Post Co-Authorship and Past Congeniality: Creative Relationship Spoils

By Colby A. Meagle*

Screen Shot 2017-06-28 at 10.51.01 AMSynergy is the sharing of talent and ideas, the combining of two or more minds in order to produce a product superior to anything one is capable of creating alone. Partnerships may look like a constructive arrangement, one where everyone benefits, and maybe that is the case at the beginning, but what happens when the relationship falls apart? What is the consequence of that fleeting love affair, or late night bar fight? In the context of art law and partnerships dissolving, who gets custody of the “kids”, a.k.a. the artwork? Artists are romanticized for their passionate relationships that include both personal and work related matters. But all too often these fiery affairs go up in flames and the issues of authorship and ownership are brought front and center. The following is a review of three recent legal battles that have highlighted these difficulties, as well as a brief discussion on the prominent applicable laws that underlie the arguments.

Cases & Controversies

In a pending case Chan v Schatz, authorship is in dispute.  Generally, to determine if work has been co-authored courts look at the intention of the parties to create a joint work. If the intent is lacking, it is likely not a joint work, but they also consider if there were substantial contributions made to the work, and the extent of control exerted over the work (Aalmuhammed v. Lee). Artist Eric Chan, well known for his abstract paintings and sculptures, is in the midst of a divorce from Heather Schatz. The split has prompted him to take precautionary actions by filing suit for a declaratory judgment naming him the sole creator of his works, therefore excluding Schatz from a co-authorship claim. He, represented by Lindsay Elizabeth Hogan of Grossman LLP, and she, now represented by Andrew Berger of Tannenbaum Helpern Syracuse & Hirschtritt LLP, were married in 1992. The suit encompasses 1139 works created during the span of their quarter century marriage.

While Chan and Schatz lived and worked together Schatz appears to have provided assistance in managing the studio. While Chan admits Schatz occasionally provided advice, and suggested concepts for pieces, he maintains in his complaint that, “her contributions were not themselves fixed independent creative expressions.” Furthermore, Chan “never intended that [his wife] would be his co-author,” rather, throughout the entirety of the relationship his understanding was that he was unequivocally the sole author of his works. This is despite the fact that the work was and is displayed under the joint name “ChanSchatz,” which he claims was merely a homage to his relationship and love for his wife.

However, Schatz feels differently. She asserts that her contributions were significant, as proven by the use of the joint name and their long history of working together publicly. As such, Schatz feels entitled to be credited as a co-creator of the work. So, while Chan maintains there was no intent for co-authorship, Schatz claims that her contributions were material.  

Chan is seeking to resolve this controversy by approaching the court for a declaratory judgment “that he is the sole author of all of the Chan Works” (Chan Complaint). A ruling in his favor would grant him status as the only author, and to full intellectual property rights over the art. Conversely, if the court side with Schatz, then the rights and credits will be shared between the two now-estranged lovers. The case is to be tried to a jury, with amended complaints due in July, 2017.

Another couple that frequently appears in the public eye, Marina Abromović and Frank Uwe Ulay, have also faced their fair share of legal issues. Following their tear-jerking reunion at Marina’s retrospective, Ulay filed suit as a citizen of Holland in Dutch courts in retribution for a breach of contract relating to joint works created before the duo’s split in 1988. Ulay was eventually awarded twenty percent of the net sales of their work by Amsterdam courts, in accordance with the contract they signed in 1999, along with legal fees and backdated royalties (theguardian.com). Abramovich v Ulay highlights how important it is for artist couples to document their arrangements. Without the contract, Ulay would have faced a more difficult legal battle in the pursuance of receiving fair compensation for his contributions.

Payment was not the only issue addressed in the Dutch filings:  attribution for future displays and documentations was also resolved. The question of whose name comes first may seem insignificant, but to many artists it is of the utmost importance, marking one as superior or more influential if named first. The courts decided that works from 1976 to 1980 be listed as by “Ulay/Abramović” and those from 1981 to 1988 as “Abramović/Ulay.” It is possible that the courts considered, based on the evidence presented, whose artistic vision was dominant in creating the work during those times to determine this order, although their reasoning for this specific division was not explicitly stated. Regardless, the suit is evidence that even the seemingly minute details, such as the name order, can cause conflict, and should be considered when drafting a partnership contract.

