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Art Law

Recent Developments in Art Litigation and Art Finance

Art Prevails Over New York’s Statutory Privacy Law

Posted in Litigation Issues

As recently reported by Artnet News, the New York State Supreme Court, Appellate Division ruled in favor of New York based fine arts photographer Arne Svenson and affirmed the Supreme Court’s decision that Svenson’s photographs of his Manhattan neighbors going about their everyday lives in their homes through open windows were protected under the First Amendment “in the form of art.”

Svenson garnered a significant amount of attention and controversy back in 2013 when his exhibition “The Neighbors” opened at a New York art gallery that was followed by legal action.  Svenson’s neighbors had learned that the photographer had been taking pictures of them inside their apartments using a telephoto lens, without their consent.

A couple of the subjects shown in the photographs originally filed a complaint in the New York Supreme Court back in May 2013 on behalf of themselves and their minor children claiming that Svenson had photographed them and their children without their consent and arguing that they were “frightened and angered by defendant’s utter disregard for their privacy and the privacy of their children,” and further that the photographs were used for commercial purposes for promotion of an exhibition where they would be available for purchase and were also available for purchase online, thereby constituting advertising and trade.

The Supreme Court ruled in Svenson’s favor in August 2013 and the plaintiffs appealed shortly thereafter in September of that year.

In upholding the lower court’s ruling, Justice Dianne T. Renwick of the Appellate Division acknowledged that the subjects in the photographs were unaware that they were being photographed and acknowledged the limitations of New York’s statutory privacy law in redressing this type of “technological home invasion and exposure of private life.”  The court found, however, that the type of “invasion of privacy” that occurred in this situation is not actionable because Svenson’s use of the images “constituted art work” and hence were not considered “use for advertising or trade purposes” under the applicable New York privacy statute.  New York’s right of privacy statute essentially prohibits the use of a person’s likeness for commercial purposes without permission.

Justice Renwick further wrote “however disturbing” Svenson’s conduct may be with the publishing of the subject photographs as works of art, “without any further action toward plaintiffs,” there was no viable claim for “violation of the statutory right to privacy.”

While the fine art photographer’s actions may be legal for now, Justice Renwick believes that legislators need to review this “troubling” issue and possibly draft legislation that prohibits it in the future.  In particular, Justice Renwick writes “many people would be rightfully offended by the intrusive manner in which the photographs were taken in this case.  However, such complaints are best addressed to the Legislature.”

Svenson’s exhibition “The Neighbors” is scheduled to open at the Museum of Contemporary Art in Denver in February 2016.

 

 

Seller Be Ware – Valuable Banksy Mural Inadvertently Sold For Only $174

Posted in Art Finance, Art Recovery/Theft, Art Valuation, Litigation Issues

A valuable Banksy mural entitled the Bomb Damage that appeared on the front door wreckage of a home that was bombed in the Gaza Strip is at the center of an ownership dispute.  According to reports, the work, which depicts Niobe, a Greek goddess who weeps for her dead offspring, was painted by Banksy during a visit the reclusive British artist/graffiti master made to the Gaza Strip in February.

Not knowing the value of Banksy’s work, Rabie Darduna, the owner of the home, now only rubble, inadvertently sold the door to Bilal Khaled for a purchase price of only $174.  It is reported that Khaled is a graffiti artist who has admitted to having knowledge of Banksy.  Upon learning of the enormous value that Banksy works bring, Darduna, the original owner, has now filed a suit against Khaled seeking the return of the work.  As a result of the suit, Palestinian officials have confiscated the door.  Both parties maintain that they are the true owner of the work.

