S.A.R.L. Galerie Enrico Navarra et al v. Marlborough Gallery Inc.

Filing 57

ORDER & OPINION: Defendants motions to dismiss and for judgment on the pleadings are DENIED. [Dkt. Nos. 44, 48]. (Signed by Judge Kimba M. Wood on 3/25/2013) (ft) Modified on 3/26/2013 (ft).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
S.A.R.L. GALERIE ENRICO NAVARRA and
:
ENRICO NAVARRA,
:
:
Plaintiffs,
:
v.
:
:
MARLBOROUGH GALLERY, INC.,
:
PHILIPPE KOUTOUZIS, and
:
PIERRE LEVAI,
:
:
Defendants.
:
---------------------------------------------------------------X
KIMBA M. WOOD, U.S.D.J.:

10 Civ. 7547 (KMW) (RLE)
ORDER & OPINION

On October 4, 2010, Plaintiffs S.A.R.L. Galerie Enrico Navarra (the “Navarra Gallery”)
and Enrico Navarra (“Navarra”) (collectively, “Plaintiffs”) filed this action alleging that
Defendant Marlborough Gallery, Inc. (“Marlborough”) had engaged in a campaign to unfairly
eliminate all competition and thereby achieve monopoly power over the ceramic artwork of Chu
The-Chun (“Chu”). On June 21, 2011, the Court dismissed the action. Navarra v. Marlborough
Gallery, Inc., 820 F. Supp. 2d 477, 488 (S.D.N.Y. 2011) (Jones, J.) [Dkt. No. 21]. 1
Plaintiffs have now filed an Amended Complaint (“AC”) against Marlborough,
Marlborough’s President, Pierre Levai (“Levai”), and Marlborough’s Director for Asia, Philippe
Koutouzis (“Koutouzis”) (collectively, “Defendants”). [Dkt. No. 30]. The AC asserts new
claims for tortious interference of contract and aiding and abetting tortious interference of
contract arising out of Plaintiffs’ relationship with Chu. Presently before the Court is Koutouzis’
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), and Marlborough and
Levai’s motion for judgment on the pleadings pursuant to Rule 12(c).
For the reasons that follow, Defendants’ motions are DENIED.
1

This matter was originally assigned to the Honorable Barbara S. Jones. On January 10, 2013, it
was transferred to the undersigned. [Dkt. No. 56].
1

I.

BACKGROUND 2
A. The Production Agreement
The Navarra Gallery is a Paris-based dealer of fine art operated by plaintiff Enrico

Navarra. (AC ¶ 9). The Navarra Gallery maintains galleries in Europe and the United States.
Since 1997, Plaintiffs have been working with Chu, a world renowned artist. (Id. ¶¶ 17-19). In
2003, the Navarra Gallery entered into a Production Agreement with Chu, under which Chu
agreed to design twenty-four ceramic plates (the “Plates” or a “Plate”), each with an original
painting. (Id. ¶ 26). Chu also agreed to execute a bon-à-tirer for each Plate, indicating that the
Plate could be reproduced and marketed to the public as a finished work bearing Chu’s
imprimatur. (Id. ¶¶ 26, 31). The Production Agreement contained an Exclusivity Provision,
whereby Chu agreed “not to commence any additional editions of ceramics during 2004,” and no
more than 20 editions during 2005 and 2006. (Id. ¶ 26).
After Chu signed the bon-à-tirer for the final Plate, Plaintiffs began marketing and selling
the Plates. They were exhibited throughout Europe and sold at various auctions, sometimes for
as much as 5,000 euros. (Id. ¶¶ 35, 37-38). Chu received substantial commissions from these
sales. (Id. ¶¶ 34-35, 64).
B. Defendants’ Alleged Tortious Interference
Defendants first began working with Chu around 2006, when they commissioned a series
of ceramic vases to be hand-painted by Chu (the “Vases” or a “Vase”). (AC ¶¶ 42, 61).
Defendants recognized, however, that the Exclusivity Provision in the Production Agreement
prohibited Chu from producing competing ceramic artwork through the end of 2006. (Id. ¶¶ 26,
45). Moreover, Defendants understood that the existence of the Plates—less expensive artwork
2

