ADDITIONAL CASES Rustam Iseev, Third-Party Plaintiff v. Nikolay Shchukin and Pavel Abramov, Third-Party Defendants In this action involving a loan for two million dollars and Russian fine art an inquest on damages was held on June 6, 2023 on the third-party complaint. The following documents were considered: NYSCEF Doc Nos 375-376, 384, and 417-430. PROCEDURAL BACKGROUND By decision and order dated October 28, 2019 plaintiff Shchukin House OU’s complaint and third-party defendant Nikolay Shchukin’s answer were stricken as sanctions pursuant to CPLR §3126 for failing to comply with discovery orders (NYSCEF Doc No 272)1. This decision was affirmed by the First Department (NYSCEF Doc No 320). By amended decision and order dated April 17, 2023 Iseev’s motion for a default judgment on his third-party complaint as against third-party defendant Pavel Abramov was granted (NYSCEF Doc No 356). Defendant Iseev’s verified answer/third party complaint naming Nikolay Shchukin (the principal of Shchukin House Ou) and Pavel Abramov as third-party defendants alleges that they failed to tender payment on a loan to them from Iseev in the amount of two million U.S. dollars and that the third-party defendants pledged the five pieces of artwork to secure the loan (third-party complaint, NYSCEF Doc No 101). In his third-party complaint Iseev asserts four causes of action against third-party defendants for breach of contract [first cause of action], implied indemnification [second cause of action], prima facie tort [third cause of action] and breach of implied warranty of title [fourth cause of action] (id.). By amended scheduling order dated April 21, 2023 an inquest on Iseev’s damages was set for June 6, 2023, the order also allows Issev the option of submitting his proof on papers pursuant to 22 NYCRR §202.46[b] (NYSCEF Doc No 361). The April 21, 2023 order further provides that pursuant to CPLR 3215(b) plaintiff/third-party defendants were to provide notice whether they intended to appear at the inquest to contest the amount of damages sought by Iseev (id.). Plaintiff/third-party defendant Shchukin by correspondence dated May 15, 2023 advised that he intended to appear at the inquest to contest damages (NYSCEF Doc No 369). Iseev submitted his proof of damages on papers and indicated he is seeking damages based on his breach of contract and indemnification claims under the Russian Civil Code and is not pursuing his claims for breach of implied warranty of title and prima facia tort (NYSCEF Doc No 384 p1). Iseev argues that he is entitled to interest based on Russian law. At the inquest on June 6, 2023 counsel presented arguments on the record but no testimony was taken.2 THE PARTIES’ SUBMISSIONS Iseev’s Submissions Iseev re-submits the affidavit he submitted in support of his motion (MS #7) for summary judgment dismissing the complaint (NYSCEF Doc No 384, Ex 1). Iseev states in his affidavit that on October 2, 2013 he entered into an agreement with third-party defendants Shchukin and Abramov to loan them the equivalent of two million U.S. dollars to be repaid no later than July 6, 2015 (id.
4-6). A copy of the loan agreement is attached to Iseev’s affidavit as exhibit A (Doc No 384, pp 35-36). Iseev further states that Shchukin and Abramov agreed to pledge their ownership rights in fourteen artworks as collateral for the loan and entered into two pledge agreements with him (id. 7). The pledge agreements are annexed as exhibits B and C to his affidavit (Doc No 384, pp 42-44 & 49-51). Iseev avers that to prove ownership of the paintings, Shchukin and Abramov presented him with a copy of a joint purchase agreement wherein they agreed they were purchasing the paintings to re-sell at a higher price at a later date; however, the agreement is between the purported two purchasers, Shchukin and Abramov, not between the purchasers and the owner of the artworks (id. 8; purchase agreements annexed to Iseev’s affd as Ex D [Doc No 384, pp 62-73]). Iseev does not include a document establishing that Shchukin and Abramov actually purchased the fourteen artworks. According to Iseev on June 26, 2015 he entered into three additional pledge agreements with Abramov for three paintings by Kazimar Malveich, “Suprematism”, “Suprematist Composition With a Circle” and “The Artist Klun Portrait”(id. 9; copies of the pledge agreements are annexed to Iseev’s affd as Exs E, F & G [Doc No 384, pp 81-85, 92-96 & 103- 106]). Iseev indicates that “Abramov told me that ownerships [sic] rights to ‘The Artist Klun, Portrait’ are based on a Purchase and Sale Agreement” (id. 10). The purchase and sale agreement Iseev refers to is annexed to his affidavit as exhibit H but the agreement is between “‘Shchukin House’ OU” “represented by its owner, Nikolay Shchukin” and “Alamano Management Ltd., Commonwealth Trust Limited, Drake Chambers, Tortola AO” “represented by its Director, Pavel Yurievich Abramov” (id. [Doc No 384, pp 110-111]). As to the other two artworks, Iseev avers that “[b]ased upon information and belief, ‘Suprematism’ and ‘Suprematist Composition With a Circle’ by Malevich were bought by Shchukin and Abramov pursuant to the [ ] Joint Purchase Agreements” (id. 11). The agreements that Iseev bases his information and belief on are annexed to his affidavit as exhibit I; however, again, the agreements are purportedly among now three purchasers, Shchukin, Abramov and Iseev not between the purchasers and the owner of the artworks (id., Ex I [Doc No 384, pp 116-118]). Iseev does not mention in his affidavit that he is purportedly one of the purchasers of the two artworks; indeed, he states explicitly that the owners of the two works of art are Shchukin and Abramov. Iseev states that “[o]n July 6, 2015 [the date by which the loan was to be repaid], none [sic] of the debtors were able to repay even a portion of the debt” and that after contacting Shchukin and Abramov they “conceded that they were in default and did not have the financial resources to repay the loan” (id.
