Opinion
No. 03 Civ. 0015 (RWS).
July 6, 2005
VERNON GINSBURG, LLP, MEL B. GINSBURG, ESQ., New York, NY, Attorneys for Plaintiff/Counterclaim Defendant.
HOGAN HARTSON, DAVID DUNN, ESQ., New York, NY,
EMILY M. YINGER, ESQ., N. THOMAS CONNALLY, ESQ., McLean, VA,
MELISSA N. HENKE, ESQ., Washington, DC. Attorneys for Defendant/Counterclaimant.
OPINION
The defendant/counterclaimant Capitolo di San Pietro ("Capitolo") has moved under Rule 56, Fed.R.Civ.P., for summary judgment on its unjust enrichment claim against plaintiff Bangkok Crafts Corporation ("BCC") and counterclaim defendant Treasures of St. Peter's in the Vatican ("TSV"). BCC and TSV have moved under Rule 56 and Rules 12(c) and 9(b) to dismiss the unjust enrichment claim, Lanham Act claims, and New York unfair competition claim of Capitolo. For the reasons set forth below, the motion of Capitolo for partial summary judgment is granted, and the motion of BCC and TSV is denied in part.
Prior Proceedings
The prior proceedings in this action have been set forth in the companion order and opinion of this date, familiarity with which is assumed.
The instant motions were heard and marked fully submitted on February 9, 2005. The Facts
The facts are set forth in the statements of the parties and are not in dispute except as noted below.
On or about May 8, 1996, representatives for BCC and Capitolo executed a license agreement under which Capitolo granted to BCC an exclusive right and license, effective as of February 8, 1996, to manufacture and sell reproductions of Capitolo's works of art (the "Reproductions"). (See Declaration of David Dunn dated January 24, 2005 ("Dunn Decl."), at Ex. A) (the "1996 License").
BCC conducted its sublicensing activities through its affiliate company Treasures Of St. Peter's In The Vatican, Ltd. ("TSV"). TSV is a separate legal entity owned by BCC principal John Loata ("Loata"), to which BCC purported to assign certain rights under the 1996 License.
On or about August 28, 2000, BCC allegedly obtained Capitolo's agreement to a new, vastly expanded license agreement with a term renewable at BCC's election for up to forty-five years (the "2000 License"). This 2000 license authorized the marketing and manufacturing of reproductions of works of art owned by the Capitolo and located in the Vatican Treasury Museum. The term of the 2000 Agreement was fifteen years with two fifteen-year options to renew, for a total of forty-five years.
BCC has also contended that representatives of Capitolo requested and received cash payments in connection with the supposed negotiation and execution of the 2000 License. BCC alleges that it delivered the sum of $580,000 to Capitolo in exchange for the rights provided by the 2000 License. On two occasions, BCC allegedly wired funds to a bank in Rome, and on both occasions, Virgilio Noe (Archpriest of Capitolo) ("Noe") was offered a bank check, once in the amount of $500,000, and once in the amount of $480,000. These contentions are challenged by Capitolo. In granting Capitolo's motion for partial summary judgment on its claims against BCC and TSV for declaratory judgment and breach of contract, this Court concluded that "[t]here is no competent evidence of any payments to Capitolo on behalf of BCC in order to obtain the alleged 2000 License, or any request or demand for such payments from Capitolo. Loata's testimony is entirely hearsay." See Bangkok Crafts Corp. v. Capitolo di San Pietro in Vaticano, No. 03 Civ. 0015 (RWS), 2004 WL 1406076, at *5 (S.D.N.Y. June 23, 2004) (the "June 23 Opinion").
During the period surrounding the execution of the 2000 License, Loata corresponded with Mr. Vittorio Caporale and Mr. Giuseppe Guarino, both of whom represented that they were authorized to deal with BCC on behalf of Capitolo with respect to the issuance of the 2000 License and the renewal of the 1996 License. This Court has previously concluded that BCC has failed to submit any admissible evidence to support its claim that individuals acting on its behalf undertook negotiations with respect to the 2000 License. See id.
The 2000 License was executed by Loata on behalf of BCC and Loata submitted certified sales reports on or about June 30, 2000, December 7, 2000, February 9, 2001, and March 30, 2001.
