Korea has a long history of invasion by foreign powers, most recently, the Japanese, who occupied the country for a 35-year period ending in 1945.  As a result, according to surprisingly precise calculations by South Korea’s Cultural Heritage Administration, as of February 2011, there were 140,560 Korean cultural treasures scattered abroad: 37,972 are in the United States, and more than 65,000 are in Japan.

These are of particular interest to Kwon, a clever Korean client who Skyped us after attending an international repatriation conference in Seoul last summer and wanted our help in securing the return of some of his family’s important ceramics that were now in New York and Osaka, Japan.

We started out by giving Kwon some good news: In America, the general rule is that a thief cannot pass good title to stolen art.  One famous application of this principle was the 1989 federal case Church of Cyprus v. Goldberg, in which the court held that a purchaser of stolen 6^th-century mosaics, the American collector Peg Goldberg, had not obtained legal title to them, and mandated their return to their rightful owner, the Church of Cyprus.  The U.S. rule is in contrast to laws in Japan and most other civil law countries, where an innocent purchaser can obtain good title to stolen property.

But Kwon’s claims could still be stymied in the United States if they were brought after the applicable statute of limitations had expired.  For example, New York has a three-year statute of limitations on claims such as Kwon’s, and the clock starts from the time that the original owner demands the return of a work.  In most other states, however, the clock runs from the date that the victim discovers, or should have discovered, the location of the stolen piece.

Another potential roadblock is that a U.S. court might question whether Kwon had diligently pursued recovery of his stolen property.  For instance, in the 2010 case Museum of Fine Arts, Boston v. Seger-Thomschitz, in which the MFA confirmed its rightful ownership of the 1913 painting Two Nudes (Lovers) by Oskar Kokoschka, the federal court dismissed a claim against the museum on the grounds that the delay by the original owner’s heir in bringing the suit prejudiced the MFA, since witnesses with actual knowledge of the transfer were by then deceased.

Since Kwon wasn’t certain that the ceramics had been stolen outright, rather than merely exported illegally, he asked us whether the United States would return works that were improperly exported from a foreign country, even if they weren’t technically stolen.  Our answer: Typically not, assuming the foreign country does not have an agreement with the United States concerning import restrictions American courts will normally allow the current owner to keep art that has been wrongly exported from a foreign country (provided it is not stolen property and was properly declared when it was imported) on the theory that foreign-export restrictions are simply an exercise of a country’s police power and do not create any ownership rights.

Kwon then asked us about suing for the return of his ceramics under international law in an international court.  Unfortunately, there isn’t, as yet, any law or forum with international jurisdiction to decide questions of ownership of artworks.  Kwon acknowledged that he wasn’t only interested in regaining his family’s personal treasures, but also those owned by his homeland:  “If a foreign country says that it owns a work, will the United States enforce that foreign law and return it?”

“Possibly,” we replied.  The National Stolen Property Act (NSPA) criminalizes dealing in property valued at $5,000 or more that has been “stolen, unlawfully converted or taken, knowing the same to be stolen.”

In the 1977 case U.S. v. McClain, the federal government used the NSPA to convict individuals who sold pre-Columbian pieces in Texas after a circuit court established that Mexico actually owned the works.  The court determined that Mexico’s legislation giving the country title to all of its antiquities was clear, so illegally exporting them from Mexico constituted theft.  Similarly, in U.S. v. Schultz, which resulted in the 2003 conviction of the New York antiquities dealer Frederick Schultz for selling stolen artifacts, Schultz’s defense team unsuccessfully argued that Egypt’s patrimony law – which states that antiquities discovered in the country after 1983 are the property of the Egyptian government – was merely an export rule.  The court rejected this argument, holding that “the NSPA applies to property that is stolen from a foreign government, where that government asserts actual ownership of the property pursuant to a valid patrimony law.”

A handful of countries, including Italy and Egypt, have been very successful in compelling foreign governments to repatriate objects of cultural and historical significance.  But South Korea’s hope of reclaiming stolen art from Japan is more problematic in light of the 1965 Treaty on Basic Relations, which normalized relations between the two countries, and under which Korea – in a controversial move – renounced its claim to cultural property in exchange for economic assistance from Japan.

Moreover, identifying the rightful cultural heir isn’t always easy.  The UNESCO Convention Concerning the Protection of the World Cultural and Natural Heritage, adopted in 1972 (and accepted by the United States and Japan), suggests that culture is everyone’s common heritage.  But the UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects, adopted in 1995 – neither the United States nor Japan is a member – seems to view cultural property as attached to a particular group.  On top of that, the laws of various countries often conflict in regard to who owns which particular artifact.

In our own experience, a patient and methodical approach to repatriation, rather than a nationalistic and emotional one, has proven most effective.  We generally suggest that clients take a careful inventory of exactly which works are missing, research the history of the pieces, investigate their legal status at home and abroad, and be creative during negotiations.  This approach has already yielded some success for Korea – witness the return last June of royal archives that had been looted by the French during its invasion of Korea, in 1866.  In the innovative solution reached in that case, France, rather than permanently returning the books (which a French court rejected), made a face – saving “permanent loan” of the works to Korea.

Kwon’s final question concerned his private claim: “If a foreign country says that I don’t own a ceramic and won’t return it to me, may I sue that nation in a U.S. court to recover the piece, or for payment equal to its value?” The answer is: Maybe.  In the 2010 case Cassirer v. Kingdom of Spain, a federal court ruled that the California resident Claude Cassirer could sue Spain for the return of the Camille Pissarro painting Rue Saint-Honoré, Afternoon, Rain Effect, 1987, which was taken from Cassirer’s family by the Nazis in 1939 and later acquired by Spain.  Sadly, however, Mr. Cassirer died a few weeks after the ruling, at the age of 89.  The lesson?  Patience and forbearance have their place in the tricky area of repatriation.  But at some point, time runs out.

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Defective title is especially problematic in the U.S., because the law here (in contrast to Swiss law, for example) holds that the thief of a work generally cannot pass good title to a purchaser.  This means that unwitting buyers of stolen good often end up surrendering the art without any compensation.  And since there is no official governmental registry of title to art works that would clearly show who owns a given piece – like, say, the land records maintained by all states – would-be art buyers have traditionally had to rely on their own due diligence to avoid disaster, with predictably mixed results.

To address this thorny problem and others caused by title defects, Aris Title Insurance Corporation has been selling art title insurance since 2006.  Arid, which was bought by Argo Group in 2010, covers the legal costs of defending a title dispute and compensates holders if they lose an ownership dispute.  The company charges a onetime premium, paid upfront, whose amount depends on the covered work’s provenance risk profile and value.

Aris was not the first to dip a toe in the art title insurance pool.  According to Dorit Straus, worldwide specialty fine–art manager at the Chubb Group of Insurance Companies, Chubb offered art title insurance from 1982 to 1985 but withdrew it because of little demand.  Instead, Chubb now offers all-risk fine-arts coverage that reimburses policyholders for legal costs up to $100, 000 in the event of a title dispute involving a scheduled artwork.  It will not, however, reimburse owners for the value of pieces they have to forfeit, and it is not valid in certain states (including New York).

