Legal News

No Serenity in the Peaceable Kingdom; Sotheby?s Gets Sued

By Dan Slater

A painting with the words “peaceable” and “serenity” in the title has led to a vicious court battle between a big wig tech mogul and the auction house Sotheby’s.

Here’s the question: When an auction house owns a stake in a painting it’s selling, must it disclose the stake to bidders?

In May, Halsey Minor — the 43-year-old, San Fran-based founder of CNET who has an estimated net worth of more than $300 million — bought Edward Hicks’s “The Peaceable Kingdom With the Leopard of Serenity” (pictured) for $9.6 million. But while New York law requires auction houses to disclose any economic interests they have in artworks they sell, Minor’s attorneys tell the WSJ that he purchased the work on advice from a Sotheby’s specialist and didn’t realize the auction house was selling the work to recoup money owed it by another collector. Here’s the WSJ story, and here’s the complaint.

Sotheby’s, which claims that Minor’s suit has no merit and is a “smokescreen” to cover up his failure to pay for art he agreed to purchase, filed a separate suit against Minor last month for failure to pay for the Hicks painting and two others.

Minor’s suit, writes the WSJ, highlights the increasingly blurred lines that can develop at auction houses between their traditional role as disinterested auctioneers and their emerging business as direct stakeholders or financiers of the work they auction. Minor’s attorney, Eric George, says that Minor would have been more skeptical about the piece — or bid lower — if he had known about Sotheby’s ties.

Minor’s suit seeks class-action status and was filed in U.S. District Court in San Francisco Wednesday. Repping him are are California-based Eric George and David Zifkin at Dreier Stein Kahan Browne Woods George, and Lee Weiss in the New York office of Dreier.

Full post as published by Law Blog - WSJ.com on October 03, 2008 (boomark / email).