Summary
finding plaintiff was "well aware of his potential injury" when he sent letters accusing defendant of tricking him and suggesting that he would sue
Summary of this case from Hutchins v. PalmerOpinion
05 Civ. 6925 (JSR).
January 16, 2006
MEMORANDUM ORDER
The plaintiffs here, an art investor named Yoichi Takeuchi and several corporations of which he is the principal (collectively "Takeuchi"), allege that defendant Ely Sakhai, together with four other defendants previously dismissed from this case, committed RICO violations predicated on fraud. By short order dated December 7, 2005, the Court granted summary judgment in favor of the remaining defendant, Sakhai. This Memorandum Order briefly states the reasons for that determination and directs the entry of final judgment.
See Stipulation dated August 16, 2005 (dismissing defendants Aaron Seligson and Seligson, Rothman Rothman); transcript, 8/18/05 (orally dismissing defendants Vincent and Altamura).
The pertinent facts, either undisputed or, where disputed, taken most favorably to plaintiffs, are as follows. From 1992 through 1997, Takeuchi purchased from Sakhai various pieces of art purportedly painted by famous artists. The first such purchase occurred in June 1992, when Takeuchi purchased from Sakhai what the parties refer to as the "Tauber Collection."
At oral argument plaintiffs challenged the admissibility of many of the defense exhibits. The Court did not then see the need to resolve the admissibility of all of these exhibits because the exhibits on which the parties were relying at oral argument,i.e., Exs. X, Y, AA, CC, and EE attached to Reply Declaration of Ely Sakhai sworn to November 16, 2005 ("Sakhai Decl."), were conceded by both sides to be admissible. See transcript, 11/30/05. Subsequently, however, the Court additionally determined that all other defense exhibits challenged by plaintiffs that were originally produced by plaintiffs during discovery and that bear facial indicia of having been received by plaintiffs at or around the times appearing on the faces of the exhibits are admissible for at least the purpose of showing plaintiffs' state of mind at the relevant times.
In July 1992, Sakhai represented to Takeuchi that a third party named Ionescu would buy part of the Tauber Collection from Takeuchi if Takeuchi purchased two additional paintings from Sakhai and added those paintings to the part of the Tauber Collection to be sold. But after Takeuchi purchased those additional paintings from Sakhai and paid various other expenses related to those transactions, Ionescu reneged on the purchase agreement. Takeuchi, through one of his companies called Prado Bijyutsu Co. Ltd., thereupon sent a letter to Ionescu accusing him of engaging with Sakhai in a "fraudulent plot" against Takeuchi. See Sakhai Decl., Ex. EE (letter from Prado Art Corporation to V. Ionesk).
In response, Sakhai informed Takeuchi that he (Sakhai) was also a victim: he represented to Takeuchi that he had sued Ionescu for breach of contract and he provided Takeuchi with a copy of a purported summons in that lawsuit. In actuality, Sakhai did not file the suit. Declaration of Yoichi Takeuchi in Response to Motion for Summary Judgment sworn to November 11, 2005 ("Takeuchi Decl.") ¶ 7. Based on Sakhai's responses, however, Takeuchi continued to purchase art and otherwise engage in business with Sakhai.
In or about June 1997, Takeuchi agreed to pay Sakhai approximately $350,000 and also to forgive a loan he had made to Sakhai, in exchange for a Rembrandt painting, "The Apostle James," which Sakhai assured Takeuchi was authentic. Shortly after the purchase, however, two experts, Professors Kuroe and Tanaka, who were hired by Takeuchi to appraise the painting, concluded that the painting was not the one Takeuchi had been promised. Declaration of Malcolm S. Taub in Support of Motion for Summary Judgment dated September 28, 2005 ("Taub Decl."), Ex. O (letter from Professor Tanaka dated June 13, 1997); Sakhai Decl., Ex. AA (Examination Report from Kotuku Kuroe). Takeuchi told Sakhai about the experts' opinions, but Sakhai responded that the experts had made a "mistake" and that Takeuchi was "wrong" to doubt the authenticity of the painting. Id. ¶ 10.
Takeuchi then wrote a letter to Sakhai (purportedly to "test" the plaintiff, id. ¶ 11), in which he accused Sakhai of selling him a "forged Rembrandt piece" and stealing "money and art work" from him. See Sakhai Decl., Ex. Z (letter dated June 21, 1997). He also threatened to report Sakhai to both the Japanese and American authorities and to file a lawsuit against him. Id. Takeuchi now alleges, however, that because Sakhai "remained unruffled" in the face of this letter, and because Sakhai had previously "closed deals with well known Japanese art dealers and critics," Takeuchi concluded that he was wrong and that Sakhai was innocent. Takeuchi Decl. ¶ 11. Takeuchi's confidence in this conclusion was purportedly buttressed by a conversation he had with Professor Tanaka, in which Tanaka said the painting, even if not the one promised, was worth 500 million yen. Id.
