Shirley Werner Kornreich (NYLJ/Rick Kopstein)
A nearly five-year lawsuit over an alleged $30 million art fraud was dismissed by a Manhattan Commercial Division judge Wednesday on statute of frauds grounds.
Justice Shirley Werner Kornreich granted summary judgment to the defendants in Komolov v. Segal, 651626/2011, finding art and antiques dealer Alexander Komolov “lacks any proof of ownership or right of possession superior to defendants” for the art works.
The suit stems from Komolov’s claims that his former business partners, David Segal and Mohamed Serry, sold him masterpieces purportedly by Claude Monet, Pierre-Auguste Renoir and Edouard Manet that turned out to be fakes.
Komolov also claimed that while away on a business trip, Segal and Serry stole from him works putatively by Pablo Picasso and Maurice de Vlaminck that Komolov stored in a lower Manhattan office and gallery shared by the three art dealers.
Komolov also sold a two-bedroom condominium in the Time Warner tower overlooking Columbus Circle to the defendants in 2007. Komolov alleged Segal and Serry breached an agreement to pay for the condo with paintings and jewelry valued at $4.2 million.
Komolov originally sued Segal and Serry in 2010 on breach of contract claims. The case was dismissed in 2011 when now-retired Commercial Division Justice Bernard Fried held all of the sales were subject to the statute of frauds requirement that the transactions be memorialized by a writing.
Komolov filed the present action based on the same facts but framed the claims as unjust enrichment and fraudulent inducement.
Ruling on a motion to dismiss in 2012, Kornreich initially threw out the case on res judicata grounds, but was reversed by the Appellate Division, First Department, in Komolov v. Segal, 96 A.D.3d 513.
The appeals court held that Fried had dismissed the first case “for pleading deficiencies and not on the merits,” and thus the second case was not res judicata. The opinion acknowledged that “judicial economy and the discouragement of forum shopping would otherwise warrant dismissal of this action.”
In the ruling, however, the appeals court affirmed Kornreich’s dismissal of the condominium claim because, even though both parties agreed there had been a written contract of sale, Komolov was unable to produce a copy.
Komolov said he was unable to secure the contract because the attorney who represented him had been convicted of 18 felony counts relating to mortgage fraud and the FBI had seized and retained the contract as part of the investigation. He was later able to obtain a copy from the title company that handled the transaction.
In her ruling last week, Kornreich said that after four years of discovery, Komolov had failed to present evidence sufficient to surmount the statute of frauds requirement on all of the claims, except the one relating to the condominium.
“It makes little sense to prohibit the enforcement of a contract violative of the statute of frauds but permit a claim to rescind it,” the ruling said. “This is particularly true with contracts for the sale of art, where the contracting parties either expressly choose to warrant the art’s authenticity or sell it ‘as is.’”
Kornreich chided the Appellate Division for its 2012 ruling, saying “one wonders how this sort of forum shopping can be dissuaded if a dismissal without prejudice may give rise to a new, virtually identical lawsuit in the same court, but before a different judge.”
“Most confoundedly, the Appellate Division held that Justice Fried’s dismissal of the artwork and antiques claims was on procedural grounds, but that the dismissal of the condominium claim was on substantive grounds,” she added.
“In so holding, the Appellate Division overlooked the fact that Justice Fried had dismissed all of plaintiffs’ claims on statute of frauds grounds,” she said.
The appellate ruling “permitted plaintiffs to revive the artwork and antiques claims, even though no contract existed, but refused to revive the condominium claim, even though a contract indisputably existed,” Kornreich found.
If the condominium claim had not been dismissed by the appellate court, she said she “would hold that questions of fact exist as to whether the supposed payment-in-goods satisfied defendants’ condominium payment obligation, and, therefore, the condominium claim would go to trial.”
Kornreich said the appeals court “should consider reinstating” the condominium claim, saying in a footnote: “As judiciously noted on Sesame Street, ‘Everyone makes mistakes, yes they do.’”
Brian Maas, a partner at Frankfurt Kurnit Klein & Selz who represented the defendants, said “the statute of frauds is there for the very purpose of precluding cases like this. We think the court got it right.”
Manhattan solo Roman Popik represented Komolov. He declined to comment.