Artists involved in romantic relationships are not the only ones at risk of authorship and credit-related legal issues: friends and acquaintances can face similar  difficulties. Moi v Chihuly Studio, inc., is instructive. In his complaint, Michael Moi alleges that renowned glass artist Dale Chihuly not only took credit for work they created together but refused to pay him at all over a period of fifteen years. Plaintiff Michael Moi worked as studio assistant to Chihuly from 1999-2014. His contributions included helping in the creation of paintings, which he claims to have co-authored, as well as forging Chihuly’s signature– under the direction of the artist — on numerous pieces. The visual works he helped produced were consequently sold to the benefit of and attributed only to Chihuly. During his time working for Chihuly, Moi was “repeatedly and consistently” promised future compensation, and Moi relied on their friendship as assurance that this was true, and that he would eventually be paid. However, the complaint puts forth that, at no point did Moi receive the promised payment. Chihuly denies the claims, stating that he has long employed studio assistants, and that the suit is merely an attempt to extort him. Moi is seeking the recovery of damages for the missing payments and proceeds of his work under the Copyright Act and the Visual Artists Rights Act (VARA).

The lack of an employee contract is important here, because without it Moi may not have any claims to the intellectual property. Under the typical contract for work or contributions to work, the creator remains the author, and the owner/contractor of the work retains all the economic rights to the work, including its copyrights. Thus, a pivotal point in the case for his claims under the Copyright Act, may be whether he was a partner and co-author of the work, or an employee of the studio.    

Conflict Foresight/Preparation

How might disputes over authorship between collaborators (spouses or business partners) have been avoided? One possibility was to have a private agreement detailing the nature of their working relationship, including exactly who would be credited as the author of the works. The agreements could also have covered various other issues of copyright ownership for the works, along with ownership of the physical pieces if a split were ever to occur. The value of the initial challenges forming these contracts would far outweigh the difficulties the pairs now face in resolving their disputes.

Artists Jack Beal and Sondra Freckelton provide an example of this forward-thinking precautionary action. Sondra was a successful sculptor in the 1970’s before she transferred into watercolor painting. Her husband Jack Beal was an American realist painter until his death in 2013. The two included a written agreement in their marriage certificate to provide that they would have an equal partnership in both marital and artistic endeavors. Sondra felt that this agreement was extremely important to maintaining her valued independence as artist, as well as to ensuring that her husband and his career would not overshadow her own.

However, the reality is that most artists, and people in general for that matter, are not anticipating the demise of a relationship upon its commencement. For this reason, contracts are rarely drafted, and often one partner could even feel insulted by the other for asking for official documents to be created – seeing it as a testimonial to the relationship’s inevitable demise. So while the creation of a contract in every working relationship is ideal, the frequency of their actual existence is much smaller. Even if one does manage to make a contractual agreement, there may still be issues of enforcement depending on the contract’s nature and terms, as evident by the Abromović – Ulay suit.

That is not say that one can’t go overboard with preparation. One couple made Internet news, when their specific contract request went viral. The couple was getting married and in need of a wedding photographer. The odd part is, they wished to include a clause in their contract stipulating that if they ever got divorced they would receive a full refund for their photographs, as they would no longer need them. Needless to say, they had quite a difficult time finding someone willing to accept such an agreement (PetaPixel.com). So, while planning is encouraged, it is possible to go too far. One should find a happy medium, somewhere between a fully stocked fallout bunker and never getting a flu shot, perhaps the contract equivalent of a first aid kit.       

Distribution of Assets: Tangible and Intangible

When relationships end, many artists may be surprised to learn that in most states, artwork is considered marital property unless provided otherwise in a prenuptial agreement. This means that during a divorce, artwork is part of the property that is divided 50/50.

