Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McKenzie v. Fishko

United States District Court, S.D. New York

February 13, 2015

RICHARD C. McKENZIE, JR. et al., Plaintiffs,
ROBERT FISHKO et al., Defendants.



In this action, Plaintiffs Richard C. McKenzie, Jr. ("McKenzie"), and Seven Bridges Foundation, Inc. ("Seven Bridges"), sue Defendants Robert Fishko ("R. Fishko"), Cheryl Fishko ("C. Fishko") and Forum Gallery, Inc. ("Forum" and collectively, "Defendants"), asserting claims of breach of contract, fraud, breach of fiduciary duty and unfair and deceptive trade practices in violation of New York General Business Law § 349. Plaintiffs seek an accounting, declaration of a constructive trust, and punitive damages. Defendants counterclaim, alleging that this action violates a prior settlement agreement and general release between the parties. Plaintiffs' claims are based on Defendants' alleged violation of two agreements between the parties and misrepresentation of the discounts that Defendants claimed to be providing to Plaintiffs in connection with the sale of artwork. The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1332.

The parties have each moved for summary judgment and the case has been stayed pending the resolution of these motions. The Court has considered carefully all of the parties' submissions and arguments. For the following reasons, the Court grants Defendants' motion for summary judgment with respect to Plaintiffs' claims and denies it with respect to Defendants' counterclaims. The Court denies Plaintiffs' cross-motion for summary judgment in its entirety.


The following facts are undisputed unless otherwise indicated. Only the facts and allegations most relevant to the instant motions are recited.[1] The Court assumes the parties' familiarity with the voluminous record.

McKenzie and Seven Bridges have amassed an art collection worth approximately $200 million, which McKenzie houses in a private museum on his property in Greenwich, Connecticut. (Def. 56.1 St. ¶¶ 2, 5-8.; Pl. 56.1 Counterstmt. ¶¶ 5-8.) Forum is an art gallery, run by the Fishkos, that has represented artists for more than fifty years. (Def. 56.1 St. ¶ 1.) McKenzie became a customer of Forum in 1997 and, approximately two years later, Seven Bridges also became a customer. (Def. 56.1 St. ¶ 21.) Although the parties do not agree as to whether McKenzie purchased particular pieces for his private collection or for Seven Bridges, it is undisputed that McKenzie and/or Seven Bridges purchased art from Defendants until 2011, obtaining more than 100 pieces in total. (Def. 56.1 St. ¶¶ 22-23; Pl. 56.1 Counterstmt. ¶ 23.) Each sale was documented with an invoice showing the price of the artwork and any attendant discount. (Declaration of Robert Fishko in Support of Defendants/Counter-Plaintiffs' Motions for Summary Judgment and Stay of Proceedings ("Fishko Decl."), Ex. 2.) Plaintiffs agreed to the prices reflected on the invoices (Def. 56.1 ¶¶ 46, 48), but now allege that the invoices were based on fraudulent reference prices.

McKenzie alleges that R. Fishko represented to him that R. Fishko could act as Plaintiffs' "agent" or "buyer's representative" and would offer them a twenty percent discount from the "list price"[2] of any works by artists that Defendants represented (Plaintiffs refer to such sales as "primary market" sales). McKenzie also alleges that R. Fishko represented that Defendants would negotiate with other dealers to get Plaintiffs the "best possible price" on works by artists not represented by Defendants (Plaintiffs refer to such sales as "secondary market" sales), and that Plaintiffs would be charged a five percent commission on those "best possible" prices. (Pl. 56.1 St. ¶ 16.) The parties agree that any alleged contract was not made in writing. (Def. 56.1 St.¶ 26; Pl. 56.1 Counterstmt. ¶ 26.) Plaintiffs further allege that the Fishkos had "an extremely high degree of specialized knowledge and expertise in the niche area of art Plaintiffs were collecting" and that McKenzie relied upon that knowledge and expertise. (Pl. 56.1 St. ¶¶ 19-20.) According to Plaintiffs, the Fishkos befriended McKenzie and his ex-wife in order to gain McKenzie's trust. (Id. ¶ 27.)

