DAVID COHEN, Editor           
       April 2005  

 

Dealer Hit With Lawsuit for Blocking Access to Art

By BRIAN APPEL

“I just don’t play well with others.”    
Christian Haye, from a “New York Times” interview, “A Gallery In Harlem Beats the Odds”, summer, 2000.

installation shot at the 8th Istanbul Biennial, 2003, showing Julie Mehretu Empirical Construction 2003, acrylic and ink on canvas

On March 2nd, 2005, for the first time ever, an art dealer/gallery owner was found guilty of denying access to artworks and was forced to pay damages.  The New York State Supreme Court fined Christian Haye a whopping $1.73 million.

Born in Queens, raised on Long Island, Haye, a 28 year old New York University comparative literature dropout opened a gallery of contemporary art, the Project, in a former disco on West 126th Street in Harlem.  It was the fall of 1998.  A poet and art critic with little in the mode of funds, Haye had literally no heat his first year in business.  In the glowing article by Holland Carter on July 19th cited above, Haye is further quoted, “I basically opened a gallery to show artists I’d been wanting to write about.”  Things heated up quickly thereafter.

There’s no question Haye has an eye for talent.  Paul Pfeiffer, who became a star in the 2000 Whitney Biennial, and the recipient of that museum’s first $100,000 award for a visual artist was part of the gallerist’s impressive international roster.

Haye is also ambitious – perhaps too much so.  Looking to trade up from what he had once described as “…a neighborhood with some history,” and, “…no place has more narrative…,” Haye was eyeing the far more upscale 57th Street art district.  Needing seed money, Mr. Haye solicited financial help from the seasoned, well-respected French/Swiss art collector Jean-Pierre Lehmann, husband of Rachel Lehmann, a partner in the cutting-edge Lehmann-Maupin Gallery in Chelsea.  In February, 2001, a $75,000 loan was exchanged for a 30% discount (up to a total of $100,000 off retail prices) and, more importantly, first choice on any works shown at the gallery.  This provision, also referred to in legal circles as “the right-of-first-refusal” was the critical perk that sealed the deal.  It provides the means for a collector to avoid the waiting lists that invariably dominate red-hot artists in a heated contemporary art market. 

Julie Mehretu Empirical Construction 2003 (detail)

2001 was also the year the brilliant Ethiopian-born artist Julie Mehretu had her first one-person show at the Project.  Lehmann was quickly drawn to her large, labor-intensive abstractions with their subtle backstory of political turmoil.  The collector approached Haye about purchasing a couple of Mehretu large works but due to a scheduling conflict (the collector was away in Europe on business when the paintings were installed) both of his selections were reserved by other collectors.  In 2002, the artist scored a prestigious solo show at the White Cube Gallery in London and the following year at the Walker in Minneapolis.  The Whitney Biennial in New York in 2004 followed and her paintings quadrupled in value as the contemporary art market came to a boil and The Museum of Modern Art made a purchase (see illustration).  Repeatedly Lehmann requested work from the artist and was told over and over to be patient. 

Court transcripts revealed that when Lehmann got a hold of the Walker Museum catalogue in the spring of 2003 and realized the Project had sold several large paintings to other collectors without offering them to him first, he felt Haye had left him no alternative but to seek judicial assistance.  As part of the lawsuit, the Project was compelled to disclose all the works by Mehreta that had been sold to date along with the retail prices listed and whether a discount was offered to the collector who made the purchase.  It was the first time in history that a litigator had won such a right to cut through the time-honored opacity of the dealer/collector agenda and the art world took notice of who was getting what and for how much.  

Apparently, when full disclosure was applied during the discovery process of the trial it was uncovered that Haye had sold 40 pieces of which only one (and a small one at that) was made available to Lehmann.  Meanwhile Haye’s business was expanding exponentially along with the exploding contemporary market and he had now successfully moved to a tony 57th Street location in Manhattan and added another gallery satellite in Los Angeles. 

Haye’s lawyer, Alan Effron gave the explanation for the delay as simply a misunderstanding.  The gallery was under the impression that Lehmann was only interested in a large painting, furthermore, the Project had also provided four other individuals with the right-of-first-refusal.  From Haye’s point of view, the important issue in the lawsuit was the gallery’s ability to put the artists’ interests above all else – selling to museums and arranging exhibitions that would be advantageous to the artist’s career came first.  His lawyer is quoted as saying, “The lawsuit was a tool to coerce a small, young gallery into giving a collector the object of his desire.” 