The Court assumes familiarity with its previous opinion and recounts only the relevant facts,
which are taken as true for purposes of Defendants’ motions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
2

than the Vases, and in the same medium—would surely decrease the price at which Defendants
could sell the Vases. (Id. ¶ 44).
Defendants took a number of steps to destroy Plaintiffs’ goods, business, and reputation.
First, on February 19, 2007, Chu’s attorney, acting at Defendants’ behest, sent Plaintiffs a ceaseand-desist letter demanding the termination of the Production Agreement and cessation of sales.
The letter caused Plaintiffs to refrain from selling the Plates and to postpone an exhibit in Bali.
(Id. ¶¶ 58, 72, 83). Second, on April 4, 2007, Defendants caused Chu’s attorney to file a
“frivolous lawsuit,” ostensibly on Chu’s behalf, making the same demands as those contained in
the cease-and-desist letter. (Id. ¶¶ 187, 71). Third, on May 16, 2008, Defendants, again through
Chu’s attorney, demanded that Christie’s Hong Kong withdraw the Plates from an upcoming
auction. (Id. ¶¶ 81, 82). Finally, Defendants produced an advertisement in the Journal des Arts
entitled “A Public Warning from Mr. Chu The-Chun,” stating that the Plates were not genuine,
and that was why the Christie’s auction had been cancelled.
These steps caused the removal of Plaintiffs’ Plates from the market, ultimately rendering
them “unsalable.” (Id. ¶ 117). In January 2009, Chu suffered a stroke that prevented him from
producing any further artwork. (Id. ¶ 124). Defendants were then able to increase their asking
price for the Vases by nearly 550%. (Id. ¶ 126).
C. Procedural History
On October 4, 2010, Plaintiffs filed their original Complaint alleging that Marlborough
had engaged in a campaign to eliminate competition and achieve a monopoly over Chu’s ceramic
artwork. [Dkt. No. 1]. Marlborough filed a motion to dismiss pursuant to Rule 12(b)(6), [Dkt.
No. 8], which the Court granted on June 21, 2011. Navarra, 820 F. Supp. 2d at 488.

3

On July 5, 2011, Plaintiffs moved, pursuant to Rules 15(a)(2) and 21, for leave to amend
their Complaint, to add several claims, and to add two defendants. [Dkt. No. 23]. Plaintiffs
justified adding new Defendants Koutouzis and Levai by claiming that previously unavailable
documents now established their involvement. (Pls.’ Mem. in Supp. of Mot. to Amend 21-22).
On April 4, 2012, the Court granted Plaintiffs’ motion in part. The Court permitted
Plaintiffs to assert two new claims—tortious interference with the Production Agreement, and
aiding and abetting this tortious interference—but rejected as futile any attempt to amend the
previously dismissed claims. [Dkt. No. 29]. The Court also granted Plaintiffs leave to add
Koutouzis and Levai as defendants. Two weeks later, Plaintiffs filed the AC, seeking to recover
their initial investment and lost profits of approximately $15 million. (AC ¶ 189).
Koutouzis now moves to dismiss, arguing that Plaintiffs’ new claims are time barred.
[Dkt. No. 44]. Relying on Koutouzis’ motion, Marlborough and Levai move for judgment on the
pleadings pursuant to Rule 12(c). 3 [Dkt. No. 48].

II.

APPLICABLE LAW
Where a defendant has not yet answered a complaint, a court may consider a plaintiff’s

failure to comply with the statute of limitations at the motion to dismiss stage. See McKenna v.
Wright, 386 F.3d 432, 436 (2d Cir. 2004). In deciding a motion to dismiss, the court accepts as
true all factual allegations in the complaint and draws all reasonable inferences in favor of the
plaintiff. Id. Where a defendant has answered the complaint and asserted a limitations defense,
the defendant may move for judgment on the pleadings on this ground. McKenna on Behalf of
U.S. v. Senior Life Mgmt., Inc., 429 F. Supp. 2d 695, 696 (S.D.N.Y. 2006) (McMahon, J.). In

