Sotheby’s not off the hook for loss of yellow diamonds, judge rules – ARTnews.com
A California federal judge ruled that Sotheby’s could be responsible for the loss of 45 yellow diamonds worth $4 million last week. The ruling overturned a previous lower court ruling in favor of the auction house.
M&L Financial, Inc., a financial services company, had sued Sotheby’s, claiming the house was responsible for the loss of the diamonds the company had consigned.
The company reportedly told the auction house that it was the sole owner of the jewelry. On the consignment deal, however, M&L was listed alongside Jadelle Jewelry and Diamonds, a Beverly Hills retailer that was allegedly the subject of a federal criminal investigation in 2020.
Jona Rechnitz, owner of Jadelle Jewelry and Diamonds in Beverly Hills and jeweler to celebrities like Kim Kardashian, owed M&L a substantial amount of money, according to the original suit. As security for his debt, Rechnitz reportedly transferred ownership of the diamonds to M&L, on the understanding that he could then buy them back at a fixed rate.
According to court documents, Rechnitz is friends with Quig Bruning, head of jewelry at Sotheby’s. Rechnitz proposed that M&L list the diamonds with the auction house. The diamonds were then taken by M&L to Sotheby’s in Los Angeles for consignment in April 2019.
Later that year, Sotheby’s handed over the diamonds to a man who was supposed to collect them on Rechnitz’s behalf. Sotheby’s did not notify M&L, and the house did not provide the judge with a written record of the release. M&L claimed not to have been informed and sued Sotheby’s.
Due to the ambiguity between the sending and the oral agreements, the judge “reverses[d] judgment and remand for further proceedings regarding M&L’s breach of contract claim. We award the costs to M&L.
In a statement, Sotheby’s said: “Sotheby’s considers the allegations contained in the complaint to be without merit and riddled with untruths and misrepresentations. We will continue to vigorously defend this in court.
M&L did not respond for comment.
Since their mysterious disappearance, the diamonds have not been found.