In a dispute arising from the purchase and sale of the painting Paysage aux Trois Arbres by Paul Gauguin, this Court is asked to determine whether claims sounding in fraud, negligent misrepresentation, breach of contract, and unjust enrichment were properly pleaded in the plaintiff's complaint.
In July 2000, J. Amir Cohen approached plaintiff Mandarin Trading Ltd.
On July 28, 2000, Wildenstein presented a written appraisal letter to Michel Reymondin, which stated that the painting was worth $15 million to $17 million. Neither Reymondin's role in the transactions, nor his relationship to the parties is pleaded. Furthermore, the letter is addressed solely to Reymondin and neither indicates the purpose of the letter nor who requested the valuation of the painting. While the letter revealed that the painting was part of Mrs. Arthur Lehman's collection and was once sold by Wildenstein, it did not disclose any contemporaneous ownership interest. Mandarin received the letter, the complaint does not say from whom, on August 12, 2000.
On August 9, 2000, Cohen contacted and informed Mandarin that if the painting was purchased expeditiously, it could be sold at auction through Christie's at an optimum price. Christie's had outlined the logistics of the auction in a letter to Cohen in which Christie's proposed to hold an auction for the painting in New York with a reserve price of $12 million—a price below which the painting would not sell. Christie's estimated that the painting could sell for $12 million to $16 million.
Mandarin purchased the painting through a series of transactions that occurred during the period of August 16, 2000 to August 30, 2000. First, Peintures Hermes S.A., a company allegedly owned by Wildenstein, forwarded an invoice to Calypso Fine Art Ltd., an intermediary, for the sale transaction. Mandarin then wired $11.3 million for the purchase of the painting to Calypso's account. Finally, Calypso paid $9.5 million to Peintures in exchange for the painting and then transferred the painting to Mandarin. It is further alleged that Peintures deposited $8.8 million into a bank account owned by Wildenstein.
On November 8, 2000, Christie's held an auction for the painting, but the highest bid failed to exceed the reserve price and the painting was not sold. Mandarin has since retained ownership of the painting.
Before discovery, Supreme Court granted Wildenstein's CPLR 3211 (a) (1) and (7) motion to dismiss Mandarin's complaint (17 Misc.3d 1118[A], 2007 NY Slip Op 52059[U]). Supreme Court held that Mandarin's fraud claims failed because the complaint did not allege that Wildenstein intended to defraud Mandarin through a misstatement of fact upon which Mandarin could
In a 3-2 decision, the Appellate Division affirmed dismissal of Mandarin's complaint by holding that the pleadings did not sufficiently allege claims for fraud, negligent misrepresentation, breach of contract, and unjust enrichment (65 A.D.3d 448 [1st Dept 2009]). One dissenting Justice voted to affirm dismissal of the claims at law, but to reinstate the equity claim of unjust enrichment, while the other dissenting Justice sought to reinstate Mandarin's entire complaint. Mandarin appeals to this Court as of right, from the two-Justice dissent, pursuant to CPLR 5601 (a).
In the context of a CPLR 3211 motion to dismiss, the pleadings are "to be afforded a liberal construction. [The Court must] accept the facts as alleged in the complaint as true, [and] accord plaintiffs the benefit of every possible favorable inference" (Leon v Martinez, 84 N.Y.2d 83, 87  [citation omitted]; see also Morone v Morone, 50 N.Y.2d 481, 484 ). Even affording Mandarin all favorable inferences, the complaint fails to sufficiently plead its claims, and we now affirm.
Generally, in a claim for fraudulent misrepresentation, a plaintiff must allege "a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Lama Holding Co. v Smith Barney, 88 N.Y.2d 413, 421 ; see also Channel Master Corp. v Aluminium Ltd. Sales, 4 N.Y.2d 403, 406-407 ). Furthermore, where a cause of action is based in fraud, "the circumstances constituting the wrong shall be stated in detail" (see CPLR 3016 [b]; see also Lanzi v Brooks, 43 N.Y.2d 778, 780  ["(CPLR 3016 [b]) requires only that the misconduct complained of be set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of"]).
Mandarin argues that the complaint properly pleads that Wildenstein's omission of his ownership interest in the painting
Wildenstein's letter regarding the painting's value constituted nonactionable opinion that provided no basis for a fraud claim (see Jacobs v Lewis, 261 A.D.2d 127, 127-128 [1st Dept 1999] ["alleged misrepresentations amounted to no more than opinions and puffery or ultimately unfulfilled promises, and in either case were not actionable as fraud"]). The letter merely disclosed Wildenstein's familiarity with the painting, a belief that the painting was worth $15 million to $17 million, and an acknowledgement that the letter was addressed in response to Reymondin, with no mention of Mandarin.
Furthermore, with respect to a claim of fraudulent omission, the complaint fails to allege that Wildenstein owed a fiduciary duty to Mandarin (see P.T. Bank Cent. Asia, N.Y. Branch v ABN AMRO Bank N.V., 301 A.D.2d 373, 376 [1st Dept 2003] ["A cause of action for fraudulent concealment requires, in addition to the four foregoing elements (of fraudulent misrepresentation), an allegation that the defendant had a duty to disclose material information and that it failed to do so"]).