3

Marlborough and Levai’s motion is made pursuant to Rule 12(c), rather than Rule 12(b)(6),
because these Defendants have answered the AC. [Dkt. No. 40].
4

adjudicating such a motion, courts employ the same standard as applicable to Rule 12(b)(6)
dismissals. Bank of N. Y. v. First Millennium, Inc., 607 F.3d 905, 922 (2d Cir. 2010).
“A federal court sitting in diversity applies the forum state’s statute of limitations.”
Hughes v. Equity Office Props. Trust, 245 F. App’x 88, 89 (2d Cir. 2007); see also Diffley v.
Allied-Signal, Inc., 921 F.2d 421, 423 (2d Cir. 1990) (same). Under New York law, the burden
of proving that the statute of limitations has expired falls on the defendant. See Romano v.
Romano, 227 N.E.2d 389, 391 (N.Y. 1967). It is the plaintiff’s burden, however, to establish that
an amended claim relates back to the date of the original complaint. In re Alstom SA, 406 F.
Supp. 2d 402, 430 (S.D.N.Y. 2005) (Marrero, J.) (citing Cornwell v. Robinson, 23 F.3d 694, 705
(2d Cir. 1994)).

III.

ANALYSIS
As discussed below, the Court finds that Plaintiffs’ claims are timely because: (A) the

relevant limitations period is three years, (B) the new claims relate back to the date of the
original complaint, and (C) the new claims accrued less than three years before the filing of the
original complaint.
A. The Relevant Limitations Period is Three Years
The AC asserts new claims for tortious interference with contract and aiding and abetting
tortious interference. In New York, the limitations period for tortious interference is three years.
See N.Y. C.P.L.R. § 214(4); Thome v. Alexander & Louisa Calder Found., 70 A.D.3d 88, 108
(N.Y. App. Div. 2009). Given that Plaintiffs’ aiding and abetting claim is premised on the same
factual allegations as the tortious interference claim, (see AC ¶ 193), the same limitations period

5

applies to both, see Marketxt Holdings Corp. v. Engel & Reiman, P.C., 693 F. Supp. 2d 387, 393
(S.D.N.Y. 2010) (Kaplan, J.).4
B. The New Claims Relate Back to the Date of the Original Complaint
Applying either federal or New York law, 5 the Court finds that the new claims relate
back to the date of the original complaint—October 4, 2010.
1. Federal Law
Under Rule 15(c)(1)(C), a new claim against a new party will relate back if: (i) the new
claim “arose out of the conduct, transaction, or occurrence set out . . . in the original pleading;”
(ii) within the time for serving the original pleading, the new party “received such notice of the
action that it will not be prejudiced in defending on the merits;” and (iii) within the time for
serving the original pleading, the new party “knew or should have known that the action would
have been brought against it, but for a mistake concerning the proper party’s identity.” Fed. R.
Civ. P. 15(c)(1)(C). These requirements seek “to balance the interests of the defendant protected
by the statute of limitations with the preference expressed in the Federal Rules of Civil

4

Defendants argue cursorily that because Plaintiffs’ allegations sound in reputational harm, the
Court should apply the one year statute of limitations applicable to defamation. (Def.’s Mem. 6 n.2
(citing N.Y. C.P.L.R. § 215(3)). The key inquiry in determining that a complaint sounds in tortious
interference, rather than defamation, is whether “the gravamen of a complaint is economic injury, rather
than merely reputational harm.” Amaranth LLC v. J.P. Morgan Chase & Co., 71 A.D.3d 40, 48 (N.Y.
App. Div. 2009). Where a complaint “allege[s] a specific business relationship,” and not “merely [a]
generalized reputational harm,” the complaint “sounds in tortious interference.” Id.; see also Classic
Appraisals Corp. v. DeSantis, 159 A.D.2d 537, 537-38 (N.Y. App. Div. 1990) (same). Plaintiffs here
allege a longstanding business relationship with Chu. (AC ¶¶ 17-19, 26). Defendants allegedly engaged
in a course of conduct designed to undermine that relationship and to cause Chu to breach the Production
Agreement, resulting in the loss of Plaintiffs’ investment and future sales. (Id. ¶ 189). Given these
allegations, the Court concludes that the applicable statute of limitations is three years.
5
“[F]ederal law applies to relation back issues in federal court diversity cases.” Lucchesi v.
Experian Info. Solutions, Inc., 226 F.R.D. 172, 175 (S.D.N.Y. 2005) (Robinson, J.) (citing Ingram v.
Kumar, 585 F.2d 566, 570 n.5 (2d Cir. 1978)). Under Rule 15(c)(1)(A), however, when state law would
permit relation back, such a finding applies equally in federal courts . For this reason, courts typically
apply whichever law is more generous. Lieber v. Vill. of Spring Valley, 40 F. Supp. 2d 525, 532
(S.D.N.Y. 1999) (Parker, J.).
6

