MDC S.p.A v. Shuman

Background

MDC S.p.A., an international art gallery based in Milan with separately incorporated branches in several countries, sued David Shuman over eleven artworks allegedly purchased between February 2015 and August 2018. MDC claimed that $798,133 remained unpaid. Shuman, a private investor and experienced modern-art collector, argued that he had not purchased nine of the works and had overpaid for LOW-629 and LOW-630. He sought a refund and asserted counterclaims, including unjust enrichment and a claim concerning a painting called PEI-550.

The dispute centered on Roberto Moiraghi, the former director of MDC’s London gallery and Shuman’s main contact. The court found that Moiraghi created invoices for works that Shuman had not agreed to purchase, including so-called “aspirational” invoices and invoices used to let the gallery acquire title to works before an eventual sale. The invoices were generally not sent to Shuman when created, and Shuman did not sign documents agreeing to purchase the disputed works.

Governing law and late counterclaims

The court applied New York law. It concluded that the United Nations Convention on Contracts for the International Sale of Goods did not apply because Shuman bought the art for personal use and MDC knew that. The court also held that the four-year statute of limitations for sales of goods applied and that there was no basis to extend the limitations period because of Shuman’s conduct or a continuing violation theory.

Shuman attempted shortly before trial to assert additional counterclaims. The court treated that filing as a request to amend his pleadings and denied leave to amend because the request came on the eve of trial, after discovery had closed, and would prejudice MDC. The court also found that the new claims had not been tried with MDC’s express or implied consent and would not consider them.

The disputed paintings

For URA-524, the court found that Shuman never agreed to purchase the painting and rejected his late claim that he had paid $26,000 toward it. MDC therefore could not recover for that work.

For UKL-624 and URA-523, the court found that Shuman had not agreed to purchase the paintings, even though MDC’s records showed that they had been delivered to his storage. Because the paintings remained in Shuman’s custody and he credibly testified that he did not want them, the court ordered him to return them to MDC within fourteen days.

For LOW-622, URA-536, and URA-537, the court found no agreement by Shuman to purchase the works. It also held that any oral agreement would have been unenforceable under the statute of frauds, which generally requires a signed writing for a sale of goods priced at $500 or more, subject to stated exceptions.

For LOW-620, LOW-629, and LOW-630, the court found that Shuman had not agreed to buy LOW-620, but had purchased LOW-629 and LOW-630. MDC’s records showed partial payments of $165,000 toward LOW-629’s $200,000 price and $142,150 toward LOW-630’s $200,000 price. The court rejected Shuman’s claim that he had fully paid for those two paintings and awarded MDC $35,000 for LOW-629 and $57,850 for LOW-630, with interest beginning on each painting’s delivery date.

The court also found that MDC had been unjustly enriched by crediting $80,000 and $38,717 of Shuman’s payments toward LOW-620, a painting he did not agree to purchase and that remained with the gallery. The court treated the pleadings as amended to conform to the evidence and awarded Shuman a refund of those amounts, plus interest.

For UKL-637 and UKL-638, the court found that Moiraghi created invoices to help MDC acquire title to the works and that Shuman never agreed to purchase them. MDC therefore had no breach-of-contract claim for those paintings. The court further held that any oral agreement would have been barred by the statute of frauds.

Other claims and judgment

The court dismissed Shuman’s counterclaim concerning PEI-550 because the painting had been paid for and delivered, and Shuman offered no evidence of harm from the late delivery. The court dismissed MDC’s abandoned request for storage costs. It denied both parties’ requests for attorney’s fees under the usual rule that each side pays its own legal fees.

Judge Colleen McMahon entered judgment for MDC for $51,543.97, including principal and prejudgment interest for LOW-629, and $86,036.42, including principal and prejudgment interest for LOW-630. She entered judgment for Shuman totaling $151,086.15, including principal and prejudgment interest for the payments credited to LOW-620. After setting off the awards, MDC was ordered to pay Shuman $13,505.76 as of June 30, 2021. The court otherwise dismissed MDC’s claims, ordered the return of UKL-624 and URA-523, denied Shuman’s late counterclaims, directed each side to bear its own costs, and closed the case.