Van Damme v Gelber

[*1] Van Damme v Gelber 2009 NY Slip Op 51515(U) [24 Misc 3d 1218(A)] Decided on July 7, 2009 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 7, 2009
Supreme Court, New York County

Alexandre Van Damme, Plaintiff,

against

Nahum Gelber and ARIJ GASIUNASEN, FINE ART OF PALM BEACH,INC., d/b/a GASIUNASEN GALLERY, Defendants.



Nahum Gelber,Third-Party Third-Party Plaintiff,

against

Arij Gasiunasen, Third-Party Defendant.



601995/07



For Alexandre Van Damme:

McLaughlin & Stern LLP

260 Madison Avenue

New York, New York 10016

For Arij Gasiunasen and

Gasiunasen Gallery:

Melvyn R. Leventhal, Esq.

488 Madison Avenue

New York, New York 10022

For Nahum Gelber:

Hartman & Craven LLP

488 Madison Avenue New York, New York 10022

Bernard J. Fried, J.

Motion sequence numbers 004 and 005 are consolidated for decision. In motion 004,

plaintiff Alexandre Van Damme moves, pursuant to CPLR 3212, for an order (1) granting partial summary judgment on his second cause of action for specific performance against defendant Nahum Gelber, and directing Gelber to deliver to him a painting by Gerard Richter, entitled "A.B. Diffus" (Painting), and (2) granting Van Damme partial summary judgment on his fourth cause of action seeking an award of reasonable attorney's fees.

In motion 005, Gelber moves, pursuant to CPLR 3211 and 3212, for summary judgment dismissing the complaint.

Background

Plaintiff Van Damme is a resident of Brussels, Belgium, and the alleged purchaser of the Painting. Defendant Gelber is a Canadian citizen, who resides in Monaco. As of January 2007, and the beginning of February 2007 (the relevant time periods), Gelber was the owner of the Painting, which is located in an apartment in Toronto, Canada, owned by Gelber's son.

Van Damme alleges that defendant Arij Gasiunasen Fine Arts of Palm Beach, Inc., d/b/a Gasiunasen Gallery (Gasiunasen), acting as Gelber's authorized agent, entered into a contract, dated January 31, 2007 (Contract), with Tricolat Fine Art (Tricolat) to sell the Painting for € 2 million (then the equivalent of $2.6 million), net to Gelber, plus $100,000 for Gasiunasen's commission.

According to the complaint, Tricolet executed a bill of sale with Van de Weghe Fine Art, LLC (Van de Weghe) of New York City, in which Van de Weghe agreed to buy the painting from Tricolat for $2.9 million. Allegedly, Tricolat was acting as an intermediary between Gasiunasen and Van de Weghe, who, in turn, was acting as an agent for Van Damme, the Painting's "ultimate purchaser." Van Damme claims that, as the ultimate purchaser, he paid in full for the Painting on February 5, 2007, by delivery of the funds to Gasiunasen's bank (Suntrust Bank). He claims further that Suntrust Bank attempted to wire € 2 million to Gelber's account at Barclay's Bank, in Monaco, but that the wire transfer was delayed, because Suntrust made an error in its wiring instructions to its correspondent bank. It is undisputed that the funds reached Gelber's account at Barclay's Bank on February 12, 2007, instead of February 7, 2007, the date set forth in the Contract for the payment of the funds. Van Damme contends that the five-day delay is inconsequential, and that Gelber wrongfully refused to deliver the Painting, in breach of the Contract.

Gelber denies that Gasiunasen was his authorized agent, either actual or implied, and alleges that Gasiunasen signed the purported Contract without his knowledge or permission, and that he had not seen the Contract prior to its execution. Therefore, Gelber contends, he is neither a party to, nor bound by, the Contract.

On February 7, 2007, the auction house Sotheby's London sold, at auction, a painting of a similar size to the Painting, also by Gerard Richter, for approximately $5.5 million. The parties dispute the extent of Gelber's awareness of this, although Gelber concedes that he became aware on that day that "the Richter at Sotheby's had gone for over 2,800,000 pounds." Van Damme alleges that, immediately following the auction at Sotheby's, Gelber and Gasiunasen disavowed the Contract, and refused to deliver the Painting. This action ensued. [*2]

The complaint contains four causes of action for (1) conversion, (2) specific performance, (3) breach of contract, and (4) reasonable attorney's fees.

