NEW YORK—Berry-Hill Galleries is facing a new lawsuit, filed in New York earlier this month, by a collector who alleges that the gallery promised to sell a painting but failed to do so.
The lawsuit was filed on March 12 in New York Supreme Court by Boca Raton, Fla., art collector Seymour Alpert, who claims the gallery breached an agreement to sell a 1908 Frederick Childe Hassam painting, The East Headland Appledore—Isle of Shoals, which the gallery and collector purchased jointly in 2001 for $501,000. The work was supposed to be sold by March 31, 2010, his suit states.
According to the complaint, Alpert paid 75 percent of the original purchase price while the gallery paid 25 percent. At the time, both collector and gallery made an oral agreement to reimburse themselves, when the painting sold, at the same 75-25 split for the original purchase price and dividing any profits on a 50-50 basis. The gallery “agreed to use their best efforts to sell the Painting for a reasonable price,” Alpert claims in the suit. However, despite “that agreement, the defendants have failed to sell the Painting despite receiving reasonable offers.”
In 2005, Berry-Hill Galleries declared bankruptcy (from which it emerged in 2007) and creditors sought to seize the Hassam to pay the gallery’s debts. “Through the expenditure of significant counsel fees, Plaintiff was able to protect the Painting from the defendants’ creditors,” the lawsuit claims. In 2010, Berry-Hill Galleries was faced with eviction for defaulting on its $16 million mortgage, but it was rescued in 2011 by a $10 million loan from New York hedge fund manager John Paulson.
Last year, a holding company that had purchased an 1887 George Inness painting, Approaching Storm, from the gallery in 2004, sued Berry-Hill for having sold a counterfeit after the author of an Inness catalogue raisonné did not include the picture.
The gallery’s failure to sell the Hassam painting reflects the gallery’s “own poor financial situation,” according to Alpert.
However, Paul Niehaus, the lawyer who has been representing Berry-Hill Galleries, countered that, stating that the art market was affected by the recent recession and that, while some areas of the art market have come back in a strong way, prices for American art have remained low. “Berry-Hill has made all reasonable efforts to sell the painting, but with the downward turn in the market, it didn’t seem wise to sell the work at a loss,” he said.
After the March 31, 2010, deadline passed, the collector and the gallery sought other ways of selling the painting, including putting it up for sale at Sotheby’s in December, 2011. The lawsuit claimed that the painting drew bids at the auction, which were acceptable to Alpert, but the gallery “unilaterally rejected the offers and withdrew the Painting from auction.”
Niehaus rejected Alpert’s claim, stating that the painting was not withdrawn from sale but that the highest bids “didn’t meet the reserve price.” According to an entry on Sotheby’s website, the painting carried an estimate of $500,000/700,000 at that sale.
After the Sotheby’s auction buy-in, according to the complaint, Alpert demanded that the gallery turn over the painting to him so that he could sell it “at its fair market value and distribute the proceeds in accordance with the parties’ agreement.” According to his complaint, Berry-Hill Galleries refused this request, which led to the breach of contract lawsuit.
Niehaus stated that he has been in contact with Alpert’s lawyer, and “we are trying really hard to resolve this situation.”