"The lawsuit claims the gallery’s conduct is 'self-dealing that can only be described as Byzantine.'"

Daniel Schnapp has news of a lawsuit by Michael Ovitz against Perry Rubinstein Gallery.

"Ms. Sonnabend’s name is now dutifully listed among the founders in the museum’s lobby."

Holland Cotter explains how MoMA's new Sonnabend show is in part "a byproduct of legal hassles":

"[Rauschenberg's] 'Canyon' plays a major role here. The show revolves around it in a very basic way. Because it incorporates the remains of a bald eagle, an endangered species, the work could not be sold. When Sonnabend died and her collection was appraised for tax purposes, her heirs ... valued the unmarketable 'Canyon' at zero; the Internal Revenue Service, however, estimated that it was worth $65 million and was prepared to tax the estate accordingly.  A deal was struck. If the piece was donated to a museum, the estate tax on it would be dropped. Both the Met and MoMA badly wanted it, and Sonnabend’s heirs made conditions for a gift. The receiving institution would be required to mount an exhibition in Sonnabend’s honor and inscribe her name in the museum’s list of founding donors."

"The elephant labored and produced a mouse."

That's how one defense lawyer summed up the result in the strange, "self-defeating" breach of confidentiality suit brought by Marguerite Hoffman.  The jury awarded her $500,000.  "Hoffman’s lead attorney had suggested a figure as high as $22.4 million in closing arguments," according to The Dallas Morning News.  I never really understood the damages theory in the case (among other things).  The one thing that seems clear is that many more people know about Hoffman's sale than would have had the case not been brought.

"The ownership of the artwork has been fiercely contested during a three-week trial in which Fawcett's final wishes and her relationship with O'Neal were dissected."

Ryan O'Neal has won possession of a Warhol portrait of Farrah Fawcett.

Oh the horror

I picked a good week to be busy with the day job because I was able to avoid the spectacle of the usual suspects reacting to the issuance of Christie's final report on the value of certain works in the DIA's collection.  Some merely threw up, but others fainted and had to be revived with smelling salts.  Still others remain in their beds, unable to go on in a world where values are assigned to artworks.  It's just too much to bear.  (This aversion to ever valuing art explains the well-known practice of museums not to insure their collections.)

In any case, if you can handle it, here is a report from Mark Stryker in the Detroit Free Press.  Here is Randy Kennedy in the Times.  The report itself is here.  Be strong.

The Jenack Decision

Was running around today, but the big news was that the Court of Appeals issued its decision in the Jenack case.  The decision is here.  Tons of coverage, including Graham Bowley in the NYT, Laura Gilbert in The Art Newspaper, and Nicholas O'Donnell at The Art Law Report.  The bottom line, as Gilbert puts it, is that the court "reversed an earlier decision that had alarmed auctioneers and those in the trade because, if upheld, it could have required them to disclose sellers’ identities" if they wanted to create a binding contract.  A few quick thoughts:

1.   Footnote 10 seems to vindicate the Olsoff Interpretation -- that the lower court decision was "narrow and technical" and "deal[t] only with the evidence that is required if an auction purchaser defaults."  The footnote says:  "Of course, if Jenack had other written documentation of this transaction that provided the seller's name, that certainly would satisfy the [statute of frauds], but there is no such documentation in the record" (my emphasis).  Of course!

2.   Though I think the decision is ultimately the right one, there's still something odd about the statutory interpretation the court employs to get there.  The relevant statutory provision says that, in the case of a sale at public auction, the statute of frauds can be satisfied if, at the time of sale, the auctioneer "enters in a sale book," among other information, (a) "the name of the purchaser" and (b) "the name of the person on whose account the sale was made."  But, says the court, since "it is well settled that an auctioneer serves as a consignor's agent," the relevant sale book (or "clerking sheet") provided "the name of the person on whose account the sale was made" by listing the name of the auctioneer (Jenack).  But if that's the case, it seems the court has read prong (b) right out of the statute:  the provision at issue only applies to sales at public auction -- but since the auctioneer is (always) the consignor's agent, prong (b) will always, by definition, be satisfied.  The court has redrafted the statute to say only the buyer's name must be entered in the sale book.

3.   The main sense you get, reading the decision, was that the court felt like the buyer here was getting away with something -- that he was "using the Statute of Frauds as a means of evading a just obligation" -- and they just weren't going to let him do that.  Sometimes that's what it comes down to.

Resale Royalty Report

The Copyright Office has issued its long-awaited report on resale royalties.  You can read it here.  The NYT's Patricia Cohen has a brief story here.  Art in America's Tracy Zwick is here (I'm quoted in that one).  The Art Newspaper's Julia Halperin is here.  Judith Dobrzynski comments here ("Still, it remains very unclear whether Nadler’s bill can get through Congress — or even get on the schedule").

