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NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY File No. 15-CvS-9995
Intersal, Inc.,
Plaintiff,
v.
Susan Kluttz, Secretary, North Carolina
Department of Cultural Resources
(NCDCR), North Carolina Department ofCultural Resources (NCDCR), and State of
North Carolina,
Defendants.
MOTION FOR LEAVE TO FILE FIRST
AMENDED COMPLAINT
Plaintiff, by and through the undersigned counsel, moves the Court, pursuant to Rule 15 of
the North Carolina Rules of Civil Procedure, for leave to file its First Amended Complaint. In
support hereof, Plaintiff shows the Court the following:
1. Plaintiff filed this action on July 27, 2015.
2.
Defendants were properly served with the Summons and Complaint.
3. Defendants transferred this action to Business Court on September 4, 2015.
4. Subsequent to the filing of this action, the North Carolina General Assembly
enacted, Session Law 2015-218 on August 11, 2015, the same being signed by the Governor on
August 18, 2015.
5. SECTION 4.(a) of Session Law 2015-218 attempts to undermine Plaintiffs claims
for relief, creating serious constitutional issues.
6. Defendants filed their Answer on October 7, 2015, raising allegedly public policy
issues in part precipitated by the enactment of SECTION 4.(a) of Session Law 2015-218.
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7. The Joint Case Management Report was submitted to the Court on October 26,
2015.
8. Rule 15 provides that leave [to amend a complaint] shall be freely given when
justice so requires.
9. Plaintiff should be granted leave to amend as there is no apparent reason to deny
leave to amend and no prejudice that can be demonstrated that would result from grant of such
leave.Madry v. Madry, 106 N.C.App. 34, 415 S.E.2d 74 (1992).
10. It is well established that denying leave to amend is limited to the following
justifications: (1) undue delay; (2) bad faith or dilatory tactics; (3) undue prejudice; (4) futility of
amendment; and (5) repeated failure to cure defects by previous amendments. Isenhour v.
Universal Underwriters Ins. Co., 345 N.C. 151, 478 S.E.2d 197 (1996) (motion for leave to amend
denied after more than five years from filing of the original complaint); Smith v. McRary, 306 N.C.
664, 295 S.E.2d 444 (1982) (no error in denying motion to amend when facts sought to be added
were irrelevant to the cause and denial created no prejudice); United Leasing Corp. v. Miller, 60
N.C. App. 40, 298 S.E. 2d 409 (1982) (denying plaintiffs right to amend to add a new claim for
relief on the date of defendants motion to dismiss after completed discovery when trial was only
one month away).
11. None of the aforestated bases for denial exists.
12. The amendment is contemplated in the Joint Case Management Report
13. Amendment is necessary to add a necessary party Defendant and add additional
necessary claims for relief.
14. The amendment will have no effect on the timely disposition of this matter.
15. There is no prejudice to the Defendants if Plaintiffs Motion is granted.
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16. Attached hereto as Exhibit A, is the proposed First Amended Complaint for
Plaintiff.
WHEREFORE, the Plaintiff respectfully requests that the Court grant the Plaintiff Leave
to file its First Amended Complaint as set forth on Exhibit A, pursuant to Rule 15 of the North
Carolina Rules of Civil Procedure.
This the 2ndday of November, 2015.
/s/______________________________
David H. Harris, Jr.State Bar No. 9841
Linck Harris Law Group, PLLC
2530 Meridian Parkway, Suite 300Durham, North Carolina 27713
919-806-4220
866-274-0756 (Fax)[email protected]
Counsel for Plaintiff
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EXHIBIT 1
NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISIONWAKE COUNTY File No. 15-CvS-9995
Intersal, Inc.,
Plaintiff,
v.
Susan Kluttz, Secretary, North CarolinaDepartment of Cultural Resources, North
Carolina Department of Cultural Resources,State of North Carolina, and Friends ofQueen Annes Revenge,
Defendants.
FIRST AMENDED COMPLAINT AND
MOTION FOR RULE 65 RELIEF
JURY TRIAL DEMANDED
AMEND
INTRODUCTION
1. This is an action for breach of contract, infringement of intellectual property rights
and civil conspiracy, as well as constitutional claims precipitated by Legislative action taken and
arguments already raised by Defendants. Intersal is seeking declaratory and injunctive relief and
damages. All Exhibits to this Complaint are incorporated herein by reference as if fully set out.
JURISDICTION AND VENUE
2. The Court has jurisdiction over the subject matter of this action pursuant to, inter
alia, N.C. Gen. Stat. 7A-240, 7A-243, 7A-245 and 7A-248.
3. The Court has jurisdiction over the persons of Defendants pursuant to one or more
provisions of N.C. Gen. Stat. 1-75.4.
4. Venue lies in the Court pursuant to N.C. Gen. Stat. 1-82 and 7A-45.4(b).
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PARTIES
PLAINTIFF
5. Plaintiff Intersal, Inc. (Intersal) is a corporation duly incorporated in and validly
existing pursuant to the laws of the State of Florida and is duly registered in North Carolina.
STATE DEFENDANTS
6. Defendant Susan Kluttz is Secretary of the North Carolina Department of Natural
and Cultural Resources, and is being sued in her official capacity.
7. Defendant North Carolina Department of Natural and Cultural Resources, formerly
North Carolina Department of Cultural Resources,
1
hereinafter referred to as DNCR or DCR
or Department, is an Executive Agency of the State of North Carolina pursuant to Chapter 143B,
Article 1, of the North Carolina General Statutes.
8.
Defendant State of North Carolina (State) is a State of the United States of
America and, as such, is subject to the Constitution of the United States and the Constitution of
North Carolina. References to the State, as the context requires, include actions by the North
Carolina General Assembly and the Governor.
9. Susan Kluttz, DNCR and the State of North Carolina, shall hereinafter be
collectively referred to as the State Defendants.
NON-STATE DEFENDANT
10. Defendant Friends of Queen Annes Revenge (FoQAR) is a nonprofit
corporation duly organized and existing pursuant to the laws of the State of North Carolina.
1Pursuant Session Law 2015-241, SECTION 14.30.(a), ratified and approved on September 18, 2015, the NorthCarolina Department of Cultural Resources was renamed the North Carolina Department of Natural and CulturalResources.
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11. All references to each Defendant or Defendants includes their respective officials,
officers, employees, agents, attorneys and contractors pursuant to the doctrine of Respondeat
Superior.
NON-PARTIES
12. Nautilus Productions, LLC (Nautilus) is a limited liability company duly
organized and existing pursuant to the laws of the State of North Carolina. Rick Allen is the Owner
of Nautilus.
FACTUAL ALLEGATIONS
13.
Intersal is a successful and well-respected marine research and recovery
corporation.
14. On November 21, 1996, operating under a valid search permit (96BUI585) issued
to it by DNCR, Intersal discovered what is believed to be Pirate Blackbeards Flagship, Queen
Annes Revenge(QAR), near Beaufort Inlet, North Carolina, just over a mile off Bogue Banks.
The identity of the site was confirmed by the number and size of the cannon and anchors exposed
on the sand bottom, and by examination and dating of the various artifacts recovered.
15. Intersals discovery of QARwas based on historical research provided by Intersals
then-president, Philip Masters, as well as trade secret survey data and other information gathered
and developed by Intersal.
16. Rather than immediately securing its rightful claim to three-quarters of any QAR
treasure found as specified in Intersals QARsearch permit, or file an In Remaction in federal
court in Admiralty, Intersal, being more interested in exclusive possession QARProject2media
and replica rights and continued renewal of theEl Salvadorsearch permit (DCR BUI584), Intersal
2 The term "Project" or QAR Project or project refers all survey, documentation, recovery, preservation,conservation, interpretation and exhibition activities related to any portion of the shipwreck of QARor its artifacts.
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negotiated with the State Defendants, and, on September 1, 1998, twenty (20) months after the
initial discovery of QAR, executed an Agreement with the State Defendants (hereinafter referred
to as the 1998 Agreement). Exhibit 1, pp. 11-23.
17. The 1998 Agreement, inter alia, granted Intersal the commercial rights to:
A. Partner in all aspects of the QARProject, including oversight and exhibition
activities;
B. Produce high quality exact or miniature replicas of any Blackbeard artifacts
of Intersals choosing (each of these replicas must be numbered as part of a limited edition);
and
C. Exclusive right to all commercial narrative of the Project, including all
operational and exhibition activities; and right to produce, co-produce or commission a
documentary film (or series of films) detailing the story of the research, search for,
discovery, and salvage of QAR.