Art title insurance differs in one fundamental respect from the casualty, property, and liability insurance offered by traditional insurers: While the latter covers the risk of a loss occurring after the effective date the policy is issued, art title insurance covers defects that occurred in the past, before the policy is issued.  It is most comparable to real-property title insurance, which buyers obtain with commercial and residential real-estate purchases and with all real estate bank loans.  (Hint: The guy sitting at the end of the table at your house closing whose name you didn’t know was probably working for your title insurer, and without him your back would not have made your loan.)

Before issuing a policy of title insurance, Aris verifies an artwork’s chain of ownership using what it says is a proprietary process and database.  This type of research has traditionally been done by independent experts (including researchers, academics, and curators), often in cooperation with attorneys.  Professionals who perform this type of due diligence generally begin with the best-known independent database of missing and stolen works, the Art Loss Register, and also check public records for liens.  They analyze bills of sale, probate records, past auction catalogues, and other historical records and may consult with art historians, archivists, biographers, and connoisseurs here and abroad to track down a work’s history.

Several high-profile restitution cases involving Nazi-looted art have drawn attention to the problem of title with regard to stolen art, but in fact as many as three-quarters of the claims in the area of art title insurance concern non-theft-related ownership problems, such as liens and encumbrances on inventory.  For instance, a collector might unknowingly buy an artwork that had been used as collateral for a loan and end up with a cloud on title.  Such was the case for buyers of jewelry that Ralph Esmerian, the former head of the famed jewelry store Fred Leighton, had pledged as collateral for loans from Merrill Lynch.  (Esmerian pled guilty to bankruptcy fraud in April and was sentenced to six years in prison.)  The Uniform Commercial Code adopted throughout the United States may offer legal protection to nonmerchant buyers of goods sold in the ordinary course of business, but the legal expenses that inevitable result from title claims are generally not recoverable, even if the innocent purchaser prevails.

Art title insurance might protect against a similar situation, but it does not cover all contingencies, and it’s important to understand its limitations.  Physical loss and damage are excluded – as when Steve Wynn famously put his elbow through his Picasso painting Lerêve            in 2006 – as are matters usually not covered by real – property title insurance, such as information known by the insured as of the date of issuance of the policy but not disclosed to the insurer.  And if your Van Gogh turns out to be a Van no Gogh, you’ll get no dough from Aris, since it does not insure against forgery or misattribution.

How widespread is the use of title insurance in the art world?  Since 2006 Aris has sold about 1,000 policies, a number that corresponds to a tiny fraction of worldwide art transactions in any given year.  (Full disclosure: We were early purchasers of Aris title insurance for a client; so far there has been no claim under this policy.)  We do not believe the insurance is used with regularity by the prime movers in the art market, dealers and auction houses, because they generally rely on warranties by sellers that they have good title.  That said, before Christie’s auctioned works from the bankrupt Salander – O’Reilly Galleries last June, it reportedly recommended that the seller purchase insurance from Aris to allay buyers’ fears about potential claims or encumbrances, even though the bankruptcy court had approved the sale.

Why isn’t title insurance more widespread?  One possibility is that the people most likely to seek coverage are those who already know of a title defect, and to the extent that they don’t disclose this information to Aris, any claim they make might not be covered.  Cost is also a factor, especially for works with gaps in provenance dating to around World War II.  But the most significant reason may be that many collectors (including any number of our clients) view title insurance as an unnecessary expense because they simply avoid buying works from people they don’t already know and trust or buy through reputable auction houses, which stand behind their sales.

Those thinking about obtaining title insurance may want to consider having an attorney review a policy’s exact terms of coverage to make certain that it meets their needs.  And although throughout the country so-called rate states set the maximum amount that real property title insurers can charge for coverage, no such regulation exists for art title insurance.  In our admittedly limited experience, Aris’s fees and terms of coverage are at least somewhat negotiable.

Art title insurance may be a useful arrow in the quiver of art buyers, but we still believe there is no substitute for carrying out independent due diligence before making a purchase.  Given the uncertainties of the art market, when our clients ask us how they can avoid a claim down the road, we advise that the surest and cheapest solution is not to buy a problem work in the first place.  After all, we’re art lawyers, not fortune–tellers.

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As it happened, Wolf served on a New York foundation dedicated to the recently deceased sculptor Katz (not his real German name) and had a simple legal question: Could the financially troubled foundation sell Kat’s cat sculptures from an edition that was still in the process of being cast at the time of his death – and if so, what disclosures did it need to make? But simple legal questions are often like golf swings: The more one thinks about them, the more difficult they become.

The basic rule in New York in this area is that foundations and others must comply with Section 15.10 of the New York Arts and Cultural Affairs Law, which was enacted to protect purchasers of sculptures.  The law makes it illegal to consign or sell any sculpture produced on or after January 1, 1991, and valued at $1,500 or more without disclosing in writing certain important information, such as the name of the foundry or person that produced the work; the year it was made; the number of casts produced; and whether the piece is authorized by the artist, or his or her estate, heirs, or other legal representatives.

For such a sculpture from a limited edition, additional information must be disclosed, including whether and how it and the edition are numbered, the size of the proposed or previous editions of the same sculpture, and whether the artist intends to produce additional casts.  The law makes the required disclosure an express warranty by the seller.

So the easy response to Wolf’s question was that, although no legal prohibition on the sale of posthumous casts of sculptures exists, the foundation had to abide by the section of the statute requiring that “if the purported artist was deceased at the time the sculpture was produced, this shall be stated.”

Similar disclosure requirements appear in the Standards and Guidelines code (which lacks the force of law) issued in 1973 by the College Art Association and endorsed by the Association of Art Museum Directors:  “All posthumous casting or reproduction of an artist’s work must be clearly identified by information supplied when possible on the work of art itself, as well as on all invoices, bills of sale, catalogues, and advertising.  This information should include the actual date of the new cast, the name of the foundry, the size of the edition, and whether or not the work is a surmoulage (one bronze made from another and not original art) or of a different scale than the original.”

Approximately 20 states besides New York have laws concerning multiples – usually applying to both prints and sculptures, as well as other types of art – that typically require disclosure to buyers of similar information in addition to value, authenticity, and rarity.  Failure to make these disclosures can land the seller in hot water.

In the 1978 L.A. Superior Court case Factor v. Stella, for instance, the artist Frank Stella was sued for breach of duty to purchasers because he had sold a work without disclosing that similar paintings existed.  According to the trial court, “an artist has a duty to a purchaser of his work to inform the purchaser of the existence of a duplicate work which would materially affect the value or marketability of the purchased work.”  However, the court found that Stella’s silence should not result in damages, since there was no evidence that the plaintiff’s painting would have brought a lower auction price if the existence of the other versions had been disclosed.  It also noted that the other versions were different enough from the plaintiff’s that they hadn’t “materially affected” its value.

Posthumous castings may, in fact, be quite desirable and even enhance an artist’s legacy.  Auguste Rodin was keenly aware of this benefit and specifically instructed the Rodin Museum in France to cast his plasters in bronze posthumously, which it does to this day.

