The billionaire Ronald Perelman’s lawsuit accusing New York City art gallery owner Larry Gagosian of defrauding him into overpaying for a Cy Twombly painting has been thrown out by a unanimous state appeals court.
Despite being a “sophisticated” plaintiff, Perelman “conducted no due diligence” to determine the value of Twombly’s “Leaving Paphos Ringed With Waves” before agreeing to buy it for $10.5 million, the Manhattan court said on Thursday.Moreover, the sale was negotiated at arm’s length, and Perelman could not base a fraud claim on what Gagosian might have said the art was worth, the court said.
The 5-0 decision overturned a February ruling by Justice Barbara Kapnick that let Perelman, through his MAFG Art Fund and MacAndrews & Forbes holding company, pursue the fraud claim. It let stand Kapnick’s dismissal of other Perelman claims.
MacAndrews & Forbes is examining its options, which could include an appeal. In a statement, it said the decision “leaves purchasers of contemporary art without an adequate remedy if they are defrauded by unscrupulous art dealers.”
The case offered a rare behind-the-scenes look at negotiations for art sales.
It also fractured the friendship of more than 20 years between Perelman and Gagosian.
Perelman is chairman and controlling shareholder of cosmetics company Revlon Inc, and according to Forbes magazine is worth $14.6 billion. Gagosian’s namesake gallery has locations worldwide that feature artists like Pablo Picasso, Jeff Koons and Richard Serra.
According to court papers, Gagosian quoted a price of $8 million for the Twombly painting when Perelman first saw it in April 2011, and later sold it for a lower price to the Mugrabi family, who, like Perelman, are major art collectors.
Five months later, and two months after Twombly died, Gagosian told Perelman the painting was back on the market for $11.5 million. The men ultimately agreed to the $10.5 million price, court papers show.
But Perelman still thought Gagosian cheated him, causing him to overpay for the Twombly painting while undervaluing art that he swapped for it, including a Koons sculpture and paintings by Willem de Kooning and Roy Lichtenstein, the papers show.
Gagosian’s lawyer Matthew Dontzin said in an interview his client was gratified with Thursday’s decision. Dontzin called the lawsuit “a shameless pretext for Perelman’s refusal to pay what he owed the gallery. Justice was done today.”
Twombly completed “Leaving Paphos” in 2009.
The case is MAFG Art Fund LLC v. Gagosian et al, New York State Supreme Court, Appellate Division, 1st Department, No. 13685.