Citations
- 137 F. Supp. 3d 430
Full opinion text
MEMORANDUM OPINION & ORDER
PAUL G. GARDEPHE, District Judge:
In these actions, Plaintiffs claim that certain paintings they purchased from Defendant Knoedler Gallery, LLC (“Knoedler”) are forgeries. In addition to Knoedler, all Plaintiffs name the following as defendants: 8-31 Holdings Inc. (“8-31”), Knoedler’s. sole member; Michael Hammer, Knoedler’s managing member and the owner of 8-31 Holdings, Inc.; Ann Freedman, Knoedler’s former president; Glafira Rosales, a Long Island art dealer who brought the forged paintings to Knoe-dler; and Jose Carlos Bergantinos Diaz, Rosales’s “longtime companion.” The Martin Hilti Family Trust (“Hilti”) and Frances White also name as defendants Jaime Andrade, a former Knoedler employee; Jesus Angel Bergantinos Diaz, Carlos’s brother; and Pei-Shen Qian, a Chinese artist based in Queens who allegedly created the forged paintings. Hilti also asserts claims against Hammer Galleries, LLC.
Plaintiffs claim that Knoedler sold nearly forty paintings it acquired from Rosales, and that all of these paintings—allegedly created by well-known American Abstract Expressionist artists—are forgeries. Plaintiffs contend that Defendants knew as early as October 2003 that these paintings were not authentic, but nonetheless continued to sell them to unsuspecting buyers.
Plaintiffs assert claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and state law causes of action for fraud, fraudulent concealment, aiding and abetting fraud, fraud conspiracy, deceptive trade practices and false advertising, breach of warranty, and unilateral and mutual mistake.
Defendants Knoedler, Freedman, Hammer, 8-31, and Hammer Galleries LLC have moved to dismiss all claims-against them under Federal- Rule of Civil Procedure 12(b)(6).
BACKGROUND
1. FACTS
A. Rosales’ Initial Contact with the Knoedler Gallery
Prior to its closing, the Knoedler Gallery was one of the oldest and most reputable art galleries in the world. (Amended Complaint (“Am. Cmplt.”) (Hilti Dkt. No. 46) ¶ 48; Am. Cmplt. (White Dkt. No. 37) ¶ 33) In April 2000, Frances Hamilton White and her then husband purchased a purported Jackson Pollock painting from Knoedler and its president, Ann Freedman, for $3.1 million. (Am. Cmplt. (White Dkt. No. 37) ¶ 1) On November 6, 2002, thé Martin Hilti Family Trust purchased a purported Mark Rothko painting from Knoedler for $5.5' million. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 1, 7) 'In November 2005, the Taubnians purchased a purport^ ed Clyfford Still painting from Knoedler for $4.3 million. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 1) All of these paintings are forgeries. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 1; Am. Cmplt. (White Dkt. No. 37) ¶¶ 1, 5, 43, 94; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 4,140,145,148) The paintings Plaintiffs purchased from Knoedler were supplied by Glafira Rosales, a Long Island art dealer. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 63; Am. Cmplt. (White Dkt. No. 37) ¶¶ 6, 37; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 75)
In the early-to-mid-1990’s, Defendant Jaime Andrade, a Knoedler employee, introduced Defendant Glafira Rosales - and Jose Carlos Bergantinos Diaz to Freedman and others at Knoedler. (Am. Cmplt. (Hilti Dkt. No. 46) ¶72; Am. Cmplt. (White Dkt. No. 37) ¶ 24; Taubman Am. Cmplt. ¶23) Knoedler and Freedman did not investigate Rosales and Diaz’s background, although Diaz had previously been associated with the sale of forged art work. (Taubman Am. Cmplt. ¶ 31)
The first séries of art works Rosales brought to Knoedler included a number of purported Richard Diebenkorn paintings. The paintings had allegedly been acquired from the Vijande Gallery in Madrid, Spain. (Am. Cmplt. (Hilti Dkt. No..46) ¶¶ 74-75; Am. Cmplt. (White Dkt. No. 37) ¶ 25; Am, Cmplt. (Taubman Dkt. No. 39) ¶24) In reality, the “Diebenkorns” had been created by Qian, with the knowledge and assistance of Rosales and the Diaz brothers. (Am, Cmplt. (Hilti Dkt. No. 46) ¶ 76; Am. Cmplt. (White Dkt. No. 37) ¶ 25) Shortly after Rosales brought these paintings to Knoedler, representatives of Diebenkorn’s family and estate—the leading experts on Diebenkorn’s work—viewed two of the works and told Freedman that these paintings did not appear to be authentic. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 77; Am. Cmplt. (White Dkt. No. 37) ¶ 25; Am. Cmplt. (Taubman Dkt. No. 39) ¶25) Between 1994 and Í998, however, Knoedler and Freedman—whom Hammer had made president of Knoedler in 1994— sold all of the purported Deibenkoms to various buyers without corroborating Rosales’s provenance story or disclosing the doubts expressed by the Diebenkorn family and estate. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 78; Am. Cmplt. (White Dkt. No. 37) ¶ 25; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 23, 26-27)
In 1996, Rosales told Freedman that she had gained access to a collection of paintings by leading American Abstract Expressionist artists, including Mark Rothko, Robert Motherwell, Jackson Pollock, Wil-lem de Kooning, Barnett Newman, Clyf-ford Still, Franz Kline, Sam Francis, and Lee Krasner. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 28; Am. Cmplt. (Hilti Dkt. No. 46) ¶ 12; Am. Cmplt. (White Dkt. No. 37) ¶ 6) According to Rosales, this collection of Abstract ■ Expressionist masterworks was owned by a Mexican Mend— the son of a deceased art collector—whose identity she had,sworn to keep secret. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 28) Rosales told Freedman that, as a child in Mexico,, she had met a European couple who—decades ago—purchased numerous works directly from now-famous Abstract Expressionist painters. (Am. Cmplt. (White Dkt. No. 37) ,¶ 27) Rosales referred to the deceased collector and his son as “Mr.. X” and “Mr.-X, Jr.” (Am. Cmplt. (White Dkt. No. 37) ¶ 27; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 28)
Rosales stated that Mr. X—who was either of Swiss or Mexican descent—had acquired these'paintings “directly from the artists” and “off the record” in New York City, either between the 1950s and early 1960s, or between the late 1940s and 1964, during business trips- Mr. X made to the United States in connection with his sugar business. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 13, 64-65, 82) After Mr. X and his wife died in the early 1990s, their two children inherited the paintings. The children were not interested in art, however, and wanted to sell the paintings, and to do so anonymously, (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 82; Am. Cmplt. (White Dkt. No. 37) ¶ 27; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 28)
Rosales had no documentation concerning Mr. X’s acquisition of the paintings or any other materials corroborating her story or the purported provenance of the works. (Taubman Am. Cmplt. ¶28) Ro: sales claimed that Mr. X’s daughter (also unidentified) had destroyed all of the paperwork concerning the paintings after Mr. X and his wife died. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 68) In any event, Mr, X purchased the paintings with cash. (Am. Cmplt. (White Dkt. No. 37) ¶28) Mr. X’s collection had never been displayed, and the paintings had been stored and ■wrapped in a “sealed” container in Mexico. (Am. Cmplt. (Hüti Dkt. No. 46) ¶ 14, 69)
In reality, Rosales and Jose Carlos Ber-gantinos Diaz had purchased the paintings at issue from Pei-Shen Qian, a Chinese painter then living in Queens. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 17-18, 55; Am. Cmplt. (White Dkt. No. 37) ¶6; .Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 19-20) Jose Carlos Bergantinos Diaz met Qian in the late 1980s in New York City, where Qian was selling his own art. (Am. Cmplt. (Hilti Dkt. No." 46) ¶ 19; Am. Cmplt. (White Dkt. No. 37) ¶ 22; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 19) From the early 1990s through the 2000s, Diaz and his brother, Jesus Bergantinos Diaz, paid Qian to paint or draw dozens of art works in the styles of famous artists. (Am. Cmplt. (Hilti Dkt. No.' 46) ¶20; Am. Cmplt. (White Dkt. No. 37) ¶22; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 19) Jose Carlos Bergantinos Diaz provided Qian with certain paints, canvasses, and other, materials for Qian to use in creating the works, in order to make them appear authentic. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 24; Am. Cmplt. (White Dkt. No. 37) ¶ 23; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 21) The two men forged artists’ signatures on these works, and Jose Carlos Bergantinos Diaz treated the works through various methods in order to make them appear aged. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 22-23; Am. Cmplt. (White Dkt. No. 37) ¶ 23; Am. Cmplt. (Taubman Dkt. No. 39) ¶22)
B. The Knoedler Gallery Begins Trading in, and Developing a Provenance for, the Rosales Paintings
In December 1996, Knoedler began trading in Abstract Expressionist paintings that Rosales claimed were part of Mr. X’s collection (the “Rosales , Paintings”). Knoedler’s first acquisition was a purported work by Mark Rothko, purchased for $225,000. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 35) Four months later, Freedman acquired this Rothko from Knoedler in an “even trade” for a Diebenkorn that she had purchased in 1991 for $100,000. (Id.) In 1997,-Knoedler purchased a second “Rothko” from Rosales for $150,000, and re-sold the work within a month for $360,000. (Taubman Am. Cmplt. -¶ 35 n. 5). . .