The signatures of Noe and Monsignor Giuseppe Bordin (then Camerlengo Maggiore), the individuals that have been alleged to have signed the 2000 License on behalf of Capitolo, have been determined to be forgeries and the 2000 License has been declared void ab initio. Id. at *6.
BCC allegedly received a letter dated January 2, 2001, from Cardinal Angelo Sodano ("Sodano"), who was and is currently the Secretary of State of the Vatican and the second highest ranking member of the government of Vatican City. The letter represented that the 2000 License was valid and that it ended in 2045. It also stated that the 2000 License would commence upon the expiration of the 1996 License on June 21, 2001.
BCC received a letter dated January 8, 2001 from Cardinal Camillo Ruini ("Ruini"), the Vicar of the Diocese of Rome, which stated that there were unresolved issues within the Vatican with respect to the 2000 License. The letter advised BCC to continue to operate under the 1996 License through June 21, 2001, at which time the 2000 License would be operative.
By letter dated February 2, 2001, Loata informed Sodano that per Sodano's instructions, BCC would continue to operate under the 1996 License. Loata's letter acknowledged Sodano's statement in his letter of January 2, 2001 that the 1996 License would remain in effect until June 21, 2001, at which time the 2000 agreement would supersede the 1996 License and remain in effect until 2045.
By letter dated February 2, 2001, BCC informed Ruini that per Ruini's advice, BCC would continue to operate under the 1996 License pending resolution of the issues concerning the 2000 License. BCC apparently relied on Ruini's apparent authority with respect to the propriety of continuing to operate pursuant to the terms of the 1996 License. The authenticity of Ruini's signature has not been verified.
On February 7, 2001, the 1996 License terminated at the end of its initial five-year term. See Bangkok Crafts, 2004 WL 1406076, at *6. The June 23 Opinion determined that Capitolo properly terminated the 1996 License as a result of BCC's repeated material breaches of the agreement. Id. at *7-8.
BCC and TSV continued their sublicensing activities notwithstanding the termination of the 1996 License on February 7, 2001. Since September 2000, BCC and TSV have received royalty payments and fees from purported sublicenses for sales activities that took place both before and after the termination of the respective sublicenses on February 7, 2001.
In or about May 2001, sublicensee E-21 Global, Inc. ("E-21") complained that they were not receiving images needed to be used to produce the products from the Vatican Treasury. By letter dated June 7, 2001, Loata and attorney Richard Rosati stipulated to a moratorium on payments under E-21's various sublicenses until photographic access to the Vatican Treasury could be obtained.
On May 7, 2001, Loata and a BCC negotiator met with Vatican representatives to resolve the dispute over the E-21 sublicense.
By letters dated June 13, 2001, Loata informed Noe and Sodano that BCC had elected to renew the 1996 License for an additional five-year term.
BCC and TSV have admitted that until this action was filed, they had not accounted or otherwise reported to Capitolo any receipt of funds or sales activity for any period after December 1999, and Capitolo contends that BCC and TSV have not made the appropriate royalty payments to Capitolo relating thereto, a contention challenged by Loata.
According to Loata, Capitolo has refused to provide BCC with reasonable access to the Works of Art, putting BCC in jeopardy with its sublicensees.
According to BCC and TSV, over $1,000,000 has been expended developing relations and accounts in good faith reliance on the validity of the 2000 License.
Applicable Standards
If, as here, on a motion to dismiss made pursuant to Rule 12 (b) (6), "matters outside the pleading are presented to and not excluded by the court, the motion shall be . . . disposed of as provided for in Rule 56." Fed.R.Civ.P. 12 (b). Whether to consider additional materials and thereby convert a Rule 12 motion into a summary judgment motion is within the sound discretion of the Court. See Hayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999) ("If a judge looks to additional materials, the motion should be converted into a motion for summary judgment"); Diezcabeza v. Lynch, 75 F. Supp. 2d 250, 256 (S.D.N.Y. 1999) ("The Court may, at its discretion, consider the affidavits attached to the motion and thereby treat the instant motion as one for summary judgment").
Since the Court has taken cognizance of matters outside the pleadings, BCC's motion will be treated as one made solely pursuant to Rule 56.
