A trust entity affiliated with prominent art collector Neil Wallace has sued a prominent art gallery over a 1985 sale of a work that was only recently discovered to be fake.  The case will likely explore issues related to timeliness in art disputes, as well as questions related to the diligence required by buyers and sellers of artworks. 
 
In a complaint filed last week in a New York federal court, the plaintiff, Greenway II, LLC (“Greenway”) sued Wildenstein & Co., Inc. (“Wildenstein”) for fraud, alleging that Wildenstein “actually knew or recklessly failed to know” that the painting it sold to Greenway was not a genuine painting by French Impressionist Pierre Bonnard.  See Docket No. 1:19-cv-04093-CM (S.D.N.Y.).  Greenway allegedly discovered the truth in 2018, when, in preparation for a possible sale of the work, the work was submitted to the world’s leading authority on Bonnard works, who then opined that Greenway’s work was not a real Bonnard.
 
The complaint takes care to emphasize Wildenstein’s “decades-old reputation” as an expert in French Impressionism and in Bonnard works specifically; it also cites the gallery’s historical emphasis on scholarly research.  These allegations are important because they serve as the basis for the plaintiff’s assertion that Greenway “justifiably relied on” Wildenstein’s representations about the work; reasonable reliance is an indispensable element of a successful fraud claim under New York law.
 
Greenway’s pleading also takes care to explain the role of catalogues raisonnés in the art market.  The plaintiff urges that these catalogues—which, generally speaking, are a comprehensive scholarly publication listing all of the known recognized works by a given artist—are vital in art sales, because a work’s inclusion in an artist’s catalogue raisonné is compelling evidence of its authenticity, while its exclusion is generally a “bright red flag” that necessitates further research.  Here, says Greenway, the work in question has never been in the Bonnard catalogue raisonné, which was published in 1974.  And in fact, the complaint alleges, the work, unbeknownst to Greenway, had been overtly rejected from the catalogue around 1974. 
 
The idea of a “red flag,” however, begs a question that may become important in this case: a “red flag” for whom?  Which party had the obligation to spot and follow up on this purported red flag—the seller, Wildenstein, or the buyer, Greenway?  Greenway asserts that either Wildenstein reviewed the catalogue raisonné and discovered the work was not included, but failed to disclose that (which, Greenway claims, would have been a “material omission” amounting to fraud), or Wildenstein failed to consult the catalogue or its author before selling the work (which, Greenway argues, would have been a “reckless failure” amounting to fraud).  But in some cases (see here for one example), courts have held that a buyer nevertheless has its own duty of diligence in transacting art purchases, which may include consulting available experts.  This is particularly true of sophisticated purchasers.  (Here, Neil Wallace and his brother Monte are today known as major collectors, having just auctioned off a significant collection at Sotheby’s earlier this year—although it’s not clear how experienced they were in 1985 at the time of this particular purchase.)  One question in this case will likely be whether Greenway itself could and should have checked the relevant catalogue raisonné or contacted its author, an exercise which might have revealed that the work was not included—and, indeed, had apparently been rejected.  
 
Greenway’s fraud claim does not rest entirely on the allegations regarding the catalogue raisonné, however; the plaintiff also says that Wildenstein had access to other non-public information that also indicated the work might not be authentic.  For example, Greenway asserts that Wildenstein had some documentation reflecting the work’s provenance, but nothing earlier than 1965, notwithstanding that the work at issue was supposedly painted around 1930, according to the invoice between the parties.  The complaint further notes that, in 1950, Wildenstein had purchased the contents of Bonnard’s estate, and that nothing in the estate contains any reference to the work at issue, “a fact that would only have been known by Wildenstein.”
 
The lawsuit seeks a monetary recovery that includes the original purchase price paid by the trust—$275,000—plus interest on that amount since 1985, as well as costs expended for the painting’s “upkeep,” and attorneys’ fees.  The gallery has not formally responded to the complaint yet, but has issued statements to the press calling the trust’s allegations “baseless.”
 
Questions about the parties’ respective duties in this case will be accompanied by and intertwined with discussion of the long passage of time since the sale in question.  Under New York’s statute of limitations for fraud claims, a plaintiff must bring a fraud claim within six years from the fraud, or within two years from the time when the plaintiff discovered or should have, with reasonable diligence, discovered the fraud.  Here, the litigation will likely explore whether the trust might have discovered the problem with this work sooner than 2018, such that the “clock” started running at some earlier date, in which case the plaintiff’s claim may be too late.  (We saw a similar debate during litigation involving the forgeries sold by the now-defunct Knoedler Gallery, where defendants affiliated with the gallery argued that bilked buyers of the fake works should have discovered their claims sooner.)
 
We’ll continue to follow this dispute as it proceeds, but the case promises to involve many of the issues we discuss frequently in this space, including how parties and courts continue to grapple with the problem of forgeries in the art market; the role of catalogues raisonnés and other authenticators in the art market; and the respective responsibilities of parties to art transactions.