In February 1998, a prospective buyer cancelled his purchase of two Rosales Paintings—a “Rothko” and a “Kline”—after learning from Freedman that Knoedler would not provide the name of “the original collector who acquired the works -in 1960.” ■ (Taubman Am. Cmplt. ¶ 36) The Knoedler invoice for the cancelled sale lists the provenance of these works as follows:
PROVENANCE (for both): Private Collection, Mexico
(Am. Cmplt. (Taubman Dkt.. No. 39) ¶37)
During a June 18, 1998 meeting at Knoedler, Rosales told Freedman that she had five Abstract Expressionist works available for sale,. including paintings by Still, de Kooning, Motherwell, and Newman. (Am.' Cmplt (Hilti Dkt. No.'46) ¶ 80; Am. Cmplt. (White Dkt. No. 37) ¶ 26; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 40) Knoedler ultimately acquired more than five Abstract Expressionist works from Rosales, including works by additional artists such as Rothko, Pollock, Kline, Francis, and Krasner. (Am. Cmplt. (Hilti Dkt. No. 46) 1Í 81; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 44)
At the June 18, 1998 meeting, Rosales also recounted details about ME X’s background, family, acquaintances, and businesses. Rosales told Freedman that Mr. X’s “American paintings were acquired' directly from the artists”; that his son, the current owner of the collection, “main-tainted] residences in Mexico City .,. and Zurich”; and that although there had once existed letters written between the artists and Mr. X, these had all been “disposed of’ after Mr. X’s death. (Am. Cmplt. (:Taubman Dkt. No. 39) ¶ 38) Rosales did not mention anyone who served as an intermediary between Mr. X and the artists from whom Mr. X acquired the works in his collection. (Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 38-39)
On July 1, 1998, Knoedler sold the “Rothko” that had been the subject of the cancelled sale to a different client. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 41) The invoice for this sale lists the work’s provenance as follows:
PROVENANCE[]
Acquired directly from the Artist in the early 1960’s. Private Collection, Mexico and Switzerland
(Id.)
On August 5, 1998, Rosales told Freedman that Mr. X’s collection included a Motherwell, two paintings by Newman, two paintings by Still, and a Jackson Pollock. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 42) Rosales did not state or suggest that any person acted as an intermediary between Mr. X and these artists. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 43)
After the August 5,1998 meeting, Knoe-dler purchased or accepted on consignment at least twenty-three Rosales Paintings. (Am, Cmplt. (Taubman Dkt. No. 39) ¶ 44) Rosales sold these works to Knoedler at a fraction of the price that Freedman and Knoedler later obtained for these paintings on the open market. (Am. Cmplt. (White Dkt. No. 37) ¶29; Am. Cmplt. (Taubman Dkt. No. 39) ¶32) In selling these works, Knoedler and Freedman used portions of Rosales’ original provenance story, buttressed with additional fabricated information. (Am. Cmplt. (Taubman Dkt. No. 39) ¶33) Freedman began referring to Mr. X as the “Secret Santa.” (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 30)
Rosales brought the Rosales Paintings only to Knoedler and one other gallery owned by a former Knoedler employee, Julian Weissman. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 15)
In 1999 or early 2000, Freedman asked Rosales whether it was possible that Mr. X had purchased the Rosales Paintings through Alfonso Ossorio, a well-known Abstract Expressionist artist and collector who lived near Pollock on Long Island. Ossorio—who was deceased—had been a friend and colleague of many of the leading Abstract Expressionist artists. (Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 46-47; Am. Cmplt. (White Dkt. No. 37) ¶ 57; Am. Cmplt. (Hilti Dkt. No. 46) ¶ 84) In January 2000, Rosales told Freedman that Mr. X, Jr. had “confirmed” that his father—in purchasing the Rosales Paintings—had relied on Ossorio’s advice. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 84-85; Am. Cmplt. (White Dkt. No. 37) ¶57; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 45-48) Knoe-dler employees and consultants then attempted to find corroboration for the theory that Mr. X had acquired his collection with Ossorio’s help. ' (Am. Cmplt. (Taub-man Dkt. No. 39) ¶ 50) Although this research yielded no corroboration (see id.), beginning in December 2001, Knoedler began using Ossorio’s name in connection with presentations about the provenance of Rosales Paintings. (Am. Cmplt. (Taub-man Dkt. No. 39) ¶ 51) The Taubman Plaintiffs allege that it is highly unusual for an art dealer to (1) change a provenance; or (2) include an agent or adviser in a work’s provenance, because a provenance addresses prior owners of a work of art. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 52) ;■
C. Levy’s 2001 Purchase of the “Green Pollock” and Changes in the Alleged Provenance of the Rosales Paintings
In March 2001, Knoedler purchased a purported Jackson Pollock—Untitled, 191/.9 (the “Green Pollock”)—from Rosales for $750,000. In late 2001, Freedman and Knoedler sold this painting to Jack Levy for' $2 million. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 87; Am. Cmplt. (White Dkt. No. 37) ¶ 56; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 56-57) The invoice documenting the sale to Levy describes the work’s provenance as follows:
PROVENANCE[]
The Artist
Alfonso Ossorio
Private Collection, Switzerland (by descent to present owner)
Knoedler & Company, New York
(Am. Cmplt. (Taubman Dkt. No. 39) ¶ 57) Freedman told Levy that the owner’s father, a Swiss collector, had acquired the work through Ossorio, who was a known collector of Pollock’s work. (Am. Cmplt. (Hilti Dkt. No. 46) ¶89; Am. Cmplt. (White Dkt. No. 37) ¶57; Am.. Cmplt. (Taubman Dkt. No- 39) ¶ 59) The sale to Levy was conditioned, however, on a favorable review of the work’s provenance and authenticity by the International Foundation for Art Research (“IFAR”). (Am. Cmplt. (Hilti Dkt. No. 46) ¶88; Am. Cmplt. (White Dkt. No. 37) ¶ 57; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 58)
