Waran v. Christie's Inc.
Waran v. Christie's Inc.
Opinion of the Court
Sandran Waran ("Waran") brings this diversity action for fraud against Christie's Inc. ("Christie's") in connection with Christie's sale of two Asian antiquities. Christie's moves for summary judgment, claiming that Waran fails to establish a misstatement, scienter, or damages. Christie's also asserts that Waran's claim is time-barred. For the reasons that follow, Christie's motion for summary judgment is granted, and this action is dismissed.
BACKGROUND
In March 2005, Waran purchased a sculpture titled "Blackstone Stele of Vishnu on Garuda" (the "Blackstone Stele") for $40,704 at auction from Christie's. (Affirmation of R. Zachary Gelber, Esq. in Opposition to Defendant's Motion for Summary Judgment, ECF No. 78 ("Gelber Affirm."), Ex. 4 ("Blackstone Invoice").) In its March 2005 Indian and Southeast Asian Art Catalog, Christie's represented that the Blackstone Stele was created in twelfth century northeastern India, and that its provenance was "of a Boston Collection," which had "[a]cquired [it] in 1993." (Gelber Affirm., Ex. 3 ("2005 Catalog"), at 37.) Before Waran's purchase, Christie's policy was to accept information regarding provenance from consignors at face value. (Defendant's Response to Plaintiff's Counter-Statement Pursuant to Local Civil Rule 56.1, ECF No. 91 ("Def.'s Response"), ¶¶ 32A, 38A; see also Gelber Affirm., Ex. 2 ("Robinson Dep."), at 12:23-13:3 (providing that "a verbal response was generally sufficient unless it flagged anything that caused worry"); Robinson Dep., at 40:18-25.)
Sometime around March 2005, Christie's began implementing a stricter policy for *716authentication. (See Affidavit of Sandra L. Cobden, Esq. in Support of Christie's Motion for Summary Judgment, ECF Nos. 66, 69, and 70 ("Cobden Aff."), Ex. 3.) Christie's started requiring consignors to provide a signed "Provenance and Country of Origin Declaration" form, or "PCOO." (Cobden Aff., Ex. 4 ("Christie's Interrogatory Responses"), at 3.) The PCOO required a consignor to certify "that the property left its source country prior to the earlier of: (i) January 1, 2000, (ii) the date of an applicable bilateral agreement restriction between the United States and the source country, or (iii) the date the source country went into conflict or war." (Christie's Interrogatory Responses, at 3.) "Consignors were also asked to provide any and all available supporting documentation ...." (Christie's Interrogatory Responses, at 3.)
Christie's did not obtain a PCOO from the consignor of the Blackstone Stele. (Gelber Affirm., Ex. 1 ("Cobden Dep."), at 71:13-19; 82:14-83:7.) Waran contends that the PCOO policy was in place at the time he purchased the Blackstone Stele. In an interrogatory response, Christie's stated that the PCOO policy began in 2005. (Christie's Interrogatory Responses, at 3.) In its statement of material facts, Christie's clarifies that it established the PCOO requirement in March 2005, and that it had acquired the Blackstone Stele prior to that time. (See Def.'s Response ¶ 38A.)
In March 2007, Waran purchased a sculpture titled "Sandstone Figure of Uma" (the "Sandstone Figure," and together with the Blackstone Stele, the "Works") for $70,620 at auction from Christie's. (Gelber Affirm. Ex. 7 ("Sandstone Invoice"); Def.'s Response ¶ 29.) In its March 2007 Indian and Southeast Asian Art Catalog, Christie's represented that the Sandstone Figure was created in eleventh century Khmer,
In 2012, Christie's amended its provenance policy. "[I]n addition to the PCOO form," consignors were required to submit "verifiable documentation to substantiate" the representations in the PCOO. (Christie's Interrogatory Responses, at 5; Cobden Dep., at 194:8-13; see also Gelber Affirm., Ex. 17.) Verifiable documentation could include receipts, invoices, inheritance documents, insurance listings, photographs, letters, "or any other source that the clients can provide above and beyond their own testimony." (Christie's Interrogatory Responses, at 5-6.)
