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In recent art world news, a Norman Rockwell painting titled “Blacksmith’s Boy—Heel and Toe” (1940) from the Berkshire Museum’s collection sold for $7 million (with buyer’s premium added, the figure is about 8.13 million) to a telephone bidder last week at Sotheby’s in New York.  This was the highest price fetched by the museum as part of a sell off of 13 works over the past few weeks at Sotheby’s.  Additional works sold include a Francis Picabia watercolor painting and an Alexander Calder mobile that came in at a below estimate of $1 million last week.

Following the recent offering of 13 artworks at auction (notably, two of which failed to sell, including a Frederic Edwin Church with an estimate of $5 million to $7 million) and a private deal involving the purchase of Rockwell’s “Shuffleton’s Barbershop” (1950) for an undisclosed amount by the Lucas Museum of Narrative Art, the Berkshire Museum has brought in $42 million just $13 million short of the $55 million goal “it has hoped to raise in an effort to build an endowment and close a budget deficit that its leadership has said risks shuttering the museum in coming years.”

The total fetched for the 11 lots that recently sold at auction was about $12.7 million (without buyer’s premium).  It can be determined from the $42 million total sales to date that the Lucas Museum of Narrative Art likely paid around $29.3 million for Shuffleton’s Barbershop, which was previously tagged by Sotheby’s with a $30 million high estimate.  It is unknown as to whether the museum is receiving a portion of the buyer’s premium paid on auctioned lots—such practice is known as “enhanced hammer”.  If it is, the price paid for Shuffleton’s Barbershop by the Lucas Museum of Narrative Art was likely less.  Sotheby’s has reportedly waived the seller’s fees for the Berkshire Museum.

Pursuant to the terms of the agreement between the museum and the Massachusetts Attorney General and approved by Massachusetts’s highest court in April, the Berkshire Museum has the option of selling up to 40 works in three separate portions to reach $55 million.  With last week’s sale of 11 lots, this means that 26 additional works could still be sold and the two works that passed could be up for auction again.

It will be interesting to see if the museum is able to reach its $55 million goal with the sale of a portion of the remaining works.  For our recent coverage of the Berkshire Museum on the Art Law blog, click here.

In recent art world news, a Manhattan art dealer, Ezra Chowaiki, who was accused of defrauding art collectors and dealers around the country last year, has pleaded guilty to one count of wire fraud in the multi-million dollar art fraud case.  Chowaiki admitted last week in New York federal court that he had made fraudulent agreements for the purchase and sale of artwork through his Manhattan art gallery, Chowaiki & Company Fine Art.  Rather than honor these agreements, Chowaiki used the funds and artwork for unauthorized purposes.

According to federal prosecutors, Chowaiki fraudulently transferred more than $16 million of artwork between 2015 and 2017.  “In some instances, Chowaiki sold artwork, purportedly on consignment, without the owners’ authorization.  In other instances, he took money from clients purportedly to purchase artwork, and kept the money but purchased no art.”

The victims of the fraud were unnamed, but according to court filings they include art collectors based in Pennsylvania and Toronto, and a Cayman Islands company managed by an art dealer who conducts business in Tokyo.

The court ordered Chowaiki to forfeit the amount traceable to the offense (over $16 million), and over 20 artworks, including works by Chagall, Degas and Picasso.

Last December, Chowaiki was charged with a single count of the following offenses:  conspiracy to commit wire fraud, wire fraud, and interstate transportation of stolen goods.  Chowaiki surrendered to federal authorities that same day and was released on $100,000 bond.  Chowaiki’s Manhattan art gallery had filed for bankruptcy one month earlier in November 2017.  The art dealer’s sentencing is set for September 12, 2018.

This case is illustrative as to why art collectors should exercise due diligence before working with art dealers in the purchase and sale of artwork.