On October 9, 2003, IFAR issued its report on the Green Pollock. (Am. Cmplt. (Hilti Dkt. No. 46) - ¶ 90; Am. Cmplt. (White Dkt. No. 37) ¶ 59; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 61) IFAR refused to certify the painting’s authenticity and cast serious doubt on the purported provenance of the painting. •■(Am, Cmplt. (Taubman Dkt. No. 39) ¶-55) The report states that the “negatives” concerning the authenticity of the Green Pollock were “very convincing;” that -the artist’s signature was “suspect;” and that, “too many reservations exist to make a positive-attribution to Jackson Pollock.” (Am. Cmplt. (White Dkt.- No, 37) ¶ 59; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 61) IFAR also found that the technique and style of the Green Pollock was not consistent with Pollock’s technique and style. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 91) The report also states that it is “inconceivable” that the work had passed through Ossario’s hands yet had never been added to the catalogue raisonné for Pollock. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 90; Am. Cmplt. (White Dkt. No. 37) ¶ 59; Am. Cmplt. (Taubman Dkt. No. 39) ¶61) As a result of the IFAR report, the sale of the Green Pollock was cancelled, and Knoedler refunded the purchase price to Levy.. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 93; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 55, 62)
Freedman informed , Hammer of the IFAR report’s conclusions and the can-celled sale - to Levy. (Am. Cmplt. (Hilti Dkt. No. 46). ¶ 95) Hammer read the IFAR report “very carefully.” (Am. Cmplt. (Hil-ti Dkt. • No.- 46) ¶¶ 95, 97; -Am. Cmplt. (White Dkt. No. 37) ¶ 61; Am. Cmplt. (Taubman Dkt.-No. 39) ¶ 63) Hammer also reviewed an internal Knoedler memo stating that the IFAR report raised questions about the Green Pollock’s “authenticity” and “authorship-,”, and noting that “IFAR is held in high esteem by galleries, museums and-the art world in general.” (Am. .Cmplt. (Taubman Dkt. No. 39) ¶ 64) Hammer told Freedman that the Green Pollock should not be sold until “we get answers.” (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 97; Am. Cmplt. (White Dkt. No, 37) Cmplt. , ¶ 61)
Despite the negative IFAR report, David Mirvish became a co-investor with Knoedler in the Green Pollock. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ ldO; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 66) Hammer allegedly “insisted” that a copy of the IFAR report be provided to Mirvish before he invested in the painting. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 67) Hammer, 8-31, Knoedler, and Freedman did not provide the IFAR report to potential purchasers of Rosales Paintings, however, nor did they disclose that the IFAR report had challenged the authenticity of, and rejected the purported provenance of, a painting that Rosales had brought to the gallery. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 103; Am. Cmplt. (White Dkt. No. 37) ¶¶ 60-61; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 67, 74),
’ In a fax to Hammer dated December 15, 2003, Freedman discussed Mirvish’s willingness to invest in the' Green Pollock. (Am. Cmplt.. (Taubman Dkt. No. 39)' ¶ 66) A handwritten note-on the reversé side of the fax cover sheet contains the following phrases in quotation marks: “discreet sources are my stock in trade,” “don’t kill the goose that’s laying the Golden egg,” and “I’m not going to change my way of doing business. If you are not [comfortable]—step away,” (Id. ¶ 66)
After the IFAR report was issued, Hammer, 8-31, Knoedler, and Freedman changed their story about the provenance of the Rosales Paintings'.' (Am. Cmplt. (Hilti Dkt, No. 46) ¶¶ 104-06; Am. Cmplt. (White Dkt. No. 37) ¶ 62; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 69) David Herbert—a deceased art world figure and An-drade’s long-time companion—became the “adviser” or “agent” who had assisted Mr. X in buying these works, and Ossorio was no longer mentioned. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 104-06; Am. Cmplt. (White Dkt. No. 37) ¶62; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 69) Rosales told Freedman that Mr. X, Jr. had “confirmed” that Herbert was his father’s adviser. (Am. Cmplt. (Hilti Dkt. .No.. 46) ¶106) Freedman told Rosales to tell Julian Weissman—the only other dealer selling Rosales Paintings—to update his provenance story by substituting Herbert’s name for that of Ossorio. (Am. Cmplt. .(Hilti Dkt. No. 46) ¶ 110) Purchasers of Rosales Paintings were never told that Knoedler had repeatedly changed its account of the provenance of the ■ Rosales Paintings. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 74)
Freedman maintained a file concerning the Rosales Paintings (the “Rosales File”). That file included internal memos in which Freedman documented changes in the provenance story, posited explanations for suspicious facts, and attempted to refute arguments that threatened to expose the truth. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 33, 64-66, 204; Am. Cmplt. (White Dkt. No. 37) ¶ 32; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 34) After Knoedler adopted the David Herbert provenance story, Freedman created an internal document entitled “Notes on David Herbert.” In this document, Freedman attempted to explain how Herbert was connected to each of the artists represented in Rosales Paintings. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 70) Andrade provided Freedman with documentation regarding Herbert’s art gallery, but nothing in these materials ties Herbert to any of the Rosales Paintings. (Am. Cmplt. (White Dkt. No. 37) ¶63; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 71-72) Knoedler researchers likewise could not find evidence suggesting that Herbert was involved in Mr. X’s acquisition of the Rosales Paintings. (Am. Cmplt. {Hilti Dkt. No. 46) ¶ 107) Freedman also asked the de Kooning Foundation for information that might confirm a connection to Herbert; no such information was uncovered. (Id. ¶ 108)
D. White’s April 2000 Purchase of a “Pollock”
In March 2000, Plaintiff White went to the Knoedler Gallery and noticed what appeared to be a Jackson Pollock on display. (Am. Cmplt. (White Dkt. No. 37) ¶ 35) Freedman told White that the painting, Untitled 19A9, was an authentic Jackson Pollock owned by a private collector in Switzerland. (Id. ¶¶ 2, 35)
Knoedler purchased this work from Rosales—who had brought it to Knoedler “only months earlier”—for $670,000, and' sold it to White on April 8, 2000, for $3.1 million. (Id. ¶¶36, 39, 95) Accordingly, Knoedler reaped a profit of nearly 400% on the transaction. (Id. ¶ 95)
The invoice for the painting reads as follows:
Jackson Pollock (1912-1956)
Untitled
1949
Oil and enamel on canvas mounted on Masonite ' ■
28 ½ x 15 inches
CA 23579
Signature location: Signed and dated lower right: “Jackson Pollock 49”
Provenance & Bibliography
Private Collection, Switzerland To be included in publication on Jackson Pollock, “A Design for Change” (working title), by Dr. Stephen Polcari, to be published by Cambridge University Press.
