ACA Galleries, Inc. v. Kinney, 552 Fed.Appx. 24 (2014) 552 Fed.Appx. 24 West Headnotes (1) This case was not selected for publication in West's Federal Reporter. RULINGS BY SUMMARY ORDER DO NOT HAVE [1] Sales PRECEDENTIAL EFFECT. CITATION TO A Mistake SUMMARY ORDER FILED ON OR AFTER JANUARY Under New York law, purchaser of painting 1, 2007, IS PERMITTED AND IS GOVERNED BY could not obtain rescission of the purchase FEDERAL RULE OF APPELLATE PROCEDURE based on mutual mistake after discovering the 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. painting was a forgery; although seller ensured WHEN CITING A SUMMARY ORDER IN A the availability of an arts foundation to inspect DOCUMENT FILED WITH THIS COURT, A PARTY and authenticate the painting prior to its sale, the MUST CITE EITHER THE FEDERAL APPENDIX purchaser instead elected to ask the foundation to OR AN ELECTRONIC DATABASE (WITH THE inspect the painting following its purchase, and NOTATION “SUMMARY ORDER”). A PARTY CITING the purchaser was aware that its self-conducted A SUMMARY ORDER MUST SERVE A COPY OF IT pre-purchase inspection provided it with only ON ANY PARTY NOT REPRESENTED BY COUNSEL. limited knowledge with respect to the fact to United States Court of Appeals, which the mistake related but treated its limited Second Circuit. knowledge as sufficient. ACA GALLERIES, INCORPORATED, a/k/a ACA 2 Cases that cite this headnote American Masters, Inc., Plaintiff–Appellant, v. Joseph A. KINNEY, Defendant–Appellee. * *24 Appeal from the United States District Court for No. 13–1099–cv. the Southern District of New York (Miriam Goldman | Cedarbaum, Judge). Jan. 15, 2014. UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the Synopsis judgment is AFFIRMED. Background: Art purchaser brought rescission and fraud action against art seller after the painting it purchased turned Attorneys and Law Firms out to be a forgery. The United States District Court for the *25 Daniel A. Fried (Susan R. Nudelman, on the brief), Law Southern District of New York, Miriam Goldman Cedarbaum, Office of Susan R. Nudelman, Dix Hills, NY, for Appellant. J., 928 F.Supp.2d 699,granted seller's motion for summary judgment. Purchaser appealed. Zara Watkins, New York, NY, for Appellee. PRESENT: RICHARD C. WESLEY, PETER W. HALL and DENNY CHIN, Circuit Judges. Holding: The Court of Appeals held that purchaser of painting could not obtain rescission of purchase based on mutual mistake after discovering painting was a forgery. SUMMARY ORDER ACA Galleries, Inc. appeals from the February 25, 2013 Affirmed. judgment and February 21, 2013 opinion and order of the United States District Court for the Southern District of New Procedural Posture(s): On Appeal; Motion for Summary York (Miriam Goldman Cedarbaum, Judge ), granting Joseph Judgment. Kinney summary judgment and denying ACA's motion for © 2019 Thomson Reuters. No claim to original U.S. Government Works. 1 ACA Galleries, Inc. v. Kinney, 552 Fed.Appx. 24 (2014) summary judgment. We assume the parties' familiarity with N.Y.S.2d 318 (3d Dep't 2010). Moreover, ACA was aware that an authentication by the Foundation “would make the the facts and issues raised on appeal. 1 painting more saleable at a higher price.” Bergen Aff. ¶ 9. ACA could have accepted the higher price that accompanies It is uncontested that ACA made out a prima facie case of certainty of authenticity, but chose instead to accept the risk mutual mistake under New York law. See Gould v. Bd. that the painting was a forgery. The contract is not voidable of Ed. of Sewanhaka High Sch. Dist., 81 N.Y.2d 446, 453, merely because the consciously accepted risk came to pass. 599 N.Y.S.2d 787, 616 N.E.2d 142 (1993). However, ACA cannot obtain rescission because of its failure to investigate ACA's arguments about Kinney's title are waived; we decline the authenticity of the painting at issue. See, e.g., P.K. Dev. v. to consider them in light of the facts of this case, in which Elvem Dev. Corp., 640 N.Y.S.2d 558, 226 A.D.2d 200, 201 the record reflects no dispute as to ACA's lawful claim to the (1st Dep't 1996). Although Kinney ensured the availability painting. We have considered all of ACA's arguments and find of the Milton & Sally Avery Arts Foundation to inspect them to be without merit. and authenticate the painting prior to its sale, ACA instead elected to ask the Foundation to inspect the painting following For the reasons stated above, the judgment of the district court its purchase. ACA was aware that its self-conducted pre- is AFFIRMED. purchase inspection provided it with “only limited knowledge with respect to the facts to which the mistake relates but treat[ed its] limited knowledge as sufficient.” Restatement All Citations (Second) of Contracts § 154(b); see also Rose Inn of Ithaca, 552 Fed.Appx. 24 Inc. v. Great American Ins. Co., 75 A.D.3d 737, 739, 905 Footnotes * The clerk of the court is directed to amend the caption to conform with the listing of the parties above. 