18. Additionally, pursuant to the 1998 Agreement, Intersal agreed to forego entitlement
to its share of any coins and precious metals recovered from the QARsite so that all QARartifacts
remain as one intact collection, and to permit DNCR to determine ultimate disposition of the
artifacts.
19. Also, in the 1998 Agreement, DNCR stated its belief that Intersals efforts
connected to QAR and El Salvador are of benefit to the historical heritage of the State, and
recognized Intersals efforts and participation in the QAR Project as sufficient to satisfy any
performance requirements associated with annual renewal of IntersalsEl Salvadorsearch permit
(DCR BUI584), and for the life of this agreement, renewal of said permits cannot be denied
without just cause. 1998 Agreement, 33.
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20. Further, the 1998 Agreement provided in pertinent part that:
Intersal shall have the exclusive right to make and market all commercialnarrative (written, film, CD Rom, and/or video) accounts of Project relatedactivities undertaken by the Parties.All Parties agree to cooperate in the making
of a non commercial educational video and/or film documentary, or series of suchdocumentaries, as long as there is no broadcast originating outside of NorthCarolina, and there is no distribution or dissemination for sale of the saideducational documentary without Intersals written permission. Intersal shallhave the exclusive rights to make (or have made) molds or otherwise reproduce (orhave reproduced) any QARartifacts of its choosing for the purpose of marketingexact or miniature replicas.
21. In 2004, the QAR became a federally protected site when it was listed on the
National Register of Historic Places, Federal Site Number 31CR314.
22.
The 1998 Agreement was renewed pursuant to Paragraph 36 of the 1998
Agreement, exercised in writing to DNCR by QARProject 1998 Agreement partners, via letters
dated 10/28/12 and 12/4/12, respectively, and was amended at least once (Exhibit 1, pp. 24-25).
23. For more than a decade, Nautilus and Intersal have maintained a contractual
relationship in which Nautilus acts as Intersals QAR Video Designee, for both the 1998
Agreement and the QARSettlement Agreement. Nautilus performs this service on a volunteer
basis, and receives no remuneration from Intersal. Nautilus Productions owns all the digital media
and the copyright to the footage it shoots as Intersals QARVideo Designee. Intersal receives 25%
of gross proceeds from Nautilus licensing of QAR footage gathered while serving as Intersals
QARVideo Designee. By definition, Nautilus is an independent contractor, not a subsidiary or
joint partner with Intersal in the QARProject.
24.
DNCR violated the 1998 Agreement in a number of respects, including, without
limitation:
A. Failure to recognize the validly executed 1998 Agreement contract renewal
option, 1998 Agreement 36;
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B. Violation of 1998 Agreement conflict of interest provisions, by DNCR
employees with specific responsibility for oversight of QAR Project and Intersals El
Salvador search permit (DCR BUI584), by serving on the FoQAR board of directors,
including the FoQAR Treasurer, whose spouse received ten thousand dollars ($10,000)
from FoQAR as part of a contract with an independent media company, which was
executed by the FoQAR board (1998 Agreement 23);
C. Undertaking a pattern of obstruction, delay, and failure to follow established
procedure, by the same DNCR employees with specific oversight responsibility referenced
in subparagraph B above, concerning permit renewal process for Intersals El Salvador
search permit (DCR BUI584), which renewal was referenced in and affected by provisions
of the 1998 Agreement, 33; and
D.
Violation of Intersals QAR1998 Agreement exclusive media rights, via
FoQAR contract with an independent media company as referenced in subparagraph B
above, representing a clear tortious interference of contractual relations by FoQAR, and
directly conflicting with the 1998 Agreement exclusive media rights and/or provisions for
dissemination of educational documentaries, 1998 Agreement 16 and 17, respectively.
25.
On July 26, 2013, Intersal filed Petition for a Contested Case, with the North
Carolina Office of Administrative Hearings (OAH), Intersal v. N.C. Dept of Cultural
Resources, 13DCR15732, seeking a remedy to the State Defendants violations of the 1998
Agreement and violations of Intersals contractual and intellectual property rights.
26. The Department of Justice (DOJ) represented DNCR in this matter.
27. OAH ordered mediation in the matter. DOJ represented DNCR during negotiations.
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28. As a result of mediation, a new agreement was executed on October 15, 2013
among Intersal and DNCR, as well as Rick Allen and Nautilus (collectively, Nautilus),3relating,
inter alia, to media rights arising out of the discovery of QAR (QARSettlement Agreement).
Exhibit 1, pp. 1-10.4
29. The QARSettlement Agreement lacks of a savings clause.
30. In addition, 1 of the QAR Settlement Agreement states, This Agreement
supersedes the 1998 Agreement, attached as Attachment A, and all prior agreements between
DCR, Intersal, and Nautilus regarding the QARProject.
31.
However, the QARSettlement Agreement make does not repeat provisions related
to title to QAR, such as 14 of the 1998 Agreement, which states: Subject to their rights under
this Agreement, Intersal and MRI hereby assign to the Department, and the Department hereby
accepts, on behalf of the People of North Carolina, the interests of Intersal and MRI in the title and
ownership of QARand its artifacts.
32. The QARSettlement Agreement provides in pertinent part:
16. Media and Access Passes.
a. Procedure.
1) DCR agrees to establish and maintain access to a website forthe issuance of Media and Access Passes to QAR-Project related artifactsand activities.
2) DCR shall manage the issuance of Media and Access Passesafter receiving access requests from third parties via the website.
3) The website shall be the primary means of access forrequests, and shall include, at a minimum:
3Rick Allen and Nautilus was brought into the negotiations at the request of DOJ.
4One of the terms of the QARSettlement Agreement was the voluntary dismissal of Intersals contested caseIntersalv. N.C. Dept of Cultural Resources, 13DCR15732.
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(a) An Intersal terms of use agreement, to beelectronically submitted;
(b) The QARmedia fact sheet; and
(c) Links to DCR, Intersal, and Nautilus Productionswebsites.
4) Upon electronic submission of requests and terms of use, ifapplicable, electronic notice shall be sent to DCR and Intersal or its designeeshowing acceptance or nonacceptance of the terms of use.
5) Intersal shall bear the sole responsibility for managing andenforcing its terms of use.
6) For requests for access that are not received through the
website, DCR shall provide the requestor with substantially the sameinformation contained on the website.
b. Non-commercial Media.
1) All non-commercial digital media, regardless of producingentity, shall bear a time code stamp, and watermark (or bug) of Nautilusand/or DCR, as well as a link to DCR, Intersal, and Nautilus websites, to beclearly and visibly displayed at the bottom of any web page on which thedigital media is being displayed.
2) DCR agrees to display non-commercial digital media onlyon DCRs website.
. . .
32. Effect of Breach of Agreement. In the event DCR, Intersal, or Nautilusbreaches this Agreement, DCR, Intersal, or Nautilus may avail themselves of allremedies provided by law or equity.
33. Despite the new QAR Settlement Agreement and prior agreements, the State
Defendants continued and continues to violate the QAR Settlement Agreement and Intersals
intellectual property rights. A summary of significant violations include:
A. Displaying over two thousand (2,000) QARdigital media images (including
thirty (30) images taken and improperly copyright claimed by Special Deputy Attorney
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General Karen Blum, the DOJ counsel who represented DNCR during mediation) and over
two hundred (200) minutes of QARdigital media video on websites other than DNCRs
own website, without watermark and/or without time code stamp, or website links, in
violation of QARSettlement Agreement, 16.b.2 and 16.b.1, respectively;
B. Undertaking a pattern of obstruction, delay, and failure to follow established
procedure concerning permit renewal process and special conditions for Intersals El
Salvador search permit (DCR BUI584) (by the same state employees mentioned in
subparagraphs 24 B and C above), which process is specifically referenced in and affected
by provisions of the QARSettlement Agreement, 3;
C. Failing to implement specific mandates of the QARSettlement Agreement,
including changes to QARProject media policy ( 16.a) and the QARProject Business
panel ( 19, 6,8);
D. Upon information and belief, failing to properly inform QARSettlement
Agreement partners, contractors and members of the press of QARProject activities and
opportunities covered under the collaborative commercial narrative opportunity and/or
media procedure language of the QARSettlement Agreement, 15, 16;
E.