Pursuant to Rule 56, summary judgment may be granted only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);SCS Communications, Inc. v. Herrick Co., Inc., 360 F.3d 329, 338 (2d Cir. 2004). The court will not try issues of fact on a motion for summary judgment, but, rather, will determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
Summary judgment is appropriate where the moving party has shown that "little or no evidence may be found in support of the nonmoving party's case. When no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper." Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1223-24 (2d Cir. 1994) (internal citations omitted). If, however, "`as to the issue on which summary judgment is sought, there is any evidence in the record from which a reasonable inference could be drawn in favor of the opposing party, summary judgment is improper.'" Security Ins. Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77, 83 (2d Cir. 2004) (quoting Gummo v. Village of Depew, 75 F.3d 98, 107 (2d Cir. 1996)).
Discussion 1. Jurisdiction and Choice of Law
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 (a) (2). See World Trade Center Properties, L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154, 161 (2d Cir. 2003) (stating that Section 1332(a) (2) provides federal jurisdiction over actions between "citizens of a State and citizens or subjects of a foreign state."). Pursuant to Section 1332(c), "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332 (c) (1). There is no dispute that the state law claims asserted in this action are governed by the law of the State of New York. 2. Capitolo's Motion For Partial Summary Judgment Is Granted A. Capitolo Is Awarded Summary Judgment On Its Unjust Enrichment Claim Against BCC and TSV (Count Three Of The Answer And Counterclaims)
Count Three of the Answer and Counterclaims asserts an unjust enrichment claim against BCC and TSV. Capitolo argues that there is no genuine issue of material fact as to whether BCC and TSV have been unjustly enriched by the receipt of royalty payments and other fees from TSV's sub-licensees based on agreements that either already had terminated or were void ab initio. As previously stated by this Court, see Bangkok Crafts Corp. v. Capitolo di San Pietro in Vaticano, 331 F. Supp. 2d 247, 256 (S.D.N.Y. 2004) (the "August 23 opinion"), the Second Circuit has interpreted New York law to provide that
a recovery for unjust enrichment is permissible "when and because the acts of the parties or others have been placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it, and which ex aequo et bono belongs to another."Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996) (emphasis added) (quoting Miller v. Schloss, 218 N.Y. 400, 407, 113 N.E. 337, 339 (1916)); see also Mfrs. Hanover Trust Co. v. Chemical Bank, 160 A.D.2d 113, 559 N.Y.S.2d 704 (1st Dept. 1990), appeal denied, 77 N.Y.2d 803, 568 N.Y.S.2d 15, 569 N.E.2d 874 (1991).
BCC argues that the Capitolo has failed to establish that BCC and TSV received a benefit at the expense of Capitolo. According to BCC, the record before the Court merely establishes that the fees at issue were paid by sub-licensees and not Capitolo. However, BCC and TSV fail to cite to any precedent that expressly requires that the benefit at issue be directly conferred on the defendant by the plaintiff, and instead points to authority that states the chain of payment at issue cannot be too attenuated.See id. In fact, the August 23 opinion makes clear that pursuant to New York law, the acts of a non-party can give rise to an unjust enrichment claim. See id.
BCC's receipt of monies under sublicenses that were allegedly (but not actually) authorized by the 1996 or 2000 Licenses does not constitute an unduly attenuated chain of payment.
B. An Accounting Of The Books and Records of BCC and TSV Is Warranted
Capitolo argues that in order to remedy this unjust enrichment, an accounting of the books and records of BCC and TSV should be ordered to determine the exact amount of money that should be disgorged to it. An accounting is a restitutionary remedy, equitable in nature, that is designed to prevent unjust enrichment. See 1 Dan B. Dobbs, Law of Remedies § 4.3 (5), at 608 (2d ed. 1993). "[An] accounting may be pursued as a separate cause of action or as incidental to some other claim." Id. at 611.
Since Capitolo's unjust enrichment claim is based on state law, the availability of the accounting remedy also depends on state law. See Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice Procedure § 4513 (2d ed. 1996) (stating that "when forum state law defines the underlying substantive right, state law [generally] governs the availability of such equitable remedies as a permanent injunction, specific performance, rescission, or an accounting").
