FYears ago, in 2018, a fire broke out on the third floor of Ron Perlman’s Hamptons home. Reports at the time said that most of his multi-million dollar art collection was undamaged, but a controversial $400m (£337m) lawsuit is working in New York courts alleging that five paintings hanging in basements have lost their “attraction”. As a result of smoke and water damage.
The lawsuit pits Perelman’s holding companies against the group’s insurers, including Lloyd’s of London, in a high-stakes battle that some say has become the embodiment of the new nature of litigation for an art world that once operated on handshakes and a simple sales receipt, but now relies on massive contracts filled with terms and conditions.
The four panels involved in the case are not merely decorative. One of them is Cy Twombly’s Untitled (1971), which was bought in 1993 and is now valued by Perelman, according to legal documents, at $125m (£105m). Two Andy Warhol paintings, Elvis 21 Times, have been estimated to be worth $75 million, and Campbell’s Soup at $100 million; Ed Ruscha’s Standard Station, $60 million, and Box Smashed Flat, $50 million.
Perlman told the court that Warhol’s Elvis “never appeared as before. You know, I come back, which is why they called it pop art.” Asked about the changes he noticed in Twombly, Perlman said in his testimony: “All of the images lost their luster, lost their depth, lost some of their definition and lost a lot of their personality.”
He added that Twombly’s painting “just lost — it just lost its appeal”.
Witness billionaire Jennifer Maas, head of scientific analysis for Vine artsaid she found all of the paintings had “fire damage,” according to court filings.
The character of the paintings is, of course, very subjective. New York-based art restorer Lisa Rosen told The Observer that she believes a thin layer of soot from the fire has slowly settled on almost every surface.
“Soot is oily. Over time, impurities from the home’s atmosphere will settle on surfaces (including the paintings), dulling the patina, and fading the original colors. It’s as if the painting were wearing sunglasses,” says Rosen.
But experts called in by the insurers, who have already paid out nearly $141m (£119m) of the claim, say the Perelman companies have not shown material loss or damage. An insurance official said the policy did not cover “wear and tear, gradual deterioration, [or] inherent vice”, and not including “accelerated aging”.
Insurers say any damage preceded the fire and they were sued before they could fully investigate. Furthermore, they argue that the allegations were made a year after the incident when Perelman, who was named America’s richest man by the institutional investor in 1989 and considered a “high-profile institutional attacker” at the time, was selling assets while Revlon was avoiding bankruptcy. In 2018, his wealth was estimated at $20 billion, a figure that has since fallen to $2 billion.
They said the insurance claim “happened to coincide with a time when, judging by news reports, Mr. Perelman was desperately seeking funds to pay off debts that were due.” Furthermore, the pictures were insured at “multiples” of their fair market value, and the five paintings “happened to carry the five highest insured values” under the documentation.
The episode also coincides with an increase in litigation across the art world, incl copyright claims regarding “fair use” of images, source, sale of museum collections or “backing down”along with fraud (The saga of Daniel Philbrick), suppression of artifact looting and counterfeiting ( The FBI seized more than two dozen BasquiatsAt the Orlando Museum of Art in June.)
The reasons for the surge in high-profile cases may be starkly obvious—the vast sums of money scattered throughout the art world, the proliferation of websites selling art online, the lack of transparency or regulations regarding art transactions—and more obscure, or at least unique. In the art world, with its own unspoken code of conduct, Note Rob’s August report.
As art values rose, so did the volume of paperwork. Sale contracts now often include clauses about resale after collectors, or consortiums of investors, enter the market with the aim of flipping art for profit—a practice considered against the spirit of the enterprise in part because it exposes young and often untested artists to the vagaries of auction.
To protect themselves from this practice, art dealers began filling contracts with clauses. In auction houses, the opaque system of third-party guarantees, which guarantee sellers a certain price, has also distorted the system.
Surprisingly, the recent sale of Microsoft co-founder Paul Allen’s collection at Christie’s was not thought to be profitable for the sales room because the collateral was so high.
In private, some art dealers say a business once built around handshakes and relationships is changing — and not for the better. “Onerous contracts will eventually damage a market that was based on relationships and trust, with the result that art will become like any regulated industry and lose its luster,” warns Mile Quinn, a New York attorney. “At this point, it is not a business based on relationships and the government and the courts will get involved.”