MCKENZIE v. BRANNAN

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

MICHAEL MCKENZIE, )

)

Plaintiff, )

)

v. ) Docket No. 2:20-cv-00262-NT

)

JAMES W. BRANNAN, et al., )

)

Defendants. )

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This case, which comes before me on remand from the First Circuit, concerns

two agreements governing the use of the late artist Robert Indiana’s “HOPE”

imagery: one entered into in 2008 (the “2008 Agreement”) and one entered into in

2019 (the “2019 Term Sheet”). The parties here disagree as to whether the latter

agreement, the 2019 Term Sheet, is a binding, enforceable contract, and, if so,

whether it extinguished an arbitration provision contained in the 2008 Agreement.

In July of 2020, the Plaintiff, Michael McKenzie, sued Defendant James

Brannan, personal representative of Indiana’s estate, and Maine Attorney General

Aaron Frey in this Court seeking an order declaring that the 2019 Term Sheet is

binding and specifically enforceable, as well as injunctive relief enjoining the

arbitration pursued by the Defendants under the terms of the 2008 Agreement.

Compl. ¶ 5 (ECF No. 1).

Without getting to the merits of the Plaintiff’s suit, Judge Woodcock held that

an arbitrator, not the Court, must decide whether the enforceability of the 2019 Term

Sheet is an arbitrable issue. See McKenzie v. Brannan, 496 F. Supp. 3d 518, 533 (D.

Me. 2020). Thus, the case was stayed and the issue of arbitrability was sent to the

American Arbitration Association (“AAA”) panel in New York. See id. at 541. After

reviewing the question, the AAA panel determined that the dispute was arbitrable,

meaning that the panel, not this Court, would proceed to the merits issues. Order

(ECF No. 63). In light of the AAA’s decision, and with the consent of the parties, this

Court dismissed the Plaintiff’s Complaint without prejudice. Order (ECF No. 67).

Immediately thereafter, the Plaintiff appealed this Court’s order directing the

question of arbitrability to the AAA as well as the subsequent order of dismissal.

Notice of Appeal (ECF No. 69). The First Circuit, confining itself to the “who decides

question,” reversed and vacated the orders below. McKenzie v. Brannan, 19 F.4th 8,

16 (1st Cir. 2021) (internal quotation marks omitted). Specifically, the First Circuit

determined that “the court—not the [arbitration panel]—holds the decision-making

power to decide whether the parties intended to arbitrate this dispute.” Id. The First

Circuit then remanded the case back to the district court to “tackle the fact-intensive

question (whether the parties agreed to arbitrate arbitrability of the merits dispute),

which will require resolution of the intertwined concepts driving this case: whether

the 2019 Term Sheet is a superseding contract that terminated the 2008 Agreement

and extinguished its arbitration provision . . . .” Id. at 20.

I held a bench trial from July 20, 2022, through July 22, 2022, to determine

these issues (ECF Nos. 130, 133, and 138). Based on the evidence and arguments

presented, I make the following findings of fact and conclusions of law in accordance

with Rule 52(a) of the Federal Rules of Civil Procedure.

FINDINGS OF FACT1

I. The 2008 Agreement

1. Robert Indiana was a painter, sculptor, and visual artist who, prior to his death

on May 19, 2018, lived on the island of Vinalhaven, Maine. J. Stipulation of

Facts ¶¶ 1–2 (ECF No. 115).

2. Michael McKenzie is an art publisher who does business as American Image

Art (“AIA”). J. Stipulation of Facts ¶ 8.

3. On or about August 11, 2008, McKenzie and Indiana both signed an agreement

(the “2008 Agreement”), which granted McKenzie the right to produce and

sell certain two- and three-dimensional artworks based upon Indiana’s HOPE

design. J. Ex. 1, at 1; J. Stipulation of Facts ¶¶ 11–12.

4. The 2008 Agreement contained the following terms:

• A requirement that McKenzie pay Indiana minimum royalties of $1

million per year for any works governed by the Agreement. J. Ex. 1, at

3.

• Production schedules for the creation and sale of HOPE sculptures, silk-

screened canvasses, and prints. J. Ex. 1, at 4–5.

1 Defendant Brannan filed three motions in limine prior to trial, all of which I reserved ruling

on: the Motion in Limine to Exclude Evidence about Morgan Art Foundation (ECF No. 118); the Motion

in Limine to Exclude Evidence about Any Alleged Forgery of Artwork or Discussions about Robert

Indiana Signing Artwork (ECF No. 119); and the Motion in Limine to Exclude Evidence of Comments

Made by the Mediator in the Portland, Maine, 2019 Mediation (ECF No. 120). The Motion in Limine

to Exclude Evidence about Morgan Art Foundation is DENIED because this evidence is relevant to

the issue of McKenzie’s alleged breach. The Motion in Limine to Exclude Evidence about Any Alleged

Forgery of Artwork or Discussions about Robert Indiana Signing Artwork is GRANTED because this

evidence is not relevant to any issues before me. And, finally, the Motion in Limine to Exclude Evidence

of Comments Made by the Mediator in the Portland, Maine, 2019 Mediation is DENIED because the

comments were not introduced to prove the truth of the matter asserted.

• A provision stating that “[a]ny disputes will be settled by arbitration

through the American Arbitration Association [“AAA”], governed by

laws of the State of New York.” J. Ex. 1, at 6.

II. The SDNY Action

5. Following Indiana’s death, Defendant James Brannan—a Maine attorney—

was appointed as the personal representative of Indiana’s estate (“the

Estate”). J. Stipulation of Facts ¶¶ 3, 7.

6. Robert Indiana’s last will and testament named Star of Hope, Inc. (“Star of

Hope”) as the sole beneficiary of Indiana’s estate. Star of Hope is a Maine

charitable corporation formed at Indiana’s direction during his lifetime. Its

stated mission includes the promotion of Indiana’s artistic legacy. J.

Stipulation of Facts ¶ 5.

7. On May 18, 2018, Morgan Art Foundation Ltd. filed an action in the U.S.

District Court in the Southern District of New York against Michael McKenzie,

AIA, Robert Indiana, and another party (the “SDNY Action”). After Indiana’s

death, James Brannan, as personal representative of the Estate, became a

defendant in that case. J. Stipulation of Facts ¶ 15.

8. On August 3, 2018, McKenzie and AIA filed cross-claims against Brannan in

the SDNY Action. J. Stipulation of Facts ¶ 16.

9. On October 9, 2018, the court in the SDNY Action ruled that the claims

between McKenzie/AIA and Brannan should proceed in arbitration pursuant

to the 2008 Agreement’s arbitration clause, and an arbitration was commenced

in New York (the “New York Arbitration”). See J. Stipulation of Facts ¶ 14,

17.

III. The Portland Mediation

10. The Maine Attorney General has oversight authority over Maine charitable

institutions and non-profits, including Star of Hope. J. Stipulation of Facts

¶ 20.

11. In his oversight capacity over Star of Hope, Maine Attorney General Aaron

Frey expressed concern that mounting costs of the SDNY Action and the New

York Arbitration could impair the future of Star of Hope and urged the parties

to mediate their disputes. J. Stipulation of Facts ¶ 21.

