Tajan v. Pavia & Harcourt

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: PETER TOM; TOM
• Citation: Tajan v. Pavia & Harcourt, 693 N.Y.S.2d 544, 257 A.D.2d 299 (N.Y. App. Div. 1999)
• Decision Date: 08 July 1999
• Parties: , Etude TAJAN, et al., Plaintiffs-Respondents-Appellants, v. PAVIA & HARCOURT, et al., Defendants-Appellants-Respondents.

Page 544

693 N.Y.S.2d 544

257 A.D.2d 299, Etude TAJAN, et al., Plaintiffs-Respondents-Appellants, v. PAVIA & HARCOURT, et al., Defendants-Appellants-Respondents.

Supreme Court, Appellate Division, First Department, New York.

July 8, 1999.

Jay R. Butterman, of counsel (Howard A. Gardner, on the brief, Butterman, Kahn & Gardner, LLP, attorneys) for plaintiffs-respondents-appellants.

Peter A. Stroili, of counsel (Robert E. Kushner, on the brief, D'Amato & Lynch, attorneys) for defendants-appellants-respondents.

PETER TOM, J.P., ANGELA M. MAZZARELLI, ALFRED D. LERNER and JOHN T. BUCKLEY, JJ.

TOM, J.P.

The issue in this case is whether the attorney-administrator of an estate can be held liable for an opinion letter stating that there were no claims against a valuable Italian painting belonging to the estate when a foreign government subsequently accused the estate of transferring the estate's property in violation of national law prohibiting the extra-national sale of precious cultural objects.

The Old Master painting that is at the center of this case is "A Capriccio with a Domed Church and Buildings in Las Pirna," by the 18th century Italian artist Bernardo Bellotto. Bellotto's "Capriccio" was owned by Enzo Colombo. It, and other works of art, were reported stolen from Colombo's villa in Florence, Italy, in 1981, and international notice was provided by a 1982 Interpol bulletin. The owner died in 1984, survived by his wife, Lucia Giacalone, and three children from a prior marriage, Davide, Annita and Sara Colombo. Although he left a will, he was intestate as to this painting.

In 1985, the painting reappeared and was placed for auction with Christie's in New York, but was seized by the United States Customs Service pursuant to international letters rogatory of the Italian government and turned over to the United States Attorney's Office for the Southern District of New York. The owner's heirs then commenced a turnover proceeding in New York County Surrogate's Court. In 1987, defendant Douglas Lehman, a partner at defendant law firm Pavia & Harcourt, was appointed by the Surrogate to be the ancillary administrator of the owner's United States estate, consisting only of the painting. By order to show cause, the defendants notified the Italian government of the recovery of the painting and of the proceeding, seeking cause why the painting should not be turned over to Lehman as ancillary administrator of the estate. It is undisputed that the Italian government declined to intervene. As a consequence, Lehman took possession of the painting for the benefit of the heirs in 1987.

Over the course of the next 10 years, Lehman obtained releases from Lucia Giacalone, the owner's wife, and from Sara and Annita Colombo, so as to vest sole title of the painting in Davide. There was no indication as to what consideration Lucia or Sara received for releasing their rights to the painting, but Annita was paid $200,000. Annita agreed, in exchange for a payment of $200,000 to be realized from the painting's anticipated sale proceeds, to relinquish to Davide her rights in the painting.

On January 13, 1997, Davide Colombo executed a Receipt and Release in connection with Lehman's relinquishment of the painting to Davide, using Tulip Enterprises, Ltd., as the transfer agent. Annita's signature of the release executed by her was apparently not authenticated until January 27, 1997, but it is not seriously contended that she had not signed it.

