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Jerome M. Eisenberg, Inc. v. Hall

Supreme Court of New York, First Department

February 23, 2017

Jerome M. Eisenberg, Inc., Plaintiff-Appellant,
v.
Maurice E. Hall, Jr., et al., Defendants-Respondents.

          Law Office of Frank Raimond, New York (Frank Raimond of counsel), for appellant.

          Heng Wang & Associates, P.C., New York (Jacob Tebele of counsel), for respondents.

          Acosta, J.P., Mazzarelli, Andrias, Feinman, Webber, JJ.

         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 secured [1] 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 N.Y.2d 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 A.D.2d 200, 201 [1st Dept 1996] [internal quotation marks omitted][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 A.D.2d 278 [1st Dept 1993], lv denied 82 N.Y.2d 652');">82 N.Y.2d 652');">82 N.Y.2d 652');">82 N.Y.2d 652 [1993]; Backus v MacLaury, 278 A.D. 504, 507 [4th Dept 1951], lv denied 278 A.D. 1043');">278 A.D. 1043 [4th Dept 1951]; ACA Galleries, Inc. v Kinney, 552 Fed.Appx 24, 25 [2d Cir 2014]; Restatement [Second] of Contracts § 154 and 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 N.Y.2d 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 A.D.2d 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 A.D. at 507 [internal quotation marks omitted]; accord ACA Galleries, Inc. v Kinney, 552 Fed.Appx at 25; ...


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