As a general rule, New York's courts have taken the position that "[t]he basis for an equitable action for accounting is the existence of a fiduciary or trust relation respecting the subject matter of the controversy." 1 N.Y. Jur. 2d Accounts Accounting § 34, at 204 (2002) (citing Sugarman v. Weisz, 28 N.Y.2d 786, 321 N.Y.S.2d 612, 270 N.E.2d 330 (1971) (affirming determination that no accounting can be ordered where plaintiff failed to prove that a fiduciary relationship existed between the parties); Village of Hoosick Falls v. Allard, 249 A.D.2d 876, 672 N.Y.S.2d 447 (3d Dep't 1998); Marine Midland Bank, N.A. v. Yoruk, 242 A.D.2d 932, 662 N.Y.S.2d 957 (4th Dep't 1997); Adam v. Cutner Rathkopf, 238 A.D.2d 234, 656 N.Y.S.2d 753 (1st Dep't 1997); Chalasani v. State Bank of India, New York Branch, 235 A.D.2d 449, 653 N.Y.S.2d 28 (2d Dep't 1997)).
This general rule notwithstanding, the New York Court of Appeals has held that an accounting can be ordered even where the defendant owes no fiduciary duty to the plaintiff. See Fur Wool Trading Co. v. George I. Fox, 245 N.Y. 215, 156 N.E. 670 (1927) (holding that plaintiff was entitled to an accounting where defendant had knowingly received stolen goods and then sold them at a profit); see also 1 N.Y. Jur. 2d Accounts Accounting § 34, at 203 (stating that New York courts have exercised authority to order accountings in "great variety of cases," including "those involving fiduciary and trust relationships, those wherein fraud is charged, and those wherein a discovery is sought") (collecting cases).
Based on the foregoing, an accounting of the books and records of BCC and TSV is hereby ordered.
C. Capitolo Is Granted Summary Judgment On BCC's Fraud Claim (BCC's Second Cause of Action)
Under New York law, the elements of a fraud claim are: (1) that the defendant made a material false representation, (2) that the defendant intended to defraud the plaintiff thereby, (3) that the plaintiff reasonably relied upon the representation, and (4) that the plaintiff suffered damage as a result of such reliance.Manning v. Utils. Mut. Ins. Co., 254 F.3d 387, 400 (2d Cir. 2001) (quoting Bridgestone/Firestone, Inc. v. Recovery Credit Servs., 98 F.3d 13, 19 (2d Cir. 1996)); see also Lama Holding Co. v. Smith Barney, Inc., 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 80, 668 N.E.2d 1370, 1373 (1996). Here, BCC has failed to proffer any evidence that Capitolo made a material false representation.
In its motion papers, BCC states that its fraud claim is based on Capitolo's failure to disavow statements made by Ruini and Sodano. The June 23 Opinion determined that no evidence had been adduced that Ruini had "any position or role whatsoever with Capitolo." Bangkok Crafts Corp., 2004 WL 1406076, at *5. Since BCC has failed to proffer any evidence demonstrating (1) that Ruini was Capitolo's agent or servant and (2) that Ruini was authorized to speak for Capitolo, there is no basis for imputing liability to Capitolo for Ruini's statements. See Restatement (Second) Of Agency § 257 (1958) (stating that ("[a] principal is subject to liability for loss caused to another by the other's reliance upon a tortious representation of a servant or other agent, if the representation is: (a) authorized; (b) apparently authorized; or (c) within the power of the agent to make for the principal").
Furthermore, BCC has offered no admissible evidence to controvert Capitolo's evidence that the January 2, 2001 letter from Sodano was a fake. See Bangkok Crafts Corp., 2004 WL 1406076, at *5. Accordingly, the letter of January 2, 2001 cannot form the basis for a fraud claim against Capitolo.
Based on the foregoing, Capitolo's motion for summary judgment is granted with respect to BCC's fraud claim. D. Capitolo Is Granted Summary Judgment on BCC's Conversion and Unjust Enrichment Claims (BCC's Third and Fourth Causes of Action)
As described above, BCC has alleged that it delivered $580,000 to Capitolo in exchange for the rights provided by the 2000 License. In light of this alleged payment, BCC has asserted that Capitolo's failure to fulfill its obligations pursuant to the 2000 License constituted conversion and unjust enrichment.
