Usov v. Lazar et al

Filing 196

OPINION: For the reasons set forth above, Plaintiff is entitled to two-thirds of money received from sales of diamonds from the Large Diamond Collection, two-thirds of the value of the diamonds in the Large Diamond Collection retained by the Defendant, monies received from the sales of diamonds in the Small Diamond collection and judgment with costs and disbursements. Settle judgment on notice. It is So Ordered. (Signed by Judge Robert W. Sweet on 8/10/2017) (js)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

--------------------------------------x
GEORGY USOV,
Plaintiff,
-againstMARC LAZAR,

13 Civ. 818
OPINION

INC.,
Defendant.

--------------------------------------x
A P P E A RA N C E S:

Attorneys for Plaintiff
THE ROTH LAW FIRM, PLLC
295 Madison Avenue, 22nd Floor
New York, NY 10017
By:
Richard A. Roth, Esq.

Attorneys for Defendant
NEIMAN & MAIRANZ P.C.
39 Broadway
New York, NY 10006
By: Marvin Neiman, Esq.
Theodore Mairanz, Esq.

Sweet, D.J.

This action was tried before the Court on November 28 and
29, 20 16, February 13 through 15, 2017, and April 3, 2017 . In
dispute are the obligations arising between two diamond
merchants, Harvey Harris ("Harris") and Defendant Marc Lazar
("Lazar"), as reflected in memos from 2002 and 2006 , and the
events which followed.

Plaintiff Georgy Usov ("Usov" or the

"Plaintiff") is the father of Elena Harris ("Elena"), Harris'
widow, and seeks judgment on her behalf. As is evidenced below,
the oft-vaunted trust between diamond merchants, at least in
this instance, does not survive death. 1

Upon the following findings of fact and conclusions of law,
judgment will be entered in favor of Plaintiff with costs and
disbursements.

1

See generally Roger Starr, The Real Treasure of 47th
Street, N. Y. TIMES, March 26, 1984,
http://www.nytimes.com/1984/03/26/opinion/the-editorialnotebook-the-real-treasure-of-47th-street.html (observing that
in the diamond community, there exists "a less tangible glue
that holds them together: mutual trust").
1

Prior Proceedings

This action was commenced on February 5,
2013,

Defendant's

motion

to

dismiss

was

2013.

granted

On June 18,
in

part

and

denied in part.

On

February

25,

2014,

the

parties

stipulated

and

agreed

that Plaintiff would file a motion to amend the complaint, which
Plaintiff filed on March 7, 2014. On August 22,

2014, this Court

granted in part and denied in part Plaintiff's motion to amend
the complaint.

On May 27,

2016,

Defendant's motion for

summary

judgment on the Amended Complaint was denied.

A

bench

February

13

trial

was

through

15,

held

on

2017.

November

Post-trial

28

and

29,

2016,

briefing

and

final

arguments were completed on April 3, 2017.

Findings of Fact

Having considered the testimonial evidence in conjunction
with the admitted exhibits, it is found that although Elena, as
Harris' widow, is an interested party, she was a
straightforward, logical, and credible witness; her testimony

2

was confirmed by the adduced documentary evidence and the
subsequent events. By contrast, Lazar was not a credible witness
with respect to the understanding reached with Harris concerning
the diamonds at issue; his testimony was not supported by the
documentary evidence and his version of the subsequent events
set forth below lacked logic and credibility. This finding
undergirds the following findings of fact.

I.

The Parties and Their Relationship

Usov, a citizen and resident of Russia, is Elena's father,
a New York resident. Tr. 14, 184-5, 245.

2

Harris met Elena in

Moscow in 2003, and the two were married in 2004. Tr. 13-14,
184-85. Harris died in May 2010, at age sixty-nine. Tr. 20;
Joint Pretrial Order, Undisputed Facts at

~

2, Dkt. 145

("Undisputed Facts").

Lazar is the sole owner of Defendant Marc Lazar,

Inc.

("MLI" or the "Defendant"), a New York corporation. Tr. 377;
Undisputed Facts at

~

1. Lazar and Elena first met in 2004 in

Lazar's New York office. Tr. 21.

