Sept. 12 (Bloomberg) -- Ronald Perelman and Gagosian Gallery Inc. sued each other over payment for the billionaire’s purchases of contemporary art.
Perelman twice failed to pay an agreed-upon price after delivery of a sculpture and a painting and refused to meet a payment schedule for an unfinished sculpture, according to a lawsuit filed today by the New York-based gallery in New York State Supreme Court in Manhattan.
Perelman, 69, also filed suit against the gallery and its owner, Larry Gagosian, in the same courthouse today, accusing them of concealing material information and using their position in the art world to manipulate the price of artwork.
Gagosian “raced to the courthouse with his suit in a failed attempt to take the focus off the lawsuit we filed today accusing him of fraud, breach of duty and breach of contract,” Christine Taylor, a spokeswoman for Perelman, said in a statement. “Gagosian has used his dominance of the market for contemporary art to enrich himself at the expense of his customers. His complaint is frivolous -- the works he identifies are fully paid for, and we will seek redress for this improper filing at the appropriate time.”
The gallery said in its complaint that on Jan. 6, it entered into a contract that was personally guaranteed by Perelman for a sculpture by an unidentified living artist for $12.6 million that was delivered on June 8 to Perelman’s home in East Hampton, New York. Perelman offered a “much lower sum” than was agreed upon in addition to pieces of art from his collection, the gallery said in the complaint.
Perelman also refused to pay for a $10.5 million painting by another contemporary artist that he had asked the gallery to acquire and that was delivered to his home, according to the gallery’s complaint. He also refused to return the artwork, again offering pieces from his collection in exchange, according to the complaint.
One of the works offered by Perelman for credit was a contract for an unfinished sculpture that hadn’t been delivered, for which he owed the gallery $1.6 million, according to the complaint.
The gallery said in its complaint it agreed to give Perelman about $18 million in credits for the art from his collection to “mitigate damages.”
Perelman’s actions have cost the gallery millions of dollars, forced it to pay the artists out of its own capital and forgo commissions, the gallery said in its complaint. Gagosian is seeking the original purchase price of the sculpture and the painting, minus the net sales price of any of the bartered pieces from Perelman’s collection that were sold, and to return the works that haven’t been sold.
“Following the non-payment, defendants engaged in a series of sham settlements and deceptive maneuvers designed to force the gallery into spending tremendous capital to cover shortfalls, to cloud the title of artworks defendants forced the gallery into accepting as barter, and to otherwise render impossible the gallery’s ability to mitigate damages including continual threats of baseless lawsuits,” the gallery said in its suit.
The gallery said it didn’t identify the artists to protect its clients’ privacy.
“The gallery prides itself on its relationships and has never sued a client in its over 30 years of business,” Gagosian Gallery said in the complaint. “Such suits are damaging to clients, to artists and to the artworks themselves, often causing negative publicity.”
Perelman said in his suit that Gagosian “took advantage of his position of trust” to force him to buy a granite sculpture by artist Jeff Koons titled “Popeye,” for $4 million, to be paid in five installments of $800,000.
Gagosian failed to tell him that the dealer’s contract with Koons entitled the artist to 70 percent of any amount over the original sale price of $4 million if the gallery resold the work -- and 80 percent of any sale if Gagosian bought the sculpture back before it was finished, delivered and fully paid for, according to Perelman’s suit.
“Such information would have materially and substantially altered plaintiffs’ view of the transaction, as these secret contract provisions detrimentally affected Gagosian’s ability and willingness to repurchase or resell Popeye above the price paid by plaintiffs,” Perelman said in his suit. “Given Gagosian’s role as Koons’ representative and the foremost dealer in Koons’ work, such restrictions effectively crippled plaintiffs’ ability to resell Popeye at its fair market value.”
Perelman agreed to trade the Koons sculpture, along with three other works of art and $250,000 in cash, in exchange for an unspecified painting, according to Perelman’s suit.
Larry Gagosian has been a “constant and trusted art advisor and mentor” for more than 20 years to Perelman, who relied on his advice when buying and selling works of art, according to Perelman’s complaint.
The two are friends and business partners outside the art world, visiting each other’s homes, attending the same social events and investing in the Blue Parrot restaurant in East Hampton, according to Perelman’s complaint.
Perelman is ranked 63rd in the Bloomberg Billionaires Index with a net worth of $13.1 billion.
The Gagosian case is Gagosian Gallery Inc. v. Perelman, 653181/2012; the Perelman case is MAFG Art Fund LLC v. Gagosian, 653189/2012; New York State Supreme Court (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York at email@example.com.
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org.