All of Plaintiffs' claims turn on the assertions that Defendants were contractually obligated to make primary market sales to Plaintiffs at a 20% discount from a "list price" and that secondary market transactions were to be priced at Defendants' acquisition price plus a five per cent commission. (Compl. ¶ 17.) Plaintiffs allege that Defendants breached their obligations by manipulating or otherwise falsifying the prices to which the discounts were applied, thereby increasing Defendants' profits. Plaintiffs principally proffer McKenzie's declarations and deposition testimony as proof of existence of the alleged contract. In his declarations, McKenzie provides no details of any alleged statements made by Defendants, nor of when the contracts were allegedly formed. McKenzie's contentions regarding the alleged secondary market agreement are based on his representations of his understanding of what R. Fishko meant when, during unspecified conversations at unspecified times, he undertook to get the Plaintiffs the "best price." (See e.g., Pl. 56.1 St. ¶ 16.) As to the primary market agreement, McKenzie asserts that Defendants did not actually have list prices, but supports this allegation only with deposition testimony in which C. Fishko referred to a database of prices. (Pl. 56.1 St. ¶ 50.)

In support of their motion, and in opposition to Plaintiffs' cross-motion, Defendants proffer transcripts of McKenzie's inconsistent deposition testimony disclaiming any recollection of what he or R. Fishko purportedly said at the time they entered into the alleged primary market agreement, where they were, or whether the alleged oral agreement was reached in person or over the phone. (Def. 56.1 St. ¶ 27.) Defendants also proffer evidence of McKenzie's conflicting accounts - varying by several years - as to when the alleged primary market agreement was formed. (Id. ¶¶ 28-29.) As to the secondary market agreement, Defendants demonstrate that McKenzie has testified both that the agreement existed from the beginning of the parties' relationship in 1997, and that it was not formed until sometime between 2004 and 2006. (Def. 56.1 St. ¶¶ 31-32.) McKenzie has also previously testified that Forum "was to charge [ ] 5 percent on any painting over $300, 000" (Def. 56.1 St. ¶ 33), but now contends that the five percent commission applied to all secondary market transactions regardless of price. (See Pl. 56.1 St. ¶ 46; Def. 56.1 St. ¶ 36.) At a deposition in a related action, McKenzie denied that there was a five per cent agreement with respect to a work on which he now contends he paid five per cent on an inflated acquisition price. (Def. 56.1 Counterstmt. ¶ 40.) Defendants further demonstrate that McKenzie has admitted uncertainty as to whether the alleged five per cent agreement was meant to be a discount from the list price or a commission on acquisition cost, that he has acknowledged that the term "cost" was never defined, and that he is uncertain as to the meaning of the term "best possible price." (Def. 56.1 St. ¶ 41.) Finally, Defendants demonstrate that Plaintiffs have not identified anyone other than McKenzie who knew about these alleged agreements. (Def. 56.1 St. ¶¶ 43-45.)

In or about 2011, a principal of a competing gallery allegedly told McKenzie that a Ralph Goings painting entitled "Tom's Diner" that McKenzie had purchased from a collector through Forum for $748, 125 was actually purchased by Forum for $350, 000. (Def. 56.1 St. ¶ 57.) McKenzie testified that he felt that Forum's alleged profit of $398, 125 on the transaction was excessive and began to suspect fraud. (Id. ¶ 58.) Defendants contend that Forum did not purchase "Tom's Diner" for $350, 000, but rather for $650, 000. (Id. ¶¶ 59-60.) According to Plaintiffs, Forum made a profit of 114 percent in connection with the "Tom's Diner" transaction, while Defendants contend that Forum made a profit of 13.1 percent. (See Declaration of Ryan Weiner in Support of Defendants/Counter-Plaintiffs' Motions for Summary Judgment and Stay of Proceedings, Ex. 7; Def. 56.1 St. ¶¶ 61-62.) Plaintiffs proffer no affidavit or other evidence of the alleged $350, 000 purchase price.