2

Citations to "Tr." refer to the trial transcripts dated
November 28 and 29, 2016 and February 13 through 15, 2017.
3

Harris was a diamond dealer known for his expertise in
fancy color diamonds; he wrote regularly for industr y magazines
and published the first authoritative book on fancy color
diamonds. Tr. 1 4 . Lazar and Harris had a professional
relationship buying and selling diamonds and other precious
stone from each another; their relationship also included
loaning and borrowing monies from one another. Tr. 377;
Undisputed Facts at

II.

~

3. 3

The Small Diamond Collection

In 2002 , Harris and Lazar entered into a consignment
agreement for a diamond collection arranged to be consigned to
La zar (the "Small Diamond Collection") . 4 Undisputed Facts at
~

11; Tr. 38; see Pl.'s Ex . 9. The parties understood that while

Harris continued to own the diamonds, Lazar would attempt to
sell the Small Diamond Collection, pay Harris the proceeds from

3

The record contains several reported instances of borrowing
and repaying money between the players involved in the instant
litigation, such Harris, Lazar, and Pinnacle; such loans were
regularly and timely repaid. See Tr. 65-67, 379-81; Pl.'s Exs.
32, 34.
4

Consignment agreements are standard documents in the
diamond business. Goods on consignment are given into the care
of another who became responsible for the value of those goods;
the consignee is responsible for paying the consignor for any
sales of the goods. See Tr. 30, 38, 395.
4

the sale, and keep for himself a pre-arranged commission.
Undisputed Facts at

~

11; Tr. 38-39. The consignment listed

prices for the gems in the Small Diamond Collection which was
"an indication of a floor" of a possible sales price for the
stones. Tr. 39.

III. The Large Diamond Collection

Through his work in the diamond business, Harris acquired a
large diamond collection (the "Large Diamond Collection"). Tr.
16-17. The Large Diamond Collection's gem centerpieces were a
3.16 carat purplish red diamond recut to 2.99 carats and a 1.68
carat violet diamond, both the largest stones of their kind
found in Australia's Argyle diamond mine. Tr. 16.

At some point, Harris became involved in an arbitration
litigation with Andre Runte ("Runte"). Tr. 18. In connection
with that litigation, Harris pledged the Large Diamond
Collection as collateral. Id. Runte won the litigation with
Harris but was uninterested in keeping the diamonds; rather,
Runte was interested in the collateral's cash equivalent. Id.;
see Undisputed Facts at

~

4.

5

In 2004, Harris informed Lazar about the opportunity to
purchase the Large Diamond Collection from Runte. Undisputed
Facts at

~

4. Harris and Lazar, with Elena as a witness,

discussed how to obtain the Large Diamond Collection from Runte.
Tr. 20. An agreement was reached between the parties to purchase
the Large Diamond Collection from Runte for $1.1 million, with
two-thirds of the funds coming from Harris and one-third of the
funds coming from Lazar. Tr. 20-21; see Undisputed Facts at

~

5.

To raise the $1.1 million, Lazar and Harris agreed that Lazar
would sell a 8.36 carat blue-colored, pear-shaped diamond that
belonged to Harris (the "Blue Stone"); Lazar ultimately sold the
Blue Stone for a profit of approximately $1.479 million. Tr. 2122; see Undisputed Facts at

~

6.

Around the time of the purchase of the Large Diamond
Collection, Lazar informed Harris and Elena that he paid Runte
with two-thirds of the $1.1 million proceeds of Lazar's sale of
the Blue Stone, which amounted to approximately $700,000, and
returned the balance of $787,500 to Harris. Tr. 22; see Pl.'s
Ex s. 34, 36. 5 By mid-2006, Lazar, through MLI, had finalized the

5

At trial, Lazar contended that all monies from the sale of
the Blue Stone were returned to Harris rather than to the
purchase of the Large Diamond Collection. Tr. 304, 317, 388; see
Def.'s Exs. B through E. Lazar also testified at trial that he
personally paid the total $1.1 million purchase price for the
6

purchase and taken possession of the Large Diamond Collection.
Undisputed Facts at

~

7; see Pl.'s Ex. 36.

