Art lawyer Nicholas O’Donnell finds in the recent ruling over a work of art by Cady Noland that was damaged and restored without her permission, some clues about the legal definition of an art advisor’s duty to his or her clients.
As O’Donnell points out, the issue has direct bearing upon the long-running dispute between Dmitiry Rybolovlev and his former advisor/dealer (which role Bouvier played is the nub of the dispute) Yves Bouvier. But it also helps define the responsibilities of the hundreds (thousands?) of art advisors and clients out there.
Here’s the issue that O’Donnell wants to focus on: Scott Mueller bought a Cady Noland with the help of art adviser Marisa Newman. Noland exercised her rights to declare the work not hers after it was restored without her consultation. Mueller responded by suing for his money back but only seems to have gone after his art advisor.
Let’s let O’Donnell take over from here:
only Newman Projects ever appeared in the litigation, and moved to dismiss the two claims against it—unjust enrichment and breach of fiduciary duty—in March 2015.
That motion has now been allowed. The unjust enrichment claim was quickly dispensed with because of the existence of the purchase contract. Unjust enrichment is an equitable claim designed to prevent someone from benefitting unfairly from the goods or services provided by the plaintiff. Generally speaking, however, where a contract spells out those duties and remunerations, a claim for breach of that agreement is the remedy.
The far more topical discussion was the breach of fiduciary duty claim. The opinion broke it down methodically. The first question is of course whether a fiduciary duty exists in the first instance. The court held that Newman Project’s status as an “independent art advisor” was not enough on its own, citing Mandarin Trading Ltd. v. Wildenstein, 17 Misc. 3d 1118(A), at *4, 851 N.Y.S.2d 71 (Sup. Ct. N.Y. Cty. 2007) (“[A]llegations of superior knowledge or expertise in the art field are per se insufficient to establish the existence of a fiduciary relationship.”). Moreover, the court felt that the Amended Complaint’s allegations did not establish “the existence of a ‘special relationship of confidence and trust’” as required. Merely relying on information provided by one party, even if of exceptional importance, does not make the advisor a fiduciary. Even if such a special relationship could be inferred from the Amended Complaint, the court was not persuaded that it had been breached because there were no allegations of self-dealing or personal enrichment in conflict with Mueller’s interest.