Long after the flood waters of Superstorm Sandy have receded, the after-math from the 2012 storm continues to play out in the courts.
Last week, the New York Supreme Court handed Christie’s Fine Art Storage a legal defeat in its lawsuit with Chowaiki Art Gallery. The court found Christie’s legally negligent for its failure to adequately protect the art owed by Chowaiki and stored in Christie’s facility. The court held that despite promising to take “extra precautions” to protect Chowaiki’s art, Christie’s did nothing to protect Chowaiki’s belongings.
Nevertheless, Christie’s had hoped to prevail in court by relying on a loss/damage waiver signed by Chowaiki in favor of Christie’s, which stated that Chowaiki not look to Christie’s in the event of a loss. Rather, Chowaiki agreed that it would seek recovery for damages to its art under its own insurance policy. Unfortunately for Christie’s, the court found that the agreement between Christie’s and Chowaiki created a bailor/bailee relationship under the Uniform Commercial Code, meaning that the exculpatory clause of the agreement is invalid.
The decision is a reminder that companies need to look beyond the “four corners” of the client agreement to determine its obligations and responsibilities to customers.
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