11-461-cv Marchig v. Christie’s Incorporated
**UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT** 

**SUMMARY ORDER**

**R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT**  **. C**  **ITATION TO A SUMMARY ORDER FILED ON OR AFTER J** **ANUARY 1,**  **2007, IS PERMITTED AND IS GOVERNED BY**  **F EDERAL**  **R ULE OF**  **A PPELLATE**  **P ROCEDURE**  **32.1 AND THIS COURT**  **’ S**  **L OCAL**  **R ULE**  **32.1.1. W** **HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT ,**  **A PARTY MUST CITE EITHER THE F** **EDERAL A** **PPENDIX OR AN ELECTRONIC DATABASE**  **( WITH THE NOTATION**  **“ SUMMARY ORDER** **”). A**  **PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL**  **.** At a stated term of the United States Court of Appeals 1 for the Second Circuit, held at the Daniel Patrick Moynihan 2 United States Courthouse, 500 Pearl Street, in the City of 3 New York, on the 12 thday of July, two thousand and eleven. 4 5 PRESENT: RICHARD C. WESLEY, 6 DEBRA ANN LIVINGSTON, 7 GERARD E. LYNCH, 8 Circuit Judges

. 9 10 11 12 JEANNE MARCHIG and THE MARCHIG 13 ANIMAL WELFARE TRUST, 14 15 Plaintiffs-Appellants , 16 17 -v.- 11-461-cv 18 19 CHRISTIE’S INCORPORATED, 20 21 Defendant-Appellee. 22 23 24 25FOR APPELLANTS: RICHARD A. ALTMAN, Law Office of Richard 1 A. Altman, New York, NY. 2 3 FOR APPELLEE: JOSEPH A. PATELLA, Andrews Kurth LLP, New 4 York, NY (Thomas R. Kline & L. Eden 5 Burgess, Andrews Kurth LLP, Washington, 6 DC, on the brief ). 7 8 Appeal from the United States District Court for the 9 Southern District of New York (Koeltl, J. ). 10 11 **UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED** 12

**AND DECREED**that the judgment of the district court be 13

**AFFIRMED**in part and **REVERSED and REMANDED**in part. 14 Appellants appeal from a judgment of the United States 15 District Court for the Southern District of New York 16 (Koeltl, J. ), which dismissed all claims as time-barred. We 17 assume the parties’ familiarity with the underlying facts, 18 the procedural history, and the issues presented for review. 19 Appellant Jeanne Marchig, a citizen of Sweden and 20 resident of Switzerland, consigned a framed drawing to 21 Christie’s, a New York auction house, in 1997. 1She 22 informed Christie’s at the time of consignment of her belief 23 that the drawing was by a fifteenth-century Italian artist 24

1 The following facts are drawn from allegations inMarchig’s complaint, which we accept as true at the motionto-dismiss stage. E.g. , Matson v. Bd. of Educ. , 631 F.3d 57, 63 (2d Cir. 2011). 2who had taught Michaelangelo. 2Christie’s expert concluded 1 it was a nineteenth-century German work. Informing Marchig 2 to that effect, the expert advised that the frame be changed 3 to one more appropriate to the supposed period of the work. 4 Marchig accepted the assessment, but did not communicate 5 anything regarding the frame. Christie’s sold the drawing 6 in January 1998 for $21,850. After Christie’s commission 7 was paid, the Marchig Animal Welfare Trust (the “Trust”), of 8 which Marchig is trustee, received the balance of the 9 proceeds. 10 In July 2009, Christie’s contacted Marchig to inform 11 her that the drawing might in fact be the work of Leonardo 12 da Vinci. Marchig now alleges that the true value of the 13 work is more than $150 million. 14 In May 2010, Marchig and the Trust 3sued Christie’s for 15 breach of fiduciary duty, breach of warranty, negligence and 16 negligent misrepresentation. The complaint alleged federal 17 jurisdiction over these state claims in light of the diverse 18 citizenship of the parties and substantial sum of money 19

2Marchig’s late husband, a well-known art collector, had shared that view.

3 Christie’s argued below and maintains on appeal that the Trust is not a true party in interest. The district court did not rule on this issue. 3involved. In response to Christie’s motion to dismiss, 1 Marchig asked for and was granted leave to file an amended 2 complaint. This new complaint added a fifth cause of action 3 for replevin and conversion of the frame in which Marchig 4 sent the drawing to Christie’s. The district court then 5 granted a renewed motion to dismiss, holding that all claims 6 were time-barred and not eligible for any form of tolling. 7 Marchig timely appealed to this Court. 8 Marchig argues that her claims are tolled due to the 9 existence of a fiduciary relationship between herself and 10 Christie’s. 4It is important to distinguish between the 11 existence of a fiduciary relationship with respect to a 12 particular matter on the one hand, and the persistence of a 13 relationship between two parties that tolls the accrual of a 14 claim with regard to those matters on the other. Under New 15 York law, which governs this case, consignees are 16 fiduciaries. Cristallina S.A. v. Christie, Manson & Woods 17 Int’l, Inc. , 117 A.D.2d 284, 292 (1st Dep’t 1986). 18

4 “We review de novo a district court’s grant of a motion to dismiss, accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiff’s favor.” Shomo v. City of N.Y. , 579 F.3d 176, 183 (2d Cir. 2009) (internal quotation marks omitted). Likewise, a district court’s application of a statute of limitations is reviewed de novo

