I began my last post with this statement about the importance of oral arguments in appellate matters: “As a student of appellate advocacy, I love to argue, attend, watch, and listen to oral arguments because I am convinced they do in fact shape the outcome of the ultimate decision.” That piece concerned the SCOTUS argument in Masterpiece Cake. See, This and That on December 21, 2017.
On Wednesday, January 24, 2018, I argued an insurance case of first impression in New York’s Appellate Division, First Department, styled DAE Associates, LLC d/b/a Danese Gallery v. AXA Art Insurance Corp., et al. The case presented legal issues that have vexed property insurers for years. What is a “fortuitous” physical loss? Must “fortuity” be “sudden and accidental?” If the insurance contract does not specifically exclude a peril, does coverage automatically attach? Does an “insurable interest” exist after the sale of insured property? And, very specific to this case, does an all at risk fine arts policy, which does not refer to “physical” loss or damage, cover defective title claims.
To be sure, the Court had studied the voluminous record. But my sense—and I hope I am right when the decision is handed down—the argument indeed will shape the outcome and reach of the decision.
Danese sold a stolen work of art and, by written contract, agreed to refund the purchase price if title proved defective. Perhaps the best summary of the operative facts comes from the question we put to the court in our brief:
Renato Danese, with a number or other intermediaries, brokered the sale of a stolen work of art, Untitled, 2002-2005, by Jasper Johns to Perry and Donna Golkin for $898,218.75. Those sale proceeds were divided among the intermediaries, with $175,000.00 going to Danese. In his written contract with the Golkins, Danese agreed to refund the full $898,218.75 sale price if title proved defective. After the FBI seized the stolen work, Renato Danese turned to AXA, requesting indemnity for the full $898,218.75 sale price of the stolen work. Danese did so even with an admitted awareness that he did not have title insurance for such reimbursement. Judge Oing properly found that there was no fortuitous loss of the work itself, but ruled the loss arose from a purely financial transaction: Danese’s breach of the Golkin sales contract. Under these circumstances, should Judge Oing’s decision be disturbed?
Answer: No.
The five judge bench was “hot” and, right from the start, asked pointed questions about fortuity; about the insured’s preliminary obligation to establish a case for coverage; about the coverage expectations of the insured, reasonable or otherwise, and, of significance, whether any existing precedent supported the notion that recovery of stolen property by the true owner resulted in a compensable insurance “loss” to anyone the chain of ownership.
In the past, based on the tenor of oral argument, I have not been shy about predicting outcomes. But here, as a contestant in the battle, I shall await the decision to comment further. And that’s it for this This and That.