Phoenix Ancient Art, S.A. et al v. J. Paul Getty Trust et al

Filing 115

OPINION AND ORDER re: 45 MOTION to Dismiss; 50 MOTION to Dismiss: For the foregoing reasons, the Getty Defendants motion to dismiss is GRANTED in part and DENIED in part, and the Russo Defendants motion to dismiss is GRANTED. Plaintiffs ' claims against the Russo Defendants are dismissed with prejudice for lack of personal jurisdiction. Plaintiffs are permitted to proceed on their unjust enrichment claim against the Getty Defendants, and Regulus is permitted to proceed on its b reach of third party beneficiary contract claim. They may replead their intentional interference, fraud, unfair competition, conversion, and DTSA claims against the Getty Defendants, but may not replead the claims they have conceded (breach of the im plied covenant of good faith and fair dealing against the Getty and tortious interference with contract against Potts). Plaintiffs' Amended Complaint must be filed, if at all, on or before April 20, 2018. If Plaintiffs choose not to amend, the p arties are directed to contact the Court to schedule a status conference. The Clerk of the Court is respectfully directed to terminate the motions, Doc. 45, Doc. 50. (Arturo Russo and Livio Russo terminated. Amended Pleadings due by 4/20/2018.) (Signed by Judge Edgardo Ramos on 3/29/2018) (jwh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PHOENIX ANCIENT ART, S.A., PETRARCH LLC
a/k/a ELECTRUM, and REGULUS
INTERNATIONAL CAPITAL CORP.,
Plaintiffs,
- against -

OPINION AND ORDER
17 Civ. 241 (ER)

J. PAUL GETTY TRUST, J. PAUL GETTY
MUSEUM, TIMOTHY POTTS, LIVIO RUSSO, and
ARTURO RUSSO,
Defendants.

Ramos, D.J.:
Phoenix 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 GRANTED.

I.

Factual Background 1
Phoenix 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.
At some 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. 2 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

1

The following facts are drawn from the Complaint and are assumed true for the purposes of deciding Defendants’
motions.

2

The timing of the Torlonia family’s decision to find a buyer and the nature of the Russo Defendants’ initial
involvement in those efforts are unclear from the Complaint.

2

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.
Beginning 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.
In the 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

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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.
On July 12, 2013, Potts, on behalf of the Getty, signed a Non-Disclosure and NonCircumvention 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.
On 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

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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. Id.
On June 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.

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Plaintiffs, 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.
Plaintiffs 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.
Plaintiffs 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. ¶ 120.

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In 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.
On May 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.
II.

Procedural History
On 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

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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.
On May 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.
III.

Legal Standard
A. Rule 12(b)(2) Motion to Dismiss: Lack of Personal Jurisdiction
“A 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

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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)).
B. Rule 12(b)(6) Motion to Dismiss: General Legal Standard
Under 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

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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.
IV.

Discussion
A. Claims against the Getty Defendants
1. Tort Claims
The 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. at 15.
Under 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.”

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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.
Plaintiffs 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.
a. Conversion
Plaintiffs bring a claim for conversion based on the Getty Defendants’ alleged refusal to
return the catalogue of Torlonia sculptures prepared by Electrum, despite their demands for its
return. Compl. ¶¶ 197–202. “Conversion is the unauthorized assumption and exercise of the
right of ownership over goods belonging to another to the exclusion of the owner’s rights.” State
v. Seventh Regiment Fund, Inc., 98 N.Y.2d 249, 259 (2002) (internal quotation marks omitted).
“For an action in conversion to lie when the original possession of the property is lawful, a
plaintiff must make a demand for the allegedly converted property and the possessor must
refuse.” AD Rendon Commc’ns, Inc. v. Lumina Ams., Inc., No. 04 Civ. 8832 (KMK), 2007 WL

11

2962591, at *4 (S.D.N.Y. Oct. 10, 2007). A claim for conversion, however, “cannot be
predicated on a mere breach of contract.” Wolf v. Nat’l Council of Young Israel, 264 A.D.2d
416, 417 (2d Dep’t. 1999). To survive a motion to dismiss, a plaintiff alleging conversion must
plead “independent facts sufficient to give rise to tort liability.” Fesseha v. TD Waterhouse
Investor Servs., Inc., 305 A.D.2d 268, 269 (App. Div. 2003) (internal quotation marks omitted).
Plaintiffs contend that their claim for conversion is not duplicative of their breach of
contract claim because they have possessory rights to the catalogue that are independent of the
NDNCA. Pl.’s Mem. at 13. In particular, Plaintiffs contend that the Getty Defendants would
still be obligated to return the catalogue even if the NDNCA did not exist because they
independently developed and created it. Id. The Court disagrees. Plaintiffs have not alleged any
facts suggesting that the Getty Defendants’ continued possession of the catalogue would be
unauthorized in the absence of the NDNCA. 3 As Plaintiff’s complaint alleges, it was the
NDNCA that imposed restrictions on the Getty Defendants’ possession of the catalogue and
created an obligation to return it to Plaintiffs. Compl. ¶ 68; NDNCA ¶ 1 (“[The Getty] shall
immediately return to Electrum all originals and copies of Confidential Information upon
request.”). Without the restrictions and obligations set forth in the NDNCA, Plaintiffs’ transfer
of the catalogue to the Getty Defendants would have been unrestricted and the Getty Defendants
would have been able to do with it as they pleased. Plaintiffs’ factual allegations, taken as true
for purposes of this motion, are devoid of any suggestion that the Getty Defendants had an
independent obligation to return the catalogue. As such, Plaintiffs’ conversion is impermissibly

3

Plaintiffs have not cited any case law or set forth a cogent argument explaining how someone who gives away an
item voluntarily and without restrictions to another could be the victim of conversion merely because he developed
and created that item.

