King v. Wang
| Decision Date | 23 November 2020 |
| Docket Number | 14-cv-7694 (LJL) |
| Parties | YIEN-KOO KING, Plaintiff, v. ANDREW WANG, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Before the Court are summary judgment motions by Plaintiff Yien-Koo King ("Plaintiff" or "Y.K. King"), in her capacity as preliminary executrix of the C.C. Wang's estate (the "Estate"), and Defendants Andrew Wang ("A. Wang") and Shou-Kung Wang ("S.K. Wang," and together, the "Wangs" or "Defendants").1 Plaintiff moves for partial summary judgment on her breach of fiduciary claim against A. Wang. Defendants move for summary judgment on all of Plaintiff's federal and state law claims.
For the reasons set forth below, Plaintiff's motion is denied and Defendants' motion is denied.
The case was previously assigned to the Honorable John F. Keenan before transfer to the undersigned on February 4, 2020. The Court assumes a general familiarity with the facts andhistory of this case. See King v. Wang, 2018 WL 1478044, at *1 (S.D.N.Y. Mar. 26, 2018). Nevertheless, the Court recites the following relevant facts, which are undisputed unless otherwise noted.
This action concerns the estate of artist and collector, Chi-Chuan Wang ("C.C. Wang"). Plaintiff, Y.K. King, a New York City resident, is the daughter of C.C. Wang. She initially brought this action—together with Northwich Investments Ltd. ("Northwich") and Soon Huat, Inc. ("Soon Huat"), corporations owned by her and her husband, Kenneth King (" " and with Y.K. King, the "Kings")—to recover works of fine art formerly belonging to the Estate.
Defendant S.K. Wang, a resident of New York, is the son of C.C. Wang and the brother of Y.K. King. S.K. Wang is the sole owner of Defendant Jian Bao Gallery, an art gallery conducting business in New York. Defendant A. Wang, also a resident of New York, is the son of S.K. Wang and grandson of C.C. Wang. A. Wang is the sole owner of Defendant Bao Wu Tang (the "Bao Wu Tang Gallery"), an art gallery conducting business in China. A. Wang was executor and co-fiduciary of the Estate for 15 years before a jury found that C.C. Wang's will had been the result of undue influence and/or fraud.
In short, Plaintiff alleges that her nephew Defendant A. Wang exploited his temporary status as Estate fiduciary to orchestrate a scheme by which Defendants sold the Estate's artwork to five "straw men"—the other defendants in this action—for deflated prices and then resold some of them greater amounts in auction houses abroad at the expense of the Estate (the "Straw Men Scheme") and to the detriment of Plaintiff who was a 35% beneficiary of the Estate under the legitimate will.
Plaintiff asserts claims under federal law for violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and claims under New York law for conversion, commonlaw fraud and conspiracy to defraud, breach of fiduciary duty and aiding and abetting breach of fiduciary duty.2
C.C. Wang was a renowned Chinese-American artist and art collector who amassed over 400 fine and rare Chinese paintings, sculptures, and antiquities during his lifetime, valued at a total of $60 million. C.C. Wang died in 2003, but Defendants' alleged misconduct began in the 1980s and 1990s when S.K. Wang, working as his father's bookkeeper and assistant, embezzled 160 paintings from his father's collection. Plaintiff alleges that C.C. Wang discovered the misconduct in 1997 and thereafter fired S.K. Wang and hired Plaintiff Y.K. King to run his affairs. In this role, Y.K. King established CY Art Ltd. to facilitate management of C.C. Wang's artwork and collection. CY Art Ltd. owned a safe deposit box that contained artwork belonging to C.C. Wang, Northwich, and Soon Huat.
C.C. Wang's health began to deteriorate and he was hospitalized in March 2003. He was released in April 2003, and sometime shortly thereafter, S.K. Wang moved C.C. Wang to his own home in Queens.
Earlier, on January 31, 2003, Plaintiff Y.K. King took inventory of CY Art Ltd.'s safe deposit box and discovered that 21 paintings were missing, some of which were owned by Northwich, Soon Huat, and the Estate. One of the paintings allegedly taken from the safe deposit box was the Landscape Album by Ma Yuan ("Ma Yuan Landscape Album"). Defendants maintain that S.K. Wang owned the Ma Yuan Landscape Album at all times. Thatsame day, Y.K. King checked her father's apartment and discovered that an additional four paintings were missing.
