Sotheby's, Inc. v. Stone

388 F. Supp. 3d 265
CourtDistrict Court, S.D. Illinois
DecidedJuly 1, 2019
Docket18 Civ. 5668 (VM)
StatusPublished
Cited by9 cases

This text of 388 F. Supp. 3d 265 (Sotheby's, Inc. v. Stone) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sotheby's, Inc. v. Stone, 388 F. Supp. 3d 265 (S.D. Ill. 2019).

Opinion

VICTOR MARRERO, United States District Judge.

*269Plaintiff Sotheby's, Inc. ("Sotheby's") filed this action against defendant Wendy Stone ("Stone") raising a contract dispute regarding payment for the sale of certain works of art. ("Complaint," Dkt. No. 1.) Stone answered the Complaint and asserted four counterclaims against Sotheby's (the "Counterclaims"). ("Answer and Counterclaims," Dkt. No. 21.)

Now before the Court are the pre-motion letters submitted by Sotheby's seeking a conference to discuss a motion to dismiss the Counterclaims. The Court construes such letters as a motion by Sotheby's to dismiss the Counterclaims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (" Rule 12(b)(6)") (the "Sotheby's Motion"). For the reasons set forth below, the Sotheby's Motion is GRANTED in part and DENIED in part.

I. BACKGROUND 1

The Complaint alleges that Stone owes Sotheby's payment for two works of fine art (the "Works") that she bought from Sotheby's at an auction in 2015 (the "Auction"). Stone is the co-executor, along with her sister, Laura Maisel ("Maisel"), of the estate of Gladys Reiner (the "Consigning Estate"), which consigned the Works to Sotheby's for sale at the Auction. Stone signed a "Consignment Agreement" on behalf of the Consigning Estate. That agreement included a term barring Stone, in her individual capacity, from bidding on the Works and another term requiring that changes to the agreement be made in writing.

The Complaint further alleges that, prior to the Auction, Stone sought and received permission from both Sotheby's and the Consigning Estate to bid on the Works, and that she allegedly received such permission under false pretenses. To bid on the Works, Stone signed an interested party bidder letter (the "Interested Bidder Letter"), as well as an absentee bid form (the "Absentee Form"). According to Sotheby's, Stone obtained permission to bid on the Works so that she could buy the Works at lower-than-market prices. Ultimately, Stone placed the highest bids for the Works at the Auction, but Stone subsequently advised Sotheby's that she wished to cancel her purchase of the Works. Sotheby's did not agree to cancel the sale. Thus, Stone allegedly owes Sotheby's over one million dollars for the Works. Based on the foregoing allegations, Sotheby's brings two causes of action against Stone seeking monetary relief for (1) breach of contract, and (2) fraudulent inducement and concealment.2

*270On November 8, 2018, Stone answered the Complaint and asserted four counterclaims against Sotheby's.3 In her Answer and Counterclaims, Stone alleges that she is not liable to Sotheby's because Sotheby's -- specifically, its employee, Rebecca Lockwood ("Lockwood") -- misrepresented the terms of the sale of the Works. According to Stone, Lockwood promised Stone that Stone would be responsible for paying only half of the hammer price and half of the buyer's premium for the Works. Stone further alleges that Sotheby's subsequently made additional false representations to Stone: Sotheby's informed Stone that it would cancel the sale of the Works. Stone alleges that this false representation caused her to enter into a written agreement with the Consigning Estate to purchase the Works directly from the estate, an agreement which Stone alleges she could not perform when Sotheby's refused to cancel the sale of the Works.

Based on the preceding allegations, Stone asserts four counterclaims against Sotheby's: (1) breach of fiduciary duty for misrepresenting the terms of the sale of the Works; (2) breach of contract for charging Stone the full hammer price and the full buyer's premium for the Works, as opposed to half of each; (3) fraud and fraudulent inducement for the false statements upon which Stone reasonably relied in entering into a separate agreement with the Consigning Estate; and (4) tortious interference with contract for interfering with the contract between Stone and the Consigning Estate for the purchase of the Works.

On November 29, 2018, Sotheby's wrote to Stone, arguing that the Counterclaims should be dismissed. (See "November 29 Letter," Dkt. No. 31.) Generally, Sotheby's argues that Stone not only fails to allege damages, but also is incapable of proving damages. (See id. at 1.) Next, Sotheby's contends that each of the Counterclaims is deficient. First, Sotheby's asserts that the breach of fiduciary duty counterclaim warrants dismissal because Stone has failed to allege the existence of a fiduciary relationship between herself and Sotheby's, the existence of which is a requisite element of the claim. Sotheby's further argues that the breach of fiduciary duty counterclaim warrants dismissal because Stone has not pled the claim with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure (" Rule 9(b)"), and because the counterclaim is duplicative of the breach of contract counterclaim.

Second, Sotheby's maintains that the breach of contract counterclaim fails to *271state a claim, because the later-in-time Absentee Form -- which Stone signed and which incorporated a "Conditions of Sale" document -- necessarily supersedes any agreement by Sotheby's to charge Stone only half of the hammer price and half of the buyer's premium. Third, Sotheby's argues that the fraud counterclaim should be dismissed because it is duplicative of the breach of contract claim. Finally, Sotheby's contends that the tortious interference with contract counterclaim is deficient because Stone fails to allege sufficient facts to support two of the four elements of a claim for tortious interference with contract -- that the defendant intentionally procured a third-party's breach of the contract without justification, and actual breach of the contract.

On December 6, 2018, Stone responded to the November 29 Letter, arguing that the Counterclaims should not be dismissed. (See "December 6 Letter," Dkt. No. 32.) The letter begins by noting that Stone "will stipulate to withdrawing her breach of fiduciary duty claim without prejudice." (Id. at 1.) Stone then proceeds to argue that each of the remaining Counterclaims is sufficient to survive a motion to dismiss. First, Stone contends that the Conditions of Sale document was not provided by Sotheby's to Stone either before or after the Auction -- thus making the terms in the Conditions of Sale document unenforceable against Stone. Second, Stone argues that her counterclaim for fraud and fraudulent inducement should be maintained because the "false promise to cancel the sale created a duty to Ms. Stone who then acted to her detriment independent of the agreement the parties had regarding the Auction." (Id. at 2.) Stone requests leave to amend the Counterclaims to clarify the distinction in the bases for this counterclaim and her counterclaim for breach of contract.

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388 F. Supp. 3d 265, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sothebys-inc-v-stone-ilsd-2019.