The firm recently secured a victory for boutique investment firm Piedmont Capital LLC and related parties in a federal RICO action brought by Alejandro Domingo Malvar Egerique involving competing claims to a work of art by Pablo Picasso. In 2017, Piedmont lent money to an art dealer in exchange for a promise to repay, a finance charge, and several works of art pledged as collateral, including Picasso’s Le Gueridon. On month later, the art dealer defaulted on the loan and purported to transfer ownership of the collateral to Piedmont. It was later revealed that the art dealer had falsely represented to Piedmont that he was the record owner of the Picasso when, in fact, he merely held the work on consignment—one of several criminal fraud schemes to which the dealer ultimately pled guilty and for which he was sentenced to 18 months in prison. Mr. Malvar, the consignor of the Picasso, sued the art dealer along with Piedmont and related parties—including Piedmont’s owner, his wife, his father-in-law, and his father-in-law’s art gallery—alleging that they had conspired to defraud him of the artwork and were liable for various RICO violations and state law claims.
Quinn Emanuel moved to dismiss the complaint based on numerous pleading deficiencies and jurisdictional arguments, including lack of a domestic injury under RICO and failure to plead a sufficient pattern of racketeering activity. The firm also filed a Rule 11 sanctions motion against opposing counsel, asserting that he recklessly filed his meritless complaint against innocent parties and should be held accountable. On April 24, 2020, the U.S. District Court for the Southern District of New York dismissed every claim against Piedmont and related defendants except for a replevin/conversion claim premised on the inaccurate allegation that Piedmont possesses the work. The Court also granted Piedmont’s motion for Rule 11 sanctions and ordered opposing counsel to pay monetary sanctions based on the recklessness of certain factual allegations in the complaint—notwithstanding opposing counsel’s argument that the motion was merely a bullying tactic, citing Quinn Emanuel’s reputation as “Most Feared” law firm in the world.
This victory follows on a previous win for Piedmont approximately one year earlier, on April 2, 2019, when the U.S. District Court for the Southern District of New York denied the government’s motion to dismiss Piedmont’s petition in forfeiture proceedings following the art dealer’s criminal conviction, in which Piedmont asserted an interest in a second artwork by Picasso that the art dealer had pledged as collateral. The original owners had consigned the work to the art dealer, who subsequently sold the work to a third party, resulting in a transfer of title to the third party under the UCC’s entrustment doctrine. Quinn Emanuel advanced the novel argument that when the third party later sold the work back to the art dealer, it transferred clear title to the work and the right of possession. As a result, the art dealer owned the work outright at that point and could post the work as collateral and transfer title. The Court accepted Quinn Emanuel’s novel argument and denied the government’s motion to dismiss.