Trial Looms In Case Over Ownership of Diamond
10/31/2019A trial is now imminent in a years-long, trans-Atlantic dispute over who is the rightful owner of a massive diamond. The case, Angiolillo v. Christie’s et al. (Case No. 650871/2015, N.Y. Co.) is of interest to the art world because it implicates some of the same themes that often crop up in art title cases—questions ranging from whether a claimant has unreasonably delayed in asserting its rights, to how much an auction house is required to do to verify the title of an item it plans to auction.
At the center of the dispute is the “Princie Diamond,” a 34+ carat pink diamond, with an estimated value somewhere in the neighborhood of $40 million. The diamond’s provenance includes a mine in India and Indian royalty, as well as famed jeweler Van Cleef & Arpels. But the facts underlying this lawsuit begin in 1960, when the diamond was purchased by Italian businessman and senator Renato Angiolillo, the same year he married his second wife, Maria Girani. Renato died in 1973, and now, decades later, various parties hotly dispute who has the right to the rock.
The plaintiffs—Renato’s direct descendants—argue that, under Italian law, they inherited the diamond, and Renato’s widow, Maria received only the right to possess it during her lifetime. But, they claim, upon Maria’s death, instead of being returned to Renato’s heirs, the stone was wrongfully taken by Marco Millela, Maria’s son from a previous relationship. From there, they say, it passed through the hands of several parties, including jewel broker Herve Fontaine, who sold it to another broker, David Gol. Gol then consigned the diamond to Christie’s for private sale; when it failed to sell privately, Gol agreed to put it up for public auction in 2013. When the plaintiffs learned about the planned auction, they contacted Christie’s to claim it, but Christie’s, maintaining that the consignors had good title, went ahead with the auction. The winning bidder, art dealer Guy Bennett, took possession of the diamond and has since transferred it to yet another third-party, a Qatari sheikh. Milella was later prosecuted in Italy in connection with the disappearance of the diamond and certain other valuable Angiolillo jewelry, but those criminal charges were dismissed on the basis of statute of limitations.
In 2015, the plaintiffs sued almost everyone who has handled the diamond since Mellela allegedly took possession of it, including Fontaine and affiliated entities, Gol and his affiliates, Christie’s, and Bennett and his affiliated entity. Their claims include conversion and replevin. But they also asserted negligence and/or gross negligence and unjust enrichment claims against Christie's. Early in the case, Christie's had asserted a counterclaim against the plaintiffs for tortious interference with contractual relations, but that counterclaim was dismissed in 2016.
The case has been making its way through a New York state court for more than four years, complete with wrangling over everything from questions of jurisdiction over foreign defendants to issues of attorney-client privilege. In May, the court issued a key summary judgment decision that has now set the stage for trial. In its May opinion, the court held that it could not decide, as a matter of law, whether Renato was the owner of the diamond at the time of his death. Certain old insurance policies and other documents support the plaintiff’s argument that, while his wife Maria was permitted to wear the diamond, Renato was its owner and it passed to his children upon his death; but other documents support the defendants’ argument that Renato gifted the diamond outright to Maria and thus it never became part of his estate, and instead was validly inherited by her son Milella. Angiolillo v. Christie's, Inc., 64 Misc. 3d 500, 514, 103 N.Y.S.3d 244, 257 (N.Y. Sup. Ct. 2019).
In that same May decision, the court addressed the defendants’ argument that, even if the diamond did not belong to Maria and she merely had the right to possess it, defendants still obtained good title under Swiss law. Id. at 258–59. (In contrast to New York law, under which a thief generally cannot pass good title to property, Swiss law is much more favorable to good-faith buyers of stolen property.) The defendants had urged application of Swiss law, reasoning that the diamond was in Switzerland when Milella sold it. But the court held that New York law, not Swiss law, governs the dispute over who has good title to the diamond, noting that it was unwilling to allow parties to “immunize” what might otherwise be an unlawful conversion “by, essentially, passing the allegedly converted item through Switzerland.” Id. at 519. See here for more detail on the court’s choice of law discussion. (As a side note, the court did dismiss the plaintiffs’ replevin claims, holding that, while plaintiffs could proceed with conversion claims, replevin claims are viable only where a defendant still actually has the property; here, the diamond’s current possessor is not named in the case.)
Another interesting component of the summary judgment decision involved the court’s ruling on defendants’ attempts to keep certain information (including the identity of the party who bought the diamond at auction) under seal during the course of the litigation. The court was unsympathetic, noting the generally strong public policy behind making litigation documents public, and further noting that Christie’s had not shown it was contractually required to keep the auction purchaser’s name confidential, nor had defendants provided good cause for sealing various documents allegedly containing “proprietary information,” particularly where the documents were over five years old. Id. at 500.
A Trial To Watch
Although this case is not about art, it bears many similarities to high-profile art disputes. For example, a court’s choice of law analysis is often an incredibly important question in art title disputes (see here for a recent case where choice of law was a key question). Likewise, in this case as in many art cases, many years have passed since some of the key events, meaning that witnesses are unavailable and documentary evidence may be incomplete; see here for a discussion of two recent cases involving laches, a defense based on delay. And in the art world, where discretion and confidentiality are often of paramount concern to players in transactions (see here for one recent example), this case serves as a reminder that a court will not automatically shield sensitive information from public disclosure if a dispute erupts into litigation.
Some of the original defendants have since been dismissed from the case; the plaintiffs stipulated to the dismissal of Fontaine on the basis of lack of personal jurisdiction, and just this week, the plaintiffs dropped their claims against Bennett and an affiliated entity. But trial is set to proceed against the Gol parties and Christie’s. The case will be tried before a jury; proposed jury instructions and jury forms foreshadow issues ranging from whether Christie’s acted reasonably and with adequate care in connection with the diamond, to whether the plaintiffs’ claims should be barred by laches (i.e., whether they unreasonably delayed in asserting their rights to the diamond and thereby prejudiced the defendants). We’ll be watching the trial unfold with great interest.
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