Larry Gagosian Withdraws Suit Against Billionaire Ronald Perelman

A development has occurred in the legal battle between former friends and art world powerhouses art dealer and gallerist Larry Gagosian and billionaire collector Ronald Perelman. For details, read our earlier report: Perelman and Gagosian Countersue over 'Popeye.' 

Last Friday, October 19, Gagosian withdrew his lawsuit filed last month against Perelman's MAFG Art Fund LLC over failure to make several payments for several works of art. The suit was dropped "without prejudice and without costs to either party." However, the story has not concluded, as Perelman is still pursuing his own suit against Gagosian.

The former friends filed suits against each other in New York's Supreme Court in Manhattan on Wednesday, September 12, each alleging the other cheated him out of millions of dollars.

Perelman's suit stated that the famed dealer had used his position in the art world to manipulate Perelman into purchasing "Popeye," a $4 million granite sculpture by the contemporary artist Jeff Koons. Perelman said that Gagosian had failed to disclose "secret contract provisions" between the gallery and Jeff Koons that prevented Perelman from earning a fair return on the piece. Perelman had not realized that contract provisions between Koons and Gagosian stipulated that the artist would receive a large percentage of any profit earned if the gallery resold the work for more than $4 million. This "detrimentally affected Gagosian's ability and willingness to repurchase or resell 'Popeye' above the price paid by plaintiffs."

Gagosian, who represents heavy-hitters such as Damien Hirst, Andy Warhol, and Richard Serra, charged that Perelman failed to pay $12.6 million for a sculpture and $10.5 million for a painting that were delivered to his East Hampton home. Gagosian stated that Perelman had refused to pay the agreed-upon price, and offered pieces from his collection as partial payment. After refusing to pay, the gallery stated in its complaint that it had agreed to give Perelman about $18 million in credits for the art from his collection to "mitigate damages." Perelman's actions had caused the gallery to pay the artists out of its own capital, forgoing its commissions. Gagosian had also stated that following non-payment, Perelman had "engaged in a series of sham settlements and deceptive maneuvers designed to force the gallery into spending tremendous capital to cover shortfalls, to cloud the title of artworks defendants forced the gallery into accepting as barter, and to otherwise render impossible the gallery's ability to mitigate damages including the continual threats of baseless lawsuits." These actions "caused the gallery to lose millions of dollars," Gagosian alleged. He was seeking the original price of the sculpture and the painting, minus the net sales prices of any of the bartered pieces from Perelman's collection that were sold, and to return the works that haven't been sold.

However, in a letter to the court, Gagosian's lawyer, Matthew Dontzin, explained that the purpose of Gagosian's lawsuit had been to establish that he owned the works in question. Since the Perelman complaint concedes that the gallery does possess title to the artworks at issue, including the unfinished granite "Popeye", Dontzin stated that there is no reason to continue his suit.

Perelman's lawyer Keith Fleischman stated that his client's lawsuit will continue, as Gagosian's goal was only to "divert the court's attention from the real issue between the parties, which is the fraud that occurred."

For further information, check out: Art Info, The New York Times, and The Gallerist

Art Theft in the Netherlands Raises Concerns About Museum Security

Last Tuesday, October 16, thieves made away with seven borrowed paintings from the Kunsthal Museum in Rotterdam, including works by Picasso, Monet, Gauguin, Matisse, and Lucian Freud. The artworks were part of a collection amassed by Willem Cordia, who died in 2011, and were put on exhibit only last week at the Kunsthal, which does not have its own permanent collection.

The New York Times reported that: "The stolen paintings span parts of three centuries: Meyer de Haan’s “Self-Portrait” of 1890 and Gauguin’s 1898 “Girl in Front of Open Window”; Monet’s “Waterloo Bridge, London” and “Charing Cross Bridge, London,” both from 1901; Matisse’s 1919 “Reading Girl in White and Yellow” and Picasso’s 1971 “Harlequin Head”; and Freud’s haunting 2002 portrait “Woman With Eyes Closed.”

The theft raises serious concerns about museum security in Europe, as only two years ago, five paintings were stolen from the Musee d'Art Moderne in Paris, including a Picasso and Matisse, with a combined value of $130 million.

