Lawsuit alleging intentionally botched auction of antique toys can proceed
The Legal Intelligencer
A couple who had to sell off their expansive collection of antique toys as part of a bankruptcy can proceed with their lawsuit against the auction house alleging a conspiracy to sell the items for less than their full value.
U.S. District Chief Judge Lawrence F. Stengel of the Eastern District of Pennsylvania granted in part and denied in part Downingtown-based auction house Pook & Pook’s motion to dismiss.
Judge Stengel allowed antique toy collectors Carter and Sarah Reese’s civil conspiracy/combination, breach of fiduciary duty, negligence, and breach of the contractual duty of good faith and fair dealing and dishonesty in fact claims to move forward to discovery and dismissed a count of unjust enrichment.
The Reeses filed for Chapter 11 bankruptcy in 2012. As part of the process, they had to sell 2,400 toys and retained Pook & Pook to handle the auction.
According to Judge Stengel’s opinion, Pook & Pook took a 5 percent sales commission for all sales of the auctioned items up to a total of $1.8 million in sale proceeds. The firm also was entitled to charge and retain a buyers’ commission of 18.5 percent.
The Reeses claimed that the actual proceeds of $560,000 fell well short of what the inventory was worth. They alleged that toy experts retained by Pook & Pook, defendants Jay Lowe and Mike Caffarella, botched the toy arrangement at the auction, resulting in lower sales — which they claim was actually a ploy by Mr. Lowe to enable him to buy the toys for himself at lower prices.
In response to the Reeses’ subsequent lawsuit, Pook & Pook and the other defendants argued that the Reeses had failed to adequately show that a civil conspiracy took place. They argued that the Reeses could not point to a single overt act on the part of any of the Pook defendants to advance the alleged conspiracy, or that the Pook defendants acted with malice.
However, Judge Stengel disagreed, reasoning that more information was needed.
“At this stage of the proceedings, the relationship among the Pook defendants, Mr. Lowe and Mr. Caffarella, is unclear. The second amended complaint alleges that defendant James Pook informed plaintiff Carter Reese that he was going to use a pair of ‘toy experts’ to assist in the auction of the Reeses’ toy collection. Mr. Reese then confirmed that Mr. Lowe and Mr. Caffarella were the toy experts.
“The second amended complaint also asserts that Mr. ‘Caffarella, in combination with Lowe, was Pook & Pook’s agent relative to the sale of certain items from the Reeses’ collection of antique toys,’” Judge Stengel said.
He added, “While I agree with the basic premise of this argument, i.e., there are no allegations of an overt act on the part of the Pook defendants, I will allow this claim to proceed to discovery to explore whether the relationship among the Pook defendants and their co-defendants could have triggered liability basedon an agency relationship.”
The Reeses’ attorney, Joseph O’Keefe, and Pook & Pook’s lawyer, David J. Shannon of Marshall Dennehey Warner Coleman & Goggin, did not respond to requests for comment.