The End of Fine Art Experts? A Few Lessons Learned From The Recent Agnes Martin Litigation
The Picasso that always hung in your childhood livingroom; a gift to your grandfather from a grateful gallery owner, liberated as your grandfather’s 264th Infantry Regiment worked its way through France in the dying days of World War II. As the years passed, and family generations moved on, the family puts the Picasso up for sale.
But what was always a family certainty, becomes clouded in doubt when the Picasso heirs refuse to authenticate the piece as an original Pablo Picasso. What was a family treasure, is now worthless.
Expert opinion in the authenticity of works of fine art is a critical component of the fine art markets. Without it, the wheels for a large part of the market-the secondary fine art market for essentially deceased artists-would be thrown into confusion. The fictional Picasso scenario is made far worse when sellers are revisited, sometimes long after the cash has gone, by buyer’s with doubts as to a piece of fine art’s authenticity.
This was the experience of The Mayor Gallery Ltd, whose attempts to authenticate thirteen works of fine art by Canadian-American Minimalist, Agnes Martin, by submission for inclusion of the works in the ‘Catalogue Raisonné’ of The Agnes Martin Catalogue Raisonné LLC (AMCR), a non-profit authenticator and compiler of the catalogue of authenticated works of Agnes Martin’s fine art, resulted in rejection and the litigation in the Supreme Court of the State of New York known initially as ‘The Mayor Gallery LTD v The Agnes Martin Catalogue Raisonne LLC, Arnold Glimcher, Tiffany Bell, Members of the Authentication Committee Of The Agnes Martin Catalogue Raisonne’.
Before the AMCR was formed, and over the period 2009 to 2013, The Mayor Gallery had sold the works to four private fine art collectors. Following the formation of the AMCR in 2012, each of the collectors submitted the works to AMCR for inclusion in the Martin Catalogue Raisonné, and in doing, so signed the non-negotiable “Examination Agreement” presented by AMCR for this purpose, which left the basis for review of the works within AMCR’s sole discretion. AMCR would take one of two actions; either reject or accept the works of fine art into the catalogue.
AMCR rejected each of the works, and as it does, it notified each of the collectors of this by simple letter without its reasons for doing so. AMCR also, according to The Mayor Gallery, did not respond to letters seeking clarification for the rejection.
Given the rejection, The Mayor Gallery refunded two of the collectors and accepted return of their works, with the remaining two collectors agreeing to retain their works pending resolution of the dispute with AMCR. In the Gallery’s view, the Catalogue represents the definitive compilation of authentic Agnes Martin works, relied upon by Sotheby’s and Christies, and for all intents and purposes a rejection is ‘“recognized in the worldwide marketplace as a conclusive statement to the public that the artwork is a ‘fake,” and such works are rendered “worthless” and unsaleable’”.
Following the refund, and return of Martin’s Day and Night from collector Jack Levy (to whom the Gallery had sold the work in 2010 for $2.9 million), the Gallery signed its own Examination Agreement with AMCR and resubmitted the work for inclusion in the Agnes Martin Catalogue, together with its radiocarbon test results for the canvas.
Again, AMCR rejected the work.
A further twist in the saga, is the Gallery’s allegation that Defendants Arnold Glimcher (who the Gallery said owns Artifex Press, the publisher of the Martin Catalogue) and Marc Glimcher (President of PACE Gallery), both members of the AMCR Authentication Committee, had a vested interest in rejecting the works. PACE represents the Agnes Martin estate, and both Glimchers, according to The Mayor Gallery, own and deal in Martin’s works, each having a ‘“substantial monetary interest in” her artworks, the value of which increases in step with the scarcity of her artworks on the market; …[with] A Glimcher and M Glimcher…[benefitting]…financially from AMCR’s exclusion of the thirteen artworks from the Catalogue: and “their decision to vote to reject” those artworks” was motivated by their economic interest . . . [to reduce] the number of Agnes Martin art works in the marketplace.”’
The litigation was decided in two successive, preliminary hearings, and perhaps, at least in part, reflective of the courts’ general unwillingness to lay liability at the foot of independent art experts, found for AMCR on all counts. The first, filed as a motion to dismiss, and decided in April 2018, alleged that The Mayor Gallery had not sufficiently pleaded its case. The court agreed and gave the Gallery the opportunity amend its complaint. In the second, in July 2019, also on motion to dismiss, the court found that the Gallery’s second amended complaint was, again, insufficiently plead, and dismissed the suit completely, ordering The Gallery to pay the Defendants’ costs.