In mid-2013, Waran began discussions with Christie's regarding consigning 24 works in his collection for auction. (Cobden Aff., Ex. 7, at 4-5; Gelber Affirm., Ex. 19.) In January 2014, Waran delivered those works to Christie's. (Cobden Aff., Ex. 8, at 1-2.) In February 2014, Christie's informed Waran that due to a lack of provenance verification, Christie's was unable to offer eight of his works in its March 2014 auction. (Cobden Aff., Ex. 11, at 6.) Christie's assured Waran that it would continue to investigate each of those works with a view to including them in a future auction. (Cobden Aff., Ex. 11, at 6.) Waran questioned Christie's inability to authenticate works that it had sold to him. (Cobden Aff., Ex. 11, at 5-6.) Christie's explained *717that since Waran's purchases, "the market for Indian antiquities ha[d] come under greater scrutiny," causing its "Legal Department [to] instill[ ] new requirements for substantiation of provenance prior to sale." (Cobden Aff., Ex. 11, at 4.)
As part of its investigation, Christie's reached out to the Works' consignors, seeking the documentation required under its more rigorous policy. (See Cobden Aff., Exs. 9 & 10.) Neither consignor could fulfill this request. The Sandstone Figure's consignor reported that his "uncle and aunt who might have [the] information passed away some years ago." (Cobden Aff., Ex. 9, at 2.) The Blackstone Stele's consignor had "no memory of [the] sculpture," and believed that it had been sold by "someone else."
Simultaneously, executives within Christie's debated whether the firm could make an exception to its stricter provenance policy because Waran had purchased the works from Christie's. (Cobden Aff., Ex. 13, at 2.) Ultimately, Christie's determined that it could not make an exception for the Sandstone Figure and Blackstone Stele. (Cobden Aff., Ex. 15, at 1-3.) Christie's resolved the provenance issues for all of Waran's consigned works except for those two. (See Cobden Aff., Ex. 16, at 2; March 2, 2018 Hearing Transcript, ECF No. 109 ("Mar. Hr'g Tr."), at 2:22-23.)
LEGAL STANDARD
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Davis v. Blige,
"The party against whom summary judgment is sought ... must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Caldarola v. Calabrese,
*718Beyer v. Cty. of Nassau,
DISCUSSION
"To prove a claim of fraud under New York law a plaintiff must show, by clear and convincing evidence ... that the defendant made a material misrepresentation of fact, knowing of its falsity and with the intent to induce reliance, and that the plaintiff justifiably relied on that misrepresentation to her detriment ...." Crawford v. Franklin Credit Mgmt. Corp.,
"Clear and convincing proof is highly probable and leaves no substantial doubt." Dongguk Univ. v. Yale Univ.,
In reviewing the evidence in a light most favorable to Waran, this Court concludes that Waran fails to establish two elements of his claim: (1) that there was a misstatement, and (2) that Christie's acted with scienter. Accordingly, this Court need not reach Defendant's other arguments.
I. Misstatement
Fraud requires a misstatement. See Sado v. Ellis,
To be clear, Christie's never determined that its guarantees of provenance were false or inaccurate. Nor did Christie's contradict its earlier representations. (See Mar. Hr'g Tr. at 4:20-25.) Rather, Christie's informed Waran that because its internal procedures had tightened, the Works no longer had sufficient documentation. (See Cobden Aff., Ex. 11, at 1 (informing Waran that Christie's continues to "stand behind the works [it] sells," but had "instilled new requirements for substantiation of provenance prior to sale" meaning "in a few instances, works sold by Christie's years before no longer comply with [its] vetting practices")).