The more interesting question in Wolf’s case was whether the fact that the cat sculptures were already being cast when Katz died made any difference to our analysis, especially since several pieces from the same edition were completed before his death.  In our view, a court would interpret the law to require disclosure of posthumous casts from an edition even if the sculpture was created before the artist died.

Wolf then asked whether the foundation could produce Katz’s cats in cast iron – a metal different from the one the artist intended.  Doing so might be an alliterative catastrophe but was not illegal.  It would, though, violate the section of the Standards and Guidelines code stating that “all unauthorized…transfers into new materials, unless specifically condoned by the artist,…should be considered inauthentic or counterfeit.”

“How about posthumously signing the sculptures or embossing them with a stamp authorized by the estate?”  asked Wolf.  We thought the signature sounded like forgery, but the estate stamp was appropriate.

Wolf’s next question:  Could the foundation stop a New York gallery from selling cheap replicas of Katz’s cats?  Apparently the artist had sold copyrights to some sculptures during his lifetime to this dealer.

If the gallery made unauthorized replicas of sculptures in which the foundation owned the copyright, the gallery would be quilty of copyright infringement.  Collectors who bought such replicas could not sue it under the Copyright Act, because that law is for the benefit only of artists and their heirs and assignees.  However, the foundation could bring the gallery to court.  Of course, if the gallery had lawfully acquired the copyright, the foundation would have little recourse.

“Couldn’t we still make a claim against the gallery based on moral rights?” cried Wolf, referring to a legal concept that originated in France and that permits artists to protect the integrity of their work.  “The shoddy replicas damage Kat’s reputation!”  The answer was no.  Unlike in France, where they are perpetual, moral rights in the U.S. – incorporated into the Visual Artists Rights Act of 1990 – expire with the artist, so there was no legal remedy available under this theory.

“Could collectors who buy these copies from the gallery compel our foundation to authenticate them?” Wolf wondered.  Again the answer was no.  In the 2009 case Thome v. Alexander & Louisa Calder Foundation, a New York appellate court refused to force the foundation to authenticate theatrical stage sets that were designed by the artist but completed just a few months after his death in 1976.  The court was not persuaded by the fact that he had reviewed and approved the completed plans for the set, holding that the foundation only had to “consider” requests for authentication.

We advise any purchaser of a sculpture produced in multiples to request detailed documentation from the seller.  This is especially important with sculptures because they normally do not bear the fraction commonly seen on prints, whose numerator indicate the number of the copy and whose denominator indicates the size of the total edition.  Buyers who are unsure if an edition is limited should do some basic due diligence, including even contacting the foundry that manufactured the sculpture to confirm that it is authentic.  For the sculptors themselves, our advice is to leave clear written records about whether, how, and by whom they want their sculptures to be reproduced after they are gone.

As for Wolf and his floundering, foundering foundation, in the area of posthumous sculptures it’s almost always safer to reveal more information to buyers than less.  That’s simply par for the course.

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Not so fast, we replied. Under a little-known quirk in U.S. law, exact copies of two-dimensional works in the public domain – meaning not protected by copyright-are not accorded the same legal protection as other photographs.

The current rule, which has caused concern among institutions like Eve’s, is that if a museum, or any other party, makes an exact photographic copy of a 2-D work that is in the public domain, the owner of the work can’t claim copyright in the reproduction because the copy lacks originality. This was the ruling in Bridgeman Art Library v. Corel Corp., which was first decided under British law and then, in 1999, under U.S. law in a federal district court in Manhattan.

Bridgeman Art Library handled the licensing of photographs of paintings (including Leonardo da Vinci’s Mona Lisa) from more than 750 museums, mainly in Europe but also including the Brooklyn Museum and the Museum of the City of New York. It insisted that it owned copyrights to the photographs, even though the paintings depicted were in the public domain, and sued Corel, which sold digitized images of European masters, claiming infringement of those copyrights. The court disagreed, stating that photos like Bridgeman’s should be denied copyright since they amounted to “nothing more than slavish copying”.

“That’s mixing apples and oranges!” railed Eve. “Creating an exact reproduction of an artwork requires tremendous skill and effort on the part of the photographer.”

Unfortunately for her, Bridgeman made a similar argument. It claimed that its reproductions possessed the requisite originality and a substantial variation from the source paintings, since the reproductions included color-correction bars and the artworks’ picture frames.  The court, however, found that “sweat of the brow” in the service of “absolute fidelity” does not equal originality. Judge Lewis Kaplan noted, “It is uncontested that Bridgeman’s images are substantially exact reproductions of public-domain works, albeit in a different medium.”

“Just because a process requires technical skill and is laborious doesn’t make it uncreative and unoriginal,” persisted Eve. “The court obviously didn’t appreciate the skill involved in crafting a faithful photographic representation of a painting.”

Bridgeman’s attorney made this point even more succinctly:  “If your Honor is going to take the position that photography is not an art, then I might as well go home.”

Eve didn’t get a plum museum directorship on her good looks alone. “The Bridgeman finding was that slavish copies are not eligible for copyright,” she pointed out.  “Are nonexact reproductions more likely to be copyrightable?”

Perhaps strangely, the answer is yes. Bad reproductions of public -domain works have distinguishing variations from the works on which they are based and, since copyright protection hinges on the originality of a work, therefore stand a better chance of copyright protection. Similarly, photos of public-domain sculptures are more likely to be copyrightable since they require the photographer to make choices that arguably involve elements of originality. Such elements, the Bridgeman opinion noted, “may include posing the subjects, lighting, angle, selection of film and camera, evoking the desired expression, and almost any other variant involved.”

“Doesn’t the fact that our museum owns all our art mean that we own the copyrights, too?” Eve cried.

“No,” we replied and reminded her of some copyright basics.

First, owning art doesn’t necessarily mean that one owns the right to reproduce it, since according to the 1976 Copyright Act, the physical work and its copyright are separate.  Second, the copyrights in most of the works in Eve’s collection had expired. Before January 1, 1978 (the effective date of the Copyright Act), the copyright term was 28 years with an option to renew for another 28. Today in the U.S. the term is generally the life of the author plus 70 years (extended from life plus 50 in 1998).

“That’s peachy for the artist,” fumed Eve, “but soon everything will be in the public domain, and museums will have nothing.”

We hold the opposite view. Because copyright now attaches automatically without the need for a copyright notice, and because of the extended term of life plus 70, we believe that more works than ever are benefiting from copyright protection. Moreover, in our opinion, museum directors like Eve should actually favor a rich and strong public domain, since they publish catalogues, posters, cards, and the like with images in which they do not hold the copyright.

The Supreme Court will soon wade into the battle between copyright protection and the public domain. It agreed in March to hear Golan v. Holder, which questions whether Congress in 1994 violated the First Amendment right to free expression when it restored copyright protection to many foreign works already in the public domain. The petitioners are Lawrence Golan, an orchestra conductor at the University of Denver, as well as film distributors and educators who now face copyright fees to use or perform the “restored” musical works by foreign composers.

“As a practical matter,” Eve asked, “what have museums been doing during the 10 years since Bridgeman decided that exact reproductions of 2-D public-domain works aren’t copyrightable?”