Nonetheless, on June 27, 1997, Takeuchi's agent sent Sakhai a letter accusing Sakhai of "defraud[ing]" Takuechi. Taub Decl., Ex. P. Takeuchi also ceased dealings with Sakhai, but took no further action until, in May 2001, upon learning from a friend that the friend had been defrauded by Sakhai in connection with the purchase of paintings, Takuechi Decl. ¶ 14, Takeuchi initiated the investigation that ultimately resulted in the filing of this lawsuit. Id. ¶ 15.
The foregoing facts, Sakhai contends, show that this lawsuit is barred by the statute of limitations as a matter of law. The limitations period for a private civil RICO action is four years and begins to run when the plaintiff discovers or should have discovered his injury. Tho Dinh Tran v. Alphonse Hotel Corp., 281 F.3d 23, 35 (2d Cir. 2002). In the case of a RICO claim predicated on fraud, a plaintiff should have discovered his injury when he has received information sufficient to alert a reasonable person to the probability that he has been misled.See In re: Merrill Lynch Ltd. P'shps. Litig., 154 F.3d 56, 60 (2d Cir. 1998). Here, plaintiffs filed their complaint on April 7, 2005, so their two claims, both alleging RICO violations, are barred by the statute of limitations if Takeuchi reasonably should have discovered, prior to April 7, 2001, that he had been fraudulently misled by Sakhai.
Even taking the evidence presented on this motion most favorably to Takeuchi, no reasonable fact finder could fail to conclude that Takeuchi had such notice by June 1997, if not earlier. By letter dated June 13, 1997, of which Takeuchi had a copy, one of Takeuchi's appraisal experts, Professor Tanaka, wrote to Sakhai, declaring that the painting sold to Takeuchi was not the authentic Apostle James and specifying "the differences between the two" that were "easily" detected. Taub Decl., Ex. O (letter from Professor Tanaka dated June 13, 1997). Similarly, Takeuchi's other expert appraiser, Professor Kuroe, rendered a written report to Takeuchi on June 16, 1997, that stated that Kuroe's X-ray examination of the painting revealed that "this painting is far from an original Rembrandt painting and the painting method does not resemble the school of Rembrandt." Sakhai Decl., Ex. AA (Examination Report from Kotuku Kuroe). Professor Kuroe's report then goes on to particularize various material differences between the painting sold to Takeuchi and the original Apostle James. Id.
Thus, both experts clearly informed Takeuchi that he was not getting the painting he had been promised. While Takeuchi claims he nevertheless received oral representations from Professor Tanaka that even this "copy" was very valuable, see Takeuchi Decl. ¶ 12, Takeuchi was still on notice that he had been materially misled by Sakhai and that, at a minimum, he should further investigate the circumstances of which he now complains.
Similarly, as to Takeuchi's argument that he believed Sakhai's protestations of innocence, any reasonable juror would have to conclude that he was still put on sufficient notice of fraud that he reasonably should have undertaken further investigation. In re: Merrill Lynch Ltd. P'shps. Litig., 154 F.3d at 60. Moreover, here, where there was a history of suspicion between the parties following the 1992 incident involving the resale of the Tauber Collection, see Sakhai Decl., Ex. EE, and where large sums of money were at stake, no reasonable juror could conclude that it was reasonable for Takeuchi to accept Sakhai's denials at face value.
Further still, there is considerable evidence that Takeuchi was well aware of his potential injury at that time. In the letter dated June 21, 1997, Takeuchi accused Sakhai of repeatedly "trick[ing]" him and "lie[ing]" to him and of selling a "forgery work of Rembrandt." Sakhai Decl., Ex. X. While Takeuchi now claims this letter was simply intended to "test" Sakhai, no reasonable juror could credit this claim given a follow-up letter dated June 27, 1997 in which Takeuchi's agent wrote, on behalf of Takeuchi, that Sakhai's explanation for why the purchased painting did not contain a signature was "not possible," indicated that Takeuchi had been "defrauded" because "this painting is not the same one in the catalogue," and again suggested that Takeuchi was going to sue Sakhai. Taub Decl., Ex. P.
The Court carefully considered plaintiffs' other arguments and, finding them wholly devoid of any merit whatsoever, determined, for the foregoing reasons, to grant summary judgment to Sakhai in the Order dated December 7, 2005. The Court now reconfirms that Order, denies all other pending motions as moot, and directs the Clerk of the Court to enter judgment dismissing the complaint as to all defendants.
SO ORDERED.