Failing to return to Intersals QAR Project Video Designee Nautilus all
Nautilus-produced video in their possession as required by the QARSettlement Agreement,
.21;
F. Setting arbitrary, discriminatory and capricious standards and requirements
for, and restrictions on the participation of Intersals QARProject Video Designee Nautilus
in 2014 and 2015 QARrecovery operations, which were not required of or imposed on all
other non-DNCR employees, volunteers, etc.;
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G. Interference with Intersals QARSettlement Agreement collaborative media
rights, by DNCR allowing FoQAR filming of QARrecovery operations via independent
media company Zion Consulting Group on September 14, 2015 (without completing
existing QAR commercial narrative request form or giving Nautilus its right of first
refusal, QARSettlement Agreement, 20), footage from which was posted to Facebook
by FoQAR on October 28, 2015 without time code stamp, watermark or website links,
despite FoQAR board members being aware of the provisions of the QAR Settlement
Agreement, which actions represent clear tortious interference with contractual relations
by FoQAR, and directly conflict with Intersals QARSettlement Agreement collaborative
media rights and/or provisions for dissemination of QARdigital media for commercial use
documentaries, QARSettlement Agreement 15, 16.b.2 and 16.b.1, respectively;
H.
Continued failure by DNCR to implement the QARSettlement Agreement
media policy, via DNCR allowing FoQAR to bring Raeford Brown and crew, from the talk
radio show Live and Local with Raeford and Friends) to dive the QARshipwreck shoot
footage aboard the 2015 QARrecovery vessel on September 9, 2015, upon information and
belief, without disseminating the Intersal terms of service document or advising said Press
representatives of changes to the QAR media policy found in the QAR Settlement
Agreement ( 16); and
I. Committing numerous additional violations of the QAR Settlement
Agreement before and after receipt of Intersals Demand Letter dated September 23, 2014,
which when added to the major violations listed above and herein, represent a continued
pattern of egregious, retaliatory and discriminatory agency action against Intersal, and a
continued attempt to deny Intersal rightful access toQAR Project revenue streams and
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commercial narrative opportunities, including a percentage of planned admission fees for
public viewing of QARartifacts and ancillary proceeds from related activities, in violation
of QARSettlement Agreement, 15.
34. On March 2, 2015, Intersal filed a second Petition for a Contested Case, with the
North Carolina Office of Administrative Hearings (OAH), Intersal v. N.C. Dept of Cultural
Resources, 15DCR 016102, seeking a remedy to the State Defendants violations of the QAR
Settlement Agreement and violations of Intersals contractual and intellectual property rights.
35. After DOJ moved to dismiss, alleging lack of OAH subject matter jurisdiction to
hear contractual claims, an allegation not raised in the earlier OAH Petition, making clear that DOJ
was more interested in making case law than resolving the issue, Intersal dismissed the Petition
without prejudice on May 26, 2015 and proceeded to prepare to file this present action.
ILLEGALITY BY THE NORTH CAROLINA GENERAL ASSEMBLY
36. Subsequent to the initial filing of this action, the North Carolina General Assembly,
upon information and belief, at the behest of Defendants, enacted Session Law 2015-218 on
August 11, 2015, the same being signed by the Governor on August 18, 2015.
37. SECTION 4.(a) of Session Law 2015-218, inter alia, amends N.C. Gen. Stat. 121-
25 by adding a subsection (b) which reads as follows:
(b) All photographs, video recordings, or other documentary materials of a derelictvessel or shipwreck or its contents, relics, artifacts, or historic materials in thecustody of any agency of North Carolina government or its subdivisions shall be apublic record pursuant to G.S. 132-1. There shall be no limitation on the use of orno requirement to alter any such photograph, video recordings, or otherdocumentary material, and any such provision in any agreement, permit, or licenseshall be void and unenforceable as a matter of public policy.
Session Law 2015-218, SECTION 4.(a).
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38. This provision was added on July 23, 2015, after Intersal dismissed its second OAH
Petition, and after Intersal made clear that it was planning to take this matter to Superior Court or
federal court. It is clear that the State Defendants, by this amendment, intended to deprive Intersal
of any legal remedy for breaching of two contracts.
FURTHER ACTS OF RETALIATION
39. DNCR, through its Office of State Archaeology (OSA) violated the QAR
Settlement Agreement, 3, by adding to IntersalsEl Salvadorsearch permit renewal (14BUI584)
new language that directly contradicts and subverts existing permit language retained per the QAR
Settlement Agreement, 3.
40. The existing permit language retained per the QARSettlement Agreement (which
language originated in the 1998 Agreement) insures that Intersals continued efforts connected to
the QARProject remain sufficient to satisfy any performance requirements associated with renewal
of theEl Salvadorsearch permit (BUI584). Intersal has been a contributing QARProject partner
without pause since 1998, and DNCR has issued BUI584 permit renewals to Intersal based on this
existing permit language since 1998.
41. In 2013 and 2014, OSA failed to follow proper and established procedure connected
to BUI584 renewal, by failing to acknowledge on time receipt of or perform oversight of BUI584
report drafts, followed by unwarranted delays in granting renewal. These actions are part of the
continuing pattern of DNCR contract violations and retaliatory behavior towards Intersal described
above and herein.
42. After Intersals September 2014 Demand Letter was dispatched to DNCR, in
November 2014, OSA sent Intersal a renewal of theEl Salvadorpermit (14BUI584) containing
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specific language that immediately follows, directly contradicts and subverts the letter and spirit
of the existing permit language retained as a requirement of the QARSettlement Agreement.
43. DNCR rejected Intersals request that the offending language be removed from the
renewal document.
44. These actions are part of the continuing pattern of DNCR contract violations and
retaliatory behavior towards Intersal described above and herein.
45. On October 20, 2015, OSA sent a letter to Intersal, seeking to suddenly impose
upon Intersal requirements and standards that DNCR does not now, nor has ever followed or
imposed upon itself.
46. This letter is part of the continuing pattern of DNCR retaliatory behavior towards
Intersal described above and herein,
47.
In further acts of retaliation, Intersal has not been formally approved of the pending
commercial salvage operation.
48. Intersal has been informed and discussed the operation with DNCR, but has not
received an acknowledgement as required by the permit.
DAMAGES
49.
All actions taken by Defendants were taken with the clear intent to deprive Intersal
is its of its contractual rights (including media rights), commercial opportunities, income, revenue
streams, commercial narrative opportunities (including a percentage of planned admission fees for
public viewing of QARartifacts), and ancillary proceeds from related activities, and to remove
Intersal from the QARProject, in favor of third parties, including, without limitation, FoQAR.
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50. Intersal, upon information and belief, has been damaged in the amount of at least
EIGHT MILLION SIX HUNDRED THIRTEEN THOUSAND SEVEN HUNDRED FIFTY
DOLLARS ($8,613,750).
WAIVER OF SOVEREIGN IMMUNITY
51. Defendants Kluttz and DNCR are authorized officer and agency of the State of
North Carolina.
52. The 1998 Agreement and the QAR Settlement Agreement are purportedly valid
contracts between Intersal and DNCR, authorized by the duly authorized officer and agency of the
State of North Carolina.
53. [W]henever the State of North Carolina, through its authorized officers and
agencies, enters into a valid contract, the State implicitly consents to be sued for damages on the
contract in the event it breaches the contract. Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412,
423-24 (1976).
54. Sovereign immunity is also waived with respect to the constitutional and federal
law violations noted herein.
FIRST CLAIM FOR RELIEF AS TO THE STATE DEFENDANTSVIOLATION OF
THE CONTRACTS CLAUSEArticle I, Section 10 of the United States Constitution
55. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
56. Article I, Section 10 of the United States Constitution provides: No state shall . . .
pass any . . . Law impairing the Obligation of Contracts . . . .
57. The 1998 Agreement and the QARSettlement Agreement each create an obligation
of contracts by the State towards Intersal.
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58. The enactment of Session Law 2015-218, SECTION 4.(a) by the General Assembly
impairs the States obligation of contracts by attempting to render ineffective those sections of the
1998 Agreement and the QARSettlement Agreement relating to Intersals contractual rights.
59. The States action of attempting to render ineffective those sections of the 1998
Agreement and the QAR Settlement Agreement relating to Intersals contractual rights is an
impairment that was not reasonable or necessary to serve any important public purpose.
60. The 1998 Agreement and the QARSettlement Agreement each create enforceable
contract rights in Intersal that the State seeks to unconstitutionally abrogate by the enactment of
Session Law 2015-218, SECTION 4.(a).
61. The States action of attempting to render ineffective those sections of the 1998
Agreement and the QARSettlement Agreement relating to Intersals contractual rights, by the
enactment of Session Law 2015-218, SECTION 4.(a), is unconstitutional as a violation of the
Contracts Clause of the United States Constitution.