The third-party complaint brought by Gelber against Gasiunasen asserts that, in the event that Van Damme prevails against Gelber, Van Damme will have so prevailed based upon the unauthorized acts of Gasiunasen, who will thus be liable to Gelber for damages of at least $3.5 million.

Van Damme now seeks summary judgment on the second and fourth causes of action for specific performance and attorney's fees, respectively, and Gelber seeks summary judgment against Van Damme dismissing the complaint. For the reasons discussed below, Van Damme's motion is granted, and Gelber's motion is denied.

Discussion

It is undisputed that Van Damme initiated the payment of the purchase price on February 5, 2007, but that the funds had not actually arrived in Gelber's bank account until five days after the date specified in the Contract (February 7, 2007), through no fault of Van Damme's. This relatively slight delay is inconsequential, because the Contract did not make time of the essence as to payment (ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, 489-90 [2006] [time was not of the essence where contract provided for payment "in no event later than December 31, 2001"; payment two weeks later was a reasonable time in which to perform]).

Nevertheless, Gelber refuses to deliver the Painting to Van Damme (and seeks dismissal of the complaint), asserting the following defenses: (1) Gasiunasen was not authorized to act as Gelber's agent regarding the Contract; (2) even if Gasiunasen were his authorized agent, Gasiunasen did not authorize him to consent to jurisdiction in New York; (3) the Contract is void as illusory; and (4) Van Damme is not entitled to specific performance or damages, because he abandoned the Contract. As for Van Damme's motion, Gelber argues that Van Damme is not entitled to summary judgment because (1) he has failed to submit an affidavit by a person having personal knowledge of the facts and (2) Van Damme failed to satisfy the express conditions that Gelber imposed about the payment of the full purchase price by February 7, 2007.

Gelber argues that Van Damme may not establish jurisdiction over him absent proof that Gelber authorized Gasiunasen to act as his agent. The record conclusively establishes, however, that Gelber had authorized Gasiunasen to act as his agent for the purpose of selling the Painting to Van Damme, and that, pursuant to the Contract that Gasiunasen entered into on Gelber's behalf, Van Damme paid the amount due.

Gelber is not a named party to the Contract, but the Contract made it clear that the contracting parties (the agents) were contracting on behalf of their respective principals. Under the law of agency, where an agent contracts with a third-party for a disclosed or partially disclosed principal (as is the case here)[FN1], the principal is subject to liability on the contract made by the agent acting within the agent's authority and if made in proper form, and with the understanding that the principal is a party (Restatement [Second] of Agency § 144; McGarry v Miller, 158 AD2d 327 [1st Dept 1990] [principal liable for the conduct of the agent acting within the scope of the agent's authority]). [*3]

Agency is a fiduciary relationship that results from the manifestation of consent of one person to permit another to act on that person's behalf (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1993]), and it binds the principal when the agent enters into a contract within the scope of the agent's authority (Hidden Brook Air, Inc. v Thabet Aviation Intl. Inc., 241 F Supp 2d 247, 260 [SD NY 2002]). "A principal-agent relationship may be established by evidence of the consent of one person to allow another to act on his or her behalf and subject to his or her control, and consent by the other to so act'" (Art Finance Partners, LLC v Christie's Inc., 58 AD3d 469, 471 [1st Dept 2009], quoting Fils-Aime v Ryder TRS, Inc., 40 AD3d 917 [2d Dept 2007] [internal quotation marks and citation omitted]).

Evidence in the record conclusively establishes that Gelber consented to the sale of the Painting, and that he authorized Gasiunasen to act as his agent in so doing. Moreover, contrary to Gelber's contention, the record contains sufficient evidence to warrant the granting of summary judgment in Van Damme's favor, even in the absence of evidence by way of affidavit (Olan v Farrell Lines, Inc., 64 NY2d 1092, 1093 [1985] [defendant entitled to summary judgment although supporting proof consists of attorney affidavit annexing plaintiff's deposition testimony and other proof rather than an affidavit of fact on personal knowledge]; EBC Amro Asset Mgt. Ltd. v Kaiser, 256 AD2d 161, 161 [1st Dept 1998] [ same]; Josephson v Crane Club, 264 AD2d 359, 360 [1st Dept 1999] [deposition testimony constitutes admissible evidence by someone with personal knowledge of the facts]).