As is the case with these ‘early-stage’ proceedings, little opportunity is given prior to their hearing to extract the facts of the case through discovery. The standard in hearing these motions is for the court to accord the Plaintiff’s (here the Gallery) “…complaint a liberal construction, …with every favorable inference, and… [accept]…the factual allegations as true; however,bare legal conclusions and allegations that are flatly contradicted or inherently incredible are not afforded their most favorable intendment…”. Even so, the Court upheld both motions to dismiss.
The Gallery’s Complaints framed the usual attack one would expect to see on fine art authentication experts. Its recipe ‘four-corners’ being product disparagement, tortious interference with prospective business relations, tortious interference with contract, and negligence, smattered with a dose of breach of contract and breach of implied duty of good-faith and fair dealing.
On product disparagement, the Court found the required allegation of ‘falsity’ to be contradicted by AMCR’s rejection letters, which were clear, the Court said, as to the rejection being not a statement of inauthenticity, but rather simply that the works of fine art would not be included in the Catalogue.
The Court, interestingly, went on to say that, ‘“…[f]urther, whether any catalogue raisonné’s inclusion or non — inclusion of an art work has any bearing on a work’s value has been recognized by New York courts as a function of the art marketplace, and it is not for the court to determine what the art market should or should not credit as reliable …noting that a catalogue raisonné is not “controlled by any governmental regulatory agency,“ and there is no “guarantee that the art world will accept (its) validity and reliability”… “(w)hether the art world accepts (it) as a definitive listing of an artist’s work is a function of the marketplace, rather than of any legal directive or requirement,” thus, a catalogue’s “inclusion or exclusion of particular works creates (no) legal entitlements or obligations”…’.
On both the product disparagement and the tortious interference with prospective business relations claims, the Court decided that the Gallery had not adequately averred the necessary allegation of ‘malice’. It relied heavily on the existence of the Examination Agreement which, according to the Court, did not require AMCR to consider or review any particular supporting documents or tests, leaving the decision to accept or reject the work of fine art within its discretion. Further, the Court found as “vague” the Gallery’s assertion that there was malice in any particular motive plead regarding the Glimcher’s apparent conflict of interest as competing dealers in Agnes Martin works of fine art and “… plaintiff’s allegation that its principal, James Mayer, and A Glimcher have had unspecified ”longstanding frictions”…[did]…not establish implied or actual malice sufficient to maintain this action.”
On each of the tortious interference claims, the Court stressed the historical nature of the contracts between the Gallery and each of the four collectors. For the Court there was no ongoing, outstanding contractual obligation from the sale to the collectors, nor evidence of prospective business opportunities with the collectors for AMCR to interfere with, even if the Gallery could prove the necessary AMCR intention or wrongful conduct, with “…the only allegations that support defendants’ knowledge that non-inclusion of the artworks in the Catalogue would force the collectors to rescind and plaintiff to issue refunds…[being]…speculative…”.
On Negligence, the Gallery’s claim was essentially two-pronged: the first for negligent misrepresentation, based on the rejection letters, and the second for AMCR’s alleged gross negligence in not taking into account the supporting documents and information submitted with the catalogue inclusion applications.
Essential to each, as a primary matter, is establishing that AMCR owed the Gallery a duty of care in rejecting or accepting the works of fine art. The Court, as intimated earlier, wasn’t prepared to find that as the arbiter of Agnes Martin works, AMCR owed a duty of care to “… the entire public, on the basis of solely AMCR’s expertise or position in the realm of Martin’s work…” This, added to the Court’s refusal to accept that the Gallery had any standing to contest any of its claims relating to the works of fine art it had not yet refunded (it had only refunded two collectors so far), meant that, as far as the Court was concerned, the Gallery was restricted to its claim of implied contractual gross negligence in the Examination Agreement it, itself had submitted for Night and Day, and here the Gallery’s Complaint had not adequately stated allegations to support a claim that “…defendants were “careless, grossly negligent and reckless in the performance of their obligations to the plaintiff and the public at-large [sic] in their vetting of the 13 artworks” under Plaintiff’s and the Collectors’ Agreements…”.
Furthermore, the Court refused to find that the Gallery had sufficiently stated its case for ‘reliance’, a key element in any negligent misrepresentation case. The Court, while stating that the Gallery produced scant information relating to the sale contracts between it and the collectors, appeared to accept, for the purposes of the motions before it, that the Gallery made the refunds based on its breach of its implied warranty to the collectors that the Agnes Martin works of fine art were authentic (which the Court, oddly referenced as the “…the implied warranty applicable to the sale of art goods under the UCC (see UCC § 2–312 [warranty of title implied in sale of art])…”) (my emphasis).
The Court however appeared to hold that nothing compelled the Gallery to make the refunds and that “…[h]ere, the amended “complaint is devoid of any-allegation as to defendants’ conduct evincing their understanding of plaintiff‘s reliance…”. This statement appears to be tied into the Court’s view that the sales to the collectors were not conditioned upon inclusion in the Catalogue.
