Floyd Zadkovich Success: Maria Iride Crippa v Dartmilano SRL and Art Lending, Inc.

We are pleased to report our success on the case Maria Iride Crippa 𝐯 Dartmilano SRL and Art Lending, Inc. (U.S. District Court, District of New Jersey, 22-cv-3104-MCA).

Read the full opinion here:   Maria Iride Crippa 𝐯 Dartmilano SRL and Art Lending, Inc.

This was a significant commercial case concerning competing claims to a Picasso painting, Le Peintre, that our client, Ms. Crippa, had consigned to Sotheby’s for private sale. The sale contract had a reservation of title clause in her favor until the full purchase price was paid. It also provided for a temporary loan of Le Peintre to the purchaser (August Uribe Fine Art, LLC), which had simultaneously entered into its own contract as owner to sell Le Peintre to Dartmilano SRL under similar terms. AUFA did not have the funds to buy Le Peintre outright and was relying on Dartmilano’s funds to meet its obligation to Sotheby’s/Ms. Crippa. Despite never paying for Le Peintre in full, Dartmilano was able through a series of machinations to place it in the art storage account of Art Lending, Inc. (its lender), to which it had already pledged the painting (and several others) as collateral for a $14 million loan.

The scheme was revealed after AUFA requested the return of Le Peintre from the same art storage facility because of Dartmilano’s non-payment (which request was denied by the facility). In the meantime, Art Lending had filed a financing statement pursuant to the Uniform Commercial Code (UCC) in an effort to perfect a purported security interest granted by Dartmilano in Le Peintre. Dartmilano then defaulted on the loan Art Lending had advanced to it.

A litigation was commenced by AUFA against Dartmilano, Art Lending and others in the U.S. District Court of New Jersey, where the art storage facility and thus Le Peintre were located. Ms. Crippa and Sotheby’s intervened in the action, and Ms. Crippa asserted a replevin claim seeking the return of Le Peintre to her as its owner. After discovery was completed, Ms. Crippa, Sotheby’s and Art Lending each moved for summary judgment.

The Court resolved the dispute in favor of our client by granting her summary judgment. It determined that “delivery” of Le Peintre to AUFA had not taken place, such that UCC § 2-401’s prohibition on reservation of title clauses in delivered goods did not apply, and title remained with Ms. Crippa. Since Dartmilano never received any interest in Le Peintre from AUFA, it could not grant a security interest therein to Art Lending.

The Court also rejected Art Lending’s alternative claim that Dartmilano obtained title under the UCC § 2-403’s “merchant entrustment rule”. That rule was found to be not applicable because the Court determined that Dartmilano could not be considered a ‘buyer in the ordinary course of business” on the grounds that (i) it was not “honest in fact” with AUFA about their dealings and (ii) it had sufficient reasons to doubt the ability of AUFA to pay for or obtain ownership of Le Peintre.

This case encompasses the breadth and depth of legal expertise at Floyd Zadkovich – a complex artlaw matter involving parties from across the globe and requiring the resolution of a complicated set of facts and UCC issues. This matter was successfully handled by Joe Johnson and Ed Floyd.

𝐑𝐞𝐚𝐝 𝐭𝐡𝐞 𝐟𝐮𝐥𝐥 opinion 𝐡𝐞𝐫𝐞:

Maria Iride Crippa 𝐯 Dartmilano SRL and Art Lending, Inc.