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CITY OF ROME v. GLANTON

April 15, 1997

CITY OF ROME, et al., Plaintiffs,
v.
RICHARD A. GLANTON, et al., Defendants v. FRANCESCO RUTELLI, et al., Third-Party Defendants.



The opinion of the court was delivered by: KATZ

 AND NOW, this 15th day of April, 1997, upon consideration of plaintiffs' and defendants' Motions for Summary Judgment, and the responses and replies thereto, and after a hearing, it is hereby ORDERED that the said motions are GRANTED.

 I. Factual Background

 While satellite disputes have not been lacking in the course of this litigation, the central dispute involves a potential exhibition of one of the most renowned art collections in the world. The Barnes Foundation was chartered in 1922, and between 1922 and 1992, the works in the collection did not travel outside the campus of the Foundation in Merion, Pennsylvania, at the express direction of its founder, Albert C. Barnes. On July 21, 1993, a ruling of the Montgomery County Orphans' Court permitted a one-time exhibition tour of select masterpieces from the Barnes Foundation to take place between April 1993 and September 1995, as part of an effort to raise funds to renovate the Barnes. After receiving court approval, the defendants assembled select works from the Foundation for a travelling exhibition entitled "From Cezanne to Matisse: Great French Paintings from the Barnes Foundation" (the "Exhibition"). The Exhibition was to conclude in April of 1995 at the Philadelphia Museum of Art, after which the collection was to return to its permanent venue, the Barnes.

 On January 12, 1994, Glanton wrote to Guizzetti and outlined the conditions required to bring the Exhibition to Rome:

 [A] fee of $ 3 million, plus expenses related to travel and other incidental costs, in exchange for the loan of the paintings. The catalogue rights would have to be worked out with our publisher, Alfred A. Knopf, Inc., and we would be able to assist you in this regard.

 At present, we are unable to conduct any negotiations on future decisions about additional venues because of the pending petition in the Orphans' Court of Montgomery County . . . .

 Compl. Ex. D.

 On December 2, 1994, Glanton wrote a letter to Guizzetti that included the following:

 
You asked that I confirm which certain conditions were mandatory in order for the Barnes Foundation to agree to this project. First, the exhibition would require a minimum of $ 3 million in cash payments to be made in three equal installments prior to the opening of the exhibition. Second, all related costs, such as travel insurance, packaging, and any other related expense would be the responsibility of the sponsors. Third, the exclusive merchandise rights could be granted to Marsilio Editore. However, catalogue rights would be subject to negotiations with Knopf. . . .

 Pl. Resp. Ex. O.

 On December 14, 1994, Glanton wrote another letter to Guizzetti following another conversation "concerning the prospects for the exhibition in Italy":

 
First, you requested that I reaffirm the fees required for the exhibition to occur, subject to Court approval. In response, this will confirm that the Foundation requires a fee of $ 3 million payable in advance in order for the exhibition to take place.

 Secondly, you requested advice as to whether an Italian publisher could be permitted to publish a catalogue in connection with the exhibition. In this connection, I will make every effort to negotiate an agreement with Knopf . . . .

 Pl. Resp. Ex. P.

 Glanton toured the Museo Capitolino, the potential site of the exhibition, when he visited Rome in December of 1994. Pl. Resp. Ex. C; Compl. Ex. G. He returned to Rome in February, 1995, and was a guest of the City of Rome. Pl. Resp. Ex. D. Glanton once again toured the Museo Capitolino during his February, 1995 visit and met with various city officials. Pl. Resp. Exs. C, D. Glanton had concerns about the security available in the Museo Capitolino and mentioned certain aspects of his concerns to Guizzetti. Pl. Resp. Ex. C. Glanton met with Paulo Gentiloni, the Director of Communications, Guizzetti, Maurizio Venafro, another Roman official, and Gianni Borgna, the Cultural Minister, to discuss the terms for staging the Exhibition in Rome. Def. Resp. Exs. L, M; Pl. Resp. Exs. A, E, F. Glanton did not meet at length with the Mayor, who walked through at the end of the meeting and greeted Glanton briefly. Pl. Resp. Ex. E. Glanton dictated a letter that he requested the Mayor sign, which included the following statement:

 The fee agreed upon is $ 3 million, payable in two installments. The initial payment shall be made upon the signing of the Agreement between the sponsors of the exhibition and The Foundation, and the balance shall be paid on or before the 21st of April, 1995.