We have seen a cornucopia of approaches. Some institutions simply ignore the ruling, on the theory that it is not binding outside New York State and has not been affirmed at the appellate level. They continue to demand dubious copyright fees and put questionable copyright notices in their names on exact copies.

Others accept the Bridgeman ruling but try to limit photographers’ access to the works by means of “no photography” policies and other restrictions. Still others choose to bypass the copyright issue altogether by turning to contract law, requiring would-be photographers to sign licensing agreements stating that they may photograph works only in accordance with specific terms set with the museum in advance.

A different approach taken by museums is to demand royalties based on trademark law from those photographing works in their collections if they mention the museums’ names. Finally, some museums deny access to their archives and other privileges to users who fail to comply with their copyright policies.

“Let’s say I ignore Bridgeman and charge for copyrights I don’t own,” Eve mused. “What’s the worst that could happen?”

We told her that the user could challenge the museum’s copyrights, and if the claim bore fruit, all prior licensees would likely want their license fees back.

“I’ll take the risk,” said Eve.  “We’ll charge the owner of the Web site who stole the image from our homepage a gigantic use fee and bar him from our Web site forever.”

To us that just sounded like sour grapes.

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Q :                   I am considering buying an ancient Greek vase from a gallery, but I hear that fakes are rampant. How can I protect myself if it turns out to be junk?

A :                   First, do your due diligence (and second and third, do your due diligence). This means making certain that you know with whom you are dealing and what you are buying, enlisting outside help if necessary. Consult an expert who specializes in antiquities. Ask your lawyer to do both a lien search on the seller (so you know the vase isn’t pledged or encumbered) and an Art Loss Register search to confirm that the vase hasn’t been reported lost or stolen, which could invalidate your title to it.

Even if your due diligence turns up nothing and you decide to buy the vase, these efforts will be helpful should you later face an ownership dispute. In fact, all else being equal, showing that you have done your homework may sway a court in your favor in the case of a competing claim.

It is also critical to have in place a good purchase agreement, which would include solid representations and warranties by the gallery should things go awry.

I bought the vase anyway after the dealer showed me a certificate of authenticity. Another dealer just told me that the vase was probably manufactured in Athens, Georgia. Now what?

The mere specter of doubt raised by another dealer (or anyone else) about a piece’s authenticity is not enough to rescind a sale, since opinions on authenticity may differ over time. However, if you can demonstrate that the work is indeed a fake, you should be on strong legal footing. In addition to suing the seller for a breach of the warranties in the contract (assuming you signed one), you may be able to take advantage of a New York State law declaring that when an arts merchant sells fine art to a non-arts merchant and furnishes a certificate of authenticity or similar instrument, that instrument creates an express warranty. Similar statutes exist in Michigan, Iowa, and Florida. In all these states you would be entitled to a full refund of your purchase price-and perhaps additional damages, if you could prove the gallery deliberately defrauded you.

A Hong Kong dealer recently sent me an image of a Tang Dynasty horse in his gallery, together with paperwork showing that it was exported from China in 2005. If I buy it, will I have problems importing the piece based on the memorandum of understanding between the U.S. and China?

The MOU restricts the importation into the U.S. only of antiquities that were exported from China after January 16, 2009, so you should have no problem bringing in the horse. That said, to smooth the way through the sometimes Byzantine U.S. Customs process, we recommend that the paper trail be verifiable, which generally means meticulous documentation (preferably on appropriate letterhead) concerning the provenance, export dates, and other relevant facts, together with good contact information in the event of questions by customs officials.

One approach we have used successfully in this area is to submit detailed provenance information (including supporting documentation (including supporting documentation) to U.S. Customs and obtain unofficial U.S. government approval before even attempting to import the work. In this way we have avoided difficulties at the border-so far.

How important is it that a work of art be signed by the artist?

In terms of marketability, it depends on the artist and the work. In terms of proving authenticity, it’s about as important as feathers are to a turtle, since a signature is one of the easiest elements to fake. We have even seen paintings where the “artist” misspelled his own name (suggestion to would-be forgers: a little more effort would be nice).

I am interested in buying a drawing that was once owned by a Hollywood legend-or so the dealer assures me. What if this provenance turns out to be false?

In your purchase agreement, make sure your lawyer includes a strongly worded representation and warranty by the seller attesting to the provenance, or ownership history; a provision stating that you are expressly relying on this “rep and warranty” in buying the drawing; and an indemnification provision that specifically survives the delivery of the work and says that if the drawing turns out not to have come from this collection, you may rescind the sale and receive a full refund of the purchase price plus interest.

Is my art collection safe under my homeowner’s insurance policy?

We recommend that collections valued above $200,000 be covered by fine-arts insurance, which generally offers greater protection than a standard homeowner’s policy, including worldwide coverage. In addition, fine-arts insurance (unlike homeowner’s) policy, usually covers breakage. We also suggest insuring your collection not at a fixed figure but at market value, which can rise over time, so that in the event of a casualty, your payout would be the amount for which the works could have sold at the date of of your loss rather than, say, the historical purchase price.

I bought a sculpture at auction in New York 20 years ago. I now have solid evidence that it’s a fake. Can I sue?

Fortunately for the legal industry, anybody can sue for anything (more or less), but you will face a statute-of-limitations problem here. The Uniform Commercial Code generally requires that a legal action in connection with the sale of goods (including art) be brought within four years of the purchase date, although the major auction houses extend this period to five years. You would have more time if you could show that the house acted fraudulently, since in New York fraud cases may be brought within six years from the sale date, or two years from the date that the fraud was (or could have been) discovered. But you’ll have to demonstrate that the seller made representations about the sculpture knowing they were false or with a reckless disregard for the truth and intended to deceive you-which is usually difficult to prove.

My cheating soon-to-be ex-husband is making a claim for my Faberge collection. How can he do this if I assembled it before out marriage?

The general rule in most states is that in a divorce, art acquired during the marriage (marital property) is distributed equitably between spouses, while works acquired before marriage or through gift or inheritance (separate property) typically remain distinct. Unfortunately, the application of this rule isn’t always so straightforward. For instance, if the pieces you both while you were single appreciated in value during your marriage in part because of the efforts of your dirt bag husband, the amount of that appreciation could be considered marital property for equitable-distribution purposes. Note that the question of what these efforts might entail is often fiercely contested. Is a recommendation not to sell a work enough of a contribution, as many spouses have claimed, or must there be more-active management? Legal opinions differ. In any event, it’s important to retain proper documentation showing how and when your pieces were acquired, since the party with more-complete paperwork-not to mention the better attorney-often emerges victorious.

If you guys are so smart, why aren’t you flying around in private jets like your clients?

That would just be showing off.

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Her first question to us was fairly blunt: “Do I have the right to destroy art?”

Yes, we told her, she was free to destroy her own works. And having seen some of her sculptures, we hoped she would take the hint.

Our advice to Robin does not apply, however, to works by other artists. As we explained in our last column, the federal law known as the Visual Artists Rights Act (VARA) prohibits the destruction of a piece of “recognized stature” by empowering its creator to “prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation.” Enacted in 1990, VARA applies only to “a painting, drawing, print, or sculpture existing in a single copy or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author” and, with a few exceptions, only to pieces created after June 1, 1991.