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duplicative and the Getty Defendants’ motion to dismiss Count Nine of the Complaint is
GRANTED.
b. Fraud
In their Complaint, Plaintiffs allege that the Getty Defendants defrauded them by making
various misrepresentations, including that they would (1) keep Plaintiffs’ information
confidential, (2) not circumvent Plaintiffs in a deal with the Torlonia family, (3) not contact or
communicate with the Torlonia family without Plaintiffs’ participation and consent, and (4)
compensate Plaintiffs for facilitating a deal with the Torlonia family. Compl. ¶ 179. In their
opposition to the instant motion, however, Plaintiffs appear to have abandoned most of their
fraud claim, contending only that the Getty Defendants are liable for fraud because they
misrepresented an intent to compensate Plaintiffs for facilitating a deal with the Torlonia family.
Pls.’ Mem. at 18. Plaintiffs, thus, appear to concede that the portions of their fraud claim based
on the other alleged misrepresentations are duplicative of their breach of contract claim.
The Second Circuit has held that a plaintiff may distinguish a fraud claim from a breach
of contract claim by demonstrating a fraudulent misrepresentation collateral or extraneous to the
contract. Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir.
1996). Here, Plaintiffs contend that the Getty Defendants’ misrepresentations that they intended
to compensate Plaintiffs for facilitating a deal with the Torlonia family are collateral to the
NDNCA. Pls.’ Mem. at 9. As the Getty Defendants recognize, the NDNCA did not provide for
compensation to Plaintiffs for facilitating a deal with the Torlonia family. Id. at 9–10; Getty
Defs.’ Mem. at 2, 5. As such, Defendants’ alleged misrepresentations regarding compensation
are sufficiently collateral to the NDNCA to support an independent fraud claim.

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However, Plaintiffs have failed to plausibly allege that the Getty Defendants made any
representations of an intent to compensate them for facilitating a deal with the Torlonia family,
false or otherwise. Plaintiffs cite two passages in the Complaint that purportedly allege that the
Getty Defendants represented an intent to compensate them. Pls.’ Mem. at 4, 12, 16. None of
the cited paragraphs, however, contains any statement by a Getty defendant promising
compensation to Plaintiffs for facilitating a transaction. The first cited passage describes (1)
initial conversations between Electrum and Potts regarding a potential deal involving the
Torlonia Collection, (2) the Getty Defendants’ oral agreement to keep certain information
confidential, and (3) the negotiation and signing of the NDNCA. Compl. ¶¶ 57–68. Nothing in
this passage alleges or even suggests that Potts or anyone else acting on behalf of the Getty
Defendants made representations regarding compensation. See id. The relevant portion of the
second passage alleges that Plaintiffs proposed a deal structure to the Getty Defendants involving
a 22% commission of the price for themselves and that Stephen Clark, general counsel for the
Getty, “expressed interest in that proposal and agreed to further discuss.” 4 Id. ¶¶ 103–104.
The only statement by a Getty defendant alleged in the Complaint that is even
tangentially related to the idea of future compensation is Clark’s expression of interest in
Plaintiffs’ proposal and agreement to discuss further. The Court disagrees with Plaintiffs’
suggestion that expressing an interest in something amounts to a promise to do that thing.
Accepting Plaintiffs’ factual allegations as true and drawing all reasonable inferences in their
favor, the Court finds that Plaintiffs have not plausibly alleged that the Getty Defendants
represented an intent to compensate them. Therefore, even accepting Plaintiffs’ contention that

4

The passage also describes further negotiations regarding the sale of the collection to the Getty, as well as the
Getty Defendants’ alleged actions to cut Plaintiffs off from discussions with the Torlonia family. Compl. ¶¶ 105–
120. These paragraphs lack any allegations concerning Plaintiffs’ claim that the Getty Defendants represented an
intent to compensate them.

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their fraud claim arises from misrepresentations that are collateral to the NDNCA, Plaintiffs’
fraud claim fails because they have not sufficiently pleaded that the Getty Defendants made
those misrepresentations. 5 Accordingly, the Getty Defendants’ motion to dismiss Count Six of
the Complaint is GRANTED.
c. Unfair Competition
Under New York law, an unfair competition claim may be based on “palming off” or
misappropriation. Sidney Frank Importing Co. v. Beam Inc., 998 F. Supp. 2d 193, 208–09
(S.D.N.Y. 2014). To state a claim for unfair competition based on misappropriation, a plaintiff
must allege that the defendant: “(1) misappropriated the plaintiff’s labors, skills, expenditures,
or good will; and (2) displayed some element of bad faith in doing so.” Id. (internal quotation
marks and citation omitted). As plead in their Complaint, Plaintiffs’ unfair competition claim
alleges that the Getty Defendants misappropriated their “trade secrets and confidential and
proprietary information” by making misrepresentations and breaching the NDNCA. Compl. ¶¶
190–196. In their opposition to the instant motion, however, Plaintiffs appear to concede that
their claim is duplicative to the extent it relies on alleged misappropriation of their confidential
information. See Pls.’ Mem. at 11. They contend that their claim survives because the Getty
Defendants, in addition to misappropriating confidential information, also misappropriated
Plaintiffs’ “knowledge and application of Italian law and the relationships necessary to bring
about a sale or transfer of the Torlonia Sculptures.” Id. In other words, Plaintiffs contend that
the Getty Defendants misappropriated their “labor, skill, and/or goodwill, which are collateral to
the NDNCA and any breach thereof.” Id.