Procedure . . . for resolving disputes on their merits.” Krupski v. Costa Crociere S. p. A., 130
S. Ct. 2485, 2494 (2010).
i. Whether the New Claims Arose Out of the Conduct, Transaction, or
Occurrence Set Out in the Original Complaint
In determining whether a new claim “arose out of the conduct, transaction, or occurrence
set out . . . in the original pleading,” courts must determine whether the “basic claim” arose out
of the conduct originally alleged. Slayton v. Am. Express Co., 460 F.3d 215, 228 (2d Cir. 2006).
The “‘central inquiry is whether adequate notice of the matters raised in the amended pleading
has been given to the opposing party . . . by the general fact situation alleged in the original
pleading.’” Id. (quoting Stevelman v. Alias Research Inc., 174 F.3d 79, 86 (2d Cir. 1999)).
In this case, the factual situation alleged in the original complaint provided Defendants
with clear notice of the matters raised in the amended pleading. Although the original complaint
did not assert a tortious interference claim arising out of the Production Agreement, it did allege
that Marlborough “demanded that the [Production] Agreement be terminated.” Navarra, 820 F.
Supp. 2d at 488. The original complaint also discussed the alleged acts of interference that form
the basis for the amended claims—in particular, the February 2007 cease-and-desist letter, the
April 2007 lawsuit, and Defendants’ production of the Vases. (Compl. ¶¶ 31-32, 36-37, 39-40
[Dkt. No. 1]). The AC thus only amplifies the “general fact situation” asserted in the original
complaint. See Slayton, 460 F.3d at 228; compare In re Rationis Enterps., Inc. of Pan., 45 F.
Supp. 2d 365, 367 (S.D.N.Y. 1999) (Owen, J.) (not permitting relation back where amended
claims were based on a distinct contract not discussed in the original pleading). 6

6

The AC includes two new factual allegations: (1) that the Production Agreement contained an
Exclusivity Provision, (AC ¶¶ 26, 45), and (2) that Chu breached the Exclusivity Provision in September
2008 when Defendants’ Vases were unveiled at the Asia Pacific Contemporary Arts Fair, (id. ¶¶ 87, 90).
These allegations are “amplif[ications of] the facts alleged in the original pleading.” Maccharulo v.
Gould, 643 F. Supp. 2d 587, 594 (S.D.N.Y. 2009) (Swain, J.). For example, although the original
7

Defendants contend that the amended claims are entirely new because they allege
interference with the Production Agreement, (AC ¶¶ 185-90), whereas Plaintiffs’ original claims
alleged interference only with Plaintiffs Christie’s Hong Kong contract, (Compl. ¶¶ 114-18).
This lack of identity, however, is not decisive. Where, as here, an amended claim “is based on
the same series of transactions and occurrences alleged in the original pleading,” the claim will
relate back “even where the revised pleading contains legal theories not included in the original.”
White v. White Rose Food, a Div. of DiGiorgio Corp., 128 F.3d 110, 116 (2d Cir. 1997); see also
Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 125 (2d Cir. 1994) (same).
ii. Whether the New Parties Received Timely Notice
Rule 15(c) requires Defendants Koutouzis and Levai to have received notice of the suit
“within the period provided by Rule 4(m)” so that they “will not be prejudiced in defending the
action on the merits.” Fed. R. Civ. P. 15(c)(1)(C)(i). This requirement has two aspects: first, the
notice must have been timely, and second, the notice must have been adequate to overcome any
prejudice resulting from the delay in naming Defendants. Sigmund v. Martinez, No. 06 Civ.
1043, 2006 WL 2016263, at *5 (S.D.N.Y. July 10, 2006) (Dolinger, Mag.).
Defendants do not dispute that they received notice of the action. Soon after receiving
the original complaint, Koutouzis was in contact with Marlborough’s counsel regarding the
action. (See Wallison Aff. Ex. A [Dkt. No. 52]). 7 Similarly, Marlborough and Levai appear to

