M & L Financial v. Sotheby's

Filed 7/14/22 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

M & L FINANCIAL, INC., B312816

Plaintiff and Appellant, Los Angeles County Super. Ct. No. 20STCV12144 v.

SOTHEBY’S, INC.,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County, Mark V. Mooney, Judge. Affirmed in part, reversed in part, and remanded with directions.

Bienert Katzman Littrell Williams, Michael R. Williams and Nancy J. Sandoval for Plaintiff and Appellant.

Sheppard, Mullin, Richter & Hampton, Todd E. Lundell, Adam F. Streisand, Bryan M. Wittlin and Meghan K. McCormick for Defendant and Respondent.

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M & L Financial, Inc. (M&L) took 45 vivid yellow diamonds worth $4 million to Sotheby’s for auction on consignment. M&L told Sotheby’s it was the exclusive owner of the diamonds, but Sotheby’s later released them to a stranger without telling M&L. The diamonds vanished. M&L sued Sotheby’s, which escaped on demurrer. We reverse a breach of contract ruling, affirm a tort ruling, and remand. Statutory citations are to the Civil Code. We independently review demurrer rulings, taking the complaint’s allegations as true. Leon Landver is the principal of M&L. We call the two M&L. A man named Jona Rechnitz owed M&L “substantial” sums. As security for his debt, Rechnitz transferred ownership of 45 vivid yellow diamonds to M&L on the understanding Rechnitz could repurchase them at a fixed price. Then Rechnitz had another idea: he proposed M&L list the diamonds with Sotheby’s, an auction house. M&L had never dealt with Sotheby’s, but Rechnitz said he had a long-standing relationship with an executive there named Quig Bruning. M&L did not know, but later learned, Bruning and Rechnitz were friends. Rechnitz had flown Bruning to Las Vegas in a private jet and had given Bruning valuable tickets to a sporting event. Rechnitz proposed to introduce M&L to Bruning. M&L, Bruning, and Rechnitz met in April 2019 at Sotheby’s Los Angeles office. M&L brought the diamonds to the meeting, and that was the last it saw of them. Bruning explained the first step in the auction process was for him to send the diamonds to Sotheby’s New York office for appraisal. Depending on the results, Sotheby’s would decide