. E.g. , Somoza v. N.Y.C. Dep’t of Educ. , 538 F.3d 106, 112 (2d Cir. 2008). 4Consignees therefore have a duty to conduct the assessment 1 and sale of individual items or sets of items in accordance 2 with the obligations of a fiduciary. 3 Claims for breach of fiduciary duty do not accrue 4 until the fiduciary relationship is repudiated or otherwise 5 terminated. E.g. , Golden Pac. Bancorp v. FDIC , 273 F.3d 6 509, 518-19 (2d Cir. 2001) (collecting New York cases). 7 However, in a consignor-consignee transaction, the fiduciary 8 relationship terminates no later than the sale of the item 9 in question. Here, Marchig did not file suit until more 10 than twelve years after the sale. Her claim for breach of 11 fiduciary duty was by then time-barred, and the district 12 court was correct to so hold. 13 The “continuing representation” doctrine is not 14 applicable, since that doctrine is generally limited to a 15 course of representation concerning a specific matter. 16 E.g. , Shumsky v. Eisenstein , 96 N.Y.2d 164, 168 (2001). 17 Here, Christie’s ceased to represent Marchig’s interests 18 with respect to this transaction no later than the time of 19 sale and the transferral to her of sale proceeds minus 20 commission. 21 Absent allegations of fraud, a claim for negligent 22

5misrepresentation accrues at the time of injury and is not 1 subject to any discovery rule. See Von Hoffmann v. 2 Prudential Ins. Co. of Am. , 202 F. Supp. 2d 252, 263-64 3 (S.D.N.Y. 2002) (applying a two-year limitations period 4 running from discovery of the negligent misrepresentation 5 where the claim is “based on the same facts as a claim for 6 fraud”); see also Fandy Corp. v. Lung-Fong Chen , 262 A.D.2d 7 352, 353 (2d Dep’t 1999) (noting that a negligent 8 misrepresentation claim “accrues on the date of the alleged 9 misrepresentation which is relied upon by the plaintiff”). 10 Marchig alleges no fraud on Christie’s part. Accordingly, 11 the claim for negligent misrepresentation is also time12 barred. On these and the remaining claims we affirm the 13 district court’s dismissal for substantially the reasons 14 stated in its order, with one exception. 15 Dismissal was improper as to Marchig’s claim of 16 replevin and conversion, which was added in the amended 17 complaint. While all Marchig’s other claims accrued no 18 later than the time of sale, her claim for conversion is 19 governed by the demand-and-refusal rule. Under this rule, 20 the claim runs not from the time of alleged conversion, but 21 rather from the time “the true owner makes demand for return 22

6of the chattel and the person in possession of the chattel 1 refuses to return it.” Solomon R. Guggenheim Found. v. 2 Lubell , 77 N.Y.2d 311, 317-18 (1991). Accordingly, 3 Marchig’s claim for conversion ran from the time her demand 4 was refused. Since she made that demand in 2010, her claim 5 is not time-barred. 6 Under the demand-and-refusal rule, however, the owner 7 may not unreasonably delay before demanding return of the 8 item sought. Id. at 319. Judge Koeltl found that “[i]t is 9 clear that Marchig has known of [Christie’s] possession 10 since [1997], because the plaintiffs allege that she caused 11 the frame to be delivered to the defendant.” Here, however, 12 it was incorrect for the district court to dismiss the claim 13 as time-barred. On this record it is unclear whether 14 Marchig knew at the time of sale that the drawing was not 15 sold in the frame in which she had transferred it to 16 Christie’s. While Christie’s assessor did express a desire 17 to sell the drawing in a new frame, the record does not 18 reflect that Marchig approved of this plan or otherwise knew 19 that a new frame would be used. If she did not, her 20 knowledge that she transferred the frame to Christie’s 21 possession is irrelevant. It may not have been clear to her 22

7until 2009 that the painting was, in fact, sold in a 1 different frame than the one she provided and therefore that 2 her frame remained in Christie’s possession. 5 3 Marchig may well have delayed unreasonably before 4 demanding the frame be returned, but under these 5 circumstances the district court should not have so found on 6 a motion to dismiss. We therefore reverse the dismissal as 7 to the claim of replevin and remand for further proceedings 8 consistent with this opinion. 9 For the foregoing reasons, the judgment of the district 10 court is hereby **AFFIRMED**in part and **REVERSED and REMANDED** 11

5 Christie’s asserts that in light of the dismissal of the other claims, Marchig fails to establish a sufficient amount-in-controversy for the purposes of diversity jurisdiction under 28 U.S.C. § 1332(a)(2). It is true that the value of the frame is not alleged in Marchig’s amended complaint or otherwise reflected in the record. However, under the affirmative defense rule, “we measure the amount in controversy as of the date of the complaint. Once jurisdiction has attached, it cannot be ousted by subsequent events.” Scherer v. Equitable Life Assurance Soc’y of U.S. , 347 F.3d 394, 397 (2d Cir. 2003). A defendant cannot retroactively remove jurisdiction over the complaint by the assertion of affirmative defenses, e.g. those based on a statute of limitations. Id. at 397-98; see also Zacharia v. Harbor Island Spa, Inc. , 684 F.2d 199, 202 (2d Cir. 1982) (“The jurisdictional determination is to be made on the basis of the plaintiff’s allegations, not on a decision on the merits.”). As a result, the district court continues to hold federal diversity jurisdiction over this case on remand despite its proper dismissal of the non-replevin claims. 8in part. 1
2 3 FOR THE COURT: 4 Catherine O’Hagan Wolfe, Clerk 5 6 7 8

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