 Pl. Resp. Ex. G.

 The Mayor then signed and faxed a letter that included the following:

 This will confirm our discussions of today in which it was agreed that the city of Rome would enter into an Agreement with The Barnes Foundation, subject to the approval of the Orphans' Court of Montgomery County, Pennsylvania, for the Exhibition of "Great French Paintings" from The Barnes Foundation, to be held in Rome beginning in April 1995. The fee agreed upon is $ 3 million, payable in two installments.

 Pl. Resp. Ex. H.

 On Monday, March 20, 1995, the Board of Trustees of the Barnes Foundation met and discussed, among other topics, potential venues for the Exhibition. Pl. Resp. Ex. Q. The minutes of the meeting state: "Mr. Glanton did not recommend Italy based on his visits and discussions with staff there. However, he felt that Munich's museum was first class and would do a very good job of mounting the exhibition." Id. On March 25, 1995, an article appeared in the Philadelphia Inquirer, which revealed the Board of Trustees' vote to stage the exhibition in Munich. Pl. Resp. Ex. J. Guizzetti saw the Inquirer article on March 27, 1995, and sent Glanton a fax marked "Urgent," asking that he and Glanton discuss "the misinformation being provided to my office, the city of Rome, and the Philadelphia Inquirer. " Pl. Resp. Ex. J. Guizzetti then called Glanton, who denied the proposed staging of the Exhibition in Munich and claimed that the news account was a racial attack. Pl. Resp. Ex. A. Glanton then faxed a copy of the petition to the Orphans' Court. Pl. Resp. Ex. L. The petition identified the requested additional venue only as "an additional premier art museum in Europe." Pl. Resp. Ex. L. Glanton did not communicate with the plaintiffs prior to March 27, 1995 about his change of mind, "for the reason that they were not in a position to make a commitment that we would accept. . . . they had not even met the minimal conditions that I had outlined to them, in terms of what would be required to execute an agreement to have an exhibition." Pl. Resp. Ex. C. The plaintiffs continued to prepare for the Exhibition prior to the Orphans' Court ruling. Pl. Resp. Ex. A.

 The Barnes Foundation received Superior Court approval to stage one additional venue for the Exhibition, and the Exhibition toured the Haus der Kunst in Munich in October, 1995. The Haus der Kunst paid $ 2.15 million for the Exhibition. Pl. Resp. Ex. I. Plaintiffs filed this action. Count I is for breach of contract; Count II is for detrimental reliance; Count III is for breach of duty of good faith and fair dealing; Count IV is for fraudulent misrepresentation; Count V is for negligent misrepresentation; Count VI is for fraudulent concealment; and Count VII is for civil conspiracy. Plaintiffs have since indicated that they will not pursue the specific performance claim in Count VIII and that their claims against defendants Frank, Jackson, Sudarkasa, and Walker will be voluntarily dismissed, so the court will not address issues that relate to this count or to these defendants. See Def. Mot. for Summ. Judg. Ex. EE; Pl. Reply Ex. B; Stipulations of April 9, 1997. Defendants have filed a number of counterclaims and crossclaims as well: Count I is an abuse of process claim; Count II is a breach of good faith negotiation claim; Count III is for fraudulent misrepresentation; Count IV is for fraudulent misrepresentation; Count V is for libel and slander; Count VI is a RICO claim; Count VII is a claim for contribution. Defendants have stipulated to a dismissal of all counterclaims on behalf of defendants Sudarkasa and Jackson; the court will not address Count I or issues that relate to defendants Sudarkasa or Jackson. Both plaintiffs and defendants have moved for summary judgment.