Plaintiffs also allege that, around this time, R. Fishko located a painting by Norman Rockwell entitled "Billiards is Easy to Learn, " which was listed at $1, 400, 000, but R. Fishko told McKenzie that he had secured a deal for McKenzie to purchase it for $1, 225, 000. Plaintiffs allege that, when the gallery sold the painting to R. Fishko for $1, 025, 000, Fishko improperly retained the $200, 000 difference instead of the allegedly agreed upon five percent commission. (Pl. 56.1 St. ¶¶ 34-39.) Defendants acknowledge the difference was $200, 000, but deny that there was any cost-plus-five percent agreement with Plaintiffs. (Def. 56.1 Counterstmt. ¶ 39.) Plaintiffs proffer evidence of disparities between the secondary market purchase prices from Defendants' gallery on which their invoices and discounts were based and Defendants' acquisition costs for the purchased works. (Id. ¶ 47.)

In or around February 2011, Forum delivered a painting called "Imperial" by Davis Cone to McKenzie's home for McKenzie to consider for purchase. (Def. 56.1 St. ¶ 63.) However, Defendants contend that, upon hearing about the alleged markup of "Tom's Diner, " McKenzie refused to pay for or return "Imperial, " instead demanding "restitution" and warning R. Fishko, "neither of us wants the publicity related to a court scene" or potential legal fees. (Def. 56.1 St. ¶¶ 64-67.) Defendants contend that they agreed to settle the dispute to avoid the litigation costs and adverse publicity and to recover "Imperial." (Id. ¶ 68.) According to Defendants, the parties reached a settlement agreement on March 9, 2011, which required Forum to wire Plaintiffs $250, 000 in return for a general release, but Plaintiffs dispute that such an agreement was reached. (Def. 56.1 St. ¶ 69; Pl. 56.1 Counterstmt. ¶ 69.) Defendants allege that McKenzie confirmed the final terms of the settlement agreement and release by emailing back, "OK LETS GO FORWARD, " and that Forum then wired McKenzie the $250, 000 settlement payment, but McKenzie refused to return "Imperial." (Def. 56.1 St. ¶¶ 74-76.) Forum sued McKenzie in Connecticut superior court on March 24, 2011, to recover "Imperial." (Id. ¶ 77.)

According to Plaintiffs, McKenzie refused to sign the "Long Form General Release" that Defendants sent because the figures were incorrect and, further, he had told Defendants five days prior to the "OK LETS GO FORWARD, " email, "please be aware there is no agreement." (Pl. 56.1 St. ¶¶ 57-58.) Plaintiffs also contend that McKenzie withheld "Imperial" as "self help" or a "set off." (Pl. 56.1 Counterstmt. ¶ 76.) On or about April 5, 2011, the Connecticut Superior Court ordered McKenzie to return "Imperial" to Forum and on July 11, 2011, the court granted Forum summary judgment on its replevin claim, but McKenzie never returned the $250, 000 settlement payment. (Def. 56.1 St. ¶¶ 78-81.) According to Plaintiffs, a general release was never contemplated. (Pl. 56.1 Counterstmt. ¶ 71.)

Defendants allege that, in January 2012, Forum received a letter from a Louisiana lawyer on behalf of McKenzie threatening to sue Forum in Louisiana if it did not turn over its business records to McKenzie. (Def. 56.1 St. ¶ 85.) Forum then filed a declaratory judgment action in Connecticut Superior Court on or about January 23, 2012 (separate from the replevin action) to enforce what Defendants claim was the general release in the earlier settlement agreement. (Id. ¶ 86.) On or about September 28, 2012, while the Connecticut case was pending, McKenzie filed the instant action and shortly thereafter filed a motion to stay the Connecticut action on the ground that "[t]he General Release should be asserted as an Affirmative Defense in the Southern District Action." (Id. ¶ 87.) In January 2013, the Connecticut Superior Court denied Forum's motion for summary judgment in its action for enforcement of the alleged release, finding that the evidence was ambiguous. (Declaration of Richard McKenzie in Opposition to Defendants' Motions for Summary Judgment ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.