complaint did not mention the Exclusivity Provision, it discussed the terms of the Production Agreement
and the acts that allegedly breached the Exclusivity Provision. (See Compl. ¶ 20 (discussing Agreement);
¶¶ 31-32 (discussing commission, marketing, and sale of Vases)). Similarly, although the original
pleading did not mention the Asia Pacific Fair, it discussed contemporaneous articles introducing the
Vases. (See id. ¶ 48). Plaintiffs’ amended and original claims thus “share a ‘common core of operative
facts.’” Triano v. Town of Harrison, NY, No. 09 Civ. 6319, 2012 WL 4474163, at *3 n.3 (S.D.N.Y. Sept.
26, 2012) (Karas, J.); see also Hood v. City of New York, 739 F. Supp. 196, 200 (S.D.N.Y. 1990) (Conner,
J.) (new claim related back where amended allegations shared the same “factual core” as the original
complaint).
7
Defendants do not object to the Court’s consideration of the Wallison Affidavit.
8

have been, at all relevant times, represented by the same attorneys. See In re Integrated Res.
Real Estate Ltd. P’ships Sec. Litig., 815 F. Supp. 620, 646 (S.D.N.Y. 1993) (Sweet, J.). The
evidence of notice is further bolstered by the new Defendants’ close relationship to the original
Defendant, Marlborough—Koutouzis serves as Marlborough’s Director of Asia, and Levai
serves as its President. Id. at 645 (“In the Second Circuit, courts have generally held that Rule
15(c) is satisfied where the original party and added party have a close identity of interests.”
(quotations and alterations omitted)).
Defendants do not suggest that they have been prejudiced by the delay. This action
remains at an early stage; only two Defendants have answered the complaint. Moreover, it
appears that at least Defendant Koutouzis may have been involved in Marlborough’s defense
from an early stage. (See Wallison Aff. Ex. A).
Accordingly, the Court finds that Defendants received timely notice of the action such
that they have not been prejudiced in defending the action on the merits.
iii. Whether Plaintiffs’ Failure to Name the New Defendants in the Original
Complaint Constitutes a Mistake Concerning Identity
Finally, Plaintiffs must show that, within the time for serving the original complaint,
Koutouzis and Levai “knew or should have known that the action would have been brought
against [them], but for a mistake concerning the proper party’s identity.” Fed. R. Civ. P.
15(c)(1)(C)(ii).
Defendants first contend that they lacked knowledge “that the suit would have been
brought against [them].” Id. The Court finds it unreasonable for Koutouzis and Levai to believe
that Plaintiffs made an informed and deliberate choice not to name them as defendants. Indeed,
Defendants have offered no reason why Plaintiffs would sue Marlborough but not two of its most
senior employees. See In re Integrated Res., 815 F. Supp. at 646 (“[I]dentity of interests has . . .
9

