PML Successfully Defends Title Claim to Renoir’s La Balayeuse

NEW YORK– Pearlstein McCullough & Lederman is pleased to announce that the New York Surrogate’s Court has granted our motion and dismissed a title claim to Renoir’s La Balayeuse against our clients MGM Resorts, Mirage Resorts and Bellagio.

Bellagio Gallery of Fine Art purchased Renoir’s La Balayeuse from Sotheby’s in 1999 and consigned it for sale to Christie’s in May 2016. Days before Christie’s auction, Mark Salz contacted Christie’s to claim title to La Balayeuse. Mark alleged that his father, Sam Salz, had owned La Balayeuse and that Janet Salz (Sam’s second wife and Mark’s step-mother) had fraudulently withheld La Balayeuse and other unspecified paintings from her accounting of Sam’s Estate.

Bellagio engaged us on an emergency basis and, days after the auction, Mark’s lawyer contacted us to demand a settlement payment, which we refused. However, Christie’s froze the sale proceeds of $900,000 until we negotiated a stipulation to release the funds.

Mark then commenced a petition for turnover of the sale proceeds against Bellagio and a petition for discovery of the other unspecified paintings against Janet’s trust, Sotheby’s, Christie’s and Day & Meyer. Bellagio and the other respondents moved to dismiss.

The Court granted our motion because Mark failed to show that Sam’s estate owned La Balayeuse and because the statutes of limitations barred his claim. The Court also granted the motions to dismiss submitted by the other respondents.

The case holds two important lessons for auction consignors. First, the provenance of even well-known paintings can be challenged. Second, consignors should negotiate their consignment agreements, which are written to protect the auction house if a claim is made to the property, no matter how thinly supported.

The decision of the New York Surrogate’s Court in the Application of Mark Salz, as Limited Administrator of the Estate of Sam Salz, for Turnover of Property Withheld from the Estate can be accessed here.

Pearlstein McCullough & Lederman Favorably Resolves Cultural Property Dispute for Hobby Lobby Stores, Inc.

NEW YORK– Pearlstein McCullough & Lederman obtained a favorable resolution with the U.S. Attorney’s Office for the Eastern District of New York on behalf of Hobby Lobby Stores, Inc. concerning the importation of certain Biblical artifacts.

The PML team, working with Kramer Levin Naftalis & Frankel, presented a compelling case that led to a civil settlement of Customs violations regarding the 2010 imports. The firms worked together to devise a balanced settlement for Hobby Lobby. Michael McCullough, PML’s lead partner on the case said, “We are pleased to have represented Hobby Lobby, a great American company, in this matter. We think this settlement is a just resolution for all parties involved, and acts as a template for future cultural property disputes. We are satisfied with the result.”

The case is United States v. Approximately Four Hundred and Fifty (450) Ancient Cuneiform Tablets, et al. No. 017-CV- 3980 (E.D.N.Y.). The PML team was led by partner Michael McCullough, who was assisted by partner William Pearlstein.

Media Contact: Michael McCullough, MMcCullough@PMCounsel.com, (646) 762-7264.
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PEARLSTEIN & MCCULLOUGH NEGOTIATES JOINT VENTURE BETWEEN ARTVEST PARTNERS AND TEFAF TO HOST SPRING AND FALL ART FAIRS AT THE PARK AVENUE ARMORY

NEW YORK – Pearlstein & McCullough (“P&M”) today announced that its client, Artvest Partners LLC, formed a Joint Venture with The European Fine Art Foundation (“TEFAF”) to own and operate the newly rebranded “TEFAF/NewYork/Fall” fair and the “TEFAF/NewYork/Spring” fair in improved and significantly expanded space at the Park Avenue Armory.

The Joint Venture was formed by a series of transactions whereby the Joint Venture acquired the “International Fine Art Fair,” held each Fall at the Armory, from its UK owners, and Artvest contributed the right to host the Spring fair at the Armory. Going forward, Artvest will continue to operate the 2016 Spring Masters Fair at the Armory and TEFAF will continue to operate the TEFAF-Maastricht fair.

The Joint Venture between Artvest-TEFAF represents a significant development in the art fair market and is another sign of the gradual migration of the international art market to the US.

P&M acted as counsel to Artvest and co-counsel to the Joint Venture.

P&M Partner, William Pearlstein stated “it’s a pleasure to use our transactional skills to help top-tier art world clients like Artvest and TEFAF complete a complex, international transaction that could transform this segment of the art market.”

The New York Times announced the Joint Venture.

 

About Pearlstein & McCullough LLP P&M is a boutique law practice based in New York servicing the international art trade. P&M’s partners understand the specialized vocabulary of the art world, understand the concerns of dealers, collectors, auction houses and museums, and have the seasoning and experience to help clients navigate the special problems that often arise in the art market. Every day, P&M helps clients who buy, sell, collect, and consult on art for a living or as part of their lives. As commercial lawyers immersed full-time in the art trade, P&M’s partners work comfortably with people who handle art for a living.

