Overton v. Art Fin. Partners LLC

• Decision Date: 02 February 2016
• Docket Number: 15-cv-3927 (SAS)
• Citation: 166 F.Supp.3d 388
• Parties: Stephanie Overton, Plaintiff, v. Art Finance Partners LLC, AF Funding LLC, Knickerbocker Funding LLC, Cerulean Art LLC, and Andrew Rose, Defendants. Art Finance Partners LLC, AF Funding LLC, Knickerbocker Funding LLC, Cerulean Art LLC, and Andrew Rose, Counterclaim Plaintiffs, v. Stephanie Overton, Counterclaim Defendant.
• Court: U.S. District Court — Southern District of New York

166 F.Supp.3d 388

Stephanie Overton, Plaintiff,

v.Art Finance Partners LLC, AF Funding LLC, Knickerbocker Funding LLC, Cerulean Art LLC, and Andrew Rose, Defendants.

Art Finance Partners LLC, AF Funding LLC, Knickerbocker Funding LLC, Cerulean Art LLC, and Andrew Rose, Counterclaim Plaintiffs,

v.Stephanie Overton, Counterclaim Defendant.

15-cv-3927 (SAS)

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

Signed February 2, 2016

For Plaintiff: John R. Cahill, Esq., Paul Cossu, Esq., Cahill Partners LLP, 70 West 40th Street, New York, NY 10018, (212) 719-4400.

For Defendants: Mathew E. Hoffman, Esq., Barton LLP, 420 Lexington Avenue, New York, NY 10170, (212) 687-6262, Christopher P. Greeley, Esq., Herrick, Feinstein LLP, 2 Park Avenue, New York, NY 10016, (212) 592-1426.

OPINION AND ORDER

SHIRA A. SCHEINDLIN

, UNITED STATES DISTRICT JUDGE:

I. INTRODUCTION

On May 21, 2015, Stephanie Overton brought this diversity action against various defendants for their alleged participation in an art fraud perpetrated by non-party Timothy Sammons and his affiliated companies. Overton subsequently dismissed some defendants and added others, filing her First Amended Complaint on July 9, 2015. The current defendants in this action are one individual, Andrew Rose, and four corporate entities that Overton alleges are “extensions” of Rose: Art Finance Partners LLC (“AFP”), AF Funding LLC (“AFF”), Knickerbocker Funding LLC (“Knickerbocker”), and Cerulean Art LLC (“Cerulean”) (with Rose, the “defendants” and without Rose, the “corporate defendants”).¹

There are six artworks at issue, created by Marc Chagall (the “Chagall”), Raoul Dufy (the “Dufy”), Amedeo Modigliani (the “Modigliani”), Henry Moore (the “Moore”), Pablo Picasso (the “Picasso”), and Tom Wesselmann (the “Wesselmann”) (the “Works”).² The First Amended Complaint contains eight claims—asserted against some or all defendants—for replevin, declaratory judgment, conversion, aiding and abetting breach of fiduciary duty and fraud, and unjust enrichment.

On November 16, 2015, the parties filed cross-motions for partial summary judgment.³ Overton seeks a judgment

(A) Declaring that the Chagall, Dufy, Modigliani, Moore, and Wesselmann Works are (i) owned solely by Overton and (ii) are not subject to any liens, encumbrances, or valid title claims by the defendants; and

(B) Awarding Overton compensatory and punitive damages for Rose's conversion of the Works and her loss of the Picasso due to Rose aiding and abetting torts by Sammons.⁴

Although Overton does not specify the claims for which summary judgment is sought, she appears to be moving as to liability on her First, Second, Third, Fourth, Fifth, Sixth, and Seventh Claims.⁵ Additionally, Overton seeks to impose alter ego liability on Rose and the corporate defendants. Defendants seek summary judgment on (1) all claims relating to the Picasso (the Second, Third, Fourth, and Eighth Claims) and (2) the Eighth Claim as it relates to all of the Works.

For the following reasons, Overton's motion is GRANTED in part and DENIED in part, and defendants' motion is DENIED in full.

II. BACKGROUND⁶

A. Overton's Relationship with Sammons

During their marriage, Overton and her former husband, Sir Arthur Douglas Myers, acquired the following Works:⁷

• Marc Chagall, Reverie , gouache on paper, 79 x 58 cm;

• Raoul Dufy, Syracuse or Chateau sur La Cote , watercolor, pencil, and gouache on paper, 48 x 64 cm;

• Amedeo Modigliani, Cariatide Rouge Sur Fond Noir , pencil and gouache on paper, 62 x 42 cm;

• Henry Moore, Reclining Figure , bronze, 9 x 15 x 7 cm;

• Pablo Picasso, Buste de Femme or Tete de Femme or Buste en Femme , oil on canvas, 33 x 24 cm; and

• Tom Wesselmann, Collage for Study for the Mouth, no. 10 , Liquitex on paper on board, 40 x 38 cm.