 

In recent art world news, and as a follow up to last week’s post on the Art Law blog, with legal hurdles now overcome, over a dozen artworks from the Berkshire Museum’s art collection are set to be offered for sale at auction next month at Sotheby’s New York in connection with the institution’s efforts to raise a total of $55 million. The lots include works by Norman Rockwell (high estimate of $10 million), Frederic Edwin Church ($7 million), Alexander Calder ($3 million), and Francis Picabia ($1.2 million).

Sotheby’s estimates that the lots could generate between $20.2 million and $28.9 million in sales after being sold at auction in mid-May. The sum from those works will be combined with an unknown sum that the museum received from the earlier announced private sale of its treasured work by Norman Rockwell, “Shuffleton’s Barbershop” (1950), to an institution (recently reported as the Lucas Museum of Narrative Art) that will keep the work on public view.

The Pittsfield, Massachusetts based museum hopes to reach its goal of $55 million through the sale of the lots at auction next month and the private sale of Shuffleton’s Barbershop. Whether the museum will be able to reach its goal depends on how much the museum received for the Rockwell masterpiece, Shuffleton’s Barbershop, which depicts a group of men playing music at the rear of a storefront late in the evening. Sotheby’s, the broker of the private deal, has said that the sales figure is confidential.

When Shuffleton’s Barbershop was set to be offered for sale at auction last November at Sotheby’s, the work was estimated at $20 million to $30 million. The auction was halted due to legal challenges that led the Massachusetts Appeals Court to hold off the sell-off of works while the state’s attorney general’s office conducted an investigation of the museum’s plans.

With the legal hurdles now cleared, the first sales of the lots from the museum’s collection are set to take place at Sotheby’s Impressionist and Modern auction the evening of May 14, when works by Francis Picabia and Henry Moore will be offered at auction. The museum’s highest estimated lot, Norman Rockwell’s Blacksmith’s Boy—Heel and Toe (1940), will round out the auction sales at Sotheby’s American Art sale on May 23.

It will be interesting to see if the Berkshire Museum is able to achieve its goal of $55 million after next month’s auction sales. If the museum hits the figure, additional works from its collection will not need to be sold.

In recent art world news, last week the Berkshire Museum has secured court approval to sell as many as 40 artworks from its collection, including works by Alexander Calder, Albert Bierstadt, Francis Picabia, and Norman Rockwell, as part of a “deaccessioning plan” that has been widely criticized by “museum groups and arts advocates who say it could encourage other museums to sell off works they hold in public trust.”

In a ruling by Justice David Lowy of the Massachusetts Supreme Judicial Court issued last Thursday, it was decided that “the museum had sufficiently established a need to sell the works, which could raise upwards of $55 million, in order to continue operations.”  In reaching its decision, the court deferred to the state’s attorney general, who has oversight of charitable organizations in the state, and who had conducted an investigation and reached a conclusion in the museum’s favor.  The court’s decision paves the way for at least some of the works to be auctioned for sale at Sotheby’s in New York, and for the private sale of the treasured Rockwell painting to an unnamed institution in a deal that was earlier approved by the state’s attorney general.

The museum’s leadership has said that it is running a structural deficit and without a cash infusion the museum will be forced to eventually close.  In particular, the museum’s leaders have said that the ability to sell the artworks is necessary due to a decrease in fundraising opportunities in the region.  Under professional guidelines, art sales are usually only allowed when funds are used to acquire other artworks or, in some instances, maintain a collection.

The museum has said that it intends to use the sale proceeds to build an endowment, renovate its building, and embark on a “New Vision” with particular emphasis on science and technology.

The Association of Art Museum Directors (“AAMD”) has said in a statement that the court’s decision “to approve the Berkshire Museum’s planned art sales addresses outstanding legal questions.  [However,] [i]t does not resolve the violations of ethical and professional standards that will occur when the museum’s plans are implemented.”  The AAMD is considering “censure and/or sanctions” against the museum in connection with any sales that result in funds being directed toward operations or endowments.

