Daughters of Mary Mother of Our Savior v LaSalleAnnotate this Case
Decided on September 16, 2011
Supreme Court, Albany County
The Daughters of Mary Mother Of Our Savior and St. Joseph's Chapel, Inc., Plaintiffs,
Mark LaSalle, Individually and d/b/a MARK LASALLE FINE ART and MARK R. ZAPLIN, Defendants. MARK R. ZAPLIN, Third-Party Plaintiff, PAUL DUMONT, Third-Party Defendant.
Mark LaSalle, Plaintiff,
Clarence Kelly, a/k/a Bishop Clarence Kelly, ST. PIUS CHAPEL, INC. a/k/a SOCITY OF ST. PIUS V, ROBERT ALEXANDER BOYLE and PAUL DUMONT, Defendants.
APPEARANCES: SCHWARTZ, GOLDSTONE & CAMPISI, LLP
(Joseph Campisi, Esq., of Counsel)
Attorneys for Plaintiffs
90 Broad Street - Suite 403
New York, New York 10004
ROTTENBERG LIPMAN RICH, PC
(Thomas E. Chase, Esq., of Counsel)
Attorneys for Defendant/Third-Party Plaintiff Mark Zaplin
369 Lexington Avenue - 16th Floor
New York, New York 10017
LAW OFFICES OF FEENEY, CENTI & MACKEY
(Daniel Centi, Esq., of Counsel)
Attorneys for Defendant Mark LaSalle
116 Great Oaks BoulevardAlbany, New York 12203
JOHN H. PENNOCK, ESQ.
Attorney for Defendants Clarence Kelly a/k/a
Bishop Clarence Kelly and St. Pius Chapel, Inc.
258 Ushers Road, Suite 204
Clifton Park, New York 1206
Michael C. Lynch, J.
By Notice of Motion filed July 12, 2011, returnable July 21, 2011, defendant LaSalle seeks an order of summary judgment dismissing the complaint. Correspondingly, by Notice of Motion filed July 14, 2011, returnable August 5, 2011, defendant Zaplin also seeks an order of summary judgment dismissing the remaining two causes of action against him alleging fraud (4th cause of action) and breach of fiduciary duty (5th cause of action). Plaintiffs oppose each application.[FN1]
Essentially, defendant LaSalle seeks an order dismissing each remaining [*2]cause of action contending the negligence (1st cause of action) and breach of contract (2nd cause of action) claims are barred by the statute of limitations. Both LaSalle and Zaplin contend that the remaining claims of fraud and breach of fiduciary duty are precluded by the arm's length sale between the parties.
As discussed in the Court's December 12, 2009 Decision and Order (Lynch, J.) denying defendant Zaplin's motion to dismiss, defendant LaSalle provided the plaintiffs (hereinafter the Daughters) with an appraisal in September, 2004 valuing the painting Notre Dame Ange by William Adolphe Bougureau between $150,000 - $250,000, while outlining the need for significant restoration (see Exhibit "B" to LaSalle and Zaplin Motions). On November 22, 2004, the plaintiffs obtained a "Proposal for Treatment" from the Williamstown Art Conservation Center, Inc. (WACC) to perform the restoration for $14,100 (see Exhibit "D" to Zaplin motion). The Daughters authorized the restoration work which continued into early 2006.
The submissions show that in February, 2006, representatives of the Daughters and LaSalle met at the WACC to view the restored painting. During this meeting, LaSalle informed Bishop Kelly that representatives from Sotheby's had viewed the painting and provided an estimated auction value between $400,000 to $600,000 (see Kelly Transcript, p. 73). LaSalle also advised that a Sotheby auction sale would be reduced by a 25% commission (Id.). LaSalle informed Bishop Kelly that he had a buyer willing to pay $350,000. During that same conversation, LaSalle increased the offer to $450,000 — essentially, the net equivalent of an auction sale at $600,000. Notably, in his supporting affidavit, LaSalle acknowledges that he had been asked to find a buyer, without further elaboration (see LaSalle affidavit, dated 7/7/11 at paragraph 9). Bishop Kelly testified that he was "suprised" that LaSalle did not just present the $450,000 offer since "[h]e represented us" (Kelly Transcript, p. 122). He asked LaSalle if the $450,000 was "a fair price" and LaSalle responded "Yes, it is a fair price" (Id p. 74). LaSalle also offered to donate his commission to the school his daughter attended (Id p. 75) — a gratuitous and generous gesture that also confirms his expectation of a commission. For his part, LaSalle testified that he informed Bishop Kelly that he "was representing Mr. Zaplin at that point" (Exhibit "F", p.
