## Facts

- Shirley D. Sack and Shirley D. Sack, Ltd. (the “Sack” plaintiffs) agreed to sell a Raphael drawing known as the “Modello” to Kenneth Lawton for $12,000,000.
- Sack’s agent and Lawton executed a bill of sale for the Modello reflecting the $12,000,000 purchase price.
- Lawton never paid for the Modello, and Sack retained possession of the drawing.
- Sack later attempted to sell the Modello to another purchaser but could not find a buyer willing to pay a comparable price.
- Sack also asserted that the outstanding bill of sale to Lawton could impair her ability to convey clear title to any new buyer.
- The Sack plaintiffs filed a diversity action in the Southern District of New York alleging breach of contract (and naming another defendant who was not served).
- Lawton failed to answer the complaint, and the court entered a default against him on liability.
- The court referred the matter to a magistrate judge for an inquest and a report and recommendation on damages.
- Although in default on liability, Lawton appeared at the damages stage and opposed the amounts sought.
- The Sack plaintiffs requested the $12,000,000 contract price, prejudgment interest, and additional consequential damages.

## Issues

1. Under New York’s U.C.C. Article 2, may a seller recover the full contract price (U.C.C. § 2-709) when the buyer fails to pay for identified, unique goods and the seller still possesses the goods?
2. Does New York’s U.C.C. Article 2 allow an aggrieved seller to recover consequential damages in addition to the contract price or other statutory seller remedies?
3. What prejudgment interest rate and accrual date apply to the damages award under New York law after a default on liability?

## Decision

- The court awarded the Sack plaintiffs $12,000,000 in contract damages representing the agreed purchase price for the Modello.
- The court denied the Sack plaintiffs’ request for consequential damages, holding that Article 2 does not provide consequential damages to an aggrieved seller.
- The court awarded prejudgment interest at 9% per year on the $12,000,000, accruing from August 23, 2000.
- The district judge adopted the magistrate judge’s report and recommendation and entered judgment accordingly.

## Legal Principles

- After a default on liability, a plaintiff must still prove damages with competent evidence; damages are not presumed simply because liability is established.
- Under U.C.C. § 2-709, a seller may recover the price for identified goods in circumstances recognized by the statute, including where the remedy is appropriate for the particular goods and transaction.
- New York’s U.C.C. Article 2 provides sellers with specified remedies (including the price remedy in § 2-709 and incidental damages in § 2-710), but it does not grant consequential damages to an aggrieved seller.
- Under New York CPLR §§ 5001 and 5004, prejudgment interest is generally awarded as a matter of right on contract damages at 9% per annum, computed from the date the claim accrued or another reasonable date tied to when payment became due.

## Conclusion

Sack v. Lawton holds that, after the buyer defaulted on a contract to purchase an identified Raphael drawing for $12,000,000, the seller could recover the contract price plus statutory prejudgment interest, but could not recover consequential damages because Article 2’s seller-remedy scheme does not include consequential damages for sellers.


Sack v. Lawton, 2003 WL 22682043 (2003)