Tuesday, February 18, 2014

Who's Faking Whom?

Just learned of a First Department decision from November that could wreak some serious havoc on the world of authentication litigation.  The decision is here.  Briefly, Dealer A sells some work to Dealer B and sues for non-payment.  In defense, Dealer B claims (among other things) that “some or all” of the works are fakes.  Dealer A denies this:  he says that, during the period of time Dealer B had possession of the works, “either [Dealer B] or some other custodian forged the authentic works that [he] originally gave to [Dealer B].”

The trial court (Justice Kornreich again) holds that “the only opinion that can shed any light on the authenticity of the Returned Works is that of an expert who has examined the originals and the Returned Works and has the wherewithal to detect a forgery” -- in other words, an authentication expert who saw the works before they were sold and can look at them again now.  The First Department affirmed.  “The motion court correctly determined that ... the testimony of an expert who viewed the consigned works before they left [Dealer A] and who can testify that they were forgeries when they left and were forgeries on their return.” “This,” they add, “is consistent with how art work and forgeries are identified, authenticated and detected.”  No biggie.

But imagine an ordinary authentication lawsuit.  A collector buys a work from a gallery, with a warranty of authenticity.  Some time later, the collector discovers (let’s imagine conclusively) that the work is a fake and sues the gallery.  The gallery can now say, “Wait a minute.  The Pollock I sold you was genuine.  Yes, this is a fake, but how do we know it’s not a fake created by you ‘or some other custodian’ in the two years since the work left the gallery?”  Unless the collector can produce an expert who examined the work before the sale and can say it’s the same as the one he now has in his possession, he loses.  That can’t be right, yet it seems to be what the case says.

Now, the facts in this First Department case were kind of odd – Dealer B had passed the works on to another party, who “had custody of the art for 2 to 6 years” leading up to the lawsuit – so maybe the intention was to limit it to similar situations where “chain of custody” is an issue.  But again, there is nothing in the language of the decisions themselves that is so limited.  Definitely worth watching to see how this develops.