The National Law Review recently summarized key lessons gleaned from Hoffman v. L&M Arts, et al., No. 15-10046 (5th Cir. Sept. 28, 2016), regarding the drafting and construction of confidentiality provisions for the sale of artwork.

Hoffman involved a claim for breach of a confidentiality provision in a Letter Agreement between Marguerite Hoffman, a wealthy art collector seeking to sell her “Untitled” 1961 Mark Rothko oil painting, and L&M Arts, a broker which was acting as an intermediary between Hoffman and the buyers, Studio Capital, Inc. and David Martinez.

The Letter Agreement included the confidentiality language: “All parties agree to make maximum efforts to keep all aspects of this transaction confidential indefinitely.”  In addition, the Letter Agreement required the buyers to not hang or display the painting for six months after the sale.

Several years later, the buyers auctioned the painting, which appeared on the cover of the Sotheby’s catalog and sold for more than $31 million.   In response, Hoffman sued L&M Arts, and the buyers for breach of the confidentiality provision of the Letter Agreement.

On appeal, the Fifth Circuit Court of Appeals, among other things, found that the Letter Agreement was not breached and ruled in favor of L&M and the buyers.  Read the full opinion here.

National Law Review’s key lessons:

  • Confidentiality provision may be used to keep the sale of artwork secret, but have to be limited in scope so as to not be deemed an unreasonable restraint on the sale of property. A significant factor with respect to enforceability of such provisions is the length of the restriction.
  • Confidentiality provisions should clearly define its scope including date, time or geographic restrictions, as well as what each party to the transaction can and cannot do.
  • The parties to a transaction should always ensure that every party is bound by the confidentiality provisions, or, at the very least, include an indemnity provision for the breach of a third-party buyer when an intermediary is used.
  • In case of breach of the confidentiality provisions, parties should clearly draft the remedies and damages that may follow.

Read the full story here.

In recent New York art world news, a dispute between actor Alec Baldwin and art gallerist Mary Boone has taken a new twist with the filing of a motion in New York State Supreme Court by Ms. Boone’s attorneys accusing Mr. Baldwin of committing fraud by failing to pay sales tax on a painting he had purchased from her in 2010.

The filing comes on the heels of a lawsuit brought by Mr. Baldwin against Ms. Boone over a month earlier alleging that the gallerist had defrauded him six years ago “by promising him a painting, “Sea and Mirror,” by the artist Ross Bleckner, for which he had paid $190,000, but supplying him another, similar Bleckner painting” by the same name.  Mr. Baldwin initially had concerns about the painting after he purchased it from the gallerist in 2010.  Mr. Baldwin has claimed that he was never informed that he would be receiving a different version of the painting and that Ms. Boone had “intentionally created a copy to appear genuine, and to fool him by passing it off as the real thing.”

In the motion to dismiss Mr. Baldwin’s lawsuit, Ms. Boone’s attorneys allege that at the time of purchase of the painting six years ago, the actor left delivery instructions that the painting be shipped directly to his home in California and then shortly after it had been delivered to the West Coast, the painting was shipped back to Mr. Baldwin’s apartment in New York.  Accompanying the filing is evidence that the painting arrived in Woodland Hills, California in late April 2010 and then was installed in Mr. Baldwin’s New York City apartment the subsequent month, describing this as a way for Mr. Baldwin to evade taxes of nearly $17,000.

Mr. Baldwin’s attorney asserts that Ms. Boone only seeks to “distract attention” from the actor’s claims and does not deny the primary allegation in Mr. Baldwin’s complaint.

Ms. Boone’s attorneys reject Mr. Baldwin’s lawsuit as false and believe it is invalidated by the statute of limitations because he took too long to bring his claim. In this latest filing, the gallerist’s attorney asserts that the two paintings are so different from each other that Mr. Baldwin should have known he was receiving a different version of the Bleckner painting.

 

The New York Times has reported that the estate of a German businessman has sued the Metropolitan Museum of Art last Friday to claim one of its valuable Picassos, “The Actor” (1904-05), alleging in the court filing that the museum does not hold title to the painting because the businessman was forced to sell the work for a low amount after fleeing the Nazis in the late 1930s.  The treasured oil on canvas depicts an attenuated male figure making hand gestures that signaled the beginning of Picasso’s interest in “the theatrical world of acrobats and saltimbanques” during the artist’s Rose Period.  The painting is estimated to be worth more than $100 million said lawyers for the estate in the court filing.