12. On November 25 and 26, 2019, McKenzie and Brannan attended a mediation

conducted by Patrick Coughlan in Portland, Maine (the “Portland

Mediation”). J. Stipulation of Facts ¶ 22. Also present at this mediation, as is

relevant here, were personnel and legal counsel representing the Estate, Star

of Hope, and the Maine Attorney General. J. Ex. 6. McKenzie’s attorney, John

Simoni, was not present at the mediation, but was available by phone. J.

Stipulation of Facts ¶ 22; Trial Tr. Vol. I, at 38:1–6 (ECF No. 145).

13. On the evening of November 25, after the first day of the Portland Mediation,

McKenzie sent an email to the mediator about Kevin Lipson, one of the

attorneys for the Estate, with the subject line: “Kevin Lipsom [sic] is a lying

swindling dirtbag holding this up to make money.” J. Ex. 7, at 1. In the email,

McKenzie voiced his concern that Lipson was going to derail the settlement

process by refusing to acquiesce to the authentication of a sculpture entitled

BRAT, which McKenzie had sold to Johnsonville, a sausage company, as a

Robert Indiana piece. J. Ex. 7, at 1; Trial Tr. Vol. III, at 475:24–476:24 (ECF

No. 147). McKenzie accused Lipson of trying to drive up legal fees and

“swindle[ ]” Star of Hope. J. Ex. 7, at 1. McKenzie threatened that “if BRAT is

not authenticated with apologies . . . by 12 [p.m.] tomorrow, I will . . .

immediately begin a separate litigation directed personally, jointly and

severally against the lawyers for [the Estate].” J. Ex. 7, at 2.

14. The next day, the second day of the Portland Mediation, McKenzie sent two

more emails about the BRAT authentication and Lipson’s alleged attempts to

derail the settlement process. J. Ex. 8; J. Ex. 9.

IV. The 2019 Term Sheet

15. On November 26, 2019, near the conclusion of the Portland Mediation,

Brannan and McKenzie signed a term sheet titled “Confidential and Binding

Term Sheet Between Michael McKenzie, individually, and as agent of

American Image Art (together ‘AIA’) and the Estate of Robert Indiana (the

‘Estate’)” (the “2019 Term Sheet”). J. Stipulation of Facts ¶ 23; J. Ex. 2.

16. As is relevant here, the 2019 Term Sheet contained the following provisions:

• “AIA and the Estate will enter into a new agreement (‘Production

Agreement’) that will permit AIA the exclusive right to publish and sell

authorized HOPE prints and sculptures. Features of the Production

Agreement will include:

o Duration of 10 years . . . .

o No annual minimum royalty payment to the Estate.

o Only HOPE works will be produced or sold, and only in strict accordance

with specifications set forth in the [2008 Agreement] . . . .

o The Estate will be notified: (a) at least ten days before a sculpture or

print run is about to begin, (b) within ten days of completion of a

sculpture or a print run,[ ] (c) that a work has been consigned to a gallery

or dealer, and (d) that a work has been sold.

o Other appropriate terms from the [2008 Agreement].”

• “AIA agrees that the [2008 Agreement] is terminated.”

• “To the extent AIA contends that any unsold non-HOPE works . . . are

authentic works of Robert Indiana, such determinations of authenticity

shall be made by a neutral art expert with appropriate knowledge of Robert

Indiana’s work. . . . All authentication to be at the Estate’s expense.”2

• “If the Expert determines that a non-HOPE work is not authentic, or that

authenticity cannot be determined, such work may not be sold and must be

destroyed or delivered to the Estate.”

• “The Estate will take no position regarding the authenticity of BRAT.”3

• “The arbitration between the Estate and AIA pending in the AAA will be

dismissed with prejudice.”

• “The Estate will provide an agreement of indemnification and defense of

AIA of any and all claims against AIA by Morgan Art in the pending lawsuit

. . . . Michael McKenzie and AIA agree to cooperate with the Estate, its

counsel, and AIA’s Counsel with respect to the lawsuit and related issues

and proceedings.”

• “This agreement is subject to normal and customary terms of settlement,

including confidentiality and non-disparagement.”

• “This term sheet is intended to be binding, and will be replaced by a more

formal Settlement Agreement and Production Agreement. Payments,

releases, dismissals and other consideration under this term sheet will be

made after a more formal Settlement Agreement and Releases and

Production Agreement are executed.”

J. Ex. 2, at 1–3.

2 I refer collectively to provisions having to do with authenticating non-Hope works as the

“Authentication Provisions.”

3 I will refer to this as the “BRAT Neutrality Provision.”

17. The day after the conclusion of the Portland Mediation, on November 27, 2019,

Attorney Edward Boyle, counsel for the Estate, wrote to the administrator of

the New York Arbitration that:

We are pleased to report that the parties have signed a

term sheet that resolves all claims and counterclaims in

this action. The parties request a one-month adjournment

of the December 6 telephone conference with the Panel, to

allow time for the preparation and execution of the

settlement agreement and related documentation.

J. Ex. 14, at 2. Simoni, McKenzie’s attorney, responded to the email: “Ditto for

the Respondents-Counterclaimants.” J. Ex. 14, at 1.

18. Following the execution of the 2019 Term Sheet, McKenzie continued to make

and sell new HOPE artwork without notifying the Estate, as required under a

provision of the Term Sheet. Trial Tr. Vol. III, 435:9–20; see J. Ex. 2, at 1. At

trial, McKenzie testified that he did not notify the Estate of the manufacture

or sales of the works because he did not believe that the Term Sheet was in

effect yet. Trial Tr. Vol. III, 436:23–437:10.

V. The Press Release

19. On December 5, 2019, McKenzie issued a press release entitled, “Estate of

Robert Indiana Names American Image Art Exclusive Worldwide Publisher,

Fabricator and Distributor of HOPE.” J. Ex. 16, at 2.

20. The press release stated, in relevant part:

• “The Estate of Robert Indiana has awarded American Image Art, Robert

Indiana’s longtime collaborator, the worldwide Exclusive as

Publisher/Fabricator and Distributor of Hope. The Estate and Star of Hope

CEO, Jamie Thomas,4 has authenticated the monumental Indiana

sculpture BRAT, as well as the seminal work WINE, two important projects

Robert Indiana collaborated with American Image Art on which continue

his legacy of four letter words.”

• “This settlement retracted American Image Art’s $30,000,000 lawsuit

against The Estate and continues the collaboration between The Artist and

Publisher conceived to be Art History’s most powerful production ever

including books, films, sculptures, prints, multiples, events, museums

shows, products, licenses and international media coverage.”

J. Ex. 16, at 2–3.

21. McKenzie distributed the press release via email, with the subject lines “finally

the dirtbags lose” and “Fwd: finally the truth comes out.” J. Ex. 16, at 1. The email

recipients included journalists at the New York Times and Washington Post. J.

Ex. 16, at 1.

