Contract – Shipwreck Salvage – Media Rights – Administrative – Separate Permit

The plaintiff-salvage company argues that, after it spend a decade locating the wreck of the Queen Anne’s Revenge, the parties entered into a contract (the 2013 Agreement) to govern the treatment of the digital media and other matters related to the QAR but that the defendant-agency ignored the terms of the 2013 Agreement and cut plaintiff out of several transactions. For the most part, there are genuine issues of material fact, requiring the submission of plaintiff’s claims to a jury.

The parties’ cross-motions for summary judgment are granted in part and denied in part.

Issues of Fact

Plaintiff claims breaches of contract arising from several occurrences.

It is unclear whether the parties intended for plaintiff to be notified of significant events in the recovery process and, if so, whether plaintiff knew or should have known of defendants’ plan to act with the Coast Guard to raise the QAR’s cannons.

The 2013 Agreement does not define “commercial narrative” so as to clearly include a documentary produced by a nonprofit organization and assigned to the defendant-agency.

Blackbeard’s Sunken Prize, a book about the QAR that contains images of recovered QAR artifacts, was written by two authors, one of whom was a former employee of the defendant-agency. While there is evidence that the agency discussed the book with its authors, the facts are not sufficiently developed for the court to determine whether the agency participated in “making” it so that it was subject to the 2013 Agreement.

The agency exhibited QAR artifacts in museums without involving plaintiff. Regardless of whether a surcharge was added to the admission fee to view the traveling exhibit, there are other ways in which the state might have profited from the exhibition. Whether it did, and whether the parties intended for the term “commercial narrative” to apply to an exhibition of this nature are questions for the jury to resolve.

Plaintiff also argues that defendants breached the 2013 Agreement by failing to work with plaintiff on a proposed “blockbuster tour” of the QAR artifacts. A determination of this claim turns on an interpretation of ambiguous language in the 2013 Agreement. Whether the parties intended for the term “commercial narrative” to include a large-scale tour, and what they meant when they agreed to “collaborate in making” commercial narratives, are matters for the jury to decide.

Whether defendants breached the 2013 Agreement in these ways will be up to a jury to decide.

Terms of Use

Paragraph 16(b) of the 2013 Agreement said, “1) All non-commercial digital media, regardless of producing entity, shall bear a time code stamp, and watermark (or bug) of [plaintiff’s affiliate] Nautilus and/or [the agency], as well as a link to [the agency], [plaintiff], and Nautilus websites, to be clearly and visibly displayed at the bottom of any web page on which the digital media is being displayed.

“2) [The agency] agrees to display non-commercial digital media only on [the agency’s] website.”

Plaintiff claims that the agency refused to post or disseminate a terms of use agreement as required by Paragraph 16(b), “destroying [plaintiff’s] ability to police unauthorized use of QAR digital media by third parties.”

All that can be definitively discerned from the language of the 2013 Agreement is that the parties intended for access restrictions to appear on a website to be established by the agency, and that plaintiff had responsibility for “managing and enforcing” them. The contract is silent regarding whether the parties intended for the language of the terms of use agreement to be mutually acceptable. Accordingly, the question must be put to a jury.

Plaintiff also claims that defendants posted hundreds of QAR images and videos to websites such as Facebook, Instagram, YouTube, Flickr, and Twitter, often without watermarks or time code stamps.

However, Paragraph 17 of the 2013 Agreement provides, “Nothing in this Agreement shall prevent [DNCR] from making records available to the public pursuant to North Carolina General Statutes Chapters 121 and 132, or any other applicable State or federal law or rule related to the inspection of public records.”

Paragraph 17 trumps any interpretation of the 2013 Agreement that would require the state to alter public records or to limit the public’s right to access or use them, both violations of state law. Therefore, Paragraph 16(b) cannot be read to mean that defendants were required to add watermarks, time code stamps and weblinks to public documents that pre-existed the 2013 Agreement. To do so would be to alter those documents, which is both contrary to public records obligations made paramount by Paragraph 17, as well as a criminal offense.

Nevertheless, plaintiff is entitled to summary judgment to the extent the agency posted on the internet non-commercial digital media regarding the QAR Project that the agency produced after the effective date of the 2013 Agreement without including a time code stamp and watermark (or bug) of Nautilus and/or the agency, as well as a link to the agency, plaintiff’s and Nautilus websites at the bottom of the web page on which that digital media was displayed. In addition, plaintiff is entitled to summary judgment for those occasions after the effective date of the 2013 Agreement on which the agency displayed non-commercial digital media regarding the QAR Project (marked or unmarked) on websites other than its own. As to these aspects of the first breach of contract claim (Media Rights), plaintiff’s motion for partial summary judgment is granted.

On the other hand, defendants are entitled to summary judgment to the extent plaintiff claims that a breach resulted from defendants’ failure to alter public records—regardless of their source—that predate the effective date of the 2013 Agreement prior to producing those records in response to a public records request. As to this aspect of the first breach of contract claim (Media Rights), defendants’ motion for summary judgment is granted.

El Salvador Permit

In a judicial review of an administrative proceeding, Judge Ridgeway determined that the agency did not abuse its discretion in refusing to renew plaintiff’s permit with respect to a second shipwreck, the El Salvador, given that Spain asserted its ownership of the wreck. Since plaintiff did not appeal Judge Ridgeway’s ruling, plaintiff is collaterally estopped from challenging the agency’s refusal to renew its El Salvador permit.

Good Faith & Fair Dealing

Plaintiff was not required to separately plead a claim for breach of the implied covenant of good faith and fair dealing. Such a claim is included in its claim for breach of contract without the need to identify it specifically.

Motions granted in part, denied in part.

Intersal, Inc. v. Wilson (Lawyers Weekly No. 020-015-23, 61 pp.) (Julianna Theall Earp, J.) David Harris, Dustin Greene, Richard Keshian, Elizabeth Winters and Kyleigh Feehs for plaintiff; Michael Bulleri, Amar Majmundar, Brian Rabinovitz, Orlando Rodriguez and Charles Whitehead for defendants. 2023 NCBC 15