5

For the same reason, the allegations do not come close to satisfying the requirement of Federal Rule of Civil
Procedure 9(b) that the circumstances constituting fraud be pleaded with particularity.

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Plaintiffs’ argument is unavailing because the Complaint’s articulation of their unfair
competition claim contains no allegations of misappropriation of “labor, skill, and/or goodwill,”
and instead only refers to misappropriation of “trade secrets and confidential and proprietary
information,” which overlaps with their contractual claim. See Compl. ¶¶ 191–193. Plaintiffs’
claim fails for a second reason. In their opposition, Plaintiffs contend that the Getty Defendants
misappropriated the fruits of Plaintiffs’ labors by misrepresenting that they intended to
compensate Plaintiffs for their services in facilitating a transaction between the Getty Defendants
and the Torlonia family. Pls.’ Mem. at 19. As discussed above, Plaintiffs have not sufficiently
alleged that any Getty defendant made a representation regarding an intent to compensate
Plaintiffs. Supra 14–15. Accordingly, Plaintiffs have failed to plausibly allege an unfair
competition claim based on misappropriation and the Getty Defendants’ motion to dismiss Count
Eight of the Complaint is GRANTED.
d. Intentional Interference
Plaintiffs claim that the Getty Defendants intentionally and maliciously cut them out of
their continued relationship with the Torlonia family by using improper or illegal means. Compl.
¶ 174. To state a claim for intentional interference with business relations under New York law,
a plaintiff must allege that: “(1) the plaintiff had business relations with a third party; (2) the
defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose
or used dishonest, unfair, or improper means; and (4) the defendant’s acts injured the
relationship.” Valley Lane Indus. Co. v. Victoria’s Secret Direct Brand Mgmt., L.L.C., 455 F.
App’x 102, 105 (2d Cir. 2012). To satisfy the third element, “the defendant’s conduct must
amount to a crime or an independent tort.” Id. at 106.

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Here, Plaintiffs contend that the Getty Defendants interfered with their relationship with
the Torlonia family through independently tortious conduct, “which necessarily exceeds the
bounds of the contract action.” Pls.’ Mem. at 12. In particular, they argue that the Getty
Defendants acted with malice and intent to harm Plaintiffs by (1) refusing to cease contact with
the Torlonia family except through Plaintiffs, (2) refusing to return the catalogue of the Torlonia
sculptures, (3) misrepresenting an intent to compensate Plaintiffs, and (4) misappropriating the
benefits of Plaintiffs’ trade secrets, labors, skills, and goodwill. Id. at 12.
Plaintiffs’ suggestion that communicating directly with the Torlonia family and refusing
to return the catalogue is wrongful independent of the NDNCA, simply because it was done
“with malice and intent to harm,” is unavailing. Despite Plaintiffs’ colorful characterization,
these allegations merely describe alleged breaches of the NDNCA. Plaintiffs have not alleged
any limitations on the Getty Defendants’ ability to communicate with the Torlonia family outside
the NDNCA and, as the Court discussed above with respect to Plaintiffs’ conversion claim, the
Getty Defendants’ obligation to return the catalogue arises solely from the NDNCA.
Moreover, Plaintiffs may not base their interference claim on misrepresentations of an
intent to compensate because, as the Court has already set forth, Plaintiffs have failed to
sufficiently allege that the Getty Defendants made such representations. Supra pp. 14–16.
Similarly, their interference claim cannot survive to the extent it is based on misappropriation
because, as the Court has also already set forth, Plaintiffs’ claims of misappropriation arise from
their insufficiently-plead allegation of misrepresentation of an intent to compensate. Supra p. 16.
Therefore, Plaintiffs have failed to sufficiently plead that the Getty Defendants intentionally
interfered with their business relationship with the Torlonia family by engaging in independently
wrongful conduct, and as such, fail to satisfy the third element of an intentional interference

17

claim. Accordingly, the Getty Defendants’ motion to dismiss Count Five of the Complaint is
GRANTED.
2. Quasi-Contractual Claims
The Getty Defendants also seek dismissal of Plaintiffs’ quasi-contractual claims on the
ground that they impermissibly duplicate their breach of contract claim. Getty Defs.’ Mem. at
19. The Court addresses these claims in turn.
a. Breach of Implied Covenant of Good Faith
“Under New York law, parties to an express contract are bound by an implied duty of
good faith, but breach of that duty is merely a breach of the underlying contract.” Harris v.
Provident Life & Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002) (quotation marks omitted).
“Therefore, when a complaint alleges both a breach of contract and a breach of the implied
covenant of good faith and fair dealing based on the same facts, the latter claim should be
dismissed as redundant.” Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 125 (2d Cir. 2013). In
their response to the instant motion, Plaintiffs acknowledge that their claim for breach of the
implied covenant of good faith is based on the same facts as their breach of contract claim. Pls.’
Mem. at 6, n. 13. Accordingly, the Getty Defendants’ motion to dismiss Count Three of the
Complaint is GRANTED.
b. Unjust Enrichment
As Plaintiffs concede, “[t]he existence of a valid and enforceable written contract
governing a particular subject matter ordinarily precludes recovery in unjust enrichment for
claims arising out of the same subject matter.” Kalimantano GmbH v. Motion in Time, Inc., 939
F. Supp. 2d 392, 418 (S.D.N.Y. 2013) (citing Clark–Fitzpatrick, 70 N.Y.2d at 388). Under New
York law, recovery pursuant to an unjust enrichment theory is available only in the absence of a

