June 24, 2010
JEFFREY M. SIMON, PLAINTIFF-RESPONDENT,
WARREN J. TAUB, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-122-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 28, 2010
Judges Graves and Sabatino.
This appeal concerns a protracted dispute between two former brothers-in-law over the ownership and control of a framed oil painting. The full title of the painting, which was created by the British portrait artist Benjamin Marshall (1768- 1835), is "Bembo, Favourite Hunter of Charles Shuttlesworth, Esquire." The painting is otherwise identified at times in the record as "A Horse Named Bembo," or simply as "Bembo." The painting depicts a black horse standing in profile, in the midst of a landscape of open country and beneath a threatening gray-green sky.
The painting was purchased as an investment jointly by plaintiff, Jeffrey M. Simon, and defendant, Warren J. Taub, in 1984 for $16,800. At the time of the purchase, plaintiff was married to defendant's sister. Plaintiff allowed defendant to retain possession of the painting throughout the period of their joint ownership and defendant claims to have spent approximately $4000 over that same period to restore it.
Eventually the brothers-in-law had a falling out. Consequently, in March 2006, plaintiff filed a verified complaint in the Chancery Division, seeking to force a sale of the painting and obtain his one-half financial interest from the sale proceeds. The case was thereafter transferred to the Law Division and plaintiff amended his complaint to seek monetary damages in the amount of one-half the "present value of the painting." Defendant answered, admitting his continued possession of the painting but otherwise denying all other aspects of an investment partnership with plaintiff.
In January 2007 the painting was examined, photographed and valued by a professional art appraiser, Mary Rabbitt. The examination took place at defendant's residence. In her appraisal report, dated January 29, 2007, Rabbitt opined that the painting's fair market value at that time was $46,000.
Rabbitt noted that the subject artwork is one of 281 catalogued paintings by Marshall. According to Rabbitt, Marshall's works between 1798 and 1818 are ranked "with that of the great artists of animal painting and sporting art of the English School." Characterizing the Bembo painting as "a straightforward example of a Ben Marshall painting with a single subject horse," Rabbitt indicated that, by comparison, some of the artist's "more complex" paintings "have sold at auction in the high five figures and into the six figures over the last ten years[.]" Her report listed six comparable sales of Marshall paintings by various auction houses, including Sotheby's and Christie's, for sale prices as high as $58,674.
Rabbitt's appraisal described the condition of the Bembo painting, at the time she inspected it in January 2007, as "very good," with "some evidence of craquelure*fn1 as [is] consistent with [the] age of [the] painting."
After a non-binding arbitration failed to resolve the dispute, both parties moved for summary judgment.
On September 20, 2007, the trial court granted summary judgment to plaintiff, declaring that the parties had an equal ownership interest in the painting. The order provided that defendant, who was then in possession of the painting, either could: (1) list the painting for sale within thirty days with a reputable auction house, and, if the painting were sold at such an auction, evenly divide the proceeds with plaintiff, again with a $4000 credit to defendant for the prior restoration costs; or, alternatively, (2) pay plaintiff one-half of its appraisal value (a net sum of $21,000, factoring in defendant's $4000 prior outlay for restoration costs) and keep the painting.
For reasons that are not divulged to us, defense counsel concedes that he did not tell his client promptly about the September 20, 2007 order. Consequently, defendant failed to list the painting with an auction house by the court's thirty-day deadline.
After the summary judgment in plaintiff's favor was recorded as a lien against defendant, plaintiff obtained a writ of execution for seizure of the painting in February 2008. Thereafter employees of the Hunterdon County Sheriff's Office seized the painting from defendant's residence. At an ensuing Sheriff's sale on April 10, 2008, plaintiff was the highest bidder, obtaining the painting for a below-market sum of $2100. Plaintiff then took possession of the painting, and took it immediately to his home in Connecticut. According to plaintiff's subsequent certification, the painting was hung "on an interior bedroom wall that receives no sunlight," and that the temperature in the room never went below 60 degrees or above 75 degrees Fahrenheit.
After the Sheriff's employees removed the painting from his residence, defendant filed an order to show cause with the trial court. Defendant's application included several requests for relief. In particular, defendant sought to: (1) vacate the sheriff's sale and the monetary judgment entered against him; (2) be granted leave to comply with the court's September 20, 2007 order by either auctioning the painting and sharing the proceeds with plaintiff, or buying out plaintiff's interest; and (3) enjoin plaintiff from taking the painting out of the country.
