The opinion of the court was delivered by: LOUIS F. OBERDORFER
In this diversity contract dispute, plaintiffs are art dealers who claim that a mobile for which they paid $ 500,000 is not the Alexander Calder work entitled Rio Nero they thought they were acquiring.... They sue the dealer who sold them the mobile, L & R Entwistle and Co. Ltd. ("Entwistle Gallery"), and Patricia Bauman, the private collector living in Washington, D.C. who sold the mobile through Entwistle Gallery.... Plaintiffs invoke theories of fraud, breach of express warranty, and mutual mistake of fact.
The testimony and exhibits establish by a preponderance of the evidence that in 1959, Alexander Calder created and signed with the initials "AC" a 31" by 65" black hanging mobile entitled "Rio Nero." The mobile was constructed of sheet metal and steel wire and composed of 27 hanging blades or elements.... In 1962, Klaus Perls and Perls Galleries of New York City sold the Rio Nero to one Anspach.... Before selling the piece, Perls, as was his custom, took an archival photograph of the mobile for the Galleries, after first lightly tethering its parts to prevent movement.... In 1967, Perls reacquired the mobile from Anspach and sold it to Patricia Bauman's father, Lionel Bauman.... Except for its exhibition in 1984 by the Herbert Palmer Gallery of Los Angeles, the mobile hung in Lionel Bauman's Palm Springs, California home until his death in 1987; Patricia Bauman remembered seeing it hanging there.... Lionel's will bequeathed the mobile to Patricia.... After Lionel's death, Herbert Palmer, the owner of Palmer Gallery, appraised it for the estate as an untitled Calder.... Lionel's executor delivered it to Bauman's home in Washington in July 1989, where it hung until November 1989.
In November 1989, Palmer Gallery sought and obtained possession of the mobile on consignment until January 31, 1990. Palmer Gallery exhibited it for sale at the Los Angeles Art Fair beginning in December 1989.... In January 1990, Ronald Greenberg, owner of plaintiff Greenberg Gallery, Inc., saw the mobile at the Los Angeles Art Fair and was interested in it, but did not pursue the purchase because Palmer's asking price of $ 750,000 was too high.
At the time Palmer was showing the mobile, he was not aware of any name for it and exhibited it as an untitled Calder.... In response to Palmer's request for more information, Bauman contacted Perls Galleries seeking documentation of the 1967 sale to her father.... In addition, Bauman asked Palmer to photograph the piece and send the resulting transparency to Perls Galleries for identification.... With the transparency before it, Perls Galleries confirmed the 1967 sale to Lionel Bauman and furnished Patricia a copy of the invoice evidencing that sale.... The Perls invoice identified the piece as a black sheet metal and steel wire hanging mobile, 31" by 65," entitled "Rio Nero," and signed "AC."
Bauman passed the Perls invoice information on to Palmer, who added the name "Rio Nero" to the display at the Los Angeles Fair. Palmer sought to extend his consignment beyond January 31, 1990, but Bauman refused the request.
In January 1990, while the mobile was on exhibit in Los Angeles, Roberta Entwistle, a co-owner of Entwistle Gallery with her former husband, Lance Entwistle, visited Patricia Bauman and her husband, John Bryant, at their Washington home.... Roberta made the visit at the suggestion of the National Gallery of Art to advise the Baumans about their private collection.... In the course of the visit, in response to an inquiry about what Bauman might wish to sell from the collection, Bauman told Roberta about the Calder mobile she had inherited.
Roberta and Lance Entwistle then began seeking purchasers for the mobile.... Their first prospect was Donald Morris, owner of plaintiff Donald Morris Gallery, Inc., of Birmingham, Michigan. Without identifying Bauman, the Entwistles informed Morris that the piece was the Rio Nero by Calder and was owned by a respectable private collector who had inherited it from her father, who, in turn, had purchased it from Perls Galleries.... Morris made two offers that were too low and which Bauman instructed the Entwistles to reject.