22. On December 6, 2019, Boyle emailed McKenzie stating that, unless McKenzie

sent a retraction email to recipients of the press release by 7 p.m. that day, “the

[2019 Term Sheet] is revoked.” J. Ex. 18, at 2. The email cited “[McKenzie’s]

violations of his confidentiality obligations, his mischaracterizations of the term

sheet, and his refusal to correct these errors in a timely way” as “substantial and

material breaches.” J. Ex. 18, at 2.

4 Jamie Thomas is a Vinalhaven resident who began working for Robert Indiana in various

capacities in the late 1980s. Trial Tr. Vol. II, at 299:8–300:18 (ECF No. 146). In 2016, Indiana executed

a document authorizing Thomas to act as power of attorney on Indiana’s behalf. J. Stipulation of Facts

¶ 6 (ECF No. 115). Although McKenzie’s press release states that Thomas was the CEO of Star of

Hope, that is not correct—Larry Sterrs was the CEO at that time. See Trial Tr. Vol. I, at 116:8–19

(ECF No. 145). Thomas was involved with the foundation, however, and served on the board for a

period of time, although that role came to an end at some point during the ongoing litigation. Trial Tr.

Vol. II, at 312:2–9.

23. On December 9, 2019, McKenzie sent an email to the recipients of the press

release stating, “The press release I sent you last week was premature and I

am retracting it. Please disregard it. I will update you accordingly.” J. Ex. 20.

VI. The Ongoing Negotiations

24. On December 16 and 17, 2019, Attorney Ed Boyle circulated a draft settlement

agreement and a draft production agreement (as called for in the 2019 Term

Sheet) for McKenzie’s review. J. Ex. 25; J. Ex. 26. Boyle’s draft settlement

agreement maintained the Authentication Provisions but specified that certain

people, including, as is relevant here, Jamie Thomas, could not serve as the

experts overseeing the authentication process. J. Ex. 25, at RI0004841. In

addition, Boyle’s draft production agreement provided that the agreement

could be terminated by either party should gross revenue dip below $2 million

in any two consecutive years (the “Gross Revenue Provision”). J. Ex. 26, at

RI0004878. In the cover emails accompanying the drafts, Boyle wrote: “We are

still working on the draft[s], and will likely have further changes.” J. Ex. 25,

at RI0004834; J. Ex. 26, at RI0004872.

25. In the following days, McKenzie voiced displeasure about the draft

agreements. In one email, dated December 18, 2019, McKenzie wrote:

[T]he problem I have with this is [that] there is MUCH

change to what I was sold on [as] a final/binding

agreement. . . . Here it appears that the “binding

agreement” can have unlimited changes and no one steps

in so that means it has ZERO validity and I need to make

my 1200 changes. . . . If it is fine to add anything you want

to an agreement, . . . then it is a [work] in progress and I

don’t really understand why I [went] to Maine.

J. Ex. 29, at 1.

26. In an email to Boyle on December 20, 2019, McKenzie criticized the drafts

Boyle had sent, complaining that it had taken four weeks to get even an

“incomplete draft.” J. Ex. 102, at 2. Through his attorney, McKenzie also

declined to provide comments on the drafts and asked to schedule a conference

call with the mediator to come up with a “plan to complete the draft.” J. Ex.

102, at 2.

27. On January 9, 2020, the parties had a conference call at the request of

McKenzie’s counsel to discuss the 2019 Term Sheet. J. Ex. 35, at 2. In an email

setting the agenda for the call, Simoni proposed several amendments to add to

the Term Sheet, including: “resolving BRAT presently and conclusively as it

creates barriers in all sales and exhibition efforts” and “drop[ping] the

authentication process unless [Star of Hope] or Estate has good faith basis to

raise it, then [Star of Hope] can be final arbiter.” J. Ex. 35, at 2.

28. The day after the call, January 10, 2020, McKenzie reiterated his belief that

the Authentication Provisions of the 2019 Term Sheet should be dropped,

explaining that “[e]very powerful artist estate . . . abandoned authentication a

long time ago . . . [because] authentication returns no money to the estate and

conversely ends up costing a fortune in fees, insurance and, the worst, the legal

battles that invariably ensue.” J. Ex. 39, at 1.

29. On January 14, 2020, Boyle prepared a draft response to the points McKenzie

raised in the January 9 call and sent it to Kevin Lipson and Nat Putnam,

attorney for Star of Hope. J. Ex. 103, at PR003754–PR003755. Putnam,

responding to Boyle, first wondered why Boyle was trying to “breathe life back

into the settlement terms that were reached at the mediation.” J. Ex. 103, at

PR003752. He then wrote:

I believe you are trying to prevent the estate from being perceived

as repudiating the settlement. Instead, if this is going to be the

result, we want it to be clear that it is due to McKenzie’s—and not

the estate’s or [Star of Hope]’s—unwillingness/inability to abide

by the terms of the settlement. In other words, McKenzie needs

to be the one to repudiate rather than the estate.

If this is in fact your objective, then I believe the e-mail is

acceptable. Given what we have observed in the weeks since the

mediation, I can tell you that [Star of Hope] would prefer to have

no relationship with McKenzie going forward. While we realize

we may be stuck with the HOPE agreement, we feel strongly that

McKenzie must be bound by the original restrictions of that

agreement.

J. Ex. 103, at PR003752. Boyle responded on January 15, 2020: “Thanks Nat.

You’re correct—the Estate is not repudiating the term sheet and is not willing

to renegotiate those terms. Any decision to walk away from the term sheet will

be McKenzie’s.” J. Ex. 103, at PR003752.

30. Boyle sent his email responding to the points McKenzie raised in the January

9 call to Simoni on January 15, 2020. J. Ex. 41, at 1. In the email, Boyle

described McKenzie’s proposals—such as dropping the Authentication

Provisions—as attempts to “renegotiate” the “key terms of the agreement to

resolve the disputes between the Estate and [AIA],” which “are outlined in the

[2019 Term Sheet].” J. Ex. 41, at 1. The Estate declined to renegotiate those

key terms, but the email explained that “many of the concerns that [AIA]

raised in our call can be addressed within the framework of the term sheet.” J.

Ex. 41, at 1. The email closed with a statement that, “We hope this helps bring

us back to negotiating a Settlement Agreement and Production Agreement

consistent with the signed term sheet, so the disputes between our clients can

be resolved as was agreed.” J. Ex. 41, at 2.

31. On January 21, 2020, Simoni sent, by email and by regular mail, a letter to

Boyle stating that the parties were at an “impasse” due to the Estate’s

“resisting without basis authentication of BRAT.” J. Ex. 45, at 1. The letter

stated that “the only way AIA can even [consider] entering into a settlement

agreement is if the Estate provides now, presently, the necessary information

for AIA to assess all matters[.]” J. Ex. 45, at 1. The letter went on to demand

records possessed by the Estate.5 J. Ex. 45, at 1–2.