PEARLSTEIN & MCCULLOUGH NEGOTIATES FIRST EVER SALE OF A HIP-HOP ALBUM AS A WORK OF ART

NEW YORK – Pearlstein & McCullough (“P&M”) today announced that its client, Paddle8 Inc. has- for the first time in history- consummated the sale of a hip-hop album as a work of art. The artwork, a sole existing copy of Once Upon a Time in Shaolin by the Wu-Tang Clan sold to an anonymous American buyer for an undisclosed figure in the millions.

On March 26, 2014, the Wu-Tang Clan announced the release of a single copy of their forthcoming album Once Upon a Time in Shaolin. Arguing that music had been economically and experientially devalued in a world of streaming media, the Clan came out with a radical concept: If society was prepared to devalue the art of music through convenient consumerism, then their final album would be released in one incarnation as a unique work of art, thus re-establish the core of musical composition.

P&M’s partner Michael McCullough said: “We are honored to have helped Paddle8 facilitate the sale of Once Upon a Time in Shaolin. The sale of Once Upon a Time in Shaolin is a seminal moment in art history, and is a great testament to the profound artistry of the Wu Tang Clan and the innovative business acumen of Paddle8. Everybody who worked on this year-long project was deeply inspired by the experience.”

About Pearlstein & McCullough LLP
P&M is a boutique law practice based in New York servicing the international art trade. P&M’s partners understand the specialized vocabulary of the art world, understand the concerns of dealers, collectors, auction houses and museums, and have the seasoning and experience to help clients navigate the special problems that often arise in the art market. Every day, P&M helps clients who buy, sell, collect, and consult on art for a living or as part of their lives. As commercial lawyers immersed full-time in the art trade, P&M’s partners work comfortably with people who handle art for a living.

About Paddle8
Paddle8 is the premier online collecting destination, presenting auctions of extraordinary art, design, jewelry, watches, and collectibles. Using innovative technology, Paddle8 has streamlined the collecting experience, combining the taste and trust of an auction house with the ease and efficiency of an e-commerce company. In addition, Paddle8 has partnered with over 350 non-profit organizations worldwide to present benefit auctions to our global community of 500,000 collectors, helping each organization expand its fundraising results. Founded in 2011, Paddle8 has over 120 employees worldwide, with teams in New York, L.A., and London. Paddle8 is funded by the investors behind Uber, Vimeo, Buzzfeed, Paperless Post, Warby Parker, and Bonobos, among others, as well as art-world insiders including artist Damien Hirst, art dealer Jay Jopling, and Matthew Mellon.

About Wu Tang Clan
The Wu-Tang Clan is an American hip hop group from New York City, originally composed of East Coast rappers RZA, GZA, Method Man, Raekwon, Ghostface Killah, Inspectah Deck, U-God, Masta Killa, Cappadonna, and the late Ol’ Dirty Bastard. The group was formed in and is associated with the New York City borough of Staten Island.
The Wu-Tang Clan has introduced and launched the careers of a number of affiliated artists and groups, often collectively known as the Wu-Tang Killa Bees, and in 2008, About.com ranked them the No. 1 greatest hip hop group of all time. Kris Ex of Rolling Stone called Wu-Tang Clan “the best rap group ever”. In 2004, NME hailed them as one of the most influential groups of the last ten years.

About Once Upon a Time Shaolin
Once Upon a Time in Shaolin is a limited edition double album by the New York hip hop group Wu-Tang Clan released in 2015.

One double-LP copy of the album was made in 2014. The agreement between the seller and buyer states that although the album is unable to be re-sold until 2103, the purchaser has the right to distribute the contents online for free and to hold free listening parties. RZA stated that the 88-year non-commercialization was due to his belief in Five-Percent Nation mathematical philosophies, as there were eight original members of the Wu-Tang, the digits of 2015 add up to eight, Paddle8 has eight in its name, eight is a symbol of infinity, and was used in their second album Wu-Tang Forever.

New York Announces Rules on Ivory Trade

By Michael McCullough            DECEMBER 4, 2014

New York- The New York State Department of Environmental Protection (DEC) issued guidance  today on the implementation of New York’s Ivory Law that was passed in August. The guidance includes Frequently Asked Questions that were negotiated between the DEC and our firm.

The New York Ivory law applies to intrastate and interstate commercial transactions in different ways:

Intrastate:

The New York State law bans intrastate sale, offer for sale, purchase, trade, barter or distribution of any ivory article or rhinoceros horn, unless one of the exceptions apply and a DEC permit is issued. For commercial sales, the object containing ivory, mammoth or rhinoceros horn must be at least 100 years old and contain less than 20% of the regulated material.  Intrastate sales are defined as those conducted wholly within New York State.  This includes sales where the seller and purchaser are located in New York State, such as an in-person retail sale at a commercial establishment.

