A recent dismissal in New York State Supreme Court, New York County Commercial Division highlights the importance of written contracts in high-value art transactions.  Last week, Justice Shirley Werner Kornreich granted summary judgment to defendants in a case brought by an art and antique dealer, Alexander Komolov, against his former business partners, alleging that they:  (1) sold him several artworks that turned out to be fakes; (2) stole works by Pablo Picasso and Maurice de Vlaminck; and (3) breached an agreement to pay him for a condominium in New York City.  See Komolov v. Segal, Index No. 651626/2011.

Plaintiff originally sued the defendants in 2011 for contractual breaches, but his case was dismissed by Justice Bernard Fried, who held that his claims were subject to the statute of frauds, requiring generally that agreements for art sales must be memorialized in a signed written contract.  And because he could not present such written agreements governing any of the alleged sales, his claims were barred.  The current action before Justice Kornreich alleged quasi-contract claims against defendants based on the same underlying facts.

The Court noted that oral contracts concerning the alleged art sales were “precisely what the statute of frauds is meant to prevent,” and that the plaintiff could not end-run the statute of frauds by recasting his claims as “quasi-contract.”  First, plaintiff alleged that defendants sold him several forgeries of works purportedly by Pierre-Auguste Renior, Édouard Manet, and Claude Monet.  However, plaintiff could not provide any documentation of these purchases and therefore the claims were barred by the statute of frauds.  Similarly, plaintiff’s claims for conversion for the alleged theft of his Picasso and Vlaminck works were dismissed because he was unable to provide any documentation to prove that he ever owned them—the plaintiff had no contracts or invoices related to any purchase of the Vlaminck work, and for the Picasso, he only had records to show that the work belonged to a third party, Artique Multinational.  Although plaintiff attempted to argue that he had purchased the work from Artique Multinational, he could only provide a wire transfer to an affiliate of the company that occurred four months prior to the alleged purchase, and the wire description stated that payment was for a “contract gold investment.”  Plaintiff did not explain these discrepancies and the Court found that no reasonable juror could conclude that he had actually purchased the Picasso.

As another court opined in a case with similar legal issues as those presented in this recent decision, “some in the art world desire a market that is neither open nor honest. Thus, collectors in this seemingly refined bazaar should heed the admonition ‘caveat emptor’ and be mindful of the Statue of Frauds.”  Robins v. Zwirner, 713 F. Supp. 2d 367, 377 (S.D.N.Y. 2010).