“But that makes no sense for contemporary art!” Robin protested. “After all, the best contemporary artists are destroying and re-creating art, rather than preserving it.” For support, she cited a historical example: Robert Rauschenberg’s famous “Erased de Kooning Drawing,” 1953, which the artist made by rubbing out a work given to him by his friend Willem de Kooning, leaving on the paper a faint shadow of the original. “And what about Warhol’s Brillo boxes and Duchamp’s urinal, both of which famously abolish the line between art and everyday objects?” she added.

We were skeptical — and, frankly, put off by Robin’s nihilistic bent.

“How about site-specific art?” she continued. “Could I destroy that? Say I bought a sculpture garden that contained busts of war heroes — could I slather black paint on the busts or smash them to pieces as my own commentary on war?”

We had the uneasy feeling that her question wasn’t purely hypothetical but decided to answer it anyway. In fact, we said, two recent cases suggest that site-specific art is actually not protected by VARA. The safety pins in Robin’s ears started to jiggle happily.

The first case, Phillips v. Pembroke Real Estate, was decided by a federal court in 2006. It concerned the sculptor David Phillips, who sued a realty company on the grounds that removing his 27 sculptures from a Boston city park violated his rights under VARA. While acknowledging the value and “importance of site-specific art, which unmistakably enriches our culture and the beauty of our public spaces,” the court concluded “that the plain language of VARA does not protect” such art.

The second case, Kelley v. Chicago Park District, decided by a federal court in 2008, involved the artist Chapman Kelley. Kelley sued after the district removed his “Wildflower Works” — elliptical arrangements of living plants — from a municipal park in which they had been exhibited for 20 years. The court denied his claim, reasoning that, in line with Pembroke, “VARA is silent on the issue of site-specific art.” It also arrived at the perplexing conclusion that although “Wildflower Works” qualified as visual art, it was not original enough to be copyrightable and therefore not protectable under the act — surprising, since the threshold for creativity under the Copyright Act of 1976 is generally low.

Some legal scholars have noted that the drafters of VARA could have chosen to protect site-specific art if they had wished to. The law was written during the time of the most famous federal case in this area: Serra v. United States General Services Administration. The 1988 lawsuit involved Richard Serra’s 1981 site-specific sculpture “Tilted Arc,” a 12-foot-high curved steel wall bisecting an open plaza in front of Foley Square in Manhattan. The sculpture, which was commissioned by the U.S. General Services Administration, generated so many complaints that the GSA eventually tried to remove it. Serra sued, arguing that the work was constitutionally protected free speech and that moving it would destroy the site-specific intent. The court held for the GSA, reasoning in part that “consideration of aesthetics is a legitimate government function.” “Tilted Arc” was ultimately pulled apart and has never been reconstructed .

Robin tried another tack. “But what are the laws on destroying artworks owned by other people?” she asked.

We replied that criminal law doesn’t distinguish art vandalism from other vandalism. The degree of the offense and the sentence depend on the financial loss. Typically, however, vandalizing art is categorized as mere criminal mischief, and in many states the sentences for this crime are relatively light. That was the case for a woman in Lakeland, Colorado, last November who, angered by an Enrique Chagoya collage depicting Jesus engaged in a sex act, attacked the display case with a crowbar and was charged with a misdemeanor.

“I can do better than that,” Robin said, frowning. “What if I wanted to, say, paint over a billboard?”

We replied that even if she technically did not damage the billboard, she would probably still be liable for vandalism and trespass.

“But that’s the whole point of ‘trespassory’ art!” she railed. “What about graffiti art?”

We said that state laws don’t distinguish between graffiti art and graffiti vandalism, classifying them as the same thing: vandalism.

“But it’s graffiti art! Like Keith Haring’s!” She paused to think. “Could I sue someone for destroying my tag or my mural? It may be trespassing, but it’s also a signed work.”

We explained that graffiti typically does not qualify as a work of “recognized stature” protectable under VARA. While proving this might require the testimony of a community of experts, such as artists, dealers, curators, and collectors, some graffiti artists have managed to prevail in such cases. In the 1998 California case Hanrahan v. Ramirez, artist M.B. Hanrahan and a group of neighborhood children painted an antidrug, antialcohol mural on the outside of a liquor store. The store’s owner painted over part of it three years later, and Hanrahan successfully sued under VARA’s mutilation and destruction sections. Citing the mural as one of 50 winners in a national contest, the judge found that it possessed “recognized stature.”

We could clearly see Robin’s wheels spinning. “How about laser graffiti?” she asked, referring to the recent trend of projecting a message on a building on a massive scale. We said that this would likely constitute both trespass and nuisance.

Robin fit Winston Churchill’s definition of a fanatic: someone who won’t change his mind and can’t change the topic. After an hour we had had quite enough of the scary sculptor and her destructive impulses.

Perhaps Robin had a right to destroy some art, but we had the right to suggest to her that she find another lawyer — which we cheerfully did.

Charles and Thomas Danziger are the lead partners in the New York firm Danziger, Danziger & Muro, LLP specializing in art law.

Some facts have been altered for reasons of client confidentiality or, in some cases, created out of whole cloth. Nothing in this article is intended to provide specific legal advice. “Destructive Impulse” originally appeared in the February 2011 issue of Art+Auction.

Over a two-year period, Ernest retained us to retrieve several works by his grandfather Oscar, a well-known Irish artist with a careless streak. Fortunately, Ernest had hired an excellent investigator to locate the lost pieces.

When Ernest first retained us, we knew that, as a legal matter, abandonment is defined as the intentional relinquishment of all title and claim to, as well as possession of, property. What we didn’t know is how difficult proving it can be. The person trying to assert ownership (usually the one who has found the property) bears the burden of showing that there was an actual intent to abandon by some affirmative act or omission, such as transfer of title. That turned out to be good news for our client.

According to the investigator’s report in our first case, Ernest’s grandfather had tossed an unfinished drawing in a Dumpster. The sketch was retrieved by a “picker,” who sold it to a dealer, who was now trying to sell it in his gallery as a completed work by Oscar.

Ernest asked if the attempted sale of an unfinished drawing violated the Visual Artists Rights Act (VARA), which gives a creator “the right to prevent the use of his or her name as the author of the work of visual art in the event of a distortion, mutilation, or other modification of the work which would be prejudicial to his or her honor or reputation.”

This reminded us of the 2007 lawsuit brought by Robert Rauschenberg against another artist, Robert Fontaine, and HW Gallery, of Naples, Florida, for allegedly trying to sell pictures that Rauschenberg had signed but in 1998 had thrown in the trash outside his home on Captiva Island. Fontaine reportedly admitted taking the works from the garbage, and Rauschenberg argued that in trying to offer the pieces as if they were completed and authorized, the defendants had violated his rights under VARA. Because such rights last only for the life of the artist, Rauschenberg’s lawsuit was dismissed following his death, in 2008. Similarly, we determined that VARA wouldn’t apply in our case, since Oscar was now dead.