18

governing enforceable agreement. Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of
New Jersey, Inc., 448 F.3d 573, 586–587 (2d Cir. 2006). Plaintiffs, however, contend that their
unjust enrichment claim does not arise out of the same subject matter governed by the NDNCA
because they performed compensable work that benefitted the Getty Defendants that is not
addressed by the NDNCA. Pls.’ Mem. at 10. In particular, they contend that the Getty
Defendants benefitted from their management of communications with the Torlonia family,
coordination of visits to inspect the Torlonia sculptures, and utilization of their relationships and
goodwill with Italian officials. Id.
Plaintiffs’ contention is at odds with the facts they alleged in their Complaint. In their
Complaint, Plaintiffs described the NDNCA as “relating to access to the Torlonia Family,
relationships with Italian officials, knowledge, trade secrets, and access relating to the Torlonia
Sculptures, and knowledge regarding appropriate deal structures to bring the Torlonia Sculptures
to the public.” Compl. ¶ 62. While the NDNCA may not have specifically enumerated all of the
services Plaintiffs agreed to provide, it undoubtedly purported to govern the parties’ relationship
in connection with a potential transaction involving the Torlonia Collection—a subject matter
that necessarily includes Plaintiffs’ services in brokering such a transaction. Thus, the NDNCA,
if enforceable, would preclude recovery under an unjust enrichment claim.
However, whether the NDNCA is actually an enforceable agreement is disputed at this
juncture. While Plaintiffs may not ultimately recover under both the breach of contract and
unjust enrichment claims, courts in this Circuit routinely allow plaintiffs to plead such claims in
the alternative. See Maalouf v. Salomon Smith Barney, Inc., No. 02 Civ. 4770 (SAS), 2003 WL
1858153, at *7 (S.D.N.Y. Apr. 10, 2003) (noting that plaintiff is allowed to plead both contract
and quasi-contract claims even though he may only recover on one such ground); Orange Cnty.

19

Choppers, Inc. v. Olaes Enters., Inc., 497 F. Supp. 2d 541, 557 (S.D.N.Y. 2007) (citing Maalouf
and Rule 8(a) of the Federal Rules of Civil Procedure for the principle that plaintiff may plead
breach of contract and unjust enrichment claims alternatively despite defendant’s contention that
a valid and enforceable contract governed the dispute); Contractual Obligation Prods., LLC v.
AMC Networks, Inc., No. 04 Civ. 2867 (BSJ) (HBP), 2006 WL 6217754, at *7 (S.D.N.Y. Mar.
31, 2006) (observing that the argument that quasi-contract claim was barred as duplicative of
contract claim was “misguided at the pleading stage”). Accordingly, Plaintiffs’ claim for unjust
enrichment survives as a potential alternative cause of action should Plaintiffs’ breach of contract
claim fail, and the Getty Defendants’ motion to dismiss Count Seven of the Complaint is
DENIED.
3. DTSA Claim
Plaintiffs allege that the Getty Defendants are liable for trade secret misappropriation
under the DTSA. Compl. ¶¶ 203–209. The DTSA applies only to acts of misappropriation that
occur on or after the effective date of the Act, May 11, 2016. Champions League, Inc. v.
Woodard, 224 F. Supp. 3d 317, 326 (S.D.N.Y. 2016). The Getty Defendants contend that to
plead a claim for violation of the DTSA, Plaintiffs must allege, inter alia, “acquisition,”
“disclosure,” or “use” of a trade secret after that date. Getty Defs.’ Mem. at 22. The Complaint
does not allege that the Getty Defendants acquired confidential information from Plaintiffs after
the summer of 2015, Compl. ¶ 117, and the only alleged wrongful disclosure or use of Plaintiffs’
confidential information occurred prior to May 11, 2016, in March 2016, when the New York
Times announced the agreement between the Torlonia Foundation and the Italian Ministry of
Culture. Id. ¶¶ 122–125. Thus, the Getty contends, Plaintiffs have not plausibly alleged that the
Getty Defendants engaged in any conduct governed by the DTSA. Getty Defs.’ Mem. at 22.

20

Plaintiffs do not dispute that they failed to allege that the Getty Defendants acquired,
disclosed, or used Plaintiffs’ trade secrets after the DTSA went into effect. See Pls.’ Mem. at
20–21. Instead, they contend that in addition to acquisition, disclosure, and use, the DTSA
prohibits concealment of a trade secret, and that the Getty Defendants have concealed Plaintiffs’
trade secrets after the DTSA went into effect by refusing to return the catalogue of Torlonia
sculptures. Id. at 21. As the Getty Defendants point out, concealment only violates the DTSA’s
criminal provision, 18 U.S.C. § 1832, and Plaintiffs have not cited any authority suggesting that
the provision authorizes private causes of action. Indeed, courts outside this Circuit have held
that private citizens do not have the right to enforce the DTSA’s criminal provision. See Steves
& Sons, Inc. v. JELD-WEN, Inc., 271 F. Supp. 3d 835, 842–43 (E.D. Va. 2017); Nelson Brothers
Professional Real Estate LLC v. Beau Jaussi et al., No. 17 Civ. 0158 (DOC), 2017 WL 8220703,
at *6 (C.D. Cal. Mar. 23, 2017). Therefore, Plaintiffs are unable to rely on a theory of
“concealment” to plead a DTSA claim, and the Getty Defendants’ motion to dismiss Count Ten
of the Complaint is GRANTED.
4. Claims against Potts
By only contending that they have sufficiently pleaded claims against Potts for
intentional interference, fraud, unfair competition, and conversion, Plaintiffs appear to concede
the balance of their claims against Potts. See Pls.’ Mem. at 23. Accordingly, the Getty
Defendants’ motion to dismiss Plaintiffs’ claims for tortious interference with contract (Count
Four), unjust enrichment (Count Seven), and DTSA (Count Ten) claims against Potts is
GRANTED.
As the Court has set forth generally, Plaintiffs’ intentional interference, fraud, unfair
competition, and conversion claims are duplicative of their contractual claim to the extent they

