Soot, fires and endless paperwork: litigation explodes across the art world | Culture

Four years ago, in 2018, a fire broke out on the third floor of Revlon beauty magnate Ron Perelman’s Hamptons home. Reports at the time said most of his multimillion-dollar art collection had survived unscathed, but a contentious $400m (£337m) lawsuit working through the New York courts claims that five of the paintings hanging on lower floors have lost their “oomph” as a result of smoke and water damage.

The lawsuit pits Perelman’s holding companies against the collection’s insurers, which include Lloyd’s of London, in a high-stakes battle that some say has come to typify the newly litigious nature of the art world that used to operate on a handshake and a simple sales receipt , but now relies on voluminous contracts peppered with stipulations and clauses.

The four paintings at issue in the case are not merely ornamental. One is Cy Twombly’s Untitled (1971), acquired in 1993 and now estimated by Perelman, according to legal documents, at $125m (£105m). Two paintings by Andy Warhol, Elvis 21 Times, valued at $75m, and Campbell’s Soup Can, were estimated to be worth $100m; Ed Ruscha’s Standard Station, $60m, and Box Smashed Flat put at $50m.

Perelman told the court the Warhol Elvis “doesn’t pop like it used to be. You know, I go back, that’s why they called it pop art.” Asked what changes he noticed in the Twombly, Perelman said in testimony: “All of the pictures lost their luster, lost their depth, lost some of their definition and lost a lot of their character.”

The Twombly painting, he added, has “just lost – it just lost its oomph”.

A witness for the billionaire, Jennifer Mass, president of Scientific Analysis of Fine Art, said she found that all the paintings had sustained “fire-related damage”, according to court filings.

The character of paintings, of course, is highly subjective. The New York art restorer Lisa Rosen told the Observer she believed that a thin layer of soot from the fire had slowly settled on pretty much every surface.

“Soot is oily. Over time impurities from the household atmosphere would settle on surfaces (including paintings), creating an obfuscating patina, falsifying the original colors. As if the painting is wearing sunglasses,” Rosen says.

But experts called by insurers, who have already paid out roughly $141m (£119m) of the claim, say Perelman’s companies had not demonstrated physical loss or damage. An insurance adjuster said the policy dis not cover “wear and tear, gradual deterioration, [or] inherent vice”, nor does it cover “accelerated aging”.

Any damage, the insurers say, predated the fire and they were sued before they could fully investigate. Moreover, they argue, the claims were made a year after the incident when Perelman, named America’s richest man by Institutional Investor in 1989 and regarded as a pre-eminent “corporate raider” of the era, was then selling off assets as Revlon was skirting bankruptcy. In 2018 he was estimated to be worth $20bn, a figure that has since fallen to $2bn.

The insurance claim, they said, “happens to coincide with a time when, based on news reports, Mr Perelman was desperately seeking cash to satisfy debts that had come due”. Moreover, the pictures were insured at “multiples” of their fair market value and the five paintings “happen to hold the five highest insured values” under the policies.

The episode, too, coincides with increased litigation across the art world, including copyright claims over “fair use” of imagery, provenance, the sale of museum collections or “deaccessioning”, alongside fraud (the Daniel Philbrick saga), a crackdown on artifact looting and forgery (the FBI seized two dozen “Basquiats” at the Orlando Museum of Art in June.)

“The reasons for the surge in high-profile cases may be both blatantly obvious – the astronomical amounts of money floating around the art world, the proliferation of websites selling art online, the lack of transparency or regulations on art transactions – and a bit more mysterious, or at least unique to the art world, with its idiosyncratic, unspoken code of conduct,” noted the Robb Report in August.

As art values ​​have risen, so has the volume of paperwork. Sales contracts now often include stipulations on resale after collectors, or consortiums of investors, entered the market with a view to flipping art for a profit – a practice considered against the spirit of the enterprise in part because it often exposes young and untested artists to the vagaries of an auction.

To protect themselves from the practice, art dealers started padding contracts with clauses. At the auction houses, the opaque system of third-party guarantees, in which sellers are guaranteed a certain price, has also distorted the system.

Astonishingly, the recent $1.5bn sale of Microsoft cofounder Paul Allen’s collection at Christie’s is not thought to have been that profitable for the salesroom because the guarantees were so high.

Privately, some art dealers say that a business that was once based on handshakes and relationships is changing – and not for the better. “Onerous contracts will end up hurting a market that was based on relationships and trust, and the outcome will be that art becomes like any other regulated industry and will lose its luster,” warns the New York lawyer Mile Quinn. “At that point, it’s not a business based on relationships and the government and courts will step in.”

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