MANHATTAN (CN) - Business mogul Ron Perelman and art dealer Larry Gagosian socked each other with lawsuits over Jeff Koons' granite sculpture, "Popeye."
Perelman's holding company, MacAndrews & Forbes Group, and his MAFG Art Fund won the race to court, suing Gagosian and the Gagosian Gallery a few hours before Gagosian sued back. Both lawsuits are in New York County Supreme Court.
Koons is known for his kitschy, often shiny, sculptures of banal objects, such as balloon animals. He is not a party to Perelman's lawsuit. At press time today (Friday) Courthouse News had not seen Gagosian's countersuit, which was reported by the Daily News.
The MacAndrews complaint describes Gagosian as "the most powerful dealer in the contemporary art world," whom the press has called a "superdealer" and a "one-man Nasdaq."
MacAndrews claims it relied on Gagosian's reputation when it signed a May 12, 2010 agreement to buy "Popeye" for $4 million, in five installments of $800,000.
The contract stipulated that the sculpture would be delivered on Dec. 15, 2011, and that the company could not sell it to another party until that time.
But MacAndrews says Gagosian did not reveal a crucial piece of information.
"Unbeknownst to plaintiffs, Gagosian and Koons had entered into a nonpublic agreement containing provisions regarding the resale of 'Popeye.'
"Specifically, Gagosian's contract with Koons entitled Koons to 70 percent of any amount over the original sale price of $4 million if Gagosian resold the work. Furthermore, if Gagosian bought back the work before it was finished, delivered and fully paid for, Koons would be entitled to 80 percent of the profit on any subsequent sale.
"Gagosian concealed this material information from plaintiffs when they negotiated and executed the purchase agreement for 'Popeye.' Such information would have materially and substantially altered plaintiffs' view of the transaction, as these secret contract provisions detrimentally affected Gagosian's ability and willingness to repurchase or resell 'Popeye' above the price paid by plaintiffs. Given Gagosian's role as Koons' representative and the foremost dealer in Koons' work, such restrictions effectively crippled plaintiffs' ability to resell 'Popeye' at its fair market value," the complaint states.
MacAndrews claims that Gagosian disclosed the "secret" contract with Koons in January 2012, weeks after the sculpture's original, expected delivery date.
Koons and Gagosian postponed that date by 7 months, in breach of contract, because of problems in the sculpture's fabrication process, MacAndrews says.
"Gagosian rejected plaintiffs' repeated attempts to assign a fair market value to 'Popeye' that was higher than $4 million, despite the fact that, as Gagosian well knew, the work was worth significantly more," the complaint states. "Gagosian also refused to allow plaintiffs to try and sell the piece to any other party. The price of 'Popeye' was further discounted because Gagosian breached the purchase agreement to timely deliver 'Popeye.' Upon information and belief, the value of works by Koons increase as delivery dates draw close and can sometimes double in value shortly after delivery. Ultimately, Gagosian agreed to raise the exchange value of 'Popeye' to only $4,250,000."
MacAndrews claims it had "no choice" but to accept Gagosian's underestimated fair market value when the company traded 'Popeye' and three other pieces of art for an undisclosed painting.
MacAndrews claims it lost "millions of dollars" on that deal.
According to the Daily News, Gagosian's matching lawsuit "portrays Perelman as a mercurial fat cat who ordered works of art and then refused to pay the agreed-upon price, insisting instead that Gagosian take payment in barter - other art work from Perelman's extensive collection."
MacAndrews seeks punitive damages for breach of contract, fraudulent inducement, breach of fiduciary duty, negligent misrepresentation and unjust enrichment.
It is represented by attorney Keith Fleischman of Fleischman Law Firm.