SECOND CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS VIOLATION
OF THE BILL OF ATTAINDER PROHIBITION
Article I, Section 10 of the United States Constitution
62. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
63.
Article I, Section 10 of the United States Constitution provides: No State shall . .
. pass any Bill of Attainder . . . .
64. Article I, Section 10 of the United States Constitution prohibits the State from
enacting bills of attainder, defined as bills of pains and penalties which are legislative acts inflicting
punishment on a person without a trial, and serves as a general safeguard against legislative
exercise of the judicial function, or more simply trial by legislature.
65. The bill of attainder prohibition also protects private corporations, such as Intersal.
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66. Session Law 2015-218, SECTION 4.(a) is a Bill of Attainder in that it singles out
Intersal for punishment without a trial, by attempting to abrogate Intersals contractual rights
circumventing the judiciary.
67. As such Session Law 2015-218, SECTION 4.(a) is unconstitutional, inter alia, to
the extent it attempts to abrogate Intersals contractual rights.
THIRD CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS TAKING
WITHOUT JUST COMPENSATION
Amendments V and XIV of the United States Constitution
Article I, Section 19 of the Constitution of North Carolina
68. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
69.
Amendment V of the Constitution of the United States provides in pertinent part
nor shall private property be taken for public use, without just compensation.
70. Amendment V of the Constitution of the United States is made applicable to the
State by Amendment XIV of the Constitution.
71. Article I, Section 19 of the Constitution of North Carolina provides in pertinent part
No person shall be . . . in any manner deprived of his life, liberty, or property, but by the law of
the land.
72. The execution of the 1998 Agreement and the QARSettlement Agreement, gives
contract rights, property rights and liberty rights to Intersal.
73. The Takings Clause of the Fifth Amendment of the United States Constitution,
incorporated to the State by the Fourteenth Amendment of the United States Constitution, and the
Law of the Land Clause of the North Carolina Constitution require that Intersals property,
contractual and liberty rights created by the 1998 Agreement and the QARSettlement Agreement
cannot be taken without a public purpose and without just compensation.
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74. Session Law 2015-218, SECTION 4.(a), on its face, violates the Federal and State
Constitutions, as it fails to state a public purpose for attempting to render ineffective those sections
of the 1998 Agreement and the QARSettlement Agreement relating to Intersals contractual rights.
75. Session Law 2015-218, SECTION 4.(a) violates the Federal and State Constitutions
in that it fails to specify the just compensation to be paid to Intersal for the loss of those sections
of the 1998 Agreement and the QARSettlement Agreement relating to Intersals contractual rights
or specify any procedure for the determination of just compensation. Session Law 2015-218,
SECTION 4.(a) bypasses all statutory mechanisms and simply abrogates those sections of the 1998
Agreement and the QARSettlement Agreement relating to Intersals contractual rights, thereby
taking property without just compensation.
76. Session Law 2015-218, SECTION 4.(a) fails to state a public purpose for the
taking.
77. There is no public purpose for the taking required by Session Law 2015-218,
SECTION 4.(a).
78.
Session Law 2015-218, SECTION 4.(a) is unconstitutional as a violation of the
Takings Clause of the Fifth Amendment of the United States Constitution, incorporated to the
State by the Fourteenth Amendment of the United States Constitution, and the Law of the Land
Clause of the North Carolina Constitution, to the extent that it abrogates Intersals contractual
rights created by the 1998 Agreement and the QAR Settlement Agreement.
FOURTH CLAIM FOR RELIEF AS TO STATE DEFENDANTS DENIAL OF DUE
PROCESS
Amendments XIV of the United States Constitution
Article I, Section 19 of the Constitution of North Carolina
79. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
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80. Amendment XIV of the Constitution of the United States provides in pertinent part
nor shall any State deprive any person of life, liberty, or property, without due process of law . .
. .
81. Article I, Section 19 of the Constitution of North Carolina provides in pertinent part
No person shall be . . . in any manner deprived of his life, liberty, or property, but by the law of
the land.
82. Intersal was never given notice of Session Law 2015-218, SECTION 4.(a) relating
to Intersals contractual rights and was never given an opportunity to be heard
83.
Session Law 2015-218, SECTION 4.(a) provides no adversary proceeding to
determine judicially, with right of appeal, whether those sections of the 1998 Agreement and the
QARSettlement Agreement relating to Intersals contractual rights and should be declared void.
84.
No public hearings were held with respect to Session Law 2015-218, SECTION
4.(a), to provide Intersal with any opportunity to debate whether those sections of the 1998
Agreement and the QARSettlement Agreement relating to Intersals contractual rights should be
voided, for what reasons, and/or any just compensation to Intersal for its loss that it bargained for
by giving up other rights relating to the QARand the loss of its investment in time, energy and
funds, and the future loss associated with the lost contractual rights.
85. Session Law 2015-218, SECTION 4.(a) is unconstitutional on its face as a violation
of due process as encapsulated in the Fourteenth Amendment of the United States Constitution
and the Law of the Land Clause of the North Carolina Constitution, to the extent that it abrogates
Intersals contractual rights created by the 1998 Agreement and the QAR Settlement Agreement.
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FIFTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS VIOLATION OF
SEPARATION OF POWERS
Article I, Section 6 of the North Carolina Constitution
Article IV of the North Carolina Constitution
86.
Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
87. Article I, Section 6 of the North Carolina Constitution states: The legislative,
executive, and supreme judicial powers of the State government shall be forever separate and
distinct from each other.
88. Article IV of the North Carolina Constitution clearly states:
a. The judicial power of the State shall . . . be vested . . . in a General Court of
Justice. The General Assembly shall have no power to deprive the judicialdepartment of any power or jurisdiction that rightfully pertains to it as a co-ordinate department of the government . . . .
89. To any extent that the State alleges any justification for by attempting to abrogate
those sections of the 1998 Agreement and the QARSettlement Agreement relating to Intersals
contractual rights, the General Assembly violated the State Constitution by acting as its own
judiciary and attempting to deprive the courts of the opportunity to resolve the dispute.
90.
Session Law 2015-218, SECTION 4.(a) is unconstitutional as a violation of the
separation of powers clauses of the North Carolina Constitution, to the extent that it abrogates
Intersals contractual rights created by the 1998 Agreement and the QAR Settlement Agreement.
SIXTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS BREACH OF
CONTRACT
91. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
92.
The 1998 Agreement and the QAR Settlement Agreement constitutes valid
contracts between Intersal and the State Defendants, an authorized officer and agency of the State
of North Carolina.
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93. The State Defendants actions described above constitute several breaches of the
terms of said valid contracts.
94. Intersal has been monetarily damaged by the State Defendants breach of contract.
95. Intersal is entitled to monetary damages from the State Defendants in an amount
greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
SEVENTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTSUNJUST
ENRICHMENT AND QUANTUM MERUIT
96. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
97. In the alternative, to the extent that all or part of the 1998 Agreement and/or the
QARSettlement Agreement are declared unenforceable, to prevent unjust enrichment, Intersal is
entitled to recover in quantum meruiton an implied contract theory for the reasonable value of
services rendered to and accepted by Defendants.
98. Therefore, Intersal is entitled to monetary payment from the State in an amount
greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
EIGHTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTSFRAUD
99. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
100. State Defendants actions, as described above, constitute fraud in that: (1) the State
made several material misrepresentations of a past or existing facts; (2) the misrepresentations
were be definite and specific; (3) the misrepresentations were made with knowledge of their falsity
or in culpable ignorance of their truth; (4) the misrepresentations were made with intention that
they should be acted upon; (5) Intersal, as the recipient of the misrepresentations, reasonably relied
upon them and acted upon them; and (6) the misrepresentations resulted in damage to Intersal.
101. Specifically, the State Defendants TWICE negotiated agreements with Intersal, the
1998 Agreement and the QARSettlement Agreement, providing contractual rights to Intersal. Now
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the State Defendants are opining that said provisions are void as against public policy. While
Session Laws 2015-218, SECTION 4.(a) has only been recently enacted, the State Defendants are
also opining that Chapter 132 of the North Carolina General Statutes prohibit enforcement of
Intersals contractual rights created by the aforesaid agreements.
102. Assuming, arguendo, that the State Defendants position is correct, State
Defendants knew or should have known this fact, but engaged in allegedly arms length two
agreements with Intersal.
103. The State Defendants actions meets the elements of fraud.
104.
Intersal is entitled to monetary damages from the State Defendants in an amount
greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
NINTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTSBAD FAITH
105.
Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
106. Every contract or agreement, including the 1998 Agreement and/or the QAR
Settlement Agreement, implies good faith and fair dealing between the parties to it, and a duty of
cooperation on the part of both parties.