5 Simoni wrote:

[W]e require the immediate delivery of the following records, all

without redaction and communications including without limit, email,

Imail, texting and redacted phone and personal conversations:

1. All communication with Johnsonville in every form to and from,

including all phone calls;

2. The numerous Indiana drawings the Estate has located and have

[sic] not yet revealed in discovery;

3. All evidence gathered by the Estate on the authenticity of BRAT

which prevents the Estate from “conclusively” determining the BRAT

sculpture is not approved by Indiana;

4. The executed settlement agreement with Thomas resulting from the

mediation in unredacted form (“Thomas Settlement”);

5. All records of Thomas turned over to the Estate or made available to

the Estate as part of the Thomas Settlement or in discovery;

6. All communications with, to or from Rosenbaum Gallery including

redacted phone calls;

32. Simoni’s letter on January 21, 2020, was followed up by an email from Simoni

to Christina Moylan of the Maine Attorney General’s Office on January 22,

2020, with copies to the Estate and Star of Hope’s lawyers, stating: “The Estate

is pressing an approach that does not enable Mr. McKenzie to help Star of

Hope.” J. Ex. 47, at 5.

33. In response to Simoni’s email to Moylan, Boyle emailed Moylan on January

22, 2020, pointing out that the 2019 Term Sheet provided that “(1) the Estate

would take no position on the authenticity of the BRAT work sold to

Johnsonville Holdings, and (2) a neutral expert review process would be

established to determine the authenticity of any ‘non-HOPE’ works that

McKenzie wishes to sell going forward.” J. Ex. 47, at 4. Boyle went on:

Last night, I asked Mr. Simoni in an email whether or not his

client will enter into a settlement agreement consistent with the

term sheet. Mr. Simoni has not answered my question. Instead,

he wrote his email to you this morning.

7. All records provided from Rosenbaum Gallery concerning Indiana,

includ[ing] all sales records for the years 2008 through and including

2018;

8. All communications with Larry Steers [sic], the Star of Hope

Foundation Board, and the Star of Hope attorneys concerning the

mediation and/or settlement or any matter concerning this case,

including all records of any meetings or telephone conferences;

9. All documents pertaining to overbilling allegations concerning Kevin

Lipson, including with the Hogan Lovells law firm and the DLA Piper

law firm as well as the current case.

The above requests apply equally to any communications with a “Jan Lipson”

or a “Jay Lipson” or “Kevin Lipsom” where intending to refer to Kevin Lipson

of the Venable law firm.

Please get back to me asap.

J. Ex. 45, at 1–2.

The Estate needs to know whether McKenzie is going to perform

on the agreement in the term sheet, or repudiate it. There is no

third option. I again ask that Mr. McKenzie answer this question.

J. Ex. 47, at 4.

34. On January 23, 2020, Simoni responded to Boyle’s email that the Estate and

its lawyers were in violation of the November term sheet by not remaining

neutral in the authentication of BRAT by (1) “poisoning the well” by providing

Johnsonville with “detrimental information[;]”6 (2) preventing Thomas from

authenticating the BRAT sculpture by “adding 30 pages to the 3 page

mediator’s settlement”7 and paying money to Thomas in exchange for his

silence; and (3) “hid[ing] numerous preliminary sketches of BRAT found at

Star of Hope.” J. Ex. 47, at 2. Later that day, in a follow-up email, McKenzie

accused the Estate and its lawyers of fraud. J. Ex. 47, at 1.

35. On January 27, 2020, McKenzie wrote an email with an attached letter to

Matthew McLaughlin—the partner in charge of the New York office of the firm

representing the Estate. J. Ex. 49, at 1. McKenzie once again made discovery

demands on the Estate and threatened to bring further charges against the

Estate, the law firm, and Star of Hope unless those demands were met. J. Ex.

49, at RI0004938–RI0004939.

6 This is an apparent reference to a claim made by McKenzie that one of the owners of

Johnsonville told him that someone named Kevin had called and written trying to convince

Johnsonville that BRAT was fake. Trial Tr. Vol. III, at 481:21–482:3 (ECF No. 147). According to

McKenzie, the owner also said that “Kevin” was trying to get Johnsonville to pay him the additional

money that Johnsonville owed McKenzie for the sculpture. Trial Tr. Vol. III, at 482:5–23.

7 The “30 pages” appears to be a reference to the draft settlement agreement provided by the

Estate to McKenzie in December of 2019. See J. Ex. 25.

36. Simoni emailed Boyle again on January 28, 2020, reiterating the discovery

demands and threatening that, “If the demanded items are not provided by

February 5, 2020, AIA advises it will have no choice but to proceed aggressively

with its multiple plenary actions . . . .” J. Ex. 51.

37. On February 3, 2020, Boyle responded to McKenzie’s January 21, 27, and 28

communications and stated that:

These communications confirm that Mr. McKenzie and [AIA] have no

intention to fulfill their contractual obligation to enter into a final

Settlement Agreement that memorializes the terms set forth in the

Binding Term Sheet they signed on November[ ] 26, 2019. The Estate

understands these communications to be a repudiation of the Binding

Term Sheet by Mr. McKenzie and [AIA], and will act accordingly. If our

understanding is incorrect, then please respond to that effect in an

unequivocal writing.

J. Ex. 52. Attorney Boyle testified that he never received an unequivocal

writing that McKenzie was not repudiating the Term Sheet. Trial Tr. Vol. I, at

165:16–18.

38. On February 14, 2020, Simoni shared a revised draft settlement agreement.

J. Ex. 55, at RI0004954. The revised draft made several substantial changes.

For example, McKenzie struck out portions of the draft that provided for the

expert review process described in the Term Sheet. See J. Ex. 55, at

RI0004968–RI0004971. In addition, although McKenzie left in a provision

stating, as was agreed to in the Term Sheet, that “[t]he Estate takes no position

on the authenticity of the BRAT work,” he also inserted seemingly

contradictory language that “BRAT has been authenticated.” See J. Ex. 55, at

RI0004971; J. Ex. 25, at RI0004844. Additionally, McKenzie added the

following “whereas” clauses:

The Estate has purported in writing to be neutral to the

authenticity of BRAT but has hidden documents with Thomas

and with Johnsonville attempting to harm its authenticity[,]

J. Ex. 55, at RI0004958, and,

the Estate has willfully hidden vital Discovery Information,

purposefully destroyed vital Federal Discovery, tampered with

Federal Witnesses and purged [sic] itself in Federal Court with

provable lies created tp [sic] willfully defame and discredit AIA

while purporting to wanting [sic] to work with AIA as a ‘partner,’

J. Ex. 55, at RI0004960–RI0004961; see J. Ex. 55, at RI0004835–RI0004839.

39. Boyle testified that he viewed these revisions as “inconsistent” with the terms

in the Term Sheet. Trial Tr. Vol. I, at 166:14–18.

40. Boyle responded to McKenzie’s draft by email two hours later, writing:

Your draft deviates in extreme ways from the settlement

term sheet that your client McKenzie/[AIA] signed. You

have rejected terms that were expressly required under the

signed term sheet, and have added terms and language

that are totally unacceptable. Based on this draft and your

client’s other communications and actions since the term

sheet was signed, the Estate understands that

McKenzie/[AIA] has repudiated the signed settlement term

sheet. The Estate sees no option but to proceed with the

arbitration.

J. Ex. 56, at 1–2. Simoni wrote back to Boyle that, “[y]our assessment of who

repudiated is way off.” J. Ex. 56, at 1.

