Safflane Holdings Ltd. et al v. Gagosian Gallery, Inc.

Filing 10

MEMORANDUM OF LAW in Support re: 9 MOTION to Dismiss.. Document filed by Gagosian Gallery, Inc.. (Bart, Hollis)

WITHERS BERGMAN LLP
Holls Gonerka Bart (HB-8955)
Brian Dunefsky (BD-3554)

Dara G. Hammerman (DH-1591)
Azmina Jasani (AJ-4161)
430 Park Avenue, 10th Floor

New York, New York 10022
212.848.9800 (p)

212.848.9888 (f)
Attorneys for Defendant Gagosian Gallery, Inc.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SAFFLANE HOLDINGS LTD., and
ROBERT WYLDE,
Plaintiffs,

No.

11 crv 1679

(DLC)

-againstGAGOSrAN GALLERY, INC.

Defendant.

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT
GAGOSIAN GALLERY, INC.'S MOTION TO DISMISS THE COMPLAINT

TABLE OF CONTENTS
Page

TABLE OF AUTHORITrES ......................................................................................................... iii
PRELrMINAR Y STATEMENT .................................................. ...................... .......... ........ .... .......1

STATEMENT OF FACTS..............................................................................................................3
Fine Ar and "Active" Collector of
Works
by Tansey .........................................................................................................................4

A. Wylde, an Experienced Purchaser of

B. Charles Cowles Enlists Gagosian Gallery to Find a Buyer for Tansey's rconic
Work, The rnnocent Eye Test ..........................................................................................4

C. Wylde Determines to Purchase Cowles' The rnnocent Eye Test....................................5
D. The Sale of Prince's Milionaire Nurse............................................................................ 7
ARGUMENT ...................................................................................................................................8
POINT r
BECAUSE GAGOSrAN GALLERY WAS AT MOST MERELY AN AGENT OF A
DrSCLOSED PRICrp AL IN THE TANSEY TRANSACTION, ALL OF
PLAITIFFS' CONTRACT CLAIMS MUST BE DrSMISSED AS A MATTER OF
LAW................................................................................................................................................8

PorNT II
WYLDE'S ACTrVE ROLE AND DrRECT COMMUNrCATIONS WITH COWLES
CONCERNING A CONTRACT TO BUY THE TANSEY PAINTING FORECLOSE
PLAINTrFFS' FRAUD CLAIM AS A MATTER OF LAW........................................................ 11
A. Plaintiffs Have Not Sufficiently Alleged Justifiable Reliance.......................................

12

Their Breach of
Contract Claim ............................................................................................................... 14

B. Plaintiffs' Fraud Claim Must be Dismissed as Duplicative of

POINT iir
PLAINTIFFS' NEGLIGENT MrSREPRESENT A TrON CLArM CONCERNING THE
TANSEY PAINTING MUST BE DrSMrSSED FOR LACK OF ALLEGATrONS OF
REASONALBE RELIANCE AND A SPECrAL RELATrONSHrp AND BECAUSE IT
rs DUPLICATrVE OF PLAINTIFFS' BREACH OF CONTRACT CLArM ..............................16
POINT rv

PLAITrFFS' NEW YORK ARTS AND CULTURAL AFFArRS LAW § 13.03 CLAIM
CONCERNING THE TANSEY PAINTING MUST BE DrSMrSSED BECAUSE
THERE rs NO CrVrL LIABrLITY PROVrDED FOR UNDER THAT STATUTE....................19
-11103080.7.

POINT V

PLAITIFFS' REPUDrA TION CLArM CONCERNING THE PRICE PAINTING
MUST BE DrSMrSSED BECAUSE THERE WAS NO BINDING CONTRACT
BETWEEN PLAINTIFFS AND GAGOSrAN GALLERy............ ........................... ............... ....1 9
POINT vr

PLAITrFFS' DECEPTrVE AND MrSLEADING PRACTrCES CLArM
CONCERNING THE PRICE PAINTING MUST BE DrSMrSSED BECAUSE A
PRrv ATE TRANSACTrON DOES NOT GrVE RISE TO SUCH A CLArM UNDER
THE NEW YORK GENERAL BUSINESS LA W........................................................................21

CONCLusrON ..............................................................................................................................22

-11i 103080.7.

TABLE OF AUTHORITIES
Cases

Amusement Indus., Inc. v. Stern, 2011 US Dist. LEXIS 15887, at *34 (SD.NY Feb. 17,
2011)......................................................................................................................... ................. 12

Amusement Indus., Inc., 2011 US Dist. LEXIS 15887, at *43 (SD.N Y Feb. 17, 2011) .......... 18
Andres v. LeRoy Adventures, Inc., 201 A.D.2d 262 (1 st Dep't 1994) .......................................... 18

ATSI Commc 'ns, Inc. v. Shaar Fund Ltd., 493 F. 3d 87 (2d Cir. 2007).......................................... 8

Bell Atl. Corp. v. Twombly, 550 US 544 (2007) ................................................. ................... ....... 8

Brady v. Lynes, et at., 2008 US Dist. LEXIS 43512, *20 (SD.N Y 2008) ........................... 17, 18
Castle v. Cohen, 840 F.2d 173 (3d Cir. 1988).............................................................................. 20
Columbia Artists Mgmt., LLC v. Swenson & Burnakus, Inc., 2008 US Dist. LEXIS
74377, at **8-9 (SD.N Y Sept. 24, 2008) ......... ....................................................................... 20

Dallas Aerospace, Inc., v CIS Air Corp., 352 F.3d 775 (2d Cir. 2003) ................................. 12, 14
Deutsche Bank Sec. Inc. v. Rhodes, 578 F. Supp. 2d 652 (SD.N Y 2008) .................................... 9

Egan v. TradingScreen, Inc., 2011 US Dist. LEXIS 47713, *27 (SD.N Y 2011) ..................... 11
Field v. Trump, 850 F.2d 938 (2d Cir. 1998) ................................................................................. 3
Granat v. Center Art Galleries-Hawaii, Inc., 1993 US Dist. LEXIS 14092, *18 (SD.N Y
.. Oct. 6, 1993).............................................................................................................................. 18

Grand Gen. Stores, Inc. v. Royal Indem. Co., 1994 US Dist. LEXIS 5251, at **11-16
(S. D. N Y 1994).......................................................................................................................... 22

Gray v. Wackenhut Servs. Inc., 721 F. Supp. 2d 282 (SD.N Y 2010) ......................................... 16
H20 Swimwear, Ltd. v. Lomas, 164 A.D.2d 804 (1 st Dep't 1990) ............................................... 21

Ho Myung Moolsan Co., Ltd. v. Manitou Mineral Water, Inc., 665 F. Supp. 2d 239
(S.D.N Y 2009).......................................................................................................................... 15
Hudson River Club v. Consolo Edison Co., 275 A.D.2d 218 (lst Dep't 2000)............................. 16

In re IAC/InterActiveCorp Sec. Litig., 478 F. Supp. 2d 574 (SD.N Y 2007) .......................... 8, 10
Jafari V. Wally Findlay Galleries, 1989 WL 116437, *3 (SD.N Y 1989)..................................... 20
-111103080.7.

