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Minor Dismissal

By Intellectual Property Law, Esq.

Total victory for Sotheby's in its breach of contract lawsuit against Halsey Minor. Story here. He owes them $4.4 million -- "plus interest, late charges, and legal fees."

Minor's claim was that he didn't have to pay because "Sotheby's had significant economic interests in the artworks at issue, which it failed to disclose." The Court found that "none of Minor's arguments have merit" and granted summary judgment to the auction house. First, it adopted the reasoning of the Magistrate Judge in an earlier ruling in the case that:

1. Minor didn't properly allege the existence of a fiduciary duty;
2. He didn't plead injury with particularity as required by Rule 9(b); and
3. He failed to identify "how Sotheby's failure to disclose its interests is material."

The Court also rejected the argument that Sotheby's failure to use its "triangle symbol" -- for lots in which it has an "economic interest equivalent to an ownership interest" -- in the auction catalogue was misleading. "It is clear that Sotheby's had only a security interest" in the works," which is "not equivalent to ownership interests."

Sotheby's Conditions of Sale provide that they can impose a "late charge" of "Prime + 6% of the total purchase price," and also that the buyer will pay its "legal fees and expenses" in a collection action, so, all told, Minor will owe significantly more than the $4.4 million (which represents the difference between what he agreed to pay and what Sotheby's was able to resell the works for during the pendency of the suit).

Here is some background on the suit. Here is an email Minor sent me saying "I am going to bet that when they have to finally cough up the documents and stop spouting nonsense they will have served in the dual role of auctioneer and secret undisclosed owner [a]nd all else will have been long forgotten." Here is another in which he said "Sotheby?s has subjected themselves and their shareholders ... to massive liability all because they could not admit they were wrong and discuss a solution like gentlemen." Here is some info on a separate Minor suit against Christie's.

Full post as published by The Art Law Blog on April 01, 2010 (boomark / email).