Sotheby's, Inc. v August Uribe Fine Art, LLC 2024 NY Slip Op 31613(U) May 7, 2024 Supreme Court, New York County Docket Number: Index No. 651350/2023 Judge: Joel M. Cohen Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 03M -----------------------------------------------------------------------------------X
DECISION + ORDER ON MOTION INDEX NO. 651350/2023
MOTION DATE 12/12/2023
MOTION SEQ. NO. 002 SOTHEBY'S, INC., MARIA IRIDE CRIPPA, Plaintiffs, - v - AUGUST URIBE FINE ART, LLC, Defendant.
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HON. JOEL M. COHEN: The following e-filed documents, listed by NYSCEF document number (Motion 002) 33, 34, 35, 36, 37, 40, 43, 44, 49 were read on this motion to DISMISS . This intervenor-action involves a consignment agreement between and Maria Iride Crippa , an Italian citizen living in Switzerland, for
the sale of Pablo Picasso s painting Le Peinture as Intervenor-Defendant, moves
pursuant to CPLR 3211(a)(1) and 3211(a)(7) to dismiss Counts I through V of the Intervenor-
Complaint and to strike the For the following reasons, the motion is
granted in part.
BACKGROUND
According to the Intervenor-Complaint (NYSCEF 27 Intervenor- ), and Ms. Crippa entered into a Private Sale Agreement dated August 23, 2021 (as amended, the
exclusive agent to sell the Pablo Picasso painting Le Peinture Painting INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
1 of 13 [* 1] Section 3 of the Consignment Agreement, , provides that Ms. Crippa acknowledge[s] and agree[s] that So loan the
payment of the Purchase Price in full and cleared
funds. Title to the Property shall only pass to the Buyer upon our receipt of full payment of the
Purchase Price in full and cleared funds Temporary Loan Provision
The Painting was sold on August 24, 2021, and -to-arrangement under which it was understood that the buyer intended to promptly
resell the Painting (see Tr. at 4:14 15). Toward that end, entered into a private
purchase agreement with August Uribe Fine Art, LLC AUFA to sell the Painting to AUFA
for $5,500,000 (id. at ¶¶31, 32 Mirroring the
Consignment Agreement, the AUFA Purchase Agreement contained a Temporary Loan
Provision and stated that title to the Painting would not pass until the purchase price was paid in
full (AUFA Purchase Agreement §§ 2, 3).
On August 25, 2021, warehouse in Long Island City, New York, which was identified in the AUFA Purchase
Agreement as the location and agreed that it returned AUFA
Purchase Agreement § 2).
On August 19, 2021 four days before Ms. Crippa entered into the
Consignment Agreement AUFA executed a contract to sell the Painting to DARTMILANO
DART (id. at ¶ 41-42). In the DART Purchase Agreement, AUFA claimed that it
(id. at ¶ 43). The DART
Purchase Agreement also included a provision remain the INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
2 of 13 [* 2] legitimate and sole owner of the Artwork until the crediting of the balance amount as indicated id. at ¶ 50). On August 27, 2021, DART convinced AUFA to transfer the Painting from
Aiston Fine Art Services to SRI Fine Art Services in the New Jersey
Warehouse (id. at ¶ 46).
Ms. net proceeds were $5,000,000 (Intervenor-Compl. ¶22). AUFA paid an initial
deposit of $1.1 million and made subsequent payments totaling $1.2 million, but failed to pay the
remainder of the Purchase Price (id. at ¶¶ 34, 40).
According to the Intervenor-Complaint, AUFA lost control of the Painting and has been
unable to obtain performance from DART (id. at ¶ 49).
The Related Action
On May 25, 2022, AUFA filed a complaint in the United States District Court for the
District of New Jersey against DART and various third parties, asserting
claims for conversion, replevin, fraud, conspiracy, and breach of the bailment agreement, among
others (id. ¶ 53). Complaint alleges that f er of the Painting to
the New Jersey Warehouse, third parties conspired to transfer the Painting from
at the New Jersey Warehouse to that of third-party Oblyon at the same location. AUFA further
alleges that Oblyon then transferred the Painting to another one account at
the New Jersey Warehouse to serve as collateral for a loan to DART (id. at ¶¶47-48).
As relevant here, the Court dismissed the conversion and replevin
claims because AUFA did not plead it was the owner of the Artwork and stated no facts to INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
3 of 13 [* 3] support a right to immediate possession of the artwork (NYSCEF 49 at 12; Intervenor-Compl. ¶54). The case remains pending.