In the court filing it is alleged that the museum “did not disclose or should have known that the painting had been owned by a Jewish refugee, Paul Leffmann, who had disposed of the work only because of Nazi and Fascist persecution.”  The lawsuit alleges that the sale of the painting was made under duress to a collector of Picasso’s work and Picasso’s dealer for $13,200 in 1938.  In 1941, Thelma Chrysler Foy bought the painting through a New York art gallery for $22,500 and eventually donated it to the Met in 1952 where the painting has been continuously displayed since.  The lawyers for the estate said that they had conducted negotiations with the Met while the claim was being investigated by the museum, but the parties had never been able to reach a settlement.

In a statement, the Met “strenuously denied there were grounds for the claim, asserting that the 1938 sale had been for fair market value and had not been made under duress.”  The museum added that the German businessman and his family did not make any claim on the painting after the war when trying to reclaim property they had been forced to sell.

The lawyers for the estate have criticized the museum claiming that for a number of years it had given an “erroneous provenance” for the painting until being corrected in 2011.  The Met indicated that the provenance was not erroneous as it was based on the recollection of the buyer at the time.  The provenance reflected that the painting was owned by a German in Switzerland and was updated as further information became available, according to the museum.

The suit is Zuckerman v. Metropolitan Museum of Art, U.S. District Court, Southern District of New York, No. 16-07665.

UPDATE: In follow up to our posts regarding the Peter Doig lawsuit, last month, a federal court in Illinois declared that the disputed work signed “Peter Doige 76” is not the work of famous Scottish born artist Peter Doig.  Among the many odd facts presented in this case was the glaring issue that “Doig” and “Doige” are two different names. This case demonstrates that authentication, even by the living artist himself, can prove to be a costly endeavor for all parties involved.

There may be some lessons learned from the Doig matter:

In this digital age, creating a definitive catalogue of work may be easier than ever for living artists, and artists that want to maintain control over their body of work should take advantage of innovative technologies that permit them to document their works.  The fact that the Doig matter went to trial demonstrates that the Visual Artists Rights Act of 1990 (VARA) is not the panacea for all of the legal issues facing artists. In particular, VARA provides artists rights for disavowing damaged or modified work but does not address when the art is misattributed.

In a recent interview, Doig commented on the time and money wasted on the lawsuit.  It is not clear whether the plaintiff will appeal the court’s decision.

Further to our post below regarding the trial over the authenticity of a painting alleged to have been made by the Scottish painter Peter Doig, some interesting notes regarding the waning days of the trial were captured by artnet.  Among them:

* The lawyers and the Judge differed as to the pronunciation of Doig’s name;

* During cross-examination, the attorney representing the plaintiffs asked whether the work in question was a painted by “Captain Butterknife.”

* The question of whether Doig was incarcerated at Thunder Bay as alleged by the plaintiffs appeared to have been left unanswered.

The final verdict is expected to be given orally in the coming weeks.

Read more here.

By Daniel Schnapp.

Scottish artist Peter Doig claims he didn’t paint the painting depicted below, and now he is forced to prove it at trial.  The New York Times recently reported on this strange case of art authentication, involving Doig’s disavowal of the painting and alleged mistaken identity.  Read full article here.

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Image: WHITTEN SABBATINI/NYT

The owner of the painting is a former corrections officer who alleges that in 1975 he purchased the painting from Doig, who was incarcerated at a Canadian detention facility at that time.  Doig denies having ever been near the detention facility, or ever being incarcerated. The lawsuit is currently pending in the U.S. District Court for the Northern District of Illinois.

The Wall Street Journal recently published an in-depth story on the Goulandris art collection, which is currently in the middle of one of the largest and most complex legal disputes over ownership of art in Europe.

The story involves a private art collection valued as much as $3 billion that has been mostly out of public view over the past two decades, an offshore company used by a secret seller to put up artwork for auction, and a dispute that essentially boils down to a non-existent will and an inscrutable one.

The late Greek shipping mogul Basil Goulandris and his late wife, Elise, amassed one of the world’s most significant private art collections, which included several hundred pieces of treasures by a number of renowned artists such as Picasso, van Gogh, Cezanne, Monet, Degas, Pollock, and Balthus.

For further information on this intriguing saga involving the Goulandris art collection, visit The $3 Billion Family Art Feud.

In recent art world news is a story about a treasured 1918 oil painting by Amedeo Modigliani of a seated chocolate merchant in a hat and tie holding a cane (“Seated Man with a Cane”).  Art dealer and billionaire David Nahmad is principal of the Nahmad holding company (International Art Center) that purchased the work at auction in 1996 and has owned it since then.