"Under New York law, . . . a `denial or violation of the plaintiff's dominion, rights, or possession, is the basis of an action for conversion.'" In re Chateaugay Corp., 10 F.3d 944, 957 (2d Cir. 1993) (quoting Sporn v. MCA Records, Inc., 58 N.Y.2d 482, 487, 462 N.Y.S.2d 413, 415, 448 N.E.2d 1324, 1326 (1983)).
As stated above, the June 23 Opinion determined that "[t]here is no competent evidence of any payments to Capitolo on behalf of BCC in order to obtain the alleged 2000 License, or any request or demand for such payments from Capitolo." Bangkok Crafts Corp., 2004 WL 1406076, at *5. Therefore, Capitolo's motion for summary judgment is granted as to BCC's conversion and unjust enrichment claims.
E. BCC's Breach of Contract, Declaratory Judgment And Specific Performance Claims Were Previously Dismissed (BCC's First, Fifth, and Sixth Causes of Action)
By Order dated August 11, 2004, the Court dismissed BCC's breach of contract, declaratory judgment, and specific performance claims. BCC has provided no basis for the reconsideration of that order.
3. BCC's And TSV's Motion For Summary Judgment on Counts Three, Seven, And Eight Of The Answer And Counterclaims Is Denied A. The Unjust Enrichment Claim (Count Three Of The Answer And Counterclaims)
As provided above, Capitolo is entitled to summary judgment on its unjust enrichment claim against BCC and TSV. Therefore, the motion of BCC and TSV for summary judgment on this claim is denied.
B. The Lanham Act Claims (Count Seven Of The Answer And Counterclaims)
BCC and TSV seek summary judgment on Count Seven of Capitolo's Answer and Counterclaims, which asserts a Lanham Act unfair competition claim against BCC and TSV. Section 43 (a) of the Lanham Act provides in pertinent part as follows:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.15 U.S.C. § 1125 (a).
Capitolo is entitled to the protections afforded by Section 43(a) of the Lanham Act pursuant to 15 U.S.C. §§ 1126(b) (h).
In its motion papers, Capitolo stated that it has asserted false advertising and false designation of origin claims. BCC and TSV argue that they are entitled to summary judgment on these claims because Capitolo has failed to proffer evidence of: (1) public confusion as to the source of the allegedly competing products and (2) damages suffered as a result of the allegedly deceptive acts.
Capitolo has proffered evidence that BCC and TSV, through Loata and marketing agent Gerald Colapinto, made a variety of false statements relating to the purported extension of the 1996 and 2000 Licenses, and actively mislead sublicensees about the validity of that license. Moreover, BCC and TVS have acknowledged accepting more than $370,000 in royalty payments and fees under sublicenses that (1) terminated in February 2001 or (2) were voidab initio.
The evidence proffered by Capitolo creates triable issues of fact as to whether BCC and TSV are liable for false advertising pursuant to Section 43 (a) of the Lanham Act. To prevail on a false advertising claim, the "plaintiff must demonstrate (1) the falsity of the challenged statement, either by proving that the statement is literally false as a factual matter, or even though literally true, it is likely to deceive or confuse customers, and (2) that the defendant `misrepresented an inherent quality or characteristic of the product.'" Sun Trading Distributing Co., Inc. v. Evidence Music, Inc., 980 F. Supp. 722, 727 (S.D.N.Y. 1997) (quoting National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir. 1997) (quotingNational Ass'n of Pharm. Mfrs. v. Ayerst Labs., 850 F.2d 904, 917 (2d Cir. 1988) and Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 278 (2d Cir. 1981)).
