By Caitlin McCurdy, Law Clerk
The unprecedented devastation of Hurricane Sandy forced many art owners to ask, what do I do with my collection now that it’s been irreparably damaged? AXA Art Insurance Corporation v. Christie’s Fine Art Storage, No. 652862 (N.Y. Sup. Ct.. Aug. 15, 2013), brings this question into stark relief for one major collection.
The Jacqueline Piatigorsky Revocable Trust contracted with Christie’s Fine Art Storage Services to store its collection at Christie’s Warehouse in Red Hook, Brooklyn. When Hurricane Sandy hit Brooklyn on October 29, 2012, the Trust’s art collection was in the staging area on the ground floor of Christie’s warehouse. The Trust claims that the collection suffered severe damage and is seeking $1.5 million.
Background
AXA Art Insurance Corporation, which insured the Trust’s collection, alleges that the collection sustained damage during the storm because Christie’s negligently left it on the ground floor of the warehouse—despite repeated flood warnings that the Red Hook area could receive as much as 11 feet of water. Authorities evacuated the entire Red Hook area before the storm.
In its complaint, AXA alleges that Christie’s sent two form emails to its clients, one before the storm and one after. The first outlined the precautions Christie’s was prepared to take to mitigate any damage, including raising all of the art on the first floor off the ground. Christie’s post-storm email stated that it had inspected the warehouse and found no damage to the property. Despite these assurances, the Trust alleges that its collection suffered water damage, affecting its value to the tune of $1.5M.
Causes of Action & Christie’s Motion to Dismiss
AXA alleged four causes of action against Christie’s: (1) gross negligence, (2) negligent misrepresentation, (3) breach of contract (bailment), and (4) breach of contract (non-performance). AXA claims that Christie’s was grossly negligent because it was on notice about the potential impact of Sandy, yet it left the collection on the ground floor staging area without even elevating it off the ground. AXA also contends that Christie’s had no reasonable grounds for believing that the representations in made in its two emails were true, that it breached the bailment contract by failing to keep the collection in a reasonably safe condition, and that it breached the contract through nonperformance by leaving the art on the ground floor staging area for more than a week after representing to the Trust that it would only take one to two days to process the collection and place it in a secure storage area.
On November 22, Christie’s moved to dismiss AXA’s complaint. Christie’s asserted that Sandy was an Act of God, meaning that no amount of foresight could have prevented the damage. Christie’s also argued that the Trust agreed to procure insurance and waive subrogation against Christie’s for any loss or damage to the property. The Loss Damage Liability Waiver (“LDL waiver”) that the Trust signed required the Trust to notify AXA of the LDL waiver and arrange for the insurance carrier to waive any rights of subrogation against Christie’s. However, Christie’s argues that even if it is found liable, the Trust agreed to limit Christie’s liability to $100,000 for any loss of or damage to the property.
More News to Come
The outcome of this case is still pending. Both parties have agreed to postpone a decision on Christie’s motion to dismiss until the end of January. At this point, the “good news” takeaway for the Trust is that insurance pays, so regardless of the outcome of the subrogation suit, the Trust will be compensated. The only undecided question is whether AXA or Christie’s will pay. The “bad news” is that art is unique; a $1.5 million pay-out may not fix all of the damage and it certainly cannot replace a piece of the collection if it was totally destroyed.
Tips for art owners at the outset of possible natural disasters: Owners should always insure their collections, even though insurance is not a cure-all. Always follow up on mass communications so that you can receive specific information about the safety of your art. Natural disasters happen, and often their severity is not properly predicted.