Although details of the claims have not been reported, if contract law as it applies in the United States governs, it appears from the information available, that Darduna could argue that he is the rightful owner of the Banksy because of a unilateral mistake.  Although generally unilateral mistake is not a grounds to rescind a contract, under general principals of contract law, a contract based on unilateral mistake can be rescinded “if the other party knows or has reason to know of the unilateral mistake, and the mistake, as well as the actual intent of the parties is clearly shown….” See e.g. Lanci v. Metropolitan Ins. Co., 564 A.2d 972, 974 (Pa. Super. Ct. 1989); see also Lapio v. Robbins, 729 A.2d 1229, 1234 (Pa. Super. Ct. 1999).  Under this circumstance, “the mistaken party may void the contract if the mistake is regarding a material term or the mistaken party may enforce the contract so that the other party for whose benefit the contract was performed will not be unjustly enriched.” Lapio, 729 A.2d at 1234 (citing Lanci and Restatement (Second) of Contracts § 153).  A claim for unilateral mistake must be supported by credible evidence demonstrating the mistake and the counterparty’s knowledge.  Thus, in this case, Darduna would need to provide evidence of Khaled’s knowledge of the true value of the work.  Under the facts of this case, it appears that Darduna may also argue that he was under duress as a result of the extreme stress related to the recent attack and destruction of his home.

Perhaps a solution is a sale of the work at auction and divvying of proceeds between the two interested parties or perhaps Banksy can make another anonymous mural for Khaled. It will be interesting to see if the doctrine of unilateral mistake is applied in the same way in the Gaza Strip or if Khaled can prevail on an argument that Darduna, as seller, is responsible for doing due diligence to determine the value of the work before accepting Khaled’s offer to purchase.  To avoid these issues, sellers must know what they are selling in order to be able to evaluate whether the purchase price is fair.

Is Art Collecting Becoming Too Financialized?

Posted in Art Finance, Art Intelligence

As recently reported in the International New York Times, art financiers are among the latest specialists in recent years hoping to carve out a niche and not only survive, but thrive, on the backs of some of the world’s most affluent art collectors.   In recent years, art collectors are increasingly using their art as collateral and then reinvesting the funds in either additional art or other assets.

From the mega banks and the specialist lenders to the boutique lenders, it seems that everyone is active in art finance these days.  And for good reason.  Art finance is regarded as a wise way to use one’s capital such that by leveraging one’s art, the work can stay on the wall, while creating greater liquidity among collectors.  In particular, it has been observed by some art financiers that ultra-high-net-worth individuals are using their art to generate liquidity and often they are not using the loan to acquire additional art.

Indeed, art collecting has become increasingly financialized these past several years – a 2014 “Art & Finance Report” by Deloitte and ArtTactic revealed that 76% of surveyed art collectors acquired art and collectibles as an investment strategy in 2013, up nearly 25% from 2012.

With a rapidly expanding art market, one may ask then what is the issue?

When the primary reason for acquiring art is adding value to one’s investment portfolio, buyers seem to focus on a narrow range of established artists.  Buyers and values can significantly drop for less proven artist names.  As recently observed, the more the art market becomes financialized, the greater the risk that demand will become narrowly concentrated on a few expensive group of names, namely, Andy Warhol, Jean-Michel Basquiat, and Gerhard Richter.  Of course, artists will always “fall in and out of fashion” as driven by collectors’ specific tastes at the time.

Only time will tell if this will actually happen as the art market continues its financialization trend.

 

Update: Indictment of Freeport King Yves Bouvier

Posted in Art Valuation, Litigation Issues

Earlier this month we posted about the arrest of Yves Bouivier, the high-profile Swiss art broker who was indicted for fraud and money laundering.  Recent reports now confirm that a court has ordered a freeze of all of Bouvier’s assets and the handover of a 1951 Mark Rothko painting.  In addition, Swiss police have conducted raids on two freeports owned by Bouvier.

The freeports have come under scrutiny by regulators in recent years.  They are large, maximum security storage facilities that allow individuals to store expensive valuables while avoiding customs duty and sales tax.

Bouvier is currently being held on €10 million bail and denies all charges.

Stolen Picasso Found in NYC to be Returned to France

Posted in Art Recovery/Theft

Pablo Picasso enjoys the unfortunate distinction of being the artist with the “Most Stolen Art” in the world. Lucky for France, recently a long lost Picasso was found in NYC and is slated to be returned to the French government.

