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Jerome M. Eisenberg, Inc. v. Hall - 2017 NY Slip Op 01437, 147 A.D.3d 602, 48 N.Y.S.3d 71 (App. Div. 1st Dept. 2017)

Rule:

The doctrine of mutual mistake may not be invoked by a party to avoid the consequences of its own negligence. Where a party, in the exercise of ordinary care, should have known or could easily have ascertained the relevant fact, that party is deemed to have been "consciously ignorant" and barred from seeking rescission or other damages. This is true even where a party must go beyond its own efforts in order to ascertain relevant facts, such as obtaining experts' reports.

Facts:

Plaintiff Jerome M. Eisenberg bought and sold antiquities and was a self-proclaimed expert in classical antiquities. Defendants Maurice E. Hall, Jr., Michael Hall Collections, Inc., and Michael Hall Fine Arts, Inc. (collectively, "Hall") were art dealers; Hall represented that he was merely an "amateur collector" of classical antiquities, and Eisenberg did not believe Hall to be an expert in classical antiquities. Eisenberg purchased two items from Hall, believing them to be ancient artifacts. Eisenberg later discovered that the items were modern forgeries. Eisenberg filed a lawsuit against Hall in New York state court alleging causes of action for, inter alia, breach of contract. Eisenberg thereafter filed a motion for summary judgment alleging that due to the "mutual mistake" of the parties regarding whether the items were ancient, Eisenberg was entitled to summary judgment. The trial court denied the motion and granted Hall's motion dismiss Eisenberg's remaining claims. Eisenberg appealed as to the breach of contract claim.

Issue:

Was Eisenberg entitled to summary judgment on his breach of contract claim based on the doctrine of mutual mistake?

Answer:

No.

Conclusion:

The appellate division affirmed the trial court's judgment. The court ruled that although the record reflected that both Eisenberg and Hall mistakenly assumed at the time of the transactions that the items at issue were ancient, issues of fact exist as to whether Eisenberg bore the risk of that mistake due to his "conscious ignorance" of the items' authenticity. While both parties shared the mistaken belief that the items were "ancient," the present record did not support a finding that Eisenberg did not consciously ignore his uncertainty as to a crucial fact. Questions existed as to whether Eisenberg genuinely believed the items to be ancient, or was aware that they might not be ancient but decided to assume that risk.

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