(Id. ¶ 35)
On April 9, 2000, Knoedler and Freedman mailed White an appraisal that valued the painting at $3.5 million. (Id. ¶ 42)
In late February 2011, White decided to sell the Pollock and contacted Christie’s. (Id. ¶¶ 4, 89) -Christie’s refused to accept the work for auction, noting that it does not appear in the Pollock catalogue rai-sonné—a fact Knoedler and Freedman allegedly concealed from White. (Id.) White contacted Knoedler, - but was told that no one was available to discuss the work with her. (Id. ¶ 90) After several months of calls, Knoedler’s Director spoke with White in mid-May 2011. (Id.) The Director told White that Knoedler was not interested in acquiring the work because it was now focusing on contemporary art. (Id. ¶¶ 4, 90) When White asked for additional information regarding the work’s provenance, the Director refused to provide any information, stating that it was confidential. (Id. ¶ 90)
White received no further information concerning the work prior to the closing of Knoedler Gallery. (Id. ¶91) Thereafter, White retained a forensic examiner, who examined the work. The examiner concluded, inter alia, that the painting contained paint that was not available commercially until 1973, more than 20 years after the work was allegedly created. (Id. ¶ 92)
E. The Martin Hilti Family Trust’s November 2002 Purchase of a “Rothko”
On May 26, 2001; Rosales consigned a “Rothko” with Knoedler. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 3, 6, 111) On January 8, 2002, Knoedler terminated the consignment arrangement and purchased the work from Rosales for $750,000. (Id. ¶ 119; Am. Cmplt. (White Dkt. No. 37) ¶65) Between June 15 and August 18, 2002, Knoedler exhibited the “Rothko” at the Beyeler Foundation’s “Rothko Rooms” in Basel, Switzerland., (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 135) '
On October 24, 2002, Michael Hilti, one of the trustees of the Martin Hilti Family Trust, visited the Knoedler Gallery and met with Freedman. (Id. ¶ 137) Freedman showed' Hilti an alleged Rothko, known as “Untitled (1965).” Freedman described .the painting as a “fantastic Rothko.” (Id. ¶¶ 1,138) Hilti had-seen the work at the Beyeler Foundation’s exhibition a few months earlier. (Id. ¶ 139)
In written materials Freedman provided to Hilti, the provenance of the painting was described as follows: “The Artist; Private Collection, Switzerland (acquired directly from the artist); By descent to current owner.” (Id. ¶ 141) In the Rosales File, Freedman maintained a different version of the painting’s provenance: “The Artist; Private Collection, Switzerland (acquired directly from the artist through Alfonso Ossorio); By descent to current owner.” (Id. ¶¶ 147-48,151)
On November 13, 2002, the Hilti Family Trust purchased the purported Rothko for $5.5 million. (Id. ¶ 172) The $ 5.5 million sale price was a markup of more than seven times Knoedler’s purchase price. (Id. ¶ 7) The invoice for the purchase stated the provenance as: “The Artist; Private Collection, Switzerland (acquired directly from artist); ’By descent to current owner.” (Id. ¶ 159)
In May 2012, Michael Hilti called Freedman in New York at her new art gallery to ask about press reports that Knoedler had been involved in a scam. (Id. ¶294) Freedman asked Hilti to call her back on her private phone line, and then told him that Hilti’s Rothko was genuine and that “Knoedler has nothing to do with this.” (Id. ¶¶ 295-96) Freedman told Hilti that Knoedler had suddenly closed “because of a divorce issue.” (Id. ¶ 297)
Hilti later engaged a forensic art analyst to examine the Rothko the Trust had purchased from Knoedler. (Id. ¶ 298) The analysis revealed, inter alia, that the “Rothko” contained paint that was not developed until the 1960s, and thus would not have been available to Rothko in 1956 when the work was purportedly created. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 4, 299)
F. The Taubmans’ November 2005 Purchase of a “Still”
On December 22, 2004, Knoedler purchased a purported Clyfford Still painting from Rosales for $600,000. (Am. Cmplt. (:Taubman Dkt. No. 39) ¶ 75) In February 2005, Knoedler exhibited the work and offered it for sale at the Art Dealers Association of America’s Art Show in New York City. (Id. ¶ 81) Eugenia Taubman, then á trustee of the Arthur Taubman Trust, attended the art show and discussed the painting with Freedman. (Id. at 82-83) Freedman stated that the work was created by Clyfford Still in 1949; that a Swiss collector had purchased the painting from Still’s studio with the help of David Herbert; that the collector had amassed a collection of Abstract Expressionist paintings directly from artists with Herbert’s assistance; and that upon the collector’s death, the collection had passed by inheritance to the collector’s children, who were the current owners and now sought to sell the works. (Id. ¶83) Freedman further represented that the collector was of a well-known aristocratic family, but that she could not reveal his identity. The collector’s children wished for their father to remain anonymous on account of his clandestine romantic involvement with Herbert. (Id.)
In April 2005, Eugenia Taubman began negotiating a purchase price for the Still painting with Freedman. (Id. ¶ 86) In October 2005, they agreed on , a purchase price of $4.3 million. (Id.) On November 7, 2005, Freedman, on behalf of Knoedler, signed a letter of agreement concerning the sale and sent Taubman an invoice for $4.3 million. (Id. ¶¶ 87-88 and Exs. C-D) In signing the letter of agreement, Knoe-dler and Freedman represented, inter alia, that the work was created by Clyf-ford Still in 1949, and that “[f]ull provenance, bibliography, and exhibition history [of] the [work], where available, shall be provided by [Knoedler].” ' (Id. ¶87) The invoice contained the following description and provenance:
Clyfford Still (American; 1904-1980)
Untitled
1949
Oil on canvas
52 x 36 inches
Signed and dated on verso: “Clyfford 1949” ■. ’
A12373
Provenance
The Artist (David Herbert as agent)
Private Collection
By descent to present owner
(Id. ¶ 89)
Taubman alleges that Knoedler and Freedman did not disclose a number of relevant facts about the painting and the transaction, including that: (1) Knoedler itself owned the painting; (2) the 'painting had been delivered to Knoedler by Rosales; (3) no one at Knoedler had ever seen any evidence substantiating the provenance story provided for the painting; (4) no one at Knoedler knew .the name of Mr. X or his children; (5) Ossorio (and not Herbert) had initially been identified as having facilitated Mr. X’s purchases of Rosales Paintings; (6) the Diebenkorn Foundation and IFAR had expressed doubts about the authenticity of other Rosales Paintings, and the sale of one work had been cancelled due to IFAR’s evaluation; and (7) the vast majority of sale proceeds paid by Knoedler to Rosales for the painting had been sent to Diaz’s brother in Spain. (Id. ¶ 103)
On November 15, 2005, Taubman wired $4.3 million from the Trust’s account at Wachovia Bank to Knoedler’s account at HSBC Bank. (Id. ¶ 90) In December 2005, Knoedler delivered the- painting to Taub-man in Bucharest, Romania, where the Taubmans were living on diplomatic assignment. (Id. ¶ 91) Knoedler made a gross profit of $3.7 million on its sale of the “Still” to Taubman—an 86% gross profit margin. (Id. ¶ 101)