For more details, see A Picasso and a Gauguin Are Among 7 Works Stolen from a Dutch Museum

Seven Year Saga of Bakalar v. Vavra Ends in Victory for Current Owner of Schiele Drawing and Settles Concerns Over Application of the Laches Defense

Last week, the United States Court of Appeals for the Second Circuit affirmed the New York Southern District Court's ruling that "Seated Woman With Bent Left Leg" (1917) by Egon Schiele should remain with its current owner, David Bakalar. The culmination of a lengthy court battle, this decision bars the claim by New York resident Leon Fischer and Czech citizen Milos Vavra, the heirs of Franz Grunbaum, that the drawing was rightfully theirs because it was taken from their family by the Nazis in 1938. The proceedings have been closely monitored by many in the art and legal worlds alike, awaiting the outcome of a case which would have significant implications for future title disputes over artworks--especially in Holocaust restitution cases.

The disputed drawing once belonged to Franz Grunbaum, a Viennese cabaret singer with an extensive art collection, prior to the outbreak of World War II. Following Grunbaum's arrest in 1938, the Nazis gave permission to Schenker & Co. AG, a shipping company, to export Grunbaum's extensive art collection. However, it is unclear whether "Seated Woman" was among the 420 pieces taken by Schenker. Grunbaum died in the Nazi concentration camp Dachau in 1941 and his wife Elisabeth died a year later in Munich. Some years later, art dealer Eberhard Kornfeld, a partner in the Swiss gallery Gutekunst & Klipstein, acquired the painting in 1956. He claimed that he acquired the piece from Elisabeth Grunbaum's older sister, Mathilde Lukacs. Otto Kallir, Jewish collector and dealer, eventually acquired the painting for his New York gallery and sold it to Boston philanthropist David Bakalar in November 1963. In 2005, Bakalar sold the drawing at Sotheby's in London. Shortly afterwards, the Grunbaum heirs, Leon Fischer and Milos Vavra, informed Sotheby's of their claim. Sotheby's responded by voiding the sale and informed Bakalar that his ownership was at issue.

Bakalar filed a complaint for a declaratory judgment in New York district court that, as a bonafide purchaser (a good faith purchaser), he was the rightful owner of the drawing. The heirs filed a counterclaim, stating that under New York law, even a bonafide purchaser cannot acquire good title to an artwork that has been stolen in the first place.

This case ultimately turned on the defense of "laches," an equitable doctrine asserted by Bakalar that bars title actions in which there has been a lengthy delay in filing a claim. The attorneys for the heirs of Dunnington, Barthlow, and Miller LLP had raised a revolutionary argument--that the defense places excessive difficulty on claimants and the burden should be shifted onto the buyer to demonstrate that he or she demonstrated the proper due diligence in acquiring the work.

The implications of this case drew the attention of many in the art and legal sectors. The ruling on the laches defense would have serious consequences for galleries, dealers, private owners, and museums alike, fearful that so changing the doctrine would have "a significant and negative impact on the art market in New York" (see: The Art Newspaper). A joint amicus brief was filed by heavy-hitters such as the Art Dealer's Association of America, the Society of London Art Dealers, and the U.K. dealer Richard Nagy demonstrates such anxieties, as the brief argued that the laches defense should not be limited, as the heirs were asserting.


Ultimately, the district court ruled in favor of Bakalar. It stated that to prevail in asserting the laches defense, a defending party must show that (1) the claimant was aware of the claim (or had reason to know of the claim), (2) the claimant inexcusably delayed in taking action, and (3) the defending party was prejudiced as a result. The district court held that Vavra and Fischer's "ancestors were aware of--or should have been aware of--their potential intestate rights to Grunbaum property," and that the ancestors "were not diligent in pursuing their claims to the drawing." And last Thursday, October 11, the Second Circuit affirmed.

Following last week's ruling, bonafide purchasers in New York can rest a little easier, though the decision is a disappointment to future claimants seeking restitution of their ancestors' property.

Sources: The Gallerist

**Spotlight: The Art Loss Register (UK)

The Art Loss Register (ALR) has become synonymous with due diligence in the art parley. Dealers, museums, collectors, insurance companies, all who consider investing in art works are expected de facto to inquire about the origins of the objects they are buying, just to make sure they are not stolen and title will pass to the buyer. According to the organizations website, the ALR operates "the world’s largest private database of lost and stolen art, antiques and collectables." With the wealth of information in the said database, the ALR provides invaluable service to insurance companies and buyers as the first point of search for provenance of works.

The ALR was established in London in 1991, it evolved from an art theft archive established by the International Foundation for Art Research to deter market transactions in stolen art. Funding for the ALR came from various shareholders, include members of the insurance industry and art market, such as the leading auction houses.

