Shane Ferro
Art market news and commentary by the staff of Art+Auction

MARKET WATCH: Art market news and commentary by the staff of Art+Auction

Judge Gives Cowles the Go-Ahead to Pursue Lawsuit Against Gagosian

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It’s hard to keep the lawsuits involving Gagosian Gallery straight these days. In the most recent development, New York Supreme Court judge Charles Ramos has denied Gagosian’s motion to dismiss the complaint against him by Jan Cowles. Cowles contends that her son, Charles Cowles, agreed to sell a painting from her collection, Roy Lichtenstein‘s “Girl in the Mirror,” through Gagosian for no less than $3 million, with the dealer’s commission not to exceed $500,000. But Gagosian allegedly took advantage of Charles’ financial hardship by fabricating reports of damages to the painting and ultimately selling the work to Thomas Dean for $2 million, keeping half of it for himself.

In the nine-page decision released today, the judge struck down Gagsian’s lawyers’ rebuttals to the complaint. Here’s what he said on each count:

1. Fraud and Breach of Fiduciary Duty

According to Cowles’ complaint, Gagosian Gallery first reported the painting  “in excellent condition overall,” only to later flip-flop and tell Charles that it was actually damaged, convincing him that he couldn’t sell it for the originally agreed upon price. In light of this, the judge writes that Jan has sufficient cause to sue for fraud on the grounds that Gagosian “improperly induced Charles to agree to a below-market sale premised upon misrepesentations concerning the condition of the work.”

And if it’s true that Gagosian capitalized on Charles’ “terrible straights” by misrepresenting the painting’s condition in order to offer the buyer a chance to make a “cruel and offensive offer,” as a Gagosian staffer wrote in an email, that fact would qualify as a breach in “his fiduciary duty to act in the utmost good faith and in the interest of Charles.”

2. Unjust Enrichment

Gagosian argued against Jan Cowles’ justification for this charge by saying that the gallery’s profits were merely part of its contract with Charles. But there is a “bona fide dispute as to the existence of an enforceable contract” according to the judge. Plus, “Mrs. Cowles sufficiently alleges that Gagosian earned its fifty percent commission by its dishonest brokerage of the work at Charles’s expense.”

3. Punitive Damages

Judge Ramos is leaving the decision about whether or not to award punitive damages to the judge or jury at trial. However, he noted, “Assuming the allegations as to defendants’ misconduct as true for the purposes of this motion, the court concludes that the complaint pleads the requisite allegations of recklessness and conscious disregard of rights.”

–Rachel Corbett

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  1. […] Cowles’s team is winning the fight. Judge Charles E. Ramos of New York State Supreme Court denied Gagosian’s motion to dismiss the case in September, ruling that the gallery’s actions “sufficiently state a cause of action for […]

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