In the summer of 2011, Nicholas Taub-man read press reports about a lawsuit alleging that Freedman had been dealing in forged art, and he began making inquiries concerning the Still the Taubmans had purchased from Knoedler. (Id. ¶¶ 133-36) In December 2012, Taubman retained forensic conservator James Martin, of Orion Analytical, LLC, to conduct scientific testing of the painting. (Id. ¶ 138) Orion’s analysis revealed that the edges of the canvas had been artificially discolored with brown paint, which is uncharacteristic of Still’s work. Moreover, the painting contained paint not commercially produced or marketed until several years after 1949, the purported date of the painting. (Id. ¶ 140)
G. The Dedalus Foundation’s December 2007' Claim that Rosales’s “Motherwells” are Forgeries
The Dedalus Foundation is responsible for the Robert Motherwell catalogue rai-sonñé. (Am. Cmplt. (White Dkt. No. 37) ¶ 82; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 117) In December 2007, as part of the effort to create a Motherwell catalogue raisonné, Dedalus examined seven purported Motherwell paintings that Rosales had sold to Knoedler and Julian Weiss-man. (Am. Cmplt. (White Dkt. No. 37) ¶¶ 82-83; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 117) The Foundation initially examined photographs of (1) a Motherwell that an art dealer—Killala Fine Art Limited— had purchased from Julian Weissman earlier that year; and (2) several purported “Spanish Elegy”. Motherwells that Knoe-dler and Weissman had acquired from Rosales. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶ 205, 208; Am. Cmplt. (White Dkt. No. 37) ¶ 83) The Foundation observed several anomalies in the works’ style and provenance, and concluded' that they were “highly suspect.” (Am. Cmplt. (White Dkt. No. 37) ¶ 82; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 117) After more than a year of extensive analysis, the Foundation concluded that “it was significantly unlikely that any of [Rosales’s Motherwells] were the work of Motherwell,” and decided that thesé works would not be included in the Motherwell catalogue raisonné. (Am. Cmplt. (White Dkt. No. 37) ¶82; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 117) The Foundation informed Freedman and Knoe-dler in December 2007 that it believed that all of the “Elegy” works were likely forgeries and that these paintings would not be included in the forthcoming Motherwell catalogue raisonné. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 209)
On January 14, 2008, Freedman wrote a letter asking Mr. X, Jr. for an “émergéncy meeting” in Mexico to discuss the “doubt and suspicion” that had been cast on the Motherwells supplied by Rosales. (Id: ¶ 211) No such meeting took place. (Am.' Cmplt. (Id. ¶ 212)) Knoedler and Freedman did not notify any buyer of Rosales Paintings that the Dedalus Foundation had concluded that “Motherwells” brought to market by Rosales were forgeries. (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 118)
After the Foundation issued its determinations concerning the Rosales Mother-wells, Knoedler retained Orion Analytical, LLC to conduct forensic tests on two of these paintings. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 213) On October 20, 2008, Orion issued a preliminary report. (Id. ¶224) Although Rosales had stated that the paintings were made and dated by Mother-well in the 1950s, and that Mr. X had acquired them from Motherwell at that time, Orion found .that the “materials used to make the paintings is inconsistent with the understanding that the paintings were made in the 1950s.” (Id. ¶225) Orion found that certain pigments in the works were not used by Motherwell until about the early to mid-1960s. (Id. ¶ 226)
On October 24, 2008, Freedman told Rosales about the Orion report “and the problems it raises regarding the dating- of the works.” (Id. ¶228) Freedman asked Rosales to gather additional information from Mr. X, Jr. that might resolve the discrepancy, and to “approach Mr. X, [Jr.,] and ask again if there exists any tangible evidence related to these transactions.” (Id. ¶ 229 (emphasis in original))
On November 7, 2008, Rosales , told Freedman that “[i]t. ha[d] recently been explained and clarified, in discussion with the owner, that his, father, the original owner, was active in acquiring works between the late 1940s and 1964. The works were acquired ‘off the record,’ directly from the artist’s [sic] studios during trips made to New York related to the family business.” (Id. ¶ 237; see also id. ¶¶ 231-32)
H. The September 2009 Grand Jury Subpoenas, the Termination of Freedman’s. Employment, and Hammer’s Direction that No Additional Rosales Paintinys be Sold
In 2009, the United States Attorney’s Office for the Southern District of New York began to investigate defendants’ activities. (Am. Cmplt. (White Dkt. Ño. 37) ¶ 86; Tmbrnan Am. Cmplt. ¶ 119) In September 2009, a grand jury issued subpoenas to Freedman and Knoedler seeking information about the sale of Rosales Paintings. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 43; Am. Cmplt. (White Dkt. No. 37) ¶ 86; Am. Cmplt. (Taubman Dkt. No. 39) ¶ 3)
On October 16, 2009, Hammer fired Freedman. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶43, 259-60; Am. Cmplt. (White Dkt. No. 37) ¶ 86; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶3, 120) In public statements, however, Hammer and Knoedler described Freedman’s .departure as a “resignation.” (Am. Cmplt. (Taubman Dkt. No. 39) ¶ 121) On October 27, 2009, Hammer sent a letter to Knoedler customers, including Taub-: man’s, art adviser, stating that Freedman had “resigned.” (Id. ¶ 122) Attached to that letter was a letter from Frank Del Deo, Freedman’s replacement, stating that the gallery was “respectful of Ann’s decision.” (Id.) Neither letter disclosed that Freedman’s departure was related to questions about the authenticity of Rosales Paintings. (Id.) Hammer ordered that all remaining Rosales Paintings were to be marked “not for sale,” and directed Knoe-dler employees not to speak to any third party about the Rosales Paintings. (Id, ¶ 123)
Knoedler’s records reveal that the gallery’s profits from the Rosales Paintings kept Knoedler in business., (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 40) Between 1994. and 2011, Knoedler earned a profit of approximately $30 million. Without the sale of Rosales Paintings, however, the gallery would have suffered a loss of more than $3 million. (Id. ¶¶264, 266-67; Am. Cmplt. (White Dkt. No. 37) ¶ 99; Taubman Am. Cmplt. ¶ 160) After the gallery stopped selling Rosales Paintings, it ceased to be profitable. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 42)
I. The Closing of the Knoedler Gallery and Rosales’s Arrest
In November 2007, Freedman and Knoedler sold Pierre Lagrange a purported Jackson Pollock for $17 million (the “Lagrange Pollock”). (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 256; Am. Cmplt. (White Dkt. No. 37) ¶ 78) Knoedler had obtained the alleged Pollock from Rosales. (Am. Cmplt. (Hilti Dkt. No. 46) ¶ 182; . Am. Cmplt. (White Dkt. No. 37) ¶78) Freedman had told Lagrange- that the painting was part of a private collection from Switzerland, and that it had been acquired directly from the artist. (Am. Cmplt. (White Dkt. No. 37) ¶79) Freedman also told Lagrange that David Herbert had acted as an intermediary between the Swiss collector and Pollock; that the Lagrange Pollock would be included in the upcoming updated Pollock catalogue raisonné; and that twelve leading - scholars had viewed the work and determinéd that it was authentic. (Id. ¶ 80)