The earlier agreement reached between the attorney general’s office and the museum requires that the works be sold in three portions such that if the target figure ($55 million) is reached before one of the later portions is offered for sale, the later portions will not be sold.  Those opposed to the sale argued that because the museum is able to structure the portions, a substantive restriction is not represented in the parties’ agreement.

For detailed coverage on the legal battle of the Berkshire Museum, please see “Berkshire Museum Sell-Off Approved by Top Massachusetts Court, Ending Lengthy Legal Battle,” published online by ArtNews on April 5, 2018.

In recent art world news, following last month’s federal district court ruling that a New York City developer violated the Visual Artists Rights Act (“VARA”) when he demolished well known graffiti space, 5Pointz Aerosol Art Center, the 5Pointz graffiti artists recently requested that the developer pay their attorneys’ fees totaling $2.6 million.  In last month’s ruling, the judge ordered the developer to pay $6.75 million in damages to the graffiti artists for his willful violation of VARA.  Our recent coverage of the aerosol art litigation can be found on the Art Law blog here.

As an amendment to the US Copyright Act, VARA’s dictate that courts “may . . . award a reasonable attorney’s fee to the prevailing party” covers the 5Pointz case.

The 5Pointz artists argue that they should be reimbursed for fighting a case that was “unprecedented in both its scope and its subject matter,” and one that “stands to shape the history of art itself in the United States.”

The plaintiffs should receive [fees] in order to encourage other attorneys to assume the risk of fighting for the cherishing and preservation of public art in the United States and to fully compensate the plaintiff attorneys for their path-breaking work and substantial assumption of litigation risks and costs on behalf of the large group of plaintiff artists[.]”

With a requested total $2.6 million in attorneys’ fees from the 5Pointz litigation, one may or may not regard such high amount as “reasonable” to justify an award to the artists.

 

 

In recent art world news, France’s highest court, the Cour de Cassation, issued a ruling on March 7, 2018 that ends the lengthy dispute between the heirs of Peggy Guggenheim’s daughter, Pegeen Vail, and the Solomon R. Guggenheim Foundation based in New York.  The court has dismissed an appeal by Guggenheim heirs who sued the foundation in 2014, alleging that it had failed to respect Peggy Guggenheim’s wishes in its management of the Palazzo Venier dei Leoni in Venice, Italy and the modern art collection it contains, which was donated and bequeathed to the foundation by the late collector.  Our earlier coverage of the parties’ long-running legal dispute was featured on the Art Law Blog in July 2014.

As some background, Pegeen Vail’s heirs first sought legal action against the foundation back in 1992.  That case was dismissed, however, before the heirs’ appeal was heard, the foundation and heirs had reached an agreement in December 1996.

Nearly 20 years later in 2014, the heirs sued the foundation again, alleging that the organization had “disrespected Peggy Guggenheim’s wishes by accepting the gift of 83 post-war and contemporary works bequeathed by the collectors Rudolph and Hannelore Schulhof and displaying these in Peggy Guggenheim’s Venetian palace.”  In 2013, the late collector’s works were moved to storage to provide space for a four month exhibition of the Schulhof bequest.

In its ruling, the court determined that the 1996 agreement between the parties “imposed no constraint on the number or the duration of the displays or other collections, nor did it require a constant presentation of all the works” in the late collector’s collection.  The court further determined that the plaintiffs “did not establish” that the display of the collections donated by Schulhof and others “damaged the reputation” of Peggy Guggenheim’s own collection and they did not represent the “failure” of the foundation to fulfill its obligations.

The plaintiffs also claimed that the foundation had desecrated the late collector’s burial site.  Guggenheim’s ashes were interred in the gardens of her Venetian palace beside those of her beloved dogs.  The heirs argued that the foundation had disrespected the site with the display of works donated by Patsy and Raymond Nasher in close proximity and “profaned” her final resting place by leasing the garden for private events.

