## Facts

- In May 1986, an auction house offered a painting attributed to Frank Weston Benson (*Interior*) for sale; the catalogue described its provenance as a “midwestern club,” and it did not sell.
- On December 5, 1986, the painting was offered again and was purchased by collectors for $38,500; the second catalogue omitted an express provenance statement.
- After the sale, the auction house provided a nameplate stating the painting had belonged to a Michigan club and stated the club had acquired the work directly from Benson.
- In 1990, the auction house issued an appraisal reaffirming authenticity and valuing the painting at $85,000.
- In 1999, the collectors sought inclusion of the painting in a catalogue raisonné and learned of another *Interior* held by a museum; the committee did not then advise that the collectors’ painting was not genuine.
- In 2002, when the collectors attempted to consign the work elsewhere, a restorer raised concerns about authenticity; the collectors notified the auction house.
- In 2003, the catalogue raisonné committee compared the collectors’ painting to the museum’s version and concluded the collectors’ painting was not authentic.
- The collectors demanded rescission of the 1986 sale; the auction house refused, citing expiration of a contractual warranty period.
- In 2004, the collectors filed in the Delaware Court of Chancery seeking rescission based on fraud and asserting tolling based on fraudulent concealment.

## Issues

1. Whether the fraud-based rescission claim filed in 2004 for a 1986 sale is barred by Delaware’s three-year limitations period under 10 Del. C. § 8106.
2. Whether the limitations period was tolled by fraudulent concealment based on the auction house’s conduct after the sale.
3. Whether the record contained evidence sufficient to permit a reasonable inference that the auction house acted with scienter in representing the painting as authentic.

## Decision

- The court granted summary judgment for the auction house and dismissed the petition.
- The claim accrued on the date of sale (December 5, 1986) and became time-barred on December 5, 1989 under 10 Del. C. § 8106.
- Tolling for fraudulent concealment did not apply because the record showed no affirmative acts or “actual artifice” intended to prevent discovery of the claim.
- Independently, the collectors failed to produce evidence from which scienter could reasonably be inferred, defeating the fraud claim on the merits.

## Legal Principles

- Under Delaware law, the limitations period generally runs from the time of the alleged wrongful act, even if the plaintiff is unaware of the claim at that time.
- Fraudulent concealment tolling requires proof of knowing conduct designed to mislead or prevent inquiry; silence or continued belief is insufficient absent affirmative deceptive acts.
- Even where concealment is shown, tolling lasts only until the plaintiff discovered, or through reasonable diligence could have discovered, the facts supporting the claim.
- Summary judgment is appropriate where the nonmovant bears the burden of proof and the record shows a failure of proof on an essential element, including scienter in a fraud claim.

## Conclusion

The court held that rescission based on alleged misrepresentations of authenticity in an art sale was barred by the three-year statute of limitations and, in any event, failed because the evidence did not support an inference that the auction house knowingly or recklessly misrepresented authenticity or concealed facts to delay discovery.


Krahmer v. Christie's Inc., 911 A.2d 399 (Del. Ch. 2006)