In 2011, a forensic analysis commissioned by Lagrange revealed that the Lagrange Pollock was a forgery. (Am. Cmplt. (Hilti Dkt. No. 46) ¶257; Am. Cmplt. (White Dkt. No. 37) ¶81) The painting contains a red pigment that did not become available until years after the Lagrange Pollock was allegedly created. (Am. Cmplt. (White Dkt. No. 37) ¶ 81) This same pigment is also found in the “Rothko” purchased by Hilti and the “Pollock” purchased by White. (Am. Cmplt. (White Dkt. No. 37) ¶¶ 81, 92)
On November 29, 2011, Lagrange presented its forensics report to Knoedler, and demanded the return of the purchase price. (Am. Cmplt. (Hilti Dkt. No. 46) 11257; Am. Cmplt. (White Dkt. No. 37) ¶ 87; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 3, 137) The next day, November 30, 2011, the Knoedler Gallery announced that it was closing permanently, notwithstanding recent renovations and an ongoing exhibition at the gallery. (Am. Cmplt. (Hilti Dkt. No. 46) ¶¶44, 258; Am. Cmplt. (White Dkt. No. 37) ¶¶ 5/87; Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 3,137)
On May 20, 2013, Rosales was arrested and charged in a criminal complaint with tax fraud and other crimes. (Am. Cmplt. (Taubman Dkt. No. 39) ¶¶3, 141) The complaint alleged that Rosales had sold more than 60 forged paintings to “two prominent Manhattan art galleries,” one of which was clearly identifiable as Knoedler. (Id. ¶ 141) On September 16, 2013, Rosales pled guilty to a nine-count indictment charging her with, inter alia, mail and wire fraud, and money laundering. (Am. Cmplt. (White Dkt. No. 37) ¶¶ 7, 93; Am. Cmplt. (Taubman Dkt, No, 39) ¶¶ 3, 142; see also United States v. Rosales, 13 Cr. 518(KPF) (S.D.N.Y.) (Dkt. No. 14)) During her plea allocution, Rósales admitted that she had “agreed with others to sell works of art claimed to be created by various [Ejxpressionist artists ... and to make false representations as to the authenticity and provenance of those works.” (Am. Cmplt. (Taubman Dkt. No. 39) ¶¶ 3, 142) Rosales also admitted that thé Rosales Paintings had been created by Pei-Shen Qian, working in concert with the Diaz brothers. (Am. Cmplt. (White Dkt. No. 37) ¶ 93) On March 31, 2014, Qian and the Diaz brothers were indicted for their role in the forged art scheme. (Id. ¶ 7)
II. PROCEDURAL HISTORY
A. Hilti
On May 1, 2014, the Martin Hilti Family Trust filed an amended ■ complaint against Defendants Knoedler Gallery, LLC d/b/a Knoedler & Company, Ann Freedman, Michael Hammer, 8-31 Holdings, Inc., Glafi-ra Rosales, Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, Pei-Shen Qian, Per Haubro Jensen, Jaime Andrade, and Hammer Galleries, LLC. (Am. Cmplt. (Hilti Dkt. No. 46)) The Amended Complaint pleads the following causes of action: (1) substantive RICO and RICO .conspiracy claims against all Defendants except Hammer Galleries; (2) deceptive trade practices and false advertising claims, pursuant to N.Y. Gen. Bus. Law §§ 349, 350, against Knoedler, Hammer, and 8-31; (3) fraud and fraudulent concealment claims against, among others, Knoedler, Freedman, Hammer,' and 8—31; (4) an aiding and ■abetting fraud claim against, among others, Hammer and 8-31; (5) conspiracy to commit fraud and conspiracy to commit fraudulent concealment claims against, among others, Hammer and 8-31; (6) an aiding and abetting fraudulent concealment claim against, among others, Hammer and 8—31; (7) breach of warranty, unilateral mistake, -and mutual mistake claims against Knoedler, Hammer, and 8-31; and (8) an unjust enrichment' claim against, among others, Freedman, Hammer, and Hammer Galleries. (Id.)
Defendants Knoedler, Freedman, Hammer, 8-31 Holdings, and Hammer Galleries have moved to dismiss the claims against them pursuant to Fed.R.Civ.P. 12(b)(6). (Hilti Dkt. Nos. 91, 93, 95, 104)
B. White
On April 29, 2014, White, filed an amended complaint against Ann Freedman, Glafira Rosales, Knoedler Gallery, LLC, d/b/a Knoedler & Company, Michael Hammer, 8-31 Holdings, Inc., Jose Carlos Bergantinos Diaz, Jaime R. Andrade, Jesus Angel Bergantinos Diaz, and Pei Shen Qian. (Am. Cmplt. (White Dkt. No. 37)) The White Amended Complaint pleads the following causéis of action: (1) fraud and fraudulent concealment against Knoedler, Freedman, Hammer, an.d 8-31; (2) aiding and abetting fraud and conspiracy to commit fraud claims against, among others, Hammer and 8-31; (3) substantive RICO and RICO conspiracy claims against all Defendants; (4) breach of express and- implied warranty claims and violation of § 13.01 of the N.Y. Arts and Cultural Affairs Law against Knoedler, Freedman, Hammer, and 831; (5) unilateral mistake and mutual mistake claims against Knoe-dler, Hammer, and 8-31; and (6) deceptive trade practices and false advertising claims, pursuant to N.Y. Gen. Bus. Law §§. 349, 350 against .Knoedler, Freedman, Hammer, and 8-31. (Id.)
Defendants Knoedler, Freedman, Hammer, and 8-31 Holdings have moved to dismiss the claims against them pursuant to Fed.R.Civ.P. 12(b)(6). (White Dkt. Nos. 72, 74, 85)
C. Taubman
On April 29, 2014, the Arthur Taubman Trust, Eugenia Taubman/ and Nicholas Taubman filed an amended complaint against Knoedler Gallery, LLC, d/b/a Knoedler & Company, 8-31 Holdings, Inc., Ann Freedman, Michael Hammer, Glafira Rosales, and José Carlos' Bergantinos Diaz. (Am. Cmplt. (Taubman Dkt. No. 39)) The Taubman Amended Complaint pleads the following causes of action: (1) fraud and fraudulent concealment against Knoe-dler, Freedman, and 8-31; (2) aiding and abetting fraud and conspiracy to commit fraud claims against, among others, Hammer and 8-31; (3) substantive RICO and RICO conspiracy claims against all Defendants; (4) breach,of express and implied warranty claims and violation of § 13.01 of the N.Y. Arts and Cultural Affairs Law against Knoedler and 8-31; (5) unilateral mistake and mutual mistake claims against Knoedler and 8-31; and (6) deceptive trade practices and false advertising claims, pursuant to N.Y. Gen. Bus. Law §§ 349, 350 against Knoedler, Freedman, and 8-31. (Id.)
Defendants Knoedler, Freedman, Hammer, and 8-31 Holdings have moved to dismiss the claims against them pursuant to Fed.R.Civ.P. 12(b)(6). (Taubman Dkt. Nos. 61, 63, 70)
DISCUSSION
I. MOTION TO DISMISS STANDARD
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible" on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “In considering a motion to dismiss ... the court is to accept as true all facts alleged in the complaint,” Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir.2007) (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir.2002)), and must “draw all reasonable, inferences in favor of the plaintiff.” Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir.2006)).
A complaint is inadequately pled “if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement,’” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955), and does not provide factual allegations sufficient “to give the defendant fair notice of what the claim is and the grounds upon which it rests.” Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir.2007) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
“In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir.2010) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002); Hayden v. Cnty. of Nassau, 180 F.3d 42, 54 (2d Cir.1999)). “Where a document is not incorporated by reference, the court may nevertheless ’consider it where the complaint ‘relies heavily upon its térms and effect,’ thereby rendering the document ‘integral’ to the complaint.” Id. (quoting Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir.2006)) (quoting Chambers, 282 F.3d at 152-53).