In relation to works created by one or both partners, the first step is to make an accounting of all the works made and sold during the marriage and their location. It is worth remembering that works in progress should be included. This step should be taken seriously since in the case of an accidental omission, one could face charges for fraud, and the other spouse could either keep the omitted work or all the profits from its sale. The work must also be assigned a value, perhaps a touchy subject. But if both sides can agree, it can be much simpler and faster to have a single appraisal completed than arguing over whose is correct.

Copyright should also be kept in mind during the distribution of assists. Although the work may be going to both parties, the copyright remains with the original creator and must be transferred separately to the new owner. This becomes important if the spouse who holds the work but did not create it wishes to sell the work or license it, as they will need the corresponding rights. The transfer of which must be explicitly detailed in the allocation of the artworks during the proceedings. It is also important to note here, that in the case of co-authors, each author has equal copyright rights.   

Lastly, there are issues that may arise under VARA (the Visual Artist Rights Act of 1990). VARA provides some protection to the artist’s work regardless of ownership. It allows, among other rights, “the right to prevent distortion, mutilation, or modification that would prejudice the author’s honor or reputation”. This means that in the case of a rather heated divorce you shouldn’t plan on keeping your spouse’s work only to burn it in a fit of rage or revenge, to do so would be a violation of their rights and you could face charges (not equal in value to the fun of your bonfire).

Conclusion

In summary, matters of heart and business are complicated, throw art into the mix and you have a recipe for calamity. Whether it is determining who receives credit for the work, or who ultimately gets to keep the work, small steps along the way in contractile prep paired with a little legal advice can lead to less headache, if not less heartache in the long run.

Select Sources:

  1. Complaint, Moi v. Chihuly Studio, inc., (Wash. Super. 2017).
  2. Complaint, Chan v. Schatz, 1:17-cv-03042 (S.D.N.Y. Apr. 26 2017)
  3. THE VISUAL ARTISTS RIGHTS ACT OF 1990, 136 Cong Rec E 3716
  4. 17 U.S.C.S. § 101 (LexisNexis, Lexis Advance through PL 115-37, approved 6/2/17)
  5. Ben Quinn and Noah Charney, Marina Abramović ex-partner Ulay claims victory in case about joint works, Sep. 21, 2016, available at https://www.theguardian.com/artanddesign/2016/sep/21/ulay-claims-legal-victory-in-case-against-ex-partner-marina-abramovic
  6. Nichole Martinez, What Happened to Art in a Divorce? [Hint: Get an Art Appraiser], Nov. 8, 2016, available at https://artlawjournal.com/art-appraiser-divorce/
  7. Daniel Grant, Love and Marriage, Artist Style, Dec. 17, 2010, available at http://www.huffingtonpost.com/daniel-grant/love-and-marriage-artist-_b_784179.html
  8. Christies, How deep is your love?, last visited Jun. 12, 2017, available at http://www.christies.com/features/10-most-famous-art-couples-of-20th-century-7062-1.aspx
  9. Noah Charney, Ulay v Marina: how art’s power couple went to war, Nov. 17, 2015, available at, https://www.theguardian.com/artanddesign/2015/nov/11/marina-abramovic-ulay-performance-art-sued-lawsuit
  10. Columbia Law School, Keep Your Copyrights, available at, http://www.law.columbia.edu/keep-your-copyrights/copyrights/know-your-rights/joint-works
  11. PetaPixel, Wedding Photographer Asked for Refund Guarantee in Case of Divorce, (2017), available at https://petapixel.com/2017/06/07/wedding-photographer-asked-refund-guarantee-case-divorce/
  12. Aalmuhammed v. Lee, 202 F.3d 1227 (9th Cir. 2000)

*About the Author: Colby Meagle is a 2019 J.D. candidate at Pepperdine University School of Law. Prior to law school, she received her B.A. in Arts Administration and B.F.A from Elon University in 2016. She can be reached at colby.meagle@pepperdine.edu

Disclaimer: This article is intended for educational purposes only and is not meant to provide legal advice. Any views or opinions made in the linked article are the authors alone. Readers are not meant to act or rely upon the information in this article and should consult a licensed attorney.