Joseph v. NRT Inc., 18 Misc. 3d 296 (NY Civ. Ct. 2007)................................................ 12, 14, 16

Kaul v. Hanover Direct, Inc., 296 F. Supp. 2d 506 (SD.N Y 2004)............................................ 20
LaSalle Bank Natl Assoc. v. Citicorp Real Estate, Inc., 2003 US Dist. LEXIS 4315, at

*9-15 (SD.N Y March 21, 2003)................................................... .......... ................................. 16

Man Diesel A/S v. Seahawk N Am. LLC, 2009 US Dist. LEXIS 87648, *6 (SD.N Y
Sept. 22, 2009)................................................................................................................... 8, 9, 10
Muller-Paisner v. TIAA, 289 Fed. Appx. 461 (2d Cir. 2008) ......................................................... 6

Papa's-June Music, Inc. v. McLean, 921 F. Supp. 1154 (SD.N Y 1996).................................... 15
Perry v. Vanteon Corp., 192 F. Supp. 2d 93 (WD.N Y 2002)....................... ............................... 3
Restatement (Third) of Agency § 1.04(2)( a) ................................................................................... 9

Restatement (Third) of Agency § 6.01 (2006)................................................................................. 8

Rubin v. Telemet America, Inc., 698 F. Supp. 447 (SD.NY 1988).............................................21

Seungv. Fortune Cookie Projects, 2010NY Misc. LEXIS 3991, at *12 (NY Sup. Aug. 9,
2010) . .. . . .. . .. . . . . .. .. .. .. .. .. . . . . . .. . . . . . . . . . . . . . . . .. .. . . .. . . . . .. .. .. . . .. .. . .. . . .. .. .. .. .. .. .. . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 12

Shaheenv. Stephen

Hahn, Inc.

1994 US Dist. LEXIS2651, **10-11 (SD.NY March

9,

1994)......................................................................................................................... ................. 21

Shea v. Angulo, 1993 US Dist. LEXIS 16740, at *9 (SD.NY Nov. 29, 1993) .................... 14,15
Struna v. Wolf 484 N YS 2d 392 (NY Sup. Ct. 1985) ................................................................. 17
Tangorre v. Mako's, Inc., 2003 WL 470577, *7(SD.N Y 2003) .................................................. 20

Tinslee Enter., Inc. v. Aetna Casualty & Sur. Co., 834 F. Supp. 605 (E.D.NY 1993)................ 22
Van Damme v. Gelber, 2008 NY Misc. LEXIS 203, at **4-7 (N Y Sup. Ct. Jan. 23,
2008) .. .. .. .. . . .. . .. . . .. . . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. . . .. . .. .. .. .. .. .. .. .. . .. .. .. .. .. .. .. .. . . .. . .. .. . .. .. . . .. .. . .. . . .. .. .. .. .. .. .. .. .. . . . . .. . .. 9

Statutes
Fed. R. Civ. P. 12 (b)

(6). .................................................................................................................. 8

Other Authorities

New York Arts and Cultural Affairs Law § 13.03............................................. ........................ 2, 19
New York General Business Law § 349.......................................... .................... ...................... 3, 21

-lV1103080.7.

PRELIMINARY STATEMENT
rn this action, plaintiffs Robert Wylde ("Wylde"), a sophisticated collector of fine art, and

Saffane Holdings Ltd. ("Safflane"), for which Wylde acts as its "authorized representative,"
seek to blame defendant Gagosian Gallery, rnc. for decisions Wylde alone made on two separate
occasions, to accept risks that were fully disclosed to Wylde before he decided he wanted to
acquire two paintings.

The first such instance involved plaintiffs' purchase from Charles Cowles ("Cowles") of
an iconic painting by Mark Tansey ("Tansey") entitled The Innocent Eye Test (the "Tansey

Painting"). Cowles, a well-known art dealer, affrmatively (though as it later turned out, falsely)
represented directly to Wylde before he bought the Tansey Painting that it was his (Cowles') to
selL. Wylde, an avid collector of quality Tansey works, knew that the Tansey Painting had been

on display at the Metropolitan Museum of Ar (the "Met"). Thus, at Wylde's request, Gagosian
Gallery, whom Cowles had enlisted to help him find a buyer for the Tansey Painting, aranged

for Wylde to go to Cowles' gallery/residence to view the work to confirm the representations
Cowles had made to Gagosian Gallery that the work was in Cowles' possession and was his to

sell. As revealed in emails (referenced in the Complaint), Wylde conducted an internet search
the next day that took him to the Met's permanent Collection Database, which listed the Tansey

Painting as the "Partial and Promised Gift of Jan Cowles and Charles Cowles, in honor of

Wiliam S. Leiberman, 1988."
Nonetheless, Wylde, having received the confirmation he had sought from Cowles
concerning Cowles' right to sell the Tansey Painting, notified Gagosian Gallery that he (Wylde)
had decided to proceed with the purchase of

the work for $2.5 milion. Though Cowles has

recently admitted in a New York Times aricle that he just decided to sell it and this was all "his

mistake," plaintiffs have not sued Cowles in this action, electing instead to pursue only Gagosian
- 11103080.7.

the

Gallery, a deeper pocket but against which plaintiffs have stated no viable claim in respect of

Tansey Painting.

rndeed, as described in the Complaint, Gagosian Gallery was at most acting as Cowles'
agent, and thus, canot be liable as a matter of

law for its principal, Cowles' failure to deliver

good and unencumbered title. Plaintiffs' contract claims relating to the Tansey Painting (Causes
1-4) therefore should be dismissed. rn any event, as Cowles made the same representations to
to do his

Wylde that he had made to Gagosian Gallery, and Wylde, having taken it upon himself

own research on the work using publicly available resources, was on actual notice before he

decided to proceed with the transaction that the Tansey Painting had been gifted to the Met. On
the basis of those allegations, and the contemporaneous exchanges referred to in the Complaint,
plaintiffs cannot state claims for fraud or negligent misrepresentation (Causes 5-6), and those

plaintiffs' breach of

claims are unavailng for the further reason that they are duplicative of

contract claim (Cause 4). As there is no private right of action under New York Arts and
Cultural Affairs Law § 13.03, plaintiffs' claim invoking this statute (Cause 7) also fails.

rn the same way, plaintiffs have failed to state a viable claim against Gagosian Gallery in

relation to its sale to a third party of a painting (the "Prince Painting") by Richard Prince, which

Wylde wished to buy for himself. Wylde, having purchased at least 10 paintings from Gagosian
Gallery since 2004, was familiar with, and accepted the terms of, the standard form of invoice

Gagosian Gallery uses, which expressly states that: "TITLE DOES NOT PASS UNTIL

PAYMENT IN FULL rs RECEIVED." As plaintiffs admit in their Complaint, this language

conditions the passage oftitle on payment in full. As the parties expressly did not intend for a
binding contract to exist until Wylde paid in full, there was no binding commitment to deliver

the Prince Painting to Wylde until he had paid for the Prince Painting in full- a condition which

-21103080.7.

did not happen because Gagosian Gallery immediately advised Wylde that the sale was cancelled

and before any payment was made. Accordingly, plaintiffs' contract "repudiation" claim must
be dismissed as a matter of

law.

