Zaretsky v. William Goldberg Diamond Corp.

In 2003, William Goldberg Diamond Corp. (WGDC) (defendant) consigned a large diamond to celebrity stylist Derek Khan to use dressing his clients; the consignment gave Khan no title and no right to sell it (any sale needed WGDC's approval and invoice). Khan never returned the diamond. It eventually passed to a couple who gave it to their daughter and son-in-law, the Zaretskys (plaintiffs). When the Zaretskys had it appraised for insurance in 2012, it was flagged as stolen and held pending resolution of ownership. The Zaretskys sued, arguing Khan could transfer title as a dealer and relying on his declaration claiming trade knowledge. The trial court found Khan was a 'merchant' who could transfer title and denied WGDC summary judgment. WGDC appealed.

Whether the entrustment rule empowers a recipient to transfer good title only when the recipient is a merchant who regularly deals in goods of that kind, as opposed to someone who merely possesses specialized skill or knowledge in the trade.