Case Dismissed: Collector/Gallery Dispute

A new article released by the Frankfurt Kurnit Art Law Group discusses the recent dismissal of McKenzie v. Fishko, a case brought by Richard F. McKenzie and his foundation against his dealer, Forum Gallery, and its director, Bella Fishko, (collectively “the gallery”) for breach of contract, fraud, and breach of fiduciary duty.  McKenzie purchased over 100 artworks through the gallery based on two oral agreements: one for a 5% commission on purchases at the “best possible price” of artworks by artists not represented by the gallery, and another for a 20% discount on purchases of artists represented by the gallery (primary market sales) where the gallery would act as McKenzie’s agent.

In 2011, McKenzie learned that the gallery may have been artificially inflating the price of artworks he had purchased to eliminate any “discount” and also that the gallery may have earned secret profits by misrepresenting whether a  work was purchased from another collector through the gallery or from the gallery itself.  However, on February 24, 2015, a New York federal judge found for the gallery, dismissing all of McKenzie’s claims because of a lack of evidence aside from McKenzie’s own testimony.

Frankfurt Kurnit asserts that this case follows a trend in the courts in which the burden of due diligence falls on buyers regarding the market value of artworks, especially in the absence of a written agreement. Galleries do not owe a fiduciary duty to collectors despite a long-standing relationship, unlike that owed to artists who consign their works to galleries as established under the New York Art and Cultural Affairs Law. This case emphasizes the importance of memorializing agreements between collectors and galleries.

More via Frankfurt Kurnit.

Tags: art, Art Law, artlaw, Contracts, fraud, law, lawsuit, Litigation