Ann Freedman Defamation Settlement

Laura Gilbert has the story in The Art Newspaper:  "The suit was based on a New York magazine article published in August in which Grassi criticised Freedman’s due diligence in researching a group of Abstract Expressionist paintings that turned out to be fakes. As part of the settlement, Grassi retracted his statements."  Background here.

Holland Cotter has the answer for Detroit

Here it is:  "If it proves that the worst seems about to happen, the art world should get itself out to Detroit en masse and put its communal spirit to good use: Form a human circle around the building and, in one voice, just say no."

That should work.

Earlier in the same article, he had noted:  "Like all insular communities, the art world is a consensus culture. Week after week, the same people say the same things about the same shows."

Yes, they do.

"The deal would raise roughly $500 million from a consortium of national and local charitable foundations and funnel the money into retiree pensions on behalf of the value of the art at the DIA." (UPDATED)

A grand bargain in Detroit?

UPDATE:  The Art Market Monitor says the discussions are "a reminder to the shrieking and fretting arts writers who framed the issue as a moral cause when it was a political fight between various Detroit-area constituencies."

And applause from the DIA.

Morel v. AFP: How The Case Was Won (UPDATED)

Find out next Monday.

UPDATE:  You'll have to wait a little longer to find out.  I'm told the panel has been postponed.  Date TBD.

"It’s pretty hard to see how a market which has doubled in a decade can be considered to be 'tepid' and 'in a doldrums'" (UPDATED)

Felix Salmon goes to town on the James Stewart state-of-the-art-market piece I mentioned over the weekend.  The Art Market Monitor identifies the piece's "most serious" failure:

"The crux of Stewart’s complaint is that not all works are selling at tremendous prices. But the necessary ingredient of a healthy market is discrimination. If all works sell well, there’s no market just a mad rush to acquire an undifferentiated mass of work. And that would be the worst sign of all for art."

UPDATE:  Further thoughts from Kathryn Tully at Forbes.com.

"The dark you're in doesn't compare to the dark the citizens of Detroit suffer day in, day out and the crime that results from that."

Nearly half of Detroit's 88,000 streetlights are broken.

"Philadelphia Wants To Use Eminent Domain To Turn An Artist's Studio Into A Parking Lot And Supermarket"

Story here.  George Mason's Ilya Somin comments here.

Is the art market really going through the roof?

James B. Stewart says no.  Jim Cramer says it's a "brilliant piece."  Marion Maneker says not so much:  "Stewart is sadly pedestrian in his analysis. Makes you wonder how much else he's gotten disastrously wrong."

"If the defendants are found liable, some legal experts say, it could have broad implications for the art world by threatening to turn such confidentiality agreements into restrictions or even prohibitions of resales."

The Wall Street Journal has an update on Marguerite Hoffman's strange, "self-defeating" lawsuit for breach of a confidentiality provision in an agreement for a Rothko she sold.  The trial starts in Dallas next week.

The agreement provided that the parties would makes "maximum effort to keep all aspects of this transaction confidential," and the claim is that the buyer breached that promise, not by talking about the transaction to anyone, but instead by selling the work at auction, where, although "the Sotheby's catalog and website didn't name Mrs. Hoffman as a prior owner," the "publicity surrounding the auction ... outed her as a previous seller."

Speaking of removing art from the market

We know that museums themselves would never do anything as "grim and venal" as "putting a pricetag on," or "monetizing," art.

That would never happen.

Wait ... hold on a second.  This just in:  the Pennsylvania Academy of Fine Arts just sold a Hopper for $40 million.

Tough break for PAFA.  I guess this will lead to its dissolution, a kind of nonprofit controlled liquidation, if you will.  Donors will stop giving.  And let's hope the surrounding counties hadn't  agreed to a special tax for its benefit because, if so, man have they blown that.

Anyway, back to Detroit.  What I don't get is why the creditors can't understand that MUSEUMS DO NOT SELL ART.  It just isn't done.  It's grim and venal and simply doesn't happen.  What, I wonder, could ever give anyone the opposite idea?

Philip Kennicott has an idea for "removing as much art as possible from the market"

"Would an art easement work, in which museums sold the right to sell their art, but held on to the art itself?"

Who exactly would pay them for "the right to sell their art" (without getting the art itself)?

The Day's DIA

Today's big Detroit news was that Christie's finished the appraisal that people have been waiting for.

Two points for now.

A lot of the press coverage is giving the impression that the entire collection was valued at under $1 billion.  This Washington Post article, for instance, under the headline "Detroit Institute of Arts works worth less than thought, surprising many," says:

"Some thought the Detroit Institute of Arts collection — which includes Van Gogh, Tintoretto and Rembrandt works, among others — could be worth upward of $8 billion, but city manager Kevyn Orr told the Free Press that Christie’s estimate for the works started below $1 billion."

