Oct. 1 (Bloomberg) -- Halsey Minor, an American art collector and entrepreneur, filed a complaint against Sotheby's a month after the world's largest publicly traded auction house sued him to recover $16.8 million.

The founder of Cnet Inc., which provides news and reviews about technology products, accused Sotheby's of ``a custom of deception'' in the complaint filed this morning in federal court in San Francisco. Minor said in the complaint that Sotheby's has a duty to disclose when it's owed money by the consignor of a work that it's selling.

``By concealing information concerning its economic interests, Sotheby's may favor one item of auctioned property (in which Sotheby's holds an economic interest) over another (in which it does not), without providing a bidder with the information necessary to make his or her own judgment in the matter,'' Minor said in the complaint.

Auction houses, which are licensed by the New York City Department of Consumer Affairs, disclose when they have a direct financial interest in lots for sale. That includes when they have guaranteed a price to a seller.

On May 22, Minor paid $9.7 million for Edward Hicks's biblically inspired ``The Peaceable Kingdom'' at Sotheby's in New York. It was a record price for American folk art and for Hicks, a Quaker minister.

Loan Collateral

With the purchase, Minor waded into the saga of wholesale jeweler Ralph O. Esmerian, who bought the painting in 1976. In 2000, Esmerian promised to donate it to the American Folk Art Museum but later pledged it to Sotheby's as collateral for a loan.

Sotheby's said in its lawsuit against Minor that he didn't pay for the Hicks painting and two other works he bought in May. The auction house said the works are worth more than $13 million. Sotheby's said in the complaint that it also was owed legal fees, interest and late fees.

Sotheby's said it offered Minor ``generous payment terms'' that would have allowed him until August to pay. He failed to agree to the terms, according to court filings.

In his complaint today, Minor said Dara Mitchell, the head of American paintings at Sotheby's, served as his ``art consultant and purchasing agent'' and never disclosed that Esmerian owed the auction house money. Minor seeks class-action, or group, status on behalf of other Sotheby's customers.

Mitchell and Sotheby's spokeswoman Diana Phillips didn't immediately return calls seeking comment. Minor wasn't immediately available, said his lawyer, Eric George of Dreier Stein Kahan Browne Woods George in Los Angeles.

Ownership Interest

Debra Force, the head of Christie's American paintings from 1989 to 1993, said she doesn't believe someone has a claim when an auction house doesn't disclose a loan because it's not akin to an ownership interest.

``If the piece doesn't get sold, the owner has to pay the auction house back,'' said Force, who is now a private dealer in New York.

The suit is Minor v. Sotheby's, 08-4568, U.S. District Court, Northern District of California (San Francisco).

To contact the writer on the story: Philip Boroff in New York at pboroff@bloomberg.net.

Last Updated: October 1, 2008 20:37 EDT