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No Money Back for Gallery Worker Who Relied on Estimate of Schnabel Painting's Value
New York Law Journal
October 27, 2009
A woman who worked in art galleries in Beijing and relied on an art dealer's valuation of a painting by contemporary artist Julian Schnabel cannot recoup the $290,000 she paid for the work, a Manhattan judge has ruled.
Najung Seung claimed she was misled by art dealer Mary Dinaburg into believing the Schnabel painting, "Chinkzee," was worth at least $500,000 in order to entice her to buy it.
But New York Supreme Court Justice Eileen Bransten dismissed Seung's suit, finding in Seung v. Fortune Cookie Projects, 600537/09, that a "party is not justified in relying on any alleged misrepresentations if the facts were not peculiarly within" the other party's knowledge and the party had the means to learn the truth by exercising ordinary intelligence.
In May 2006, Seung, a resident of North Korea, paid Dinaburg $118,000 toward the purchase of a painting by John Wesley entitled "Bulls and Bed."
But the following March, Seung learned that Dinaburg had sold the Wesley painting to another buyer. Instead of returning Seung's money, Dinaburg offered her a $200,000 credit toward the purchase of "Chinkzee."
"I believe we have a good opportunity to place your work within the year and resell it a profit," Dinaburg wrote in a May 2008 e-mail.
On July 1, 2008, allegedly relying on Dinaburg's representations that the painting was worth at least $500,000, Seung advanced $90,000 to buy "Chinkzee."
Seung later learned that in May 2007 the painting had been sold at auction for $156,000 and that it had a current market value of no more than $110,000.
At that point, Seung decided she no longer wanted the painting and sued Dinaburg and her partnership, Fortune Cookie Projects, for $290,000, plus punitive damages.
On a motion to dismiss, Dinaburg argued that Seung failed to allege the defendant "possessed any unique or specialized expertise in the valuation of contemporary art beyond that common to any art dealer."
The complaint also did not "assert how Dinaburg might have assumed any position of trust and confidence such that Seung could have reasonably relied on her opinion as to the painting's 'value,'" the defendant maintained.
Justice Bransten agreed.
"In the context of an arms-length transaction, Seung's blind reliance on Dinaburg's alleged statements of the painting's value is not reasonable as a matter of law," the judge wrote.
In dismissing the fraud claim, the judge noted that Seung made no effort to appraise the work before buying it.
And while the plaintiff offered "persuasive authority" from other jurisdictions to back up her negligent representation claim, Bransten held that under New York law "vague allegations of general expertise" are not sufficient to establish the existence of a special relationship.
The judge also threw out claims of promissory estoppel and unjust enrichment.
Citing the majority holding by the Appellate Division, 1st Department, in Mandarin Trading Ltd. v. Wildenstein, 63 AD3d 448, Bransten noted that "unjust enrichment cannot be a back door recovery based upon reliance on the appraisal" when the appraisal could not be relied on in the first instance.
Michael F. Maschio of Cowan Liebowitz & Latman, who represented Seung, said he plans to move for reargument and appeal.
Alan Effron of Pelosi Wolf Effron & Spates represented the defendants.
