Skinner Inc. v. Lucheng Li

1

SKINNER, INC., Plaintiff, v. LUCHENG LI, MAOLIANG FANG, Defendants.

Civil Action No. 20-11402-MPK^[1]

United States District Court, D. Massachusetts

March 2, 2023

MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (#85), DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (#88), PLAINTIFF'S MOTION TO STRIKE MAOLING FANG'S ERRATA SHEET (#101), AND DEFENDANTS' MOTION TO STRIKE PLAINTIFF'S MOTION TO STRIKE (#109)

M. Page Kelley Chief United States Magistrate Judge

I. Introduction.

This case involves the auction of a blue and white Yongzheng lotus-mouth vase (the “Vase”) by plaintiff Skinner, Inc., an auction house located in Marlborough Massachusetts. On June 18, 2020, defendant Maoliang Fang, an art dealer located in China, through his agent, defendant Lucheng Li, located in the United Kingdom, won the Vase with a final bid of $1,330,000. After the hammer fell, a series of events unfolded that thwarted the sale and ultimately led to this lawsuit.

In their claims and counterclaims, both parties allege that the other (i) breached the Conditions of Sale (“COS”) that controlled the parties' relationship during the auction and sale (ii) breached the covenant of good faith and fair dealing and (iii) violated M.G.L. c. 93A § 11. In its amended complaint (#35), plaintiff also included claims for intentional misrepresentation and declaratory judgment. Plaintiff moved to dismiss defendants' counterclaims, and in its order on the motion, the court narrowed their scope. (#67). Defendants did not move to dismiss plaintiff's claims, so they remain as pled in the amended complaint. (#35.)

Before the court are the parties' cross-motions for summary judgment (##85, 88), plaintiff's motion to strike Mr Fang's errata sheet (#101), and defendants' motion to strike plaintiff's motion to strike (#109). The court heard argument on all four motions on January 5, 2023. (#118.) For the following reasons, Skinner's motion for summary judgment (#85) is allowed in part and denied in part; defendants' motion for summary judgment (#88) is denied; and both motions to strike (##101, 109) are denied.

II. Undisputed Material Facts.^[2]

A. The Parties.

Skinner is an auction house and appraiser located in Marlborough, Massachusetts. (#87 ¶ 1; #107 (undisputed).)

Mr. Fang is a Chinese national living in China. (#87 ¶ 17; #107 (undisputed).) Before his deposition in this case, Mr. Fang had never communicated with Skinner, either orally or in writing. Id.

Mr. Li is a Chinese national and an art agent with a place of business in Middlesborough, UK. (#88-2 ¶ 1; #104 ¶ 1; #87 ¶¶ 19-20; #107 (undisputed).) He has worked for Mr. Fang since 2015, acting as his agent and bidding on his behalf in foreign art auctions approximately ten times per year. (#87 ¶¶ 19-20; #107 (undisputed).) When acting as Mr. Fang's agent, Mr. Li does not determine what to bid on; he acts solely in accordance with Mr. Fang's instructions. (#88-2 ¶ 5; #104 ¶ 5.)

Before the auction of the Vase in June 2020, Mr. Li had made one purchase from Skinner, on behalf of a client, in September 2017. (#87 ¶ 22; #107 (undisputed).) Mr. Li paid for the item within four days and submitted an authorized release form, including information that he was using an MC/DOT preferred shipper, which made clear that the item qualified for a sales tax exemption. (#87 ¶ 23; #107 (undisputed).) After receiving the full payment for the item, minus sales tax, and the appropriate paperwork to support the exemption, Skinner released the item to Mr. Li and his client via the shipper. (#87 ¶ 24; #107 (undisputed).)

B. The 2020 Auction of the Vase and the Operative Conditions of Sale.

Skinner listed the Vase in its Asian Works of Art online auction to be held on June 18, 2020, valuing the item between $5,000 and $10,000.^[3] (#87 ¶ 16; #107 ¶ 16; #88-2 ¶¶ 1-2; #104 ¶¶ 1-2.) On June 16, Mr. Li registered for the auction. (#87 ¶ 25; #107 ¶ 25 (not disputing registration date).) As part of his registration, Mr. Li acknowledged his agreement of the COS, as all bidders are required to do. Id. Mr. Li claims he does not recall doing so. (#88-2 ¶ 12; #104 ¶ 12.) But, the parties agree-and the court already has ruled (#67 at 6)-that the COS controlled the parties' relationship throughout the auction and sale. (#40 ¶¶ 10-12, 25, 34-37, 42 (citing COS terms throughout counterclaims); #67 at 9 (“The terms defendants identify from Skinner's website are identical to those contained in the [COS].”).) They provide, in relevant part:

2. All property is sold “as is” .... (#87 ¶ 7; #107 ¶ 7; #91-1 at Ex. 12 §2.)

[ . . .]

4. All merchandise purchased must be paid for and removed from the premises the day of the auction.... (#87 ¶ 9; #107 ¶ 9; #91-1 at Ex. 12 §4.)

[. . .]

