In a motion disposed on the 31st of January, New York State Supreme Court Justice Barbara Kapnick summarily dismissed all but one of six charges brought against international gallerist Larry Gagosian by the financier Ronald Perelman, Businessweek reported. Kapnick ruled that Perelman’s charge of market manipulation stands as Gagosian has what can reasonably be construed as a “superior and unique” understanding of the art market. The five charges dismissed, all filed in 2012 and characterized by an attorney for Gagosian as “bogus,” were: breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and unjust enrichment and deceptive business practices.
The lawsuit’s fraud charge was arguably its most significant to the broader art market, as it alleges that Larry Gagosian’s dominance of the commercial arena could compromise his ability to engage in fair dealings with buyers. The accusation stems from a botched $23 million, multi-artwork deal that led to both parties simultaneously filing suit against each other in September 2012. Though the gallery dropped its suit shortly thereafter, Perelman persisted, and the present ruling came as a response to a motion to dismiss filed by Gagosian on January 23rd of last year. Though the five other dismissed charges centered around a number of transactions made in 2011 between the pair, who had been friends and associates for two decades, the fraud charge stemmed specifically from the $4 million sale of a granite Jeff Koons sculpture depicting Popeye.
In his 2012 suit, Perelman alleged that Koons and Gagosian delayed delivery of the sculpture by 7 months, apparently due to fabrication issues, and further claimed that Gagosian did not disclose in a timely fashion the existence of a contract with the artist that guaranteed Koons certain revenue shares in the event of various transaction scenarios. The 2012 complaint states:
Specifically, Gagosian’s contract with Koons entitled Koons to 70 percent of any amount over the original sale price of $4 million if Gagosian resold the work. Furthermore, if Gagosian bought back the work before it was finished, delivered and fully paid for, Koons would be entitled to 80 percent of the profit on any subsequent sale.
“The court has affirmed that we have a valid fraud claim against Mr. Gagosian based on his unfair dominance of the art market,” a spokeswoman for Perelman, who is himself no stranger to lugubrious allegations, told Businessweek.
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