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Investor Wins Claim Against Manhattan Gallery

A decision on damage awards in a lawsuit pitting an investor against a Manhattan gallery is anticipated on Feb. 16. The investor, Jean-Pierre Lehmann, who successfully sued The Project for breach of contract because he hadn’t been given access to certain works of art, is expected to receive a substantial court-ordered award from the gallery.

NEW YORK—A decision on damage awards in a lawsuit pitting an investor against a Manhattan gallery is anticipated on Feb. 16. The investor, Jean-Pierre Lehmann, who successfully sued The Project for breach of contract because he hadn’t been given access to certain works of art, is expected to receive a substantial court-ordered award from the gallery. The case is indicative of how intense competition can be for the works of up-and-coming young artists.

On Jan. 12 Judge Ira Gammerman rendered a finding in state supreme court that The Project had not lived up to its written agreement with collector and gallery investor Lehmann that “Lehmann would have a right of first refusal on any work by any artist represented by The Project,” the lawsuit said.

“This case isn’t about money. It’s about access,” Lehmann’s attorney Peter R. Stern told ARTnewsletter. “The lesson of this case is: You make a deal, you live up to it.”

Lehmann assumed that he had bought his way to the front of the waiting list for the work of Ethiopian-born artist Julie Mehretu. The investor, who has dual French and Swiss citizenship and maintains homes in both Geneva and New York City, made an interest-free loan (sans due date) of $75,000 in 2001 to the gallery, which needed the money to move from its location at 126th Street to another one at East 57th Street.

There are two parts to the written agreement, dated Feb. 7, 2001, that The Project’s principals—Christian Haye and Jenny Liu—presented to Lehmann: In exchange for the $75,000 loan, that agreement states, the collector would have his pick of the gallery’s artwork and would “receive a 30 percent discount on any work purchased from The Project, such discount to be applied until an aggregate of $100,000.00 (U.S.) has been discounted off of your purchases.”

Richard Solomon, president of New York’s Pace Prints gallery and current president of the Art Dealers Association of America, told ARTnewsletter that many galleries, particularly smaller and start-up operations, have investors and financial backers. The agreements that investors make with dealers range widely—from owning a percentage of the gallery or obtaining a share of the gallery’s profits to generous discounts for purchases and insider access to works by artists that are much in demand.

Offering the right of first refusal, however, is “a risky thing to do,” Solomon says. Dealers themselves will want “to buy the most desirable piece—it’s called cherry-picking—with the idea of making a good profit.” Lehmann did make a number of purchases, racking up a discount amount of $82,500. These consisted of six videos by artist Paul Pfeiffer. But the collector was particularly interested in the work of Mehretu, who creates large abstract drawings and paintings, and relatively few of them in the course of a year.

Repeated requests by Lehmann to the gallery for Mehretu’s work were turned aside, the suit alleges, even as The Project sought to place the artist’s work in a number of private and institutional collections in the U.S. and Europe.

The gallery sold Mehretu’s work to several private collectors and dealers—including Jeanne Greenberg Rohatyn of Greenberg Van Doren Gallery, New York; Jay Jopling of White Cube, London; fellow London art dealer Thomas Dane; and the Walker Art Center, Minneapolis.

According to attorney Stern, the plaintiff was told by the gallery in November 2001 that one work by the artist, entitled Retropistics: A Renegade Excavation, had already been sold when, in fact, it wasn’t sold until two weeks later.

In 2003, the suit stated, Lehmann was finally given the opportunity to buy one small Mehretu painting for which he paid $17,500, discounted from a list price of $25,000. The work, an ink and acrylic on canvas measuring 32-by-54 inches, is entitled Excerpt (Regiment). In his ruling Judge Gammerman stated that “damages should be computed based on the difference between what the plaintiff would have paid for the paintings that should have been offered to him,” and the current value of the works.

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