The services provided by the ALR include stolen "item registration, search and recovery services to collectors, the art trade, insurers and worldwide law enforcement agencies." The ALR staff attends art fairs and reviews auction catalogs in order to identify stolen works that have been reported by their rightful owners. The ALR encourage registration of valuable items and registration of stolen items to facilitate recovery.

The ALR publishes its recovery successes in an newsletters; over the last decade it has helped recover numerous objects ranging from jewelry to paintings and antiquities. The recent recovery success story is related to stolen jewels of the Duchess of Argyll. Six years after they  disappeared, the ALR worked with a private dealer-consignor, auction house and insurance companies to recovery the pieces when they were offered for sale in 2012. The ALR employs art historians and attorneys, including Christopher A. Marinello, who specialize in recovering stolen, looted and missing works of art.

Source: The Art Loss Register

**Note: Periodically, we publish brief articles about organizations that play an important role in the sphere of law and the arts. If you would like to propose an organization for this column, please contact itsartlawATgmailDOTcom.

Fires Ravaging Aleppo's Ancient Souk Raise Concerns Over Destruction of Cultural Heritage Sites in Syria

The struggles in Syria have claimed thousands of lives. Across war-torn regions, damage is also being done to ancient sites as a byproduct of the bloody fighting that has already claimed more than 30,000 lives.

Forces of the rebel Tawhid Brigade recently launched an attempt to take control of Aleppo from President Bashar al-Assad. Almost two weeks ago, fires began sweeping through the ancient souk, or marketplace, of Aleppo, damaging well-preserved medieval storehouses, shops, schools, and ornate courtyards, as a result of the fighting between security forces and rebels. The rebels, seeking to liberate neighborhoods that were largely pro-government, have used these areas as posts from which to attack the opposition.


Aleppo is one of the world's oldest continually inhabited cities and one of Syria's largest. Fires have damaged more than 1,500 shops and new fires have been set ablaze in Aleppo's Zhrawi, Aqaba, and Bab Al Nasr markets. Parts of the Great Mosque, nearly a thousand years old, have been close to being set ablaze. Four other World Heritage sites have been damaged in Syria, including the old city of Damascus, the ruins of Palmyra, the Crac de Chevaliers crusader castle, and the "forgotten villages" in the north.

The destruction occurring in the Old City has also angered opponents of the Syrian president. The New York Times interviewed a doctor who identified herself only as "Dima" who expressed her sorrow at the destruction and, though she supported peaceful resistance against the current regime, said that, "our hearts and minds have been burned in this fire... it's not just a souk and shops, but it's our soul too."

Damage of priceless sites of shared cultural heritage has always been a consequence of warfare. Following the unprecedented destruction of historic sites, monuments, and artifacts of the Second World War, the 1954 Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict was enacted as a measure for the international community to manage damage done to important cultural heritage sites and pieces resulting from armed conflict. As a signatory to this treaty, Syria is obligated to protect its cultural heritage sites and monuments.


UNESCO's Director-General Irina Bokova stated, "That the fighting is now destroying cultural heritage that bears witness to the country's millenary history - valued and admired the world over - makes it even more tragic." Though Bokova has sent a UNESCO team to Syria, they will not be able to survey the damage to the Old City until the fighting stops.

Sources: Rebel Forces Set Fire to Aleppo's Old City, In Syria's Largest City, Fire Ravages Ancient Market

Cultural Property Agreement b/n Ecuador and Brazil

On October 2, 2012, the Ministry of Foreign Affairs of Ecuador announced that the Foreign Ministers of Ecuador Ricardo Patiño and of Brazil, Antonio Patriota signed the Cooperation Agreement on stolen or illegally exported cultural assets. According to the Press Release, "in this agreement, the Governments of Ecuador and Brazil recognize the importance of protecting the cultural heritage of both countries and they are aware of the serious damage that represents for both contracting parties the theft and illegal export of objects that compose this heritage. The loss of cultural assets and the damage that is put on upon archaeological spaces, such as churches and other deposit places."

The purpose of the Agreement is to establish "common standards to allow the recovery" of culturally importatn objects that are either stolen or illicitly imported or exported. Apparently, "both contracting parties assume the entire responsibility to prohibit and prevent the income in their respective territories of these cultural, patrimonial and other specific property from the other contracting party that lack the respective authorization for export."


Source: Ministry of Foreign Affairs of Ecuador.

