Gagosian Suit Offers Rare Look at Art Dealing

A lawsuit claiming that the gallery owner Larry Gagosian defrauded a prominent collector is pulling back the curtain, if ever so slightly, on the way high-end deals are sometimes made in the contemporary art world. The collector, Jan Cowles, 93, sued in January, accusing Mr. Gagosian of selling a 1964 Roy Lichtenstein painting, “Girl in Mirror,” from her collection without her consent.

The following is taken from a recent article in the New York Times. It is copied for your convenience. http://artsbeat.blogs.nytimes.com/2012/11/07/gagosian-suit-offers-rare-look-at-art-dealing/?goback=.gde_2054749_member_185417266

“In court papers the Gagosian Gallery has said that Mrs. Cowles’s son, Charles Cowles, who was in financial straits, maintained that the painting was his to sell, not his mother’s. Another version of the painting sold at Sotheby’s in 2007 for just over $4 million. But Mrs. Cowles’s painting, which Mr. Gagosian took on consignment, was eventually sold for only $2 million after assertions by the gallery — disputed by Mrs. Cowles — that it was damaged. Mr. Gagosian made an unusually high commission, $1 million.

A central question in the case has been whether Mr. Gagosian in essence worked both ends of the deal — not disclosing to Mr. Cowles that his gallery had a relationship with the buyer and that it was trying to get a favorable price for that buyer. In a deposition made public on Wednesday, Mr. Gagosian said that he frequently represented both the seller and buyer in a deal without disclosing that fact to either party. “To be honest with you, the question hardly ever gets asked,” he said. “I never get asked the question, ‘Are you representing both sides.'”

When asked whether, in a consignment agreement, Mr. Gagosian felt “any duty of loyalty whatsoever to the seller,” he replied: “I just don’t think about it in terms of — in those terms. I think about, ‘It’s a financial transaction, and the seller wants to get paid.’ My objective is to pay the seller and to make a profit for the gallery.” Mrs. Cowles’s lawyer, David Baum, claims that such representation of both parties without disclosure is “blatantly unlawful under New York agency law.” On Wednesday the gallery called the claims baseless and said its “practices are fully consistent with both the law and the standards in the art world.” A lawsuit claiming that the gallery owner Larry Gagosian defrauded a prominent collector is pulling back the curtain, if ever so slightly, on the way high-end deals are sometimes made in the contemporary art world. The collector, Jan Cowles, 93, sued in January, accusing Mr. Gagosian of selling a 1964 Roy Lichtenstein painting, “Girl in Mirror,” from her collection without her consent.
Larry Gagosian.Casey Kelbaugh for The New York Times Larry Gagosian.

In court papers the Gagosian Gallery has said that Mrs. Cowles’s son, Charles Cowles, who was in financial straits, maintained that the painting was his to sell, not his mother’s. Another version of the painting sold at Sotheby’s in 2007 for just over $4 million. But Mrs. Cowles’s painting, which Mr. Gagosian took on consignment, was eventually sold for only $2 million after assertions by the gallery — disputed by Mrs. Cowles — that it was damaged. Mr. Gagosian made an unusually high commission, $1 million.

A central question in the case has been whether Mr. Gagosian in essence worked both ends of the deal — not disclosing to Mr. Cowles that his gallery had a relationship with the buyer and that it was trying to get a favorable price for that buyer. In a deposition made public on Wednesday, Mr. Gagosian said that he frequently represented both the seller and buyer in a deal without disclosing that fact to either party. “To be honest with you, the question hardly ever gets asked,” he said. “I never get asked the question, ‘Are you representing both sides.'”

When asked whether, in a consignment agreement, Mr. Gagosian felt “any duty of loyalty whatsoever to the seller,” he replied: “I just don’t think about it in terms of — in those terms. I think about, ‘It’s a financial transaction, and the seller wants to get paid.’ My objective is to pay the seller and to make a profit for the gallery.” Mrs. Cowles’s lawyer, David Baum, claims that such representation of both parties without disclosure is “blatantly unlawful under New York agency law.” On Wednesday the gallery called the claims baseless and said its “practices are fully consistent with both the law and the standards in the art world.” “

The Law Offices of Aaron Resnick is one of the few South Florida firms with an Art Law division.