356)[FN2]. The eventual purchase agreement identified the buyer as Mark LaSalle Fine [*3]Art "on behalf of a client" (see Exhibits "D", "E" and "F").
In May, 2006, LaSalle sent a proposed purchase agreement to Bishop Kelly, (Exhibit "D"). The $450,000 check was also sent to Bishop Kelly around this time. In response, Bishop Kelly explained that he had consulted an attorney and, as noted in the Court's March 12, 2009 Decision and Order, proposed several revisions to the terms of the agreement without adjusting the purchase price (Exhibit "E"). The record also shows that the Daughters consulted a parishioner, Mr. Erdelyi, and independently researched the value of Bougureau paintings on the internet prior to the sale. LaSalle forwarded a revised agreement on June 20, 2006, which included Bishop Kelly's revision that a transfer would not occur until the $450,000 check was deposited (Exhibit "F"). Bishop Kelly deposited the check in early August, 2006.
In his deposition, Zaplin explained that he spent an additional $45,000 to apply a lining to the back of the painting and for a frame. After arranging to have the painting displayed at the Dallas Museum of Fine Art (albeit the painting remained in New York), Zaplin sold the painting in 2007 for $2.15 million through a Texas art dealer. After expenses, the net profit was distributed as follows: $150,000 to Dumont, with LaSalle and Zaplin each receiving $750,000. Curiously, Zaplin explained that the distribution was only determined after the Texas sale (Zaplin Transcript, p. 192).
From the scenario described above, both LaSalle and Zaplin contend that the Daughters sold the painting in a protracted arm's length transaction, precluding any claim of a fiduciary relationship with LaSalle or reasonable reliance on the value representations made by LaSalle.
The Court recognizes that there is no evidence of any direct communications between Zaplin and the Daughters . There is also no dispute that Zaplin funded the purchase of the painting.
Superficially, the scenario described above indicates that LaSalle may have been wearing two hats at the February, 2006 meeting, representing both the Daughters in securing a fair sale, and the interests of his purchasing client. His true role remains a question of fact for a jury to access. As discussed in the Court's March 12, 2009 Decision and Order, the Dumont affidavit raises serious questions of fact implicating both LaSalle and Zaplin in a scheme to defraud the Daughters. The Court agrees with defendants that the Dumont affidavit has been [*4]seriously called into question by Dumont's equivocal deposition testimony — a significant development that plaintiffs have inexplicably failed to address in their opposition papers. From a reading of the Dumont deposition, it is evident, Dumont has backed off the affidavit that unquestionably implicates LaSalle, Zaplin and himself, but not completely (Exhibit "M" Dumont Transcript, pp. 193-197; 214-216; see complete deposition transcript at pp. 138-160; 163-166). Dumont's credibility has been compromised, but credibility is ultimately for a jury to resolve, not the Court. The Dumont affidavit embraces a scheme to defraud arising from the September, 2004 appraisal through the acquisition — a scenario that cannot be rejected by this Court as a matter of law. Not to be overlooked here is that during his February, 2006 meeting with Bishop Kelly, LaSalle reported the Sotheby auction estimate as $400,000 to $600,000, compared to the Sotheby experts who discussed a value range from $500,000 to $1,000,000 (Sartori Transcript, pp. 132-133; Doller Transcript, pp. 59-60). As previously determined by Decision and Order (Lynch, J.) dated February 16, 2011, a factual issue also exists as to the viability of an e-mail delivered to plaintiffs on January 24, 2008 concerning an independent appraisal from Sotheby International valuing the painting for more than a million dollars, which LaSalle ostensibly failed to disclose.
