A feud between a billionaire art collector and a gallery owner continued in a Manhattan court on June 5, 2013. The head of Forbes Holdings Inc. & MacAndrews, Ronald Perelman, is suing Larry Gagosian over past art deals. The case started in September 2012 when both parties filed claims against each other on the same day in the same New York court. Gagosian accused Perelman of backing out of a $23 Million art deal. Perelman’s suit asserts that Gagosian manipulated art prices and concealed information in several past sales. One of these sales is Perelman’s $4 Million purchase of “Popeye”, a granite sculpture of the cartoon character.
Gagosian dropped his suit in October, and on Wednesday, he urged the judge to dismiss Perelman’s complaint. The judge was astonished that the case couldn’t settle outside of court. She said, “This is a crazy case to have going on in the court…” She went on to suggest that the parties discuss the suit over cocktails in the Hamptons.
In the dismissal hearing, Gagosian argued that his adversary is a sophisticated art investor and therefore had a heightened duty to conduct his own due diligence. He furthered his argument by saying that no fiduciary duties existed in the arm’s length deal because it was negotiated by attorneys on both sides. Gagosian said the valuation of pieces such as “Popeye” could not be used as evidence of fraud because art valuations are opinions that are not actionable for fraud in NY.
Perelman, admitting he was a prominent collector, said he could not be compared to Gagosian. In an attempt to lower his due diligence standard, he claimed that Gagosian is “probably the world’s leading and most powerful art dealer”. Perelman’s attorney continued by telling the judge, “you can’t get up there and lie about things” and then use someone else’s sophistication for immunity. Trying to establish a fiduciary relationship, he pointed to the parties’ 20 year friendship in which Gagosian acted as an art dealer, adviser, and broker. Additionally, Perelman argued that other judges have allowed art valuation opinions to go past the pleading stage and pushed for the same in this case.
The judge is considering the motion to dismiss and will make a decision about whether the suit can go on.