Flaster Greenberg successfully defended our client, an international freight forwarder and logistics provider based in London, England, that specializes in fine art, designer services, and antiques, in a recent lawsuit brought by a US insurance provider in an attempt to recoup its insurance payout to its New York-based insured.
Backstory:
Though our UK-based client conducted no business in New York and had no business contacts in New York, it nonetheless found itself sued there in regard to the loss of a painting of extraordinary value following transportation of the painting from an auction house in London, England, to a gallery in New York, prompting our client to engage American counsel to defend itself.
During initial due diligence, our attorneys discovered that the artwork wasn’t in fact lost in transit; rather, it had apparently been mistakenly thrown out by the New York gallery staff after they received it.
Through our diligent and careful representation, we were able to protect our client from liability and shortcut the litigation against it by taking prompt steps to have the lawsuit dismissed at a very early stage of the litigation.
Human errors are sometimes unavoidable; however, there are serious ramifications associated with such a disastrous mistake as throwing away a painting of extraordinary value. Though our client had done nothing wrong in regard to the matter, it was required to defend itself against the costly transatlantic lawsuit that arose from the mistaken destruction of the painting until we were able to have the matter dismissed. Our strategy for this case drew upon American legal and equitable transportation and contractual law concepts applicable to the transportation of fine art, as well as effective and creative arguments focused on the facts in play.
This demonstrates how crucial it is to call upon attorneys who are well experienced in the law associated with the transportation of Fine Art to handle such matters.
How Could Such A Mistake Happen?
The New York-based art gallery purchased the painting in question as well as a second painting at an auction in England. Both paintings were to be shipped in the same shipping crate to the gallery in New York.
The allegations against our client were that when they performed the necessary packing services in England, they allegedly crated the painting improperly and failed to properly notate that there were two paintings in the crate on the shipping paperwork. Therefore, the New York gallery staff, thinking that there was only one painting in the shipping crate (and relying upon a “pkg” notation on the paperwork attached to that crate), allegedly destroyed the crate, because they were unaware that the painting in question was also inside, after unloading the other painting.
When the gallery staff discovered that they had inadvertently destroyed the painting, they filed an insurance claim under the gallery’s cargo insurance policy. The insurer paid them for the loss, in exchange for an assignment of rights that would allow them to then sue the party whose negligence actually caused this loss, to recover the money they had paid out for the loss. The insurer then proceeded to file a subrogation lawsuit against our client seeking to prove that the alleged negligence of our client was the cause of the loss, and thus that our client was responsible for repaying the insurer for the payment it issued to the gallery, its insured.
How Our Philadelphia Art Law/ Transportation Attorneys Prevailed
Relying upon our significant experience in the areas of transportation, fine art, and insurance coverage, our attorneys immediately moved to dismiss the insurer’s lawsuit for lack of contractual privity and lack of jurisdiction. (“Contractual privity” is a common law principle that says that a contract cannot discuss rights or impose obligations upon anyone who is not a party to that contract, and the phrase “lack of jurisdiction” means the court does not have the power to act in a certain way or provide certain types of help.)
In this case, the shipping documentation demonstrated that the New York gallery actually had no direct role in shipping the painting that it inadvertently destroyed, nor did it have any direct dealings with our client. Instead, the London-based auction house that had shipped the painting engaged a UK-based logistics company to facilitate the shipment. A representative of the UK logistics company then engaged our client. International carriage of the painting was then performed by a non-party air carrier and local delivery was effectuated by a separate domestic freight forwarder and domestic motor carrier. This means that our freight-carrier client had no direct contact with anyone in New York as part of the shipment of the painting.
Additionally, because equities are often just as important as the black-letter law, we pointed out that the New York art gallery’s insurer was only suing our client – a company its insured had no direct dealings with whatsoever - in an effort to avoid limited liability and/or forum-selection provisions that the gallery had expressly agreed to in its transportation contract with the auction house. Therefore, we successfully argued that it would be improper and unjust for the plaintiff insurer to be permitted to go outside the chain of contractual privity and file a tort lawsuit in New York against our client that did not have any presence in the state.
We successfully argued to the Court that were it to allow the insurer to employ this tactic, the insurer would not only be allowed to sidestep the express contract provisions agreed to by its insured for the shipment; but it would also deprive our client of the benefit of the separate contractual terms it bargained for with the international logistics company that mandated that any lawsuit be filed in England.
Ultimate Outcome:
After full briefing and oral argument, the Judge agreed with the arguments our attorneys put forth on behalf of our client, found in favor of our client, and dismissed the lawsuit.
About The Team Leader- Christopher Merrick:
Christopher Merrick led the Flaster Greenberg team in this case. He is a shareholder in Flaster Greenberg’s Litigation Department, and a national leader in commercial transportation and supply chain law. Chris handles all stages of transportation and supply chain litigation and represents corporate clients acting as both plaintiffs and defendants. He also assists clients with the development and implementation of strategies for avoiding or minimizing the risk of litigation. Chris’s litigation experience is diverse, but he focuses his practice on representing the interests of rail carriers, motor carriers, freight forwarders, intermediaries, warehouses, logistics companies, and ocean carriers in a wide variety of commercial transportation contexts. He also represents private and corporate clients in complex matters involving the transportation and storage of fine art and antiquities.
