June 5 (Bloomberg) -- Two entities controlled by billionaire Ronald Perelman are “sophisticated” art investors whose lawsuit against gallery owner Larry Gagosian should be dismissed, lawyers for Gagosian told a New York state judge.
Gagosian sued Perelman in New York state Supreme Court in Manhattan in September, accusing the billionaire of reneging on an agreement to buy two works of art for more than $23 million and offering less money and other works of art in exchange. Perelman sued Gagosian and his gallery in the same court the same day, accusing them of concealing material information and using their position to manipulate the price of art.
The gallery dropped its suit in October and asked Justice Barbara Kapnick to throw out Perelman’s complaint in January. Matthew S. Dontzin, an attorney representing Gagosian, today told the judge that Perelman’s MacAndrews & Forbes Group LLC holding company and its MAFG Art Fund are “sophisticated” business entities that had a “heightened duty” to conduct due diligence on their purchases.
“It is undisputed that the plaintiffs here are professional investors in art, not just buyers and sellers,” Matthew S. Dontzin, an attorney representing Gagosian, told Kapnick during a hearing today.
Perelman accuses Gagosian of taking advantage of his position of trust to force him to buy “Popeye,” a granite sculpture of the cartoon character by Jeff Koons, for $4 million.
Gagosian bought the sculpture from the Sonnabend Gallery for $4 million about 2 1/2 weeks after executing its sales agreement with MacAndrews & Forbes -- restricting Perelman’s ability to sell or trade the sculpture for its full market value by requiring Gagosian to pay Koons a 70 percent share of any profit made above $4 million, Perelman’s lawyers said in court filings.
Gagosian is “probably the world’s leading and most powerful art dealer,” and Perelman -- who isn’t of the same “level of expertise and skill” -- has relied on him for more than 20 years for advice in buying and selling art, Marc Kasowitz, an attorney representing Perelman, told Kapnick today.
Gagoisan’s knowledge of art sold through private sales allows him to know the value of pieces not known to the public, and the “secret agreement” with the Sonnabend gallery “seriously undercut” Perelman’s ability to sell or exchange the sculpture for its full market value, Kasowitz said.
“You can’t go up and there and lie and say that because someone is sophisticated there is immunity,” Kasowitz said. “If you know the market and the results of private transactions, those are misrepresentations of existing facts.”
Kapnick dismissed one of the claims in the suit, for deceptive business practice, while reserving decision on the remainder of the claims and urging the two sides to resolve the case themselves.
“I really think that these two gentlemen ought to get together at a cocktail party in the Hamptons this summer,” Kapnick said. “This is a crazy case to have going on in this court and you ought to see if this can’t get resolved before I write a decision.”
The case is MAFG Art Fund LLC v. Gagosian, 653189/2012, New York State Supreme Court, 653189/2012, New York state Supreme Court, New York County (Manhattan).
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