Lehmann’s council, Peter R. Stern, from McLaughlin & Stern, argued that Jean-Pierre would have bought eight works by the artist had Haye honored their written agreement.  Experts were brought in on both sides (some at fees of up to $500 an hour plus expenses) to estimate the value of the artworks in question from the purported time Lehmann first attempted to buy the works to their value at the time of the court proceedings when the Mehreta works were already hanging at the Carnegie International.  Lists of collectors who bought Mehretua works, the prices they paid, whether they got a discount or not and what the paintings were worth today was made public.  This then exposed the normally unavailable mechanizations and idiosyncratic ways the dealer has at his/her disposal to control the distribution of art.

On March 2nd of this year, the New York State Supreme Court Judge Ira Gammerman accepted Lehmann’s testimony that he would have purchased eight works by artist Julie Mehretu and accepted the higher evaluations put on the works by the collector’s expert.  The over $1.7 million award was calculated by “…combining the difference between the actual sales prices of the eight works (sold to other clients, of course) and their estimated current value.” 

This story is a bombshell – the 8,000 pound elephant in the room.  It really is about access to the culture’s prizes.  This millionaire collector (court transcripts revealed the 66-year-old Lehmann buys over one million dollars of contemporary art yearly and maintains a collection of upwards of 1,000 pieces) was certainly angered by the breaking of their contract – but really the underlying lesson here is that the works of art that are truly coveted are not available to the merely rich who can afford them.  Important works of art will never get to anyone other than the special few who are deemed “of an appropriate class of collector” unless of course these artworks are offered in the only “free” marketplace – the auction house, where it is truly only about the money.  When the few “special” pieces are made available in the auction market (“special” meaning works where the desire for the few items available far exceeds availability), all the pent-up demand from people who can afford to buy but are not offered an opportunity to purchase will “blow-up” the cost to acquire these trophies.  That’s why the prices go through the roof.  All these Wall Street hedge fund managers who have deep pockets but no collector credibility can actually get these items by simply offering the most money. 

This is very similar to those few “statement” restaurants where unless you are one of the truly big wigs you will never get the most coveted positioning as certain tables are only “reserved” for those few important “it” players.  Otherwise – if it was only about the money, these tables would lose their special status and the restaurants would lose their cache and fail as places “to be seen.”

A large Julie Mehretu painting in one’s collection does not mean you are only rich enough to own one.  It means much more.  It means you are one of the few truly “important taste makers.”  Everyone looks to you for the right answers and where to move next.  The dealer screwed up because he not only failed to live-up to his legal responsibilities – worse, he took away the “special status” that separates this collector from all the other rich collectors thereby stripping him of his “privilege”. 

The $1.73 million reward pales in comparison to the public beating this dealer has been receiving by the press.  Watch what happens to this dealer over the next few months.  Will he be ostracized by the rich “privileged” collector because he failed to adhere to the “rules” and be forced into bankruptcy?  Will he take the matter to a higher court?

Here’s some thoughts.  Collectors will not stop buying art from Mr. Haye because of this publicity.  Looking at the Sotheby’s/Christie’s price-fixing scandal from just a few years back we can see collectors and dealers didn’t stop shopping - if anything, business has been expanding vigorously.  Did people stop buying at Larry Gagosian or using the services of Thea Westreich when both were hammered for uncollected sales tax and fines?  No.  If a collector wants to buy an art object, the dealings of the gallerist is unlikely to prevent him/her from doing so.  The dealer’s taste in art, however, has a lot to do with it.  Haye has both a great eye for talent and the ability to keep his focus on the big picture.  His gallery in New York and in Los Angeles will continue to flourish because of his ability to locate artists who have cultural impact before the curve.  Purchasing contemporary art at the Project Worldwide is perceived as a prudent decision by people knowledgeable with trends and movements before they are reflected in curated shows in museums.  Here, provenance, even in the context of contemporary art seen in a ‘fresh’ setting will have an impact in price at re-sale down the road.  As works of art find themselves at the auction house closer and closer to the time they were created, the gallery from which the art was first sold becomes an important part of its eventual value.  Haye will appeal the State of New York Supreme Court’s decision and, more than likely, will have his penalty and fines reduced.  He will carry on with even more gusto.         

 

 

 

 

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