To assure plaintiff Wombaca which was negotiating for the purchase of the painting, of Divide's good title to the painting, defendant Pavia & Harcourt issued an opinion letter dated that same day, addressed "to Whom It May Concern," stating that the painting:

"was distributed by Douglas Lehman, as Ancillary Administrator of the U.S. Estate of Enzo Colombo, to Tulip Enterprises S.A., on instructions received from all of the distributees of the aforesaid estate, i.e. the legal heirs of Enzo Colombo. During the period of Estate administration, i.e. from 1987 to today's date, no claim has been asserted or lien imposed, or attempted to be imposed, on the painting."

On January 13, 1997, the same day as the transfer to Tulip Enterprises, the painting was sold to plaintiff Wombaca for $1.1 million after Wombaca had inspected and authenticated the painting. Wombaca is a Panamanian corporation in the business of or purchasing rare works of art.

The bill of sale executed by Davide on behalf of Tulip Enterprises warranted the painting's good title. Notably, the motion court found that there was no evidence that defendants had warranted good title, with which we agree. The bill of sale also stated that disputes would be resolved under the law of the United States. Wombaca's check was sent by Pavia & Harcourt to a Swiss bank and deposited into an escrow account with irrevocable instructions by Davide, as agent for Tulip Enterprises, to release $200,000 to Annita as soon as the funds were available to Tulip enterprises. This explains Annita's appearance in the bank on January 27, 1997, where she executed a Release and Receipt acknowledging her receipt of $200,000, which she stated to be her share, as an heir, of the painting.

During the Spring of 1997, Wombaca consigned the painting to plaintiff Etude Tajan, a French auction house, which anticipated a sale price in excess of $3 million, for which its commission would be 25%. The auction was scheduled for the evening of June 17, 1997. At 10 A.M. that morning, Lucia reported to the Italian police that she had just learned the prior evening about the auction, and that the painting had been stolen from her house in 1981 and reported stolen by her deceased husband. Acting on that information, the Italian police contacted French authorities, faxing a copy of the original Interpol notice of theft, who then seized the painting. However, the eventual basis for the Italian government's confiscation of the painting was its illegal export, and not that it was stolen. The seizure cancelled the auction, jeopardizing Wombaca's investment in the painting, and costing Etude Tajan its commission.

Plaintiffs commenced an action against the estate's administrator and his law firm, and advanced a single claim in the complaint that by virtue of the allegedly inaccurate opinion letter, defendants were liable to them for negligent misrepresentation. Defendants moved to dismiss the complaint under CPLR 3211(a)(1), (a)(3) and (a)(7). Plaintiffs cross-moved to add a breach of warranty claim to the complaint and for leave to replead in the event the complaint was dismissed. The motion court, correctly, dismissed the complaint with regard to plaintiff Etude Tajan, finding no basis to conclude that it was a party known to defendants or even a party likely to rely on defendants' letter (Prudential Ins. Co. of America v. Dewey, Ballantine, Bushby, Palmer & Wood, 80 N.Y.2d 377, 590 N.Y.S.2d 831, 605 N.E.2d 318). The court also, correctly, denied the cross-motion to add a claim sounding in breach of warranty, insofar as Wombaca had submitted no evidence in support of the cross-motion that defendants had warranted good title. The court found triable issues, though, regarding why the painting was seized, ostensibly supporting the negligence claim by plaintiff Wombaca, whose investment in the painting was lost upon the seizure.

However, since the issue is not whether Davide might have violated an Italian regulation, discussed infra, by the method of his sale to Wombaca, but whether defendants diligently and accurately communicated the steps to ensure good title until the time Tulip Enterprises took custody of the painting, plaintiff Wombaca failed to state a cause of action. Additionally, as will be noted infra, the defense was proved at the outset on the basis of documentary evidence. As such, we modify and dismiss the complaint in its entirety.

Attorneys, like other professionals, may be held liable for economic injury arising from negligent misrepresentations (Prudential Ins. Co., supra ). In order to establish a cause of action for negligent misrepresentation by a professional, the plaintiff must demonstrate defendant's awareness that its report or opinion is intended to be used for a particular purpose, that plaintiff relied on that...