Finally, plaintiffs' attempt to morph their flawed "repudiation" claim into a violation of
New York General Business Law § 349 also should be rejected because it is well-established that
Section 349 does not apply to a single dealing between a private party and a merchant, such as

the one here. As such, plaintiffs' scandalous allegation that Gagosian Gallery makes it a

business practice of entering into agreements to sell ar only to accept higher offers from
someone else, can only be viewed as an attempt to malign the stellar business reputation of

Gagosian Gallery. Accordingly, this allegation should be stricken from the Complaint.

STATEMENT OF FACTS
The claims alleged in the Complaint are premised on two discrete events, one involving

the Tansey Painting, and the other involving the Prince Painting. rn the case of the Tansey
transaction, Wylde acted as the "authorized representative" for his principal, Saffane (Cpl. ir 11)
in his dealings with Gagosian Gallery, which was known to plaintiffs to be "one of

the most

reputable and renowned contemporary art dealers in the world (Cpl. ir 19(ii)). rn regards to the
Prince claim, Wylde apparently acted on his own behalf. See Cpl. ir 29; Bart Aff. at Ex A
1 Accordingly, consideration of
(Prince invoice in Wylde's name only).

the legal theories

advanced below in support of defendant's motion to dismiss must be viewed in the context of

1 "Bart Aff." or "Bart Affidavit" refers to the Affidavit of Hollis Gonerka Bar and "Good Aff."
which was sworn to on May
1 1, 201 1. The exhibits attached to the affidavits and the statements in the Good Affidavit are
referred to in the Complaint and are thus properly considered on this motion to dismiss. See
Field v. Trump, 850 F.2d 938, 949 (2d Cir. 1998); Perry v. Vanteon Corp., 192 F. Supp. 2d 93,
94 n. i (W.D.N.Y. 2002); see also Cpl. irir 14 (referring to oral and email communications), 17
(communications which "confirmed" representations), 24 (Tansey invoice) and 29 (Prince
invoice).
or "Good Affdavit" refers to the Affidavit of John Good, each of

-31103080.7.

fine ar, and the

Wylde's admitted knowledge and experience as a sophisticated collector of

proactive and informed role he took in deciding to proceed with these two purchases, as detailed
below.

A. Wylde, an Experienced Purchaser of Fine Art and '''Active'' Collector
Works by Tansey
of

Since 2004, Wylde, as Saffane's "authorized representative," has engaged "in no less
than 10 transactions" with Gagosian Gallery, totaling $5,100,000, including the acquisition ofa
work by Tansey, a postmodern painter. Id. at ir 13, n.2; see also id. at irir 9, 11, 14 (plaintiffs are

known for wanting to improve and complement their ar collection). In this regard, plaintiffs
have "actively collected the works of

Tansey," whose works sell for millions of dollars. Id. at irir

9,13.
B. Charles Cowles Enlists Gagosian Gallery to Find a Buyer for

Tansey's Iconic Work, The Innocent Eye Test
In or about late July 2009, Cowles, a well-known New York City ar dealer, contacted
"one of

Defendant's most senior and experienced sales persons," John Good. Id. at irir 11, 14(ii);

see also id. at ir 14 (Tansey transaction spaned period July 20-31, 2009). Cowles, with whom
Gagosian had previously done business without incident, allegedly informed Good that he was

winding down his art dealership and was interested in sellng Tansey's The Innocent Eye Test.
See, e.g., Cpl ir 19(iii). Cowles asked Good if Gagosian Gallery could help find him a buyer for
the Tansey Painting. See id. at ir 19(iii); see also id. at irir 14(ii), 14(iv).

The Innocent Eye Test has attained an "iconic status" in the art world, and had been on
display at the

Metropolitan Museum of Art (the "Met"). See Cpl. at ir 161 Moreover, there is a

scarcity of quality works by Tansey in the secondary market (id.), thus making the market for his

works relatively small and easy to track (see, e.g., infra at Section C). Good thus asked Cowles
whether the Met had an interest in the Tansey Painting. See Cpl. irir 14(iv), 19(i). In response,

-41103080.7.

Cowles is alleged to have represented to Good that due to a "spat" Cowles had with the Met's
director, the Tansey Painting was no longer being exhibited at the Met, and as such, "the Tansey

Painting had been properly returned to (Cowles) by the Met," that Cowles was "rightfully in
possession of

the Tansey Painting," and it "was now owned by (Cowles) and could be sold to
Wylde's interest in, and knowledge of, Tansey and his

Safflane." Cpl. ir 14(ii)-(iv). Knowing of

works, Good contacted Wylde to determine whether he might be interested in purchasing
Cowles' Tansey Painting. See id. at irir 9, 13.
C. Wylde Determines to Purchase Cowles' The Innocent Eye Test
During their discussion of

the Tansey Painting, Good conveyed to Wylde exactly what
the Tansey Painting,

Cowles had told him - namely, that Cowles owned and was in possession of

that "prior to (Cowles) having taken possession the Tansey Painting, (it) had been located and

exhibited at The Metropolitan Museum of Ar (the "Met")," that due to a "spat" that Cowles had
with the Met's director, the Tansey Painting was no longer being exhibited at the Met, and that
the Tansey Painting "was now owned by (Cowles) and could be sold to Saffane." Id. at irir 14,

19(i)(iii).

Plaintiffs do not allege that Wylde asked Good if he had contacted the Met to determine
whether it had any ownership interest in the Tansey Painting, nor did Wylde request that Good
do so. Instead, Wylde appears to have conducted his own due diligence, which confirms that he

was fully aware ofthe Met's interest in the Tansey Painting before he decided to purchase it

from Cowles. See Good Aff. at Ex A.
Specifically, the next day on July 28, 2009, Wylde sent an email to Good with the

wiliam s. lieberman.,,2

following subject line: "promised gift of charles cowles in honour of

appears in the subject line from
The Innocent Eye Test.
the webpage on the Met's website regarding the Cowles' promised gift of
See The Met Works of Art, Modern Collection Database, Mark Tansey, Innocent Eye Test,
2 As a quick Google search confirms, Wylde lifted the text which

available at http://ww.metmuseum.org/works_or-arcollection_ database/modern_art
-51103080.7.

