Sothebys, Inc. v. Thut
| Decision Date | 28 July 2022 |
| Docket Number | Civil Action 21 Civ. 6574 (LJL) (SLC) |
| Parties | SOTHEBYS, INC., Plaintiff, v. FREDERIC THUT, BETTINA VON MARNITZ THUT, and FAAM, LLC, Defendants. |
| Court | U.S. District Court — Southern District of New York |
THE HONORABLE LEWIS J. LIMAN, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
Plaintiff Sotheby's, Inc. (“Sotheby's”) filed this action asserting fraud and breach of contract claims under New York law against Defendants: (1) Frederic Thut (“Mr. Thut”), (2) Bettina Von Marnitz Thut (“Mrs. Thut,” together with Mr. Thut, the “Thuts”), and (3) FAAM, LLC (“FAAM,” together with the Thuts, the “Defendants”). (ECF No. 10 at 1 (the “Complaint”)). Following Defendants' failure to appear and defend themselves in this action, Sotheby's moved for entry of default judgment. (ECF No. 28 (the “Motion”)). The District Court referred the Motion to the undersigned for a report and recommendation. (ECF No. 32).
For the reasons set forth below, I respectfully recommend that Sotheby's be awarded: (1) compensatory damages in the amount of $3,013,910.00; (2) pre-judgment interest in the amount of $688,560.70; (3) post-judgment interest; and (4) permission to file a bill of costs with the Clerk of the Court, pursuant to Federal Rule of Civil Procedure 54(d) and Local Rule 54.1.
The Court summarizes the factual background of Sotheby's claims based on the allegations in the Complaint (ECF No. 10), which are accepted as true for purposes of determining liability. See Arellano v. Green Apple 37 Inc., No. 20 Civ. 5293 (LJL), 2021 WL 4319568, at *1 (S.D.N.Y. Sept. 23, 2021); Rosado v. Castillo, No. 20 Civ. 3913 (LJL), 2021 WL 1172626, at *1 (S.D.N.Y. Mar. 29, 2021); see also Augusto Corrales v. AJMM Trucking Corp., No. 19 Civ. 4532 (LJL), 2020 WL 1911189, at *2 (S.D.N.Y. Apr. 20, 2020) (). Where noted, additional facts are drawn from documents Sotheby's submitted in support of the Motion, including Sotheby's Memorandum of Law in Support of its Motion for Entry of a Default Judgment (ECF No. 29 (the “Memorandum of Law”)), the Declarations of Paul Cossu (ECF No. 30 (“Cossu Decl.”)) and Aimee M. Scillieri (ECF No. 31 (“Scillieri Decl.”)), and their supporting exhibits (ECF Nos. 30-1 - 30-4; 31-1 - 31-12 (the Motion, Memorandum of Law, Cossu and Scilleri Decl., and exhibits, the “Damages Submission”)).
On October 3, 2016, Mrs. Thut signed a consignment agreement (the “October 2016 Agreement”) with Sotheby's, agreeing to consign three works of art (the “October 2016 Lots”) to Sotheby's for sale at a public auction in November 2016 (the “First Auction”). (ECF Nos. 10 ¶¶ 1618; 31-1 at 7-10). According to the October 2016 Agreement, Mrs. Thut authorized Sotheby's “to rescind the sale of [the October 2016 Lots] in accordance with the Conditions of Sale and Terms of Guarantee,” which the October 2016 Agreement incorporated by reference, if Sotheby's (1) were to learn “that the [p]roperty is inaccurately described in the catalogue,” (2) were to learn “that the [p]roperty is a counterfeit (a modern forgery intended to deceive),” or (3) “determine[s] in [its] sole judgment that the offering for sale of any lot of [p]roperty has subjected or may subject [it] and/or [Mrs. Thut] to any liability[.]” (ECF No. 31-1 at 5 (the “Liability Clause”); see ECF No. 10 ¶ 20). If Sotheby's received notice from a purchaser of an intent to rescind one of the October 2016 Lots subject to rescission, the October 2016 Agreement obligated Mrs. Thut to return to Sotheby's, within ten days of receiving notice, “any sale proceeds[.]” (ECF No. 31-1 at 5 (); see ECF No. 10 at 5 ¶ 21). The October 2016 Agreement also obligated Mrs. Thut “to indemnify and hold [Sotheby's] and each purchaser harmless from and against any and all claims, actions, damages, losses, liabilities and expenses (including reasonable attorneys' fees) relating to the breach or alleged breach of any of your agreements, representations or warranties in” the October 2016 Agreement. (ECF No. 31-1 at 3-4 (the “Indemnification Clause”); see ECF No. 10 ¶ 22).
Mrs. Thut represented that the October 2016 Lots consisted of three works by Diego Giacometti (“Giacometti”),[1] (1) Console a double plateaux, modele a grenouilles (“Lot 306”); (2) Table-feuilles: modele de salle a manger aux grenouilles (“Lot 307”); and (3) Lanterne aux feuilles et oiseau (“Lot 308”). (ECF Nos. 10 ¶¶ 16-17; 31-1 at 7-10). Mrs. Thut also represented that she had “no reason to believe that any lot of [p]roperty is not authentic or is counterfeit[,]” and submitted authenticity documents from: (1) Pierre Matisse, a New York art detailer whose archives are now held at the Morgan Library, (2) Serge Matta, the brother of surrealist Chilean painter Roberto Matta, and (3) James Lord, an associate of Giacometti (collectively, the “Provenance Documents”). (ECF No. 31-1 at 4; see ECF No. 10 ¶¶ 3, 24-25).