served as touchstone for determining whether the new party knew or should have known that
‘but for’ a mistake in identity, he would have been sued in the first instance.”). The natural
inference to draw is that Plaintiffs’ “choice” was either unintentional or resulted from a lack of
knowledge regarding Defendants’ misconduct. In either case, Defendants should have known
that the suit would have been brought against them.
Defendants next contend that Plaintiffs did not commit “a mistake concerning the proper
party’s identity.” Fed. R. Civ. Proc. 15(c)(1)(C)(ii). Plaintiffs explain that they failed to name
Koutouzis and Levai in the original complaint because the information regarding their
involvement only recently came to light. The Court finds that Plaintiffs’ explanation qualifies as
a “mistake concerning the proper party’s identity” under Rule 15(c)(1)(C)(ii).
The Supreme Court in Krupski v. Costa Crociere, S.p.A., 130 S. Ct. 2485 (2010), recently
addressed the mistake element of Rule 15(c). There, the Supreme Court explained that, for
purposes of the mistake inquiry, “it would be error to conflate knowledge of a party’s existence
with the absence of mistake.” Id. at 2494. The Court further explained that “a plaintiff may
know generally what [a prospective defendant] does while misunderstanding the roles that [the
defendant] . . . played in the ‘conduct, transaction, or occurrence’ giving rise to her claim.” Id.
Thus, even a deliberate choice can be mistake where the plaintiff “harbor[s] a misunderstanding
about [the defendant’s] status or role in the events giving rise to the claim.” Id.
Plaintiffs contend that their lack of knowledge regarding Koutouzis and Levai’s conduct
qualifies as a mistake under Krupski. Prior to Krupski, the rule in the Second Circuit was that
“lack of knowledge does not constitute a ‘mistake’ for relation back purposes.” Hickey v. City of
New York, No. 01 Civ. 6506, 2004 WL 736896, at *3 (S.D.N.Y. Apr. 5, 2004) (Maas, Mag.)
(citing Barrow v. Wethersfield Police Dep’t, 66 F.3d 466, 470 (2d Cir.), modified, 74 F.3d 1366

10

(2d Cir. 1996)). The Court need not decide the precise contours of this standard in light of
Krupski for the purposes of resolving this motion. 8 The Court agrees with other courts that have
held, in light of Krupski, that Rule 15(c) can be satisfied where the plaintiff “[lacked] knowledge
regarding the conduct or liability” of the newly added party. Abdell v. City of New York, 759 F.
Supp. 2d 450, 457 (S.D.N.Y. 2010) (Sullivan, J.); see also Roe v. Johnson, No. 07 Civ. 2143,
2011 WL 8189861, at *4 (E.D.N.Y. Aug. 12, 2011) (citing Abdell). 9 Indeed, the Supreme Court
mandated this result when it explained that a mistake under Rule 15 encompasses situations in
which the plaintiff has general knowledge regarding a prospective defendant’s conduct, but
misunderstands that person’s role “in the ‘conduct, transaction, or occurrence’ giving rise to [the]
claim.” See 130 S. Ct. at 2494.
Accordingly, under Rule 15(c), the amended claims, even with respect to new
Defendants, relate back to the date of the original complaint.
2. New York Law
New York’s relation back doctrine is similar to, and likely “more generous” than, its
federal counterpart. Pape v. Bd. of Educ. of the Wappingers Cent. Sch. Dist., No. 07 Civ. 8828,
2009 WL 3151200, at *15 (S.D.N.Y. Sept. 29, 2009) (Karas, J.). Under New York law,
amendments relate back to timely filed pleadings when
(1) both claims arose out of same conduct, transaction or occurrence,
8

See Askins v. City of New York, No. 09 Civ. 10315, 2011 WL 1334838, at *1 n.3 (S.D.N.Y.
Mar. 25, 2011) (Buchwald, J.) (noting Krupski has “engendered a split in the district courts as to whether
Barrow remains good law”).
9
Defendants cite various cases which they claim establish that “the majority of courts addressing
this issue have concluded that Barrow survived Krupski.” (Def. Koutouzis’ Reply Mem. 9 (citing
Felmine v. City of New York, No. 09 Civ. 3768, 2012 WL 1999863, at *3 (E.D.N.Y. June 4, 2012);
Rodriguez v. City of New York, No. 10 Civ. 1849, 2011 WL 4344057, at *9 (S.D.N.Y. Sept. 7, 2011);
Dominguez v. City of New York, No. 10 Civ. 2620, 2010 WL 3419677, at *3 (E.D.N.Y. Aug. 27, 2010)).
As noted above, however, the relevant question is not the general issue of whether Barrow survived
Krupski, but the far more specific issue of whether a lack of knowledge regarding a defendant’s conduct
constitutes a mistake under Rule 15(c). None of the cases cited by Defendants addresses this latter issue.
11

