Gagosian Gallery’s Legal Troubles

Gagosian Gallery e-mails reveal the “behind the scenes” of the litigated sale of Girl in Mirror. (http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

Recently, the embattled Gagosian Gallery suffered another legal setback. New e-mails have come to light, suggesting that in his negotiations to sell a painting, Larry Gagosian, the owner of the Gagosian Gallery, ardently solicited a “low ball” bid from a buyer. In January, Jan Cowles, a prominent New York art collector, filed a lawsuit against Gagosian and his gallery for conversion, fraud, breach of fiduciary duty, and unjust enrichment over the sale of a painting from her collection. The piece in question is Roy Lichtenstein’s 1964 Girl in Mirror, which is one of a series of eight pieces in epoxy enamel on metal. In her complaint, Mrs. Cowles alleged that in the fall of 2008, Mr. Gagosian struck a deal with her son, without her knowledge or consent, to sell the painting on consignment for $3 million and retain half a million dollars as commission. The plaintiff maintains that the piece’s market value at the time had been $4.5 million. Mrs. Cowles further alleged that her son, who had been an art dealer for many years, had no authority to sell the painting and acted without her knowledge only because he was in a “desperate financial condition.” (See Jan Cowles’ complaint, available at (http://www.courthousenews.com/2012/01/20/Gagosian.pdf).

Mr. Gagosian eventually sold the piece for $2 million and retained a $1 million commission. The plaintiff claimed that Mr. Gagosian induced her son to accept the “below market sales price” by falsely representing that the painting was badly damaged. She argued that if there had been any damage to the work, Gagosian Gallery’s staff would have documented it before accepting the painting on consignment, which is a customary practice in the industry to avoid subsequent disputes about the value and condition of the artwork. Mrs. Cowles further implies that at the time of the sale of the painting, the Gagosian Gallery had a second piece from the Girl in Mirror series that may have been damaged. Her theory is that Gagosian sold the damaged painting for $2 million while her painting may still be in Gagosian’s possession. If Mrs. Cowles is able to back up this admittedly cinematic hypothesis, she would provide a plausible explanation of the sold painting’s condition report, which describes the damage as “numerous dark inclusions and small pits in the yellow field,” “three areas of discoloration,” “altered texture” and “noticeable prior restoration.”

As The New York Times reported, the latest papers filed by Mrs. Cowles’ attorney reveal the e-mail negotiations between Mr. Gagosian and the art collector who eventually bought the painting. Apparently, Gagosian represented that the seller of the work was “in terrible straits and needs cash” and invited the art dealer to make “a cruel and offensive offer” for the painting. This new evidence, coupled with Mrs. Cowles’ theory that the piece had been swapped with a damaged one, may account for why it was sold for less than half of its claimed market value at the time. (Randy Kennedy, Frank E-Mails Reveal Negotiations at Art Gallery, N.Y. TIMES, March 26, 2012, http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

This is not the first time Mr. Gagosian and his gallery have been sued over the sale of a painting from Mrs. Cowles collection. Last year, Mrs. Cowles filed a lawsuit in Federal court for the gallery’s sale of The Innocent Eye Test by Mark Tansey, another piece her son had put up for sale. Apparently, she had donated 31 percent of her interest in the painting to the Metropolitan Museum of Art, where the painting was on display for many years, with the intention of eventually transferring her entire interest in the work to the museum. Mrs. Cowles sued Gagosian for the return of the painting and the British collector who purchased it sued him for fraud. The case was settled for $4.4 million after the piece was returned to Mrs. Cowles, who then donated it to the museum. This prior implicit victory for Mrs. Cowles adds more ammunition to the merits of her case in the current dispute with Gagosian. (Randy Kennedy, Collector Sues Gagosian Gallery for Selling Him a Painting Partially Owned by Met, N.Y. TIMES, March 11, 2011, http://artsbeat.blogs.nytimes.com/2011/03/11/collector-sues-gagogosian-gallery-for-selling-him-a-painting-partially-owned-by-met/).

Mrs. Cowles is seeking $4.5 million in compensatory damages and $10 million in punitive damages for the Girl in Mirror sale.