In late 2005, Harris' health problems worsened. Tr. 25,
185. Shortly thereafter Usov, in 2006, with Harris' assistance,
formed Pinnacle Trading Limited ("Pinnacle") in 2006 shortly
thereafter, to receive certain of Harris' assets, including the
diamonds rele v ant to the instant litigation. See Tr. 2 6, 150
185-87, 218-19. Uso v was the sole owner of Pinnacle. Tr. 185-6. 6
Elena became a consultant at Pinnacle and was the primary person
involved in dealing with its collection of stones. Tr. 27. In
that capacity, Elena went to jewelry shows, investigated the
value of Pinnacle's assets, and dealt directly with Lazar. Id.

In June 2006, Elena, Harris, and Lazar met to document the
arrangement between the parties and confirm that Pinnacle was
Large Diamond Collection. Tr. 289, 292. Given the wide-spread
inconsistencies between the invoices Lazar presents and the sale
of the 8.36 Blue Stone-including the total carats of the
invoiced stones, the number of invoiced stones, the dates of the
invoices, and rebuttal testimony that more logically e x plains
the payments-Lazar's contention is rejected. See Def.'s Exs. B
through E; Tr. 483-86.
6

No documentary evidence was presented expressly noting a
transfer of assets from Harris to Pinnacle. However, the
subsequent documentation, such as the Agreement, signed on
Pinnacle letterhead, and the relevant testimonial evidence
presented, establishes that this transfer did in fact occur.
7

owner of the transferred Harris assets. Tr. 27-29; 186. Prior to
the meeting, a memo agreement was created by Elena at Usov's
direction using letterhead provided by Pinnacle (the
"Agreement"). Tr. 28, 186; Pl.'s Ex. 1. The Agreement contained
a list of stones to be consigned and which corresponded to the
Large Diamond Collection. See Tr. 28, 398. Elena described the
Agreement as:

[A] document between Pinnacle Trading Limited and Marc
Lazar, basically confirming the terms of the agreement
where the [Large Diamond Collection] would be owned in
proportions one-third to Marc Lazar and two-thirds to
Pinnacle Trading Limited, and any proceeds from the
sale of those diamonds would be split in the one-third
to Marc Lazar, two-thirds to Pinnacle Trading Limited
proportion.

Tr. 27-28; see Pl.'s Ex. 1. During the meeting regarding the
Agreement, the parties inspected many stones, including the
stones in the Large Diamond Collection, and discussed marketing
strategies for selling the stones, such as reducing the size of
the largest stone in the collection, getting diamond-rating
reports, and recutting stones to achieve necessary color
distribution. See Tr. 31-33.

Prior to the signing of the Agreement, Elena handwrote the
following onto the bottom of the document to memorialize the
parties' understanding of ownership over the gems: "Percentage
8

of ownership: Marc Lazar 33 % (thirty three)

& Pinnacle Trading

Limited 66 % (sixty six)." Pl.'s Ex. l; see Tr. 29-30. A copy of
the Agreement was brought to the meeting, held at Laz ar 's New
York office, at which point the Lazar, Elena, and Harris
"discussed this deal one more time, reconfirmed all the terms
and

. signed the document." Tr. 29; see Tr. 28; Pl.'s Ex. 1. 7

The Agreement was understood to be a consignment agreement,
where the stones listed in the Agreement were consigned from
Pinnacle to Lazar. Tr. 30, 31, 395. The Agreement was in keeping
with usual business practices between Lazar and Harris, who
regularly documented their transactions. See Tr. 446,

477. s

7

During the meeting where the Agreement was signed, Lazar
also inquired into why the stones had been transferred from
Harris to Pinnacle. Elena testified that Harris wanted to
transfer the stones to Pinnacle for estate-planning purposes in
case "anything happen[ed]" to him; at the time, Elena explained
to Lazar that both she and her father would still be involved,
to which Lazar indicated acceptance and approval. Tr. 33.
Additional evidence presented indicated that Lazar was aware
around that time that Pinnacle, not Harris, was the owner o f the
stones. See Tr. 324, 407.
8

At different points, Lazar has testified that he first
learned about the handwriting included on the Agreement either
in later 2006 or 2008. See Tr. 397, 476. Lazar also stated that
whenever he learned of the handwriting, he did nothing prior to
the instant action to "correc t" what he alleges was an incorrect
statement of the arrangement, which commenced in 2013. Tr. 477.
Given the difference in monetary value between what Defendant
and Plaintiff claim to be the distributions, Lazar's explanation
as to his actions is not credible.