 

Of Koons, Twombly, Perelman and Gagosian: Lessons to be Learned

By Jessica M. Curley (Part I) and Daniel Kokhba (Part II)

Part I: Places, lights, action

The lack of transparency in the art world can sometimes cause unease and distrust among transacting parties, as can be seen in the protracted litigation between billionaire financier Ronald O. Perelman and renowned art dealer Larry Gagosian. Former friends, who once traveled in the same social circles, and had even co-owned a restaurant together, found themselves entangled in an ongoing legal battle stemming from an exchange/sale transaction involving a Jeff Koons sculpture and a Cy Twombly painting.

The initial dispute dates back to April of 2011 when Perelman first expressed interest in the Cy Twombly painting titled “Leaving Paphos Ringed with Waves” (the “Twombly painting”), which at the time had been available for sale at Gagosian’s Gallery. Court papers filed in 2012 stated that Gagosian, whose clients include Steve Cohen and Francois Pinault, quoted a price of $8 million for the painting. Shortly thereafter, Perelman returned to the gallery to purchase the work only to find that it had already been sold to another notable art collector Jose Mugrabi, famous for his extensive Warhol collection. According to Perelman, a few months following the sale, Gagosian advised him that the Twombly painting was back on the market, this time at the increased price of $11.5 million. Even after negotiating a $1 million discount, paying a final price of $10.5 million, Perelman still felt as though he was being defrauded by the forgoing series of transactions, so he proceeded to file suit.

According to the amended complaint, Perelman asserted several legal causes of action against Gagosian including breach of contract, breach of fiduciary duty, fraud, breach of the covenant of good faith and fair dealing, unjust enrichment, and deceptive business practices under section 349 of the General Business Law. Perelman alleged that Gagosian conspired with the Mugrabi family, to take advantage of him by upwardly manipulating the market price of the Twombly painting, resulting in a second sale and commission for Gagosian and a quick profit for the Mugrabis. Perelman also accused Gagosian of undervaluing artworks, including Koon’s “Popeye” sculpture and multiple Willem de Kooning paintings that he exchanged as partial satisfaction of the $10.5 million purchase price of the Twombly.

The attorney representing Gagosian, Matthew S. Dontzin, of Dontzin Nagy & Fleissig LLP, stated in court that Perelman’s business entities, including MacAndrews & Forbes Group LLC and MAFG Art Fund, through which he acquired the art, are “sophisticated” professional art investment firms that had a “heightened duty” to engage in due diligence in selecting artworks to acquire. Typically, professional art investment firms specialize in generating returns by strategic purchase and sale of artworks, and have a fiduciary duty toward their investors to secure returns according to best practices and efforts. The attorney for Perelman, Marc Kasowitz, partner at Kasowitz Benson Torres & Friedman LLP, countered Dontzin’s claim by asserting that Perelman is not of the same “level of expertise and skill” as Gagosian, who is “probably the world’s leading and most powerful art dealer,” and thus has relied on Gagosian for over twenty years for advice on investing in art. Kasowitz went on to emphasize that Gagosian not only has “unique knowledge of the art markets,” but that he “makes those markets.”

In his ongoing quest to uncover how other deals involving Gagosian have been executed, Perelman sought unprecedented access to transaction details and even subpoenaed numerous high profile figures and institutions in the art world including members of the Mugrabi family, Gagosian himself, and Sothebys and Philips auction houses. He even apparently hired a former FBI agent experienced in the art business to interview other major collectors, dealers and artists.

Perelman has remarked that art is “a beautiful thing” and has stated that the goal of his litigious activity is to expose the “dirty” side of the otherwise prestigious world of buying and selling fine art. In response, Gagosian’s lawyers stated that Perelman was motivated by a different agenda, mainly “harassing Gagosian and disparaging the gallery”.

