ARTnewsletter Archive

Update: Slew of Lawsuits Hits Salander-O’Reilly Galleries

A Massachusetts district court judge has sided with collector Saundra B. Lane, who brought a multimillion-dollar lawsuit against Lawrence Salander and Salander-O’Reilly Galleries, New York—for money she said was owed her for a painting she had sold to the gallery. Meanwhile, Salander and his gallery are currently facing at least seven other claims from clients,

NEW YORK—A Massachusetts district court judge has sided with collector Saundra B. Lane, who brought a multimillion-dollar lawsuit against Lawrence Salander and Salander-O’Reilly Galleries, New York—for money she said was owed her for a painting she had sold to the gallery. Meanwhile, Salander and his gallery are currently facing at least seven other claims from clients, collectors, art dealers and a former landlord. At press time neither Salander nor the gallery had responded to ARTnewsletter’s requests for comment. Nor would any of the attorneys involved, except one, comment on the respective cases.

On Sept. 24, U.S. district court judge Dennis Saylor issued a ruling that grants Lane a judgment of $4.3 million. This includes the outstanding balance ($3.98 million) owed her for a painting by Charles Sheeler, Newhaven, 1932, which she had sold to Salander for over $9 million in April 2005. Salander also was ordered to pay accrued interest of more than $111,000, late fees of $167,760.50, attorneys’ fees and costs of $50,559.10 and $77.74, respectively, and $8,467.35 for insurance and storage costs. Several of these suits were first reported in the Maine Antique Digest.

Meantime, a suit filed against Salander and the gallery in late May by painter Stuart Davis’ son Earl Davis is ongoing. Davis accuses Salander of selling dozens of his father’s paintings without informing him or sending him any of the proceeds. The Davis suit, filed in U.S. District Court in the Southern District of New York, states that he gave hundreds of his father’s pictures to the gallery “for evaluation and possible sale” but made it clear that “he did not want any of the works of art to be sold.” (ANL, 9/18/07, pp. 7-8)

He accuses the gallery of failing to return, despite repeated requests, works by his father still in its possession. “For this reason, Plaintiff brings this lawsuit against Defendants for breach of statutory duties, breach of contract, breach of fiduciary duties, recovery of chattels and an accounting,” court documents state.

According to a July 9 order from the district court, Salander was directed to “retrieve all works that have not yet been sold . . . and deliver such unsold works” to Davis. The stipulation also called for Salander to “segregate . . . and deliver to Plaintiff” any funds received on the sales of the Davis works in question, as well as a full accounting of whether individual works had been sold, consigned, pledged as collateral or loaned.

On Aug. 20, Davis filed a motion for contempt and a preliminary injunction against Salander-O’Reilly, alleging that the defendant “disregarded the Stipulation and Order” of July 9 and “made no effort . . . to return any and all unsold works.” Davis says that only through the efforts of his own counsel had another Manhattan gallery “returned seven of the works to me.”

In a response filed Sept. 5, Salander and his attorneys assert, “Defendants have been working diligently to locate and recover any Stuart Davis Work that is unaccounted for and have sought to comply with the Order in all other aspects.”

However, Davis and the gallery clearly remain far apart with respect to how, when and by whom any efforts have been made to retrieve the works. Papers filed by Davis and his attorney on Sept. 11 assert that Salander-O’Reilly “did not contact other dealers or galleries. . . . They did not return any of Plaintiffs’ works of art.”

Davis and his attorney requested, for the second time, that the defendants be “held in contempt because they all but ignored this court’s order.” Davis again asked the court for a “preliminary injunction directing Defendants to pay to Plaintiff all trust funds” an amount stated as $9.38 million.

Other charges were brought in New York State Supreme Court on Aug. 7 by Curtis Galleries Inc. and Curtis Squire Inc., described as Minneapolis-based “passive investors” with a “50 percent interest” in Salander-O’Reilly Galleries, referred to as “SOR” in the complaint, which charged that “Plaintiffs invested in SOR and reposed their money and their valuable artwork, and their trust and confidence in Salander and SOR. . . . Millions of dollars owed them have gone unpaid.”

In August 2006, the complaint states, Salander-O’Reilly exercised an option to acquire Georgia O’Keeffe’s painting Shelton Hotel for $7 million. Under the terms of the agreement, dated March 21, 2006, the gallery was obligated to pay Curtis Galleries monthly installments of $500,000 until the balance was paid in full. After “certain initial payments [the gallery] stopped paying altogether in September 2006,” defaulting on its obligation and breaching the contract, the complaint states.

