Jerome M. Eisenberg, Inc. v. Hall

2017 NY Slip Op 1437, 147 A.D.3d 602, 48 N.Y.S.3d 71

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 23, 2017
• Docket: 653439/12 2651 2650
• Status: Published

Opinions

Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered on or about August 28, 2015, which denied plaintiff’s motion for summary judgment on its cause of action for breach of contract, affirmed, without costs. Appeal from order, same court and Justice, entered on or about August 28, 2015, which granted defendants Maurice E. Hall, Jr. and Michael Hall Collections, Inc.’s motion for summary judgment to the extent of dismissing the fourth, fifth and sixth causes of action in the amended complaint, dismissed, without costs, as abandoned.

Jerome M. Eisenberg buys and sells antiquities. He is a principal of plaintiff Jerome M. Eisenberg, Inc. (Eisenberg, Inc.), and a Qualified Appraiser of the Appraisers Association of America. He is a self-proclaimed expert in classical antiquities with a doctorate in Roman, Egyptian, and Near Eastern Art.

Defendants Maurice E. Hall, Jr. (Hall), Michael Hall Collections, Inc., and Michael Hall Fine Arts, Inc. are art dealers that mainly deal in sixteenth to nineteenth century European art. Hall was a principal and sole shareholder of both Hall entities. Hall asserts that his expertise is in Renaissance art and that he is merely an “amateur collector” of classical antiquities. Eisenberg also stated that he did not believe Hall to be an expert in classical antiquities.

This appeal deals with plaintiff securing from defendants a bust and a statue that they believed to be ancient but were later revealed to be modern forgeries.

In February 2009, Eisenberg visited Hall’s townhouse, out of which Hall operated his business, and secured¹ a marble head or bust of Faustina II, purported to be ancient Roman,² and a bronze warrior statue purported to be Etruscan or Roman era (the Etruscan Warrior).³ Some months later plaintiff sold the Faustina Bust to the Mougins Museum of Classical Art in France. In or about September 2011, the Mougins Museum informed plaintiff that the Faustina Bust was a fake in that it was modern and not ancient. The museum sent plaintiff a report by Professor R.R.R. Smith of Oxford University and Susan Walker, a curator at the British Museum, who opined that the bust was likely modern.

In April 2011, plaintiff obtained from defendants the Etruscan Warrior and a bronze helmet. Plaintiff subsequently sent photographs of the statue to Dr. Michael Padgett at Princeton University, who opined that the piece had some stylistic inconsistencies. Plaintiff then submitted the statue to Oliver Bobin of the Centre d’Innovation et de Recherche pour l’Analyse et le Marquage for metallographic analysis. Bobin determined that the Etruscan Warrior was actually from the nineteenth or twentieth century and therefore was not ancient.

Plaintiff alleges that due to the “mutual mistake” of the parties regarding whether the items were ancient, it is entitled to summary judgment.

We agree with the motion court’s decision that plaintiff is not entitled to summary judgment on its breach of contract claim pursuant to the doctrine of mutual mistake (see generally Matter of Gould v Board of Educ. of Sewanhaka Cent. High School Dist., 81 NY2d 446, 453 [1993]). Although the record reflects that both plaintiff and defendants mistakenly assumed at the time of the transactions that the items at issue were ancient, issues of fact exist as to whether plaintiff bore the risk of that mistake due to its “[c]onscious ignorance” of the items’ authenticity (P.K. Dev. v Elvem Dev. Corp., 226 AD2d 200, 201 [1st Dept 1996] [internal quotation marks omitted and alteration in original]; Richard L. Feigen & Co. v Weil, 1992 NY Misc LEXIS 711, *10-12 [Sup Ct, NY County 1992], affd for reasons stated below 191 AD2d 278 [1st Dept 1993], lv denied 82 NY2d 552 [1993]; Backus v MacLaury, 278 App Div 504, 507 [4th Dept 1951], lv denied 278 App Div 1043 [4th Dept 1951]; ACA Galleries, Inc. v Kinney, 552 Fed Appx 24, 25 [2d Cir 2014]; Restatement [Second] of Contracts § 154, Comment c).