21

allege duties that are not independent of the NDNCA. Potts cannot be held liable in tort for
claims that are duplicative of Plaintiffs’ breach of contract claim. See Courageous Syndicate,
Inc. v. People-to-People Sports Comm., Inc., 141 A.D.2d 599, 600 (1988) (“Generally, a director
of a corporation is not personally liable to one who has contracted with the corporation on the
theory of inducing a breach of contract . . . .”). The only claims that the Court has found to not
be duplicative are those alleging tortious conduct based on the Getty Defendants’ alleged
misrepresentations of an intent to compensate Plaintiffs. However, the Court has determined that
Plaintiffs have not sufficiently alleged that any Getty Defendant, including Potts, made such
representations. Accordingly, Plaintiffs have failed to sufficiently state claims against Potts, and
the Getty Defendants’ motion to dismiss all remaining claims against him is GRANTED.
5. Claims brought by Regulus
The Getty Defendants contend that “the threadbare allegations in the Complaint
concerning Regulus’ involvement in this case are insufficient to state a claim—any claim—for
relief.” Getty Defs.’ Mem. at 24. In light of the Court’s dismissal of a number of Plaintiffs’
claims against the Getty Defendants, the remaining claims asserted on behalf of Regulus are for
(1) breach of third party beneficiary contract, and (2) unjust enrichment.
Regulus claims that despite not being a party to the NDNCA, it is entitled to recover for
the Getty’s breach of the NDNCA’s confidentiality obligations as a third party beneficiary.
Compl. ¶ 153. “Under New York law, a third party may enforce a contract when ‘recognition of
a right to performance in the beneficiary is appropriate to effectuate the intention of the parties
and . . . the circumstances indicate that the promisee intends to give the beneficiary the benefit of
the promised performance.’” Bayerische, 692 F.3d at 52 (quoting Levin v. Tiber Holding Corp.,
277 F.3d 243, 248 (2d Cir. 2002)). “A third party is an intended beneficiary where either (1) no

22

one other than the third party can recover if the promisor breaches the contract or (2) the
language of the contract otherwise clearly evidences an intent to permit enforcement by the third
party.” Piccoli A/S v. Calvin Klein Jeanswear Co., 19 F. Supp. 2d 157, 162 (S.D.N.Y. 1998)
(internal quotation marks omitted); see also United Int’l Holdings, Inc. v. Wharf (Holdings) Ltd.,
988 F. Supp. 367, 373 (S.D.N.Y. 1997) (“Courts have found that third-party status may be
established where only the third party may recover if the promisor breaches the contract;
conversely, if another besides the third party may recover, beneficiary status is negated.”).
The NDNCA defines “confidential information” as including “information disclosed to a
party by third parties at the direction of either Electrum or [the Getty].” NDNCA at 1. Plaintiffs
contend that this language in the NDNCA shows an intent to afford third-parties and their
information the same confidentiality protections that the parties to the contract enjoy. Pls.’
Mem. at 23. Therefore, Plaintiffs assert, a provider of confidential information like Regulus is a
third-party beneficiary of an agreement to maintain such confidentiality, and as such, has a right
to enforce the NDNCA’s confidentiality provisions. Id.
The Getty Defendants contend that Regulus cannot be a third party beneficiary because it
did not come into the picture until four months after the NDNCA was signed, and a third party
claiming to be a beneficiary of a contract must demonstrate that the contractual parties intended
to confer a benefit at the time of contracting. Defs.’ Mem. at 24. “Although a third party need
not be specifically mentioned in the contract before third-party beneficiary status is found, New
York law requires that the parties’ intent to benefit a third party must be shown on the face of the
agreement.” In re Gulf Oil/Cities Serv. Tender Offer Litig., 725 F. Supp. 712, 733 (S.D.N.Y.
1989). “Absent such intent, the third party is merely an incidental beneficiary with no right to
enforce the contract.” Id. The Getty Defendants have not cited any authority indicating that a

23

contract must demonstrate that the contracting parties intended to benefit a specific third party, as
opposed to third parties in general. Indeed, the authority examined by the Court suggests that it
is sufficient if the contractual counterparts intended to benefit a third party. See In re Gulf
Oil/Cities Serv. Tender Offer Litig., 725 F. Supp. at 733. Construing the pleadings liberally, the
Court finds that Regulus has sufficiently alleged that Phoenix/Electrum and the Getty intended
that a third-party provider of confidential information be protected by the NDNCA, granting
Regulus third-party beneficiary status to bring a breach of third-party beneficiary contract claim
against the Getty. Accordingly, the Getty Defendants’ motion to dismiss Count Two of the
Complaint is DENIED.
The Court also rejects the Getty Defendants’ motion to dismiss Regulus’ claim for unjust
enrichment. The Getty Defendants contend that “the Complaint contains only the most
conclusory allegations about how Regulus was involved in the transaction or how Regulus was
injured by the Getty’s alleged conduct.” Getty Defs.’ Mem. at 25. However, as the Getty
Defendants concede, Plaintiffs have set forth allegations that Regulus provided services to the
Getty related to developing potential deal structures and that the Getty did not compensate
Regulus for those services. Compl. ¶¶ 70, 138, 150. In the context of an unjust enrichment
claim, such allegations are sufficient to survive a motion to dismiss. See Baron v. Pfizer, Inc., 42
A.D.3d 627, 629 (2007) (“A claim for unjust enrichment will lie when (1) the defendant was
enriched, (2) at the expense of the plaintiff, and (3) . . . it would be inequitable to permit the
defendant to retain that which is claimed by the plaintiff.”). Accordingly, the Getty Defendants’
motion to dismiss Count Seven of the Complaint, to the extent pleaded by Regulus, is DENIED.

