Galin v. Hamada

• Decision Date: 26 September 2017
• Docket Number: 15–CV–6992 (JMF)
• Citation: 283 F.Supp.3d 189
• Parties: Reed GALIN, Plaintiff, v. Kumitake HAMADA, Defendant.
• Court: U.S. District Court — Southern District of New York

283 F.Supp.3d 189

Reed GALIN, Plaintiff,

v.Kumitake HAMADA, Defendant.

15–CV–6992 (JMF)

United States District Court, S.D. New York.

Signed September 26, 2017

Irina Tarsis, Center for Art Law, Brooklyn, NY, Richard Allen Altman, New York, NY, for Plaintiff.

Paul Cossu, Cahill Partners LLP, New York, NY, for Defendant.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

In this case, general familiarity with which is presumed, Plaintiff Reed Galin brings an action to recover proceeds from the sale at auction of a painting by Andrew Wyeth titled "Ice Storm," which are being held in escrow by the auctioneer, Christie's Inc. (See Docket No. 5 ("Compl.") ¶¶ 1, 73–80). In a prior Opinion and Order, entered on May 10, 2016, the Court largely denied the motion to dismiss filed by Defendant Kumitake Hamada, the alleged owner of the painting when it was sold at auction, and allowed Galin's equitable lien claim to proceed. See Galin v. Hamada , 15–CV–6992 (JMF), 2016 WL 2733132 (S.D.N.Y. May 10, 2016). To the extent relevant here, the Court found that, although the "entruster provision" of the Uniform Commercial Code, see N.Y. U.C.C. Law § 2–403, "likely" barred Galin's claim, it was an affirmative defense and not sufficiently "clear" on the face of the Complaint to warrant dismissal at the pleadings stage. See id. at *1–2. Not surprisingly, Hamada now moves, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment on Galin's remaining claims, arguing that they are barred by the entruster provision. (Docket Nos. 52, 53 ("Def.'s Mem.")). Hamada also moves, pursuant to Rules 11, 26, and 37 of the Federal Rules of Civil Procedure, for sanctions against Galin. (Docket No. 47; Def.'s Mem. 19–21). For the reasons that follow, Hamada's motion for summary judgment is GRANTED, his Rule 37 motion for discovery-related sanctions is DENIED, and his Rule 11 sanctions motion is GRANTED.

BACKGROUND

The following facts, taken from the admissible materials submitted by the parties, are, unless otherwise noted, undisputed. See Costello v. City of Burlington , 632 F.3d 41, 45 (2d Cir. 2011) ; see also Raskin v. Wyatt Co. , 125 F.3d 55, 66 (2d Cir. 1997) ("[O]nly admissible evidence need be considered by the trial court in ruling on a motion for summary judgment.").

In June 1989, Galin purchased a one-third interest in the Wyeth painting "Ice Storm" from his childhood friend, Davis Ramus, an art dealer operating in New York and Atlanta. (Compl. ¶¶ 16–19, 20, 27, 31; Docket No. 54 ("Def.'s SOF") ¶¶ 1–8; Docket No. 65 ("Pl.'s SOF") ¶¶ 1–8). The prior month, Ramus had purchased the painting at auction at Christie's for $319,000. (Pl.'s SOF ¶ 3). Galin never took physical possession of the painting; instead, Ramus retained it to resell for a profit. (See id. ¶¶ 7–9). Ramus did sell the painting, in November 1989, but he did not inform Galin. Ramus sold the painting to the Coe Kerr Gallery as part of a transaction in which Ramus gave the painting and $450,000 to the gallery in exchange for a painting by Frank W. Benson, which Ramus valued at $819,382.15. (See id. ¶ 12; Docket Nos. 54–6 ("Coe–Kerr Records") & 54–7 ("Ramus Records")). Notably, Ramus had occasionally conducted business with the Coe Kerr Gallery prior to the transaction involving "Ice Storm" (Pl.'s SOF ¶ 14), and this sort of transaction—involving the exchange of paintings by each side—was a practice of both Coe Kerr and Ramus at the time. (Id. ¶ 15).

Following the sale, Ramus never paid Galin his portion of the proceeds. (Id. ¶ 18). Perhaps relatedly, Ramus around then began to have difficulties, financial and otherwise; he was eventually indicted, convicted of various charges, and sent to prison in 1996. (Id. ¶¶ 19, 22). In the meantime, no later than December 1995, Galin learned that "Ice Storm" had been sold to the Coe Kerr Gallery, which, at that point, was no longer in business. (Id. ¶¶ 25, 28). Galin did not contact any of the former principals of the Coe Kerr Gallery; nor did he register the painting with the Art Loss Register. (Id. ¶¶ 27–28). But over the past twenty years he has "sporadically" contacted museums and galleries to inquire about the painting's current location. (Id. ¶¶ 26–28). In May 2015, Galin learned that the painting would be sold at auction by Christie's, and he contacted Christie's to assert an ownership interest in the painting. (Id. ¶ 29). By agreement, the painting was sold and Christie's currently holds the sale proceeds pending a determination as to which party—Hamada or Galin—had good title to the painting at the time of the sale. (Id. ¶ 30). Galin alleges that the sale proceeds are rightfully his because he held title to the painting.

