Faggionato v. Lerner
500 F. Supp. 2d 237, 2007 U.S. Dist. LEXIS 23443, 2007 WL 959102 (2007)
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Rule of Law:
Under French law, an intermediary who is not the owner of the property being sold, and who does not have a legally recognized agency relationship with the owner, lacks standing to sue a prospective buyer for breach of an alleged sales contract.
Facts:
- Randolph D. Lerner, through his New York art dealer Curt Marcus, expressed interest in purchasing a Claude Monet haystack painting.
- Anne Faggionato, a UK art dealer, located such a painting in France, which was owned by an undisclosed family and not yet listed in the comprehensive Wildenstein catalogue raisonné.
- Over several months, Faggionato and Marcus exchanged emails regarding the painting's authenticity, provenance, and condition, but Faggionato did not disclose the owner's identity.
- Lerner's accountant executed a 'letter of intent' stating Lerner was 'prepared to purchase' the painting for $13 million, 'subject to his viewing and approval, and the receipt of customary documentation.'
- On January 10, 2006, Lerner inspected the painting in Paris.
- Faggionato alleges that after the viewing, Lerner orally stated, 'I have made my decision. I am buying the painting.'
- Following the alleged oral agreement, Lerner and his representatives continued to request additional documentation, including the owner's identity and a formal bill of sale, expressing concern about 'transparency.'
- On February 6, 2006, Marcus informed Faggionato that Lerner had decided not to purchase the painting because his requests for documentation had not been met.
Procedural Posture:
- Anne Faggionato sued Randolph D. Lerner in the United States District Court for the Southern District of New York.
- The complaint alleged breach of contract and sought specific performance, damages for lost profit and commissions, and damages for loss of reputation.
- Lerner filed a motion to dismiss pursuant to FRCP 12(b)(1) for lack of subject matter jurisdiction (due to lack of standing) and 12(b)(6) for failure to state a claim.
- In her response to the motion, Faggionato withdrew her claim for specific performance.
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Issue:
Does an art dealer, who is not the owner of a painting and has not demonstrated a recognized agency relationship with the owner under French law, have legal standing to sue a prospective buyer for breach of an alleged sales contract for that painting?
Opinions:
Majority - Preska, District Judge
No, an art dealer who is not the owner of a painting and does not have a legally recognized agency relationship lacks standing to sue for breach of an alleged sales contract. The court first determined that French law applies using New York's 'center of gravity' choice-of-law test, as the most significant contacts (location of the painting, viewing, and negotiations) were in France. Under French law, a plaintiff must be a proper party to a contract to have standing to sue for its breach. The court analyzed several potential legal roles Faggionato could have occupied and found she met none of them. She was not a proper agent ('mandat') because she failed to prove she had been granted powers by the owner and because the owner's identity (the principal) was not disclosed to Lerner. She could not be a strawman ('préte-nom') because, among other reasons, she did not even know the owner's identity at the time of the alleged agreement and such a status cannot exist before a contract is formed. Because Faggionato was neither the owner nor a valid agent or intermediary with contractual rights under French law, she was not a proper party to the alleged contract and therefore lacks standing to bring the suit.
Analysis:
This case emphasizes the critical role of choice-of-law analysis in international commercial litigation, demonstrating that the applicable substantive law can be dispositive on threshold issues like standing. It establishes that an intermediary's ability to enforce a contract hinges on their specific legal status under the governing law, rather than their mere involvement in negotiations. For future cases, this decision serves as a strong precedent that intermediaries, such as agents or brokers, must have clearly defined and legally recognized authority to act on behalf of a principal, especially when the principal is undisclosed. The court's refusal to entertain a new legal theory raised late in the proceedings also reinforces the importance of thorough and accurate initial pleadings.