24

B. Personal Jurisdiction over the Russo Defendants
In a diversity action, personal jurisdiction is determined in accordance with the law of the
forum in which the federal court sits. Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d
Cir. 2001). This determination involves a two-step analysis. Metro. Life Ins. Co. v. RobertsonCeco Corp., 84 F.3d 560, 567 (2d Cir. 1996). In New York, the Court must first determine
whether personal jurisdiction is appropriate pursuant to the State’s general jurisdiction statute,
C.P.L.R. § 301, or its long arm jurisdiction statute, C.P.L.R. § 302. Chloe v. Queen Bee of
Beverly Hills, LLC, 616 F.3d 158, 164 (2d Cir. 2010). If and only if the Court’s exercise of
personal jurisdiction is deemed appropriate according to New York law, the second step is an
evaluation of whether the Court’s exercise of personal jurisdiction comports with the Due
Process Clause of the United States Constitution. Id.
The Complaint does not specifically identify the statutory basis for this Court’s personal
jurisdiction over the Russo Defendants. However, Plaintiffs’ submissions argue that personal
jurisdiction is warranted under New York’s long arm statute, C.P.L.R. § 302(a). Plaintiffs’
Memorandum in Opposition to the Russo Defendants’ Motion to Dismiss (referred to as “Pls.’
Mem.” in section IV.B. of this opinion) at 1–2. As Plaintiffs do not allege that the Russo
Defendants are subject to New York’s general jurisdiction statute, the Court will evaluate
jurisdiction under New York’s long arm statute only.
1. Long Arm Jurisdiction
Under C.P.L.R. § 302(a), a court may exercise personal jurisdiction over any nondomiciliary who, either in person or through an agent: (1) “transacts any business within the
state or contracts anywhere to supply goods or services in the state;” (2) “commits a tortious act
within the state . . . ;” (3) “commits a tortious act without the state causing injury to person or

25

property within the state . . . if he (i) regularly does or solicits business, or engages in any other
persistent course of conduct, or derives substantial revenue from goods used or consumed or
services rendered, in the state, or (ii) expects or should reasonably expect the act to have
consequences in the state and derives substantial revenue from interstate or international
commerce;” or (4) “owns, uses or possesses any real property situated within the state.” N.Y.
C.P.L.R. § 302(a)(1)-(4) (McKinney). 6
a. Section 302(a)(1)
“To establish personal jurisdiction under Section 302(a)(1), two requirements must be
met: (1) the defendant must have transacted business within the state; and (2) the claim asserted
must arise from that business activity.” 7 Barrett v. Tema Dev. (1988), Inc., 251 F. App’x 698,
700 (2d Cir. 2007) (internal quotation marks and citation omitted). A defendant “transacts
business” in New York when, looking at the totality of the circumstances, he “purposefully
avails [himself] of the privilege of conducting activities within [New York], thus invoking the
benefits and protections of its laws.” Hill v. HSBC Bank plc, 207 F. Supp. 3d 333, 338–39
(S.D.N.Y. 2016). “Random,” “fortuitous,” or “attenuated” contacts are not sufficient. SAS Grp.,
Inc. v. Worldwide Inventions, Inc., 245 F. Supp. 2d 543, 548 (S.D.N.Y. 2003) (internal quotation

6

Section 203(a)(4) does not apply as Plaintiffs do not allege that the Russo Defendants own, use, or possess real
property in New York.

7

Section 302(a)(1) also provides for personal jurisdiction over a non-domiciliary who contracts anywhere to supply
goods or services in the state. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 786 (2d Cir.
1999). A defendant contracts to supply services in the state “when he projects himself into New York to perform
services and purposefully avails himself of the privileges and benefits of performing such services in the State.”
Liberatore v. Calvino, 742 N.Y.S.2d 291, 293 (1st Dep’t 2002) (citing Bank Brussels Lambert, 171 F.3d at 789).
Here, Plaintiffs allege that the Russo Defendants requested on multiple occasions that Plaintiffs serve as a conduit of
communications between the Getty and the Torlonia family, and that numerous communications were sent “through
New York” this way. Pls.’ Mem. at 4–5. Plaintiffs contend that as a result of this method of communication, the
Russo Defendants caused Plaintiffs to render services in New York, conferring personal jurisdiction. Id. at 5. This
argument is meritless. As Defendants indicate, Plaintiffs’ provision of services in New York is irrelevant to the
jurisdictional inquiry under Section 302(1)(a). “The appropriate focus of an inquiry under CPLR § 302(a)(1) is on
what the non-domiciliary defendant did in New York and not on what the plaintiffs did.” Int’l Customs Assocs., Inc.
v. Ford Motor Co., 893 F. Supp. 1251, 1262 (S.D.N.Y. 1995)).

