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

Filing 91

TRANSCRIPT of Proceedings re: Conference held on 1/9/2012 before Magistrate Judge Michael H. Dolinger. Court Reporter/Transcriber: Paula Speer, [phone]. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 2/6/2012. Redacted Transcript Deadline set for 2/17/2012. Release of Transcript Restriction set for 4/16/2012.(McGuirk, Kelly)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SAFFLANE HOLDINGS, LTD., et al.,

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Plaintiffs,
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v.

11 CV 1679 (MHD)(DLC)

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GAGOSIAN GALLERY,
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Defendant.
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New York, N.Y.
January 9, 2012
2:30 p.m.

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Before:
HON. MICHAEL H. DOLINGER

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Magistrate Judge

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APPEARANCES
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AARON RICHARD GOLUB, ESQUIRE, PC
Attorneys for Plaintiff Safflane Holdings, Ltd.
and Robert Wylde
BY: NEHEMIAH S. GLANC, ESQ.
WITHERS BERGMAN LLP
Attorneys for Defendant Gagosian Gallery
BY: BRIAN DUNEFSKY, ESQ.
DARA HAMMERMAN, ESQ.

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SNR DENTON US LLP
Attorneys for Defendant Jan Cowles
BY: DAVID R. BAUM, ESQ.

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CHARLES COWLES, Pro Se
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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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(In open court)

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THE COURT:

What is the current posture of this case?

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And by "this case," let me make it clear I'm referring to the

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Safflane lawsuit against Gagosian, etc.

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MR. GLANC:

Nehemiah Glanc for Safflane and Robert

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Wylde from Richard Golub's office.

The matter is being

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settled.

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claims, plaintiffs' claims, against Charles Cowles, assigning

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those claims to Gagosian Gallery, which we are in the midst of

I think the only item left is an assignment of our

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negotiating, and hopeful we should have that done this week.

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Other than that, the matter is settled.

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THE COURT:

I had thought that these terms had

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previously been agreed to, including the assignment of whatever

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claims Safflane has against Mr. Cowles to Gagosian.

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not been reduced to a stipulation?

This has

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MR. GLANC:

We're in the midst of doing that, Judge.

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THE COURT:

How complicated can an assignment be?

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MR. GLANC:

Because we have an indemnification

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provision somewhere, discussing an indemnification provision.

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That's the only outstanding matter.

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THE COURT:

What does the case involve in terms of

discovery and other proceedings?
MR. GLANC:

In terms of discovery, that was, I

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believe, both -- I think all sides completed document

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discovery, if I'm correct.

And depositions, there were two

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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depositions that were taken.

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THE COURT:

And then the matter settled.

Except it hadn't completely settled.

I

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mean, I'm used to statements or representations in this case

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from various counsel that are, shall we say, not always precise

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and occasionally not quite accurate.

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surprised, given the fact that there were explicit

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representations made to me that this case had settled except

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with regard to claims against Mr. Cowles and that that was

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being assigned, as part of the settlement, to Gagosian, and now

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suddenly none of this has happened.

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But I'm somewhat

MR. GLANC:
being signed.

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It has.

The stipulation of dismissal is

I think it's even being filed.

THE COURT:

OK.

So there's a stipulation of dismissal

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that dismisses the claims of Safflane and Wylde against

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Gagosian?

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MR. GLANC:

Yes.

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THE COURT:

So they're done.

And so at this point,

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the only thing left is claims by Safflane against Mr. Cowles,

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right?

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MR. GLANC:

Correct.

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THE COURT:

And am I correct in understanding that at

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a certain point Judge Cote entered a default against

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Mr. Cowles?

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MR. GLANC:

Correct.

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THE COURT:

Currently, your client either is going to

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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have to pursue its remedies against Mr. Cowles by way of an

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inquest or we'll dismiss those claims.

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to do that?

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MR. GLANC:

What we're going to do is, we're going to

sign that claim against Mr. Cowles.

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THE COURT:

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can show up here next week.

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you to do an inquest.

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You have a week to do that.

Otherwise you

We will set a date and time for

This is ridiculous.

Harriet, what does our schedule look like in the next
couple weeks?

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When are you prepared

THE CLERK:
morning.

Thursday, January 19, we're open all

Tuesday the 17th we're open at 2 p.m.

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THE COURT:

Which date would you like?

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MR. GLANC:

We'll pick the 19th, Judge.

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THE COURT:

OK.

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Are you going to proceed by affidavit or by live

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19th, 10 a.m., inquest.

witnesses?

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MR. GLANC:

I'm not sure, Judge.

Again, we were

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almost -- we are going to have our assignment done.

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the last --

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THE COURT:

Except that it's not done.

to have it done a long time ago.