The Tale of a $7.00 Renoir Demonstrates the Surprises and Difficulties of Determining Good Title in the Art World

A small painting purchased for $7.00 at the Harpers Ferry Flea Market in Virginia may turn out to be a work of the Impressionist master Pierre Auguste Renoir stolen from the Baltimore Museum of Art over sixty years ago. "Paysage Bords de Seine," which measures 5.5 by 9 inches and whose estimated value is now over $75,000, was scheduled for sale at the Potomack Company, a small auction house in Alexandria, Virginia this past Saturday. The new owner alerted Potomack of the new information regarding and the sale has been postponed while the F.B.I. conducts its investigation.

The story of the Renoir stars an ensemble cast of characters. Herbert L. May originally purchased the work from Berheim-Jeune, a Paris gallery whose owner was a friend of Renoir, in 1926. His ex-wife, Saidie May, lent the artwork to the Baltimore Museum of Art in 1937. The Renoir was subsequently stolen in November 1951, soon after Sadie May died and bequeathed the remainder of her art collection to the museum. Following the theft, the museum had been paid $2,500 by its insurance company for the painting. Of course, the years between the theft and the flea market purchase remain a mystery.

Elizabeth Wainstein, The Potomack's owner, said in a statement: "Potomack is relieved this came to light in a timely manner as we do not want to sell any item without clear title."

Determining clear title is an increasingly unachievable task. The claims of the parties involved in this affair illustrate the great difficulty in tracking title in the art world, even when companies, institutions, and individuals try to do their due diligence. For example, before putting the piece up for auction, Potomack checked the Art Loss Register, the world's largest private database of stolen and missing art, but did not find it listed. The lack of unified central registry, the traditional secrecy with which many art world transactions occur, and inconsistency in litigation and interstate and international legislation all contribute to the problem of determining good title in the art world. It's widely reported that the stolen art trade is one of the world's most profitable illicit international industries, surpassed only by guns and drugs.

Competing claims for ownership of the little Renoir could include: the Baltimore Museum of Art--from which the painting was stolen, the insurance company--which paid a $2,500 claim for the work, The Potomack Company--the auction house about to sell the work, and the Virginia shopper--who unwittingly purchased the painting at the flea market.

The Washington Post surveyed the opinions of some experts in the field and case:

Christopher Marinello, executive director and general counsel of the London-based Art Loss Register, believes that the insurance company is the rightful owner. He explained that most art insurers in the mid-1950s had policies stipulating that they were entitled to the stolen artwork that is recovered for which they have paid claims.

However, the BMA isn't sure who insured the painting, nor do are they certain of the terms of the policy or standards of the day. Museum officials have explained that records at BMA are not well maintained and it was not until they checked the loan records that they found a record of ever having had the Renoir in its collection at all. The 1951 police report on the theft was not detailed, stating only that between 4:00 pm on November 16 and 1 pm on November 17, "someone stole" the painting and there "no evidence of forced entry."

Others believe that the painting should return to the museum to which it was lent in the first place. Susan Helen Adler, Saidie May's niece who also wrote a book about her aunt, believes that the piece should return to the BMA. "It was originally given to them for a purpose," she said. "It would be wrong for someone else to buy it and know that it had been stolen."

As the investigation continues, new information may come to light.

Sources: The New York Times, The Washington Post

New York Times Surveys Aggressive and Controversial Measures Taken By Turkey to Ensure the Return of Antiquities

Turkey has instilled fear in museum directors and curators across North America and Europe with its an aggressive new campaign to repatriate its antiquities. Though it ratified the UNESCO convention that permits museums to acquire artifacts that were outside their countries of origin before 1970, Turkey is now relying on a 1906 Ottoman-era law banning export of artifacts to demand return of any object removed after that date. Turkey is employing measures such as refusing to lend treasures, delaying licenses for archaeological excavations, and publicly shaming museums to ensure the return of artifacts.

Turkey's tactics have met with success. Last year, the Pergamon agreed to return a 3,000 year old sphinx from the Hittite Empire that Turkey said had been taken to Germany for restoration in 1917. And last month the University of Pennsylvania's Museum of Archaeology and Anthropology announced that it agreed to lend 24 artifacts from ancient Troy to Turkey, whose questionable provenance helped inspire the 1970 UNESCO convention. Additionally, the Museum of Fine Arts in Boston returned the top portion of an 1,800 year old statute "Weary Herakles."

Yet these strong-armed techniques have also met with criticism. Hermann Parzinger, president of the Prussian Cultural Heritage Foundation, which oversees the Pergamon in Berlin, stated that "the Turks are engaging in polemics and nasty politics" and that "they should be careful about making moral claims when their museums are ful of looted treasures," acquired through centuries of Ottoman conquest and rule.

Read the full article: Seeking Return of Art, Turkey Jolts Museums