26

marks and citation omitted). It is the “nature and quality” and not the amount of New York
contacts that determine whether purposeful activity occurred. Id. (internal quotation marks and
citation omitted).
Plaintiffs contend that the Russo Defendants transacted business in New York because
they met with Electrum representatives in the state on various occasions and discussed a possible
transaction involving the Torlonia Collection. 8 Pls.’ Mem. at 3–4. With respect to Livio,
Plaintiffs point to evidence that he met with Hicham Aboutaam, Electrum’s president, in New
York in February, April, and October of 2012, and made representations regarding his
willingness to share a seller’s commission with Plaintiffs, requirements for a potential deal by
the owner of the Torlonia Collection, and the status of the sculptures in the Torlonia Collection.
Id. at 3. Arturo, on the other hand, met Hicham Aboutaam in New York in January 2013 and
discussed the possibility of a transaction involving the Torlonia Collection. Id. Arturo and
Hicham Aboutaam met again in New York in January 2014, and, among other topics, discussed
Electrum’s ongoing negotiations with Livio and with the Torlonia family’s legal adviser
regarding the collection. Id.
A handful of meetings in New York during which a transaction was discussed in the
abstract does not constitute “purposeful availment” of New York law. Meetings that do not
result in the execution of a contract or are not essential to or do not substantially advance the
business relationship rarely provide the basis for jurisdiction pursuant to Section 302(a)(1). See
8
Plaintiffs also appear to contend, for the first time in their opposition memorandum, that Livio is a third-party
beneficiary of the NDNCA and has therefore availed himself of the protection of New York law because the
NDNCA has a New York choice-of-law provision. Pls. Mem. at 5. That argument is unavailing. While New York
choice-of-law provisions are significant considerations under a “transacting business” analysis, they are insufficient,
on their own, to convey personal jurisdiction over a defendant. ESI, Inc. v. Coastal Corp., 61 F. Supp. 2d 35, 59
(S.D.N.Y. 1999). Presumably, courts grant choice-of-law provisions significant consideration because they are
highly probative of a conscious intent to purposefully avail oneself of the benefits and protections of New York law.
However, such a theory is tenuous in the case of a third-party beneficiary that has not participated in the negotiation
of the contract, let alone the choice-of-law decision.

27

Posven, C.A. v. Liberty Mut. Ins. Co., 303 F. Supp. 2d 391, 398-99 (S.D.N.Y. 2004) (collecting
cases); Bozell Group, Inc. v. Carpet Co-op of Am. Ass’n, Inc., No. 00 Civ. 1248 (RWS), 2000
WL 1523282, at *6 (S.D.N.Y. Oct. 11, 2000) (finding two meetings in New York that took place
three months apart, were not part of a systematic pattern of New York visits, and did not result in
any contract being signed, did not rise to the level of “transacting business” required for Section
302 jurisdiction); PaineWebber Inc. v. WHV, Inc., No. 95 Civ. 0052 (LMM), 1995 WL 296398,
at *3 (S.D.N.Y. May 16, 1995) (“occasional meetings in the forum state that are exploratory,
unproductive or insubstantial are insufficient to establish requisite contacts with the state”).
Here, there is no evidence that any meaningful negotiation occurred or substantial decisions were
made at these meetings. It is not clear what, if anything, was accomplished at these meetings,
thus they do not amount to the transaction of business.
Even if the Russo Defendants’ meetings with Electrum representatives did rise to the
level of “transacting business” in New York, Plaintiffs’ claims do not “arise out of” those
contacts as is required for jurisdiction pursuant to Section 302(a)(1). A claim “arises out of” the
transaction of business when there is a “substantial nexus” between the transaction of business
and the cause of action alleged. Bozell, 2000 WL 1523282, at *7. Plaintiffs’ claims arise out of
alleged wrongful conduct by the Russo Defendants in connection with a potential transaction
between the Torlonia family and the Getty—a transaction that had not yet even been
contemplated when most of the New York meetings took place. At best, the Russo Defendants’
New York meetings with Hicham Aboutaam were mere “link[s] in the chain of events leading to
the claim[s] for which relief is sought” and cannot serve as the basis for jurisdiction under
Section 302(a)(1). Id. at 7. 9

9

Significantly, as the Russo Defendants point out, Plaintiffs have refused to produce documents and
communications relating to proposed deals regarding the Torlonia Collection not involving the Getty Defendants on

28

b. Section 302(a)(2)
Under Section 302(a)(2), a court may exercise personal jurisdiction over a nondomiciliary who “commits a tortious act within the state . . . ” either in person or through an
agent. Courts typically require that the defendant have been physically present in New York
while committing the tortious act to confer jurisdiction under Section 302(a)(2). See Overseas
Media, Inc. v. Skvortsov, 277 F. App’x 92, 95 (2d Cir. 2008); Bensusan Rest. Corp. v. King, 126
F.3d 25, 28 (2d Cir. 1997). According to Plaintiffs, the Court has personal jurisdiction because
the Russo Defendants made false representations during their meetings with Plaintiffs in New
York. Pls. Mem. at 7. Specifically, Plaintiffs point to Hicham Aboutaam’s declaration stating
that Arturo and Livio represented to him in New York that Electrum would participate in any
transaction regarding the Torlonia Collection. Pl.’s Ex. 61 ¶ 12. Plaintiffs claim that they
discovered those representations to be false when the Getty and Russo Defendants cut them out
of the negotiations with the Torlonia family. Pls.’ Mem. at 7. Plaintiffs’ argument fails,
however, because they have not properly alleged all of the elements of a fraudulent
misrepresentation claim under New York law. In particular, they have not alleged any facts
purporting to establish that they relied on the Russo Defendants’ specific misrepresentations, nor
have they alleged that they relied on those misrepresentations while present in New York. See
Saudi Computer Aided Translation Ltd. v. Weidner Commc’ns Corp., 663 F. Supp. 1104, 1107
(S.D.N.Y. 1987) (rejecting plaintiff’s assertion of personal jurisdiction under Section 302(a)(2)
because plaintiff did not allege that each element of the tort occurred in New York.).

the ground that such information is irrelevant to the claims and defenses in this action. Russo Defs.’ Ex. D. at 5.
That position is untenable with Plaintiffs’ contention here that meetings discussing potential transactions not
involving the Getty have a substantial nexus to their claims for purposes of personal jurisdiction.