41. The New York Arbitration recommenced in April of 2020. Trial Tr. Vol. III, at

434:18–21. On April 7, 2020, the AAA panel held a preliminary hearing with

attorneys for the Estate and McKenzie/AIA. J. Ex. 57, at 39. In an order issued

after the hearing, the AAA panel stated that “counsel for the Parties . . .

[c]onfirmed that the Panel has jurisdiction to decide all claims and defenses

asserted in this arbitration.” J. Ex. 57, at 39.

42. On April 23, 2020, McKenzie filed documents in the SDNY Action seeking to

amend his claims against the Estate to add claims of slander of title, tortious

interference with contract, and prima facie tort, and to add new claims against

Brannan. See J. Ex. 58, at 5; J. Ex. 59, at 74–77. McKenzie did not seek

approval from the Estate prior to filing these claims, Trial Tr. Vol. I, at 89:1–

9, although the 2019 Term Sheet required that “AIA and the Estate mutually

release all claims against each other” and cooperate in the SDNY action, J. Ex.

2, at 3. McKenzie testified that he did not believe the 2019 Term Sheet

precluded him from asserting those claims because a final agreement was

never signed. Trial Tr. Vol. I, at 85:8–87:12.

CONCLUSIONS OF LAW8

There are two central issues in this case: (1) whether the 2019 Term Sheet was

a binding agreement, and (2) whether the 2019 Term Sheet remains enforceable in

8 The 2008 Agreement contains a choice-of-law provision, which states that “[a]ny disputes will

be . . . governed by laws of the State of New York.” J. Ex. 1, at 6. Defendant Brannan asserts that, if

the 2008 Agreement is still in effect, New York law controls, but if not, Maine law controls. Def.

Brannan’s Post-Trial Br. 16 n.3 (ECF No. 153). Brannan clarifies, however, that “from a practical

perspective, on the relevant contract law principles, New York law and Maine law are similar, and

Defendant has provided citations to the laws of both states.” Def. Brannan’s Post-Trial Br. 16 n.3.

Because Defendant Brannan does not argue that there is a conflict between Maine and New York law

that would affect the outcome of the issues before me, I need not decide what law to apply. Okmyansky

v. Herbalife Int’l of Am., Inc., 415 F.3d 154, 158 (1st Cir. 2005) (“[W]hen the resolution of a choice-of-

law determination would not alter the disposition of a legal question, a reviewing court need not decide

which body of law controls.”). Though I could cite to New York and Maine law “interchangeably without

affecting the outcome” of this case, “for simplicity’s sake” I will refer only to Maine law. Id. at 158 n.4.

light of the Estate’s allegation that McKenzie repudiated it.9 I address each of these

issues in turn:

I. Binding Agreement

The parties disagree whether the 2019 Term Sheet is a binding agreement.

McKenzie asserts that the 2019 Term Sheet is a binding contract because it contains

“[a]ll the terms necessary” and “the parties . . . manifested their intent to be bound

by it.” Pl. McKenzie’s Post-Trial Br. 7, 10 (ECF No. 154). Defendant Brannan

responds that the Term Sheet is not a final, enforceable contract but rather an

“agreement to agree.” Def. Brannan’s Post-Trial Br. 22 (ECF No. 153). “Settlement

agreements are analyzed as contracts, and the existence of a binding settlement is a

question of fact.” 2301 Cong. Realty, LLC v. Wise Bus. Forms, Inc., 2014 ME 147, ¶ 10,

106 A.3d 1131 (quoting In re Est. of Snow, 2014 ME 105, ¶ 11, 99 A.3d 278). The

Plaintiff, “as the party seeking to enforce the alleged contract, bears the burden of

proving its existence.” Butler v. Hardy, 576 A.2d 202, 204 (Me. 1990). “In order to be

binding, a settlement agreement requires the mutual intent of the parties to be bound

by terms sufficiently definite to enforce.” In re Est. of Snow, 2014 ME 105, ¶ 11, 99

A.3d 278; see also McClare v. Rocha, 2014 ME 4, ¶ 16, 86 A.3d 22 (“A contract exists

when the parties mutually assent to be bound by all its material terms, the assent is

9 The Defendants raise two additional issues: (1) whether the 2019 Term Sheet extinguished the

arbitration provision in the 2008 Agreement, and (2) whether the 2019 Term Sheet is a violation of

public policy. See Def. Brannan’s Post-Trial Br. 1; Def. Attorney General’s Post-Trial Br. 1 (ECF No.

152). My decision here obviates the need to address these issues. Having found that McKenzie

repudiated the Term Sheet, I hold that the 2019 Term Sheet has been entirely rescinded and the 2008

Agreement (and its arbitration provision) is once again in effect.

either expressly or impliedly manifested in the contract, and the contract is

sufficiently definite.” (internal quotation marks omitted)).

Courts “have recognized a distinction between a preliminary ‘agreement to

agree’ and a binding settlement agreement.” Muther v. Broad Cove Shore Ass’n, 2009

ME 37, ¶ 6, 968 A.2d 539. “It is possible . . . to make a contract the terms of which

include an obligation to execute subsequently a final writing which shall contain

certain provisions. If parties have definitely agreed that they will do so, and that the

final writing shall contain these provisions and no others, they have then concluded

the contract.” Restatement (Second) of Contracts § 27 cmt. a (Am. L. Inst. 1981). “On

the other hand, if either party knows or has reason to know that the other party

regards the agreement as incomplete and intends that no obligation shall exist until

other terms are assented to or until the whole has been reduced to another written

form, the preliminary negotiations and agreements do not constitute a contract.” Id.

§ 27 cmt. b; see also McClare, 2014 ME 4, ¶ 20, 86 A.3d 22 (“Preliminary negotiations

as to the terms of a future agreement do not constitute a contract.”). “Whether the

parties are merely negotiating the contract, or entering into a present contract, is

purely a question of intention.” McClare, 2014 ME 4, ¶ 20, 86 A.3d 22 (quoting

Masselli v. Fenton, 157 Me. 330, 336–37, 172 A.2d 728, 731 (Me. 1961)). “The absence

of a formalized contract does not affect the binding nature of a potential contract if

the parties intended to close the contract prior to a formal writing.” In re Est. of Snow,

2014 ME 105, ¶ 12, 99 A.3d 278 (quoting McClare, 2014 ME 4, ¶ 20, 86 A.3d 22).

To determine intent, courts look to:

the language of any agreement, viewed in the light of the circumstances

under which it was made, including the use of the words “offer” and

“acceptance.” Other relevant circumstances include the extent to which

an express agreement has been reached on all terms to be included;

whether the contract is of a type that is usually put in writing; whether

it needs a formal writing for its full expression; whether it is a common

or unusual contract; whether a standard form of contract is widely used

in similar transactions; and whether either party takes any action in

preparation for performance.

Id. (quoting McClare, 2014 ME 4, ¶ 21, 86 A.3d 22).