The narrative within the complaint is devoid of facts indicating any connection between Mandarin and Wildenstein that would give rise to a fiduciary duty. Highlighting this deficiency are pleadings that require leaps of fact and logic such as the unknown role played by Reymondin—the man who allegedly received the appraisal from Wildenstein. By failing to plead the role played by Reymondin or how he was related to the parties, no inference can be drawn, for example, that Wildenstein misrepresented his alleged ownership interest or the painting's value, knowing that Reymondin would transfer the information to Mandarin. Moreover, the letter offers no assistance to Mandarin's claim, in light of the fact that the letter was addressed solely to Reymondin, and in the absence of allegations creating a bridge between Mandarin and Wildenstein. Rather than alleging that Wildenstein misrepresented his ownership to Mandarin specifically, an insufficient, general allegation is proffered that Wildenstein was required to disclose his interest because he should have known that a hypothetical purchaser would rely on the appraisal letter (see Garelick v Carmel, 141 A.D.2d 501, 502 [2d Dept 1988] ["Moreover, in order to plead a
As such, Mandarin's fraud claims were properly dismissed.
It is well settled that "[a] claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" (J.A.O. Acquisition Corp. v Stavitsky, 8 N.Y.3d 144, 148 ; see also Parrott v Coopers & Lybrand, 95 N.Y.2d 479, 483-484 ).
Mandarin argues that the Appellate Division majority erred in affirming dismissal of this claim because, here, a buyer-seller relationship established privity. Wildenstein responds that no relationship existed between the parties.
A special relationship may be established by "persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified" (Kimmell v Schaefer, 89 N.Y.2d 257, 263 ). Although Mandarin generally pleads that "a special relationship of trust or confidence" existed between the parties, the lack of allegations showing a relationship with Wildenstein mandates dismissal of this claim. The complaint does not allege whether Wildenstein had any contact with Mandarin, whether Mandarin solicited the appraisal directly from Wildenstein, whether Wildenstein knew the purpose of the appraisal letter, or whether Wildenstein was even aware of Mandarin's existence.
In Kimmell, the defendant sought to induce plaintiffs to invest in a business venture by directly sending them a memo regarding business projections, meeting with them personally, and sending out correspondence to assure the safety of the investment. We held that the record supported a finding that the defendant established a special relationship with the plaintiffs because of the financial skill and expertise of the defendant, and his continued attempts to communicate directly with the plaintiffs to induce their investment (id. at 264).
Ravenna v Christie's Inc. (289 A.D.2d 15 ) involved a similar issue in the context of the sale of a painting where the
Here, the pleadings fail to allege the existence of any relationship between Mandarin and Wildenstein that would support a negligent misrepresentation claim. Unlike the defendant in Kimmell, there are no allegations here that Wildenstein ever met with Mandarin, was retained by Mandarin for an appraisal, or knew that the appraisal would be used by Mandarin for the purpose of purchasing the painting (see Spitzer v Christie's Appraisals, 235 A.D.2d 266 [1st Dept 1997]). And this case has an even more tenuous basis for finding privity, or a privity-like relationship, as it lacks even the bare, minimal contact of the parties in Ravenna. Wildenstein's art expertise alone cannot create a special relationship where otherwise the relationship between the parties is too attenuated.
Mandarin further argues that Wildenstein should have known or foreseen that the appraisal was requested by a purchaser for the purpose of buying the painting, but this Court has
Accordingly, without further allegations establishing a relationship between the parties, Mandarin's complaint fails and was properly dismissed.
Mandarin alleges that it has sufficiently pleaded a breach of contract claim because it was an intended third-party beneficiary to an appraisal contract between Wildenstein and Reymondin. However, the failure to allege a relationship between the parties again proves fatal to this claim as well.
Generally, a party alleging a breach of contract must "demonstrate the existence of a ... contract reflecting the terms and
The complaint only offers conclusory allegations without pleading the pertinent terms of the purported agreement. We are left to speculate as to the parties involved and the conditions under which this alleged appraisal contract was formed. Consequently, by failing to plead the salient terms of a valid and binding contract, Mandarin cannot show that the contract was intended for its immediate benefit.
"The essential inquiry in any action for unjust enrichment... is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Paramount Film Distrib. Corp. v State of New York, 30 N.Y.2d 415, 421 ). A plaintiff must show "that (1) the other party was enriched, (2) at that party's expense, and (3) that `it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered'" (Citibank, N.A. v Walker, 12 A.D.3d 480, 481 [2d Dept 2004]; Baron v Pfizer, Inc., 42 A.D.3d 627, 629-630 [3d Dept 2007]).
Mandarin's unjust enrichment claim fails for the same deficiency as its other claims—the lack of allegations that would indicate a relationship between the parties, or at least an awareness by Wildenstein of Mandarin's existence. Although privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated (see Sperry v Crompton Corp., 8 N.Y.3d 204, 215 ).
Moreover, under the facts alleged, there are no indicia of an enrichment that was unjust where the pleadings failed to indicate a relationship between the parties that could have caused reliance or inducement. Without further allegations, the
Accordingly, the order of the Appellate Division should be affirmed, with costs.