Instead, we referred to a 1982 lawsuit involving a somewhat similar situation, in which Frank Stella sued the dealer Stephen Mazoh for allegedly trying to sell two water- damaged paintings from Stella’s “concentric circles” period that the artist had discarded on the landing outside his studio. The parties settled the case, with Mazoh returning the works and Stella destroying them. We proposed a similar resolution in our first case, and the dealer agreed to return the drawing to Ernest in exchange for a nominal sum.

The second missing work was a painting titled “Picture of Dorian,” which Oscar had apparently left in a restaurant coatroom some years past following a long night of revelry. The restaurant’s owner, Gwendolen, was now refusing to return it, even though Ernest still had his grandfather’s original coatroom check for the work.

We told Gwendolen that the painting had doubtless been left in the coatroom on the understanding that it would be returned. In legal terms, this was a classic “bailment” — that is, the placing of property in the custody and control of another. At the termination of a bailment, the bailee, here Gwendolen, was under an absolute obligation to deliver the property or be liable for an unlawful taking. Gwendolen, however, insisted that Oscar had told her he didn’t want the work.

Ernest thought that with the coatroom claim check in hand we would win a quick victory in court. We weren’t so sure, because the facts surrounding the bailment were in dispute. We advised Ernest that since a determination of abandonment hinges on intent, he might face a costly and time-consuming trial with an uncertain outcome. With this in mind, he settled out of court with Gwendolen, again paying a relatively small sum for the painting.

Our client contacted us a few months later about retrieving yet another work, a sculpture that Oscar had made for a nearby hospital. Ernest’s investigator had determined that during a remodeling job, workers had temporarily placed the sculpture on the sidewalk, where it was found and carted off by a man named Algernon.

Ernest was tempted to try to buy the sculpture from Algernon. However, given the lack of evidence of intent to abandon the piece on the part of the hospital, which had, in fact, apparently diligently searched for it, we doubted that Algernon had title to the work.

The 1992 federal case Hoelzer v. the City of Stamford, Connecticut, involved a similar set of facts. During the course of renovations in 1970, Stamford High School removed and stored six murals on canvas that the Works Progress Administration had commissioned from the artist James Daugherty in 1934. The paintings were later inadvertently placed with construction debris, where they became wet and torn. A graduating student rescued them and eventually contacted the government, which had them delivered to the art restorer Hiram Hoelzer but didn’t pay for his work nor make any attempt to collect the murals. The increasingly frustrated Hoelzer finally sued to “quiet title” — that is, obtain undisputed legal ownership of the paintings, which had been appraised in the interim by Sotheby’s at $1.25 million — on the grounds that they had been “knowingly trashed” by the city. The court, however, held for Stamford, finding no evidence that it had intended to abandon the murals, and instead suggested that Hoelzer could pursue claims for equitable compensation for storing and restoring them.

In our case, the hospital itself recovered the sculpture from Algernon and not surprisingly refused to sell it to Ernest. This time there was little we could do to help.

Last summer Ernest’s investigator turned up a fourth work by Oscar — a painting he had lent to a New York museum more than 40 years ago for an indefinite period. There was seemingly no supporting written documentation, but Ernest clearly remembered Oscar’s referring to the painting as a loan.

We contacted the museum’s counsel and relayed Ernest’s request to terminate the loan. Its lawyer’s response surprised us: She said that the museum — which had made no effort over the years to contact Oscar’s family — believed that it was entitled to keep the painting forever.

The museum’s position was not without legal basis. Its attorney cited a New York State law enacted in 2008 that provides procedures for museums to acquire title to abandoned art. Such “stale loan” legislation exists or is pending in at least 16 states to afford museums a fair mechanism to resolve the ownership of undocumented property. We did not believe, however, that the painting in question fell under the New York law, which covers property that has been in the possession of a museum for a minimum of 10 years and for which it is unable to determine the lender, donor, or owner after making a good faith search. This was clearly not the case here, and the museum came to the same conclusion, since it eventually returned the painting to Ernest. In the end, perhaps the biggest lesson we learned is the importance of being diligent — if not earnest — when retrieving “abandoned” art.

Charles and Thomas Danziger are the lead partners in the New York firm Danziger, Danziger & Muro, LLP specializing in art law.

Some facts have been altered for reasons of client confidentiality or, in some cases, created out of whole cloth. Nothing in this article is intended to provide specific legal advice. “Abandonment Issues” originally appeared in the December 2010 issue of Art+Auction.

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Questions:

1. Alvin stole a painting titled The Chipmunk from Simon last Monday and sold it to you this morning. You had no idea the work was stolen. Do you now have good title to The Chipmunk?

2. Alvin stole The Chipmunk from Simon 25 years ago and squirreled it away, and his aunt sold it to you last Friday. In the interim, Simon hired a detective but couldn’t locate it. You had no idea the work was stolen. Do you now have good title to The Chipmunk?

3. Alvin stole The Chipmunk 25 years ago, but Simon never reported the loss to the police and didn’t bother to look for it. Over the years key documents concerning the work’s ownership have disappeared, witnesses have died, and memories have faded. You bought the painting yesterday from Alvin’s aunt. Do you now have good title to The Chipmunk?

4. Simon lent The Chipmunk to an art gallery for display in an exhibition but specifically said the painting was not for sale. You had no idea that the work was just on loan and bought it from the gallery after the exhibition opened. Do you now have good title to The Chipmunk?

5. Simon owns 60 percent of The Chipmunk, and Theodore, an art dealer, owns 40 percent. Simon lets Theodore temporarily display the painting in his home. Theodore sells the painting to you in the ordinary course of business, without telling you that Simon owns part of it. Do you now have good title to The Chipmunk?

6. Simon sells you a collage, Homage to the Chipmunk, that is decorated with real eagle feathers and whale teeth. Do you have good title to it?

7. Alvin consigns a copy of The Chipmunk that he painted in prison to Theodore’s South Beach art gallery for sale. The gallery goes bust. Who gets the work: Alvin or the gallery’s creditors?

8. A California convent, Our Lady of the Acorns, bought The Chipmunk years ago at auction. Recently, the nuns learned that Father Marmot had scampered off with the painting and was offering it for sale in New York. Unfortunately, the convent has lost all records showing that it owns the picture. Can Father Marmot be prosecuted for this theft under the National Stolen Property Act (nspa)?

9. Can Father Marmot be prosecuted under the nspa if the convent discovers that its version of The Chipmunk is actually a worthless copy of the original?

10. Do all art law cases involve chipmunks?

Answers:

1. No. Under Section 2-403 of the Uniform Commercial Code (UCC), a person who steals a work doesn’t acquire title to it and therefore cannot convey good title.

2. Maybe. Public policy favors quieting stale claims and fostering confidence in the marketplace, so all civil actions, including those involving art, are subject to statutes of limitations. These statutes vary by state, but the limits specified are usually between three and five years. However, this leaves open the key question of when the statute of limitations begins to run. Under the so-called Discovery Rule adopted in many jurisdictions, the clock starts ticking after the owner has discovered (or should have discovered) that the work was stolen. In contrast, under the so-called Demand Rule followed in New York, the statute of limitations begins only after the owner demands return of the work and the purchaser refuses the demand.