107. The facts shown above, and as will be shown through discovery and trial, show that
the State Defendants breached their duty of good faith and fair dealing.
108. Intersal was damaged by the State Defendants breach.
109. Intersal is entitled to monetary damages from the State Defendants in an amount
greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
TENTH CLAIM FOR RELIEF AS TO THE STATE DEFENDANTS UNCLEAN
HANDS
110. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
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111. The State has acted inequitably and with unclean hands in that it committed various
acts inconsistent with or in breach of the spirit and letter of the 1998 Agreement and the QAR
Settlement Agreement, erected obstacles to the QARProject implementation and documentation,
interfered with Intersals rights and/or obligations to be shown through discovery and at trial.
112. The State Defendants unclean hands bars any equitable claim or defense the State
Defendants may raise.
ELEVENTH CLAIM FOR RELIEF AS TO STATE DEFENDANTS 42 U.S.C. 1983
113. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
114.
The collective and separate actions of the State Defendants as noted above,
constitute violations of 42 U.S.C. 1983.
115. Intersal is entitled to damages from the State Defendants, jointly and severally, in
an amount greater than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
TWELFTH CLAIM FOR RELIEF AS TO FoQARTORTIOUS INTERFERENCE
WITH CONTRACTUAL RELATIONS
116. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
117. The actions of FoQAR, described above, constitute tortious interference with
contractual relations.
118. As a direct and proximate result of FoQARs actions, Intersal was damaged,
including, but not limited to, pecuniary loss and inconvenience.
119. FoQAR is liable to Intersal in an amount greater than TWENTY-FIVE
THOUSAND DOLLARS ($25,000.00).
120. FoQARs actions were fraudulent, willful, wanton and malicious, and in total
disregard of the truth and the rights of Intersal.
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121. FoQAR should be required to respond in punitive damages on account of said
actions, to Intersal, in an amount greater than TWENTY-FIVE THOUSAND DOLLARS
($25,000.00).
THIRTEENTH CLAIM FOR RELIEF AS TO ALL DEFENDANTSCIVIL
CONSPIRACY
122.
Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
123. All Defendants have engaged in a conspiracy to undercut and diminish Intersals
contractual rights for monetary gain.
124. The wrongful acts complained of above were agreed upon by Defendants and
performed by the co-conspirators in furtherance of that conspiracy.
125. Intersal was injured as a result of that conspiracy.
126. The actions of Defendants described above constitute civil conspiracy.
127. As a direct and proximate result of Defendants actions, Intersal was damaged,
including, but not limited to, pecuniary loss and inconvenience.
128. Defendants are jointly and severally liable to Intersal in an amount greater than
TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
129. FoQARs actions were fraudulent, willful, wanton and malicious, and in total
disregard of the truth and the rights of Intersal.
130. FoQAR should be required to respond in punitive damages on account of said
actions, to Intersal, in an amount greater than TWENTY-FIVE THOUSAND DOLLARS
($25,000.00).
FOURTEENTH CLAIM FOR RELIEFDECLARATORY JUDGMENT
Article 26, Chapter 1, General Statutes of North Carolina
Rule 57 of the North Carolina Rules of Civil Procedure
131. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
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132. Intersal is entitled to Declaratory Judgment as follows:
A. Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a
violation of the Contract Clause of the United States Constitution to the extent that it
abrogates Intersals contractual rights created by the 1998 Agreement and the QAR
Settlement Agreement;
B. Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a Bill
of Attainder, to the extent that it abrogates Intersals contractual rights created by the 1998
Agreement and the QAR Settlement Agreement;
C.
Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a
violation of the Takings Clause of the Fifth Amendment of the United States Constitution,
incorporated to the State by the Fourteenth Amendment of the United States Constitution,
and the Law of the Land Clause of the North Carolina Constitution, to the extent that it
abrogates Intersals contractual rights created by the 1998 Agreement and the QAR
Settlement Agreement;
D.
Declare Session Law 2015-218, SECTION 4.(a) unconstitutional on its face
as a violation of due process as encapsulated in the Fourteenth Amendment of the United
States Constitution and the Law of the Land Clause of the North Carolina Constitution, to
the extent that it abrogates Intersals contractual rights created by the 1998 Agreement and
the QAR Settlement Agreement;
E. Declare Session Law 2015-218, SECTION 4.(a) unconstitutional as a
violation of the separation of powers clauses of the North Carolina Constitution, to the
extent that it abrogates Intersals contractual rights created by the 1998 Agreement and the
QAR Settlement Agreement;
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F. Declare Chapters 121 and 132 of the North Carolina General Statutes, to the
extent that said provisions abrogate Intersals contractual rights created by the 1998
Agreement and the QAR Settlement Agreement, unenforceable;
G. In the alternative, declare that the QARSettlement Agreement is void and
the provisions of the 1998 Agreement continue to be in effect;
H. In the alternative, declare that both the 1998 Agreement and the QAR
Settlement Agreement are void, and as such, based on Fla. Dept of State v. Treasure
Salvors, 458 U.S. 670, 102 S.Ct. 3304 (1982), title to the QAR is vested in Intersal;
I.
Declare the State Defendants actions constitute breach of contract by an
executive agency of the State and violates Intersals intellectual property rights;
J. Declare that the incorrect language in the El Salvador search permit
(15BUI584) must be removed; and
K. Make further declarations a warranted by the State Defendants actions as
shown above and as is just and proper.
FIFTEENTH CLAIM FOR RELIEFRULE 65 RELIEF
133. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
134.
Defendants continue to violate the 1998 Agreement and the QAR Settlement
Agreement.
135. Intersal has no adequate remedy at law; monetary damages are incapable of fully
compensating Intersal for the losses incurred from DNCRs continued violations of the QAR
Settlement Agreement.
136. Thus, in the absence of immediate action, imminent and irreparable harm will be
inflicted upon Intersal.
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137. For the foregoing reasons, Intersal requests that this Court enter a temporary
restraining order, preliminary injunction, and permanent injunction enjoining DNCR from further
violation of the QARSettlement Agreement and further recovery of artifacts from the QARsite.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff respectfully requests the Court to enter Judgment as follows:
1. Accept this Verified Complaint as an Affidavit;
2. Enter Declaratory Judgment as prayed for in the FourteenthClaim for Relief;
3. Enter a temporary restraining order, preliminary injunction, and permanent
injunction enjoining Defendants from further violation of the Intersals contractual rights, as
specified in the 1998 Agreement and the QAR Settlement Agreement and further recovery of
artifacts from the QARsite;
4.
Enter Judgment against Defendants, as prayed above, in an amount greater than
TWENTY-FIVE THOUSAND DOLLARS ($25,000), to be determined by the Jury, plus
prejudgment and post judgment interest.
5.
Enter an order directing Defendants to renew theEl Salvador permit without the
language that is in violation of the QAR Settlement Agreement.
6.
Award to Intersal its cost, expenses, and fees, including reasonable attorneys fees,
pursuant to applicable statutory and common law;
7. Direct a trial by jury on all issues so triable; and
8. Grant such other and further relief as the Court deems just and proper.
MOTION FOR RULE 65 RELIEF
1. Plaintiff restates and incorporates the foregoing paragraphs of this Complaint.
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2. Upon information and belief, Defendants continue to violate Intersals contractual
rights, as specified in the 1998 Agreement and the QARSettlement Agreement.
3. Intersal has no adequate remedy at law; monetary damages are incapable of fully
compensating Intersal for the losses incurred from Defendants continued violations of the QAR
Settlement Agreement.
4. Thus, in the absence of immediate action, imminent and irreparable harm will be
inflicted upon Intersal.
5. For the foregoing reasons, Intersal requests that this Court enter a temporary
restraining order, preliminary injunction, and permanent injunction enjoining Defendants from
further violation of Intersals contractual rights, as specified in the 1998 Agreement and the QAR
Settlement Agreement, and further recovery of artifacts from the QARsite.
This the ______ day of November 2015.
______________________________David H. Harris, Jr.Counsel for PlaintiffState Bar No. 9841Linck Harris Law Group, PLLC2530 Meridian Parkway, Suite 300Durham, North Carolina 27713919-806-4220866-274-0756 (Fax)[email protected]
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NORTH CAROLINA IN THE GENERAL COURT OF JUSTICESUPERIOR COURT DIVISION
WAKE COUNTY File No. 15-CvS-9995
Intersal, Inc.,
Plaintiff,
v.