Upon hearing the order to show cause on September 10, 2008, the trial court vacated the Sheriff's sale. The court also amended its prior September 20, 2007 order, by stating that defendant had the right to possession of the painting "upon payment to [p]laintiff [of] $21,000.00 (plus interest from September 20, 2007) or 1/2 of the [new] appraisal price, less $4000.00, whichever is greater, for his [plaintiff's] share of the painting, within 30 days of the completion of the appraisal."
Various settlement offers were then exchanged. Eventually, defendant, through his counsel, offered on October 9, 2008 to pay plaintiff $31,000 in settlement for the painting. Apparently, the $31,000 figure took into account plaintiff's one-half property interest in the painting, counsel fees plaintiff expended in connection with the Sheriff's sale and in opposing defendant's ensuing order to show cause, and interest.
Plaintiff's counsel responded to this offer in a letter dated October 14, 2008. The letter stated that he had "reviewed your [defendant's] settlement offer of $31,000.00 in the above-referenced matter with my client [plaintiff] and he has agreed to accept it." The letter went on to outline a process for the exchange of releases pursuant to the settlement.
After receiving a signed release from his adversary, defendant's counsel wrote plaintiff's counsel on November 19, 2008, raising, apparently for the first time, a desire by defendant to inspect the painting before the settlement was fully implemented. Specifically, defendant's counsel stated, "Please be advised that before we can turn over the funds to receive the painting, we will need to inspect the painting to insure that it is in the condition it was when it was taken from [defendant's] home."
Plaintiff's counsel responded to defendant's inspection request in a letter dated November 21, 2008. In that letter, which referred to the matter as "settled," plaintiff's counsel asserted that it "does not make sense" for [defendant] to make two trips to plaintiff's residence in Connecticut, the first trip to inspect the painting and then a second trip to take final possession of it. Instead, he suggested that the $31,000 in settlement funds be deposited in escrow in his attorney trust account. Following such a deposit, "[i]f the painting is damaged or is in any way not acceptable, then the $31,000 would be returned to you immediately upon your demand and we would have to proceed back to court to resolve the damage issue." On the other hand, wrote plaintiff's attorney, "[i]f the painting is not damaged, then whoever is inspecting it can take it at that time and once the painting is taken then I would contact you [defendant's counsel] and ask you [for authorization] to release the escrow to my client."
Defendant's counsel responded to this suggestion by requesting that the painting be brought to the Princeton office of plaintiff's counsel for defendant's inspection. Plaintiff's counsel agreed to do so, but insisted that defendant bring with him a certified or bank check for $31,000. The record is unclear as to whether plaintiff ever specifically rejected that condition demanding the simultaneous turnover of a check. In any event, an inspection date was mutually established for January 16, 2009.
Pursuant to these arrangements, defendant personally inspected the painting in opposing counsel's Princeton office on January 16, 2009. Defendant did not bring with him a professional appraiser, and he is not one himself. Defendant was dissatisfied with the painting's condition. According to a certification he later filed with the court, defendant stated that "it was immediately noticeable that the painting was not in the same condition it had been when it was in my possession in 2007." Specifically, defendant claimed that: (1) the painting had "extensive craquelure present," suggesting that "[it] had been stored in excessive temperatures and/or had been mishandled or dropped[;]" (2) the painting "had shifted in the frame," with a "substantial white border visible down the left side[;]" (3) "each of the four corners of the frame [were] separated and cracked[;]" and (4) the "frame [was] now chipped and the white museum board is dented in the rear of the painting." Defendant contended that these flaws showed that the painting's condition had worsened since Rabbitt had inspected it in 2007.
Because of his perception that the painting had been damaged after it had been removed from his premises, defendant refused to take possession of it or tender a check. This prompted plaintiff to contact Rabbitt and ask her to re-examine the painting. Rabbitt immediately came to counsel's office in Princeton later in the afternoon after defendant's inspection. She examined the painting once again, using for comparison her notes and the photographs from her first inspection in 2007.
In her second expert report dated January 23, 2009, Rabbitt commented on each of the areas of alleged damage to the painting identified by defendant. She rejected his claim of increased craquelure, stating that she was "unable to see any difference in the extent or range of craquelure over the two-year timeframe" between January 2007 and January 2009. She further stated that, in her opinion, "the craquelure does not obscure the surface character of the painting." Rabbitt attributed defendant's mistaken perception of increased craquelure to the differences in lighting between defendant's foyer, where the painting had been previously hung without direct natural light, and plaintiff's counsel's conference room, which is illuminated by overhead fluorescent lighting that shone more directly on the artwork.