Here, there is ample evidence that the parties intended the 2019 Term Sheet

to be an enforceable settlement agreement that would subsequently be memorialized

in a more formal writing. Most obviously, the title of the document, which is placed

in bold letters at the top of the first page, is “CONFIDENTIAL AND BINDING

TERM SHEET,” and the final provision of the Term Sheet reiterates that “This term

sheet is intended to be binding, and will be replaced by a more formal Settlement

Agreement and Production Agreement.” J. Ex. 2, at 1, 3. Although the Defendants

now seek to qualify the language of the Term Sheet,10 I am not at liberty to “ignore

plain language[ or] . . . disregard terms purposefully inserted into an agreement by

experienced business[ people].” Crowe v. Bolduc, 365 F.3d 86, 97 (1st Cir. 2004).

Defendant Brannan points out some aspects of the Term Sheet that he asserts

undermine its enforceability: the Term Sheet’s use of “prospective language” and the

10 At trial, Mr. Boyle testified that he wanted the term sheet to be called “confidential and

binding” because the Defendants “didn’t want any backward movement . . . . This was basically

supposed to set a marker where any negotiation going forward this was the baseline and there would

be fine-tuning, obviously, between this term sheet and the settlement agreement and production

agreement, but we wouldn’t be moving backwards.” Trial Tr. Vol. I, at 185:7–17. This statement

indicates that the Estate believed that the 2019 Term Sheet contained the essential terms of the

agreement.

“future tense,” as well as its reference to undefined terms that would be included in

the formal Production Agreement. Def. Brannan’s Post-Trial Br. 22–23. I am not

persuaded. For example, though the Term Sheet does utilize the future tense, that

tense is primarily used to indicate that the terms would be included in the

forthcoming Production Agreement. See J. Ex. 2, at 1 (“Features of the Production

Agreement will include: . . . .”). Moreover, while the Term Sheet does include

undefined terms, namely the requirement that “other appropriate terms” from the

2008 Agreement would be included in the Production Agreement, there is no evidence

that those undefined terms were material or otherwise indicated the lack of a binding

agreement. Indeed, as Mr. Boyle put it in an email to Mr. McKenzie’s counsel a few

months later, the 2019 Term Sheet contains “[t]he key terms of the agreement to

resolve the disputes between the Estate and [AIA].” J. Ex. 41, at 1.

Finally, Defendant Brannan asserts that the Term Sheet is not binding

because McKenzie never took “action in preparation for performance.” Def. Brannan’s

Post-Trial Br. 23 (quoting McClare, 2014 ME 4, ¶ 21, 86 A.3d 22). While I agree that

McKenzie largely continued to conduct himself as if the 2008 Agreement was still in

effect, there is also evidence that McKenzie prepared to perform the 2019 Term Sheet

by expressing his intention to work toward a finalized agreement and by urging the

parties to move more quickly in the finalization process. In addition, the Estate took

action in preparation for performance by writing to the administrator of the New York

Arbitration that: “We are pleased to report that the parties have signed a term sheet

that resolves all claims and counterclaims in this action” and asking for an

adjournment of arbitration proceedings “to allow time for the preparation and

execution of the settlement agreement and related documentation.” J. Ex. 14, at 2.

McKenzie’s attorney replied to that email, “[d]itto for the Respondents-

Counterclaimants,” indicating McKenzie’s assent to the Estate’s preparation for

performance. J. Ex. 14, at 1.

Taking these facts together, I find that the parties intended the 2019 Term

Sheet to be binding prior to its terms being memorialized in a more formal writing.

As such, the Term Sheet was not a mere agreement to agree, but rather a binding

agreement.

II. Repudiation

Next, the parties disagree about whether either side repudiated the Term

Sheet. “An anticipatory repudiation of a contract is a definite and unequivocal

manifestation of intention on the part of the repudiator that he will not render the

promised performance when the time fixed for it in the contract arrives.” Wholesale

Sand & Gravel, Inc. v. Decker, 630 A.2d 710, 711 (Me. 1993) (internal quotation marks

omitted). “The manifestation of an intention to repudiate a contract may be made and

communicated by either words or conduct[,]” but “the words or conduct evidencing

such refusal or inability to perform . . . must be definite, unequivocal, and absolute.”

Id. “Moreover, the repudiation must concern obligations or promises going to the

whole consideration.” Roger Edwards, LLC v. Fiddes & Sons, Ltd., 387 F.3d 90, 95–

96 (1st Cir. 2004) (citing Martell Bros. v. Donbury, Inc., 577 A.2d 334, 337 n.1 (Me.

1990)).

In general, “[a] mere request for a change in the terms or a request for

cancellation of the contract is not in itself enough to constitute a repudiation.” Thermo

Electron Corp. v. Schiavone Const. Co., 958 F.2d 1158, 1164 (1st Cir. 1992) (quoting

4 Arthur L. Corbin, Corbin on Contracts § 973, at 905–06 (1951)). However, “[a]

contracting party’s insistence, ‘[willfully] or by mistake,’ on preconditions to

performance not stated in the contract, constitutes a breach by anticipatory

repudiation.” VanHaaren v. State Farm Mut. Auto. Ins. Co., 989 F.2d 1, 6 (1st Cir.,

1993); see also Thermo Electron Corp., 958 F.2d at 1164 (explaining that repudiation

occurs when a party insists on terms “contrary to those in the [contract], to the point

where that insistence ‘amounts to a statement of intention not to perform except on

conditions which go beyond the contract’ ” (quoting Restatement (Second) of Contracts

§ 250 cmt. b)).

Here, Defendant Brannan asserts that, even if the 2019 Term Sheet created a

binding agreement, “it is clear . . . that McKenzie repudiated any such contract.” Def.

Brannan’s Post-Trial Br. 26. For his part, the Plaintiff presents his own theories of

repudiation that he says establish that it was the Estate, not him, who repudiated

the Term Sheet. Pl. McKenzie’s Post-Trial Br. 17–29. Below I address the Defendant’s

repudiation arguments and then turn to the Plaintiff’s counterarguments.

A. Defendant Brannan’s Theories of Repudiation

Brannan contends that McKenzie and AIA repudiated the 2019 Term Sheet in

the following ways: (1) by issuing the press release in violation of the confidentiality

and non-disparagement provisions; (2) by issuing discovery demands to the Estate

despite the dismissal of claims provision; (3) by McKenzie’s refusal to confirm that he

was not repudiating the agreement while he was insisting upon terms that directly

contradicted the Term Sheet; (4) by filing new claims against the Estate and its

attorneys in violation of the general release; and (5) by refusing to cooperate with the

Estate in the Morgan Art case despite a requirement to do so in the Term Sheet. Def.

Brannan’s Post-Trial Br. 28.

As for the first instance of alleged repudiation, I agree with Defendant

Brannan that McKenzie’s issuance of the press release shortly after the signing of

the 2019 Term Sheet constituted a breach of the Term Sheet’s confidentiality

provision. I discredit McKenzie’s testimony that it was only a “preliminary press

release” to allow select associates to advise him on it. Trial Tr. Vol. I, at 54:8. By my

count, the press release was sent to 28 different email addresses, including

individuals at the New York Times and the Washington Post. J. Ex. 16, at 1. Nothing

suggests that the document was provided on background or solely for comments, and

I see nothing that would have prevented any journalist who received it from

publishing it.