1 The standard of review is neither contested nor determinative. Lederman v. NYC Dep't of Parks and Recreation, 731 F.3d 199, 202 (2d Cir.2013). End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works. © 2019 Thomson Reuters. No claim to original U.S. Government Works. 2 Artcurial, S.A. v. Lowenthal, 763 F.Supp. 768 (1991) Attorneys and Law Firms 763 F.Supp. 768 United States District Court, *768 LeBoeuf, Lamb, Leiby & MacRae, New York City S.D. New York. (Ellen August, of counsel), for plaintiff. ARTCURIAL, S.A., Plaintiff, *769 John B. Koegel, New York City (Norman H. Zivin, of v. counsel), for defendants. Chester LOWENTHAL, Esq., and Hand– In–Hand Galleries Ltd., Defendants. MEMORANDUM AND ORDER No. 89 Civ. 6409 (RO). | OWEN, District Judge: May 20, 1991. This lawsuit arises out of plaintiff Artcurial's purchase of Synopsis a painting from defendant Chester Lowenthal, an art dealer Buyer of unauthentic painting brought action against art and owner of Hand-in-Hand Galleries Ltd. in New York. dealer to recover for fraud by representing that painting was Artcurial, a French corporation, paid Lowenthal $180,000 for an original. The District Court, Owen, Senior District Judge, a painting that Lowenthal represented to be an authentic work held that art dealer's fraudulent sale of painting warranted by the deceased Spanish painter Manolo Millares. Shortly punitive damages award of $100,000. after plaintiff took possession of the painting and shipped it to France, it became aware that the painting was not an authentic Judgment for buyer. Millares. Plaintiff also learned that in fact Mr. Lowenthal had purchased the painting two months earlier for only $2200 and therefore knew that the painting was not an authentic Millares. Plaintiff commenced this action to recover the purchase price West Headnotes (2) of the painting and punitive damages for the fraud perpetrated by the defendant. [1] Fraud Amount Awarded Although trial of this matter was scheduled for Monday, May 20, 1991, a fact of which Mr. Lowenthal was made aware Art dealer's fraudulent sale of unauthentic by his counsel, counsel for the defendants represented to the painting for $180,000 after buying it for $2,200 Court on the morning of trial that he has been unable to locate two months earlier warranted punitive damages or communicate with Mr. Lowenthal for several months. As award of $100,000 under New York law. counsel represented that he was unable to present a defense 1 Cases that cite this headnote in the absence of Mr. Lowenthal, a judgment of default was entered in favor of the plaintiff, and defense counsel's request to be relieved was granted, leaving only the matter of damages [2] Fraud to be determined. Knowledge of Defendant Art dealer's representation that painting was [1] The matter of compensatory damages is plainly original was knowingly fraudulent and was established and uncontroverted by reference to the amount breach of trust under New York law; dealer that plaintiff paid for the painting, $180,000, plaintiff standing bought painting for $2,200 two months before ready to return the painting upon payment of the judgment, selling it for $180,000 and subsequently or apply it against the judgment as appropriate. Plaintiff disappeared and failed to defend fraud suit. also seeks punitive damages in the amount of $200,000 for the fraud perpetrated by Mr. Lowenthal. Under the law of New York, which governs in this diversity action, an award of punitive damages is appropriate where “the defendant's conduct has constituted ‘gross, wanton, or willful fraud © 2019 Thomson Reuters. No claim to original U.S. Government Works. 1 Artcurial, S.A. v. Lowenthal, 763 F.Supp. 768 (1991) or other morally culpable conduct’ to an extreme degree.” supported by Mr. Lowenthal's disappearance and consequent failure to defend. Smith v. Lightning Bolt Productions, Inc., 861 F.2d 363, 371 (2d Cir.1988) (citing Borkowski v. Borkowski, 39 Upon all of these circumstances, I conclude that an award of N.Y.2d 982, 387 N.Y.S.2d 233, 233, 355 N.E.2d 287 (1976)). punitive damages is appropriate in this case. The evidence Although the defendant's default enables the Court to accept before me reveals that Mr. Lowenthal acted in gross disregard as true all of the allegations in plaintiffs complaint, in light of his contractual obligations toward Artcurial, and he of plaintiff's application for punitive damages, a review of breached the duty of trust between himself as one who held the documentary evidence submitted to me on this subject is himself out as an art dealer and his purchaser.