Found in a mysterious package from Belgium, labeled as a Christmas gift worth a mere 20-30£ (the equivalent of $37 USD), the work surfaced in NYC last month. The painting (c. 1911) known as “La Coiffeuse” or “The Hairdresser” was originally exhibited at the Musee National d’Art Moderne collection in Paris. After returning to France from a museum in Germany, where it was on loan, the painting eventually ended up in a storage room in Centre George Pompidou. The painting is reported to be valued well over $2.5 M, which was the painting’s value in 2001 when it went missing from the Pompidou.

Interestingly, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) division, which is not just border patrolling for safety concerns, assisted in the work’s recovery. Lucky for art lovers, HIS is a division that has been active in the recovery of other Picasso’s and countless other cultural treasures.

High-Profile Swiss Art Broker And Businessman Arrested For Alleged Manipulation Of Prices On Art Market In Global Investigation

Posted in Art Valuation, Litigation Issues

As recently reported here, Yves Bouvier, the high-profile Swiss art broker and businessman, who is head of an international art shipping and storage business, was arrested last week in Monaco in connection with alleged fraud relating to works of art.  The investigation that led to Bouvier’s arrest is believed to have centered on the inflation of prices in significant transactions of art works in which Bouvier was involved as an intermediary.

Among the alleged victims is the family of Dmitry Rybolovlev, a Russian magnate, who is the owner of the Monaco Football Club.  Rybolovlev’s family art collection includes works by renowned artists such as Gauguin, Monet, Picasso, and Van Gogh, and is believed to be worth up to $1 billion.

The amount of the alleged fraud from the suspected inflation or overpricing of art works had not been specified and it remains unclear as to the number of affluent international private art collectors who may have been affected by the alleged fraudulent activity.

The investigation is indeed a global one with the potential to spread across several countries and will likely provide some insight into the secret world of affluent international private art collectors.

“Restoring A Legacy: Rothschild Family Treasures” Exhibit Opens At Museum Of Fine Arts, Boston

Posted in Art Museums, Art Recovery/Theft, Current Art Exhibits

A new exhibition celebrating recent gifts of an exquisite European collection to the Museum of Fine Arts (“MFA”) by the heirs of Bettina Looram de Rothschild, who was a daughter of the original owners Baron and Baroness Alphonse and Clarice de Rothschild of Vienna, opened yesterday.  Bettina Looram de Rothschild’s daughter, MFA Trustee Bettina Burr, is among the donors who have made these gifts to the MFA.  The collection of 186 objects, which was looted during the Nazi era and eventually returned to its rightful owners, consists of European decorative arts, furniture, prints, drawings, paintings, and personal objects, consisting of jewelry and jeweled objects, miniatures, and rare books.

It has been reported that the Rothschild family treasures of some 3,500 pieces from the family’s palaces were discovered by Allied forces in Austria’s salt mines after World War II.  Most of the vast European collection was returned to the Rothschild family after Baroness Clarice de Rothschild traveled to the salt mines to identify the family’s art.

While the complete story of the Austrian Rothschild collection may never be pieced together, Ms. Burr noted in a recent article that about 60 pieces are listed on the Art Loss Register (a private database of lost and stolen art works) and she has “a big file, pages and pages, of 3,500 pieces.”

The Rothschild family treasures of the MFA’s new exhibition are said to evoke “the Rothschild taste,” and have been described by Thomas Michie, the MFA senior curator for European decorative arts and sculpture, as “opulent high-style French 18th-century” and “palatial when all together.”

The exhibition remains open through June 21, 2015.

Top Four Auction Houses With Online Art Trading Platforms Lead Global Online Trade Volumes Capturing $144 Million In Combined 2014 Sales

Posted in Art Finance, Art Intelligence

As recently reported by Skate’s earlier this week, four art auction houses with online art trading platforms, namely, Auctionata, Paddle8, Christie’s, and artnet.com AG, generated a combined $144 million in gross merchandise volume (“GMV”) in 2014, which represents on average a doubling of the volume of global online trade compared to 2013.