But even assuming that McKenzie breached the Term Sheet by issuing the

press release, Defendant Brannan waived any right to assert that breach by

continuing to make attempts at finalizing the Term Sheet for months thereafter. See

Interstate Indus. Unif. Rental Serv., Inc. v. Couri Pontiac, Inc., 355 A.2d 913, 919 (Me.

1976) (“A waiver is a voluntary or intentional relinquishment of a known right and

may be inferred from the acts of the waiving party. Thus, if one in knowing possession

of a right does something inconsistent with the right or of his intention to rely upon

it, he is deemed to have waived that right and is estopped from asserting that right

if renunciation of the waiver would prejudice the party who has relied upon it.”

(internal citations omitted)).

McKenzie’s discovery demands and insistence on terms that were contrary to

the 2019 Term Sheet, however, lead to a different conclusion. In the beginning of

January of 2020, McKenzie and his attorney made several proposed amendments to

the 2019 Term Sheet under the guise of finalizing the agreement, including “resolving

BRAT presently and conclusively” and “drop[ping] the authentication process.” J. Ex.

35, at 2; see also J. Ex. 39. As explained above, the proposal of changes to a contract

is not a repudiation, see Thermo Electron Corp., 958 F.2d at 1164, and the Estate did

not treat McKenzie’s proposals as a repudiation. Instead, Boyle wrote back to

McKenzie to decline the invitation to “renegotiate” the “key terms of the agreement

. . . outlined in the [2019 Term Sheet].” J. Ex. 41, at 1.

On January 21, 2020, however, the tenor of McKenzie’s conduct changed.

Simoni wrote to Boyle that the parties were at an “impasse” because the Estate

refused to authenticate BRAT and he demanded the disclosure of certain discovery

materials before he would “even [consider] entering into a settlement agreement”

with the Estate. J. Ex. 45, at 1. The next day, Simoni emailed Moylan, with copies to

Boyle, that the parties were at a “serious impasse” because “[t]he Estate is pressing

an approach that does not enable Mr. McKenzie to help the Star of Hope.” J. Ex. 47,

at 5. Boyle responded: “The Estate needs to know whether McKenzie is going to

perform on the agreement in the term sheet, or repudiate it. There is no third option.

I again ask that Mr. McKenzie answer this question.” J. Ex. 47, at 4.

Rather than answer the question of whether he was repudiating the

agreement, McKenzie reiterated his discovery demands in an email to other lawyers

representing the Estate on January 27, 2020. J. Ex. 49. On top of this, on January

28, Simoni emailed Boyle and threatened that if his discovery demands were not met,

AIA would “have no choice but to proceed aggressively with its multiple plenary

actions.” J. Ex. 51.

On February 3, 2020, the Estate wrote Simoni expressing its understanding

that McKenzie was repudiating the 2019 Term Sheet, and stating: “If our

understanding is incorrect, then please respond to that effect with an unequivocal

writing.” J. Ex. 52. McKenzie never provided the Estate with an unequivocal writing

to confirm that he was not repudiating. Instead, on February 14, 2020, Simoni sent

McKenzie’s redraft of the settlement agreement, which struck the Authentication

Provisions and added a statement that BRAT had been authenticated—both changes

that directly contravened the 2019 Term Sheet. See J. Ex. 55, at RI0004954;

RI0004968–RI0004971. In addition, McKenzie added a “whereas” clause that stated:

“The Estate has purported in writing to be neutral to the authenticity of BRAT but

has hidden documents with Thomas and with Johnsonville attempting to harm its

authenticity.” J. Ex. 55, at RI0004958.

Later that same day, February 14, 2020, Boyle responded by email that, based

on provisions in the draft that were incompatible with the 2019 Term Sheet, the

Estate understood McKenzie and AIA to be repudiating the 2019 Term Sheet. J. Ex.

56, at 1–2. Simoni responded that Boyle’s assessment of who had repudiated was

“way off.”11 J. Ex. 56, at 1.

McKenzie’s communications to the Estate on January 21, 27, and 28, and

February 14, 2020, constitute a clear and unequivocal repudiation. That is, McKenzie

went from making a mere request for changes to the agreement to insisting on

preconditions to performance that were at odds with the provisions contained in the

2019 Term Sheet. McKenzie stated in no uncertain terms that the Term Sheet could

not be finalized until the Estate agreed to authenticate BRAT or provided the

documents that would allow McKenzie to authenticate BRAT. The first of these

options was in direct contravention of the BRAT Neutrality Provision, and the

discovery demand was inconsistent with the Term Sheet’s release of claims provision.

The 2019 Term Sheet gave no right to McKenzie to demand discovery from the Estate.

And by responding on February 14, 2020, with a draft agreement that included terms

already clearly rejected by the Estate, McKenzie was insisting on his terms. See

11 The Plaintiff suggests that Simoni’s February 14, 2020, email stating that Boyle’s “assessment

of who repudiated is way off,” J. Ex. 56, at 1, constitutes an assurance that McKenzie did not intend

to repudiate the Term Sheet, see Pl. McKenzie’s Post-Trial Br. 21. I disagree. The Estate began seeking

assurances from McKenzie weeks earlier, on January 22, and the Plaintiff responded not with an

assurance, but rather with another draft agreement including the terms that were contrary to the

2019 Term Sheet and that the Estate had already indicated it would not accept. See J. Ex. 55. Then,

on February 14, after asking for reassurances repeatedly to no avail, Boyle informed the Plaintiff that

the Estate understood McKenzie’s actions to be a repudiation, meaning that it viewed dealings

between the two parties under the Term Sheet as at an end. J. Ex. 56, at 1–2; see Drinkwater v. Patten

Realty Corp., 563 A.2d 772, 776 (Me. 1989) (“A party to a contract with reasonable grounds to believe

the other party will not perform may demand assurance of performance and may treat as a repudiation

a failure to provide adequate assurance within a reasonable time.” (citing Restatement (Second) of

Contracts § 251 (Am. L. Inst. 1981))). Simoni’s February 14 email came after this. The email thus came

too late for it to constitute an unequivocal writing that McKenzie was not repudiating.

VanHaaren, 989 F.2d at 6 (“A contracting party’s insistence . . . on preconditions to

performance not stated in the contract, constitutes a breach by anticipatory

repudiation.”); Thermo Electron Corp., 958 F.2d at 1164 (explaining that repudiation

occurs when a party insists on terms “contrary to those in the [contract], to the point

where that insistence ‘amounts to a statement of intention not to perform except on

conditions which go beyond the contract’ ” (quoting Restatement (Second) of Contracts

§ 250 cmt. b)).

In sum, McKenzie repudiated by mid-February of 2020.12 I next address the

Plaintiff’s assertion that it was the Defendant, not McKenzie, who repudiated.

B. The Plaintiff’s Theories of Repudiation

The Plaintiff contends that, if anyone repudiated, it was the Estate. I address

each of the Plaintiff’s arguments below, though, ultimately, I am not convinced.