At his deposition, Gelber's testimony establishes that he authorized Gasiunasen to sell the Painting on his behalf. For example, Gelber testified that "[b]ased upon my experience on wire transfers from the U.S. to Monaco, that inasmuch as the funds had been wire transferred on February 5th that the money would arrive either that day or the day following, being February 6th" (Dep. Tr. at 132). Gelber testified that he did not question why the funds had been sent first to Gasiunasen's bank, and then to his bank, rather than directly to his bank (Dep. Tr. at 133). Gelber answered affirmatively to questions as to (1) whether he wanted a document prepared that confirmed that Gasiunasen sold the Painting for his account for € 2 million, and that he instructed that, upon receipt of the funds, "they are to arrange for the release of the painting" (Dep. Tr. at 135); (2) whether he "authorized the Gasiunasen Gallery to sell a Richter for two million euros," but "subject to certain conditions" (Dept. Tr. at 155); and (3) whether he deemed himself committed to the release of the Painting to any entity that Gasiunasen directed, had he received the € 2 million prior to the Sotheby's auction (Dep. Tr. at 176).

To be sure, in his affidavit, sworn to February 12, 2009, Gelber emphatically states, on page three, that: "Gasiunasen is not, and never was, my agent." Although issues of fact and credibility may not be ordinarily determined on a motion for summary judgment, where a self-serving affidavit statement by a party clearly contradicts that party's own deposition testimony, and can only be considered to have been tailored to avoid the consequences of the earlier testimony (see deposition testimony excerpts, above), such affidavit is insufficient to raise a triable issue of fact to defeat a summary judgment motion (Phillips v Bronx Lebanon Hosp., 268 AD2d 318, 320 [1st Dept 2000]). This is especially true here where Gelber's conclusory denial that he authorized Gasiunasen to act as his agent in selling the Painting not only contradicts his deposition testimony, it also contradicts other statements in that very same affidavit.

Indeed, further on in his affidavit, Gelber states that (1) he has both purchased and sold a total [*4]of three works of art from and to Gasiunasen; (2) in December 2006, he told Gasiunasen that he was willing to consider selling the Painting for € 2 million; (3) on January 7, 2007, Gasiunasen informed him that he had received some interest in the Painting from a potential buyer; (4) on January 26, 2007, having heard nothing further about the possible sale of the Painting, he decided to take the Painting off the market, aware that Sotheby's was about to sell another Richter painting on February 7, 2007; (5) on January 26, 2007, he told the administrator of the Gasiunasen Gallery (Karene Telesca) that he no longer wished to sell the Painting; (6) that same day, Gasiunasen called Gelber, and "pleaded" with him to allow the Painting to be sold to a certain buyer who had made an offer to purchase the Painting for € 2 million; and (7) Gelber "eventually relented," and, in a separate telephone conversation from Monaco to Palm Beach about one hour later, he told Gasiunasen that he would allow the Painting to be sold, but subject to three conditions: (a) € 2 million net to Gelber, (b) the purchase price had to be credited to his Barclay's Bank account in Monaco prior to the Sotheby's London auction on February 7, 2007, and (c) the Painting would not be moved or released until the full purchase price was credited to that account (Gelber February 12, 2009 Aff. at 10-12).[FN2]

Furthermore, contrary to Gelber's contention, the record contains an affidavit by a person with personal knowledge, namely Arij Gasiunasen himself, who describes in detail the manner in which Gelber authorized his gallery to act as his agent for the sale of the Painting. As discussed above, this does not create an issue of credibility, because it is not inconsistent with Gelber's own deposition testimony establishing that he authorized Gasiunasen as his agent for the sale of the Painting. Additionally, an email from Gasiunasen to Gelber, dated February 5, 2007, confirms the terms of the transaction. It provides: "This will serve to confirm that we have sold for your account and for an amount of Two Million Euro, net to you, the following painting:

Gerard Richter

Diffus (612-2) 1986

Oil on Canvas

225 x 200 cm As per your instructions we have today wire transferred the funds to your account at Barclay's Bank. Upon receipt of the funds please arrange for the release of the painting to _______ who will act on our behalf. He will provide the necessary identification."