(2) the new party is united in interest with the original defendant, and by reason of
that relationship can be charged with such notice of the institution of the action
that he will not be prejudiced in maintaining its defense on the merits, and
(3) the new party knew or should have known that, but for a mistake by the
plaintiff as to the identity of the proper parties, the action would have been
brought against that party as well.
Xavier v. RY Mgmt. Co., Inc., 45 A.D.3d 677, 678 (N.Y. App. Div. 2007); see also Coupal v.
Buran, 661 N.E.2d 978, 981 (N.Y. 1995).
The Court finds that each of these requirements is met. First, the new claims arise out of
the “same conduct, transaction, or occurrence” as the original pleading. See supra Part II.B.1.i
(discussing the same language under Rule 15). Second, even absent actual notice, Koutouzis and
Levai, as high-ranking officers of Marlborough, are sufficiently “united in interest” with
Marlborough such that they can be charged with notice of the action and will not be prejudiced.
See, e.g., City of New York v. Lexington Ins. Co., 735 F. Supp. 2d 99, 112 (S.D.N.Y. 2010)
(Castel, J.) (holding that employees and employer are united in interest); Amaya v. Garden City
Irrigation, Inc., 645 F. Supp. 2d 116, 122 (E.D.N.Y. 2009) (“The most frequently cited
relationship creating a unity of interest is vicarious liability, such as between an employer and
employee or a corporation and its agents.”) (citing Connell v. Hayden, 83 A.D.2d 30, 46 (N.Y.
App. Div. 1981))). Finally, the Court finds that Plaintiffs have established that their failure to
include Koutouzis and Levai in the original complaint was a mistake and not a deliberate choice.
See supra Part II.B.1.i (discussing Krupski); see also Haidt v. Kurnath, 86 A.D.3d 935, 936
(N.Y. App. Div. 2011) (finding mistake to satisfy standard for relation back when based on
plaintiff’s lack of “sufficient knowledge of defendant’s role” in the alleged conduct).
Accordingly, the amended claims against all Defendants also relate back to the original
complaint under New York Law.

12

C. The New Claims Accrued Less than Three Years Before the Original Complaint
Having concluded that the applicable statute of limitations is three years, and that the AC
relates back to the date of the original complaint (filed October 4, 2010), the final question
becomes whether Plaintiffs’ new claims accrued before October 2007.
In New York, the statute of limitations begins to run when the cause of action accrues.
N.Y. C.P.L.R. § 203(a). Under New York law, 10 a claim for tortious interference with contract
accrues when the plaintiff sustains damages from the breach of contract. See, e.g., ESI, Inc. v.
Coastal Corp., 61 F. Supp. 2d 35, 77 (S.D.N.Y. 1999) (Conner, J.); DT Corp. v. Morgan Stanley
Dean Witter & Co., 907 N.E.2d 268, 273 (N.Y. 2009). Given that the Court has determined that
the new claims relate back to the date of the original complaint (October 4, 2010), these claims
will be time barred only if they accrued more than three years prior—before October 2007.
To make this showing, Defendants present two arguments. First, they argue that the
claims accrued in February 2007, when Chu’s attorney, at Defendants’ behest, sent Plaintiffs a
cease-and-desist letter demanding that “the Production Agreement be terminated,” that “all
further production, exhibition[,] and sale” of the Plates cease, and that Plaintiffs return all of the
Plates produced in 2006 and 2007, “including those currently exhibited or for sale but not
already sold.” (AC ¶¶ 58, 70). Alternatively, Defendants contend that the claims accrued in
April 2007, when Chu’s attorney, again at Defendants’ behest, filed a lawsuit asserting many of
the same claims as the cease-and-desist letter. (Id. ¶¶ 187, 71). Defendants argue that these

