We, here, at WCM are often asked to tackle the appropriate legal measurement of a work of fine art’s loss in value.   Often times, when we get involved, one side or the other has declared the work a “total loss” requiring full market or scheduled value repayment.  But, perhaps, that is the wrong way of looking at things since even damaged art can have value.  This interesting article profiles the Salvage Art Institute, an organization that takes the position that even damaged art has value.  The question is — can that value be measured in terms a court will accept?

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Sandy has had a terrible impact on New York and New Jersey and initial damages estimates are in excess of 30 billion.  One specific area of damages is in respect of fine arts.  As this interesting piece makes clear, many lower Manhattan galleries and dealers were hard hit and while there should be insurance on the works themselves (although we all know what complications therein can exist — especially in respect of valuation), coverage for the businesses themselves might be lacking.  Stay tuned for a flurry of claims!

For more information about this post, please contact Bob Cosgrove at .

In the early morning hours of October 16, 2012, thieves looted The Kunsthal museum in the Netherlands, making off with seven borrowed paintings.  The New York Times reported that the stolen paintings included works from artists such as Matisse, Monet, and Picasso, and could be valued at over $100 million.  The New York Times article noted that the recent plundering brings back memories of a theft in 2010 in Paris where five paintings (including a Picasso and a Matisse) were stolen.  Those two paintings alone were valued at about $130 million, and remain missing today.  One must wonder whether such daring art heists would be so prevalent without the wealth and power that can be amassed in the underground world of art smuggling, as noted by Michel Van Rijn.

Thanks to Joe Fusco for his contribution to this post.

Milton Greene was a renowned photographed in the 1950 and 60’s that was particularly well known for his work with celebrities, especially Marilyn Monroe.  After Monroe’s death, Greene’s company continued to sell photographs of Monroe.

In March, 2005, Monroe’s estate filed suit, claiming that the sale of those photographs violated Monroe’s “publicity rights.”  Generally, publicity rights are the rights of an individual to control the commercial use of his or her name, image, or likeness.  In some states, like California, such rights exist beyond the person’s death and violations can be prosecuted by their estate.  In other states, like New York, publicity rights are extinguished upon death.

The defendants moved for summary judgment, alleging that New York does not recognize a posthumous, descendable right of publicity, and because Monroe was a resident of New York upon her death, her estate’s claims are now barred; the estate argued instead that she was a resident of California.

The Court looked to numerous filings that were made in connection with Monroe’s probate proceedings that established that she was a New York resident, and thus permitted her to avoid paying California inherited tax.  The Court then applied “judicial estoppel,” which is an equitable doctrine designed to prevent a party from gaining an advantage by taking inconsistent position with the court – or in other words, to prevent a litigation from “playing fast and loose” with the court.

Thus, the Court held that Monroe could not claim she was a New York resident on the one hand to avoid paying taxes, and now on the other hand claim she was a California resident to prevail in this matter.  As such, it ruled in favor of the defendants and dismissed the case.

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The heirs of New York art dealer Ileana Sonnabend have been placed in quite the quandary.  They have inherited a work of art that cannot legally be sold — but the IRS claims that they owe $29 million in taxes based on their appraised value of the work.

Robert Rauschenberg was an American artist known for his unique  “combines,” in which he put together various objects, often to accompany paintings.  The work at issue here, Canyon, included a stuffed bald eagle.  Sale of a bald eagle is illegal under federal law.  Indeed, possession of a bald eagle, alive or dead, is a violation of the Bald and Golden Eagle Protection Act, but a waiver was obtained for this work years ago because it was shown that the eagle was killed before the law went into effect.

Because of that law, it would be illegal for the heirs to sell the work.  But the IRS’s Advisory Law Panel put a valuation of $65 million on the work, allegedly because it could, in theory, be sold on the black market.  That appraised value created a tax bill of more than $29 million.

The ruling has been challenged in tax court, and we will continue to follow this matter.

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