First, the Plaintiff contends that the Estate repudiated first by including a

provision in the draft production agreement that required “a whopping minimum of

$2,000,000 to be paid by McKenzie to the Estate where the [2019] Term Sheet

provided no annual minimum payment.” Pl. McKenzie’s Post-Trial Brief 19. But even

if, as McKenzie suggests, this added provision contravened the Term Sheet, a

proposed addition to a contract is not a repudiation. See Thermo Electron Corp., 958

F.2d at 1164. And, there is nothing in the record to suggest that the Estate insisted

on the provision.

12 Because I find that McKenzie repudiated the agreement by mid-February, I need not address

Defendant Brannan’s claims that McKenzie also repudiated by bringing new claims or by violating

discovery obligations.

I also reject the Plaintiff’s contention that the Estate repudiated the Term

Sheet first by violating the BRAT Neutrality Provision. In his letter to Moylan on

January 23, 2020, Simoni asserted that “the Estate has COMPLETELY violated that

neutral position” by providing Johnsonville “detrimental information” about BRAT’s

authenticity; by adding terms in the draft settlement agreement that prevented

Thomas from authenticating BRAT and by paying Thomas off to stay silent; and by

hiding sketches of BRAT that had been found at Star of Hope and refusing to share

them with McKenzie as the 2019 Term Sheet required. J. Ex. 47, at 2. Had the

Plaintiff shown that what Simoni said in his letter to Moylan was true, then I would

agree that the Estate had violated the BRAT Neutrality Provision.

However, the Plaintiff failed to demonstrate that any of Simoni’s claims were

true, and some of the claims are demonstrably false. McKenzie’s claim that Lipson

provided detrimental information about the authenticity of BRAT to Johnsonville

was unsubstantiated except for McKenzie’s testimony, which consisted of double

hearsay, was not credible, and made little sense in light of McKenzie’s claim that

Lipson also asked Johnsonville to pay him the $700,000 balance due to McKenzie on

the sculpture. See Trial Tr. Vol. III, at 482:5–12. Why would Lipson disparage the

authenticity of BRAT and then demand payment for it? And though Simoni claimed

that the Estate prohibited Thomas from authenticating the BRAT sculpture in the

“30 pages [added] to the 3 page mediator’s settlement” (presumably a reference to the

Defendants’ draft settlement agreement), J. Ex. 47, at 2, that document only stated

that Thomas could not serve as an independent expert and preside over the review

process, J. Ex. 25, at RI0004841. Nowhere in the draft settlement agreement did it

state that Thomas could not speak to the independent experts about BRAT’s

authenticity, nor is there any evidence that Thomas was under a gag order or that he

was paid to stay silent. In fact, Thomas testified at trial that he had seen Robert

Indiana working on the BRAT design. Tr. Tr. Vol. II, at 312:20–313:9. As for the claim

that the Estate was “hiding” sketches, other than the unsupported charges made by

Simoni and McKenzie, there is no evidence before me to support the claim that the

Estate violated any duty to turn anything over under the 2019 Term Sheet (if such a

duty can even be found in the 2019 Term Sheet).

Finally, I address the issue of whether the Estate was baiting McKenzie to

repudiate the agreement. See Pl. McKenzie’s Post-Trial Brief 25. The lawyers for the

Estate endured vicious attacks by McKenzie from the first day of mediation.

McKenzie challenged their competence, their billing practices, and their honesty at

virtually every turn. See, e.g., J. Ex. 7. It is not surprising that the Estate and Star of

Hope, faced with such vitriol, were questioning their decision to partner with

McKenzie and AIA. And the lawyers may well have adopted a belief that McKenzie

would eventually repudiate and sink the deal. That they were secretly hoping that

McKenzie would repudiate is irrelevant. What is relevant is whether either side

actually did repudiate, and it is clear to me that McKenzie did.

While McKenzie testified at length about why he felt that the Authentication

Provisions and the BRAT Neutrality Provision were not in Star of Hope’s best

interests,13 the fact of the matter is that the parties agreed to both provisions when

they signed the 2019 Term Sheet. And while McKenzie may have been correct, as

Star of Hope’s director ultimately agreed, that the business of authentication by an

artist’s estate was fiscally risky, it was nevertheless a part of the agreement. When

the Estate indicated that it would not renegotiate those provisions, McKenzie and

AIA could not insist that they be changed in a way that directly contradicted the 2019

Term Sheet without repudiating the agreement.

III. The Effect of the Repudiation

Having found that McKenzie repudiated the 2019 Term Sheet, I now discuss

the effect of that repudiation. “[A] ‘distinct and unequivocal’ repudiation entitles the

injured party to treat the contract as ‘entirely rescinded,’ and its obligations under

the contract as discharged.” VanHaaren, 989 F.2d at 6 (quoting Martell Bros., 577

A.2d at 337 n.1); see also Roger Edwards, LLC, 387 F.3d at 95 (“[W]here one party to

a contract repudiates it, the other party is authorized to rescind.” (citing Simpson v.

Emmons, 99 A. 658, 660 (Me. 1917))). Given McKenzie’s repudiation, the Estate, as

the injured party, was within its rights to view its obligations under the Term Sheet

as discharged and to treat the Term Sheet as entirely rescinded. See Martell Bros.,

Inc., 577 A.2d at 337 n.1.

The parties have not directly briefed the issue of whether an underlying

contract is resurrected when a superseding contract is repudiated and rescinded, but

13 While I have no reason to question McKenzie’s altruistic concern, I would also note that he

had a financial motive to push for the BRAT authentication. During McKenzie’s trial testimony, he

revealed that Johnsonville still owes AIA $700,000 for the BRAT sculpture. Trial Tr. Vol. III, at

482:21–23.

they seem to agree that if the 2019 Term Sheet is not in effect, the 2008 Agreement

comes back into force. See Trial Tr. Vol. III, at 436:23–437:10 (McKenzie testifying

that he is still acting pursuant to the 2008 Term Sheet because the 2019 Term Sheet

is not in effect); Def. Brannan’s Trial Br. 3 (ECF No. 110) (“Even if the 2019 Term

Sheet were an enforceable contract, which it is not, Plaintiff has long since repudiated

[it] . . . . Thus, the 2008 Agreement’s arbitration provision has not been extinguished,

and this case should be referred back to the Arbitration Panel.”). Absent any guidance

to the contrary, I simply follow the lead of the parties and conclude that the 2008

Agreement was revived by McKenzie’s repudiation. The effect of McKenzie’s

repudiation was to resurrect the 2008 Agreement—including its arbitration

provision.14

CONCLUSION

Accordingly, I find that, although the 2019 Term Sheet was a binding contract,

not an agreement to agree, McKenzie repudiated it. Because of that repudiation, the

Estate was justified in treating the entire 2019 Term Sheet as rescinded. And, the

repudiation and subsequent rescission resurrected the 2008 Agreement and its

arbitration provision. Thus, McKenzie’s requests for a declaratory judgment that the

2019 Term Sheet is binding and enforceable and for an order enjoining the New York

Arbitration are DENIED. There being nothing left to rule on, the case is

DISMISSED.

14 Because this decision reaches the merits of Defendant Brannan’s motions for judgment on

partial findings (ECF Nos. 136–37), I now DENY those motions.

SO ORDERED.

/s/ Nancy Torresen

United States District Judge

Dated this 1st day of February, 2023.