3. Maybe. You might be able to assert a so-called laches defense (an affirmative defense to untimely claims) if Simon’s delay was unreasonable and you were prejudiced by the delay. In the 1999 case Greek Orthodox Patriarchate of Jerusalem v. Christie’s, a federal court sitting in New York decided against a plaintiff who had not searched for its missing manuscript for 70 years. The court reasoned that the delay made it difficult for the defendant to provide evidence of ownership.

4. It depends. Because you had no knowledge that the gallery was not entitled to sell the painting and bought it in the ordinary course of the gallery’s business, under Section 2-403(2) of the UCC you might acquire title. However, if Simon had filed a simple UCC-1 financing statement when loaning the work and complied with other requirements, he would have put the world on notice that the gallery lacked clear title and would have an easier time getting his painting back.

5. Again, it depends, and you’ve probably bought yourself a lawsuit in addition to a painting. According to the 1981 New York case Porter v. Wertz, an owner’s interest in art can be conveyed if the owner “clothed” the seller with ownership or authority to sell the work and the buyer relied on the seller’s apparent ownership. In that case, the collector Samuel Porter let Harold Von Maker hang a painting by Maurice Utrillo in his home while deciding whether to buy it. Von Maker gave the painting to Peter Wertz, who worked in a deli and who sold the painting to the Feigen Gallery. When Porter sued Feigen for recovery of the painting and damages, the dealer raised as a defense the fact that the work had been entrusted to Wertz. However, the New York Court of Appeals held for Porter, in part because he had entrusted the painting to Von Maker, not Wertz, and in part because Wertz worked in a deli, not a gallery, so the sale was not in the ordinary course of business.

6. You may have gotten good title, but that won’t necessarily help you keep the collage if possession violates applicable federal laws, such as the Eagle Protection Act. In that case the collage would have to be forfeited to the U.S. government.

7. Yet again, it depends. Although Section 2-326 of the UCC suggests that a gallery’s creditors can reach art consigned by an artist to the gallery, some states, including Florida and New York, have enacted special statutes protecting works consigned by the artist. Note that artists must strictly comply with the requirements of such laws to be eligible for protection.

8. Yes. The convent needn’t prove clear title for Father Marmot to be prosecuted under the nspa, which is a federal statute making it a crime to knowingly transport stolen merchandise valued at $5,000 or more in interstate or foreign commerce.

9. Yes. As long as Father Marmot believed the painting was genuine, it doesn’t matter that the work was fake for purposes of the nspa. In the 1978 federal case United States v. Tobin, the defendants stole sculptures they believed were by Frederic Remington and Emile Picault and were arrested when trying to sell them to undercover FBI agents for $15,000. At trial a dealer revealed the Remington to be a fake, but the defendants were convicted anyway.

10. That’s nuts.

“Whose Painting Is It?” originally appeared in the October 2010 issue of Art+Auction.

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Here are excerpts from some recent letters we received on this and related topics.

When I lend art to a gallery, must the gallery insure it?

No. But we always advise lenders to sign a consignment agreement that specifically provides for insurance at the gallery’s expense.

Am I protected if I sign a consignment agreement stating that the dealer will cover my work with “standard, wall-to-wall, all-risk” fine-art insurance?

Not necessarily, since there are no generally accepted standard exclusions, and since all-risk is still subject to any exclusions listed in the policy. We recommend carefully examining the exclusions in the underlying insurance policy, and not just the certificate of insurance (which only briefly summarizes the main points in the policy). To avoid disputes in the event of a loss, your consignment agreement should specify all the risks that are excluded, or at least state that your art is covered under the terms of the fine-arts policy.

If I consign a painting to a gallery that suddenly goes bankrupt, will all-risk insurance protect me if the painting has been sold and I haven’t been paid?

This question is being considered now in dueling lawsuits between the Philadelphia Museum of Art (PMA) and its insurer, AXA Art Insurance Corp. In 2006 the PMA consigned paintings by Maurice Prendergast and Arthur B. Davies to Salander-O’Reilly, which sold the Prendergast to another gallery and later declared bankruptcy without ever paying the museum. The PMA now claims AXA should reimburse it $1.5 million for the painting because Salander-O’Reilly effectively stole it (the present location of the Davies is unknown). AXA counters that this kind of loss is not covered since the policy was intended to compensate the museum in the event of physical loss or damage to the works, not financial fraud. Whatever the case’s outcome, we assume that most insurers will start writing policies with exclusions for “conversion,” meaning unlawful appropriation or use of another person’s property.

What other types of exclusions do you think will soon be added to art-insurance policies?

We anticipate that at least one new exclusion will result from the Transportation Safety Administration (TSA) mandate that goes into effect August 1, 2010, requiring all passenger-plane cargo that has not been certified by the TSA to be screened. Specifically, we expect insurers to start excluding losses incurred when an uncertified packer or shipper transports art and the airline opens the package (possibly even on the tarmac) and damages it. Our advice: Work with a TSA-certified screening facility or fine-art shipper to decrease the risk of a package’s being opened and damaged at the airport or while in transit.

My gallery’s insurance policy has an exclusion for employee theft. Is it possible to buy coverage for this?

Yes, there is a crime policy that covers losses from embezzlement, but the limits tend to be relatively low.

Are galleries legally required to provide terrorism insurance?

No. Personal insurance must provide this coverage, but not a gallery or other commercial venture. Galleries can, however, easily purchase it.

If my all-risk insurance policy won’t protect me, what other steps should I take when consigning work to a gallery?

We always recommend filing a Uniform Commercial Code financing statement with the Secretary of State of the state where the gallery is located. This filing puts the world on notice that you have an ownership interest in the work. Assuming the filing is done correctly, if the gallery goes under, you have a first-priority security interest in the art, and this interest should come before the rights of most other creditors.

My painting was stored in a gallery’s basement, where it became moldy. Does my policy’s exclusion for mold mean that I am not covered?

Not necessarily. Insurance broker Mary Pontillo, of the New York brokerage DeWitt Stern, tells of a client in a similar situation who consulted a conservator and determined that the mold (not covered under the policy) was actually due to water damage, which was covered. Knowing how to report your claim accurately is vital if you want to get paid.

My sculpture was damaged in a Chelsea gallery when water poured in during a storm. Does the policy exclusion for flooding mean I’m not covered?

It depends how “flooding” is defined in the insurance policy. Some policies define it as the rising of a body of water, such as the overflowing of the Hudson River, while others include surface water, as in a heavy rain.

Acts of God, such as wind, lightning, and fire, are normally excluded from policies, right?

On the contrary, they are usually covered; they are exactly what insurance is for. Since many perils are regional, consider where your art is going when and what is prone to happen in that area during that season — for example, California brush fires and earthquakes, Florida hurricanes, Chelsea rainstorms (see above), and so on.

Do policies typically exclude damage due to restoration?