That was

You were going

And we're moving forward.

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Are you going do it by affidavit, or are you going to

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do it by live witness, assuming you haven't assigned the claim

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by then?
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. GLANC:

I need to discuss it with my client.

I

cannot make that decision myself.

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THE COURT:

OK.

You have until the close of business

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tomorrow to inform the Court in writing whether you want to

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proceed by affidavit or by live witness.

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By the way, is Gagosian represented here today?

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MR. DUNEFSKY:

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THE COURT:

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MR. DUNEFSKY:

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THE COURT:

You're taking this all in?

OK.

MR. DUNEFSKY:

THE COURT:

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MR. DUNEFSKY:

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So in the interim, the claims get
OK?

I could tell you, if that is the

case --

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I am.

assigned to Gagosian and Gagosian will appear on the 19th.

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Yes.

That's the case.
-- we would presume to proceed by

affidavit as opposed to live witnesses.
THE COURT:

What is the nature of the claims that are

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being talked about at this time?

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MR. DUNEFSKY:

It's Safflane's claim against Cowles on

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the underlying proceeding for breach of contract, essentially,

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and the measure of damages we would propose is the difference

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between what Safflane recovered from Gagosian and the fair

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market value of the painting at the time of the inquest.

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think it's as simple as that.

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THE COURT:

The one specific painting.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. DUNEFSKY:

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THE COURT:

Correct, the Tansey.

The Tansey.

And is it the case that,

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whatever the settlement was, that involved a payment of funds?

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Parenthetically, as I recall, there were two paintings of

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issue.

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painting?

Was there an allocation of amount to each separate

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MR. DUNEFSKY:

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THE COURT:

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Not in the settlement agreement.

So are you going to have to then somehow

prove what portion of the total amount that was paid is

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attributable to the paintings?

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MR. DUNEFSKY:

I presume we would.

And we made an

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argument on that basis in connection with our other default

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that we moved for.

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with you now, or we're happy to present it next week.

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have a theory as to what it should be.

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THE COURT:

It's in those papers.

I could discuss it
But we

If, as appears to be the case, the

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application for damages on the Safflane claim is going to be

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made by affidavit, that would be due, of course, the 19th, as

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we have said.

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later.

Any response would be due by the 26th, one week

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What day of the week is the 19th?

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THE CLERK:

Thursday.

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THE COURT:

Thursday, OK.

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And then any reply would be due January 30.

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Now, you alluded to a motion, as I understand it, for
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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a default judgment, which is pending on behalf of Gagosian.

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this correct?

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MR. DUNEFSKY:

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THE COURT:

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MR. DUNEFSKY:

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THE COURT:

Is

That's correct.

And that's also directed at Mr. Cowles.
That's correct.

And to what extent and in what respect do

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the claims for which the default is being sought differ from

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the claims that we've referred to as the Safflane claims?

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MR. DUNEFSKY:

The measure of damages would be

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different.

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is seeking the amount it paid as damages, plus its attorney's

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fees.

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the proceeding that brings us here today.

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In the matter Gagosian v. Cowles, default, Gagosian

That would not be included in the measure of damages in

THE COURT:

I should mention, I have not raised this

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issue before, I haven't had the parties in front of me in this

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context, but it is my understanding that although in this case

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the parties that appeared in the case have consented to my

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jurisdiction, that to the extent that there is a default

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application against a defaulting defendant who has not

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consented, that I am not in a position to enter judgment and

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that, therefore, whatever decision I would render would be in

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the form of a report and recommendation.

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different understanding of the law on this point, obviously you

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are free to submit any learning that you have on this point to

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me.

If you have a

You should certainly do that by the 19th.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. DUNEFSKY:

I take it you prefer it in advance so

you're not wasting your time, potentially, on the 19th?

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THE COURT:

Well, either way, I'm going to end up

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making an initial decision.

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myself without a report and recommendation it would be a final

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decision.

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recommendation to Judge Cote.

If I had the jurisdiction to do it

Otherwise it's going to be a report and

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MR. DUNEFSKY:

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THE COURT:

I understand.

But either way, I'll deal with it.

So

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obviously if you can get it in before the 19th, that would be

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fine.

Otherwise, we'll work with what we get.

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MR. DUNEFSKY:

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THE COURT:

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Understood.

When we get it.

But at least it will be

here by the 19th.
Are there any other matters that we should address at
this time?
MR. DUNEFSKY:

I don't believe so.

By order it's

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clear that this was a conference to discuss what's going to

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happen at the inquest.

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the issues that should arise on the 19th.

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perspective.