9

IV.

Post-Agreement Events

In December 2007 , Lazar sold three of the stones consigned
to Pinnacle, two from the Large Diamond Collection and one from
the Small Diamond Collection. See Undisputed Facts at

~~

8-9;

Tr. 73. Invoices issued in December 2007 list the total weight
as 5.10 carats, see Pl.'s Exs. 12-13, which refer to three
diamonds: a 2 .04 marquise pink stone polished down by the time
of the sale to a 2.03 carat marquise pink diamond; a 1.04 fancy
intense blue diamond; and a 2.03 carat fancy deep blue heart
diamond. See Tr. 36, 187-88. The 2.03 carat fancy deep blue
heart diamond, part of the Small Diamond Collection, was sold
for $960,000. Tr. 35, 39-40; Pl.'s Ex. 9. The other two stones,
part of the Large Diamond Collection, were sold for $537,950 and
$192,400. Tr. 36.

Pinnacle forwarded to Defendant an invoice for the sale in
the amount of $1,446,900. See Tr. 73, 187-88, 439; Pl.'s Exs.
12-13. 9 Lazar paid Pinnacle the $1,446,900 for the sale of the

9

The handwriting on these invoice exhibits is Elena's and
reflect Pinnacle internal inventory list to identify stones that
were sold. See Tr. 35 . The diamonds sold from the Large Diamond
Collection needed to be separated out because of the two-thirds,
one-thirds distribution in accord with the Agreement. Tr. 40,
73.
10

three stones by wire. Tr. 40, 73-74; see Pl.'s Exs. 23, 34.
Lazar called Elena to confirm that the wire payments for the
invoices were made. Tr. 42. Defendant's accounting records noted
these wire transactions as a "purchase." Tr. 450-51. 10

Usov formed Mervia Investments, S.A.

("Mervia") in 2008 and

was its sole owner. Tr. 187. Evidence adduced established that
Pinnacle transferred its ownership interests Harris' assets to
Mervia, both through testimony and evidence of monies
outstanding to Harris redirected to Mervia following Mervia's
formation. See Pl.'s Exs. 8, 26, 34; Def.'s Ex. VV; Tr. 44, 187,
384-85. 11 Around July 15, 2008, David Dawes ("Dawes"), a director
at Pinnacle and Mervia, sent Lazar a letter informing him that
Dawes had had a meeting with Harris and that Dawes wanted Lazar
to accept his letter, which had attached to it the list of
diamonds constituting the Large Diamond Collection, as "formal
authority to transfer the ownership record to the name Mervia

At trial, Lazar contended that this transaction was
actually an advance of capital to Harris of approximately a
half-million dollars. See Tr. 443-44. In light of the fact that
the two kept fastidious records of their transactions, see Tr.
473-74, the absence of documentation as to such a substantive
loan makes Lazar's portrayal of this event not believable.

10

11

These exhibits also include references to an entity called
Margo Investments ("Margo"). Margo is another company that, at
the time, was owned and operated by Usov. See Tr. 240-41.
11

Investments S.A. of Panama." Pl.'s Ex. 4 at 1; see id. at 2;
Undisputed Facts at

~

10.12

Harris died in May 2010. Undisputed Facts at

~

2; Tr. 184-

85, 188. Following Harris' death, Lazar received emails from
Dawes about the diamonds in Lazar's possession. On May 14, 2010,
Lazar received an email from Dawes confirming that Lazar was is
"holding a substantial stock which is owned by Mervia," an email
to which Lazar did not respond.

Pl.'s Ex. 15; Tr. 421-22. Around

December 31, 2008, Lazar received another email from Dawes
confirming that diamonds Lazar was holding on the "attached list
which are owned by Mervia Investments S.A., remain held by you
to our order .

[Dawes] also wish[ed] to confirm for audit

purposes that is has been agreed with [Lazar] that [Lazar]

[was]

to receive 33 % of the sale proceeds." Def.'s Ex. NN; Tr. 409-12.

