Sotheby’s Avoids Some But Not All Claims Asserted By Seller Of A Picasso That Buyer Failed To Pay For In Full

On May 7, 2024, Justice Joel M. Cohen dismissed some claims, and sustained others, brought against an auction house by the seller of a Picasso painting.

In Sotheby's, Inc. v. August Uribe Fine Art, LLC, Index No. 651350/2023, defendant August Uribe Fine Art, LLC (“AUFA”) contracted to purchase a Picasso painting consigned to Sotheby’s by seller Maria Iride Crippa. The Sotheby’s-AUFA purchase agreement stated that title to the painting would not pass to AUFA until the purchase price was paid in full. Before AUFA paid in full, Sotheby’s delivered the painting to a warehouse in which AUFA was to “hold” the painting subject to AUFA’s agreement that it would “be returned to Sotheby’s in the event [AUFA] fail[s] to timely remit the Purchase Price”. Sotheby's, Inc., Slip Op., p. 2. Sotheby’s notified Crippa that the painting had sold and that her net proceeds were $5,000,000. After AUFA sold and delivered the painting to a third party without making full payment, Sotheby’s sued AUFA for the balance due and related damages.

Crippa successfully intervened into Sotheby’s suit against AUFA, asserting claims against Sotheby’s for breach of contract, fraudulent inducement, negligent misrepresentation, violation of N.Y. General Business Law § 349, and breach of fiduciary duty. Sotheby’s moved to dismiss.

Crippa’s claims that Sotheby’s fraudulently or negligently misrepresented at that “[t]itle to the [Painting] shall only pass to the Buyer upon our receipt of full payment of the Purchase Price in full and cleared funds” were dismissed. Even assuming this proposition could be taken as a representation of current fact rather than an opinion as to a point of law, it accurately stated the terms of the Sotheby’s-AUFA purchase agreement and “[t]he fact that AUFA (and its counterparties) exercised dominion over the Painting despite these contractual provisions does not mean that Sotheby’s defrauded or misled Ms. Crippa.” Id., p. 7.

The GBL claim, based on a private contract concerning a high-end painting, lacked the necessary consumer orientation. Slip op., p. 8. Crippa’s contract claim failed to the extent it relied on the contention that Sotheby’s allowed title to transfer to AUFA before receipt of full payment; Sotheby’s was not responsible for AUFA’s assertion of title contrary to the purchase agreement. Id., p. 9. The contract claim survived to the extent it relied on Sotheby’s failure to forward to Crippa certain of the funds it received from AUFA, since “Sotheby's was obligated to pay the net sale proceeds within five business days of receiving each installment”, id., or on section 9 of Crippa’s consignment agreement with Sotheby’s, under which “Sotheby’s assumed liability for any loss or damage incurred while the Painting remained within its custody or control.” Id., p. 10.

The attorneys at Schlam Stone & Dolan frequently litigate cases involving commercial transactions, including sales of art. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.