As to defendant's allegation that the painting had shifted within its frame, Rabbitt detected only a two millimeter increase in the left unpainted edge of the painting. She attributed that slight shift as likely resulting from the process of moving the painting. The expert indicated that the shift could be rectified by having a professional restorer refit the painting to its frame. Rabbitt was unable to confirm from the comparative photographs defendant's claim that the frame had developed cracks in three of its corners. She did note that there were seven or eight "small (approximately [three] to [five] millimeters wide) chips on the surface of the frame[,]" but she could not "conclusively state whether these chips [were] recent or new." She stated that the chips could be repaired by a professional restorer, matching the color of the original gold leaf.
The total costs to repair and re-set the frame, in the manner recommended by Rabbitt, were estimated to run between $300 and $500.
Lastly, Rabbitt did observe an indentation in the back of the painting. She could not verify if that indentation was recent, but opined that "since the mark is on the framing support on the back, and not on the painting itself [there is] no substantive effect on [the painting's] value."
In February 2009, plaintiff filed a motion in aid of litigant's rights, seeking to enforce the settlement terms. After considering defendant's opposition, the trial court entered an order on March 20, 2009 granting the application. The court directed defendant to deliver to plaintiff's counsel the $31,000 in settlement proceeds within thirty days, following which the painting was to be turned over to defendant's possession. The court rejected as moot defendant's cross-motion to reconsider that aspect of the September 10, 2008 order giving plaintiff the exclusive right to sell the painting at auction, subject to a division of the sale proceeds.
In the written statement of reasons accompanying the March 20, 2009 order, the motion judge found that the settlement agreement was valid, and that it was not vitiated by defendants' claim that the painting had been materially damaged since it was removed from his residence. The judge found that defendant had failed to provide sufficient evidential support for his claim of significant damage. After considering Rabbitt's most recent expert report and the record as a whole, the judge concluded that "defendant has provided no proof that the painting had sustained any damage that would be beyond de minimus damage; particularly considering that the total cost to restore the painting to a condition equal to, or possibly better than, the condition of the painting in 2007 would be approximately $300 to $500." The judge ordered defendant to pay the $500 cost of Rabbitt's updated appraisal, a sum which the court noted, in light of the damage to the picture frame costing a comparable sum to repair, "maintains the parties in equipoise."
After defendant failed to pay the $31,000 as directed by the court, plaintiff filed another motion in aid of litigant's rights, seeking to enforce the March 20, 2009 order. By way of relief, plaintiff demanded full title to the painting. While that application by plaintiff was pending in the trial court, defendant filed the instant appeal in May 2009. Defendant also filed with the trial court a cross-motion for a stay pending appeal.
On May 15, 2009, the court resolved the pending applications by issuing an order that gave plaintiff the option to either pay defendant the sum of $35,000 for the painting (taking into account the $31,000 settlement amount, plus the $4000 that defendant had expended in restoring the painting while he possessed it), or, alternatively, sell the painting at a "reputable auction house" and then divide the proceeds of that sale evenly with defendant, after deducting and delivering to defendant the $4000 in restoration costs.
Plaintiff then filed a third motion in aid of litigants rights, contending that the May 15, 2009 order had erred in assuming that plaintiff, rather than defendant, wished to buy out the other party's interest in the painting. This application led the trial court to issue one last order on July 31, 2009, vacating the May 15, 2009 order and reaffirming the settlement.
In particular, the July 31, 2009 order grants final judgment "in favor of plaintiff and against defendant in the amount of $30,500 unless plaintiff repairs the damage to the frame, in which event the settlement shall be in the amount of $31,000 plus costs." The order also grants plaintiff leave to satisfy the judgment "by offering the painting . . . for sale with a reputable auction house provided reasonable notice of the time and place of the auction of the painting is given to defendant, with the proceeds of the auction to go to plaintiff for the first $31,000 less $500 for repairs unless plaintiff has the repairs completed before the sale which then shall not be deducted." In addition, "[t]he next $4,000 received for the painting shall go to defendant and any balance received for the painting shall be divided equally between the parties."