Id. ; see also Cpl. ir 18. As the email contained a link to an apartment, but nothing that would

explain the subject line, Good responded: "Saw the listing for the loft but was there something

Wiliam S.

else about the promised gift?" Good Aff. Ex. A. Wylde replied: "in honour of

Lieberman. . .. who was he?" Good answered, explaining, "Curator of 20th century art; now

retired and replaced by Gary Tinterow." Id.
After Wylde conveyed his decision to purchase the Tansey Painting for $2.5 milion,
Gagosian Galley issued an invoice to plaintiff Safflane dated July 3 i, 2009 for the Tansey

Painting. See id. at ir 24; see also Bart Aff. at Ex. C. As expressly stated on the Gagosian
Gallery invoice, title passed when payment in full was made in or about August 5,2009, and the

Tansey Painting was delivered to plaintiff Saffane. Cpl. ir 24; Bart Aff. at Ex C.
In or about April

2010, Gagosian Gallery leared for the first time that Cowles in fact did

not have the authority to sell the Tansey Painting, and that the Met, through gifts made by
Cowles and his mother, held a 31% undivided interest in it. Id. ir 25.

Almost a year later, plaintiffs filed this action seeking to recover $6 milion from
Gagosian Gallery. Though Wylde clearly was sufficiently satisfied by the confirmation he
received from Cowles when he viewed the Tansey Painting that it was Cowles' to sell, plaintiffs

have not sued Cowles, even though Cowles has readily admitted in an article that was recently
published in the New York Times discussing this lawsuit, that he misrepresented his abilty to

convey to Plaintiffs unencumbered title to the Tansey Painting, and that it was all his mistake:

(continued)
the _innocent_eye _test_ mark_tansey/objectview.aspx?collD=2 1&OID=21 0005 1 85; see also
Bart Aff. at Ex B; Muller-Paisner v. TlAA, 289 Fed. Appx. 461, 466,466 n.5 (2d Cir. 2008)
its publications.").
judicial notice of
"defendants' website for the facts of
(taking
i

-61103080.7.

Mr. Cowles. . . said that he considered the whole dispute his mistake. He said
that after the museum returned the painting to him "I didn't even think about
it or not." "And one day I saw it on the wall and .
whether the Met owned par of
thought, 'Hey, I could use money' and so I decided to sell it," he added. "And
now it's a big mess."
See New York Times, Collector Sues Gagosian Gallery for Sellng Him a Painting Partially

Owned By Met, dated March i 1,2011. Bar Aff. at Ex D.
On May 10, 201 1, the Met fied a lawsuit against plaintiffs in the Southern District of
the Tansey

New York for a declaratory judgment that the Met is the sole and exclusive owner of

Painting and for its immediate return. Id. at Ex. E.

D. The Sale of Prince's Milionaire Nurse
A few months after plaintiffs purchased the Tansey Painting, Gagosian Gallery showed

Wylde, on or about October 15,2009, a painting by Prince entitled, Milionaire Nurse, and the

next day provided a fact sheet to him concerning the work. Cpl. irir 26- 27. Upon learing that
Wylde wished to purchase the Prince Painting, Gagosian Gallery issued its standard form of
$2.2 milion. Cpl. irir 28-29.

invoice to Wylde on or about October 23, 2009 in the amount of

The invoice expressly provided in capital

letters that "TITLE DOES NOT PASS UNTIL

PAYMENT IN FULL IS RECEIVED." See Cpl. ir 24; Bar Aff. at Ex A. As plaintiffs readily
concede in their Complaint, this language expressly conditions the passage of title upon receipt

of payment in full. Cpl. ir 24; see also id. at ir 50 (conceding that payment is required "on its part
to be performed") and ir 68 (title passes "when payment in full (is) received.").
On or about October 25,2009, before Wylde paid for the Prince or took possession of

it,

Good advised Wylde that the sale was cancelled. Cpl. ir 30. In the Complaint, plaintiffs seek to
recover damages of $ 1 ,000,000 on the theory that by repudiating the sale before they had paid

for the Prince Painting, Gagosian Gallery wrongfully repudiated the parties' alleged agreement.
Cpl. irir 74-75.

-7i 103080.7.

ARGUMENT
A complaint wil be dismissed if a plaintiff fails to "state a claim upon which relief can

be granted." Fed. R. Civ. P. 12(b)(6). To surive a motion to dismiss, factual allegations must
raise a right to relief that is above the speculative level, on the assumption that all of the
complaint's allegations are true. Bell Att. Corp. v. Twombly, 550 U.S. 544 (2007); see also ATSI
Commc 'ns, Inc. v. Shaar Fund Ltd., 493 F.3d 87 (2d Cir. 2007). While a cour, on a motion to

dismiss, must accept the truth of the allegations in a complaint, the court need not accept as true
bald assertions and legal conclusions, or legal conclusions masquerading as facts. See Twombly,

550 U.S. at 555-56. Nor must a court accept allegations that are contradicted by other
allegations in a complaint. See In re IAC/lnterActiveCorp Sec. Litig., 478 F. Supp. 2d 574,585
(S.D.N.Y. 2007).

POINT I
BECAUSE GAGOSIAN GALLERY WAS AT MOST MERELY AN AGENT OF A
DISCLOSED PRINCIPAL IN THE TANSEY TRANSACTION, ALL OF PLAINTIFFS'
CONTRACT CLAIMS MUST BE DISMISSED AS A MATTER OF LAW
Plaintiffs seek to hold Gagosian Gallery responsible on breach of contract and warranty
theories, alleging that it is liable for Plaintiffs' inability to obtain full title to the Tansey Painting.
As demonstrated below, those allegations, even if accepted as true (which is not conceded), fail

to state a claim because, as evident from the allegations in the Complaint, Gagosian Gallery was
at most acting as an agent for the actual seller of

the Tansey Painting - Cowles - and as such,

canot be held responsible for Cowles' failure to deliver good and unencumbered title.
It is well-established that an agent who enters into a contract with a third party on behalf
of a disclosed principal "is not a party to the contract unless the agent and the third party agree
. otherwise." Man Diesel A/S v. Seahawk N Am. LLC, 2009 U.S. Dist. LEXIS 87648, *6

(S.D.N.Y. Sept. 22, 2009), quoting Restatement (Third) of Agency § 6.01 (2006). Thus, absent
such agreement (and n0i.e is alleged here), an agent for a disclosed principal is not liable to such
-81103080.7.

third pary in the event the principal breaches the contract. Id.; see also Van Damme v. Gelber,

2008 N.Y. Misc. LEXIS 203, at **4-7 (N.Y. Sup. Ct. Jan. 23, 2008).
par enter into the contract,

A principal is disclosed if, at the time the agent and third

"the third pary has notice that the agent is acting for (the) principal and has notice ofthe
principal's identity." Man Diesel A/S, 2009 U.S. Dist. LEXIS 87648, at *7, quoting Restatement

(Third) of Agency § 1.04(2)(a). The key to such disclosure is whether the third pary has
"sufficient information to distinguish the principal from all others." Id., quoting Deutsche Bank

Sec. Inc. v. Rhodes, 578 F. Supp. 2d 652,666 (S.D.N.Y. 2008) (citation omitted). The third
the principal's identity when it "knows, has

pary is deemed to have "sufficient information" of

reason to know, or should know of such identity." Id. Based on the allegations in the Complaint,
it is clear that plaintiffs knew or should have known that Gagosian Gallery was acting at the

behest of Cowles who sought its assistance for the purose of finding a buyer for the Tansey
Painting. See, e.g., Cpl. at irir 14, 19.