In March 1990, the Entwistles approached a second prospect, Greenberg, who had seen the piece when exhibited by Palmer in Los Angles.... In the ensuing negotiation, the Entwistles told Greenberg about the Perls invoice and furnished him the transparency made by Palmer. After arranging for equal participation in the purchase by the other three plaintiffs, Greenberg offered $ 500,000 for the mobile, with the understanding that Entwistle Gallery would deliver it to him promptly and that he could inspect it before making payment.... Greenberg received delivery on March 23, 1990, had the mobile assembled and hung, compared it with the transparency, and satisfied himself that it was the piece in the transparency and that he had seen in Los Angles.... Whatever Greenberg may have observed at that time, he advised his co-venturers that the piece was "fabulous" and "beautiful." They assembled the funds and paid $ 500,000 to the Entwistle Gallery.... The Entwistles, in turn, delivered $ 485,000 to Bauman's decorator, a Swiss Corporation, retaining $ 15,000 for their trouble and risk.
Two weeks later, the Entwistle Gallery furnished to Greenberg the 1967 Perls invoice, from which Lionel Bauman's name was redacted at Patricia's request.
Between March and November 1990, plaintiffs exhibited the mobile around the country and offered it for sale as a Calder for $ 750,000.... Greenberg published a photograph of the mobile in his catalogue, describing it as Calder's Rio Nero.... In May 1990, Greenberg shipped it to Chicago for display and sale at the Chicago Art Fair, together with 14 other Calders from his gallery.... At the Fair, the other co-owners (Morris; Barbara Mathes, owner of plaintiff Mathes Gallery, Inc. of New York City; and John Stoller, owner of plaintiff John C. Stoller & Co. gallery of Minneapolis, Minnesota) all saw the mobile for the first time.... All noticed problems with its movement and balance and that some of the pieces bumped each other.... Greenberg and Stoller attempted to rearrange the mobile so it would hang more aesthetically.... They took off armatures, disconnected the mobile's blades, and moved them around. Despite the problems, Greenberg, Mathes, Stoller, and Morris concluded the mobile matched the transparency and the description in the Perls invoice.
In late May 1990, following the Chicago Art Fair, the mobile was shipped to the Mathes Gallery in New York and offered for sale there.... On two separate occasions, Morris' son spent one hour and an hour and a half, respectively, trying to reconfigure the mobile to conform to the transparency.... Despite these efforts, neither he nor Mathes believed the mobile was moving correctly.... Morris' son phoned Morris and told him he had "funny feelings" about the mobile and could not get it to work right.... At this time, Morris began to doubt it was authentic.
The mobile remained for sale at the Mathes Gallery until October 1990.... In October, it was shipped to the Morris Gallery in Detroit.... Morris and his son again attempted to reassemble it by manipulating its blades and armatures.... Despite his doubts, Morris continued to believe the mobile was the same as that depicted in the transparency and that it simply had been hung incorrectly. He did not seek expert assistance in hanging it. Thereafter, however, he stopped showing it to potential buyers.... After Morris left on a trip to Europe, his son continued in his efforts to rearrange the mobile.
On November 17, 1990, Morris met with Lance Entwistle and expressed his concern that the mobile might not be authentic.... On November 19, 1990, Lance sent a copy of the Perls invoice to Morris.... The Perls Galleries confirmed to Morris that the invoice was a correct copy of the bill of sale from Perls Galleries and sent Morris a copy of the archival photograph.... Upon comparing the mobile to the archival photograph, Morris concluded the mobile was not the same.... Plaintiffs then decided to send the mobile from Detroit to New York for inspection by Perls Galleries, and Mathes called Perls for an appointment.
After plaintiffs requested, and Bauman refused to accept, rescission of the contract, this lawsuit ensued.
At trial, the parties presented competing expert testimony regarding the mobile's authenticity.... Plaintiffs introduced the video-taped deposition of Klaus Perls as their Calder expert. Perls, age 79, has been a partner in Perls Galleries since 1937. The Galleries served as Calder's exclusive American dealer between 1955 and 1976, and together with Pace Gallery and the Maeght Galleries of Paris (Calder's former European dealer), Perls Galleries are among the world's leading experts on Calder.... The Galleries have sold "hundreds" of Calder paintings and sculptures, and Perls himself has seen "several thousand" Calders.... Deposition of Klaus Perls ("Perls Dep.") at 6.... He is asked to appraise the value or authenticity of Calder works several times a year.... Perls says that his assessment of Calders is based on knowledge and feelings acquired from 20 years as Calder's dealer.
Perls examined the mobile in December 1990 for a maximum of 10 minutes and looked at it again for a "couple of minutes" before an October 1991 deposition.... On both occasions, his examination was limited to comparing a few of the mobile's blades to the archival photograph.... At no time did Perls speak to the "AC" signature or offer any opinion as ...