Procedural History
against AUFA on March 15, 2023 to obtain the
outstanding unpaid portion of the Purchase Price ($3.2 million), plus applicable taxes, accrued
collection of amounts due under the Purchase Agreement or, in the alternative, return of the
Painting (NYSCEF 1, 2).
On Nove NYSCEF
24). fraudulent inducement (Count II), negligent misrepresentation (Count III), violation of N.Y.
General Business Law § 349 (Count IV) and breach of fiduciary duty (Count V).
claims.
DISCUSSION
A motion to dismiss
the documentary
Goshen v Mut. Life Ins. Co. of New York, 98 NY2d 314, 326
[2002]). CPLR 3211(a)(7) permits dismissal when
Leon v
Martinez, 84 NY2d 83, 87 88 [1994]).
conclusions as well as factual claims flatly contradicted by documentary evidence are not INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
4 of 13 [* 4] Myers v Schneiderman, 30 NY3d 1, 11 [2017] [citations omitted]).
A. Fraudulent Inducement & Negligent Misrepresentation Ms. Crippa has failed to allege viable claims for fraudulent inducement or negligent
misrepresentation.
To state a cause of action for fraud, a plaintiff must allege with particularity a
representation of material fact, made for the purpose of inducing another to act on it, the falsity
of the representation, knowledge by the party making the representation that it was false
when made, justifiable reliance by the plaintiff and resulting injury (Kaufman v Cohen, 307
AD2d 113, 119 [1st Dept 2003]). Similarly, [t]o recover on a theory of negligent
misrepresentation, a plaintiff must establish that the defendant had a duty to use reasonable care
to impart correct information because of some special relationship between the parties, that the
information was incorrect or false, and that the plaintiff reasonably relied upon the information
provided (Grammer v Turits, 271 AD2d 644, 645 [2d Dept 2000]).
The crux of claims is that misrepresented to Ms. Crippa that [t]itle to the [Painting] shall only pass to the Buyer upon our
Assuming for present
purposes that this statement contained in the Consignment Agreement can be considered a
statement of fact rather than an opinion as to a point of law (Natl. Conversion Corp. v Cedar
Bldg. Corp., 23 NY2d 621, 627 [1969] [
else, may be intended and understood either as one of fact or one of opinion only, according to
, the Court finds that it was not a misrepresentation. INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
5 of 13 [* 5] S e (United States v Chowaiki, 369 F Supp 3d 565, 572 [SDNY 2019] [applying New York law]). As
relevant here, UCC section 2-401 provides in relevant part:
(1) Title to goods cannot pass under a contract for sale prior to their identification to the contract (Section 2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this Act. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the Article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a
(UCC 2-401[1],[2]).
Under this provision, the general rule is that title to goods passes upon delivery, with the
seller s rights limited to a reservation of a security interest Subaru Distributors Corp. v Subaru
of Am., Inc., 98 CIV 5566 CM, 2002 WL 188473, at *45 [SDNY 2002]). UCC § 2-401[1]
primarily deals with the identification of goods under a contract for sale and it has been said that
[i]dentification is the earliest that title can pass, and shipment or delivery is the latest In re
Alcom Am. Corp., 156 BR 873, 884 [Bankr DDC 1993], affd sub nom. ALCOM Am. Corp. v
Arab Banking Corp., 48 F3d 539 [DC Cir 1995] [applying the UCC under New York and DC
law]). The question here is whether it was fraudulent or negligently misleading
assert, effectively, that the UCC permits the parties to agree to modify this general rule in a
particular transaction in its agreement with AUFA for sale of the Painting. The
Court finds, as a matter of law, that it was not. INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
6 of 13 [* 6] The Court agrees with the determination by the Southern District of New York (applying New York law) that section 2-401, like almost all of the UCC, is an unless otherwise agreed
provision. As long as the parties to a contract explicitly agree that title shall pass at some other
time, it does . . .[T]he parties are free to agree that title passes prior to or subsequent to delivery
(Subaru, 2002 WL 188473, at *45; see also Chowaiki, 369 F Supp 3d at 575 [ To escape § 2-
401(1) s default rule, a contract must explicitly identify when title passes This reading is
consistent with the statutory language in section 2-401, which contains multiple references to its
terms being subject to modification by explicit agreement of the parties. The notion that
