Grossman LLP Team Obtains—and Collects—$3 Million Judgment In Art Fraud Case
08/25/2021The team at Grossman LLP has just recovered $3 million in satisfaction of a judgment that the firm obtained for an art collector defrauded by an art dealer in connection with the sale of a Pablo Picasso painting.
In March 2019, our client sold her Pablo Picasso painting for $3 million. Consistent with industry practice for such high-end art transactions, the sale to the buyer was brokered by an art dealer, who was supposed to act as an intermediary to facilitate the transfer of funds and physical delivery of the work. As planned, the buyer paid the purchase price to the dealer, and the Picasso painting was physically delivered to the buyer. But instead of remitting the $3 million to our client, the dealer stole the money and then transferred those funds to a major art gallery as a partial payment for a Robert Motherwell painting in a totally unrelated transaction.
On June 22, 2020, we filed a lawsuit against the dealer on our client’s behalf in New York State Supreme Court to recover the stolen $3 million. And on March 3, 2021, we obtained a $3.5 million money judgment. After the art dealer failed to pay any portion of that money judgment, we aggressively pursued post-judgment discovery. In connection with those efforts, we subpoenaed bank records and other documents confirming that the dealer stole our client's funds and revealing the identity of the gallery to which the dealer transferred the money.
After serving restraining notices on the gallery, and the gallery’s bank—effectively freezing $3 million in the account—the gallery commenced a new action against our client to vacate the restraining notices, arguing that the dealer—and, by extension, our client, as the dealer’s judgment creditor—had relinquished any rights to the money. Following expedited briefing and oral argument, the Court disagreed with the gallery, and sided with our client, finding that the partial payment (less a nominal non-refundable deposit) remained the property of the judgment debtor because the Motherwell sale had never been consummated. And, therefore, the Court held, the money should remain frozen so that it could be remitted to our client to satisfy the unpaid money judgment. On August 23, 2021, the Court entered a Stipulation and Order releasing the $3 million from the gallery’s account to our client.
As this case illustrates, obtaining a money judgment is not always the end of the story. Where, as here, the judgment debtor refuses to pay the judgment, proper steps must be taken to vindicate the client’s rights and actually obtain the funds awarded. New York’s statutes provide important mechanisms enabling judgment creditors to obtain information about a debtor’s assets, formulate strategies for recovering those assets, restrain (freeze) accounts or other property (whether in the hands of the debtor or, as in this case, a third party), and enforce the judgment. This case stands as a reminder that, when executed properly, post-judgment legal proceedings can be a powerful tool for judgment creditors.ATTORNEY: Kate Lucas
CATEGORIES: Art Galleries, Firm Update
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