As noted, Hamada moved to dismiss Galin's claims, arguing—among other things—that they were barred by the entruster provision of the Uniform Commercial Code. (Docket No. 10, at 10–11). Although the Court agreed that was "likely," it refrained from dismissing on the ground that the entruster provision is an affirmative defense and that its application was not clear on the face of the Complaint. See 2016 WL 2733132, at *1–2. On June 15, 2016, after entry of the Court's Opinion and Order, the parties appeared for a conference to discuss the parameters of discovery. (See Docket No. 26 ("CMP") & 27 ("Conf. Tr.")). At the conference, the Court limited discovery "to the circumstances surrounding the transfer [of the painting] to Coe–Kerr Gallery," reasoning that, "if the entruster provision [did] apply to that transfer and Coe–Kerr Gallery acquired good title, [then] Mr. Galin [h]as no valid claim with respect to Mr. Hamada notwithstanding Mr. Hamada's knowledge or lack thereof of the earlier circumstances surrounding Mr. Ramus." (Conf. Tr. 10). The case management plan memorialized this ruling: "As discussed on the record at the initial conference, discovery will be limited to the circumstances surrounding the transfer of the painting at issue from Mr. Ramus to the Coe–Kerr Gallery and application of the entrustment provision." (CMP 7).

On November 1, 2016, the date discovery closed, Ramus was deposed by Galin's counsel. (See Docket No. 48–9 ("Supp. Ramus Depo.")). Right before the deposition, Galin's counsel e-mailed a list of documents that he said might be shown to Ramus during the deposition, including two documents identified as numbers 35 and 36. (Docket No. 55–3, at 2). Hamada's counsel responded, objecting to the use of the documents numbered 35 and 36 on the ground that he had never received any documents numbered above 33A. (Id. at 3). Galin's counsel did not use the contested documents during the Ramus deposition, but did produce them two days later. (Docket No. 55–4). During the deposition—which was conducted by Galin's counsel in California (with the other counsel appearing by phone)—Ramus testified that he had received a call the day before from Galin's "friend" (and former counsel), David Johnson,¹ who "seemed to indicate that there was some question of Summary Judgment coming up, and they wanted a very specific bit of information regarding to the transaction concerning ‘Ice Storm.’ " (Supp. Ramus Depo. 38). Ramus testified that Johnson had told him "they just wanted to make sure there was some specific piece of information concerning the transaction with Coe Kerr Galleries that would forestall Summary Judgment," but Johnson "didn't tell [Ramus] what that piece of information was." (Id. at 96).²

The day after Ramus's deposition, Hamada's counsel sent a letter to Galin's counsel advising him of Hamada's intent to seek Rule 11 sanctions "for the frivolous and unsupported allegations in the Complaint" unless the Complaint was withdrawn. (Docket No. 48–12, at 1). A few days later, Hamada's counsel also sent an e-mail to Galin's counsel asking that counsel provide the "specifics" of what "admissible evidence" was adduced during discovery in support of Galin's claims. (Docket No. 48–13). Galin's counsel did not respond. (Docket No. 49 ("Def.'s Sanctions Mem.") at 5). The present motions followed.

THE MOTION FOR SUMMARY JUDGMENT

The Court begins with Hamada's motion for summary judgment. Summary judgment is appropriate where the admissible evidence and pleadings demonstrate "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Johnson v. Killian , 680 F.3d 234, 236 (2d Cir. 2012) (per curiam). A dispute over an issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; accord Roe v. City of Waterbury , 542 F.3d 31, 35 (2d Cir. 2008). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "In moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant's burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party's claim." Goenaga v. March of Dimes Birth Defects Found. , 51 F.3d 14, 18 (2d Cir. 1995) (citing Celotex , 477 U.S. at 322–23, 106 S.Ct. 2548 ); accord PepsiCo, Inc. v. Coca–Cola Co. , 315 F.3d 101, 105 (2d Cir. 2002) (per curiam). In ruling on a summary judgment motion, all evidence must be viewed "in the light most favorable to the non-moving party," Overton v. N.Y. State Div. of Military & Naval Affairs , 373 F.3d 83, 89 (2d Cir. 2004), and the Court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought," Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc. , 391 F.3d 77, 83 (2d Cir. 2004).

The key question in this case, as the Court noted in its prior Opinion and Order, is whether "the entruster...