The grandson of a Jewish antiques dealer, however, claims that the Modigliani painting is the same work that was stolen from his relative’s shop in Paris during the Nazi occupation and sold off over 70 years ago.

For nearly five years, the grandson, Philippe Maestracci, and the Mondex Corporation, a company specializing in the recovery of looted art on behalf of beneficiaries, have pursued a claim in New York state and federal courts for the work, which was once estimated to be valued at around $25 million.

Nahmad, a scion of a family of international art dealers, remains determined that he will not settle the case.  In support of his position, the art dealer relies on an obscure French court document dated 1947 that he asserts raises doubt as to whether his painting is the same Modigliani painting that antiques dealer, Oscar Stettiner, had tried to recover after the Second World War.  The court document, which was filed in connection with Stettiner’s claim in 1946 to recover the painting, describes the work as a “Modigliani self-portrait” and not as a painting of a chocolate merchant.

Conflicting evidence cited by Maestracci includes the provenance listing when Nahmad’s holding company attempted to sell the disputed painting through Sotheby’s in 2008.  The auction house listed Stettiner as a possible previous owner of the painting and indicated that the painting had been sold anonymously between 1940 and 1945.

Nahmad is determined to fight on in the courts, but has said if it is proven that the painting is looted art by the Nazis, he will return it.

For further information on this prolonged dispute since 2011, see Dealer’s Estate Sues Nahmad Gallery Seeking Return of Modigliani Portrait and The Art of Secrecy.

As an update to an earlier post featured on the Art Law Blog relating to a dispute between the Gagosian Gallery and Qatar Royal Family’s Agent over the ownership of Pablo Picasso’s plaster “Bust of a Woman” sculpture, it has been reported this week that a settlement was reached between the parties.

Details of the settlement were not disclosed in a filing earlier this week in New York federal court, so it remains a secret as to who now owns the 1931 prized Picasso sculpture of the artist’s then French muse/mistress, Marie-Thérèse Walter.

The sculpture was considered a treasured possession of Picasso’s daughter, Maya Widmaier Picasso, who was born from the artist’s affair with Walter.

As blog readers may recall, prominent New York art gallery owner Larry Gagosian claimed that he had agreed to purchase the sculpture for $106 million in 2015 to resell it to a then undisclosed New York art collector who has since been identified as New York billionaire Leon Black.  However, an agent for the Qatar Royal Family claimed that they had already consummated a deal in 2014 to purchase the sculpture for 38 million euros (about $47.4 million at time of sale) from Widmaier Picasso through a transaction that was negotiated by her son.

Both sides had filed lawsuits earlier this year in New York federal court in Manhattan.  In a three-paragraph order that had issued on Monday, the U.S. District Judge William Pauley ruled:  “It having been reported to this court that these actions have been or will be settled, these actions are discontinued without costs to any party.”  Pursuant to the order, either party can request the court to reopen the dispute within 30 days.

The cases are Gagosian Gallery Inc. v. Pelham Europe Ltd., and Pelham Europe Ltd. v. Gagosian, 16-cv-00214 U.S. District Court, Southern District of New York (Manhattan).

Richard Prince continues to push the boundaries of copyright law, if not the art world.

In 2014 he exhibited dozens of inkjet prints on canvas–Instagram posts that the artist had commented on, then enlarged and printed out on canvas–at the Gagosian Gallery in New York City. Collector Daily‘s review lauded his appropriations, declaring that they break down “our new way of communicating” and rebuild it into a vehicle for social satire: “While we may think that the images we post online are ‘secure’ or ‘ours’ in some manner, his pictures quickly undermine that outdated fantasy.”

Others disagree. The photographer of one of the images quickly registered his copyright, complained and recently sued.

What do you think? Were Richard Prince’ s changes transformative and so a fair use? The changes were:

  • A comment on the Instagram feed featuring the photograph: “Canal Zinian de lam jam (emoji)”.
  • Cropping of the bottom and top portions of the photograph and adding elements of the Instagram graphic user interface (this happens automatically by using a cell phone screen print feature).
  • Enlarging the screen print and printing it on to a different medium (canvas).

(images are here)

Does your answer change if you review the Second Circuit’s 2013 decision finding that 25 out of 30 of his works qualified as non-infringing fair use? (Richard Prince argues “This lawsuit reflects an attempt to essentially re-litigate Cariou and should be dismissed with prejudice.”)