Van Damme, 2008 N.Y. Misc. LEXIS 203, is instructive in this regard. In Van Damme,

plaintiff sought enforcement of a contract to buy a painting from defendant, a gallery, who was
acting as the agent for the owner/seller of

the painting. The gallery moved to dismiss the causes

of action for breach of contract, specific performance and conversion, arguing that it could not be

held liable since it was a mere agent in the transaction. Id. at **4-7. The court agreed that the
specific performance and conversion claims must be dismissed, because the gallery was acting as
the agent of

control of

the painting's owner in the transaction, and the gallery did not have ownership or

the painting. Id. at 4. As for the breach of contract claim, that court stated that "(i)t is

established law that an agent of a fully disclosed principal canot be personally liable under a
liability." Id. at 5.

contract, unless the agent separately assumes individual

-9i 103080.7.

Here, the allegations of the Complaint are clear that Cowles was a fully disclosed

principal, and that Gagosian Gallery was at most merely acting as Cowles' agent in connection
with the sale of

the Tansey Painting to plaintiffs. As alleged in the Complaint, Wylde was
the Tansey Painting."

specifically and repeatedly informed that "Cowles (was) the owner of

Cpl. ir 14, 18, 19. Moreover, Wylde admits that he even met with Cowles and confirmed that
the Tansey Painting, when he viewed it

Cowles, not Gagosian Gallery, was in possession of

hanging in Cowles' residence. Cpl. ir 17. In addition, when Wylde, the "authorized

representative" of Safflane (Cpl. ir 11), met with Cowles, he directly asked Cowles whether the
Tansey Painting was Cowles' to sell, and Cowles responded yes.3 See Cpl. ir 17; Good Aff. ir A.

In sum, plaintiffs cannot dispute that they were aware that Cowles was the seller, and
thus principal, in the sale of

the Tansey Painting to them. As such, there simply is no basis to

hold Gagosian Gallery liable for the alleged breaches of contract or warranty by Cowles, a fully
disclosed principaL. See Man Diesel A/S v. Seahawk N Am. LLC, 2009 U.S. Dist. LEXIS 87648,

*6 (S.D.N.Y. Sept. 22, 2009) (dismissing plaintiffs claims against agent where its principal was
disclosed).
In light of

these specific allegations, plaintiffs' speculative and vague allegation that they

"believed' that Gagosian Gallery was acting as a principal during the negotiations and ultimate
sale of

the Tansey Painting should be rejected. Cpl. ir 20. Indeed, given the admissions in their

Complaint that Wylde was repeatedly informed by all involved that Cowles was the owner of

the

Painting and the person sellng it - not Gagosian Gallery - their assertion that they "believed"
Gagosian Gallery to be the principal is not plausible and is contradicted by their other more

specific allegations concerning Cowles' ownership. Thus, plaintiffs' vague belief should be
rejected by the Court. See In re IAC/InterActiveCorp Sec. Litig., 478 F. Supp. 2d at 585 (a court
3 Moreover, plaintiffs fail to make any allegation (nor was it the case) that Gagosian Gallery ever

accepted individual liability that would subject them to contract liability as an agent of Cowles.
-101103080.7.

should not accept allegations that are contradicted or undermined by other more specific

allegations in the complaint); see also Egan v. TradingScreen, Inc., 2011 U.S. Dist. LEXIS
47713, *27 (S.D.N.Y. 2011) ("Conclusory pleadings on information and belief

are inadequate as

a matter of law to surive a motion to dismiss"). For the foregoing reasons, Gagosian Gallery
cannot be held liable for the failure of its fully disclosed principal, Cowles, to deliver good title,

the Tansey Painting must

and Plaintiffs' first four causes of action relating to the sale of

therefore be dismissed.

POINT II
WYLDE'S ACTIVE ROLE AND DIRECT COMMUNICATIONS WITH COWLES
CONCERNING A CONTRACT TO BUY THE TANSEY PAINTING
FORECLOSE PLAINTIFFS' FRAUD CLAIM AS A MATTER OF LAW
As detailed in the Complaint and in the contemporaneous communications referenced
therein (Cpl. ir 18) Wylde, acting as Safflane's "authorized representative," took an active role in

conducting such due diligence as he deemed necessary to represent his principal's interests in the

purchase ofthe Tansey Painting, including speaking directly to Cowles to obtain "confirmation"
of the representations Cowles had made to Gagosian Gallery; and he made the decision to

purchase the Tansey Painting from Cowles, knowing that the work was listed on the Met's
website as a promised gift from Cowles and his mother to the Met. See Cpl. at irir 1 1, 14, 17, 18,

19,24, Good Aff. at Ex. A; Bar Aff. at Ex. B. Thus, plaintiffs' fraud claim against Gagosian
Gallery, alleging that the Gallery knew or should have known that Cowles did not have the right

to sell the Tansey Painting, but deceived and defrauded and induced plaintiff Saffane to
purchase it anyway (Cpl. at ir 55), is frivolous and should be dismissed on this ground alone.

But, even accepting this allegation as true, plaintiffs have not stated a claim for fraud

because, as demonstrated below, (i) plaintiffs have not sufficiently alleged that they justifiably
relied on any statement Gagosian Gallery (as opposed to Cowles) allegedly made to Wylde
-111103080.7.

concerning Cowles' claim of ownership of

the Painting, and (ii) plaintiffs' fraud claim clearly is

duplicative of their breach of contract claim, which seeks the very same relief.

A. Plaintiffs Have Not Suffciently Allel!ed Justifiable Reliance
To establish a claim for fraud, plaintiffs must show "a misrepresentation or a material
omission of fact which was false and known to be false by defendant, made for the purose of
inducing the other pary to rely upon it,

justifable reliance of

the other party on the

misrepresentation or material omission, and injur." Joseph v. NRT Inc., 18 Misc. 3d 296,299
justified in relying on any alleged

(N.Y. Civ. Ct. 2007) (emphasis added). A pary is not

misrepresented facts if such facts were "not peculiarly within the other pary's knowledge and the

party had the means to discover the truth by the exercise of ordinary intelligence." See id.; see
also Seung v. Fortune Cookie Projects, 2010 N.Y. Misc. LEXIS 3991, at *12 (N.Y. Sup. Aug. 9,

2010) (internal citations and quotations omitted) (dismissing plaintiffs fraud claim and holding
that plaintiff

failed to show justifiable reliance on defendant's assessment of

the painting's value

because the painting's value was not peculiarly within the defendants' knowledge); Dallas
Aerospace, Inc., v CIS Air Corp., 352 F.3d 775, 785-86 (2d Cir. 2003) (where alleged
misrepresented facts were not peculiarly within the defendants' knowledge and plaintiff

had

available means of ascertaining the truth, including asking the defendant to procure the requested
information, a claim for fraudulent misrepresentation is defeated); Amusement Indus., Inc. v.