The court disagreed and ruled that under Italian criminal law (applicable in this suit) the foundation’s management of the late collector’s burial site had not undermined “the memory of the deceased person” and that events held in the garden did not constitute “profanation”.  The plaintiffs were ordered to pay the foundation €3,000.

For further information on this lengthy legal battle between Guggenheim’s heirs and the foundation, see Case dismissed:  France’s highest court rules in favour of Guggenheim foundation, published online by The Art Newspaper on March 8, 2018.

 

 

In recent art world news, last week a federal district court in New York ruled the Visual Artists Rights Act of 1990 (“VARA”), a federal law protecting visual artwork from destruction, covered the graffiti artists’ aerosol artwork on a property owner’s warehouse buildings.  VARA amended existing copyright law to protect artists’ moral rights of attribution and integrity.  Intentional destruction, mutilation, or modification of a work of visual art violates that integrity.  The court determined that the destruction qualified for heightened damages because it was a willful violation.

The court’s ruling may be a warning to property owners who permit street artists to create art on abandoned properties.  For nearly two decades, property owner Gerald Wolkoff allowed a group of graffiti artists to occupy what has become known as the 5Pointz Aerosol Art Center in Long Island City in New York.  When Wolkoff moved to develop the property, the group of 21 street artists sued and sought a preliminary injunction.  The court had issued an order denying preliminary injunctive relief to the artists, but stated that a written opinion would soon be issued.  In the eight days between the court’s denial of the artists’ request and the issuance of the opinion, Wolkoff painted over the artwork.

Under VARA, if a work is part of a building to be torn down, the artist must have an opportunity to remove it, but Wolkoff’s hasty whitewashing denied the artists that opportunity said the court.  The court rejected Wolkoff’s argument that any damages should be tied to a valuation of the works.  The court said that deterrence of such behavior was “perhaps the most important factor” of the five relevant factors it considered in deciding the case.  “Wolkoff remains undeterred, and unrepentant that his thoughtless act violated the law and had a devastating impact on people he claims he was trying to help.”

According to the court,

[i]f potential infringers believe that they can violate VARA at will and escape liability because plaintiffs are not able to provide a reliable financial valuation for their works, VARA will have no teeth.”

The court determined that all five relevant statutory factors (i.e., the infringer’s state of mind; the expenses saved, and profits earned, by the infringer; the revenue lost by the copyright holder; the deterrent effect on the infringer and third parties; and the conduct and attitude of the parties) supported the maximum award of statutory damages under VARA.  Thus, the court awarded the artists $150,000 for each of the 45 works “wrongfully and willfully destroyed” for a total statutory damages award of $6,750,000.

For a detailed background and history of the aerosol art litigation and the entirety of the court’s decision, click here.

Massachusetts Appeals Court Justice, Joseph A. Trainor, granted a motion for an injunction on the sale of important works of the Berkshire Museum.  The auction was to be hosted by Sotheby’s this week. The controversial injunction was entered two weeks after Judge John A. Agostini of Massachusetts’ Superior Court held that the Board of Trustee’s of the Berkshire Museum was permitted to pursue its plan to raise $50 M through the sale of art.

Justice Trainor entered his decision after the Massachusetts Attorney General, Maura Healey, filed an appeal three days before the scheduled auction. The Massachusetts Attorney General based her last minute appeal on the fact that the lower court did not consider, among other things, that the planned deaccession of important works would violate the museum board’s duties under its museum charter.

The museum’s controversial sale was to include the sale of two famous Norman Rockwell paintings – Shuffleton’s Barbershop and Shaftesbury Blacksmith Shop. Sotheby’s announced that it was disappointed that the Massachusetts Attorney General had decided to appeal, and that Justice Trainor entered the injunction.  The Board of Trustees of the Berkshire Museum has been fighting Margaret Rockwell, who represents the family of Norman Rockwell as well as other dissatisfied museum members.

