This week, the Grossman LLP team obtained a complete dismissal of a lawsuit filed by NBCUniversal executive Ron Meyer against art dealer Susan Seidel.  Meyer’s claims focused on a 2001 art deal involving a painting, purportedly by famed abstract expressionist Mark Rothko, which turned out to be a forgery.   
 
According to Meyer’s complaint, in 2001, California art dealer Jaime Frankfurt recommended that Meyer talk to Seidel, who was looking to sell a Rothko.  During their communications, Meyer claimed, Seidel told him that the work was signed by Rothko, would be included in the Rothko catalogue raisonné, and had been acquired directly from the artist by the seller’s family.  Meyer paid a total of $945,000 for the painting, which was delivered to him in Los Angeles.  After that, it hung in his home for nearly twenty years, until 2019 when he took it to a New York auction house for possible consignment; it was only then, he claims, that he learned it was a forgery.  (The work turned out to be a product of the same forgery ring that took down the Knoedler Gallery—see here for a recap and links to some of our previous blog posts on that scandal, which rocked the art world beginning in 2011.)
 
The case was initially filed in late 2019 in a state court in California, where Meyer lives.  The Grossman LLP team first removed the case to federal court, and then won a motion to transfer the case to New York, where Seidel is based (along with Frankfurt, who was also named as a defendant and who moved to New York shortly after the sale at issue).  In mid-2020, Frankfurt and Seidel filed separate motions to dismiss.  And on August 16, Judge Vernon S. Broderick of the Southern District of New York sided with the defendants, dismissing the complaint in its entirety.
 
Meyer had asserted claims for fraud, breach of warranty, negligent misrepresentation, and rescission.  The Court ruled that Meyer’s fraud claim against Seidel was fatally flawed, where “Plaintiff fails to provide any non-conclusory factual allegations that Seidel knew that the representations she allegedly made to Plaintiff about the Painting were false.”  It was insufficient to argue that, simply by virtue of her expertise and experience, she must have known her representations about the work were false. 
 
But the crucial question for all of these claims was whether Meyer should have, with reasonable diligence, discovered his claim before 2019.  And here, the Court concluded that, as of 2011, Meyer had enough information to permit him to discover and bring his claims.  The Court first pointed to a demand letter sent by Meyer’s counsel, which stated that in 2011, Meyer had received a phone call from Seidel indicating that the FBI was investigating a group of possibly forged artworks by Mark Rothko, and that if there was an issue with his painting, he would receive a call from the FBI.  The Court held that “this phone call alone was sufficient to put Plaintiff on inquiry notice” of potential claims regarding the artwork—it would suggest to a reasonably diligent person that he may have been defrauded and should investigate further.  And beyond that, the Court continued, between 2011 and 2015, multiple news reports and a “slew of lawsuits” made it public knowledge that a major forgery ring had defrauded many art collectors and dealers, including people who had bought works they believed to be by Rothko.  At least one report also mentioned Frankfurt by name.  And the allegations by these other defrauded buyers told a similar tale, where buyers believed that their works would be included in the relevant catalogues raisonnés, and that the works had been acquired directly from the artists by the mystery seller’s family.  These factual similarities between Meyer’s purchase and the other forgeries discovered around 2011 should have prompted further investigation, which would have revealed that he had potential claims related to his “Rothko.”  But he did not sue until 2019, meaning his claims were too late under all the relevant statutes of limitations of either New York or California.  Further, the Court held that Meyer cannot invoke the doctrine of “equitable tolling,” which in some cases might ameliorate a timeliness problem, because equitable tolling only applies where a defendant took some subsequent action, separate from the initial conduct giving rise to the claim, that kept the plaintiff from bringing suit.  Here, there was no communication between Meyer and the defendants other than the 2011 phone call affirmatively telling him about the FBI investigation. 
 
In an important coda to the case, Meyer will not be given an opportunity to try to assert these claims again.  When a court grants a motion to dismiss, the court sometimes permits a plaintiff to amend their pleadings in an effort to remedy the flaws identified in their initial complaint.  But here, the Court held that “any effort to amend would be futile” because of the timeliness problem.  The case was instead dismissed with prejudice, leaving Meyer no further path forward in this court.