So, all in all, you may be asking, what lessons does The Mayor Gallery v AMCR leave us for art experts and their continued willingness to engage in fine art authentication?
For one, it evinces a general reluctance among the courts to find against fine art experts who have no financial incentive in authenticating or not authenticating fine art. Even here, where there were allegations of conflicts of interest and vested financial interests, the Court apparently used its efforts at a very early stage in the litigation, before it had the chance to factually examine the merits, to dismiss the Gallery’s claims.
Furthermore, while there has been considerable concern for authenticity opinions or certificates exposing art experts to excessive risk of liability, the Mayor Gallery decision shows that there are ways and means for experts to protect themselves from liability.
The exposure concern has emanated particularly from statutes the likes of New York’s Arts and Cultural Affairs Law and California’s Sale of Fine Prints laws, as read with the Uniform Commercial Code’s (UCC) Article 2 provisions on implied warranties in sales of goods, which together, effectively express warranties into the sale of original or multiple works of fine art that any certificate of authenticity provided by a seller in the sale of the work of fine art is presumed to be part of the “basis of the bargain” and that the work of fine art will conform to the stated description.
While there is certainly risk in authenticating works of fine art (which has been the catalyst for so far unsuccessful attempts at legislative reform, particularly in New York, to exempt non-financially involved experts), having a well-drafted examination or ‘no-sue’ agreement would go along way to mitigating this risk and providing disincentives for dragging fine art experts into costly litigation (for example, by including attorneys fees provisions).
Furthermore, as we have seen from The Mayor Gallery litigation, the traditional claims against fine art experts include considerable evidentiary hurdles, including showing malice, intention or other wrongful conduct in, particularly, the product disparagement, and tortious interference heads.
In the case of negligence, well this should require a showing that the expert has a duty of care to the plaintiff, and that that duty of care was not breached. This is, generally, the same test that applies to any person in any other professional capacity. Absent an agreement excluding liability for mere negligence, the expert would, surely, need to exercise a degree of care in making her assessment or in authenticating or not authenticating. Granted, the expert may be seen as being damned if she does or damned if she doesn’t in authenticating, but, again, the test ought to be what is a reasonable opinion based on the facts at hand, and any opinion or certificate could be qualified, expressly, by that. Again, a properly drafted examination agreement could serve to mitigate this risk substantially.
This being said, the context, and facts of authentications may be important too. In The Mayor Gallery case, as we have seen, the fact that inclusion submission was made years after the sales was, in the Court’s view, important. The situation may be different, where, for example, a dealer or buyer requests a certificate of authenticity or opinion for use in a pending sale. Here it may be argued that the fine art expert’s duty of care extends beyond its contractual obligations.
One has sympathy, to some extent, for The Mayor Gallery based on this fact pattern. All thirteen works were rejected. The Gallery’s claim was for in excess of $7 million in works refunded or to be refunded. The works were sold as Agnes Martin originals. AMCR, according to the Gallery, was controlled by the principals of a competing gallery, with whose founders James Mayor had, apparently, been at loggerheads. Even if rejection were not a statement of inauthenticity, it is hard to see how the fine art markets would not react negatively to the works. This seems to be indicative in The Mayor Gallery’s refund of at least some of the works.
One could be inclined to take a second glance at the Court’s reasoning that AMCR did not owe a general duty of care to participants in the sale, and even though AMCR is not “…controlled by any governmental regulatory agency…”, it still wields considerable, exclusive power over Martin’s works in the fine art markets, with the ability, at least technically, to exclude others from the market. Perhaps something the Court should not have been so quick to dismiss, at least at this pre-evidentiary stage.
Excluding liability completely for non-financially involved fine art experts (as has been suggested in the course of proposed amendments to the New York Arts and Cultural Affairs Law) may not be the answer. As this case shows, there is an inclination to protect fine art authentication experts, and the barriers to a successful claim are high. This and the ability to contractually limit liability, may persuade exclusive repositories of authentication powers, such as AMCR and the Picasso heirs, to continue to authenticate.
And we hope they do. After all, they are very necessary protagonists, and what would the fine art markets be without them. And who knows how technology will assist in this role in the future: perhaps blockchain authentication of fine art will, going forward, remove much of the burden of this process.
**Competent, specific legal advice from a suitable, licensed attorney, should always first be obtained before taking any action, and the information in this article should not be relied upon independently of that advice. Sam Miller is Founder: theFineArtLedger.com, the blockchain powered fine art title and authentication platform, art collector, and Rimon P.C. corporate finance attorney