Stern, 2011 U.S. Dist. LEXIS 15887, at *34 (S.D.N.Y. Feb. 17,2011) (finding that "courts have
granted motions to dismiss because of a failure to adequately plead reasonable reliance. . . where
a plaintiff failed to examine readily available information, relied on oral representations of
information when it could easily have asked for additional information, or failed to properly
investigate a transaction.") (citation omitted).

-121103080.7.

Here, Wylde similarly fails to allege that he justifiably relied on any of Gagosian
Gallery's statements, because any alleged misrepresentation of facts were not peculiarly within

Gagosian Gallery's knowledge, and more tellngly, plaintiffs concede in their Complaint and in
contemporaneous communications referenced therein, that Wylde conducted his own due

the Met's potential interest in the Tansey

diligence, which confirms that he was fully aware of

Painting before he decided to purchase it from Cowles. See Cpl. ir 17; Good Aff. at Ex A. Good
also openly exchanged emails with Wylde before he decided to purchase the Tansey Painting
about Wylde's discovery that the work appeared on the Met website as a gift to the Met from
Cowles and his Mother. 4 Good Aff. Ex A.

Thus, Wylde, having met directly with Cowles, seen the Tansey Painting hanging on the
wall in Cowles' gallery/residence, and conducted research on the Met website, was nonetheless

the Tansey Painting

sufficiently satisfied with Cowles' representations about his ownership of

when he (Wylde) made the decision to buy it from Cowles. By plaintiffs' own account, then,
Wylde, the "authorized representative of Safflane," had the same information as Gagosian
Gallery with respect to Cowles' ownership of

the Tansey Painting.

As Wylde clearly was conducting his own due diligence, including internet research
which revealed that Cowles and his mother gifted the Tansey Painting to the Met in 1988, he
could have easily tested the veracity of Cowles' representations that the Tansey Painting was his

to sell, through the exercise of ordinary due diligence by conducting further investigation or
insisting on a follow-up conversation with Cowles regarding his finding on the Met's webpage.

But the Complaint alleges no such follow-up. Instead, the Complaint shows that Cowles, having
"confirmed" Cowles' representation, made the decision to purchase the Tansey Painting.
4 While Plaintiffs allege that the "lay Plaintiffs had no such capability" to research and evaluate

the truth of Cowles' representations, Wylde, in fact, did have the capabilty and equal access to
the same information as Gagosian, as evidenced, inter alia, by the internet research he
conducted. See Cpl. at ir 19(v).

-131103080.7.

Plaintiffs' fraud claim, thus, must be dismissed. See Joseph v. NRT Inc., 18 Misc. 3d at 300

(dismissing plaintiff s fraud claim against real estate broker where, while the defendant

misrepresented the number of bedrooms in the listing for an aparment, plaintiffs were not
reasonable in relying on the defendants' representations as it was not a matter peculiarly within

the defendant's knowledge and plaintiffs had the means to "discover the truth by the exercise of

ordinary intellgence"). See also Cpl. at ir 19(i), (iii).
Nor was there any reason why Wylde could not have asked Gagosian Gallery to call the

Met or, for that matter, called the Met himself. See Dallas Aerospace, Inc., 352 F.3d at 786

(rejecting plaintiffs argument that it did not have access to certain information, noting that it
"could have asked (defendant) to procure" it for plaintiff, but did not, and thus the information
was not peculiarly within defendant's knowledge).

rn sum, as the Complaint reflects, Wylde knew that the Met, having displayed the

Painting, had some connection to it and was concerned enough that he wanted to confirm
Cowles' possession of

it by viewing it himself

in Cowles' residence. It was only after observing

the Painting in Cowles' residence, and having the opportunity to hear Cowles' responses to

questions about his ownership of it, did Wylde decide to purchase the Tansey Painting. The
notion that, having done so, plaintiffs relied on Gagosian Gallery - who made no
misrepresentations of

its own but rather simply conveyed Cowles' prior statements about his

ownership to Wylde - is nonsensical and fails to state a claim against Gagosian Gallery as a
matter of law.
B. Plaintiffs' Fraud Claim Must be Dismissed as

Duplicative of Their Breach of Contract Claim

It is well-established that "a cause of action for fraud does not arise when that fraud
relates to a breach of

contract." Shea v. Angulo, 1993 U.S. Dist. LEXIS 16740, at *9 (S.D.N.Y.

Nov. 29, 1993). See also Papa's-June Music, Inc. v. McLean, 921 F. Supp. 1154, 1160

-141103080.7.

(8.D.N. Y. 1996) ("a contract claim canot be converted into a fraud claim by the addition of an

allegation that the promisor intended not to perform when he made the promise"). In
determining whether a fraud claim relates to a breach of contract claim, courts scrutinize whether
a plaintiff

the parties' contractual relations.

has alleged that a legal duty exists independent of

See Shea, 1993 U.S. Dist. LEXIS 16740, at *11 (holding that "to overcome the general rule and
allege an independent fraud claim (a plaintiff

must) allege that the representation or concealment

breached a legal duty between the parties that existed independently of their contractual
has alleged "a fraudulent misrepresentation

relations"). Cours also look to whether the plaintiff

collateral or extraneous to the contract," or "special damages proximately caused by the
fraudulent representation that are not recoverable under the contract measure of damages."

Papa's-June Music, Inc., 921 F. Supp. at 1161.
Here, even a cursory review of plaintiffs' Complaint reveals that their fraud claim is

nothing more than their contract claim dressed up as a tort. rn particular, the fraud claim
contains no allegation of an independent duty between the parties arising outside of their

contractual relations. Nor does that claim contain an allegation of a fraudulent misrepresentation
collateral or extraneous to the contract. See Papa 's-June Music, Inc., 921 F. Supp. at 1161.

the Tansey Painting - is

Moreover, the damages plaintiffs seek - namely, the alleged value of

identical to the damages plaintiffs seek in their breach of contract claim. Compare Cpl. ir 52
with ir 58. As such, it reflects both that the fraud claim is duplicative of

the breach of contract

claim and that special damages (which are not recoverable under the contract claim) have not

been alleged. See Ho Myung Moolsan Co., Ltd. v. Manitou Mineral Water, Inc., 665 F. Supp. 2d

239,254 (S.D.N.Y. 2009) (holding that fraud claim was duplicative of contract claim where

plaintiff could recover the same damages for its contract claim). Accordingly, plaintiffs' fraud
claim must be dismissed as a matter of law.

-151103080.7.