Susan Kluttz, Secretary, North CarolinaDepartment of Cultural Resources, NorthCarolina Department of Cultural Resources,State of North Carolina, and Friends ofQueen Annes Revenge,
Defendants.
CORPORATE AFFIDAVIT
The undersigned, being duly sworn, states the following:
1. I am the Chairperson of the Board of Plaintiff Intersal, Inc., a corporation duly
incorporated in and validly existing pursuant to the laws of the State of Florida and duly registered
as a foreign corporation with the North Carolina Secretary of State.
2.
I am duly authorized to execute this Affidavit on behalf of Intersal, Inc.
3. I have read the foregoing First Amended Complaint and know the contents thereof.
4. The allegations set forth in the First Amended Complaint are true and of my own
knowledge, except for those allegations set forth upon information and belief, and as to those
allegations, I believe them to be true.
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Further affiant sayeth not.
______________________________John Masters
Signed and sworn to before me this day by John Masters.
Date: __________________
______________________________Notary Public
(Official Seal)
______________________________
Notary Publics Printed Name
My commission expires: ___________________
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Settlement Agreement
This Settlement Agreement, made this the 15 thday of October, 2013, by and between the North
Carolina Department of Cultural Resources (DCR), Intersal, Inc. (Intersal), and Rick Allen and NautilusProductions, LLC (collectively, Nautilus):
WHEREAS, Intersal, a private research firm, operating under a valid permit issued to it by DCR,discovered the site believed to be Queen Annes Revenge (QAR) on 21 November 1996. QAR waslocated near Beaufort Inlet, North Carolina, by Intersals director of operations, Michael E. Daniel, whoused historical research provided by Intersals president, Phil Masters. Daniel now heads up MaritimeResearch Institute (MRI), the non-profit corporation formed to work on the project in cooperation withState archaeologists and historians of the North Carolina Department of Cultural Resources, Office of
Archives and History; and
WHEREAS, DCR, MRI, and Intersal previously executed a Memorandum of Agreement on 1
September 1998 (1998 Agreement); and
WHEREAS, as a result of the 1998 Agreement, Intersal and Michael E. Daniel agreed to foregoentitlement to their share of any coins and precious metals recovered from the QAR site in order that all
QAR artifacts remain as one intact collection, and in order to permit DCR to determine ultimatedisposition of the artifacts;
WHEREAS, Nautilus has been filming underwater and other footage of the QAR project forapproximately fifteen (15) years as the projects videographer;
WHEREAS, various disputes and uncertainties have arisen between DCR, Intersal, and Nautilusregarding the terms of the 1998 Agreement and related issues; and
WHEREAS, Intersal and DCR currently are in administrative appeal litigation regarding the termsof the 1998 Agreement, and desire to fully settle such litigation and related issues; and
WHEREAS, DCR, Intersal, and Nautilus desire to resolve fully their differences and continue theirmutual efforts to promote the history of Blackbeard the Pirate, and continue the archaeological recoveryand conservation of his flagship, the Queen Annes Revenge(QAR).
NOW, THEREFORE, DCR, Intersal, and Nautilus contract, settle and agree as follows:
I. GENERAL
1. Prior Agreements. This Agreement supersedes the 1998 Agreement, attached as AttachmentA, and all prior agreements between DCR, Intersal, and Nautilus regarding the QAR project.
2. No Admission of Liability. DCR, Intersal, and Nautilus mutually agree that this Agreement isentered into for the purpose of compromising all disputed claims, grievances, or allegations, and is
not to be construed as an admission by DCR, Intersal, or Nautilus regarding the merit or lack ofmerit of DCRs, Intersals, or Nautiluss contentions, nor an admission of any wrongdoing by the
same.
II. EL SALVADORPERMIT
3. El SalvadorPermit. In consideration for Intersals significant contributions toward the discoveryof the QAR and continued cooperation and participation in the recovery, conservation, andpromotion of the QAR, DCR agrees to continue to issue to Intersal an exploration and recovery
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permit for the shipwreck El Salvador in the search area defined in the current permit dated 9August 2013. DCR agrees to continue to issue the permit through the year in which the QARarchaeology recovery phase is declared complete so long as the requirements contained in thepermit are fulfilled. Subject to the provisions of Article 3 of Chapter 121 of the North CarolinaGeneral Statutes, entitled, Salvage of Abandoned Shipwrecks and Other UnderwaterArchaeological Sites, and the North Carolina Administrative Code, DCR agrees to recognizeIntersals efforts and participation in the QAR project as sufficient to satisfy any performancerequirements associated with annual renewal of Intersals permit for the El Salvador. DCR expectsto complete recovery of the QAR shipwreck by the end of 2016. The Secretary of DCR shall havethe exclusive authority to determine when recovery of QAR is complete. The Secretary shall timelynotify Intersal in writing of DCRs determination that recovery is complete. If the recovery phase iscomplete prior to 2016, DCR agrees to renew the permit through at least the end of 2016.
III. EXACT AND MINIATURE REPLICAS AND COLLECTIBLES
4. Artifact Replicas. DCR and Intersal may make, or have made, molds or otherwise reproduce, orhave reproduced, replicas of QAR artifacts for educational, scientific, retail sale, or other
commercial purposes. All aspects of the conservation of artifacts, including whether or not to
conserve the artifact, shall be at the sole discretion of DCR.
5. Types of Replicas. DCR and Intersal may make two types of replicas:
a. Miniature or Exact Replicas. Miniature or exact replicas shall be museum or archival qualityand shall be produced on a limited edition basis, be individually numbered, or otherwiseuniquely identified to facilitate authentication.
b. Collectibles. Collectibles shall be true representations of artifacts. Collectibles do not have to
be miniatures or exact replications, and may be constructed of materials that do not rise tothe level of museum or archival quality, and may be mass produced without being
individually identifiable.
6.
Selection of Miniature or Exact Replicas to Produce. Up to ten (10) QAR artifacts may be inthe replication process at any given time. DCR and Intersal shall select one artifact each, takingalternate turns, until each has selected up to five (5) artifacts for possible replication. DCR andIntersal must present a separate business plan for the production, marketing, and sale of each of
its selected replicas. The Business Panel must review and approve the business plan. Once aprototype is made, the Business Panel must review and approve the prototype, and accompanying
packaging, marketing, or audio, visual, or literary materials (e.g., booklets, DVDs, etc.) forreplication quality and historical accuracy. The Business Panel will issue its decisions in writing andprovide the same to Intersal and DCR. Upon approval by the Business Panel, the entity seeking to
reproduce the artifact may proceed with production, marketing, sales, and distribution. If, two (2)years after the written approval of the prototype by the Business Panel, the replica has not beenoffered for sale or distribution, the artifact will be placed back into the available pool of artifacts to
replicate. The replication, sale, or distribution of replicas (as opposed to selection) need not be onalternating bases, but may be done according to DCRs and Intersals respective plans andschedules.
Intersal agrees that the sword hilt it currently plans to produce as a miniature or exact replica shall
be Intersals first selection and shall fall under the terms of thisAgreement.
7. Production of Subsequent Miniature or Exact Replicas. DCR and Intersal may, individuallyor collectively, produce more than one artifact replica at a time. When either DCR or Intersalcompletes a replica and has offered it for sale or distribution, it may begin producing another
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artifact according to the approval process in III.6. Once DCR or Intersal has offered an artifactfor sale and distribution, it may choose another artifact from the artifact pool so that it has up tofive (5) artifacts eligible for replication at any given time. If either DCR or Intersal decides torelinquish an artifact before the end of two (2) years, the artifact will be placed back into theavailable pool of artifacts to replicate. DCR and Intersal may enter into a written agreement as tothe further selection of artifacts after the first ten (10) have been selected.
Except by written agreement, neither Intersal nor DCR may select additional artifacts until theyhave produced, or the Business Panel has declined, all five (5) of its initially-selected artifacts.
8. Collectibles. Either DCR or Intersal may propose the reproduction, marketing, sales, anddistribution of collectible replicas as defined above. The reproduction, marketing, sales, and
distribution of collectible artifacts shall be approved in advance by DCR and Intersal, or, ifconsensus cannot be reached between them, by the Business Panel.
9. Replicas to be Used in Exhibits, Scientific Study, or Educational Tools. Understanding thatthere may be times when original artifacts cannot be used, DCR may make, or have made, moldsor otherwise reproduce, or have reproduced, any QAR artifacts of its choosing for use in museums
or traveling exhibits, as educational props in its exhibits, museums or laboratories, as scientifictools, or for scientific study. These replicas shall not be sold.
10. Costs. DCR and Intersal shall each be responsible for their own costs of making miniature orexact replicas, or collectibles produced by or for them.