On November 15, 2016, the October 2016 Lots were sold at the First Auction. (ECF No. 10 ¶¶ 27-32; see ECF No. 31-2 at 2-3). Lot 306 sold for $162,500.00, of which Mrs. Thut received $122,200.00. (ECF No. 10 ¶¶ 27-28). Lot 307 sold for $300,000.00, of which Mrs. Thut received $255,600.00. (Id. ¶¶ 29-30). Lot 308 sold for $672,500.00, of which Mrs. Thut received $363,000.00. (Id. ¶¶ 31-32). Altogether, Mrs. Thut received $740,800.00 in proceeds from the sale of the October 2016 lots.[2] (Id. ¶¶ 27-32).
On March 27, 2017, Mrs. Thut signed a consignment agreement (the “March 2017 Agreement”) with Sotheby's, agreeing to consign a single work of art (the “March 2017 Lot”) to Sotheby's for sale at a public auction in May 2017 (the “Second Auction”). (ECF Nos. 10 ¶¶ 3334; 31-3 at 8-11). The March 2017 Agreement contained Rescission and Indemnification Clauses identical to the October 2016 Agreement. (Compare ECF No. 31-3 at 4-5 with ECF No. 31-3 at 4-5).
Mrs. Thut represented that the March 2017 Lot consisted of Giacometti's Applique au oiseau a Trois Branches (A Pair). (ECF Nos. 10 ¶ 33; 31-3 at 9). Mrs. Thut also represented that she had “no reason to believe that any lot of [p]roperty is not authentic or is counterfeit[,]” (ECF No. 31-3 at 4), and submitted “virtually identical provenance to the provenance provided by Defendants in connection with the October 2016 Lots.” (ECF No. 10 ¶ 40).
On May 17, 2017, the March 2017 Lot was sold at the Second Auction. (ECF No. 10 ¶ 41; see ECF No. 31-4 at 2-4). The March 2017 Lot sold for $225,000.00, of which Mrs. Thut received $169,200.00. (ECF No. 10 ¶¶ 41-42).
On April 13, 2017, Mrs. Thut signed a Private Sale Agreement (the “April 2017 Agreement”) with Sotheby's, agreeing to consign a single work of art (the “April 2017 Lot”) to Sotheby's for a private sale (the “Private Sale”). (ECF Nos. 10 ¶ 43; 31-5 at 1-7). According to the April 2017 Agreement, Mrs. Thut authorized Sotheby's “to rescind the sale and return the Purchase Price (including commission)” for the April 2017 Lot if Sotheby's were to determine that Mrs. Thut could not “guarantee to the purchaser . . . the authorship, period, culture or origin of” the April 2017 Lot. (ECF No. 31-5 ¶ 5; see ECF No. 10 ¶ 46). The April 2017 Agreement gave Sotheby's a four-year right to rescind the sale should Mrs. Thut breach her guarantee. (ECF No. 31-5 at ¶ 5).
Mrs. Thut represented that the April 2017 Lot consisted of Giacometti's Hanging Lantern. (ECF Nos. 10 ¶ 43; 31-5 at 5). Mrs. Thut also represented that she had “no reason to believe that the [p]roperty is not authentic or is counterfeit[,]” (ECF No. 31-5 ¶ 3), and submitted “virtually identical provenance to the provenance provided by Defendants in connection with the October 2016 Lots and the March 2017 Lot[].” (ECF No. 10 ¶ 44).
On April 24, 2017, the April 2017 Lot was sold in a Private Sale. (ECF No. 10 ¶ 49; see ECF No. 31-6 at 2-4). The April 2017 Lot sold for $535,000.00, of which Mrs. Thut received $435,417.00. (ECF No. 10 ¶¶ 49-50).
On October 11, 2017, Mrs. Thut signed a consignment agreement (the “October 2017 Agreement,” together with the October 2016, March 2017, and April 2017 Agreements, the “Agreements”) with Sotheby's, agreeing to consign a single work of art (the “October 2017 Lot,” together with the October 2016, March 2017, and April 2017 Lots, the “Consigned Lots”) to Sotheby's for sale at a public auction in November 2017 (the “Third Auction”). (ECF Nos. 10 ¶¶ 51-52; 31-7 at 8-10). The October 2017 Agreement contained Rescission and Indemnification Clauses identical to the October 2016 Agreement. (Compare ECF No. 31-1 at 3-5 with ECF No. 31-7 at 4-5).
Mrs. Thut represented that the October 2017 Lot consisted of Giacometti's La Promenade des Amis. (ECF Nos. 10 ¶ 51; 31-7 at 10). Mrs. Thut also represented that she had “no reason to believe that any lot of [p]roperty is not authentic or is counterfeit[,]” (ECF No. 31-7 at 4), and submitted “virtually identical provenance to the provenance provided by Defendants in connection with the October 2016 Lots, the March 2017 Lot[], and the [April 2017 Lot].” (ECF No. 10 ¶ 58).
On November 15, 2017, the October 2017 Lot was sold at the Third Auction. (ECF No. 10 ¶¶ 59-60; see ECF No. 31-8 at 2-6). The October 2017 Lot sold for $411,000.00, of which Mrs. Thut received $310,200.00. (ECF No. 10 ¶¶ 59-60).
In 2018, Denis Vincenot (“Mr. Vincenot”), an...
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