In late May 2010, Elena and Lazar had a meeting in Lazar's
office. Tr. 44-45. At the meeting, Lazar "reconfirmed his
understanding" of the Agreement, including the Agreement's "two12

While this exhibit was the only presented documentary
evidence from around the time of Mervia's formation detailing an
ownership transfer of diamonds, and only for the Large Diamond
Collection, subsequent dealings between the parties indicate
that ownership over the Small Diamond Collection was also
transferred, including Dawes' authorization allowing Elena to
collect the Small Diamond Collection, as described below.
12

thirds/one-third ownership" distribution as to the Large Diamond
Collection and that the diamond assets belonged to Mervia, and
discussed offers at the time.

Id.

In June 2010, Dawes informed Lazar that Lazar was to ignore
any claims by Harris's children as to the consigned stones and
to deal exclusively with Elena with regard to the diamond
collections. See Def.'s Ex. J; Tr. 414 -15. On July 6 , 2010 ,
La zar received another email from Dawes , informing Lazar that
Mervia was "fully documented as to ownership including the
Collection effective as from 2008" and that Elena could recall
any part of the collection at any time. Def.'s Ex. K; Tr. 41720 . Lazar testified that by this time, he knew he was dealing
with Mervia with regard to the diamond collections, but that he
chose not to respond to either message. See Tr. 416-17,

421.

In October 2010, Lazar and Elena met; Dawes had given Lazar
authorization to allow El ena to pick up the Small Diamond
Collection. See Pl.'s Ex. 21 ; Tr. 46. In anticipation of the
meeting, Lazar prepared a "pi ckup memo" for Elena to pick up
those diamonds. Tr. 45; see Pl.'s Ex. 10. At that meeting, Elena
retrieved the entire Small Diamond Co llecti on from Lazar except
one stone that Lazar asked to keep: a 1.75 carat fancy intense

13

pink diamond, that Lazar said he was trying to sell to an
"important client ." Tr. 45; see Tr. 487; Undisputed Fac ts at
~~

12-13. 1 3 While co lle ct ing the diamonds, Elena signed Lazar's

pickup memo on behalf of Mervia. See Pl.'s Ex. 10.

In 20 1 1 , Elena and La z ar maintained contact to ensure the
diamonds were sold for the best price; for example, Elena went
to a jewelry show in Hong Kong to see how the Large Diamond
Collection was being displayed in the booth. See Tr. 51. Around
the time of the Hong Kong show, Usov attempted to contact Lazar,
but Lazar did not return any phone calls or emails. See Tr. 190.

In 2011, Usov, with Elena's assistance, decided to close
Mervia and transfer the assets to himself to avoid the costs
associated with keeping Mervia open . See Tr. 47-48, 188-89.
Around the time of Mervia's dissolution, Elena had a meeting
with Lazar regarding Mervia's transfer of the diamonds to Usov
and to explain the purpose of shutting down Mervia. Tr. 48, 50.
Elena brought a document with her to the meeting for Lazar to
execute that would confirm his assent to the transfer of the
diamond assets from Mervia to Us ov ; Lazar made changes to the

13

Lazar testified that he kept the 1.75 carat fancy intense
pink diamond because Harris owed him $500,000. Tr. 435. For
reasons described above, this claim is found to be not credible.
14

document's language and ultimately, along with Dawes, executed
it. See Tr. 48-50; Pl.' s Exs. 5, 29.

Throughout 2010 and 2011 , Lazar did not indicate in any
writing that the Agreement was dissolved or any of the diamond
asset transfers were improper or unrecognized. See Tr. 436, 48182.

In early 2012, Elena had both a telephone call and meeting
with Lazar, during which time Lazar informed Elena of sales of
certain of the diamonds still in his possession. 14 Tr. 53-54;
Undisputed Facts at

~

14. During those conversations, Lazar

promised Elena that "the money was corning" for her from the
sales. Tr. 54 . In April and May 2012 , the two met to discuss the
invoice for the three stones in Lazar's possession because Lazar
indicated he did not want to deal with Usov or "any entity he
[had] dealt [with] before." See Tr. 54-55. Elena prepared an
invoice pursuant to their discussions with regard to the Large
Diamond Collection ' s 2 . 99 purplish red diamond and 1.68 carat
violet diamond, which she presented to Lazar and to which he

14

Specifically, a 2 . 99 purplish red diamond and 0 . 57 carat
round violet from the Large Diamond Collection as well as a 1.75
fancy intense found pink diamond from the Small Diamond
Collection . See Tr. 53 .
15

promised he would pay. Tr. 55-57, 99-100; Pl.'s Ex. 25. 15 On June
15, 2012, Us o v attempt e d to reach Lazar by email to discuss
payment from Lazar's sale of these diamonds; Lazar did not
respond. See Tr. 190-91; Pl.'s Ex. 3.