A district court may also “rely on matters of public record in deciding a motion to dismiss under [R]ule 12(b)(6).” Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d Cir.1998); see also Blue Tree Hotels Inv. (Can.), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir.2004) (“[W]e may also look to public records ... in deciding a motion to dismiss.”) “In the motion to dismiss context, ... a court should generally take judicial notice ‘to determine what statements [the documents] contain[ ][,] ... [but] not for the truth of the matters asserted.’ ” Schubert v. City of Rye, 775 F.Supp.2d 689, 698 (S.D.N.Y.2011) (quoting Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir.1991)).
Fed.R.Civ.P. 9(b) sets standards for pleading fraud claims, and requires -that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b); see also In re Pfizer Inc. Sec. Litig., 584 F.Supp.2d 621, 632-33 (S.D.N.Y.2008). Rule 9(b) requires a plaintiff to “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Kottler v. Deutsche Bank AG, 607 F.Supp.2d 447, 462 (S.D.N.Y.2009) (quoting Stevelman v. Alias Research, Inc., 174 F.3d 79, 84 (2d Cir.1999) (internal quotation marks and citation omitted)).
II. SUCCESSOR LIABILITY
White purchased the forged Pollock in April 2000. (Am. Cmplt. (White Dkt. No. 37) ¶¶ 1, 39,115,175(g)) Knoedler Gallery, LLC and 8-31 Holdings, Inc. were not formed until 2001, however. (Sehmerler Deck (Dkt. No. 76), Ex. A at 1, Ex. B at 1) Both entities argue that all claims against them should be dismissed because White’s Amended Complaint does not allege sufficient facts to demonstrate successor liability. (Knoedler/8-31 Br. (White Dkt. No. 75) at 1)
As to 8—31, the Court agrees that White has not pled facts demonstrating that 8-31 is the successor to any entity that existed in 2000. Accordingly, White cannot proceed against 8-31 on a successor liability theory. As discussed later in this opinion, however, White has pled facts demonstrating that 8-31 is Knoedler’s alter ego. Moreover, for the reasons discussed below, this Court concludes that White has pled facts sufficient to show that Knoedler is a successor to the entity that sold the forged Pollock to White.
White argues that Knoedler is liable under both the “de facto merger” and “mere continuation” theories of successor liability (Pltf. Br. (White Dkt. No. 82) at 7-9), while Knoedler argues that White has failed to state a claim for successor liability under either theory. (Knoedler/8-31 Reply Br. (White Dkt. No. 81) at 2-5)
White’s Amended Complaint alleges that “Knoedler Gallery, LLC is the successor-in-interest of'M. Knoedler & Co. and/or of Knoedler-Modareo, Inc., all of which did business as ‘Knoedler & Company,’ and each of which is a mere continuation of the prior entity operating under that name.” (Am. Cmplt. (White Dkt. No. 37) ¶¶11, 103, 1 n. 1) 8-31 is the sole member of Knoedler, and “Hammer is, and has been since 1990, directly and/or via 8-31 and/or Knoedler-Modareo, the sole beneficial owner of Knoedler.” (Id. ¶¶ 12-13) White further alleges that Knoedler operated for 200 years before it closed, and that Freedman was the “Director, President and/or sole manager of Knoedler beginning in 1994[, through 2009].” (Id. ¶¶5, 10, 86) Finally, White alleges that, “[a]t all relevant times, Hammer managed and oversaw the officer-level personnel and company finances of Knoedler.” (Id. ¶ 12)
Knoedler is a Delaware limited liability company whose sole member is 8-31, which is a Delaware corporation. (Id. ¶¶ 11,13) Both entities have their principal place of business in New York. (Id.)
“In federal question cases, federal courts generally apply a federal-law—as opposed to a state-law—choice of law analysis to determine which jurisdiction’s substantive law is applicable.” Lyons v. Rienzi & Sons, Inc., 863 F.Supp.2d 213, 221 (E.D.N.Y.2012). on reconsideration in part, No. 09 Civ. 4253, 2012 WL 1339442 (E.D.N.Y. Apr. 17, 2012); see also Barkanic v. Gen. Admin. of Civ. Aviation of the People’s Repub. of China, 923 F.2d 957, 961 (2d Cir.1991). “The federal common law choice-of-law rule is to apply the law of the jurisdiction having the greatest interest in the litigation.” In re Koreag, Controle et Revision S.A., 961 F.2d 341, 350 (2d Cir.1992).
“In a federal question action where a federal court is exercising supplemental jurisdiction over state claims, the federal- court applies the choice-of-law rules of the forum state.” Manning Int’l Inc. v. Home Shopping Network, Inc., 152 F.Supp.2d 432, 436 n. 3 (S.D.N.Y.2001). “Under the law of New York, the forum state, the first step in a choice of law analysis is to determine whether an actual conflict, exists between the laws of the jurisdictions involved.” Forest Park Pictures v. Universal Tel. Network, Inc., 683 F.3d 424, 433 (2d Cir.2012). Where an actual conflict exists, “ ‘New York courts seek to apply the law of the jurisdiction with the most significant interest in, or relationship to, the dispute.’” Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1539 (2d Cir.1997) (quoting Brink’s Ltd. v. South African Airways, 93 F.3d 1022, 1030 (2d Cir.1996)); see also Forest Park Pictures, 683 F.3d at 433.
The parties have briefed both New York and Delaware law. See Knoedler/8-31 Reply Br. (Dkt. No. 81) at 2-5; Pltf. Br. (Dkt. No. 82) at 6-9. It is not necessary to resolve the issue of which state’s law applies to the successor liability issue, however, because New York and Delaware law are generally in agreement, and to .the extent they differ, that difference has no bearing on resolution of the successor liability issue here.-
“TO state a claim based on- successor liability, a plaintiff must -plead enough facts for the Court to infer that one of the exceptions to ‘the general rule finding that a business entity acquiring the assets from another business generally results in no successor liability.’ ” New York v. Town of Clarkstown, 95 F.Supp.3d 660, 682 (S.D.N.Y.2015) (quoting City of Syracuse v. Loomis Armored US, LLC, 900 F.Supp.2d 274, 288 (N.D.N.Y.2012)); Hayden Capital USA, LLC v. Northstar Agri Indus., LLC, No. 11 Civ. 594(DAB), 2012 WL 1449257, at *4 (S.D.N.Y. Apr. 23, 2012) (“[B]oth New York and Delaware recognize that when one company sells or transfers all of its assets to another company, the acquiring company generally does not become liable for the debts or liabilities of the seller/transferor.”). “Both Delaware and New York [ ] recognize that there are [four] exceptions to this rule: (1) where the buyer expressly assumed the debt at issue; (2) where the transaction amounted to a fraud; (3) where the transaction constitutes a defacto merger; or (4) where the successor is a mere continuation of the predecessor.” Hayden Capital USA, LLC, 2012 WL 1449257, at *4 (citations omitted). Only the latter two exceptions are at issue in this case.
Under New York law, the hallmarks of a defacto merger include:
(1) continuity of ownership; (2) a cessation of ordinary business and dissolution of the acquired corporation as soon as possible.; (3) assumption by the . successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and (4) a continuity of management, personnel, physical location, assets, and general business operation.