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THE COURT:

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MR. BAUM:

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I believe your Honor has identified all
That's it from our

Anything else?
Your Honor, David Baum for Jan Cowles.

wanted to introduce Mr. Charles Cowles to the Court.
THE COURT:

Greetings and salutations.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. BAUM:

As your Honor is aware, I merely noted that

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although these parties may want to proceed by affidavit and

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your Honor noted a response date for that affidavit, I don't

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know if Mr. Cowles wants to actually appear in person in

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connection with those affidavits, or if he wanted to submit

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replies.

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Mr. Cowles and the Court.

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THE COURT:

Well, Mr. Cowles, it's up to you.

What's

your wish at this point procedurally speaking?

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I thought the matter might be discussed with

MR. COWLES:

Well, I'm sorry, I'm not an authority on

this, but I just wish the whole thing would disappear.

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THE COURT:

I have no doubt that that wish is

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typically shared by defendants in many cases.

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magicians here and so the case is not about to disappear, at

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least as we see it today.

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MR. COWLES:

Alas, we are not

I believe the painting is now back at the

museum.

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MR. GLANC:

No, it is not, your Honor.

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THE COURT:

What is the status of the painting?

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understood that it was to be returned sometime in late

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I had

December.

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MR. GLANC:

Within 30 days of late December, I

understand.

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THE COURT:

So that would extend to late January.

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MR. GLANC:

Yes, sir.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. COWLES:

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THE COURT:

Do we have a settlement agreement?
If, Mr. Cowles, you want to resolve any

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matters that you have with the various other parties in this

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litigation, obviously, you are free to attempt to do so.

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should discuss that separately with the attorneys after today's

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session if they're available and see if, by dint of an effort

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on your part, you can make the rest of the case disappear.

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That's between you and the attorneys.

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MR. COWLES:

And do I have to ask about a settlement

agreement?
THE COURT:

Do you have to ask?

I don't know what you

mean by asking about it.

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MR. COWLES:

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THE COURT:

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You

Do we have a settlement agreement?
Are you asking whether you have a

settlement agreement with any of the other parties?

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MR. COWLES:

Right.

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THE COURT:

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agreement, to your knowledge?

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MR. COWLES:

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THE COURT:

Have you entered into a settlement

Not to my knowledge, no.
In that case I don't think you have a

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settlement agreement.

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sides agree to terms of.

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there's no settlement agreement with you.

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MR. BAUM:

Settlement agreements come when both
If you haven't agreed to terms,

Your Honor, I can probably act as an

interpreter for a moment.

I believe what Mr. Cowles is asking,

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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as he has asked me, is, he wanted the settlement agreement

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between them so he knows what he is being demanded to repay

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them for.

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THE COURT:

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MR. DUNEFSKY:

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OK.

THE COURT:

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MR. BAUM:

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There is a settlement agreement

attached to our motion for default judgment.

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I follow that.

OK.
No, it's not.

Your Honor, it has not

been -- it's submitted to the Court, but I do not believe it
was provided to the parties.

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MR. DUNEFSKY:

I believe it was sealed.

Your Honor, Mr. Baum by his own

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admission is not representing a party here, and he happens to

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be wrong about this, so I take issue with his speaking about

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this.

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MR. COWLES:

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THE COURT:

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MR. COWLES:

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THE COURT:

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We represent a party, your Honor.
Mr. Baum, I -Sorry, your Honor.
I know your desires in this matter and

I'll deal with them eventually.
Mr. Dunefsky, when you served a copy of the default
motion on Mr. Cowles, did you include a copy of the settlement?

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MR. DUNEFSKY:

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THE COURT:

We did, yes.

Good.

Absolutely.

So at this point, what we will look

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for is, on the 19th, assuming that the assignment is finally

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finalized, we will look for Gagosian to be submitting whatever
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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papers it does, and serve a copy, obviously, on Mr. Cowles, and

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at that point Mr. Cowles will have the week to respond to it.

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And two days, then, for a reply.

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endeavor to address the motion for a default judgment by

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Gagosian's own behalf.

And in the interim, I will

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Anything else at this point?

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MR. COWLES:

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THE COURT:

I don't think so, no.
OK.

And as I said, if you think you can

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settle whatever claims are pressed against you by -- I assume

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it's likely to be Gagosian alone, although for the moment part

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of it is Safflane -- you are free to do so.

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encourage it.

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Indeed, I would

Do what you can.

MR. COWLES:

I'm not aware that they have actually

asked me for anything.
THE COURT:

OK.

You may want to take a little bit of

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time to discuss with Mr. Cowles.

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MR. DUNEFSKY:

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We're always happy to try to work

things out and avoid the Court's involvement if we can.
THE COURT:

OK.

Go in peace.
o0o

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]