As for the issue of jurisdiction, the Contract provides:

"This transaction shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its choice of law rules. In the event of a dispute, the parties consent to the exclusive jurisdiction of the state and federal courts sitting in the State of New York. This Agreement will be construed without regard to any presumption or rule of construction to the effect that a written agreement will be construed against the party that drafted such agreement. The parties hereto consent and submit to the jurisdiction of the state and federal courts sitting in the [*5]State of New York" (emphasis added).

This forum selection clause is enforceable (see General Obligations Law § 5-1402; Freeford Ltd. v Pendleton, 53 AD3d 32, 36 [1st Dept 2008] [forum selection clause designating New York valid where the contract containing the clause is worth not less than $1 million], lv denied 12 NY2d 702 [2009]).

Gelber argues that, even if Gasiunasen were his authorized agent, and even if the clause is valid, it is not binding on him. He contends that, because the Painting is located in Canada, Gasiunasen is located in Florida, Gelber is a citizen of Canada and resides in Monaco, Van Damme resides in Belgium, and Ticolat Fine Art is located in Japan, he cannot reasonably be said to have contemplated a contractual provision consenting to jurisdiction in New York, and thus, that provision is outside the scope of any purported agency or authority.

This argument in unpersuasive. Gelber does not contend that he gave Gasiunasen any specific instruction as to the issue of contractual jurisdiction, and fails to establish that, given the international nature of the transaction, where some of the parties are located in New York, that it would be unreasonable for his agent to have executed the Contract containing the consent to New York jurisdiction provision. Van de Weghe is located in New York City, and he played a major role in the transaction. Van de Weghe acted as agent for Van Damme, and he is the person who visited the apartment in Toronto to inspect the Painting prior to the purchase. The escrow agent — the law firm of McLaughlin & Stern, LLP — is located in New York City, and the escrow agreement, dated February 2, 2007, designates Signature Bank, 261 Madison Avenue, New York, New York, as the location of the escrow account. Considering the international nature of the transaction, with no one jurisdiction predominating in importance, it was not unreasonable for the contracting parties to have chosen New York as the situs for any litigation. As such, Gelber is bound by the agreement (and its terms) that his authorized agent entered into on his behalf (O'Hare v General Marine Transport Corp., 740 F2d 160, 168-169 [2d Cir 1984], cert denied 469 US 1212 [1985]).

Moreover, in seeking dismissal of a related action in Canada (also brought by Van Damme against Gelber and Gasiunasen concerning the same subject matter presented here), Gelber asserted that that action had no connection with Ontario, noting that Van de Weghe was located in New York, New York, that the relevant agreements expressly provide that they are subject to the laws of New York, that the parties consent to the jurisdiction of the New York courts, and that New York is "a more appropriate forum in which to resolve the dispute." By taking this position, Gelber ratified the forum provision, even if it had been unauthorized (see Skyline Agency v Ambrose Coppotelli, 117 AD2d 135, 148 [2d Dept 1986] [principal bound to a third-party by acts of another by confirming unauthorized acts either expressly or impliedly by words or conduct]).

Gelber next argues that the Contract is illusory and void for lack of mutuality of obligation, because neither Van Damme, nor his agent, was obligated to purchase the Painting. This assertion is based upon the following provision in the Contract: "Seller understands that Purchaser's [Ticolat] purchase is conditioned upon performance by Purchaser's client, the ultimate purchaser (the Ultimate Purchaser')."

Gelber's argument violates the principal that courts are to avoid an interpretation that renders a contract illusory, and therefore unenforceable for lack of mutuality of obligation (Curtis Props. [*6]Corp. v Greif Cos., 212 AD2d 259, 265-66 [1st Dept 1995]). Fairly read, this provision is meant only to confirm that Ticolat was acting on behalf of its principal, and not for its own account, and would thus not be personally liable (see Leonard Holzer Assoc. v Orta, 250 AD2d 737, 738 [2d Dept 1998]). Indeed, the Contract recites that the "Seller" is "acting by and through Seller's Agent" (i.e., Gasiunasen). The Contract expressly states that both contracting parties are acting on behalf of their respective principals. Ticolat's purported reservation of rights does not absolve its principal in the event that the principal does not honor the contractual obligations (see McGarry v Miller, 158 AD2d 327, supra [principal liable for the conduct of the agent acting within the scope of the agent's authority]).

