Canilao v. City Commercial Investments, LLC

Background

City Commercial Investments, LLC (CCI) owned a building at 399 9th Street in San Francisco. The building was leased to Handsome Heidi, LLC, which operated The Stud bar. Six artists had murals on the building’s exterior. One mural was already present when CCI acquired the building in 2015, another was added shortly afterward, and four more were added in 2017.

The artists alleged that The Stud invited them to contribute murals, selected artistic themes, and decided to install the works. They also alleged that CCI knew about the murals and communicated with San Francisco officials to establish that the murals were art on the building rather than graffiti. After The Stud shut down during the COVID-19 pandemic, CCI began painting the building’s exterior white on June 20, 2020, erasing the murals.

The artists asserted claims under the Visual Artists Rights Act (VARA), the California Art Preservation Act, and negligence. In the First Amended Complaint, the claims at issue in this order were the VARA claim and the negligence claim. CCI moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim.

VARA claim

The court analyzed two provisions of VARA concerning art incorporated into buildings. Under Section 113(d)(1), protections for artwork that cannot be removed without destruction or modification may not apply if the artist consented to installation under the circumstances specified by the statute. The court had previously determined that, for such non-removable artwork, the artist must allege the building owner’s consent to installation.

The artists alleged that CCI consented through The Stud acting as CCI’s agent. They advanced theories of ratification and apparent authority. The court held that the First Amended Complaint did not plausibly allege either theory. It did not allege an existing agency relationship in which CCI authorized The Stud to manage or control the mural installations. CCI’s later communications with San Francisco officials about graffiti citations showed knowledge of the murals’ existence, but did not show that CCI knew the material facts concerning the artists’ arrangements with The Stud, the installation methods, or the artists’ expectations that the murals would remain permanently.

The court also held that the lease did not give The Stud apparent authority to invite the murals. The lease addressed maintaining the premises, graffiti removal, and exterior repainting, but did not authorize installing artwork on the exterior walls without CCI’s knowledge or consent. CCI’s communications with San Francisco officials occurred after all six murals had been installed and therefore did not give The Stud authority to invite their original installation. The VARA theory based on Section 113(d)(1) therefore did not survive the motion to dismiss.

Under Section 113(d)(2), however, VARA protections apply to artwork that can be removed without destroying, distorting, mutilating, or otherwise modifying the work, unless the owner satisfies specified notice requirements. The court found that the amended allegations plausibly showed that the murals were removable. Those allegations described preservation and engineering techniques, including chiseling, cutting, and replacement methods, and identified murals installed on a door or wood surface that could be removed or preserved. The court concluded that the artists’ Section 113(d)(2) theory—that CCI failed to provide the required 90-day notice—survived the motion to dismiss, regardless of whether CCI consented to installation.

Negligence claim

The artists alleged that CCI owed them a duty to preserve the murals and give them an opportunity to remove the works, and that CCI breached that duty by destroying the murals without notice. The court had previously ruled that this theory was preempted by VARA unless the artists could show property rights distinct from VARA’s moral rights.

The court held that the First Amended Complaint did not establish those separate property rights. Applying California fixture law, the court determined that the murals were affixed to CCI’s building and therefore belonged to the building owner rather than the artists, because the artists had no agreement allowing them to remove the murals. The court explained that removability under VARA did not determine whether the murals were fixtures under California law. It therefore dismissed the negligence claim.

Disposition

The court granted CCI’s motion to dismiss as to Section 1 of the VARA claim, denied the motion as to Section 2 of the VARA claim, and granted the motion as to the negligence claim. The order disposed of CCI’s motion to dismiss, Docket No. 82.