Societe Anonyme Dauphitex v. Schoen-felder Corp., No. 07 Civ. 489, 2007 WL 3253592, at *3 (S.D.N.Y. Nov. 2, 2007) (citing Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 46 (2d Cir.2003)). Moreover, “there is significant support in the case law for the notion that ‘not all [of] these elements are necessary to find a de facto merger.’ ” Id. (quoting Fitzgerald v. Fahnestock & Co., Inc., 286 A.D.2d 573, 574-75, 730 N.Y.S.2d 70 (1st Dep’t 2001)).
Under Delaware law, a de facto mergér requires the following elements:
(1) one corporation transfers all of its assets to another corporation; (2) payment' is made in stock, issued by the transferee directly to the shareholders of the transferring corporation; and (3) in exchange for their stock in that corporation, the transferee agreeing to assume all the debts and liabilities of the transferor.
SungChang Interfashion Co. v. Stone Mountain Accessories, Inc., No. 12 Civ. 7280(ALC)(DCF), 2013 WL 5366373, at *14 (S.D.N.Y. Sept. 25, 2013) (quoting Magnolia’s at Bethany, LLC v. Artesian Consulting Eng’rs Inc., No. S11 C04013, 2011 WL 4826106, at *3 (Del.Super.Ct. Sept. 19, 2011)).
Although under both New York and Delaware law a plaintiff attempting to demonstrate a de facto merger must allege continuity of ownership between the selling and acquiring corporations, the two states interpret this element differently. Under New York law, it is sufficient to allege that “shareholders of the selling corporation hold even an indirect interest in the assets.” SungChang, 2013 WL 5366373, at *14 (citing In re New York City Asbestos Litig., 15 A.D.3d 254, 256, 789 N.Y.S.2d 484 (1st Dep’t 2005) (“The first criterion, continuity of ownership, exists where the shareholders of the predecessor corporation become direct or indirect shareholders of the successor corporation as the result of the successor’s purchase of the predecessor’s assets, as occurs in a stock-for-assets transaction.”)). “In contrast, under Delaware law, the ‘continuity of ownership’ element is only met if shareholders of the predecessor corporation acquire a -direct ownership interest in the successor corporation.” SungChang, 2013 WL 5366373, at *15 (emphasis in original) (citations omitted).
Here, given the allegations of the Amended Complaint, it is not clear that White is alleging that the shareholders of the predecessor companies—M. Knoedler and .Co. and Knoedler-Modarco, Inc.—acquired, a direct ownership interest in the successor entity, Knoedler Gallery, LLC. White alleges that Hammer ultimately controlled or controls all of these entities, but White pleads that 8-31 is the sole member of Knoedler Gallery, LLC, and it is unclear whether 8-31 existed prior to the creation of Knoedler Gallery, LLC, Moreover, White does not allege that 8-31 is the successor to any entity that existed prior to Knoedler Gallery, LLC’s formation. Accordingly, it is possible that White is alleging that the shareholders in the predecessor corporation acquired an indirect interest in the successor company. An indirect interest in a successor corporation does not satisfy Delaware requirements for demonstrating the “continuity of ownership” element of a de facto merger. SungChang, 2013 WL 5366373, at *15. The Court need not resolve this issue, however, because White has .plausibly alleged Knoedler’s successor, liability under the “mere continuation” exception.
In both New York and'Delaware, “the mere continuation exception ... is only available where ‘it is not simply the business of the original corporation which continues, but the corporate entity itself.’ ” SungChang, 2013 WL 5366373, at *16 (quoting Colon v. Multi-Pak Corp., 477 F.Supp.2d 620, 626-27 (S.D.N.Y. Mar 07, 2007) (citations omitted)). “[Because] there is no actual conflict between Delaware and New York law on the mere continuation exception, [this Court] will apply New York law.” Id.
“The mere continuation exception applies where ‘it is not simply the business of the original corporation which continues, but the corporate entity itself and there is a ‘common identity of directors, stockholders, and the existence of only one corporation at the completion of the transfer.’” Silverman Partners LP v. Verox Grp., No. 08 Civ. 3103(HB), 2010 WL 2899438, at *5 (S.D.N.Y. July 19, 2010) (quoting Colon v. Multi-Pak Corp., 477 F.Supp.2d 620, 626-27 (S.D.N.Y.2007)) (internal quotation marks and citation omitted). Accordingly, where there is a common identity of directors and stockholders, and where the predecessor entity transfers not only assets, but also business location, employees, management and good will to the successor, this exception is applicable. McDarren v. Marvel Entm’t Group, Inc., No. 94 Civ. 910(LMM), 1995 WL 214482, at *8 (S.D.N.Y. Apr. 11, 1995). “ ‘[T]he underlying theory of the exception is that [ ] if [a] corporation goes through a mere change in form without a significant change in substance, it should not be. allowed to escape liability.'" Silverman Partners LP, 2010 WL 2899438, at *5 (quoting Societe Ano-nyms, 2007 WL 3253592, at *6) (second and third alterations in original).
Here, White alleges that Knoedler Gallery, LLC “is a mere continuation of the prior entity operating under that name” (Am Cmplt. (White Dkt. No. 37) ¶ 11), and the facts pleaded in the Amended Complaint bear out.this claim. The corporate change appears to have been a change in form rather than in substance. .Hammer’s control over Knoedler’s operations was not affected by the corporate change. “At all relevant times, Hammer managed and oversaw the officer-level personnel and company finances of Knoedler.” (Id. ¶ 12) Freedman also remained in her roles as “Director, President and/or sole manager of Knoedler.” (Id. ¶¶ 10, 86) Moreover, the predecessor entity transferred not only its assets, but also its business location, employees; management, and good will to the successor. -The allegations in White’s Amended Complaint are sufficient to support a claim of successor liability against Knoedler under the “mere continuation” theory of successor liability. See Societe Anonyme, 2007 WL 3253592, at *5-7 (plaintiff sufficiently alleged “mere continuation” where predecessor and successor company had shared office space, shared an address, shared employees and management, and where it was logical to infer that the successor company was created to avoid contractual liability).
III. STATUTE OF LIMITATIONS
In Hilty Knoedler, 8-31, Hammer, and Hammer Galleries argue that the statute of limitations has expired on all of Plaintiffs claims against them. (Knoedler/8-31 Br. (Hilti Dkt. No. 94) at 7-15; Hammer Br. (Hilti Dkt. No. 92) at 21 (adopting arguments made by Knoedler and Freedman); Hammer Galleries Br, (Hilti Dkt. No. 96) at 4-6) Freedman argues that the statute of limitations has expired on Plaintiffs fraud and fraudulent concealment claims, breach of warranty claims, and New York General Business Law claims against her. (Freedman Br. .(Hilti Dkt. No. 105) at 4, 8-12, 22, 24-25)
In Taubman, Knoedler, 8-31, and Hammer argue-that the statute of limitations has expired on. all of Plaintiffs’ claims against them. (Knoedler/8-31 Br. (Taub-man Dkt. No. 64) at 5r-13; Hammer Br. (Dkt. No. 62) at 20 (adopting arguments made by Knoedler and Freedman)) Freedman argues that the statute of limitations has expired on Plaintiffs’ fraud and fraudulent concealment claims, and deceptive business practices claims against her. (Freedman Br. (Taubman Dkt. No. 71) at 7-11,19-21)
In White, Knoedler, 8-31, and Hammer argue that the statute of limitations has exp