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Rothko Rumblings: Last-Minute Lawsuit by Prior Owner (not the consignor) of Sotheby’s Star Offering

Rothko, “Untitled,” 1961, scheduled for auction tonight at Sotheby’s

Mark Rothko‘s 1961 untitled red abstraction, the highest-estimated lot in Sotheby’s big contemporary sale tonight (at $18 million to $25 million), has suddenly become the subject of a lawsuit on the brink of the auction.

Lindsay Pollock of Bloomberg reports:

Marguerite Hoffman,
a prominent
Dallas art collector, filed suit this week against Mexican
financier David Martinez
for failing to keep her 2007 sale of a
star Mark Rothko
painting a secret.

The amended complaint was filed Monday in U.S. District Court, Dallas. Also named as defendants are L & M Arts, the New York gallery; Sotheby’s; Sotheby’s auctioneer and head of contemporary art, Tobias Meyer; and Studio Capital, Inc., which the complainant says is controlled by Martinez. Hoffman alleges that the purchaser of her Rothko, through L & M, was Martinez and/or Studio Capital. Sotheby’s will not identify tonight’s consignor, who is widely believed to be Martinez.

Bloomberg quotes this reponse from Sotheby’s spokesperson Diana Phillips:

The lawsuit neither challenges our consignor’s title to
the painting, nor its right to sell the painting, and the sale
will go forward as planned. The lawsuit is entirely without merit.

But the relief sought by Hoffman, a past chair and present trustee of the Dallas Museum of Art, at the end of her 18-page amended complaint, includes “rescission” of “the Contract,” which is defined in Paragraph 37 of the complaint as the “purchase agreement” for the Rothko that Hoffman then owned.

In response to my query, Jon Olsoff, Sotheby’s North American general counsel, said this about the “rescission” provision:

Reading the petition as a whole it is clear that Mrs. Hoffman is not asserting title to the Painting or seeking to stop this evening’s sale. Instead, each of her causes of action expressly seeks damages based on the price the painting achieves this evening.

While there is, as you note, a reference to “rescission” of the 2007 Contract in the last paragraph of the complaint, it is Sotheby’s understanding that the rescission language refers only to an alternative and secondary remedy that Mrs. Hoffman may pursue if tonight’s auction sale were not to take place for some reason unrelated to the filing of the lawsuit (see Paragraph 61).

It is clear from the petition that, if the painting is sold this evening, Mrs. Hoffman will not contest title and instead will pursue her damages claims against the defendants, in which she is seeking to obtain proceeds from the auction sale for her benefit. And, as previously stated, Sotheby’s and the consignor fully warrant that the successful purchaser will obtain good title to the Painting.

In Paragragh 61 of the complaint, which Olsoff refers to, Hoffman states:

If the sale is cancelled, Plaintiff [Hoffman] has elected to rescind the Contract and return the money she received from Martinez in 2007. Once Martinez has returned the painting, plaintiff intends to commit it to the Dallas Museum.

That was the plan in the first place: Hoffman’s Rothko had been displayed in the Dallas Museum’s 2007 Fast Forward exhibition of promised gifts to the museum from three local families. The chronology set forth in Hoffman’s complaint suggests that the sale was being negotiated while that exhibition was in progress.

an ArtsJournal blog