sophisticated buyers and sellers of art (or other goods) are rigidly prohibited from agreeing to a
bespoke and conditional loan arrangement such as this one without irrevocably relinquishing title
is inconsistent with the language of the statute and the overarching approach of the UCC to favor
freedom of contract. 1
Here, the Consignment Agreement accurately reflected the terms of the AUFA Purchase
Agreement, in which AUFA expressly agreed that its receipt of the Painting was a temporary
loan and that full payment of the
AUFU Purchase Agreement ¶ 3). The fact that AUFA (and its
counterparties) exercised dominion over the Painting despite these contractual provisions does
1 Ms. Crippa points out that a few decisions have interpreted Section 2-401(1) as limiting the , with one opining by explicit agreement, designate when title shall pass, his reservation of title [after delivery] is
treated in effect as a r (L. B. Smith, Inc. v Foley, 341 FSupp 810, 813 [WDNY 1972] [applying New York law]; see also At Last Sportswear Inc. v Newport News, Holding Corp., 2010 NY Slip Op 32792[U] [Sup Ct, NY County 2010]; Brandes v Pettibone Corp., 79 Misc 2d 651, 654 [Sup Ct, Monroe County 1974]; Shanghai Changhong Int'l Trading Co. v K & D Logistics Co., 2002 WL 1732807, at *2 [EDNY 2002]). To the extent these decisions suggest that contracting parties are unable to agree to the type of lending agreement at issue in this case without passing title, the Court respectfully finds them unpersuasive. INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
7 of 13 [* 7] defrauded or misled Ms. Crippa. Accordingly, her fraudulent inducement and negligent misrepresentation claims are dismissed.
B. NY General Business Law § 349
acts or practices in the conduct of any
(Himmelstein, McConnell, Gribben, Donoghue &
Joseph, LLP v Matthew Bender & Co., Inc., 37 NY3d 169, 176 [2021] that: (1) the defendant's conduct was consumer-oriented; (2) the defendant's act or practice was
deceptive or misleading in a material way; and (3) the plaintiff suffered an injury as a result of
id.).
The Court of Appeals has explained that a plaintiff asserting a claim under the statute
that ]rivate contract disputes,
[GBL § 349 Oswego Laborers' Local 214 Pension Fund v Mar. Midland Bank, N.A., 85 NY2d
20, 25 [1995]). Here, the Consignment Agreement involves a prototypical private contract
dispute between sophisticated parties with respect to a $5 million painting. Even crediting Ms.
that contract provisions such as those at issue here are widely used in the art
market, this does not transform a private contract dispute into a consumer-oriented act (New York
Univ. v Cont. Ins. Co., 87 NY2d 308, 321 [1995] [finding consumer-oriented conduct not pled
under GBL § 349 he policy was not a standard policy, although it contained standard
provisions, but was tailored to meet the purchaser's wishes and requirements
this claim is dismissed. INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
8 of 13 [* 8] C. Breach of Contract breach of contract claim is granted in part.
a contract, the plaintiff s
Harris v
Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010]). Ms. Crippa alleges that
Sotheby's breached the agreement by (1) allowing title transfer to AUFA before receipt of full
payment, (2) failing to remit a $55,000 credit it gave to AUFA on the purchase price, and (3)
losing control of the painting under Section 9 of the agreement.
As to the first allegation breach of contract claim on the same issue fails for
the same reason as her fraudulent and negligent misrepresentations fail. did not
permit title to transfer to AUFA before receipt of full payment.
However, the remaining breach of contract allegations state potentially viable claims.
According to the Crippa Sale Agreement, Sotheby's was obligated to pay the net sale proceeds
within five business days of receiving each installment (Intervenor-Compl. at ¶ 71). On or before
December price of
AUFA. To date, Ms. Crippa has not
states that it intends
to apply the $55,000 credit to reduce its own $500,000 commission (NYSCEF 37 at 25 n.11).
However, as Ms. Crippa points out, monies received to Ms. Crippa and has credited $55,000 as having been received. Accordingly,
this claim is sustained.
Finally, under the terms of the Consignment Agreement, § 9(a), Sotheby s assumed
liability for any loss or damage incurred while the Painting remained within its custody or INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
9 of 13 [* 9] In particular, asserts that hen it is temporarily unavailable but physically undamaged.
analogy to recent COVID insurance cases to be unpersuasive.
[insurance] policies that insure against
physical loss or damage Madison Sq.