11. Profits. DCR and Intersal agree to share the profits generated by the sale of miniature or exactreplicas and collectibles. The entity producing the replica shall receive 80% of the net income aftertaxes; the other entity shall receive the remaining 20%. Where DCR is the entity producing,
selling, and distributing the replica, DCR will account for its marketing and operations indetermining net income. Either DCR or Intersal may request from the other documentation
regarding marketing, distribution, or other costs.
12.
Miniature or Exact Replicas Sold at Auctions or Fundraisers. If DCR or Intersal sells aminiature or exact replica at auction or a fundraiser, the gross/net income shall be based on a fairmarket value and not on the price the replica was sold for at auction or a fundraiser.
13. Termination. After five (5) years, either DCR or Intersal may terminate, with or without cause,this Reproduction Agreement section upon ninety (90) days written notice.
IV. PROMOTION OPPORTUNITIES
14. Commercial Documentaries. Intersal, through Nautilus, has documented approximately fifteen(15) years of underwater and other activities related to the QAR project. For purposes of thisCommercial Documentaries section, Intersal represents to DCR that Nautilus Productions shallremain Intersals designee. Intersal shall have the exclusive right to produce a documentary filmabout the QAR project for licensing and sale. Intersal may partner with DCR if it chooses to do so.
If Intersal chooses to partner with DCR, DCR and Intersal shall negotiate an appropriate cost-sharing agreement, and will agree about the documentary script for historical accuracy, contentand story line. If DCR and Intersal do not partner to make a documentary, the Intersaldocumentary script shall be reviewed by DCR for historical accuracy prior to final release byIntersal or its agents.
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Intersal agrees to allow DCR to use its completed documentary, free of charge, in its museums andexhibits for educational purposes. DCR agrees to recognize Intersals participation in the making ofthe documentary.
Termination. Either DCR or Intersal may terminate this Commercial Documentaries section atany time after four (4) years have passed from the date the Secretary of DCR notifies Intersal in
writing of DCRs determination that recovery is complete. Notice of termination must be given inwriting six (6) months in advance.
15. Other Commercial Narrative. DCR and Intersal agree to collaborate in making othercommercial narrative such as, but not limited to, books and e-books, mini- and full-lengthdocumentaries, and video games. Any profit-sharing agreements shall be based on the amount of
work contributed by each entity. If DCR and Intersal cannot reach an agreement on the sharingand production of any such commercial ventures that they propose to undertake, DCR and Intersal
will refer the issues to a mutually selected, neutral arbitrator for binding arbitration, with arbitrationto be concluded within three (3) months of selection of the neutral arbitrator.
16. Media and Access Passes.
a. Procedure.
1) DCR agrees to establish and maintain access to a website for the issuance of Mediaand Access Passes to QAR-project related artifacts and activities.
2) DCR shall manage the issuance of Media and Access Passes after receiving accessrequests from third parties via the website.
3) The website shall be the primary means of access for requests, and shall include, at aminimum:
(a) An Intersal terms of use agreement, to be electronically submitted;
(b) The QAR media fact sheet; and
(c) Links to DCR, Intersal, and Nautilus Productions websites.
4)
Upon electronic submission of requests and terms of use, if applicable, electronic noticeshall be sent to DCR and Intersal or its designee showing acceptance or non-acceptance of the terms of use.
5) Intersal shall bear the sole responsibility for managing and enforcing its terms of use.
6) For requests for access that are not received through the website, DCR shall providethe requestor with substantially the same information contained on the website.
b. Non-commercial Media.
1) All non-commercial digital media, regardless of producing entity, shall bear a time codestamp, and watermark (or bug) of Nautilus and/or DCR, as well as a link to DCR,
Intersal, and Nautilus websites, to be clearly and visibly displayed at the bottom of anyweb page on which the digital media is being displayed.
2) DCR agrees to display non-commercial digital media only on DCRs website.
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c. Termination. This Media and Access Pass section shall terminate after the 5th anniversaryof the signing of this Agreement. After five (5) years, DCR and Intersal may agree to extendthis provision by mutual written consent.
V. RECORDS
17.
Public Records. Nothing in this Agreement shall prevent DCR from making records available tothe public pursuant to North Carolina General Statutes Chapters 121 and 132, or any otherapplicable State or federal law or rule related to the inspection of public records.
18. Records Management. During the recovery phase of the QAR project, DCR and Intersal agreeto make available to each other records created or collected in relation to the QAR project. Theentity requesting copies bears the cost of reproduction. Within one (1) year after the completion ofthe recovery phase, Intersal shall allow DCR to accession duplicate or original records that werecreated or collected by Intersal during the project and that are related to the site, or the recoveryor conservation of the QAR materials. Such records shall include relevant field maps, notes,drawings, photographic records, and other technical, scientific and historical documentation createdor collected by DCR or Intersal pursuant to the study of the site and the recovery of materials
therefrom. These materials shall become public records curated by DCR. All digital media providedby Intersal under the terms of this paragraph shall include a time code stamp and watermarks (orbugs). It is expressly recognized and agreed that, to the extent Intersal possesses confidentialinformation or documents related to its search for El Salvador, no such documents or information
fall under the terms of this paragraph.
VI. Business Panel
19. Business Panel. Members of the Business Panel shall include a secretary level representative
from DCR, the president of Intersal, the president of Nautilus Productions, one representative fromthe North Carolina Department of Commerce or its successor, and one member of the academic
community.
Business Panel meetings shall be subject to the open meetings laws codified at Article 33 ofChapter 143 of the North Carolina General Statutes.
VII. NAUTILUS PRODUCTIONS
20. Right of First Refusal. Nautilus Productions shall have the right of first refusal on the production
of all commercial and non-commercial digital media for which no time code stamp, and watermarkor bug of Nautilus has been affixed. Nautilus Productions agrees that digital media produced in-house by DCR staff shall not be included in this right of first refusal.
Termination. This Right of First Refusal provision shall terminate after the 5th anniversary of thesigning of this Agreement.
21.
Return of Video. DCR agrees to return to Nautilus Productions all archival footage, stillphotographs, and other media, produced by Nautilus Productions, which do not bear a time codestamp and a Nautilus Productions watermark (or bug). DCR may retain, for research purposes,
archival footage, still photographs, and other media that contain a time code stamp and watermark(or bug), and as to such media, DCR shall provide Nautilus with a current, accurate list.
22. Copyright Violations. DCR agrees to compensate Nautilus Productions by payment of the cashsum of $15,000 for any copyright infringements by DCR or its support groups occurring through thedate of the signing of this contract, including Friends of the Maritime Museum display photograph
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of the pile (central portion of the QAR shipwreck), DCRs Flickr account showing anchor A1 on thepile, DCRs website showing anchor A1 on the pile, DCRs News website showing anchor A2, andFriends of the QAR website showing mapping dividers (artifact). DCR shall pay NautilusProductions $15,000 by 31 January 2014.
VIII. MISCELLANEOUS
23. DCR Agreement and Release. Except as expressly provided in this Agreement, DCR and theState, their successors and assigns hereby release and forever discharge Intersal and Nautilus,
including their officers, agents and employees, from any and all claims, demands, actions, causesof action, rights, damages, costs, attorney fees, expenses and compensation whatsoever, whetherarising out of common law or statute, whether state or federal claim, that DCR or the State now
have, or that were or could have been made relating to their rights under the 1998 Agreement orany other prior agreements related to the Adventure, El Salvador, or Queen Annes Revenge
shipwrecks. DCR expressly represents that it is not aware of any contracts that other Stateagencies have entered into that infringe upon the intellectual property rights of NautilusProductions.
24.
Intersal Agreement and Release. Except as expressly provided in this Agreement, Intersal andits successors and assigns hereby release and forever discharge the State, its officers, agents andemployees, including DCR, from any and all claims, demands, actions, causes of action, rights,damages, costs, attorney fees, expenses and compensation whatsoever, whether arising out of
common law or statute, whether state or federal claim, that Intersal now has, or that were or couldhave been made relating to Intersals rights under the 1998 Agreement or any other prioragreements related to theAdventure, El Salvador, or Queen Annes Revengeshipwrecks.
25. Petition for Contested Case Hearing. Intersal agrees to withdraw its petition for contestedcase hearing in Intersal v. N.C. Dept of Cultural Resources(13DCR15732) within five (5) businessdays of the signing of this Agreement.
