AXA Art Ins. Corp. v. Christie's Fine Art Storage Servs., Inc.
| Decision Date | 21 January 2016 |
| Docket Number | Index No. 652862/13 |
| Parties | AXA ART INSURANCE CORPORATION, as subrogee of JEPHTA DRACHMAN and JORAM PIATIGORSKY, as TRUSTEES of the JACQUELINE PIATIGORSKY REVOCABLE TRUST AND THE JACQUELINE PIATIGORSKY REVOCABLE TRUST; AND AXA ART INSURANCE CORPORATION, INDIVIDUALLY, Plaintiffs, v. CHRISTIE'S FINE ART STORAGE SERVICES, INC., Defendant. |
| Court | New York Supreme Court |
DECISION and ORDER
Christie's Fine Art Storage Services, Inc. ("CFASS") moves, pursuant to CPLR 3211 (a) (1), (a) (3), and (a) (7), for dismissal of the amended complaint.
The following allegations are taken from the amended complaint. AXA Art Insurance Corporation ("AXA"), an insurer of fine art, issued an insurance policy to the Jacqueline Piatigorsky Revocable Trust ("Trust") for loss or damage to its art collection, effective from January 15, 2012, through January 15, 2013. In addition to its well-known auction house, defendant CFASS is engaged in the business of storing works of fine art.
After the death of Jacqueline Piatigorsky in 2012, her art collection ("Collection") was transferred to the Trust. Thereafter, the Trust sought a suitable storage facility for the Collection, identifying CFASS as a potential resource. Before the Trust agreed to store the Collection with CFASS, CFASS allegedly made representations to the Trust that once the Collection arrived at its storage facility, the intake process would take no more than one or two days, and the Collection would then be moved into a secure storage unit. The Trust entrusted the Collection to CFASS for storage pursuant to a "Managed Unit Storage Agreement," dated September 5, 2012 ("Storage Agreement").
On October 11, 2012, the Collection was transported to CFASS's storage warehouse, located in the Red Hook neighborhood in Brooklyn, New York ("Warehouse"). The Warehouse is in what was then designated by the New York City Office of Emergency Management as an evacuation flood Zone A. Zone A faced the highest risk of flooding, because it was a low-lying coastal area that could experience a storm surge when a hurricane of any category made landfall near the City.
On October 18, 2012, the Collection arrived at the Warehouse, and was placed in the staging area on the ground floor, where incoming artwork is inspected, condition reports are prepared, and the intake process is completed. The Collection remained for more than a week, fully exposed to the impact of the soon-to-arrive "Sandy" that was upgraded from a tropical storm to a hurricane on October 24, 2012, as it approached Jamaica. As Sandy passed through the Caribbean on its way to the United States, weather forecasters predicted that there was a significant chance that Sandy would strike the City, and by October 25, 2012, it was being likened to the "Perfect Storm" of 1991.
On October 26, 2012, Mayor Bloomberg announced that parts of the City, particularly in Zone A, were most at risk of flooding, because Sandy was going to make landfall during high tide. That same day, Governor Cuomo declared a State of Emergency in New York. On October 27, 2012, the "Hurricane Center" and "National Weather Service" predicted levels of storm surges in the tri-state area as high as 11 feet, and national weather forecasters repeatedly warned that maximum precautionary measures needed to be taken. The next morning, Mayor Bloomberg ordered residents of Zone A to evacuate.
Plaintiffs allege that CFASS took virtually no steps to protect the art, failing to even elevate the Collection and other art from the ground floor to higher floors. As the storm approached, rather than bring in auxiliary workers to help protect the art, CFASS fired the operations manager of the Warehouse, and left emergency measures in the hands of an inexperienced skeleton crew. Rather than warn its clients that it lacked the resources to adequately prepare for the storm, on October 26, 2012, CFASS sent an email to clients, including AXA, entitled "CFASS's Hurricane Preparations." The email stated:
In reality, Plaintiffs allege, CFASS took no extra precautions; had inadequate staff on-site; and failed to raise the art to a safe level. When Sandy struck Brooklyn on October 29, 2012, the Collection remained in the same location as when it first arrived, and Sandy's storm surge cascaded into the staging area of the Warehouse, inundating the Collection. Thereafter, rather than inform its clients of the damage so that restoration efforts could immediately be taken, on October 30, 2012, CFASS sent an email to its clients falsely stating that "CFASS staff has inspected our facility today and I can confirm that your property is safe and has experienced no damage." On November 1, 2012, CFASS's chairman contacted the attorney for the Trust to inform him that the Collection had suffered some water damage as a result of flooding.
The complaint asserts four causes of action for gross negligence, negligent misrepresentation, breach of bailment, and breach of contract. In the first cause of action for gross negligence, AXA alleges that CFASS failed to keep the Collection in a reasonably safe condition, and caused damage to the Collection through gross negligence, careless, and reckless acts or omissions. After the Collection was inundated by the storm surge, CFASS falsely advised all of its clients, including AXA, that none of the property stored in the Warehouse was damaged; told AXA and the Trust that the Collection was not significantly damaged; and CFASS failed to make reasonable efforts to mitigate the damage caused to the Collection, which resulted in the Collection suffering greater damage.
The second cause of action for negligent misrepresentation alleges that CFASS had a special relationship with AXA and the Trust that imposed a duty on CFASS to provide accurate information. When CFASS made the above-stated representations, it had no reasonable ground for believing that such representations were true. AXA and the Trust reasonably relied on CFASS information, and took no efforts to secure the safety of the Collection, because CFASS falsely or incorrectly claimed that it was taking all such necessary precautions and actions.
The third cause of action, for breach of bailment, alleges that CFASS breached its duty of care to the Trust to maintain the Collection in a reasonably safe condition. In the fourth cause of action, Plaintiffs allege that CFASS materially breached the Storage Agreement, and that the Storage Agreement is therefore null and void. In the complaint, AXA seeks to recover at least $1.5 million in damages, as well as punitive damages, interest, costs, and attorney's fees.
In support of its motion, CFASS argues that the complaint must be dismissed because: (1) none of the causes of action are validly stated; (2) the alleged loss was due to an act of God; (3) the Trust agreed to procure insurance and waive subrogation against CFASS for any loss or damage to the Collection as contained in a binding loss damage liability waiver ("LDL waiver") provision; and (4) the Trust agreed that CFASS' liability __________ In opposition, Plaintiffs argue that: (1) the terms of the Storage Agreement and the LDL waiver are unenforceable, because CFASS materially breached those agreements; (2) the LDL waiver is void as against public policy, and does not bar the third cause of action for breach of bailment; (3) because the LDL waiver is void as against public policy, the waiver of subrogation provision, incorporated therein, is unenforceable; (4) any purported limitation on liability is a flawed defense to AXA's subrogated gross negligence claim; and (5) CFASS failed to demonstrate that an act of God was the sole proximate cause of the damage alleged in the complaint.
The parties submit copies of the Storage Agreement and the LDL waiver. The Storage Agreement states, at paragraph 7(c), that in the event that CFASS does not accept liability as described in paragraph 7(a), "the Goods will remain at the Depositor's risk at all times, and Depositor will sign a loss/damage waiver letter in the form attached hereto." It further states...
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