In July 201 2 , Elena and Lazar met again to discuss the
payment for the sale of the diamond collection, a meeting which
Elena tape-recorded.

16

See Tr. 78-79; Pl.'s Ex. 2. During that

meeting, the two discussed Lazar's estimations of the market
value of the remaining stones in the Small and Large Diamond
Collection, estimates which Lazar gave to Elena. See Tr. 80-81;
Pl.'s Ex. 11. During the meeting, Lazar calculated the value of
the remaining Large Diamond Collection stones as $3,497,000:

15

The invoice was from Aces Advisors Corp., a company
incorporated by Uso v to "accommodate payment of the sale" as
requested by Lazar. See Tr. 56; Pl.'s Ex. 25. The total weight
on the invoice-5.31 carats-corresponds to the three diamonds
Lazar sold in early 2012. See Tr. 57; supra at 15 n.14.
l6
The iPhone was admitted as Plaintiff's Exhibit 28, as were
the audio recordings of the July and October 2012 meetings as
Plaintiff's Ex hibits 2 and 28A, respectively. See Tr. 97, 199,
273. Transcripts of the audio recordings were admitted as aids
to witnesses. See Tr. 88-90; Pl.'s Exs. 17, 24. Lazar challenged
that the particular v ersion of the iPhone was in existence at
the time of the meeting but introduced no evidence to establish
the challenge. See Tr. 374-76. Although Lazar asserted there
were additional statements which were omitted, see Tr. 497-99,
he did not in the main challenge the accuracy of the recording
or the transcripts.

16

ELENA:

That's what I think should be done, really.
I have a 3.5 26950,
is this the right
number?

LAZAR:

What is that for everything that--

ELENA:

That's point 57, 175 and 299--

LAZAR:

It is around 3.5 give or take, yeah.

ELENA:

Yeah, 3.5 26950. 531--

LAZAR:

I don't know exactly, but it's give or take-it is what we came to last time.

* * * *
LAZAR:

71250
3497.

ELENA:

3497?

LAZAR:

--make sense? Want to do it again?

ELENA:

Yeah. No, no. Where do you fall?

LAZAR:

I remember it around three point 5.

ELENA:

No, no, that's about right.

LAZAR:

In my mind it's 3.5 and give or take--

times

.6666,

47495.

Plus

34496--is

Pl.'s Ex. 2; see Pl.'s Ex. 17 at 20, 26. During the meeting,
Elena also discussed the possibility of Lazar buying out Usov's
interest in the remaining diamonds in the Large Diamond
Collection. Tr. 79.

Following the July 2012 meeting, Elena also performed
market value analysis on the remaining Small and Large Diamond
17

Collection stones, which she discussed with Lazar in October
2012 and also recorded. See Tr. 103-04; Pl.'s Exs . 18, 28A . At
the time, the total valuations of the remaining diamonds in both
collections were comparable and totaled around $5 million.
Compare Pl.'s Ex. 11 (Lazar's estimation of $5,044,575), with
Pl.'s Ex. 18

(Elena's estimation o f $5,061,380.50).

On September 19 and 28 , 2012, Elena emailed Lazar asking
for an update and payment; Laz ar replied to the first email to
say that he had tried to call but could not "get through." Pl.'s
Ex. 22; see Tr. 78. Elena ultimately arranged another meeting
with Lazar in October 20 1 2 . See Tr. 105.

At the October 2012 meeting, also recorded by Elena, Elena
discussed these va luations with Lazar, who agreed with the
amounts. See Tr. 10 8 . At the October 2012 meeting, Elena and
Lazar also discussed Elena's interest in selling the remaining
diamonds and her desire to come to an agreement as to the worth
of the diamonds. See Tr. 105. Specifically while discussing the
valuation of the Large Diamond Collection stones, Lazar and
Elena discussed percentage shares:

ELENA:

I told you if it's cash today, 1.6. 1.7.