"In this circuit, to constitute `commercial advertising or promotion' under the Lanham Act, a statement must be: (1) `commercial speech,' (2) made `for the purpose of influencing consumers to buy defendant's goods or services,' and (3) `although representations less formal than those made as part of a classic advertising campaign may suffice, they must be disseminated sufficiently to the relevant purchasing public.'"Gmurzynska v. Hutton, 355 F.3d 206, 210 (2d Cir. 2004) (quotingFashion Boutigue of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 56, 57-58 (2d Cir. 2002)). The Second Circuit has stated that promotional activities such as those engaged in here by BCC and its agents (i.e., the making of promotional statements to the sublicensees for the purpose of securing financial commitments) can give rise to a Lanham Act claim. See Fashion Boutique of Short Hills, 314 F.3d at 57 (stating that "[a]lthough advertising is generally understood to consist of widespread communication through print or broadcast media, `promotion' may take other forms of publicity used in the relevant industry, such as displays at trade shows and sales presentations to buyers").
To prevail on a claim under Section 43(a) for false designation of origin, a plaintiff must establish that "its trademark is valid and eligible for protection, and that as a result of a defendant's use of the mark there is the `likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question.'" Nasdaq Stock Market, Inc. v. Archipelago Holdings, LLC, 336 F. Supp. 2d 294, 304 (S.D.N.Y. 2004) (quotingEMI Catalogue Partnership v. Hill, Holliday, Connors, Cosmopulos, Inc., 228 F.3d 56, 61 (2d Cir. 2000). The facts in the record in this case, as described herein and in the Court's previous decisions, are sufficient to create genuine issues of material fact as to whether BCC and TSV engaged in conduct that amounted to false designation of origin in violation of the Lanham Act.
Based on the foregoing, BCC's and TSV's motion for summary judgment is denied as to the Lanham Act claims asserted by Capitolo.
C. The State Law Unfair Competition Claim (Count Eight Of The Answer And Counterclaims)
BCC and TSV seek summary judgment on Count Eight of the Answer and Counterclaims, which asserts that BCC and TSV violated New York's unfair competition law. It should be noted that "unfair competition law" is a generic term describing a variety of causes of actions including offenses against trademarks, deceptive advertising, and price fixing. See generally 104 N.Y. Jur. 2d Trade Regulation §§ 124-364, at 128-411 (2005). It is assumed that Count Eight was intended to assert a common law unfair competition claim.
With respect to this claim, the Second Circuit has stated:
The essence of an unfair competition claim under New York law is that the defendant has misappropriated the labors and expenditures of another. See Flexitized, Inc. v. National Flexitized Corp., 335 F.2d 774, 781-82 (2d Cir. 1964); Electrolux Corp. v. Val-Worth, Inc., 6 N.Y.2d 556, 161 N.E.2d 197, 190 N.Y.S.2d 977 (1959); Metropolitan Opera Association, Inc. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483 (Sup.Ct. 1950), aff'd per curiam, 279 A.D. 632, 107 N.Y.S.2d 795 (1951); accord, International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918). Central to this notion is some element of bad faith.Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980). "The single most important element of a state law unfair competition action is a showing that the defendant's conduct will result in consumers confusing the source of defendant's products." McDonald's Corp. v. McBagel's, Inc., 649 F. Supp. 1268, 1280 (S.D.N.Y. 1986) (quoting Perfect Fit Industries, Inc. v. ACME Quilting Co., 618 F.2d 950, 953 (2d Cir. 1980)).
Because Capitolo has created genuine issues of material fact as to whether BCC and TSV engaged in conduct that amounted to false designation of origin in violation of the Lanham Act, it has created genuine issues of material fact as to the majority of the elements necessary to state a claim for unfair competition under New York law. Furthermore, the evidence in the record is sufficient to create an issue of fact as to whether BCC and TSV acted in bad faith, as required for an unfair competition claim under New York law. In this regard, it should be noted that "`[s]ubjective issues such as good faith and intent are generally inappropriate subjects of summary judgment.'" Castle Rock Entertainment v. Carol Pub. Group, Inc., 955 F. Supp. 260, 274 (S.D.N.Y. 1997) (quoting Brown v. Quiniou, 744 F. Supp. 463, 472 (S.D.N.Y. 1990)).
Based on the foregoing, BCC's and TSV's motion for summary judgment is denied as to the state law unfair competition claim asserted by Capitolo.
Conclusion
The motion of Capitolo for partial summary judgment is granted. The motion of BCC and TSV for summary judgment on Counts Three, Seven, and Eight of the Answer and Claims is denied.
It is so ordered.