Waran's attempt to proffer evidence that the catalogs' descriptions of provenance were false is insufficient. All he points to is that the Works' consignors could not provide additional documentation *719to Christie's. While the failure by the consignor of the Blackstone Stele to remember selling that piece is troubling, it falls short of clear and convincing evidence that the provenance was false. "The evidence of fraud must be clear and convincing and any inference of fraud must be unequivocal." Miller v. Grigoli,
While Waran contends that Christie's fails to prove its assurances of provenance were legitimate, this overlooks that it is ultimately his burden to prove the opposite-that the assurances were false. See In re Trico Marine Servs.,
Nothing in the record demonstrates that the Blackstone Stele and Sandstone Figure were not the antiquities that Christie's represented them to be. Rather, Waran's evidence is "loose, equivocal, or contradictory." Hindsight Solutions,
II. Scienter
"[C]ommon law fraud ... require[s] the [p]laintiff to plead scienter." Saltz v. First Frontier, LP,
As scienter is generally a question of fact, "[t]he Second Circuit has been lenient in allowing scienter issues to withstand summary judgment based on fairly tenuous inferences." Press v. Chem. Inv. Servs. Corp.,
Waran does not contend that Christie's intentionally or knowingly misled him. Instead, he argues that its due diligence before guaranteeing provenance was so deficient as to constitute recklessness. "A refusal to see the obvious, a failure to investigate the doubtful, if sufficiently gross, may furnish evidence leading to an inference of fraud ...." Rolf v. Blyth, Eastman Dillon & Co.,
*720While Waran may have an argument that Christie's should have done more, that amounts to negligence, not recklessness. "Reckless conduct is, at the least, conduct which is 'highly unreasonable' and which represents 'an extreme departure from the standards of ordinary care ... to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it.' " Rolf,
Further, Waran offers no evidence Christie's practices were so deficient that they constitute "an extreme departure from the standards of ordinary care." See Rolf,
Waran contends that the due diligence Christie's conducted was "so flimsy as to lead to the conclusion that there was no genuine belief in its truth." See State St. Trust Co. v. Ernst,
But Rolf arose in the context of a fiduciary relationship. See S. Cherry St., LLC v. Hennessee Grp. LLC,
Notably, no fiduciary relationship existed between Waran and Christie's. And Christie's did not "actively lull" Waran "by expressing confidence in [the consignors]." See Rolf,
Waran's reliance on Eaves v. Designs for Finance,
Edward Tyler Nahem Fine Art, L.L.C. v. Barral,
CONCLUSION
Undoubtedly, Waran thought he made a prudent investment when he acquired antiquities from a reputable auction house. But what occurred here, although unfortunate and unfair, does not constitute fraud. For the foregoing reasons, Christie's motion for summary judgment is granted and this case is dismissed. The Clerk of Court is directed to terminate all pending motions and to mark this case as closed.
SO ORDERED.
"The Khmer empire was the largest continuous empire of South East Asia, based in what is now Cambodia." Khmer Empire , NEW WORLD ENCYCLOPEDIA (May 18, 2008, at 8:59 PM), http://www.newworldencyclopedia.org/entry/Khmer_Empire.
Specifically, in two emails, the Blackstone Stele's consigner stated: (1) "I don't remember this sculpture... Maybe I have some memory loss (I'm serious)"; and (2) "I would certainly help if I could-but I have no memory of this sculpture. It was probably someone else. Please send me a record of the consignment that bears my name. 99.99% this is not mine. I hope I don't have memory loss. I'm serious." (Cobden Aff., Ex. 10, at *2, *6.)
In connection with its summary judgment motion, Christie's submits an Expert Report by James McAndrew. (See Cobden Aff., Ex. 2 (the "Report").) Waran argues that this Court should strike this Report based on Christie's failure to comply with Federal Rule of Civil Procedure 26 and Federal Rule of Evidence 702. Ultimately, the Report's utility in determining this motion is de minimis, and this Court need not consider it.
In September 2017, this Court held that Waran failed to designate an expert within the time permitted under this Court's Scheduling Order. (See September 14, 2017 Hearing Transcript, ECF No. 62, at 20-21.)
Reference
- Full Case Name
- Sandran WARAN v. CHRISTIE'S INC.
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- Published