18

LAZAR:

So 1.6, 1.7 to someone--for the whole --

ELENA:

For that whole small collection.

LAZAR:

The whole collection , not just your share?

ELENA:

The whole small collection from my share.

LAZAR:

Oh , so this--I'm trying to figure out what
the total collection was , because I had my
share , too.

ELENA:

Well, the total according to the paper was 3
million 200 something.

LAZAR:

So 1.6, 1.7, you have to add 33 % on top of
it for my share.

Pl.'s Ex. 28A ; see Pl.'s Ex. 24 at 27 -2 8. During the October
20 1 2 meeting, Lazar had "no misunderstanding as to how much he
owe[d] or what his share was." Tr. 100.

Conclusions of Law

Plaintiff has made three claims against Defendant in
relation to contested diamonds from the Small Diamond Collection
and Large Diamond Collection :

( i) breach of contract,

(ii)

unjust enrichment, and (iii) account stated. Based on the
findings of fact described above,
case.

17

Plaintiff has proven his

17

As Plaintiff has proven his breach of contract claim , his
unjust enrichment claim, based on the same operative transaction
19

Under New York law, to state a claim for breach of
contract, a plaintiff must show (1) the existence of a contract;
(2) adequate performance of the contract by the plaintiff;

(3)

breach of contract by the defendant; and (4) damages. See
Eternity Global Mas t er Fund Ltd. v. Morgan Guar. Trust Co., 375
F.3d 168, 177

(2d Cir. 2004) . Plaintiff has put forward the

Agreement as the breached contract, see Pl.'s Ex. l; Defendant
disputes that the Agreement is enforceable, contending instead
that it lacked agreement between the parties on the crucial
terms.

The facts have established the Agreement is a consignment
agreement. Under a consignment agreement, one party contracts to
transfer possession of goods to another for the purpose of
and facts, is duplicative and need not be addressed. See Beth
Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J.,
Inc., 448 F. 3d 573, 587 (2d Cir . 2006) ("The existence of a
valid and enforceable written contract governing a particular
subject matter ordinarily precludes recovery in quasi contract
for events arising out of the same subject matter."). Similarly,
as Plaintiff has proven a breach of contract claim as to the
Large Diamond Collection, the discussion of Plaintiff's account
stated claim need only address the Small Diamond Collection. See
Media Tenor Int'l AG v . Medco Health Solutions, Inc., No. 13
Civ. 7223 (DLC) , 2014 WL 2933215, at *8 (S.D .N.Y. June 27, 2014)
("If plaintiff can prove an enforceable contract, then it will
be able to recover under that cause of action, and the account
stated claim can be dismissed." (internal quotation marks
omitted)).
20

resale; this is not "a sale of goods," and in a consignment
agreement, the "title remains in the party supplying the goods
(the consignor) until the transferee (the consignee) exercises
an option to take title to the goods once certain conditions are
met." United States v. Nektalov, 440 F. Supp. 2d 287 , 298
(S.D.N.Y. 2006)

(citing Rahanian v . Ahdout, 258 A.D.2d 156, 694

N.Y.S.2d 44, 47

(1st Dep't 1999) ) . "In determining whether

parties intend their transaction to be a consignment, courts
look to certain indicia traditionally associated with the
consignment relationship." Id. at 298 -99 (internal citations,
omitted). Howe ver , in evaluating a consignment agreement, courts
need to look at "the entire relationship between the parties" as
"no single feature of that relationship can be regarded as
determinative by itself." Id. at 299 n.11

(quoting C.B.S. Bus.

Equip. Corp. v. Underwood Corp ., 240 F. Supp. 413,

419 (S.D.N.Y.

1964)).

The facts here establish that the Agreement was a
consignment between Defendant and Plaintiff's predecessors-ininterest. That consignments are frequently used in the diamond
industry weigh in favor of the Agreement being viewed as such.
See id. at 299 (citing 4 James J. White & Robert S. Summers,
Uniform Commercial Code

§

30-4, at 34

21

(5th ed. 2002))

(finding

that "consignment arrangements are frequently used in the
diamond industry" and "may weigh this fact in favor of the
existence of a consignment" but that "such a fact,

in and of

itself , does not dictate" that finding) .

