We previously posted about the litigation involving Ron Perelman’s investment group and the Gagosian Gallery. The parties failed to heed the Court’s suggestion that they resolve the matter at a cocktail party, and instead an appellate court recently dismissed the case entirely.
The Appellate Division agreed with the trial court and found that there were no fiduciary obligations between these sophisticated parties who negotiated at arm’s length and that the gallery did not “exercise control and dominance over plaintiffs” who were admittedly companies that frequently purchased, sold, and exchanged works of art as investments.
The Court then went even further than the trial court and dismissed the fraud claims, which alleged that the defendants misrepresented the value of certain works of art which were claimed to be supported by market data — when they were not.
The Court found that the complaint failed to state a cause of action for fraud because plaintiffs did not allege justifiable reliance. As a matter of law, the “sophisticated plaintiffs cannot demonstrate reasonable reliance because they conducted no due diligence; for example, they did not ask defendants, “Show us your market data.””
In addition, the Court found that fraud claims against the gallery for misrepresenting the value of certain art works could not stand because “statements about the value of art constitute nonactionable opinion that provide[s] no basis for a fraud claim.”
It would have been interesting to see whether there would have been a different outcome if the case was brought by an individual collector and not an art investment group. But in any event, this decision shows that suing an art gallery because of a perceived bad deal is an uphill battle.
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