Sotheby’s could be held responsible for missing diamonds, according to a decision – JCK

On July 14, a California court ruled that Sotheby’s could be liable for $4 million in missing diamonds.

According to the call decision in Los Angeles Superior Court – which assumes that all of the facts of the plaintiff’s complaint are true – the sequence of events leading up to the trial unfolded as follows:

– Jona Rechnitz, owner of Jadelle Diamonds and Jewelry, owed money to M&L Financial, a Los Angeles-based finance company.

– As security for his debt, Rechnitz transferred ownership of 45 bright yellow diamonds to M&L on the understanding that they could eventually be redeemed.

– Rechnitz later proposed that M&L list diamonds at Sotheby’s, where he had a long-standing relationship with a jewelry executive.

– M&L took the diamonds to Sotheby’s, who sent the diamonds to their New York office for appraisal.

– In late 2019, Sotheby’s told M&L it gave the diamonds to an associate of Rechnitz.

– The auction house had no written record of the release of the diamonds.

The Superior Court based its decision on the contract signed by M&L. It listed a space for “Sender Name” (singular). The Sotheby’s executive originally wrote both “Jadelle Jewelry + M&L Financial Inc.”, which M&L protested as inaccurate. The executive of Sotheby’s would have accepted. M&L signed the form, without deleting the word “Jadelle”.

A lower court ruled in favor of the auction house, citing precedent that where a deposit is made with “one or more persons”, payment can be made to either person.

But the Court of Appeal overturned that judgment.

“Sotheby’s view is that the written contract governs, plain and simple, and cannot be informed by what M&L has told Sotheby’s,” the ruling said. “M&L claimed to have explained the situation to Sotheby’s, which expressed its agreement. This allegation controls at this point.

Sotheby’s tells JCK that he “considers the allegations contained in the complaint to be baseless and full of untruths and distortions. We will continue to vigorously defend this in court.

Rechnitz notes that he is not being prosecuted in his case and agrees with Sotheby’s that the complaint contained “misrepresentations”.

JCK previously reported that Rechnitz’s company, Jadelle, went bankrupt after being the target of multiple lawsuits. Los Angeles Assistant U.S. Attorney Dan Boyle has since said that Rechnitz was the victim of a robbery, in which his property was stolen. This led to the majority of the lawsuits against Jadelle, as well as the bankruptcy case, being fall.

M&L’s attorney did not respond to a request for comment at the time of publication.

Photo: Getty Images Plus/Alena Kravchenko

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Sarah C. Figueiredo