In 2013, presiding judge Barbara R. Kapnick suggested that the parties “get themselves together at a cocktail party in the Hamptons” and work their issues out amicably, adding that “this is a crazy case to have going on here in court.” However, the former friends chose not to settle.

Part II: Bright Line on Control and Dominance (Arm’s Length Precedent)

The December 4, 2014 decision by the Appellate Division, First Department in the high profile action entitled MAFG Art Fund, LLC et al. v. Larry Gagosian, et al offers valuable jewels of insight into the art industry and beyond on such topics as fiduciary obligation, investigation, statements about value, and contracts – constant themes underlying many art transactions and attendant disputes. The case included breach of fiduciary duty and fraud claims filed by Plaintiff-buyer against Gallery-seller in connection with a purchase agreement.

Fiduciary Obligation

A fiduciary obligation owed to seller by the dealer is often mistakenly assumed and expected in art transactions. In MAFG, the Court did not find a fiduciary obligation between Plaintiff and the Defendant gallery. “The parties operated at arm’s length when they negotiated for art works. Thus, fiduciary obligations did not exist between them. Moreover, even read liberally, the complaint does not establish that the defendants exercised control and dominance over Plaintiffs – limited liability companies who, by their own description, frequently purchased, sold and exchanged works as investments. Gagosian had no duty vis-à-vis Perelman, an active player in the art market. Accordingly, parties to this and similar transaction should not assume a fiduciary duty, especially when both sides are sophisticated participants in the art market.

Investigation

The false expectation of fiduciary obligation can contribute to sloppy due diligence and lack of investigation. The Court in dismissing the fraud claim recognized the absence of such investigation. The lesson here is to conduct independent investigation before closing on a transaction. Meaning, if Perelman was uncertain of the fair market price for the works he was exchanging for the Twombly or if he did not believe the Twombly offered to him was priced fairly, he had a duty to conduct independent research into the prices.

Statements of value

The Court interestingly notes, “[a]s to the claim that defendants misrepresented the value of certain art works, statements about value of art constitute [a] ‘non-actionable opinion that provide[s] no basis for a fraud claim’”. (Internal citation omitted).   This pointed sentence is a warning to buyers and their advisors and may impact the viability of similar future fraud claims predicated on misrepresentations relating to value.

Contract

In MAFG, Plaintiff claimed that Defendants breached the covenant of good faith and fair dealings by entering into a subsequent agreement that decreased Defendants’ incentive to be involved in resales thereby adversely affecting Plaintiff. The Court refused to interpret the purchase agreement in this manner because subsequent agreement and resale were not covered in the agreement. Granted, many art transactions are regrettably entirely undocumented at great risk to the parties involved. However, even when the parties cross the threshold of handshake to written agreement, they should ensure to document in sufficient detail all provisions, contingencies and expectations.

Review

Friendship is not a defense and should not be used or relied upon while making business decisions involving any sums of money, especially millions of dollars. Careful drafting, review offering plans, negotiation, contemplations and incorporation of expectations and contingencies, and coordination of due diligence by counsel seem like an implicit lesson from the resulting litigation and decision. A dose of preventive medicine may help reduce the risk of litigation. Hamptons may help too.

Sources:

About the Authors:

Jessica M. Curley is a post-graduate fellow at Center for Art Law, and a recent graduate from the Benjamin N. Cardozo School of Law, admission to the NY State Bar pending. Curley is pursuing her interest in art law and financial regulation. She may be reached at jessicamcurley@gmail.com or 858.822.9410.

Daniel S. Kokhba, Esq. is a Partner at Kantor Davidoff, Mandelker, Twomey, Gallanty & Olenick, P.C. and focuses his practice on civil litigation, art law and employment law. He may be reached at Kokhba@kantordavidoff.com or 212-682-8383

Disclaimer: This article is intended as general information, not legal advice, and is no substitute for seeking representation.