Berlin-based Auctionata came out on top with 2014 results that provided for an increase in online auction trade volume over that originally anticipated.  Auctionata captured $41 million in GMV sold, which represents a 148% increase in dollar terms to 2013.  These results catapult Auctionata into the top position as the leading global online art trading platform followed by Paddle8, Christie’s, and artnet.com AG.

Paddle8 and artnet.com AG have yet to publish their results, however, Skate’s closely tracks each firm’s online auctions and expects Paddle8 to report about $37-40 million GMV and notes that artnet.com AG is unlikely to exceed $30 million GMV for 2014.

Christie’s experienced a 60% growth compared to 2013 for its online-only sales in 2014 generating $35.1 million GMV.  For further information on Christie’s results, click here.

It will be interesting to see if these top four players for 2014 remain in their respective positions for 2015.  Indeed, the online art trading platform is quickly establishing itself as the way to collect and sell art in the 21st century.

 

 

Sotheby’s Caravaggio Controversy – Sotheby’s Specialists Prevail

Posted in Art Valuation, Litigation Issues

Sotheby’s UK prevailed recently in a court dispute over an Old Master attribution. At the heart of the dispute was a painting entitled The Cardsharps, which Sotheby’s attributed to a follower of Michelangelo Merisi da Caravaggio (1571-1610) and sold for £42,000 in 2006 on behalf of consignor, Lancelot Thwaytes.

Following the 2006 sale, it was suggested that the work was actually painted by Caravaggio himself, and thus valued at £10M. The attribution came from renowned collector and Caravaggio expert, the late Sir Denis Mahon, who declared that the painting was in fact a Caravaggio from 1595. After news of the value of the painting hit the press, Thwaytes commenced a negligence lawsuit against Sotheby’s for failing to consult with Caravaggio experts. Sotheby’s defended the suit on the grounds that many specialists had not agreed on the Old Master attribution (and many specialists remain unconvinced that it is a true Caravaggio). Ultimately the Court concluded that Sotheby’s was not negligent in attributing the painting to a follower of Caravaggio. Specifically, the Court determined “I am firmly of the view that Sotheby’s were entitled to come to the view that the quality of the Painting was not sufficiently high to merit further investigation.” Additionally, the court noted that “there is nothing disclosed on visual examination which should have counteracted Sotheby’s view that the Painting was of poorer quality than the Kimbell Cardsharps [an undisputed Caravaggio original] and did not therefore have Caravaggio potential.”

The court concluded that even if the painting had been sold with a catalog entry detailing the varying views of authenticity, the painting would not have sold for much more than the price obtained in 2006 because the weight of authority was in favor of Sotheby’s follower attribution.

Thus, while this case is evidence that reasonable minds can and do differ, the court’s ruling supports the position that the Sotheby’s specialists were correct in their original cataloging of the work.

Dispute Over Andy Warhol’s Prints of Mao Zedong

Posted in Litigation Issues

In a recently filed lawsuit in the New York Supreme Court, plaintiffs allege that certain defendants failed to deliver six out of a set of ten prints by Andy Warhol depicting Mao Zedong, for which the plaintiffs had allegedly paid in full.

In their Complaint, the plaintiffs — Marc Latamie and DM Fountain, Inc. — claim that they fully paid for the set of prints, yet Benrimon Contemporary delivered only four of the ten prints and, despite repeated demands spanning over a year and a half.

Moreover, the plaintiffs allege that Benrimon Fine Art was offering the same prints for sale to other potential purchasers after the plaintiffs had purchased the prints.

The plaintiffs have asserted causes of action for (i) breach of contract, (ii) tortious interference with contract, (iii) fraud, (iv) conversion, (v) promissory estoppel, and (vi) unjust enrichment.

Read the Complaint here.