6. If the purchaser breaches any of its obligations under these Conditions of Sale, including its obligation to pay in full the purchase price of all items for which it was the highest successful bidder, Skinner Inc. may exercise all of its rights and remedies under the law including, without limitation, (a) canceling the sale and applying any payments made by the purchaser to the damages caused by the purchaser's breach, and/or (b) offering at public auction, without reserve, any lot or item for which the purchaser has breached any of its obligations, including its obligation to pay in full the purchase price, holding the purchaser liable for any deficiency plus all costs of sale. (#87 ¶ 10; #107 (undisputed); #91-1 at Ex. 12 §6)

[. . .]

9. Sales in Massachusetts, Florida, and New York are subject to the respective current sales taxes. Dealers, museums, and other qualifying parties may be exempt from sales tax upon submission of proper documentation. (#87 ¶ 13; #107 ¶ 13; #91-1 at Ex. 12 §9.)

[. . .]

11. Bidding on any item indicates your acceptance of these terms and all other terms printed within, posted, and announced at the time of the sale whether bidding in person, through a representative, by phone, by Internet, or other absentee bid. (#87 ¶ 4; #107 (undisputed); #91-1 at Ex. 12 § 11.)

Before the auction, Mr. Li requested from Skinner's Asian Art Department information about the Vase's condition, to which Skinner responded with the requested explanations and photographs. (#87 ¶ 26; #107 (undisputed); #91-1 at Exs. 15, 23) Two days later, on June 18, 2020, Mr. Li, acting on behalf of Mr. Fang, won the Vase with a bid of $1,330,000 (the “hammer price”). (#87 ¶¶ 29, 30; #107 ¶ 29, (¶ 30 undisputed).)

C. Payments for the Vase.

Shortly after the auction,^[4] Skinner sent Mr. Li an invoice for $1,709,031.25, including the hammer price, various charges, and $100,531.25 in sales tax. (#87 ¶ 30; #107 (undisputed).) The invoice included Skinner's bank information for wires, its address for checks, and a website link that included further information about payments, sales tax, and shipping. (#87 ¶ 31; #107 (undisputed).) The day after the auction, June 19, Mr. Li forwarded the invoice to Mr. Fang. (#87 ¶ 33; #107 ¶ 33.) Neither Mr. Li nor Mr. Fang made any payments on the Vase before June 24, 2020. (#87 ¶¶ 32, 34; #107 (¶ 32 undisputed), ¶ 34.) Instead, following his winning bid on June 18, Mr. Li sent an email to Skinner that same day requesting additional information regarding the Vase, this time related to its provenance. (#87 ¶ 34; #107 ¶ 34.) Skinner did not respond. Id.

Mr. Li and Skinner did not communicate again until June 24, on which date Mr. Li (i) conversed with William Debordes Jackson, of Skinner's Accounts Receivable Department, via telephone (#87 ¶ 36; #107 (undisputed)), and (ii) emailed Judith Dowling, of Skinner's Asian Art Department, requesting additional information regarding the Vase's provenance and condition (#88-2 ¶ 36; #104 ¶ 36).

As to (i), Mr. Debordes Jackson followed the telephone call with an email dated June 24, 2020, stating that Skinner would not allow Mr. Li to make a down payment or inspect the item before completing full payment, and demanding payment in full. (#87 ¶ 37; #107 (undisputed); #92-1 at Ex. 32.) Mr. Li responded the same day, stating that he understood Mr. Debordes Jackson's message, that he would make payment in full without inspecting the lot, and that he would “aim to make full payment within the next week, because the Chinese Dragon Boat Festival would . . . delay payment this week.” (#87 ¶ 38; #107 (undisputed); #92-1 at Ex. 33.) If Skinner was concerned, Mr. Li continued, he would “transfer 300,000 USD immediately to [Skinner's] bank account.” Id. Mr. Li also requested the final invoice without sales tax “[b]ecause [the Vase] would be ship[ped] out of [the] US.” (#88-2 ¶ 40; #104 ¶ 40; #92-1 at Ex. 33) In response, Mr. Debordes Jackson explained that Skinner's COS “clearly state that payment is due at the time the invoices [sic] is incurred” and that Mr. Li must “make full payment immediately” or else the Vase may be offered to the underbidder (#87 ¶ 39; #107 ¶ 39; #92-1 Ex. 33), to which Mr. Li replied that he would “do the transfer now” and send the receipt “later on” (#87 ¶ 40; #107 (uncontested); #92-1 Ex. 33).

As to (ii), Ms. Dowling responded to Mr. Li's email on June 24 2020, with an unequivocal demand for full payment: “If you have not made arrangements with our accounting department for the payment of [the Vase] . . . by the end of the day tomorrow, June 25, 2020, I am offering the [Vase] to the under bidder.” (#87 ¶ 41; #107 (undisputed); #92-1 at Ex. 34.) That same day, Mr. Li sent a receipt for a partial payment of $300,000 that he claimed to have sent “from a bank in UK” and stated that it “should . . . arrive in [Skinner's] bank account within 3 days.”^[5] (#92-1 at Ex. 35.) As he did with Mr. Debordes Jackson, Mr. Li promised Ms. Dowling that the rest would be sent from a ...