Manus v. Pincione

Background

Ninotchka Manus sued Max Pincione over a platinum ring with a pear-shaped emerald. She alleged that she had purchased the ring from Pincione at Harry Winston, Fifth Avenue, entrusted it to him to sell, and that he instead converted it for himself. She sought return of the ring or damages for its value. Pincione removed the case to federal court and filed counterclaims alleging fraud and breach of contract. He alleged that he had made loans to Manus, that she had entrusted the ring and a matching platinum necklace to him to cover those loans, and that she had later taken the necklace and refused to repay him.

The court’s September 15, 2023 case-management order and January 10, 2024 amended order stated that neither party could sell the jewelry in that party’s possession until the case was resolved. At the time, the parties’ lawyers represented that Manus possessed the necklace and Pincione possessed the ring. Manus later disclosed through new counsel that she had sold the necklace before the lawsuit began. Pincione then sold the ring on July 29, 2024, for $546,000. During later proceedings, the court also warned that it would consider further disbursement of sale proceeds sanctionable.

Sanctions and contempt

The court ordered Manus, Pincione, and Pincione’s counsel to explain why they should not be held in civil contempt or sanctioned under Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, and the court’s inherent authority. After written submissions, sworn affidavits, and a January 30, 2025 hearing, the court concluded that the parties had received notice and an opportunity to respond.

The court declined to sanction Manus. It found no clear and convincing evidence that she personally misrepresented her possession of the necklace or acted in bad faith. The court also declined to sanction Pincione’s counsel, finding that counsel’s failure to timely file documents was inadvertent, although the court admonished counsel to comply with deadlines in the future.

The court found Pincione in contempt. It concluded that the no-sale order was clear, that Pincione admitted selling the ring while the order was in effect, and that he did not seek court permission before concluding that the order no longer applied. The court also found that he disregarded the warning against disbursing sale proceeds, including by making a $3,600 disbursement on December 13, 2024, and by transferring $16,594.53 on December 12, 2024.

The court found clear and convincing evidence of bad faith. It relied on Pincione’s testimony that he sold the ring to secure funds for debts and personal affairs, his spending of sale proceeds on items including a computer and a hotel charge, and the fact that no ruling had determined that he was entitled to money from Manus. The court also emphasized that selling the ring prevented Manus from obtaining the specific relief she sought—return of the ring—if she ultimately prevailed.

Sanctions imposed

As a compensatory and coercive contempt sanction, the court ordered Pincione to pay Manus’s counsel’s reasonable fees and costs for litigating the order-to-show-cause proceeding, the earlier emergency restraining-order application, and the preliminary-injunction motion. The court directed Pincione not to disburse the $9,643 that he admitted remained from the ring sale during the rest of the litigation.

As a discovery sanction under Rule 37, the court permitted Manus to seek an adverse-inference instruction in later pretrial proceedings. Such an instruction could allow the factfinder to draw a negative conclusion from Pincione’s knowing sale of the ring, but the court stated that it would determine the appropriate instruction after further briefing. The court also ordered Pincione to provide Manus’s counsel with unredacted copies of the bank statements discussed at the hearing and reserved the possibility of additional sanctions.

Discovery disputes and final orders

The court granted Manus’s motion to quash the subpoenas directed to her former lawyer, Rick Stone, because the requested information concerned conduct and representations that had already been addressed in the sanctions proceeding and was therefore moot. The court also granted Pincione’s request to extend expert discovery so he could retain a handwriting expert, consistent with the parties’ proposed case-management plan. The court warned that further extensions were unlikely absent extraordinary circumstances.

The court terminated Manus’s preliminary-injunction motion as moot because the ring had been sold, most of the sale proceeds had been disbursed, and the remaining $9,643 had been ordered preserved. The court required Manus’s counsel to submit a fee application by March 10, 2025, set deadlines for Pincione’s response and Manus’s reply, and directed the clerk to terminate the preliminary-injunction motion and the motion to quash from the docket.