A New York Supreme Court judge says collector and financier Asher Edelman’s company must foot the bill for a failed multi-million-dollar art deal involving a $5 million Keith Haring painting.
Edelman initially saw the work at art dealer Lio Malca’s loft in late 2016 and then arranged a viewing of it with a representative for “a Middle Eastern royal family” that was supposedly interested in buying it as part of a set of five works Edelman Arts would be selling them, according to the court documents.
Malca claims in the lawsuit that Edelman’s company, Edelman Arts, agreed to purchase the work for $5 million and was sent an invoice for that amount. But Edelman Arts never paid and instead told Malca that “the intended buyers of the art—to whom Edelman Arts had hoped to resell the work—no longer wanted to buy it. In Malca’s view, the invoice remained outstanding, regardless of what happened on Edelman’s end; their deal was done,” according to court papers.
Art dealer Lio Malca at “Will Ryman: A New Beginning” at Marlborough Gallery, September 2009. ©Patrick McMullan. Photo by: Michael Plunkett/PatrickMcMullan
Meanwhile, Edelman says in the lawsuit against his company that he believed the deal was “definitively off” since it was “merely an agent for the ultimate buyers and… the transaction was canceled within a reasonable amount of time.”
“The facts and law on the summary judgement are questionable,” Edelman says. “It has no net financial impact on the company.” Edelman also cited a separate lawsuit against the agents for the original intended purchaser of the Haring, the Middle Eastern Royal family, which his company has won in federal court in April (the amount of damages awarded to Edelman Arts has yet to be determined).
In an interesting twist, following the failed art deal, Malca put the Haring was up for auction at Christie’s in November 2017, acting on behalf of consignors identified only as SL Fine Art. They negotiated a $4 million guarantee from Christie’s, according to the ruling, and the painting sold for a hammer price of $3.5 million, requiring Christie’s to pay the $4 million for the work.
Five months later, Edelman Arts filed a complaint seeking to void his unpaid invoice with Malca. Two days later, Malca countersued Edelman Arts for $1 million—the difference between the previously agreed-upon price of $5 million and the $4 million he received from the auction house.
Image via Christies.com.
The judge ruled in favor of Malca (granting him summary judgment, which is intended to prevent the case from going to a full trial), arguing that he had provided “sufficient evidence… of contract formation, breach and damages, while Edelman Arts’s various defenses fail to raise material issues of triable fact.”
“The decision highlights that art dealers are subject to liability when they agree to purchase an artwork in their own name (even if they intend to immediately resell the artwork to a client), particularly if they use a resale certificate to make the purchase and paper the resale as a separate transaction,” Malca’s attorney Paul Cossu told Artnet News:
The judge ordered Edelman Arts to pay Malca $1 million plus interest from April 2018, when Edelman first filed his claims.
Update: An earlier version of this story said that Edelman did not respond to a request for comment when in fact he had. This post now reflects those comments.