Moreover, the scenario outlined above presents a question of fact as to both reasonable reliance and a fiduciary relationship between the Daughters and LaSalle. All of Plaintiffs' claims are essentially premised on LaSalle's repeated undervaluation of the painting in his 2004 appraisal and during the 2006 meeting at the WACC. A claim for fraudulent misrepresentation requires "a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173, 178, citing Lama Holding Co. V. Smith Barney, 88 NY2d 413, 421). To establish a breach of fiduciary duty, a plaintiff must show the existence of a fiduciary relationship, misconduct by the defendant and resulting damages (see EBCI, Inc. v. Goldman, Sachs & Co., 5 NY3d 11, 19-20; Kurtzman v. Bergstol, 40 AD3d 588; 1 PJI §3.59). With respect to a claim premised on negligent misrepresentation, a "special relationship may be established by persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified" (Mandarin Trading Ltd v. Wildenstein, supra 16 [*5]NY3d at 180, citing Kimmell v. Schaefer, 89 NY2d 257, 263 [internal quotations omitted]). It bears emphasis that in determining whether a fiduciary or special relationship exists, "liability is not dependent solely upon an agreement or contractual relationship between the fiduciary and the beneficiary but results from the relation" (Restatement [Second] of Torts §874 Comment b; EBCI, Inc. v. Goldman, Sachs & Co., supra at p. 20).
There is no dispute here that LaSalle provided the September 2004 pre-restoration appraisal, and that the painting required substantial restoration as stated in the appraisal. While LaSalle waived the appraisal fee, that gratuitous gesture does not change the fact he agreed to and did provide the appraisal. The Daughters also heeded LaSalle's recommendation to have the painting restored at the WACC. While Zaplin argues that there was no meaningful contact between the Daughters and LaSalle from the September 2004 appraisal date until the February 2006 meeting at WACC, Sister Xavier testified in her deposition that she spoke with LaSalle every couple of months (Xavier deposition, p. 58).
Given this background and Bishop Kelly's explanation of the February 2006 meeting, a factual issue as to reasonable reliance and a fiduciary relationship remains. This is not a situation like in Mandarin Trading Ltd., where the defendant provided a written appraisal of the painting Paysage aux Trois Arbres by Paul Gauquin to a non-party with no known connection to the plaintiff (Mandarin Trading Ltd., supra). Nor is this an instance of a one-time meeting where a specialist rendered an opinion as to the value of a work of art (Ravenna v. Christie's, Inc., 289 AD2d 15). The claims in Mandarin Trading and Ravenna were both dismissed as mere opinion, lacking any fiduciary relationship. Notwithstanding the time gap between the initial 2004 appraisal and 2006 meeting to view the restored painting, LaSalle remained involved with the Daughters creating a factual question as to whether a fiduciary relationship existed and whether plaintiffs reasonably relied upon his advice.
Citing to Stanfield Offshore Leveraged Assets v. Metropolitan Life Ins. Co., (64 AD2d 472), Zaplin maintains there is no showing he provided "substantial assistance" to LaSalle because he did not actually participate in making any misrepresentations. "Substantial assistance" has been defined as "where (1) a defendant affirmatively assists, helps conceal, or by virtue of failing to act when required to do so enables the fraud to proceed, and (2) the actions of the aider/abettor proximately caused the harm in which the primary liability is predicated" (Unicredito Italiano SPA v. JP Morgan Chase Bank, 288 F. Supp. 2d 485, 502 [SD NY 2003 [internal quotation marks omitted]; see Kaufman v. Cohen, [*6]307AD2d 113, 126). The Court does not agree with Zaplin's thesis that "substantial assistance" is limited to an actual misrepresentation by Zaplin to the Daughters. Zaplin's funding of the acquisition satisfies the "substantial assistance" element required to hold him responsible for aiding and abetting the fraud and breach of fiduciary claims. This is particularly so considering that LaSalle was able to up the offer from $350,000 to $450,000 during the February 2006 meeting with Bishop Kelly; and the check was sent to Bishop Kelly before the Purchase Agreement was fully executed. As the "money man" in the scheme described by Dumont a factual issue exists as to whether Zaplin aided and abetted LaSalle.
