opinion, at this stage of the action, the court cannot so find. The Court of Appeals has set forth four factors which should generally be considered in differentiating between fact and opinion. "The four factors are: (1) an assessment of whether the specific language in issue has a precise meaning which is readily understood or whether it is indefinite and ambiguous; (2) a determination of whether the statement is capable of being objectively characterized as true or false; (3) an examination of the full context of the communication in which the statement appears; and (4) a consideration of the broader social context or setting surrounding the communication including the existence of any applicable customs or conventions which might signal to readers or listeners that what is being read or heard is likely to be opinion, not fact.'" Steinhilber v Alphonse, 68 NY2d 283, 292 (1986) (quoting Ollman v Evans, 750 F2d 970, 983 (US App DC 1984). "Courts should look to the over-all context in which the assertions were made and determine on that basis whether the reasonable reader would have believed that the challenged statements were conveying facts about the libel plaintiff.'" Guerrero v Carva, 10 AD3d 105, 112 (1st Dept 2004) (quoting Brian v Richardson, 87 NY2d 46, 51 (1995).

While some of Dabrowski's alleged statements, such as calling some works "worthless" or "nothing," do seem to fall in the category of opinion, her statements "that Galerie was selling fake works by an artist identified as Kogan" and "that there is no such artist named Kogan and yet Galerie has made a practice of selling works attributed to this non-existent person" clearly do not fall within the category of opinion. See Complaint ¶ 43. The same is true for her alleged statements that plaintiff "sold fake works to Ernst Schwitters." See Complaint ¶ 47. [*5]

These statements have a precise meaning which is readily understood, i.e., she called the art works fakes. Further, these statements are capable of being objectively characterized as true or false. The court has examined the context of the communication in which the statement appears, and has considered the broader social context and setting surrounding the communication, and at this stage, it appears that these statements are not opinion. Although, du Carrois allegedly contacted Dabrowski for her opinion, a person listening to such statements would believe that the speaker, an art expert, was conveying facts, and not opinion. Especially, since Dabrowski was allegedly very knowledgeable about the art world and Russian avant garde art. Obviously, this decision is based on a reading of the complaint alone, in connection with a pre-answer motion, in which the factual allegations of the complaint are deemed true.

Defendants further argue that Dabrowski's statements fall under the common interest privilege because, as an art expert, she had a duty to respond to inquires, and communicate freely. "A communication made bona fide upon any subject matter in which the party communicating has an interest, or in reference to which he has a duty, is privileged if made to a person having a corresponding interest or duty, although it contained criminating matter which, without this privilege, would be slanderous and actionable." Shapiro v Health Ins. Plan of Greater New York, 7 NY2d 56, 60 (1959).

However, the common interest privilege is one that is overcome on a motion to dismiss by pleading malice. See Mihlovan v Grozavu, 72 NY2d 506 (1988). Malice is plead by alleging spite or ill will, or with knowledge of the statement's falsity, or with reckless disregard to its truth or falsity. See Dos v Scelsa & Villacara, 200 AD2d 705 (2nd Dept 1994). Here, plaintiff has sufficiently pleaded malice. Plaintiff has alleged that Dabrowski made the statements with ill will and with a reckless disregard to their truth or falsity. Plaintiff overcomes the privilege, and has pleaded the cause of action for defamation against defendant Dabrowski.

Defendants also argue that the alleged defamatory statements made by Dabrowski on April 20, 2000 are time barred by the one year statute of limitations, since the complaint was filed on April 30, 2001. However, plaintiff filed its Summons with Notice on April 5, 2001. Thus, the statements made on April 20, 2000 are not time barred.

Since, plaintiff has successfully pleaded a cause of action for defamation, the court must examine the conspiracy allegation in regard to that underlying tort. "Allegations of conspiracy are permitted only to connect the actions of separate defendants with an otherwise actionable tort." Alexander & Alexander, Inc. v Fritzen, 68 NY2d 968, 969 (1986). However, the complaint must contain more than conclusory assertions of a conspiracy.

Here, plaintiff does not assert facts that demonstrate an agreement to conspire. Rather, plaintiff makes conclusory assertions that the defendants, having past relationships, are scheming to destroy the plaintiff. The mere fact that defendants may have had contact or dealings in the past is not enough to connect them to the alleged defamation by defendant Dabrowski. Thus, plaintiff's allegations of a conspiracy are insufficient.

Plaintiff requests further discovery pursuant to CPLR 3211 (d). However, the court does not find this necessary. Plaintiff's allegations of a conspiracy are merely speculative, and insufficient to make a showing that facts essential to establish a conspiracy may be uncovered during discovery. [*6]

Finally, plaintiff seeks a declaration that it has not sold "fake" works of art. This court can not make such a declaration. Plaintiff has an adequate remedy for damages in regard to the defamation claim. There is no basis for this relief in the context of this action and the parties remaining.Accordingly, it is,

ORDERED that defendants Ingrid Hutton, Leonard Hutton Galleries, Inc., and Eugena Ordonez a/k/a Eugena Chu's motion to dismiss is granted and the complaint, in its entirety, is dismissed as to these defendants with costs and disbursements to these defendants as taxed by the Clerk of the Court; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly; and it is further

ORDERED that defendant Magdelena Dabrowski's motion to dismiss is granted, in part, and the first cause of action for tortious interference and third cause of action for a declaratory judgment are dismissed, while the action shall continue as to the other causes of action; and it is further

ORDERED that the defendants Magdelena Dabrowski and Alexandra Shatskikh are directed to serve a verified answer to the complaint within 10 days after service of a copy of this order with notice of entry, on their attorney.

Dated: March 29, 2005ENTER:

/s/

J.S.C.

[*7]