Zaretsky v. Willam Goldberg Diamond Corp.

69 F.Supp.3d 386 (2014)

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Nature of the Case

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Facts

In February 2003, the owner of the diamond - the William Goldberg Diamond Corporation (D) - consigned it to Derek Khan. Derek is a well-known celebrity fashion stylist. Khan to 'adorn his celebrity clients' with high-end jewelry. A Consignment Agreement made clear that Khan had no freestanding authority to 'sell, pledge, hypothecate, or otherwise dispose of the diamond. He could sell the diamond 'if and when he received from D a separate invoice.' Khan was only authorized to sell the diamond if D approved the sale, and set out specific terms, prior to any sale. In February 2003, Khan failed to return the diamond in a timely manner. D filed a police report. On March 17, 2003, the diamond-surfaced in the legitimate market, when Louis Newman - a New York diamond merchant - submitted the diamond to the GIA for certification. D notified the GIA that the diamond had been stolen. This was two days after Newman submitted the diamond for certification. GIA dropped the ball and issued the certification. The diamond was purchased by Stanley & Sons on behalf of Frank and Donna Walsh. The Walshes conveyed the diamond to Ps, their children. D argues that Khan stole the diamond and had no title to transfer. Ps argue that Khan was not a thief, but rather an entrusted merchant who held 'voidable title' in the diamond - and was therefore capable of transferring title - under the UCC. Ps argue that their parents acquired good title to the diamond, which was subsequently transferred to them. Both sides moved for summary judgment.