OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge:

I. INTRODUCTION

This case concerns the ownership of a 7.44 carat pear-shaped diamond,1 which is currently being held by the Gemological Institute of America ("GIA"), pending determination of title. In February 2003, the owner of the diamond — the William Goldberg Diamond Corporation ("WGDC") — consigned it, along with other items, to Derek Khan, a well-known celebrity fashion stylist.2 The purpose of the consignment — which reflected an ongoing arrangement between Khan and WGDC,3 and between Khan and other established jewelers4 — was for Khan to "adorn[] his celebrity clients" with high-end jewelry,5 in preparation for "special events and fashion shoots."6 The arrangement was governed by a Consignment Agreement, which made clear that Khan had no freestanding authority to "sell, pledge, hypothecate, or otherwise dispose of the [diamond]," but that he could sell the diamond "if and when [he] ... received from [WGDC] a separate invoice."7 In other words, Khan was only authorized to sell the diamond if WGDC approved the sale, and set out specific terms, prior to any sale.

Typically, after WGDC consigned a piece of jewelry to Khan, he would "return the jewelry to WGDC ... within a few days of the celebrity event."8 After the February 2003 consignment, however, Khan failed to return the diamond in a timely manner, prompting WGDC to become suspicious and, eventually, file a police report.9 On March 17, 2003, the diamond surfaced in the legitimate market, when Louis Newman — a New York diamond merchant — submitted the diamond to the GIA for certification,10 which was issued on March 25, 2003.11 In late 2003, the diamond was purchased by Stanley & Sons — another New York diamond merchant12 — on behalf of Frank and Donna Walsh (the "Walshes").13 Some years later, the Walshes conveyed the diamond to plaintiffs, their children.14

WGDC argues that because Khan stole the diamond, he could not hold title in the diamond — nor transfer title to it — as a matter of law. Therefore, WGDC argues that it is the rightful owner of the diamond. On the other hand, plaintiffs argue that Khan was not a thief, but rather an entrusted merchant who held "voidable title" in the diamond — and was therefore capable of transferring title — under the Uniform Commercial Code ("UCC"). When the Walshes purchased the diamond in 2003, plaintiffs argue that their parents acquired good title to the diamond, which was subsequently transferred to them. Therefore, plaintiffs contend that WGDC is no longer the owner of the diamond as a matter of law. In the alternative, plaintiffs argue that even if WGDC's legal theory is correct, any replevin action is barred by the doctrine of laches, due to needless and prejudicial delay.15

Both sides moved for summary judgment on their respective legal theories. For the reasons set forth below, plaintiffs' motion is GRANTED, and WGDC's is DENIED.

II. STANDARD OF REVIEW

"Summary judgment is appropriate `[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.'"16 Accordingly, summary judgment is appropriate "only where, construing all the evidence in the light most favorable to the [non-moving party] and drawing all reasonable inferences in that party's favor, there is `no genuine issue as to any material fact and... the movant is entitled to judgment as a matter of law.'"17

III. APPLICABLE LAW

Under New York law,18 "[u]nlike a thief, an entrustee" — i.e., someone to whom property has been entrusted by its owner — "has voidable, as opposed to void, title, and therefore can pass good title to a third party."19 Section 2-403(2) of New York's UCC provides that "[a]ny entrusting of ... goods to a merchant who deals in goods of that kind gives [the merchant] power to transfer all rights of the entrustor to a buyer in the ordinary course of business." In other words, if an owner entrusts his property to a merchant, he is estopped from seeking replevin, down the line, against a good faith purchaser for value — even if the sale was the product of "fraud punishable as larcenous under the criminal law."20

The purpose of the merchant entrustment rule is to "enhance the reliability of commercial sales by merchants who deal in the kind of goods sold by shifting the risk of resale to one who leaves his property with [a] merchant."21 Put otherwise, the rule is meant to protect "buyers in the ordinary course of business"22 by making owners — not purchasers — shoulder the financial risk associated with fraudulent transactions. If an owner "knowlingly delivers [] property into the possession of a merchant," he "assumes the risk of the merchant's acting unscrupulously by selling the property" — without the owner's consent — "to an innocent purchaser."23 This puts the onus on owners to carefully "select the merchant to whom [they] entrust[] [their] property."24