10

Plaintiffs briefly argue that “French law would presumably govern” whether and when the
Production Agreement was breached. (Pls.’ Mem. in Opp’n 3 [Dkt. No. 51]). Defendants contend that
this assertion of French law comes too late. (Def. Koutouzis’ Reply Mem. 4 [Dkt. No. 53]). Because the
Court decides in Plaintiffs’ favor under New York law, the Court does not address this dispute. The
Court notes, however, that although Federal Rule of Civil Procedure 44.1 requires a party raising an issue
of foreign law to give notice, courts have held that “notice provided in the first submission by a party in
connection with a motion will usually be adequate because the opposing party still has the opportunity to
respond.” Torah Soft Ltd. v. Drosnin, 224 F. Supp. 2d 704, 718 (S.D.N.Y. 2002) (Francis, Mag.).
13

actions amounted to breach by repudiation of the Production Agreement. (Def. Koutouzis’
Mem. 10). Defendants add that this repudiation caused damage because Plaintiffs refrained from
selling Plates and postponed an exhibit in Bali. (AC ¶¶ 72, 83; see also Def. Koutouzis’ Mem.
17 n.7). At this stage, however, drawing all inferences in Plaintiffs’ favor, the court cannot agree
that Plaintiffs’ tortious interference claim accrued at either of these points.
First, it is not clear that either of these events amounted to a breach of the Production
Agreement. Under New York law, “[a] repudiation [of a contract] can be either ‘a statement by
the obligor to the obligee indicating that the obligor will commit a breach that would of itself
give the obligee a claim for damages for total breach’ or ‘a voluntary affirmative act which
renders the obligor unable or apparently unable to perform without such a breach.’” Norcon
Power Partners, L.P. v. Niagara Mohawk Power Corp., 705 N.E.2d 656, 659 (N.Y. 1998)
(quoting Restatement (Second) of Contracts § 250). Such repudiation occurs when the breaching
party’s “word or deeds are unequivocal” and draw “a discernible line in the sand.” Id. at 659;
see also Palazzetti Import/Export, Inc. v. Morson, No. 98 Civ. 722, 2001 WL 1568317, at *9
(S.D.N.Y. Dec.6, 2001) (Maas, Mag.) (“The renunciation . . . must rise to the level of a clear and
unqualified refusal to perform the entire contract.”).
“Whether anticipatory repudiation has occurred is generally an issue of fact for the jury,”
and thus inappropriate to resolve on a motion to dismiss. Briarwood Farms, Inc. v. Toll Bros.,
Inc., 452 F. App’x 59, 61 (2d Cir. 2011). An exception exists where “the purported repudiation
is in writing” and “there is no ambiguity as to the writing’s meaning.” Id. In this case, however,
the Court has not been presented with either the cease-and-desist letter or the filings in the
French lawsuit. The descriptions in the AC are insufficient for the Court to determine whether
Chu unequivocally repudiated his obligations under the Production Agreement.

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Moreover, when confronted with Chu’s purported repudiation, Plaintiffs had two
mutually exclusive options: (1) “elect to treat the repudiation as an anticipatory breach and seek
damages,” or (2) “continue to treat the contract as valid and await the designated time for
performance.” Lucente v. Int’l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002). The
parties to the Production Agreement do not appear to have treated the cease-and-desist letter or
the lawsuit as a breach. Third parties continued to sell Plaintiffs’ Plates, (AC ¶ 72), and Chu did
not object to these sales; in fact, he continued to cash the royalty checks sent by Plaintiffs. (Id.
¶ 73). Plaintiffs subsequently revived the Bali exhibit and even scheduled a separate auction of
twelve Plates at Christie’s Hong Kong. (Id. ¶ 74). These actions suggest a lack of breach (and
thus non-accrual of Plaintiffs’ claims) because “repudiation . . . followed by continued
performance . . . amounts to a retraction of any repudiation.” Liebowitz v. Elsevier Sci. Ltd., 927
F. Supp. 688, 702 (S.D.N.Y. 1996) (Kaplan, J.).
Accordingly, at this stage, Defendants have not shown that Plaintiffs’ tortious
interference claim accrued before October 2007. Given that the applicable limitations period is
three years and the amended claims relate back to the original complaint, the Court rejects
Defendants’ limitations defense.

IV.

CONCLUSION
For the aforementioned reasons, Defendants’ motions to dismiss and for judgment on the

pleadings are DENIED. [Dkt. Nos. 44, 48].
SO ORDERED.
DATED:

New York, New York
March 25, 2013
/s/_________________________
KIMBA M. WOOD
United States District Judge
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