A disgruntled client’s claims against the Elliot Stevens Gallery and its executive are headed to trial this fall in a dispute involving the client’s purchase of a group of sculptures.

The plaintiff, UK citizen Christopher Rouse, made the purchase in July 2007 during a visit to New York, while he was staying at the luxurious Waldorf Astoria, whose lobby houses the Elliot Stevens Gallery.  According to Rouse’s complaint, he went to the gallery multiple times, and was shown ten statues purportedly by art deco-era sculptors: eight purportedly by Demetre Chiparus, one purportedly by Paul Philippe, and one purportedly by Michael Godard.  He says that gallery representatives told him that Chiparus had at one time lived in the Waldorf Astoria, and that Elliot Stevens had acquired a number of his molds upon his death.  He also claims he was told he could buy the works at a significant discount because the owners of the gallery were planning to retire.  According to Rouse, he relied on representations that the works were genuine, and that he was getting a “special deal,” in deciding to buy the ten works for a total of $105,000.

He claims, however, that when he received the works, they did not appear to be the ones he had viewed.  He later learned—and obtained confirmation from independent appraisers—that all ten of the works delivered to him were “inexpensive and poorly crafted copies,” worth no more than the materials from which they are made, and that the appraisals he received from the gallery in connection with the purchase contained fraudulent misrepresentations.  Moreover, he says the stories about Chiparus living in the Waldorf and about the gallery owners’ impending retirement were untrue.  He further notes that the appraisals, signed by gallery executive Steven Shalom, indicated that Shalom was a member of the “Mid-Am Antique Appraisers Association,” an organization that he later learned had been defunct for years, and that Shalom was not in fact licensed by any existing appraisal organization.

Rouse’s federal lawsuit was first filed in March 2013, and the parties have engaged in discovery and motion practice since then.  See Docket No. 13-cv-01443 (S.D.N.Y.).  The original complaint included claims for fraud, breach of contract, and unjust enrichment.  But this past summer, the court narrowed the issues significantly in advance of trial, entering judgment for the defendants on all but the fraud claims.  The court ruled that any contract claim (as well as any unjust enrichment claims, which were duplicative of the contract claims) were time-barred because they had not been brought within the required four-year statute of limitations for claims for breach of contract under the New York Uniform Commercial Code.  Rouse had argued that the “clock” on his contract claims should not begin running until 2013, when the parties’ negotiations over a possible refund of the purchase broke down.  However, the court sided with the gallery in holding that the clock began running at the time the statues were delivered to Rouse in 2007.  The court emphasized that a U.C.C. claim accrues at the time of the breach, regardless of whether the plaintiff knew of the breach at that time, and that any breach occurred when the gallery delivered the (allegedly non-conforming) goods.

Both parties had also moved for judgment on the pleadings as to Rouse’s fraud claims.  But the court held that those claims could only be resolved at trial, given that the parties vigorously dispute what was said and done leading up to the purchase.  For example, Rouse, alleges that he made the purchase in reliance on the gallery’s assurances that the works were genuine, as well as their representations that he was getting a significant discount due to the owners’ impending retirement.  The gallery’s pre-trial memorandum, in contrast, indicates that Rouse was told that the works “were cast and carved from an original model of each piece,” not that they were “genuine works of art”; the gallery says that at trial, they will show that the gallery employee “advised [Rouse] that the statues were art deco copies of the original pieces.”  They also note that Rouse did not ask for or receive the appraisals until after the purchase was complete.  The gallery further denies Rouse’s story about the discount, and disputes Rouse’s claim that the statues are really worth no more than $500 each.

Interestingly, Rouse’s pre-trial memorandum also raises an intriguing side issue; he notes that the sculptures he bought contained ivory, which he asserts the defendants “obtain by unknown means” and that, when shipping the sculptures to Rouse in England, the gallery “covered the ivory portions of the statues with gold paint to evade U.S. and English law that prohibits the import and export of undocumented ivory.”  It’s unclear what role, if any, those facts might play in adjudicating Rouse’s actual legal claims, but their inclusion nevertheless seems calculated to cast a shadow over the gallery’s reputation, particularly given recently tightened regulations of ivory and increased public attention to the ivory trade in light of rapid decline of global elephant populations.

The trial began on August 31, but paused after Shalom was unable to testify due to illness.  The court ordered that the trial will continue in early October.  We’ll continue to watch the case, but for now, it should serve as a cautionary tale to art buyers to educate themselves in advance of a purchase—particularly one where, as here, the sales documentation indicates that the sale is “final.”  Rouse claims that he was told incorrect biographical facts about at least one of the artists, and that he was misled by Shalom’s appraisal credentials from a defunct organization; but it appears he may not have sought any independent verification of such potentially publicly-available facts.

On the other hand, courts have grappled with how much due diligence a buyer should be obligated to do before relying on a seller’s word (see other examples of cases involving issues of pre-sale diligence here, here, here, and here).  This is particularly tricky where the buyer may be inclined to trust the representations of a seller with a prestigious reputation; as Rouse pointed out, “Because I was in a beautiful shop in the lobby of the Waldorf Hotel,” so “[I was] inclined to believe what I was told.”  Moreover, a buyer must take care to understand the nuances of a particular area of art; for example, when it comes to sculptures, the very idea of what is “genuine” or a “copy” can be confusing; does that mean the work in question was created by the artist’s hand?  Using the artist’s original molds?  How might that differ from what the gallery claims it told Rouse: that the statues were “cast and carved from original models”?  Moreover, Rouse’s case must now rise or fall on his fraud claims, because his contract claims were brought too late; this, too, is an important reminder that parties may find themselves with fewer options or remedies if they delay too long in taking legal steps during a dispute over an art transaction.