26. Nautilus Productions/Rick Allen Agreement and Release. Except as expressly provided in
this Agreement, Nautilus and Rick Allen, and their heirs, successors, and assigns, hereby releaseand forever discharge the State, its officers, agents and employees, including DCR, whetherindividually or in their capacity as State employees, and its support groups, including the Friends ofthe Maritime Museum and the Friends of the QAR, from any and all claims, demands, actions,causes of action, rights, damages, costs, attorney fees, expenses and compensation whatsoever,whether arising out of common law or statute, whether state or federal claim, that Nautilus now
has, or that were or could have been made relating to Nautiluss and Rick Allens rights under the1998 Agreement or any other prior agreements related to the Queen Annes Revengeshipwreck orUnited States Copyright Act. Nautilus and Rick Allen agree that, as part of this Agreement andRelease, Nautilus/Rick Allen shall withdraw the public records request it submitted to DCR on 28
August 2013, within five (5) business days of the signing of this Agreement.
27. Binding Effect of Agreement on Successors in Interest.This Agreement shall be binding onand inure to the benefit of the successors and assigns of DCR, Intersal, and Nautilus.
28. Non-disparagement Clause. DCR, Intersal, and Nautilus agree that they will not disparage oneanother professionally or in any public forum regarding any allegations related to this Agreement.
29. Choice of Laws. This Agreement is entered into in the State of North Carolina and shall be
construed and interpreted in accordance with its laws.
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7
30. Counterparts. This Agreement may be executed in counterparts, any of which shall be deemedto be an original and all of which together shall be deemed the same instrument.
31. Entire Agreement.The foregoing constitutes the entire agreement as specified by DCR, Intersal,
and Nautilus, and the considerations stated herein are contractual and are not mere recitals.
32.
Effect of Breach of Agreement. In the event DCR, Intersal, or Nautilus breaches thisAgreement, DCR, Intersal, or Nautilus may avail themselves of all remedies provided by law orequity.
33. Review and Construction. Intersal, DCR and Nautilus have read and reviewed all of the termsof this Agreement, with the benefit of advice from legal counsel of their choosing. The terms ofthis Agreement have been drafted and revised with input from all of them and, thus, the terms ofthis Agreement shall not be construed for or against any of them as author.
34. Notice. Notices under this Agreement shall be provided as follows:
To DCR: Secretary, North Carolina Department of Cultural Resources, 109 East Jones Street,
Raleigh, NC 27601
To Intersal: Intersal, Inc., c/o Haft Steinlauf & Co., 1200 South Pine Island Road, Plantation,
Florida 33324
To Nautilus:Nautilus Productions, LLC, c/o Mr. Rick Allen, P.O. Box 53269, Fayetteville, NC 28305
Any of the entities named above may change its contact information as stated above by providingwritten notice of the new information to all other entities named above.
[THIS SECTION INTENTIONALLY LEFT BLANK]
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EXHIBIT 1
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~~ ~
~
DATE: 1( 2 .
;2 3 ' I
:3
STATE
OF FLOfilDA. i
COUNTY OF ~e\ttl C\..
Sworn to or affirmed) and subscribed before
me
this ;:> day of
Ocm iC
2013, by David J. Reeder.
Q M ~
N
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EXHIBIT 1
Exh. 1 Page 9
Nautilus Productions
BY:
Frederick Allen, Owner
DATE:
11 /z-
;3
STATE OF NORTH
CAROLINA
COUNlY OF
\; .
R
\ \ f\ ~
-:- -:::>
I G , Jo N ,:\--
0
E ..J
~-,
a Notary Public in
and for the County
of
bu~\-\-- A
~ :h
and State aforesaid, do
hereby certify that Frederick Allen, personally appeared before me this
date and acknowledged the due execution by him of the foregoing
instrument
as
for the purposes therein expressed. 1r....,
WITNESS m hand.. and Notarial Seal, this the Q.~ day of
C
C? f,
2013.
Print Name
9
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EXHIBIT 1
Exh. 1 Page 10
North Carolina Department of Cultural Resources
,;
' _j l:L i __
Ltt ,
BY:
Susan
W. Kluttz, Secretary
DATE:
/();:?_ f-/3
STATE OF NORTH
CAROLINA
COUNTY OF WAKE
- I ( {
A
,--,
I,
, l(J \i li1-o
rvt tonks ,
a Notary
Public in
and for the County of
Lua l(e.,
and State aforesaid, do
hereby certify that
Lt5a.q
W,
I< 11
Hz
,
personally
appeared before me this date and acknowledged the due execution by
her of the foregoing instrument as for the purposes therein expressed.
0
WITNESS
my hand and Notarial
Seal,
this the
.;iq
fl day
of
C mbrr , 2013.
~ di
if
Tu
:fuct1,
No
a Publi
\
:Jenh1tev
N
hlnies
Print Name
My Commission Expires:
lO,~\
lJ
10
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EXHIBIT 1
Exh. 1 Page 11
STATE OF
NORTH
CAROLfNA
COUNTY OF WAKE
AGREEMENT
THIS AGREEMENT
is
entered into this 1st day of Sept.
,
1998, by and among the
State of North Cal'olina represented by the Department of Cultural Resources (hereinafter the
Department ), Intersal, Inc., a
Florida
corporation (hereinafter
Intersal ),
and Maritime
Research Institute, Inc., a North Carolina nonprofit corporation (hereinafter MRI ).
WITNESSETH, THAT
WHEREAS,
under the provisions of
the federal
Abandoned Shipwreck
Act
of
1987 {43
U.S.C. 2101-2106)
and
Article 3
of Chapter
121
of
the General Statutes of North Carolina
(N.C.G.S. 121-22 through 121-28), the title to non-federal abandoned shipwrecks and artifacts
embedded in the submerged lands
of
the State of North Carolina is transferred
by
the United
States to the State of
North
Carolina and all such artifacts are placed under the custody and
control
of
the Department; and
WHEREAS, working
under a
permit
issued
by the
Department, Intersal, under the
direction of Michael
E. Daniel,
located a
shipwreck
site
believed
to be that of the ship QUEEN
ANNE S REVENGE
(hereinafter QAR ) within the State waters
of North
Carolina, and are to be
credited with
the
discovery
of
said vessel;
and
WHEREAS, QAR was
the
flagship of the
pirate
Edward Teach or Thatch (a.k.a.
Blackbeard'') and
was
lost
while
attempt ing to enter Beaufort Inlet in 1718 and is of
inestimable
historical and archaeological value; and
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EXHIBIT 1
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2
WHEREAS,
lntersal has been searching
for QAR and
other 18th Century shipwrecks at
Beaufort Inlet
under
permits issued by the
Department since
198 7,
and
has
expended
a
considerable amount ofpersonnel and financial
assets
in
that
effort;
and
WHEREAS, paragraph L of the QAR Pennit (BUI 585) issued to lntersal states that
Any material recovered during Phase Five (the salvage phase] of the project shall
be
divided
between
the
Department and the Permittee, according to a system to be developed, with 25 of
all coins and precious metals retained by the Department, and 75
of
the material awarded to the
Permittee.
The
Department and the Permittee agree that the most appropriate disposition
of
other
artifacts, such as
vessel structure,
ship's fittings,
weapons, personal effects,
and
non-precious
cargo shall be a suitable
facility,
possibly
in
the Beaufort area [the North Carolina Maritime
Museum], where the material can be curated for scientific study and public display; and,
WHEREAS, Intersal and
Michael E. Daniel are willing to forego entitlement
to any
coins
and
precious metals recovered
from the QAR site in
order that
all
QAR
artifacts
remain as one
intact collection and in order to permit
the
Department to determine ultimate disposition
of
the
artifacts; and,
WHEREAS, the Department recognizes MRI, as a partner in the project for the life of
this
Agreement;
and,
WHEREAS, in
order
to facilitate
this Agreement, the Department recognizes Intersal
and
MRI as
partners,
to
work
in
partnership
with
the Department to research, survey, search, recover,
preserve,
protect,
conserve, curate, and
promote the collection for the
life
of this Agreement; and,
WHEREAS, Intetsal, MRI,
and
the Department, in
a spirit of
partnership, are
willing to
establish
a five-member project Advisory Committee
with
the responsibilities set out
in
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EXHIBIT 1
Exh. 1 Page 13
3
paragraph
12 of
this
Agreement; and,
WHEREAS, Intersal has shown in the past, and continues
to
evidence, a strong awareness
of
and commitment to
the
historical significance
of
QAR
through the
quantity and quality
of
Intersal s historicaJ research its willingness to employ state of the rt equipment
in
its
underwater search and recovery efforts, and the prompt reporting
of
its activities to the
Department; and,
WHEREAS, all of
the