 II. Standard

 Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party has the burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 When ruling on a summary judgment motion, the court must construe the evidence and any reasonable inferences drawn therefrom in favor of the non-moving party. Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987); Baker v. Lukens Steel Corp., 793 F.2d 509, 511 (3d Cir. 1986). In other words, if the evidence presented by the parties conflicts, the court must accept as true the allegations of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 III. Discussion

 A. Choice of Law

 As a threshold matter, this court must determine the law that applies to the claims in this case. A federal court sitting in diversity applies the choice of law rules of its forum state. Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); LeJeune v. Bliss Salem, Inc., 85 F.3d 1069, 1071 (3d Cir. 1996). Under Pennsylvania's choice of law rules, the court must first determine whether a false conflict or a true conflict exists. LeJeune, 85 F.3d at 1071. A false conflict exists if only one jurisdiction's interests are impaired by the application of the other jurisdiction's law, or if there is basically no difference between the laws of the jurisdictions. See id. ; Lucker Manufacturing v. Home Insurance Co., 23 F.3d 808, 813 (3d Cir. 1994). If a true conflict exists, then this court must use Pennsylvania's choice of law analysis and apply the law of the jurisdiction with the greatest interest in the application of its laws. See Lucker Manufacturing, 23 F.3d at 813. *fn1" Italy's Code mandates a more restrictive interpretation of contract formation and the duties that attend such negotiations than Pennsylvania law. See F.R.C.P. 44.1; Affidavit of Avv. Mario Beltramo; Def. Mot. for Summ. Judg. Ex. DD. Italy's system of tort recovery is more restrictive than Pennsylvania's. See John G. Culhane, The Limits of Products Liability Reform Within a Consumer Expectation Model: A Comparison of Approaches Taken by the United States and the European Union, 19 Hastings Int'l & Comp. L. Rev. 1, 23-50 (1995); Franco Ferrari, Comparative Remarks On Liability for One's Own Acts, 15 Loy. L.A. Int'l & Comp. L.J. 813 (1993). In this setting, both Italy and Pennsylvania have an interest in regulating torts and contracts that affect their own domiciliaries, as well as in controlling the outcomes that result from the conflicts between the organizing principles of their legal systems. In this situation, the court finds that a true conflict exists and that it must apply Pennsylvania's choice of law analysis.

 Pennsylvania's choice of law analysis involves a hybrid of the most significant relationship test set forth in the Second Restatement of Conflict of Laws and Currie's governmental interest analysis. This approach applies to both tort and contract actions. Melville v. American Home Assur. Co., 584 F.2d 1306, 1311-13 (3d Cir. 1978); Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (Pa. 1964).

 As for the contract claims at issue, *fn2" a number of the relevant contacts occurred or would occur in Rome, as the site where the contract was to be performed, and as the site in which the bulk of the contract negotiations took place. *fn3" However, central to the parties' discussions and negotiations was the understanding that their agreement had to be approved by the Montgomery County Orphans' Court. *fn4" As a singular undertaking by the Barnes Foundation, the Exhibition was subject to number of legal proceedings in Pennsylvania before it could travel to a foreign venue. The interests of Pennsylvania in applying its own law, not only for its interest in the uniformity of the Orphans' Court's approval of the Exhibition in a variety of venues, but also for its interest in the Orphans' Court's ability to enforce and control the manner in which the Barnes and the City of Rome handled their proposal for the Exhibition, receive greater weight in this instance. As a result, for the counts that may be characterized as either contract or quasi-contract claims, and the issues therein, Pennsylvania law applies.

 For the libel and slander counterclaims, Pennsylvania law applies. Defendant Glanton is a Pennsylvania domiciliary, and despite the international nature of these negotiations and this lawsuit, any harm to his professional and personal reputation that resulted from the allegedly defamatory statements occurred ...


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