POINT III
PLAINTIFFS' NEGLIGENT MISREPRESENTATION CLAIM .
CONCERNING THE TANSEY PAINTING MUST BE DISMISSED FOR
LACK OF ALLEGATIONS OF REASONALBE RELIANCE AND A
SPECIAL RELATIONSHIP AND BECAUSE IT IS DUPLICATIVE
OF PLAINTIFFS' BREACH OF CONTRACT CLAIM
For the reasons discussed above in Point II, Plaintiffs simply cannot allege that they

reasonably relied on any statement from Gagosian Gallery given Wylde's visit to, and

questioning of, Cowles. As such, plaintiffs' claim for negligent misrepresentation must also be
dismissed as a matter oflaw. See Joseph, 18 Misc. 3d at 301 (negligent misrepresentation claim

dismissed where plaintiffs could not demonstrate that they reasonably relied on the defendants'

misrepresentations); Hudson River Club v. Consolo Edison Co., 275 A.D.2d 218,220-21 (lst
Dep't 2000) (reversing lower court's decision and dismissing plaintiffs claim of

negligent
"did not reasonably rely upon

misrepresentation on a motion to dismiss, where plaintiff

(defendant's) misrepresentation," as plaintiff could have reasonably ascertained the facts it relied
upon by conducting its own due diligence); see also Gray v. Wackenhut Servs. Inc., 721 F. Supp.
2d 282,292 (S.D.N.Y. 2010) ("The law has long required plaintiffs to make full use of

the facts

known to them, and their ordinary intellgence, before asserting a cause of action for
misrepresentation").

Moreover, like their fraud claim, plaintiffs' negligent misrepresentation claim simply
duplicates their breach of contract claim, provides no independent duty that was breached

beyond the alleged breach of contract, and seeks the same exact damages sought in their breach

of contract claim. Accordingly, this claim too must be dismissed as a matter oflaw. See LaSalle
Bank

Natl Assoc. v. Citicorp Real Estate, Inc., 2003 U.S. Dist. LEXIS 4315, at *9-15 (S.D.N.Y.

March 21,2003) (dismissing plaintiffs negligent misrepresentation claim on a Rule 12(b)(6)
motion because, inter alia, plaintiff

had not alleged a "legal duty (that) spring(s) from

circumstances extraneous to, and not constituting elements of, the contract. . . .").
-161 103080.7.

Finally, Plaintiffs' negligent misrepresentation claim is defective for the further reason

that the Complaint does not contain legally suffcient allegations of a "special relationship."
While Plaintiffs allege that Gagosian Gallery failed to discharge its duty of reasonable care by

not properly investigating the Tansey Painting's title, that allegation is misguided, as Gagosian

Gallery and Wylde did not have the requisite "special relationship" that would impose such a
duty of care on Gagosian Gallery.

It is well-settled that for liability to arise for negligent misrepresentation, there must be a

relationship between the parties which gives rise to a duty owed. Brady v. Lynes, et at., 2008

U.S. Dist. LEXIS 43512, *20 (S.D.N.Y. 2008). Courts have specifically found that such duty
from an art gallery to potential purchasers generally does not exist, but rather only arises in very

limited circumstances, such as a contract specifically employing a gallery for the purpose of

rendering an appraisal concerning the work at issue or a fiduciary relationship. See id.; see also

Struna v. Wolf 484 N.Y.S. 2d 392,397 (NY Sup. Ct. 1985) ("Whether or not a special

relationship exists depends on many considerations. . . but more often than not. . . it arises out
of a contract where the defendant was specifically employed. . . .").

Here, Plaintiffs did not employ Gagosian Gallery in any capacity, as Gagosian Gallery, if
anything, was working solely in the capacity as an agent for Cowles in respect to the Tansey

Painting. Thus, plaintiffs and Gagosian Gallery were merely acting at arm's length to effectuate
plaintiffs' purchase of

the Tansey Painting from Cowles. As such, the relationship between
the "special relationship" ordinarily

Wylde and Gagosian Gallery is quite the opposite of

required, and clearly does not support holding Gagosian Gallery to a higher duty of care to
investigate the title of

the Tansey Painting. See Struna at 397 (finding that an arm's length

transaction, where the plaintiff was attempting to achieve a sale of a sculpture to the defendant

Museum, was the "very antithesis" of a special relationship ordinarily required to support

-171103080.7.

holding defendant to higher duty of care than otherwise required); see also Andres v. LeRoy

Adventures, Inc., 201 A.D.2d 262,262 (lst Dep't 1994) (affirming dismissal of a negligent
misrepresentation claim on the grounds that a special relationship "could not be discerned from
the arms' length dealing between paries alleged in the complaint"); Amusement Indus., Inc.,

2011 U.S. Dist. LEXIS 15887, at *43 (S.D.N.Y. Feb. 17, 2011) (internal citations
omitted)("transaction between the defendant and (plaintiff) is alleged to have been nothing more

than an ar's length business arrangement between sophisticated and experienced parties, a
circumstance insufficient to create' a special relationship, ", and court therefore dismissed
negligent misrepresentation claim).

Moreover, while plaintiffs allege that a special relationship was formed because they

purchased numerous pieces of ar from Gagosian Gallery over the course of the last few years,
that allegation alone is not enough to establish the type of fiduciary relationship that might give

rise to a special relationship. See Granat v. Center Art Galleries-Hawaii, Inc., 1993 U.S. Dist.
LEXIS 14092, * 1 8 (S.D.N.Y. Oct. 6, 1993) (holding that the mere fact that plaintiffs bought

numerous pieces of ar from defendants over the course of two years is not enough to establish a
fiduciary relationship between them). 5

Finally, Plaintiffs' allegation that Gagosian Gallery's unique and specialized expertise in

the art market is simply not enough to create a fiduciary relationship that would give rise to a
special relationship, since "allegations of superior knowledge or expertise in the art field are per

se insuffcient to establish the existence of a fiduciar duty," Brady, 2008 US Dist. LEXIS at

5 Plaintiffs also allege that Gagosian Gallery rendered written appraisals on plaintiffs' arork
for plaintiffs' insurance company. Cpl. ir 13. However, plaintiffs have not alleged that any
appraisals are at issue in the instant matter, and thus, that allegation is irrelevant for purposes of
analyzing whether plaintiffs and Gagosian Gallery had a "special relationship" in connection
the Tansey Painting from Cowles.
with plaintiffs' purchase of
-181103080.7.

*21. Thus, Plaintiffs' claim for negligent misrepresentation must be dismissed for failure to
show the requisite special relationship between plaintiffs and Gagosian Gallery.