When their marriage ended in the 1980s, Overton received sole title to the Works.⁸

In 2007 or 2008, Overton contemplated selling some of her artwork, and was referred to Timothy Sammons, an individual who operated United Kingdom-based Timothy Sammons Ltd. (“Sammons UK”) and Timothy Sammons Fine Art Agents (“TSFAA UK”) and New York-based Timothy Sammons, Inc. (“TSI NY”).⁹ As part of their initial communications, Sammons sent Overton a letter stating, inter alia , that “[w]e have offices in the two main centers of selling—London and New York” and that he and his companies “act only as agents on behalf of a principal who is either the buyer or the seller.”¹⁰

1. The Modigliani

In 2008, Overton delivered the Modigliani to Sammons, along with other artworks not at issue in this case.¹¹ Overton claims that she entrusted these pieces to Sammons UK only, whereas defendants assert that they were held pursuant to an agreement between Overton and TSI NY.¹² In connection with this delivery, Sammons informed Overton on April 4, 2008: “I confirm that all times we will hold any pictures delivered to us by you ..., and nothing in this Agreement nor this letter can give us authority to sell or transfer title on your behalf.”¹³ This April 4, 2008 letter included Sammons' London and New York addresses in the contact information section.¹⁴

2. The Dufy, Moore, and Wesselmann

Overton delivered the Moore to Sammons in July 2013,¹⁵ followed by the Dufy and Wesselmann in August 2013.¹⁶ Again, Overton claims that these pieces were entrusted to Sammons UK, whereas defendants assert that she entrusted them to TSI NY.¹⁷

Overton states that she delivered the Moore to Sammons UK (in London),¹⁸ although the receipt for this delivery again includes Sammons' London and New York addresses in the contact information section.¹⁹ The shipping invoice for the Dufy and Wesselmann designates TSI NY (in New York) as the intended recipient.²⁰ Overton denies seeing this shipping invoice prior to the litigation.²¹ Further, a November 22, 2013 consignment agreement applicable to all three Works lists Sammons' London and New York addresses on the cover page, uses TSI NY's address in the introduction, and defines “ ‘we,’ ‘us,’ ‘our,’ and ‘TSI’ ” as “Timothy Sammons Inc[.] and any affiliated company.”²²

3. The Chagall and Picasso

The following year, Overton also delivered the Chagall and Picasso to Sammons.²³ Overton avers that she sent these Works to Sammons simply for storage and insurance in London (and not in contemplation of their sale).²⁴ This delivery is memorialized by an insurance receipt issued by TSFAA UK on December 2, 2014, which again includes Sammons' addresses in London and New York.²⁵

4. Recording of Overton's Consignments to Sammons

During depositions, Overton testified that she “[did not] think she ... ever publicized” the fact that Sammons was holding her artwork, explaining that she chose not to “publicize her private life.”²⁶ Accordingly, Overton did not—“[a]t any point in time”—file Uniform Commercial Code statements, publish periodical listings, or otherwise provide notice that she was the owner of the Works placed in Sammons' custody.²⁷

B. Relationship Among the Defendants

Rose, whose former employers have included the Christie's and Sotheby's auction houses, is the sole member of each corporate defendant.²⁸ All of the corporate defendants are incorporated in Delaware.²⁹ Cerulean, AFF, and Knickerbocker use either Rose's personal residence in Delaware or AFP's New York offices to conduct business.³⁰ At least some of the corporate defendants have lines of credit between one another.³¹

During depositions, Rose testified that Cerulean allows AFP to act as its agent for acquiring art, and that Cerulean is named as a loss payee on AFP's insurance policy.³² Further, Rose stated that Cerulean “[a]bsolutely” owns more than one hundred works of art and “probably” owns over one thousand art and non-art items.³³ Additionally, Rose stated that Cerulean has not made any purchases requiring the payment of New York sales tax.³⁴ Rose also explained that AFF and AFP function as lenders,³⁵ and stated, “[t]ypically, we lend 40 to 50 percent of the value of the work of art that we have as [sic] physical possession as collateral.”³⁶ In addition, Rose explained that he “occasionally act[s] as an adviser to friends or family purchasing or selling works of art.”³⁷

C. Relevant Transactions Involving Defendants and Sammons

Rose testified that he first encountered Sammons when he worked in the auction industry, and that he has known Sammons for approximately twenty years.³⁸ Between 2014 and 2015, defendants entered into several purchase and loan agreements with Sammons and his affiliated entities, which Overton now asserts interfered with her ownership of the Works. Defendants maintain that they believed Sammons had title to the Works and authority to enter into these agreements.

1. Defendants' Purchases of the Dufy, Moore, and Wesselmann

On approximately February 5, 2014, Rose and Sammons executed a bill of sale for five artworks—including the Dufy and Wesselmann—which reflected that the seller of these Works was TSFAA UK, reachable at TSI NY's address.³⁹ Rose also sent Sammons a separate agreement providing Sammons with the right to repurchase the five pieces, at a price ten-percent higher than Rose's purchase price and with compounded monthly interest.⁴⁰ The bill of sale did not include individual purchase prices.⁴¹ Rather, Cerulean purchased the lot for $360,000, which defendants state reflected the aggregate “approximate market price.”⁴² The parties now offer competing valuations for the Works.⁴³ On February 6, 2014, Knickerbocker wired $360,000 to Sammons, which defendants state was credited back to Knickerbocker from Cerulean that same day.⁴⁴

Rose testified that his pre-transaction due diligence regarding Sammons' ownership of the Dufy and Wesselmann involved: “check[ing] the UCC websites to be sure there were no liens against them,” “Googl[ing],” “check[ing] the Catalogue Raisonné”⁴⁵ for the Dufy, and “check[ing] ... [his] Wesselmann archives for information on the Wesselmann.”⁴⁶ He further stated that he “[did not] know what other lien search one could have done” and that...