The Cnet Founder Files a Class-Action Suit
According to Minor’s class-action suit, he started to build a collection of American art early this year, relying on advice from Dara Mitchell, head of Sotheby’s American paintings department. Assured by Mitchell that the Hicks was a plum piece, Minor bid $8.6 million at the May 22 auction. He balked at paying, the suit says, after subsequently learning that seller Ralph Esmerian owed money to Sotheby’s, and that “The Peaceable Kingdom” was being used as security for Esmerian’s debt.
It’s not clear how the Esmerian debt differs from the seller’s commission in this whole equation. But then there’s another twist to the argument:
Minor’s attorney, Eric M. George, said Wednesday that buyers who know that a painting is being sold to settle a debt may be inclined to keep their bids low because it could be a “distressed asset” — not because there’s anything wrong with the art, but because the debtor may be under pressure to unload it and may not have the option of refusing all bids and holding onto the piece until the market for it improves. By keeping Minor and others in the dark about “The Peaceable Kingdom,” he said, Sotheby’s avoided a fire-sale mentality that would have kept down the bidding, resulting in a less lucrative sale.
Sotheby’s Faces Suit Over Disclosure (Wall Street Journal)