The suit seeks at least $3.5 million plus interest for breach of the option agreement. According to the complaint, “For an extended period of time, Plaintiffs attempted to resolve these disputes amicably, but it was futile. On April 25, 2007 [Curtis Squire] notified Salander in writing of [Curtis Squire’s] withdrawal as a member of SOR,” effective Oct. 25, the complaint states.

Another document obtained by ARTnewsletter and dated March 19 is a “judgment by confession” that was filed in the Supreme Court of the State of New York, ordering Salander-O’Reilly Galleries to pay plaintiff Stanley Moss & Company, Riverdale, N.Y., $1,014,844, described only as “unpaid principle” and interest.

Six More Suits

Among other active legal actions against Salander and the Salander-O’Reilly Galleries:

• Former tennis pro John McEnroe filed a “motion for summary judgment in lieu of complaint” against Salander and the gallery, seeking $325,000 owed him for investment in a painting referenced in court documents as a “letter guarantee of Lawrence Salander” that was reportedly issued Oct. 5, 2006. McEnroe’s attorney, Philip Schatz, declined to comment on the case but notes that his client has been repaid $200,000 of the claimed amount.

• A suit, seeking $4.6 million, was brought in late August by New York hedge-fund investor and art collector Roy Lennox. The claim alleges that Lennox and Salander had an arrangement to buy Renaissance and contemporary art as investments and share the profits when the work was sold, but that Salander stopped sharing the profits in 2006. The suit seeks damages for breach of contract, unjust enrichment, conversion, breach of fiduciary duty, fraud and deceptive acts and practices in violation of New York general business law.

“In what has emerged as nothing more than an illegal Ponzi scheme,” the suit states, “Defendants Salander O’Reilly Galleries and Salander have extracted millions of dollars from Plaintiff Lennox, promising attractive returns on ‘investments’. . . . In a repeating pattern, when the times came to pay Lennox for his investments, Defendants instead offered no more than excuses as to why payment could not yet be made, or alternative arrangements, including payment in dubiously attributed works of art. . . . All the while, upon information and belief, Defendants were using Lennox’s investments to pay other creditors and investors.”

• A suit filed July 11 by collectors Monty and Sarah Diamond, of New York and Colorado, seeks at least $477,500 plus $1 million in damages related to 16 works consigned to the gallery in April 2006. The suit alleges that Salander made unauthorized sales of all but six of the works for a total of $477,500 and disregarded a prior agreement that “no pieces of the Artwork should or would be sold without the consent and authorization of [Monty] Diamond as to price.” According to the complaint, “despite repeated demands for payment, the defendant has failed and refused to pay the plaintiffs the sum of $477,500. . . . Plaintiffs are unsure of where the sales proceeds from the Artwork were deposited.”

• Last January Elaine Rosenberg sued Salander-O’Reilly for $400,000 plus attorney’s costs for money she claims is owed on the joint purchase and subsequent sale of Stuart David’s oil-on-canvas Brown Table Still Life, 1922. The charges state that Salander and Rosenberg agreed in May 2005 to jointly acquire the painting for $400,000, with Rosenberg contributing $200,000 to the purchase price.

“At that time,” the complaint says, “Salander represented that Galleries had already located a buyer for the Painting at a price of $800,000. . . . Galleries would thereafter pay to Plaintiff the sum of $400,000 (‘Rosenberg’s Share’), representing Plaintiff’s share of the proceeds from the sale of the painting on or before Dec. 15, 2005.”

According to the suit, Rosenberg believes the painting was sold for $800,000. However, to date neither “Galleries nor Salander has paid any portion of Rosenberg’s share from the sale of the Painting—the amount of $400,000—to Plaintiff.”

•Also this past January, Paul Rosenberg & Co., the landlord of Salander’s previous gallery space on East 79th Street in Manhattan, sued Salander-O’Reilly Galleries for failing to vacate the premises on or before May 15, 2006, under the terms of an amended lease (the gallery has since relocated to a new space on East 71st Street). “Tenant continued to occupy the premises through and including Nov. 3, 2006,” the filing contends. Rosenberg & Co. is seeking an amount that, including unpaid rent, attorney’s fees and interest, may exceed $1.5 million.

• In a case filed against Lawrence Salander and his wife, Julie, in June 2006, in which Fulton Landing Inc. and Timothy Crowley are listed as plaintiffs, the claim is for almost $100,000 and related to “renovation and construction of defendant residence located at 63 East 82nd Street.” The suit alleges that of a total cost of $472,481.15, only $374,388.05 was paid, leaving a balance of $98,093.10 owed to the plaintiffs.