29

c. Section 302(a)(3)
Section 302(a)(3) applies to non-domiciliary defendants who “commit[] . . . tortious
act[s] without the state causing injury to person or property within the state.” This provision
applies if the non-domiciliary “(i) regularly does or solicits business, or engages in any other
persistent course of conduct, or derives substantial revenue from goods used or consumed or
services rendered, in the state, or (ii) expects or should reasonably expect the act to have
consequences in the state and derives substantial revenue from interstate or international
commerce . . . .” Bank Brussels Lambert, 171 F.3d at 791. In determining whether Section
302(a)(3) confers jurisdiction, courts apply a “situs-of-injury test, which asks them to locate the
‘original event which caused the injury.’” Id. “[T]he situs of such a nonphysical commercial
injury is the place where ‘the critical events associated with the dispute took place’ and not
where the resultant monetary loss occurred.” Darby Trading, 568 F. Supp. 2d at 337 (quoting
Am. Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428, 433-34 (2d Cir.
1971)).
According to Plaintiffs, the Court has jurisdiction over the Russo Defendants because
they engaged in tortious interference and fraud abroad that caused injury in New York. Pls.’
Mem. at 8. Plaintiffs contend that the Russo Defendants satisfy Section 302(a)(3)(i) because
they are each shareholders—and Arturo is a salaried employee—in NAC and NAC AG,
companies that derive substantial revenue from goods consumed in New York. Id. at 9. They
contend that the Russo Defendants also satisfy Section 302(a)(3)(ii) because they derive
substantial revenues from international commerce from their ownership interests in and salary
from NAC and NAC AG. Id.

30

As the Russo Defendants indicate, a company’s revenues are not automatically
attributable to its shareholders and employees for purposes of satisfying the substantial revenue
requirement of Section 302(a)(3). See Lehigh Valley Indus., Inc. v. Birenbaum, 389 F. Supp.
798, 805 (S.D.N.Y.), aff’d sub nom. Lehigh Val. Indus., Inc. v. Birenbaum, 527 F.2d 87 (2d Cir.
1975) (“While plaintiffs are correct in asserting that the revenue derived from interstate
commerce need not be related to the acts out of which the case arises, they are incorrect in
reasoning that the revenue derived by [the corporation] is automatically attributable to its sole
shareholder defendant . . . .”); Drake v. Lab. Corp. of Am. Holdings, No. 02 Civ. 1924
(FB)(RML), 2007 WL 776818, at *11 (E.D.N.Y. Mar. 13, 2007), aff’d, 417 F. App’x 84 (2d Cir.
2011) (“Although the parties do not dispute that [the corporation] has derived substantial revenue
from interstate commerce, the revenues from interstate commerce derived by [a corporation]
cannot be attributed to [its non-domiciliary employee].”). Plaintiffs have not set forth any facts
showing that the Russo Defendants derive substantial revenue independent of their roles in NAC
and NAG AG. Accordingly, they have failed to satisfy the requirements of Section 302(a)(3).
As Plaintiffs have failed to meet their burden of demonstrating long-arm jurisdiction
under New York law, the Court need not determine whether exercising personal jurisdiction over
the Russo Defendants comports with due process. The Court also need not address the Russo
Defendants’ Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state a
claim. Accordingly, the Russo Defendants’ motion to dismiss all of Plaintiffs’ claims against
them is GRANTED.
V.

Leave to Amend
Rule 15 of the Federal Rules of Civil Procedure instructs courts to “freely give leave” to

replead “when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Supreme Court has held that it

31

would be an abuse of discretion, “inconsistent with the spirit of the Federal Rules,” for a district
court to deny leave without some justification, “such as undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility
of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). When a motion to dismiss is
granted, “[i]t is the usual practice . . . to allow leave to replead.” Schindler v. French, 232 F.
App’x 17, 19 (2d Cir. 2007) (internal quotation marks and citation omitted).
The Getty Defendants have not articulated any reasons why Plaintiffs should not be
granted leave to amend. Allowing Plaintiffs to amend their claims for intentional interference,
fraud, unfair competition, conversion, and DTSA against the Getty Defendants would not be
futile and would otherwise be in the interest of justice. Accordingly, the Court grants Plaintiffs
leave to amend those claims. 10
The Court, however, reaches a different conclusion with respect to Plaintiffs’ claims
against the Russo Defendants. Plaintiffs have failed to establish a prima facie case of personal
jurisdiction, despite having the aid of jurisdictional discovery. Accordingly, the Court finds that
allowing Plaintiffs to amend their claims against the Russo Defendants would be futile, and they
will not be permitted to do so.
VI.

Conclusion
For the foregoing reasons, the Getty Defendants’ motion to dismiss is GRANTED in part

and DENIED in part, and the Russo Defendants’ motion to dismiss is GRANTED. Plaintiffs’
claims against the Russo Defendants are dismissed with prejudice for lack of personal

10

Plaintiffs conceded their claim for breach of the implied covenant of good faith against the Getty (Count Three)
and tortious interference with respect to Potts (Count Four). Plaintiffs will not be given an opportunity to replead
those claims.

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