Yes, and that’s why properly drafted consignment agreements usually state that the gallery may not clean your art without your consent. LeConte Moore, also a broker at DeWitt Stern, advises modifying this exclusion by saying that the insurer will nevertheless cover damage that is “not specifically caused by the repair or restoration” — for example, if oily rags in the restorer’s studio catch fire and your painting is damaged in the conflagration.

A gallery that wants to send my photographs on tour to various less-developed countries has offered me “worldwide” insurance coverage. Is this enough?

Yes, so long as none of the nations on the tour are excluded in the policy. If they are, you can try to get the exclusion removed, which might involve buying specific reinsurance for those locations. We wouldn’t count on having Afghanistan included.

When artworks consigned to galleries are damaged, are insurers normally good about paying claims?

In our experience, yes, in part because they receive so few claims that not paying is simply bad marketing.

Do exclusions in art insurance vary greatly?

Yes, so when buying insurance, shop around for more than just the lowest premiums.

How can you both be so smart and so good-looking?

Thanks, Mom.

Charles and Thomas Danziger are the lead partners in the New York firm Danziger, Danziger & Muro, specializing in art law.

“Damage Control” originally appeared in the July/August 2010 issue of Art+Auction.
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Bunny had demanded this meeting with Imke to discuss the situation. Even before sitting down, we sensed a slight tension between the two ladies. “Battle-ax!” spat Bunny. “Tramp!” retorted Imke. Then things got ugly. Bunny insisted that the foundation was trying to limit the number of authentic works by Max — thereby rendering its own collection of his sculptures more valuable — and that Imke was acting purely out of spite based on Bunny’s “special relationship” with Max. Imke responded that the piece in question was “as fake as Bunny’s face-lift” and that as a legal matter the foundation’s motivation was irrelevant. Imke was right — about the motivation, at least.

Bunny’s lawyer, who had joined the meeting late, declared that since the foundation was widely regarded as the arbiter of authenticity for Max’s art, it had an obligation to authenticate Bunny’s sculpture. We countered that this same argument had been rejected by the New York appeals court in the 2009 case Thome v. Alexander & Louisa Calder Foundation, in which the conductor Joel Thome tried to compel the Calder Foundation to authenticate two stage sets that he said the artist had redesigned after the originals were destroyed.

In July 1976, Calder had met with Thome in New York and approved working plans, based on his original drawings, for the sets for the musical Socrate. Thome had then had the sets completed at his own expense, but Calder died that November before seeing them. Eventually Thome decided to sell the sets, and in 1997 he asked the Calder Foundation to authenticate them and include them in its catalogue raisonné. The foundation did neither and gave him no formal response — even though, according to Thome, its chairman had assured him that the pieces would be in the catalogue. Two collectors later offered to buy the sets from Thome, but only if the foundation authenticated them, so the sales fell through.

In 2007, Thome sued the Calder Foundation, asking the court to declare the sets authentic, compel their inclusion in the catalogue raisonné, and award him damages. The court dismissed his complaint, reasoning that authenticity decisions are “highly subjective” and “ill-suited” to resolution by declaratory judgment. It observed that the fact that the art market wouldn’t recognize the sets as authentic unless they were in the catalogue was a marketplace problem, not a legal one.

Bunny’s attorney next argued that since Max’s foundation, according to its own Web site, had been established “to preserve Max’s legacy and authenticate all his works,” it couldn’t arbitrarily refuse to authenticate a piece that was clearly genuine. We still saw no legal reason for the foundation to authenticate Bunny’s sculpture. In the words of the Calder court: “Unless the plaintiff can establish an independent legal right to have the work included in the catalogue, such as an enforceable contractual promise to include it, there can be no injunction mandating the work’s inclusion.”

In response, Bunny’s attorney claimed that such a contract had indeed arisen when his client submitted materials concerning the sculpture and the foundation accepted them for review. He pointed out that the Web site encouraged owners of Max’s art to submit such materials. Although this wasn’t an entirely harebrained position, in our view Bunny’s actions didn’t create an enforceable contract.

Undaunted, Bunny’s lawyer next argued that the foundation’s failure to authenticate the sculpture was malicious and defamed the work and accordingly constituted “product disparagement.” He cited the famous 1929 New York case Hahn v. Duveen, in which the art dealer Joseph Duveen called a painting allegedly by Leonardo da Vinci a copy, derailing the work’s sale to a museum. The owner, Andrée Hahn, sued Duveen, who settled by paying Hahn $60,000. (Contemporary scholars generally agree with Duveen’s assessment of the “da Vinci” as a copy.)

We reminded Bunny’s lawyer that a key element of product disparagement is publication to a third person, which did not occur in Bunny’s case — even if the foundation’s failure to authenticate the sculpture was arguably tantamount to telling the world it was fake.

The lawyer next claimed that the foundation had engaged in “tortuous interference with prospective business advantage” by willfully refusing to authenticate the sculpture in order to disrupt the purchase offer Bunny had received. However, we saw no evidence that the foundation had violated the law or acted with the sole purpose of harming her, which are two requirements of a tortuous-interference claim.

Bunny’s lawyer went on to speculate that Imke and the other members of the foundation’s board had conspired to restrain the market for Max’s works in violation of antitrust laws, comparing Bunny’s situation to that of the plaintiff in the ongoing 2009 New York district court case Simon-Whelan v. the Andy Warhol Foundation for the Visual Arts, Inc. The plaintiff there, Joe Simon, claimed that the Andy Warhol Authentication Board and the Andy Warhol Foundation for the Visual Arts in New York had refused to authenticate his painting — which had previously been authenticated by the Andy Warhol Foundation — as part of a conspiracy to reduce competition in the Warhol market, increase the value of works owned by the foundation, and encourage museums and galleries to choose those works. Since there was no evidence of a conspiracy in our case, we could only assume that Bunny’s lawyer had seen too many Oliver Stone movies.

Realizing that her lawyer was getting nowhere, Bunny tried one last tack. “If you don’t give me that authenticity letter,” she threatened, “I’ll hire a big-gun law firm and sue you for millions!”

“Make our day,” we replied, citing the 2007 Montana Supreme Court case Seltzer v. Morton. Steve Morton, heir to the Morton Salt fortune, retained a powerful law firm to sue the art expert Steve Seltzer for $750,000 plus punitive damages after Seltzer refused to change his opinion about the authenticity of Morton’s painting Lassoing a Longhorn. Morton said the work was by the famous Western artist Charles M. Russell, while Seltzer thought it was by a lesser-known artist, O.C. Seltzer (who was Russell’s protégé and happened to be Steve Seltzer’s grand- father). Morton eventually dropped his suit, but Seltzer filed his own claim against Morton and his law firm for malicious prosecution and won an $11 million judgment. Both sides appealed (Seltzer sought higher damages), but the Montana State Supreme Court upheld the award, finding that the defendants had used their lawsuit “as an instrument of coercion rather than a legitimate means to resolve a genuine dispute.”

Our decision to use a stick rather than a carrot was effective. The next thing we knew, Bunny and her lawyer had hightailed it out of our office. Bunny may have had a signed sculpture, but she had little chance of winnng her case. And that’s for real.

“A Genuine Dispute” originally appeared in the April 2010 issue of Art+Auction.

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