The applicability of the entrustment rule depends on whether an entrustee is a "merchant," which the UCC defines in two ways. First, an entrustee is a "merchant" if he "deals in goods of the kind."25 Second, an entrustee is a merchant if "by his occupation," he "holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction."26

IV. DISCUSSION

There is no dispute that WGDC voluntarily consigned the diamond to Khan,27 or that the Consignment Agreement set the terms of their arrangement.28 The parties' disagreement pertains to the reason for the consignment. WGDC maintains that it entrusted the diamond to Khan "for the sole and limited purpose of [Khan], a fashion stylist, adorning his celebrity clients."29 Plaintiffs, in contrast, argue that Khan had conditional authority to sell the diamond, and that he therefore operated as a broker for WGDC.30 If true, this would make Khan a "merchant" under the UCC's first definition: it would mean that Khan "deal[t] in" jewelry.31

The nature of Khan's and WGDC's relationship is a disputed question of fact — and not one that the Court is authorized, at this stage, to resolve.32 But no such resolution is necessary, because even if WGDC is right about its relationship with Khan, he still qualifies as a "merchant" under the UCC's second definition. "By his occupation," Khan clearly "[held] himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction."33 Therefore, the merchant entrustment rule applies, and WGDC is estopped from seeking replevin against plaintiffs.

WGDC offers two arguments against this construction of "merchant." First, it repeatedly emphasizes that Khan "was a fashion stylist, not a [jeweler]," so whatever his knowledge or skill regarding jewelry, it was not "by virtue of his occupation."34 This argument fails. Put simply, fashion stylists often do — and the record makes clear that Khan, in fact, did — have "knowledge or skill peculiar to [jewelry]." At the time of the diamond's consignment, Khan made his living "preparing celebrities... for events and fashion shoots,"35 a job that required him to "provide ... jewelry to certain celebrities or other well-known individuals, for whom [he] was employed as [a] personal stylist."36 Obviously, "by [this] occupation," Khan must have "[held] himself out as having knowledge or skill" about jewelry — specifically, knowledge about jewelry as a category of accessory, and skill in the selection of jewelry for fashion purposes. That is why WGDC (and others) consigned their jewelry to him.

Second, WGDC argues that Khan did not hold himself out as having the specific type of "knowledge or skill" necessary to make him a "merchant."37 According to WGDC,

But even if all this is true, nothing in the language of the UCC suggests that the phrase "knowledge or skill peculiar to the practices or goods involved in the transaction" necessarily refers to knowledge of, or skills related to, the business dimension of those "practices or goods." If anything, the UCC's bifurcated definition of "merchant" cuts the other way. That the UCC differentiates between "deal[ing] in goods" and possessing "knowledge or skill [about] goods" suggests that the latter definition is not exclusively concerned with business knowledge.

Khan obviously had "knowledge [and] skill[s]" related to jewelry. Absent explicit guidance from New York courts, I conclude that Khan's particular type of "knowledge [and] skill[s]" — related to aesthetics, not business — is covered by the UCC's broad definition. WGDC has not identified any case that holds otherwise.39 And more importantly, rejecting this broad definition would undermine the spirit of the merchant entrustment rule, which aims to protect purchasers by "shifting the risk of loss through fraudulent transfer to the owner of the goods, who can select the merchant to whom he entrusts his property."40 The rationale behind the rule, in other words, is to "enhance[] confidence in commercial transactions by protecting the innocent purchaser who buys from a merchant dealing in goods of that kind"41 — which counsels in favor of giving "merchant" a broad definition, to the benefit of purchasers, not owners.

It is undisputed that plaintiffs came into the possession of the diamond innocently.42 And it is also clear that if the merchant entrustment rule applies — to protect plaintiffs' innocent acquisition — WGDC will be left to bear an unfortunate liability. Such is the nature of a case like this, where the true perpetrator — Khan — is beyond the Court's grasp. There can be no doubt that Khan's actions were larcenous. However, because he falls within the broad definition of "merchant" set out in the UCC, his larceny did not preclude him from passing title. I conclude, therefore, that plaintiffs are the rightful owners of the diamond.

V. CONCLUSION

For the foregoing reasons, plaintiffs' motion for summary judgment is GRANTED, and WGDC's motion for summary judgment is DENIED. The Clerk of the Court is directed to close both motions (Dkt. Nos. 174 and 183).

SO ORDERED.