The Court previously dismissed RICO claims pertaining to the artwork allegedly stolen from the safe deposit box and C.C. Wang's apartment as time-barred. See King v. Wang, 2017 WL 2656451, at *7 (S.D.N.Y. June 20, 2017). For the artwork owned by Northwich and Soon Huat—13 of the 25 paintings stolen—the Court dismissed those claims as time-barred because Northwich and Soon Huat, through Y.K. King, had actual notice of the alleged RICO scheme as it pertained to their property no later than February 2003. Id. That holding was based on the facts that: (1) Y.K. King, the co-owner of Northwich and Soon Huat, discovered in January 2003 that the paintings had been stolen; (2) A. Wang allegedly admitted to Y.K. King in February 2003 that he had taken the 25 missing paintings and demanded that Y.K. King turn over control of the balance of the family's assets; and (3) the concession in Plaintiff's brief that RICO claims related to those artworks were time-barred and therefore she did not seek recovery of the missing paintings. Id. As for claims pertaining to the artwork from the safe deposit box and C.C. Wang's apartment belonging to the Estate, the Court did not decide whether those claims were similarly time-barred because it held that the Estate was not a party to the action at the time and therefore Y.K. King did not have standing on its behalf to assert claims. Id. at *8. However, Plaintiff had conceded that she was not seeking recovery of any of the 25 artworks stolen on January, 31, 2003, whether owned by the Estate or not, so that those paintings are not at issue. Id. at *7.
C.C. Wang died on July 3, 2003. Thereafter, Y.K. King submitted to New York County Surrogate's Court ("Surrogate Court") a June 13, 2000 will and July 10, 2002 codicil that namedher the executor and a principle beneficiary of the Estate, and entitled each of Y.K. King and S.K. Wang to a 35% share of the Estate.
Contemporaneously, Defendants produced a second will allegedly executed by C.C. Wang on February 18, 2003 (the "2003 Will"), four months before his death. The 2003 Will disinherited Y.K. King, designated A. Wang as executor, and made S.K. Wang and his children chief beneficiaries.
In July 2003, Y.K. King initiated proceedings in Surrogate Court to contest the 2003 Will. On August 4, 2003, the Surrogate Court issued temporary letters of administration to the Public Administrator of the County of New York (the "P.A.") and preliminary testamentary letters to A. Wang (the "August 4, 2003 Order"). A. Wang and the P.A. assumed the role of Estate co-fiduciaries and exercised control over Estate assets. Ethel Griffin ("Griffin") served as P.A. during this time until her death in 2015 when she was replaced by Dahlia Damas ("Damas"). Attorney Peter Schram (the "P.A.'s counsel") represented the P.A. in connection with its administration duties.
The August 4, 2003 Order directed the co-fiduciaries to "retain an expert in the field of Chinese art to catalog and evaluate [C.C. Wang]'s works of art." Dkt. No. 202-7. Plaintiff suggested Sotheby's would be capable of appraising the artwork and specifically suggested Arnold Chang ("Chang") of Sotheby's, who had been a long-time student of C.C. Wang's and was familiar with his collection. The Estate and Sotheby's entered into an appraisal agreement on June 17, 2014.
In the fall of 2003, the P.A. and/or A. Wang requested that all parties deliver all artwork to the Estate that they conceded formerly belonged to C.C. Wang. The Estate ultimately took possession of approximately 500 artworks, including 133 classical Chinese artworks, 360modern Chinese artworks, and five other artworks, as well as a variety of Chinese decorative art objects. This artwork was kept at Crozier Fine Arts ("Crozier") storage facility in New Jersey.
On October 1, 2004, Sotheby's issued an appraisal of the 133 classical Chinese artworks in the Estate for estate tax purposes ("2004 Sotheby's Appraisal"). See Dkt. No. 202-13. The 2004 Sotheby's Appraisal valued the work, as of the date of C.C. Wang's death on July 3, 2003, with an aggregate appraisal value at fair market value ("FMV") of $4,400,350. Id. It was submitted to the IRS in connection with the Estate's tax filings.
On or around October 2004, the Estate filed its estate tax returns and learned that it owed $1.2 million in state taxes and $3.3 million in federal taxes. The Estate faced administrative expenses, including legal fees and fees used to store and insure the Estate-owned artwork. The parties dispute whether the Estate "needed to liquidate its assets immediately," including artwork, to pay the taxes owed and to cover the Estate's expenses.
Defendants assert that financial pressure on the Estate increased in 2007, when the IRS issued a Notice of Deficiency to the Estate, claiming an additional $22.5 million was owed in federal estate taxes. See Dkt. No. 202-23. The P.A. and A. Wang brought an action in tax court to challenge the amount, alleging that the IRS erred in including in that amount certain artwork not belonging to the Estate. That litigation is still ongoing.
After the Surrogate Court appointed the P.A. and Defendant A. Wang as co-fiduciaries in 2003, Plaintiff and Defendants continued to litigate the will contest. At some point, Plaintiff and A. Wang...
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