Shanus v. R.L. Americana, LLC

Decision Date12 May 2017
Docket NumberCiv. No. 2:11-cv-02839-KM-SCM
PartiesCOREY SHANUS, Plaintiff, v. R.L. AMERICANA, LLC f/k/a ROBERT EDWARD AUCTIONS, LLC and ROBERT LIFSON, Defendants.
CourtU.S. District Court — District of New Jersey

COREY SHANUS, Plaintiff,
v.
R.L. AMERICANA, LLC f/k/a ROBERT EDWARD AUCTIONS, LLC and ROBERT LIFSON, Defendants.

Civ. No. 2:11-cv-02839-KM-SCM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

May 12, 2017


OPINION
(Under Seal)

MCNULTY, District Judge

The plaintiff, Corey Shanus, is a purchaser of baseball memorabilia who has come to believe that some items in his collection are bogus. Shanus bought some of the questioned items from defendant R.L. Americana, LLC (formerly known as Robert Edward Auctions, LLC) ("REA"), an auction house owned by defendant Robert Lifson. Others he bought from non-party and now-defunct auction house Mastro Net, Inc. ("Mastro Net"), Lifson's former employer.

Count 1 of the Complaint, alleging "lulling fraud," concerns two potentially counterfeit items purchased from Mastro Net in 2002 and 2003. Shanus claims that Lifson fraudulently vouched for the items' genuineness and failed to disclose red flags about the items' phony origins for years. By the time he saw through Lifson's statements and omissions, he says, Mastro Net was defunct or at least judgment-proof, and the statute of limitations had run on any breach of contract claim against Mastro. Count 2, also a fraud claim, alleges that Lifson conspired with baseball memorabilia collector and seller Peter Nash (not a party to this action), to inflate the entire market for baseball memorabilia. As a result of this inflation, says Shanus, he overpaid for items he acquired between 2006 and 2014. Count 3, asserting breach of contract, concerns an item Shanus purchased from REA in 2007. Shanus alleges that

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REA breached the terms of sale by not disclosing that the item had failed a professional authenticator's review for genuineness.

The parties have filed cross-motions for summary judgment on all counts (ECF Nos. 152, 157). The parties have also filed a number of ancillary motions: three by each party to exclude the testimony of the other's experts, and two by the defendants for sanctions against Shanus (Id.).1

For the reasons discussed below, the defendants' motion for summary judgment on Shanus's claim that Lifson fraudulently lulled him into sleeping on his rights (Count 1) is granted. The remaining motions are denied.

I. BACKGROUND

The parties substantially agree on the facts summarized below, except where otherwise noted.

A. Factual Background

1. Shanus's History with Sports Memorabilia

Shanus, a graduate of the University of Pennsylvania and the University of Chicago Law School, is a sophisticated private collector of sports memorabilia. He took up that pursuit in the 1980s and has developed his collection extensively since that time. (Defs. Stmt. ¶¶ 22-23; Pl. Resp. ¶¶ 22-23)2 The defendants characterize Shanus as an aggressive collector who often

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purchases items he desires at above-market prices. (Defs. Stmt. ¶ 24) Shanus demurs, claiming that his purchases reflect his accurate view of the items' market value. (Pl. Resp. ¶ 24)

2. Lifson's Relationship with Nash

Lifson was the owner and operator of an auction business called Robert Edwards Auctions from early 1990 through 2000. From 2000 to 2003, Lifson worked for the auction house Mastro Net, where he was an officer, minority shareholder, and director, specializing in Americana memorabilia. Lifson denies having any sub-specialty in baseball memorabilia or authentication. (Defs. Stmt. ¶ 65; Def. SJ Opp. 11-12) The former owner of Mastro Net, Bill Mastro, is not a party to this action, but plays prominently in the parties' allegations. In 2003, Lifson again formed his own auction business, REA, which he owned and operated in New Jersey. (Pl. Br. 4; Defs. Resp. ¶3)

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From early 1990 until 2009, Lifson had a close working relationship with a sports memorabilia collector named Peter Nash. Nash consigned to Robert Edward Auctions, Mastro Net, and REA large quantities of purportedly rare and valuable 19th and 20th century items (the "Nash items"). At times, Lifson would advance cash to Nash, holding the consigned but not yet auctioned items as collateral. That credit arrangement between Nash and Lifson was in place when Lifson owned Robert Edwards Auction and continued while he was employed by Mastro Net. In the latter period, Mastro Net would reimburse Lifson for the cash advances he made to Nash.