Defendant's notice of appeal, as amended, seeks review of the trial court's orders dated September 10, 2008, March 20, 2009, and July 31, 2009. Plaintiff has not filed a cross-appeal. According to plaintiff's responding brief, the painting remains in plaintiff's possession. It has not been sold "due to a[n intervening] change in market conditions." In his brief on appeal, defendant argues that the trial court abused its discretion in denying reconsideration of the September 10, 2008 order, because the court failed to provide him--rather than plaintiff--with the option of auctioning the painting and splitting the proceeds, as had been provided for in its initial September 20, 2007 summary judgment order. Defendant also contends that the trial court misapplied contract law in holding that the damage to the painting after it was taken from defendant was merely de minimus and insufficient to justify defendant's refusal to purchase the painting, as is, for the $31,000 settlement amount. Additionally, defendant contends that the trial court abused its discretion in adopting Rabbitt's expert opinions without conducting a plenary hearing on the extent of the post-removal damage to the painting. Finally, defendant argues that the trial court lacked jurisdiction to enter the July 31, 2009 order because an appeal had already been filed.
Having thoroughly considered defendant's arguments in light of the record and the applicable law, we conclude that they lack sufficient merit to warrant discussion in this written opinion, see Rule 2:11-3(e)(1)(E), except for one modification that we shall discuss presently. Only a few comments are in order.
We agree with the trial court that the terms of the parties' settlement that they negotiated in the fall of 2008 are valid and properly enforceable. See Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (noting that, as a matter of public policy, settlement agreements are enforced, absent fraud or other compelling circumstances). We reject defendant's claim that the settlement agreement can or should be fairly construed as one in which defendant would have an implicit right to refuse to accept the painting based upon matters of personal taste or satisfaction. Cf. Medivox Prods., Inc. v. Hoffmann-LaRoche, Inc., 107 N.J. Super. 47, 58-59 (Law Div. 1969) (requiring plain language within a contract to create a personal satisfaction proviso). No such subjective condition was expressed in the series of correspondence between counsel leading to the October 14, 2008 letter from plaintiff's counsel accepting "the final settlement offer of $31,000." The correspondence of counsel that followed the October 14, 2008 acceptance did not result in a mutually-assented-to condition of defendant's personal satisfaction. Instead, the legal significance or insignificance of that personal satisfaction was left, as the November 21, 2008 correspondence from plaintiff's attorney stated, up to the court's determination "to resolve the damage issue." In sum, there was no meeting of the minds achieved on this point, and the trial court reasonably rejected defendant's argument.
Moreover, we concur with the trial court that the alleged damage to the painting claimed by defendant was either nonexistent or de minimus, in light of the detailed second expert report of Rabbitt, which was not rebutted by any competing expert retained by defendant. Her report substantiated the absence of any proven material change in the craquelure, as well as the minor and easily-corrected nature of the imperfections detected in the frame. The court was not obligated to consume the time and expense of a plenary hearing in these circumstances. The law does not require a remedy for what are inconsequential or de minimus concerns.
Further, we discern no equitable or legal necessity to grant to defendant, rather than to plaintiff, the right to place the painting for sale with a reputable auction house, particularly in light of defendant's prior non-compliance with court orders and the events that led to the settlement agreement.
Lastly, we detect no improper assertion of jurisdiction by the trial court after defendant filed his notice of appeal in March 2009. The ensuing orders issued by the trial court in May and July of 2009 were in response to what were, in essence, applications for enforcement, over which the trial court retained jurisdiction. See R. 2:9-1(a).
We only require one modification to the final order of July 31, 2009, in an effort to maintain fidelity to the spirit of the parties' settlement, and also to achieve equity and clarity. Paragraph 3 of the order, as it is presently worded, provides plaintiff with a right to collect a monetary judgment from defendant, but it omits any reference to a corresponding right of defendant to receive possession and title to the painting if he pays plaintiff that judgment amount. We suspect that the omission was merely an oversight.
An amended judgment must be issued on remand, giving defendant the right to pay plaintiff the settlement amount within thirty days and then requiring plaintiff, in turn, to convey the painting to defendant within fourteen days after such payment is made in full. Otherwise it would be an unfair windfall, and also inconsistent with the structure and patent rationale of the settlement agreement, to allow plaintiff to retain both the payment of the settlement monies by defendant and the painting itself.
In addition, the terms of paragraph 4 of the order, giving plaintiff the option to list the painting for sale at an auction house should likewise be revised, so that the auction process is not pursued unless and until defendant fails to remit the settlement funds within the prescribed period. Furthermore, the trial court should revise paragraph 4 so that, if the auction does go forward, an equitable allocation of the sale proceeds is achieved, in a manner consistent with this opinion, fairly taking into account the counsel fees and other reasonable expenses incurred by the respective parties relating to the painting and this litigation.
Affirmed, as modified, and remanded for the prompt entry of a corrected final order by the trial court consistent with this opinion.