Su v. Sotheby's Inc.

Background

Wei Su and Hai Juan Wang, whom the opinion identifies as Su’s agent, and Yeh Yao Hwang disputed ownership of an ancient Chinese ritual wine vessel. Su, acting through Wang, consigned the vessel to Sotheby’s for auction in August 2014. After Yeh contacted Sotheby’s and claimed an ownership interest, Sotheby’s withdrew the vessel from auction and retained it while the ownership dispute was addressed.

Su later sued Sotheby’s for breach of contract and recovery of the vessel. Sotheby’s filed an interpleader claim against Su and Yeh so their competing ownership claims could be resolved. Sotheby’s was later discharged as a disinterested stakeholder, but continued holding the vessel for safekeeping. Yeh eventually answered, asserted a conversion claim against Su, and sought a declaration that he co-owned the vessel.

According to Yeh, a Chinese court determined in 2007 that he and Zhang Shenbao were co-owners. Su claimed that he bought the vessel from Zhang in good faith in 2007 without knowing about Yeh’s interest. Su moved for summary judgment, arguing that Yeh’s conversion claim was barred by New York’s three-year statute of limitations and that no material factual dispute existed about Yeh’s equitable-estoppel argument.

Statute of Limitations

Because the case was based on diversity jurisdiction, the court applied New York’s choice-of-law rules and statutes of limitations. New York generally gives a plaintiff three years to bring a conversion claim, measured from the conversion. When a good-faith purchaser is involved, however, the period runs from the true owner’s demand for return of the property and the purchaser’s refusal.

The parties disputed whether Su was a good-faith purchaser. If he was, the claim would ordinarily have accrued in 2014, when Sotheby’s told Su about Yeh’s ownership claim and Su rejected it. If he was not, the claim would ordinarily have accrued in 2007, when Su purchased the vessel. Yeh filed his conversion claim on May 24, 2019, which was outside the three-year period under either of those scenarios. The court rejected, for purposes of summary judgment, the argument that the record established a single limitations date that ended the case because factual disputes remained about equitable estoppel.

Equitable Estoppel and Factual Disputes

Equitable estoppel can prevent a defendant from relying on a statute of limitations when the defendant’s affirmative wrongdoing caused the delay in filing. The plaintiff must identify particular acts that prevented a timely lawsuit and must bring the action within a reasonable time after the circumstances supporting estoppel ended.

The court found factual disputes about whether Su and Wang affirmatively concealed information from Yeh. The alleged conduct included transporting the vessel between Hong Kong and Shanghai in connection with customs forms, using a possibly questionable statement attributed to Zhang as evidence of Su’s ownership, and working with Chongyuan Art Auction Company in an alleged concealment scheme. The court did not decide that these allegations were proved; it held that the evidence could support Yeh’s position at trial.

The court also identified disputes about whether Su prevented Sotheby’s from giving Yeh his identity, failed to include Yeh in a 2015 Chinese quiet-title action, failed to tell Sotheby’s about that action, omitted Yeh from Su’s 2017 lawsuit, and failed to respond to a 2018 email from Yeh. The court stated that a trial was needed to determine whether these events constituted affirmative concealment.

There were also factual disputes about due diligence. Su argued that any concealment ended in 2014 when Yeh learned that the consignor appeared to be Su. Yeh argued that he still lacked contact information, did not know Wang’s role, and believed Su might have been acting for Zhang. Yeh said he learned the parties’ identities and roles in March 2019, then quickly retained counsel and filed his claim. The court held that the dispute over what Yeh knew and when made summary judgment improper.

Other Arguments and Disposition

The court rejected Su’s arguments that Yeh had failed to plead enough facts about equitable estoppel, had abandoned that defense by not responding to an earlier argument, or had admitted too many facts by submitting an inadequate statement under the court’s local summary-judgment rules. The court excused the deficiencies because Yeh’s supporting evidence was cited elsewhere in his filings, while warning counsel that compliance with the rules was required.

The court did not rely on the substance of a declaration from Yeh’s attorney, Hugh H. Mo, in deciding that factual disputes required denial of summary judgment. It therefore denied Su’s motion to strike that declaration as moot.

The court denied Su’s motion for summary judgment. It directed the clerk to terminate the motion and ordered the parties to attend a telephone conference to discuss scheduling a trial.