LaSalle maintains that the plaintiffs' negligent misrepresentation claim (1st cause of action) and breach of contract claim (2nd cause of action) are barred by the three year statute of limitations imposed under CPLR 214. The summons in this case was filed on August 11, 2008, more than three years after the appraisal was provided by LaSalle. These claims however, are premised on both the 2004 appraisal and the valuation provided by LaSalle during the February 2006 meeting at the WACC. Moreover, the question is not whether a buyer in an arm's length transaction has a duty to inform a seller that the seller is undervaluing his painting. The Court agrees that a buyer has no such duty in an arm's length transaction. The question here is whether a fiduciary relationship existed between the Daughters and LaSalle and whether the Daughters justifiably acted in reliance upon his advice. Also, contrary to LaSalle's argument, where, as here, the plaintiff seeks to recover damages to their pecuniary interests arising out of "a contractual agreement between the parties, the general tendency has been to allow the plaintiff to elect to sue in contract or tort, as he sees fit" (Matter of Paver & Wildfoerster [Catholic High School Assoc], 38 NY2d 669, 675). It follows that the breach of contract claim was timely.
The Court is mindful that a party pursuing a breach of contract claim must "demonstrate the existence of a...contract reflecting the terms and conditions of their...purported agreement" (Mandarin Trading Ltd. v. Wildenstein, supra 16 NY3d of 181-182, quoting American-European Art Assoc. v. Trend Galleries,
227 AD2d 170, 171). Given that LaSalle unquestionably provided the 2004 appraisal and acknowledged he was asked to provide a buyer to purchase the restored painting, and expected a commission, a factual issue has been presented as to whether there was a contract concerning the sale of the painting and, if so, whether it was breached.
Accordingly, the motions of defendants LaSalle and Zaplin for summary [*7]judgment dismissing the complaint are denied, without costs.
This Memorandum constitutes the Decision and Order of the Court. This original Decision and Order is being returned to the attorneys for plaintiff. The below referenced original papers are being mailed to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.
Dated: Albany, New York
Michael C. Lynch
Justice of the Supreme Court
(1)Notice of Motion of Defendant LaSalle returnable July 21, 2011, with Affidavit
of Mark LaSalle dated July 7, 2011, and Exhibits "A" - "E"; Memorandum of
Law dated July 7, 2011;
(2)Notice of Motion of Defendant Zaplin returnable August 5, 2011, with Affirmation
of Thomas Chase, Esq. dated July 12, 2011 and Exhibits "A" - "G", and various
partial EBT's; and Memorandum of Law dated July 11, 2011;
(3)Affirmation in Opposition of Joseph Campisi, Esq. dated August 1, 2011, with
Exhibits "A" - "E"; and the complete deposition transcript of Dumont provided
with September 14, 2011 letter of Mordecai Schwartz, Esq.;
(4)Reply Affirmation of Thomas Chase, Esq. dated August 4, 2011, with partial
(5)Reply Affirmation of Daniel Centi dated August 3, 2011 with Exhibits "A" - "B";
Reply Memorandum of Law dated August 4, 2011; and
(6)August 5, 2011 letter from John Pennock, Esq. Footnotes
Footnote 1:While plaintiffs' correctly contend that the Court's March 14, 2011 letter order required dispositive motions to be filed and made returnable no later than July 21, 2011, defendant Zaplin correctly explains that the Court agreed to extend this deadline to August 5, 2011 (see ReplyAffirmation of Thomas Chase, Esq. dated August 4, 2011, at p.2, footnote 2)
Footnote 2:While Attorney Campisi asserts in his opposition papers that Bishop Kelly testified that LaSalle never told him that he represented the purchaser citing to p. 123 of the Kelly transcript, there is no such testimony on the page attached as Exhibit "D" — indeed, the discussion on that page simly refers to a lunch break.