“Generally, a contract entered into under a mutual mistake of fact is voidable and subject to rescission” because it “does not represent the ‘meeting of the minds’ of the parties” (Matter of Gould v Board of Educ. of Sewanhaka Cent. High School Dist., 81 NY2d 446, 453 [1993]). In order to justify rescission, “[t]he mutual mistake must exist at the time the contract is entered into and must be substantial” (id.).

The doctrine of mutual mistake “may not be invoked by a party to avoid the consequences of its own negligence” (P.K. Dev. v Elvem Dev. Corp., 226 AD2d at 201). Where a party “in the exercise of ordinary care, should have known or could easily have ascertained” the relevant fact (id. at 202) — here, whether the items were ancient — that party is deemed to have been “[c]onscious[ly] ignoran [t]” and barred from seeking rescission (id. at 201 [second and third alterations added]) or other damages. This is true “[e]ven where a party must go beyond its own efforts in order to ascertain relevant facts (such as obtaining experts’ reports)” (id. at 202).

The conscious ignorance exception applies only where a party is aware that his knowledge is limited but decides to contract anyway “in the hope that the facts accord with his wishes,” thus assuming “[t]he risk of the existence of the doubtful fact ... as one of the elements of the bargain” (Backus v MacLaury, 278 App Div at 507 [internal quotation marks omitted]; accord ACA Galleries, Inc. v Kinney, 552 Fed Appx at 25; Feigen, 1992 NY Misc LEXIS 711, *10-12; Restatement [Second] of Contracts § 154, Comment c).

We agree with the dissent that both plaintiff and defendants shared the mistaken belief that the Faustina Bust and the Etruscan Warrior were “ancient.” Where we diverge is that we find that the record at this time does not support a finding that Eisenberg did not consciously ignore his uncertainty as to a crucial fact (see Feigen, 1992 NY Misc LEXIS 711, *12).

Questions exist as to whether Eisenberg genuinely believed the bust and statue to be ancient, or was aware that they might not be ancient but decided to assume this risk. Plaintiff presented evidence that Eisenberg is an expert on classical antiquities and a qualified appraiser who generally relies on his own expertise in evaluating works unless he is unsure of a piece’s authenticity. He could thus have reasonably accepted that the items were ancient “based on [a] rational assessment of the source and style of work” (Feigen, 1992 NY Misc LEXIS 711, *15). Moreover, as to the Etruscan Warrior, Hall admittedly informed Eisenberg that he believed it to be from the private collection of renowned art collector J. Pierpont Morgan as signified by a painted red number. Eisenberg could have rationally relied on Morgan’s reputation in addition to his own observations (id.).

However, plaintiff also admits in its complaint that several other items purchased from defendants later turned out to be inauthentic. This suggests that plaintiff should have been on notice that the items might not be ancient — at least by the time of the later Etruscan Warrior purchase.

The circumstances surrounding the transactions, including the visits to Hall’s townhouse and bedroom, with little or no discussion of the provenance of the pieces, as well as plaintiff’s admission that several other items purchased from defendants turned out to be inauthentic, cast plaintiffs professed certainty as to the authenticity of the items into doubt and could support a finding that plaintiff was on notice that the items might not be ancient.

Concur — Acosta, J.P., Mazzarelli, Feinman and Webber, JJ.

1 . The parties dispute as to whether there was a consignment or sale, whether the sale was “as is,” and whether the invoices accurately reflected the underlying agreements.

2 . Faustina II or Faustina the Younger was an Empress Consort of the Roman Empire from 7 March 161-175 CE. She was the daughter of Emperor Antoninus Pius and Faustina the Elder and became the wife of Emperor Marcus Aurelius. She died in 175 or 176 CE.

3 . The Etruscan civilization is the modern name given to a powerful, wealthy and refined civilization of ancient Italy, in existence from 768 BC to 264 BC. It refers to an area corresponding to what is now Tuscany, western Umbria and northern Lazio. It ultimately assimilated into the Roman Republic beginning in the late fourth century BC with the Roman-Etruscan Wars.