Gelber next argues that Van Damme's demand for the return of the purchase price constituted an abandonment of the Contract, thereby precluding his right to pursue a claim for specific performance or damages. This argument is without merit, and Gelber's reliance upon decisions such as Savitsky v Sukenik (240 AD2d 557 [2d Dept 1997]) for that proposition is misplaced. In Savitsky v Sukenik, the court found that plaintiff abandoned the contract for the purchase of a building by not paying the purchase price, by demanding the return of her down payment, and by taking no steps to preserve her rights under the contract, or to prevent the defendant seller from selling the building to a third-party. Her demand for the return of the down payment was consistent with her earlier demand for the same return on the ground that that the building was unsuitable for her purposes. The court stated that "it is not even alleged that either party was ready, willing, and able to perform on or within a reasonable time after the closing date set forth in the contract, and the record does not reveal that either party made a bona fide effort to either tender or demand the tender of performance." Here, in contrast, Van Damme's performance of his contractual obligation, i.e., payment of the full amount of the purchase price, is hardly indicative of an abandonment of his contractual obligations.

Gelber also contends that he need not deliver the Painting (or pay damages) because the purchase price had not arrived on or before February 7, 2007. As discussed above, that argument lacks merit because the parties had not made time of the essence, and, therefore, Van Damme had a reasonable time within which to perform (see e.g. ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, supra), which he did. That the parties did not intend to make time of the essence as to payment is also indicated by the language in the Contract that: "Title to the Work will not pass to Purchaser until Seller and/or Seller's Agent has received and collected payment of the Purchase Price in full." The use of the word "until" indicates that the only express condition was payment of the purchase price in full (see MHR Capital Partners Presstek, Inc., __NY3d __, 2009 NY Slip Op 05200 [2009] [use of terms such as "if," "unless," and "until" constitute unmistakable language of condition]).

As for Van Damme's request for summary judgment on the fourth cause of action for an award of reasonable attorney's fees, Section 3 of the Contract provides: "Each party will bear the legal fees and costs of their respective attorneys. Nevertheless, in the event that either Party breaches this Agreement and litigation ensues, the prevailing Party in such litigation shall be entitled to recover the prevailing Party's reasonable attorney's fees and costs."

As the prevailing party, Van Damme is entitled to this award (Luis Lopez & Son's v Dannie's Auto Care, 61 AD3d 643 [2d Dept 2009]; Spindel v Shor & Assoc., 297 AD2d 244 [1st [*7]Dept 2002]), and Gelber has not argued otherwise.

Finally, although Gelber argues that he is not liable, he does offer opposition to Van Damme's request for specific performance in the event that he is indeed found liable, which is the case here. Therefore, the request for specific performance as a remedy for breach of contract is also granted.

Accordingly, it is

ORDERED motion 004 by plaintiff Alexandre Van Damme for summary judgment on his second (specific performance) and fourth (attorney's fees) causes of action against defendant Nahum Gelber is granted; and it is further

ORDERED that, as for the cause of action for specific performance, plaintiff Alexandre Van Damme is directed to settle an order with respect to this cause of action; and it is further

ORDERED that the issue of reasonable attorney's is referred to a Special Referee to hear and report with recommendations; except that, in the event of and upon the filing of a stipulation of the parties, as permitted by CPLR 4317, the Special Referee, or another person designated by the parties to serve as referee, shall determine the aforesaid issue; and it is further

ORDERED that a copy of this order with notice of entry shall be served on the Special Referee Clerk in the Motion Support Office in Room 119, 60 Centre Street, New York, New York, to arrange a date for the reference to a Special Referee for the hearing on attorney's fees; and it is further

ORDERED that motion 005 by defendant Nahum Gelber is denied.

Dated:

ENTER:

_________________

J.S.C. Footnotes

Footnote 1:See discussion in a prior decision in this action, dated January 23, 2008, regarding motion sequence number 001, in which Gasiunasen sought dismissal on two grounds, including that it cannot be liable as agent for its principal's failure to perform.

Footnote 2:The effect of these conditions not being strictly complied with is discussed below.