Or here's CNNMoney.  The headline:  "Detroit's art worth $452 million to $866 million."  The lead:

"Detroit's city-owned art collection is worth between $452 million and $866 million, far less than most expected, according to a preliminary estimate by Christie's auction house."

But that's not true.  As Randy Kennedy's NYT story correctly points out, "Christie’s examination was limited to works that were bought entirely or in part with city funds .... So the appraisal covers only a small part of the collection in terms of numbers — less than 5 percent of the museum’s 66,000 works."  He adds that "art experts enlisted by The Detroit Free Press this year to conduct a quick, unofficial appraisal had said that 38 of the museum’s masterpieces alone would be worth at least $2.5 billion in the current art market."  (Mark Stryker notes that only 6 of those 38 were included in Christie's appraisal.)

So this appraisal doesn't tell us what the value of "the collection" is.

The second thing I wanted to mention is that the museum seems to have settled on its talking points.  From Kennedy's article:

"The museum’s director, Graham W. J. Beal, has said that any sale of art will most likely lead to the museum’s dissolution; donors would stop giving, and the museum will lose a crucial tax stream established last year by surrounding counties to provide the museum with badly needed operating revenue."

First there's the sky-is-falling business again.  The sale of any of the art will lead to the museum's dissolution.  Any of the art.  (Because, as we all know, museums never ever under any circumstances sell art.  Any of it.)  But why would it lead to dissolution?  Presumably for the two reasons that come after the semicolon:  (1) donors would stop giving and (2) the museum will lose the tax revenue from last year's millage.

Let's start with the second one.  As I've said before, they don't have to lose the millage.  If it happens, that would just be a punishment imposed by the surrounding counties.  (Also known as Kicking Someone When They're Down.)  More importantly, the millage is supposed to bring in $23 million a year for 10 years.  The city could in theory decide to sell $460 million worth of art (settle down, not advocating it, just making a point) and "replace" the $230 million in millage moneys and still have another $230 million left over.  There would be no "dissolution" of the museum.  So: stop.

On the other point, I know I'm missing the deaccession outrage gene, but it just completely escapes me.  If the city comes through this desperate, horrific process and, at the end of the day, the museum remains standing but in a somewhat diminished capacity -- say it's 90 or 95% of what it was pre-bankruptcy -- are we supposed to think that the response of potential donors is going to be hell no, I'm not donating anything to that museum.  If the city goes through a Chapter 9 bankruptcy again, they may sell the work I donated!  In what world does that make any sense?  Particularly since, even in the midst of this desperate, horrific, unprecedented process, the city has bent over backwards (to this point anyway) to look only at works that were not donated.  (Again, "Christie’s examination was limited to works that were bought entirely or in part with city funds.")  If the city survives this and comes back to life, wouldn't donors be flocking to help the museum?  I find the whole thing just baffling.

As I've said before, send better talking points.

Four Simple Rules For Writing About Art Auctions

From Felix Salmon.

"Many legal specialists and government officials say they expect Detroit will be found eligible for bankruptcy protection." (UPDATED 5X)

Big day in the Detroit bankruptcy proceeding.

UPDATE:  It's on.  More later.

UPDATE 2:  The Detroit Free Press's Mark Stryker on what it could mean for the DIA:

"In announcing the city of Detroit is eligible for bankruptcy, Judge Steven Rhodes created a benchmark for selling city assets, including art, but did not rule on whether he would allow the sale of treasures at the Detroit Institute of Arts.  Rhodes said that when deciding whether to sell any asset, the city 'must take extreme care that the asset is truly unnecessary in carrying out its mission.' Rhodes also said that a one-time infusion of cash from the sale of city assets would not solve Detroit’s insolvency. Rhodes, who mentioned the DIA by name, did not expressly remove the art from possible sale."

More later!

UPDATE 3:  Here's the New York Times story.  The takeaway:  "The judge made it clear that public employee pensions were not protected in a federal Chapter 9 bankruptcy, even though the Michigan Constitution expressly protects them. 'Pension benefits are a contractual right and are not entitled to any heightened protection in a municipal bankruptcy,' he said."

UPDATE 4:  Here is a sword-rattling tatement from the DIA: "The DIA remains hopeful that the Emergency Manager will recognize the City's fiduciary duty to protect the museum art collection for future generations and that he will abide by the Michigan Attorney General's opinion that the City holds the art collection in trust and cannot use it to satisfy City obligations. If the art is placed in jeopardy, the DIA remains committed to take action to preserve this cultural birthright for future."

UPDATE 5:  Finally (for tonight), here is Randy Kennedy in the Times on what the ruling means for the art specifically.  DIA director Graham Beal does his sky-is-falling routine, claiming that the sale of any art (even 8% of the collection) would lead to a "nonprofit controlled liquidation," whatever that is.