Garden Sports Corp. v Factory Mut. Ins. Co., 213 AD3d 459, 460 [1st Dept 2023], lv to appeal
denied, 41 NY3d 902 [2024] [emphasis added]; see also Consol. Rest. Operations, Inc. v
Westport Ins. Corp., 205 AD3d 76, 82 [1st Dept 2022], lv to appeal granted in part, dismissed in
part, 39 NY3d 943 [2022], and affd, 2024 NY Slip Op 00795 [Ct App Feb. 15, 2024]; Source
Food Tech., Inc. v U.S. Fid. and Guar. Co., 465 F3d 834, 836 [8th Cir 2006]), here Section 9(a)
refers only to loss of or damage to the Property, not to physical loss or damage. Furthermore,
Consolidated Restaurant and Madison Sq. Garden
(real estate) that was within the and would not have been capable of being
in these circ*mstances.
Here, Section 9(a) addresses of . . . the Proper
Black's Law Dictionary [11th ed. 2019]). At a minimum, that is a
reasonable reading of the language. Here, failed to maintain possession of the Painting, and therefore has lost control over the Painting.
Accordingly, this claim is sustained. INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
10 of 13 [* 10] D. Breach of Fiduciary Duty claim for breach of fiduciary duty, plaintiffs must allege that (1) defendant owed them a
fiduciary duty, (2) defendant committed misconduct, and (3) they suffered damages caused by
(Burry v Madison Park Owner LLC, 84 AD3d 699, 700 [1st Dept 2011]). In
the Intervenor-Complaint, Ms. Crippa alleges a series of breaches of fiduciary duty, only some of
which survive the motion to dismiss.
First , that Ms.
agent gives rise to an independent fiduciary duty that predated the Consignment
Agreement. a
-to-contract with AUFA have been sufficiently stated namely that failed
to sufficiently investigate AUFA or its ability to pay the full purchase price before entering into
the AUFA Purchase Agreement, allowed AUFA to enter an onward sale agreement (the Dart
purchase agreement) before entering the Consignment Agreement and paying the full purchase
price, and failed to confirm that AUFA satisfied its obligation to obtain the contractually
mandated insurance coverage while on loan to AUFA under Sec. 2(e) of the AUFA Purchase
Agreement (Intervenor Compl. ¶¶ 124, 126, 131). Accordingly, these allegations are sustained.
However, for the reasons already stated, the allegations relating to the Temporary Loan
Provision are dismissed (see Intervenor Compl. ¶¶ 127-130). Furthermore, the claim relating to
her breach-of-contract claim and is therefore duplicative and is dismissed as a separate claim for
relief (id. ¶132) (see William Kaufman Org., Ltd. v Graham & James LLP, 269 AD2d 171, 173
[1st Dept 2000] A cause of action for breach of fiduciary duty which is merely duplicative of a INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
11 of 13 [* 11] breach of contract claim cannot stand Finally, Ms. Crippa has not alleged what (id. at ¶¶125, 133). Accordingly, these conclusory allegations
are insufficient to state a claim.
E. Fees demand for is granted. Since the Court has
based on GBL § 349(h). Moreover, request for attorn under an implied
indemnification contract theory also fails. A person is entitled to implied indemnity when in
whole or in part, has discharged a duty which is owed by him but which as between himself and
another should have been discharged (McDermott v City of New York, 50 NY2d
211, 217 [1980]). Ms. Crippa has failed to allege any facts supporting such a theory. Finally, the
Consignment Agreement does not provide for an award of . Therefore, the
demand stricken.
Accordingly, it is
ORDERED that Defendant- Motion to Dismiss the Intervenor
Complaint is GRANTED IN PART, as follows: The first cause of action for breach of contract
claim is dismissed insofar as it is based on the Temporary Loan Provision; the second cause of
action for fraudulent inducement, the third cause of action for negligent misrepresentation, and
the fourth cause of action for deceptive and unlawful practices under GBL §349 are dismissed;
the fifth cause of action for breach of fiduciary duty claim is dismissed in part; and the demand
for stricken; the motion is otherwise denied; and it is further INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
12 of 13 [* 12] ORDERED that the stay of discovery entered by this Court on the record on April 18, 2024, pending this Decision and Order is hereby vacated and discovery shall proceed based on
the claims that remain in the case.
This constitutes the Decision and Order of the Court.
5/7/2024 DATE JOEL M. COHEN, J.S.C. CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION GRANTED DENIED X GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE INDEX NO. 651350/2023 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 05/07/2024
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