Zaretsky v. William Goldberg Diamond Corp., No. 15-35 (2d Cir. 2016)Annotate this Case
This case stems from a dispute between the parties regarding the ownership of a 7.35 carat pear-shaped diamond. WGDC consigned the diamond to celebrity fashion stylist, Derek Khan. Khan, without WGDCʹs permission, subsequently sold the diamond to a third party. Through a series of transfers, the diamond ultimately came into the possession of the Zaretskys. The district court concluded that Khan had the power to transfer WGDCʹs rights to the diamond under NYUCC 2-403(2) solely because, by his occupation, he clearly held himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. Therefore, the district court found that Khan qualified as a merchant. Pursuant to section 2-403(2), Khan had the power to transfer all rights in a "good" given to him by an "entruster" if he was at the time a merchant who "deals in goods of that kind." However, the court concluded that, although the New York Court of Appeals has not explicitly defined ʺdeal[ing] in goods of that kind,ʺ persuasive authority from New York courts and elsewhere leads the court to conclude that the phrase means the regular sale of the kind of goods at issue in the case; applying that definition, the court concluded that the Zaretskys have not raised a triable issue of fact as to Khanʹs capacity to transfer title under section 2‐403(2) because there is no record evidence that he regularly sold diamonds or other high‐end jewelry; and the Zaretskysʹ remaining arguments - regarding the timeliness of this appeal, whether the consignment is a ʺtransaction of purchaseʺ under section 2‐403(1) of the NYUCC, and the defense of laches - are without merit. Therefore, the court directed the district court to enter summary judgment for WGDC on remand.