By July of 2004, Nash was in debt to Lifson for over $500,000. Nevertheless, Lifson continued to extend cash advances to Nash, setting aside "tubs of sports memorabilia" that Nash had previously consigned to him as collateral. (Pl. Br. 5; Rosenfeld Decl. Ex. G; Defs. Resp. ¶¶ 5-6) Additionally, around this time, Nash executed a promissory note and mortgage on his real estate, valued at approximately $423,000, for the benefit of REA. (Defs. Resp. ¶¶ 7-8; Pl. Resp. ¶ 142; Rosenfeld Decl. Ex. G)

One subset of Nash items that Lifson was well known for carrying was a collection that, according to Nash, was originally owned by Henry Chadwick (the "Chadwick Collection"). Chadwick is known as baseball's first noted sportswriter and historian. (Pl. Br. 4; Rosenfeld Decl. Ex. H, p.71, Ex. I, p. 120, Ex. G, pp. 30-33, 144)

3. Lifson's and REA's Alleged Fraud and Breach of Contract

a) 2002-2003: Shanus Purchases 1861 and 1853 Trophy Balls

In September of 2002, Shanus purchased the 1861 Grant Match Trophy Baseball (the "1861 Trophy Ball"), an item that had been part of Nash's Chadwick Collection, for over $50,000 at a Mastro Net auction.3 Mastro Net represented that the 1861 Trophy Ball was "from the earliest days of baseball"

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and was "handmade by future sporting good magnate, Al Reach, who is also recognized as being the first professional ballplayer . . . ." (Pl. Br. 11; Rosenfeld Decl. Ex. V) The parties agree that the terms and conditions set forth in Mastro Net's August 2002 Auction Catalogue, in which the 1861 Trophy Ball was listed, provide that "all material is guaranteed genuine." (Pl. Stmt. ¶ 29; Defs. Resp. ¶ 29)

Shanus claims that before purchasing the 1861 Trophy Ball, he "consulted with Lifson," who advised him "there was no reason to think that the trophy ball was not real." (Pl. Br. 11) He testified that prior to bidding on the 1861 Trophy Ball he performed due diligence: He reviewed books to confirm that the relevant Grant Match game had occurred, he reviewed materials from Sotheby's (the auction house from which Nash had previously purchased the 1861 Trophy Ball), and he inspected the item itself. Shanus testified that he was comforted by another fact he learned through his own research: that the item had come from the collection of a well-known collector named Barry Halper. (Defs. Resp. ¶ 27; Kozyra Cert. Ex. 6 pp. 131-133 & Ex. 11 pp. 194-195; Defs. Stmt. ¶ 84-89) Additionally, Shanus stated in a 2009 draft complaint against Mastro Net that he received representations from Bill Mastro and former Mastro Net President Doug Allen that the 1862 Trophy Ball had been "independently examined before being offered for sale and that there were independent experts to verify [its] authenticity." (Defs. Resp. ¶ 32 (quoting Kozyra Cert. Ex. 17 ¶ 18; see also Kozyra Cert. Ex. 16, pp. 401-402)4

In April 2003, Shanus purchased an 1853 Knickerbocker Trophy Ball (the "1853 Trophy Ball") for $161,992.45 at a Mastro Net auction. Shanus contends that the 1853 Trophy Ball was subject to the same "genuine" guarantee as the 1861 Trophy Ball, pursuant to terms and conditions set forth in Mastro Net's 2003 catalogue. That catalogue also represents that the 1853 Trophy Ball is "the earliest known game-used trophy ball in existence" and that

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it "commemorat[es] the game played between the Knickerbockers Baseball Club (baseball's first organized team) and the Gotham Club of New York on July 5, 1983." (Pl. Br. 12; Rosenfeld Decl. Ex. Y)

Shanus states that before bidding on the 1853 Trophy Ball, he performed due diligence. Shanus says he talked to Lifson, who assured him of the item's genuineness, told him that it came from Nash's Chadwick Collection, and referred Shanus to Nash's business partner Paul Reiferson for further advice. According to Shanus, Reiferson assured him that the 1853 Trophy Ball was authentic. (See Pl. Resp. ¶¶ 96-97) According to Shanus's 2009 draft complaint, Bill Mastro and Allen represented that the 1853 Trophy Ball had been independently examined. Shanus testified that Bill Mastro represented to him that the item was "real." (Defs. Resp. ¶ 32 (citing Kozyra Cert. Ex. 11, pp. 201-203)) Before bidding, Shanus also considered that it appeared to be consistent with a similar trophy ball from 1854 that he had seen at the Baseball Hall of Fame. (Defs. Resp. ¶ 27; Kozyra Cert. Ex. 11, pp. 200-208)

b) 2003-2005: Early Warnings

By his own admission, Shanus first developed concerns about the authenticity of the 1862 and 1853 Trophy Balls later in 2003. At that time, he asked a furniture expert to examine the casing on another trophy that Mastro Net would be offering at auction. (Pl. Stmt. ¶ 50; Shanus Decl. ¶ 5) The expert told Shanus that the casing contained certain modern enhancements. Shanus says he inquired of Lifson, who assured him that the trophy was a genuine antique and that the modern enhancements had been placed by Mastro Net to upgrade and reinforce the item. (Pl. Br. 17; Rosenfeld Decl. Ex. I, p. 296-297) Lifson testified to the contrary; he says that he did not speak to Shanus about the trophy casing at that time. (Defs. Resp. ¶ 52; Kozyra Opp. Cert. Ex. A)

Another warning sign appeared in 2004. Lifson was contacted by Josh Evans, a dealer and authenticator of sports memorabilia who was the Chairman and founder of a well-known auction house called Leland's. (see Defs. Stmt. ¶¶ 34-35) Evans demanded that Lifson refund money for items that

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Leland's long-time client Charlie Sheen5 had purchased from REA. Evans believed the items to be counterfeit. One of those allegedly counterfeit items was a baseball contained in a box bearing the...

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