The facts surrounding the Agreement support this
conclusion. As found above, the evidence established that the
parties agreed that to raise funds to buy the Large Diamond
Collection from Runte , Harris delivered to Lazar the 8 . 36 Blue
Stone so that Lazar could sell the Blue Stone and use the
proceeds to purchase the Runte's collection . No documentary
evidence or credible testimony has established that Defendant
paid anything for the Large Diamond Collection or that Defendant
returned all monies to Harris for the sale of the Blue Stone .
The Agreement memorialized the resu l tant consignment of the
Large Diamond Collection ' s diamonds from Harris to Lazar and
laid out the percentage distribution for monies earned from the
sales of those stones . In the years following the Agreement,
there were numerous communications between Defendant,

Plaintiff ,

Harris, Elena, and Dawes as to Plaintiff and Plaintiff's
predecessors-in-interest ' s ownership of the diamonds, which are
described above and to which Lazar never expressed any
indication that such an arrangement was not the case . Lazar ' s

22

communications with Dawes and Elena, as most notably established
by the recorded meetings, are further evidence that Lazar was
aware, unde rstood , and accepted the transfer of ownership as to
Harris' diamonds from Harris to Pinnacle, Mervia , and, lastly,
to Plaintiff.

Lazar's conduct in partial performance of the Agreement is
"an unmistakable signal" of the consignment contractual
agreement and demonstrates that Lazar understood "a contract to
be in effect." R.G. Grp.,

Inc. v . Horn & Hardart Co ., 751 F.2d

69, 75-76 (2d Cir. 1984). As found above, after Lazar sold two
stones from the Large Diamond Collection, Pinnacle invoiced
Lazar for those said stones in accord with the Agreement's two third and one-third percentage terms, and Lazar paid. That
partial performance confirms the existence of the Agreement and
Lazar's agreement to its terms. See , e.g., Nat'l Trends,
Krimson Corp., No.

91 Civ. 3178

*11 (S.D.N.Y. Mar. 23 , 1994)

(KMW)

Inc. v.

(LB), 1994 WL 97058, at

(noting that partial performance is

"useful to determine the parties' intent" and that such intent
may be ascertained by parties' "expressed intentions, the words
and deeds which constitute objective signs in a given set of
circumstances" (c itation omitted)).

23

Lazar has failed to perform the consignment by returning to
Usov the moneys received by him for Usov's share of diamonds
sold. Accordingly,

Plaintiff is entitled to two-thirds of those

sales and two-thirds of the value of the remaining diamonds in
that collection still held by Lazar.

Plaintiff has also established his account stated claim as
to the Small Diamond Collection . To state a claim f or an account
stated, a plaintiff must plead that there was "a promise by a
debtor to pay a stated sum of money wh i ch the parties had agreed
upon as the amount due." White Diamond Co. v . Castco, Inc.,
F. Supp. 2d 615,

623 (S.D.N.Y. 2006) ; see also Abbott,

Wiener v. Ragusa, 214 A.D.2d 412, 413,
Dep't 1995)

625 N.Y.S.2d 178

436

Duncan &
(1st

("An account stated is an account, balanced and

rendered, with an assent to the balance either express or
implied. There can be no account stated where no account was
presented or where any dispute about the account is shown to
have existed.")

The facts as found above confirm an agreement as to the
Small Diamond Collections as alleged by Plaintiff. The evidence
has established that Harris and Defendant agreed that Harris
would receive all of the proceeds from sales of the Smal l

24

Diamond Collection, an ownership right shown to be transferred
ultimately to Plaintiff. The facts have established that
Defendant has breached that agreement by retaining the monies
owed from Lazar's sale of the diamond from the Small Diamond
Collection. Accordingly , Plaintiff is entitled to one hundred
percentage of the value of the sale of the remaining Small
Diamond Collection diamond in Lazar's possession.

25

Conclusion

For the reasons set forth above , Pl aintiff is entitled to
two-thirds of money received from sales of diamonds from the
Large Di amond Collection, two - thirds of the va l ue of the
diamonds in the Large Diamond Co l lection retained by the
Defendant , monies received from the sa l es of diamonds in the
Small Diamond Collect i on, and judgment with costs and
disbursements.

Settle judgment on notice.

It is so ordered .

New York, NY
August

f (J

,

2017

U.S . D . J .

26