The $6 Million Lawsuit against David Zwirner over a Jeff Koons Sculpture, Explained
A New York Supreme Court is allowing part of a $6 million lawsuit brought by Italian art dealer Fabrizio Moretti against gallerist David Zwirner and his gallery David Zwirner, Inc. to proceed. The case centers around an edition of Gazing Ball (Centaur and Lapith Maiden) (2013), a Jeff Koons sculpture purchased by Moretti in 2014. Alleging breach of contract and other charges, Moretti claims the gallery did not provide legally required information about the work and its editions, and also that Zwirner failed to deliver the purchased piece within the necessary timeframe. By way of recompense, Moretti is seeking a refund and damages. The gallery disputes Moretti’s characterization of the facts and says the work is completed and ready to be delivered. The ruling, first reported by The Art Newspaper, came after Zwirner looked to have the case dismissed.
Though far from a conclusion to the saga, both Moretti and Zwirner declared victory after the decision, the latter because Justice Barry R. Ostrager dismissed two counts of fraud against the gallery while absolving the gallerist of personal liability. But the ruling affirms that Moretti will—barring settlement—receive his day in court on the remaining allegations of breach of contract, breach of warranty and, most notably, on if Zwirner violated Article 15 of New York’s Arts and Cultural Affairs Law by failing to disclose information about the edition purchased at the time of sale. The case is a reminder that big ticket transactions in the art world, which can be tricky affairs even when dealing with unique works, are more convoluted when involving editions or multiples to be manufactured by an artist.
How long is too long?
Many of the core facts remain in dispute. Justice Ostrager’s decision is not a determination of the truth of the facts, but rather a determination on whether or not the claims can proceed as a matter of law. And when handling a pre-answer motion to dismiss, such as the one brought by Zwirner, the balance of proof is heavily in the plaintiff’s favor. The judge must “accept the facts as alleged in the [plaintiff's] complaint as true” and will only dismiss if the “documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.”
Agreed by both parties is that Blue Art, Moretti’s company, purchased the Koons sculpture, which was identified as “Edition 2 of 3, 1 AP” (AP standing for artist’s proof) for some $2 million and paid in installments over the course of a year. The terms of the transaction were laid out in a June 24th, 2014 agreement, though that agreement did not include an explicit delivery date. Indeed, a key point of contention is the timeframe of the work’s delivery. Moretti argued that a work, purchased in 2014, should have been delivered in a year or less and that this timeframe was affirmed orally, though it was not stipulated in the written contract.
But Zwirner asserted that Moretti continued to pay for the work over a two year period, when all that was required was an initial deposit. The motion to dismiss states that, over this time, Moretti did not demand a specific delivery date and thus acquiesced to the timeframe. As such, the gallery asserts that when it told Moretti that the Koons had been completed in an email sent on August 4th, 2016, the gallery had not violated the terms of the contract. In response, Moretti stated that he made these payments because the gallery told him the work was near completion.
The judge’s ruling notes that when a timeframe isn’t explicitly laid out in an agreement, the question becomes one of reasonableness. Was a two year wait period reasonable? Did Moretti waive the delivery timeframe by continuing to pay? Did he only continue to pay because he was told the work was near completion? In allowing the plaintiff’s allegations of breach of contract and breach of warranty to proceed, the judge noted that these were facts that could not be decided in this pretrial motion.
In some ways, the crux of the case is determining how many editions of Gazing Ball (Centaur and Lapith Maiden) (2013) actually exist. According to Moretti, Zwirner willfully mislabeled the editions of the Koons sculptures. Moretti claims that there are four editions, not three. The plaintiff states that the first casting of the piece was exhibited at the gallery in 2013. Further, they assert that the next fabrication, which occurred in 2015, is the “true” second casting of the work that should have been Moretti’s.
Instead, the work was labeled as the third edition by Koons, who donated the piece to a charity auction at Sotheby’s in 2015. The piece failed to sell, damaging the work’s value before Moretti’s edition had been fabricated. Moretti also charged (though without evidence, according to the ruling) that another edition of Koons’s sculpture was fabricated and sold to a third party that same year. Eventually, another was fabricated and labeled edition No. 2, bringing the total number to four—a purported violation of the terms of the agreement which provided that only three would be fabricated.
Zwirner flatly denied the production of four editions. Further, the gallery said that the work exhibited in 2013 was not an edition but rather a “prototype” for the Koons cast that was not for sale, is not for sale, and is not part of the edition of three. Further, the work that Koons fabricated and labeled as “No 2 of 3” is waiting to be delivered to Moretti and that, as the artist, Koons is able to decide which fabrication is which edition. In allowing the case to proceed, the judge noted that these competing timelines are “not ripe for adjudication at the pleading stage” and that the sequence in which the works were fabricated are a matter of fact that needs to be determined by evidence, not a matter of law.
The Judge also allowed claims centered on the dimensions of the work to proceed. Though Moretti charged that the final dimensions did not conform to those specified in the the agreement, Zwirner said that they informed Moretti about the difference and that they are so minor as to be unimportant. Refusing to dismiss the claim, the Judge invoked the doctrine of perfect tender which allows a buyer to “reject goods if they fail to conform to the contract in any respect,” noting such alterations may particularly dampen an artwork’s value.
A particularly novel aspect of the case involves Article 15 of New York’s Arts and Cultural Affairs Law. That statute, amended in 1991, requires sellers of editioned work to supply the buyer key information around the piece in a timely manner. This information includes the name of the artist, the dimensions, where it was made, and what number of editions are to be created. The law aims to prevent fraud on the part of the seller, who may promise that an edition is one of twenty when in fact it is one of twenty thousand.
In this particular case, Moretti charged that the gallery did not provide the requisite written disclosures, alleging in an amended complaint that Zwirner knowingly provided false information about the dimensions and did not disclose information about the editions. Zwirner noted that the work was paid for in advance, and so wasn’t governed by the statute. Additionally, they argued that time for disclosure had not run out since the work is yet to be delivered and that the information was provided.
The judge sided with the plaintiffs, writing that “the statute at issue was designed to protect customers from fraud and deceptive practices in the sale of art multiples and reproductions. If we follow the defendants’ logic to conclusion, a purchaser who spends millions of dollars for a valuable artwork would potentially have to wait until the minute before the artwork is delivered to receive information concerning the artwork.” The statute allows for triple damages. According to John Cahill, Moretti’s attorney, the ruling is a “landmark decision” since “the case breaks new ground for being the first time a judge’s decision has case law around Article 15 of New York’s Arts and Cultural Affairs Law.”
Reasserting that the work is ready to be picked up by Moretti, Zwirner’s attorney also declared victory, stating: “The gallery is pleased that the court has dismissed Fabrizio Moretti’s frivolous fraud claims and has dismissed the case entirely against David Zwirner. We are confident that the court will reject the remaining claims once the evidence comes out.” The judge did indeed toss out two claims of fraud against the gallery, noting that the charges “would add nothing to this action” since what is charged by the plaintiffs as fraud is covered under breach of contract. Charges leveled against Zwirner directly were also dismissed. Zwirner’s attorneys have 20 days to respond to the complaint.