In recent art world news, and further to our recent blog post on the Met Museum’s return to authorities of an ancient artifact on loan due to concerns that it had been looted from a storage area during the civil war in Lebanon, the prior owners of the 2,300 year old marble sculpture of a bull’s head have since dropped a federal lawsuit seeking to prevent the Manhattan district attorney’s office from returning the artifact to the Republic of Lebanon.  The prior owners, a couple from Colorado, had asserted that they bought the artifact in good faith in excess of $1 million in 1996, but after having been “presented with incontrovertible evidence that the bull’s head was stolen from Lebanon, the [couple] believed it was in everyone’s best interest to withdraw their claim to the bull’s head and allow its repatriation to Lebanon.”

In a latest twist, however, prosecutors are now pursuing the return of a second ancient artifact, an archaic marble torso of a calf bearer, to Lebanon that was discovered while they were reviewing a profile of the couple in the June 1998 issue of House & Garden magazine.  The artifact was later sold by the art collector couple to a collector in New York.  The district attorney’s office has obtained a warrant to seize the artifact.

The couple had also sold the bull’s head sculpture to the same collector in New York who in turn loaned it to the Met Museum.  After learning about the provenance dispute, the collector in New York requested the couple to take back the work and refund his money.

The couple had sued the district attorney’s office and the Lebanese government this summer claiming that they had clear title to the bull’s head artifact and demanding its return.  The district attorney’s office, however, produced evidence that the antiquity had been “discovered during a state-sponsored excavation in 1967 at the ancient Temple of Eshmun in Sidon, Lebanon.  The [work] had been put in storage after its discovery and then was stolen in the summer of 1981 during the Lebanese civil war.”  The artifact later came into the possession of Robin Symes, a British antiquities dealer, who had sold it to the couple.

The district attorney’s office has said that the investigation continues even though the bull’s head will be released without the couple or any other individuals being the subject of criminal charges.  Manhattan District Attorney Cyrus R. Vance, Jr. issued a statement this week that said:

The art world must acknowledge that stolen antiquities are not simply collectible commercial property, but evidence of cultural crimes committed around the world.  These important historical relics must be treated with caution and care, and galleries, auction houses, museums, and individual collectors must be willing to conduct proper due diligence to ensure that an item has not been unlawfully acquired.”

This latest discovered calf bearer ancient artifact passed through the same parties as the bull’s head sculpture.  The artifact had been excavated at the ancient Temple of Eshmun and was stolen from Lebanon, according to prosecutors.  It was then sold by Mr. Symes in 1996 for $4.5 million to the couple, who later sold it to the collector in New York.

We will follow this latest twist of the discovery of the second ancient artifact and its expected eventual return to Lebanon.

In recent art world news, one of the largest art scandals in New York has come to a close with the recent settlement of the last of ten lawsuits brought against Ann Freedman, the former director of the now defunct Knoedler Gallery, that arose from a $70 million forgery ring forcing the long established, renowned art gallery to close in 2011.  The lawsuit was brought by a California art collector who with her then husband had purchased a purported Jackson Pollock for $3.1 million in 2000.  The terms of the settlement were filed in federal court in Manhattan in late August and were not disclosed.

According to Freedman’s attorney, all of the cases had been amicably resolved and Freedman was thankful that she can now focus on her own art gallery, FreedmanArt, which opened on the Upper East Side in Manhattan in 2011.

The plaintiffs in the lawsuits, who also sued Knoedler Gallery and its holding company 8-31 Holdings, alleged that “Knoedler and Freedman knew or should have known that the works were fake, an allegation the defendants denied.”  Two lawsuits against Knoedler Gallery and 8-31 Holdings remain ongoing.

For our previous coverage of the Knoedler Gallery litigation on the Art Law blog, see “The Knoedler Gallery Litigation – Can Art Buyers Rely On Dealer Representations?” and “Extradition Of Alleged Member Of Knoedler Forgery Ring And Settlement Of The Knoedler Litigation,” published online in February 2016.