POINT IV
PLAINTIFFS' NEW YORK ARTS AND CULTURAL
AFFAIRS LAW § 13.03 CLAIM CONCERNING THE TANSEY
PAINTING MUST BE DISMISSED BECAUSE THERE IS
NO CIVIL LIABILITY PROVIDED FOR UNDER THAT STATUTE
Plaintiffs seventh claim is premised on New York Ars and Cultual Affairs Law § 13.03,
which provides that "(a) person who, with intent to defraud, deceive or injure another, makes,

utters or issues a certificate of authenticity or any similar written instrument for a work of fine ar
attesting to material facts which the work does not in fact possess is guilty of a class A

misdemeanor." Setting aside that, as alleged in the Complaint and the communications
referenced therein, Gagosian Gallery made no representation of its own to Wylde, and that any
claim of deceit is belied by Wylde's active role and access to relevant information, no private

right of action is provided for under that statute.6 Accordingly, plaintiffs' cause of action under

New York Ars and Cultural Affairs Law § 13.03 relating to the Tansey Painting must be
dismissed.

POINT V

PLAINTIFFS' REPUDIATION CLAIM CONCERNING
THE PRINCE PAINTING MUST BE DISMISSED BECAUSE THERE WAS
NO BINDING CONTRACT BETWEEN PLAINTIFFS AND GAGOSIAN GALLERY
Generally, to establish a cause of action for repudiation of contract, a plaintiff must show

that the defendant has indicated "an unequivocal intent to forego performance of its obligations
under a contract." Columbia Artists Mgmt., LLC v. Swenson & Burnakus, Inc., 2008 U.S. Dist.

6 Gagosian Gallery has not found a single case where a party has been held liable under New

York Arts and Cultual Affairs Law § 13.03 in a civil context.

-191103080.7.

LEXIS 74377, at **8-9 (S.D.N.Y. Sept. 24, 2008) (emphasis added). However, where there is a
failure to meet a condition precedent under a contract, no liability can arise on the promise. See

Kaul v. Hanover Direct, Inc., 296 F. Supp. 2d 506, 516 (S.D.N.Y. 2004). A condition is defined
as an act or event which "must occur before a duty of performance under an existing contract

becomes absolute." Id., quoting Castle v. Cohen, 840 F.2d 173,177 (3d Cir. 1988).
Here, the parties clearly did not intend for a binding contract to exist until plaintiffs paid

in full. That is evidenced by the fact that the standard form of invoice Gagosian Gallery sent to
Wylde stated, in all capital letters, that "TITLE DOES NOT PASS UNTIL PAYMENT IN

FULL is RECEIVED" by Gagosian Gallery. See Cpl. ir 24; see also Bar Aff. Ex. A. Indeed,
plaintiffs have readily admitted that the passage of title is "conditioned upon payment in full"
and that only when plaintiffs paid the full amount due did they "perform the contract on its part

to be performed." See Cpl. irir 24, 50. Such admissions evidence the course of dealing between
plaintiffs and Gagosian Gallery, and the parties' intent that full payment by plaintiffs is a
condition precedent to any binding contract between them. See Tangorre v. Mako's, Inc., 2003

"shall grant to (defendant)"

WL 470577, *7(S.D.N.Y. 2003) (contract clause stating that plaintiff

payment in full" constituted a condition

the right to use the photographs "(u)pon receipt of

precedent to performance); Jafari v. Wally Findlay Galleries, 1989 WL 116437, *3
(S.D.N.Y.1989) (holding that a contract term providing that "(p)ainting to be shipped on receipt
of payment" should be interpreted as a condition precedent).
Here, given that there is no dispute that any potential sale was cancelled before Wylde

made any payments to Gagosian Gallery, plaintiffs' allegation that Gagosian Gallery "unlawflly
repudiated" an alleged contract fails as a matter of law.

-201103080.7.

POINT VI
PLAINTIFFS' DECEPTIVE AND MISLEADING
PRACTICES CLAIM CONCERNING THE PRINCE PAINTING MUST BE
DISMISSED BECAUSE A PRIVATE TRANSACTION DOES NOT GIVE
RISE TO SUCH A CLAIM UNDER THE NEW YORK GENERAL BUSINESS LAW
Plaintiffs claim that Gagosian Gallery's supposed repudiation of

its alleged agreement
New York General

with plaintiffs concerning the Prince Painting constitutes a violation of

Business Law § 349. However, it is well-established that this law does not apply to a private
transaction between a consumer and a merchant. See Shaheen v. Stephen Hahn, Inc. 1994 U.S.
Dist. LEXIS 2651, **10-11 (S.D.N.Y. March 9, 1994) (dismissing the cause of

action because "a

private transaction, such as the sale of a unique painting, that does not affect the public interest
and is not one of a recurring nature, falls outside the purview of Section 349"); Rubin v. Telemet

America, Inc., 698 F. Supp. 447, 451 (S.D.N.Y. 1988) ("Section 349 was not adopted to address

unique problems that may occur between a solitar consumer and a merchant," but instead "to
combat recuring acts which are deceptive such as false advertising, pyramid schemes, and bait
and switch operations"), citing H20 Swimwear, Ltd. v. Lomas, 164 A.D.2d 804, 806 (lst Dep't
1990) (Section 349 applies "solely to matters affecting the public interest and involving

transactions of a recurring nature.").
Here, the dealings between Wylde and Gagosian Gallery were clearly between a private

consumer and a merchant concerning a work of art and as such, do not fall under New York

General Business Law § 349. See Rubin, Inc., 698 F. Supp. at 451. Plaintiffs' allegation that
"Defendant has engaged in consumer related activity affecting consumers at large. . . by
maintaining a business practice of entering into a binding agreement to sell a work of art and
thereafter. . . seeking and/or accepting higher offers(s)" (Cpl. ir 79), can thus only be viewed as

irrelevant, inflammatory and indicative of a purposeful attempt to try to turn a private transaction

-211103080.7.

into a public har.7 However, courts have already held that unsubstantiated allegations that a
defendant has engaged in similar improper behavior against others is insufficient to state a claim
Indem. Co., 1994 U.S. Dist. LEXIS

under GBL § 349. See Grand Gen. Stores, Inc. v. Royal

5251, at **11-16 (S.D.N.Y. 1994) (dismissing plaintiffs claim for deceptive acts and practices
under GBL § 349 where plaintiff merely made a conclusory statement that defendant's conduct

was "part and parcel of a scheme," because it did not satisfy the requirement of a recurring injury
to the public generally);see also Tinslee Enter., Inc. v. Aetna Casualty & Sur. Co., 834 F. Supp.

605,608-610 (E.D.N.Y. 1993) (dismissing GBL § 349 claim because plaintiff's allegation that
"defendant has taken actions of a similar nature to those herein in the handling of other similar
claims" was insufficient).

CONCLUSION
For all of

the reasons stated herein, and in the accompanying Bart Affidavit, the Good

Affidavit, and all the documents appended thereto, the Complaint should be dismissed in its
entirety with prejudice and with costs.

DATED: New York, New York
May 11,2011

Attorneys for Defendant Gagosian Gallery, Inc.

7 Defendants also ask the Cour to strike the allegations alleged at irir 32, 76-80 of

-221103080.7.

the Complaint.