Well, it turns out, the court agrees with me on at least one case filed by billionaire Ron Perelman about the art market. As I wrote here in October, in a legal match-up between art dealer Larry Gagosian and financier Ronald Perelman, neither is a sympathetic character. But I thought then, and still do, that Perelman’s suit about his purchase of a Cy Twombly painting was probably a frivolous case. Some RCA readers disagreed.
Last week, the New York Supreme Court dismissed a Perelman suit against Gagosian filed in 2012 in which he said he had been tricked into paying an inflated price for a $4 million Jeff Koons sculpture called “Popeye.†That suit, which charged breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and fraud, has now been dismissed.
It’s hard to keep score on Perelman’s legal maneuvers. But I cite this dismissal because of what the judge said about the market (I’ve cut the case law references):
The parties operated at arm’s length when they negotiated (e.g. over the price of the $10.5 million painting) …Thus, fiduciary obligations did not exist between them… Moreover, even read liberally, the complaint does not establish that defendants exercised control and dominance over plaintiffs – limited liability companies who, by their own description, frequently purchased, sold, and exchanged works of art as investments….
The amended complaint alleges that defendants misrepresented the value of certain works of art and that the values were supported by market data, when they were not. As to the latter,
the complaint fails to state a cause of action for fraud because plaintiffs did not allege justifiable reliance… As a matter of law, these sophisticated plaintiffs cannot demonstrate reasonable reliance because they conducted no due diligence; for example, they did not ask defendants, “Show us your market data†… As to the claim that defendants misrepresented the value of certain art works, statements about the value of art constitute “nonactionable opinion that provide[s] no basis for a fraud claim†…
That “sophisticated plaintiffs” phrase is what counts. That is why I thought, and think, the new suit is also wrong-headed, unless it was filed for other motives.