Interstate:

Federal law prohibits the import, export and interstate sale (sale across state lines) of species listed in the Endangered Species Act, or their parts, without a Federal ESA permit.  However, Federal law also creates a specific exception for items that qualify as “antique.”   Therefore, the New York law, in concert with Federal law, limits the interstate sale, offer for sale, purchase, or distribution of any ivory article or rhinoceros horn to an ivory article or rhinoceros horn that has a Federal ESA Permit or:

• is 100 years or older;

• is composed in whole or in part of an ESA-listed species; and

• has not been repaired or modified with any such species after December 27, 1973.

As a general rule, the 20% rule does not apply to interstate sales. However, other in-state activities, such as exhibition or offering for sale, might invoke the 20% restriction.

Interstate sales are defined as any sale, offer for sale, purchase or distribution of an ivory article or rhinoceros horn conducted in part within New York State and in part in another state or foreign country.  Interstate transactions include those where legal transfer of the article occurs in another state, or where the purchaser or seller is in another state.

Interstate sale, offer for sale, purchase or distribution of an ivory article or rhinoceros horn in or from New York State requires a DEC permit.

Mammoth Ivory is treated in a similar way. Mammoth is an extinct species not regulated under the Federal Endangered Species Act.  However, New York has determined that effective enforcement efforts require that elephant ivory and mammoth ivory be treated identically.  Therefore, interstate sale, offer for sale, purchase or distribution of mammoth ivory is permissible under similar conditions as elephant ivory. However, in order to treat individuals who own mammoth ivory equitably, the Governor proposed legislation which the Legislature has introduced that would provide a sell-through provision for individuals who possessed mammoth ivory on the effective date of the new law. In anticipation of the enactment of this legislation, DEC will use its enforcement discretion to allow any person who possessed mammoth ivory articles on August 12, 2014 to sell, offer for sale, trade, barter or distribute those articles until June 30, 2015, provided that the articles are accompanied by documentation sufficient to show that they are mammoth ivory and were obtained prior to August 12, 2014. This enforcement discretion does not apply to elephant ivory articles or rhinoceros horn.

Special rules apply to non-commercial transfers and museum purchases.

Pearlstein & McCullough LLP is hosting a seminar for clients on Monday, December 8, 2014 from 3-5pm to review these new rules. Space is limited to 35 participants. Clients wishing to attend should contact Chloe Henry-Jones at chenryjones@pmcounsel.com to secure a seat.

The “Deceptive” Ivory Trade

By Michael McCullough       JUNE 18, 2014

New York- In a statement on the state-sponsored ban of the sale of ivory in New York, Assembly Speaker Sheldon Silver, employing one of the much misused phrases of our time, described the new legislation as necessary to fight “terrorist organizations.” There was a sort of half-truth to what he said. But he would have been much more nearer the mark if he had described the actual situation as what it is: combating the sale of illegal ivory by shutting down the antiques market.

Year-after-year, the largest amount of elephant ivory sold in New York has been the legal and documented trade in antiques. Ivory was used throughout history as a medium for artistic carvings and paintings, as well as a constituent of the decorative arts. However, in more recent times, unfortunately, ivory has been used for the creation of tourist trinkets and decorative carvings. The use of ivory in the European arts ended before the Second World War, so the continued use of ivory in modern times was largely done in Africa and Asia. The United States had a tradition of using ivory for portrait miniatures, silver tea sets, cutlery and the like, but these uses ended in the early part of the last century.

For the past twenty years, auctioneers and antique dealers have been licensed by the New York State Department of Environmental Conservation (DEC) to sell elephant ivory in New York. Two years ago those licensing standards were tightened to require the sellers to submit detailed inventory lists, as well as the names and addresses of sellers and buyers, to the DEC as part of the licensing process. In January, New York Assemblyman Sweeney conducted a public hearing to discuss the illegal trade in elephant ivory, and part of the testimony given by critics of the DEC and by the DEC itself was that the regulators didn’t have the staff or expertise to properly review these license applications. In consequence of this, Mr. Sweeney decided to introduce a bill in the Assembly to ban the sale of all ivory objects in New York State.

Mr. Sweeney had the backing of various wildlife organizations, such as the Wildlife Conservation Society and the Natural Resources Defense Council, among others. These wildlife groups object to the sale of antique ivory because they believe it encourages people to collect objects made of newly-poached ivory. This is another half-truth. While the sale of antiques gives value to ivory as an important material used in historical artworks, the people who buy art and antiques are not interested in contributing to the poaching problem in Africa. In fact, all of the antique dealers’ organizations were in favor of more strict licensing and enforcement standards to deal with the problem of newly-carved tourist trinkets and decorative carvings entering the market. They proposed to the Governor and Legislature that only antique ivory over 100 years of age and subject to strict appraisal and documentation standards should be sold in New York. This, coupled with increased resources for the DEC to review license applications, would have addressed the DEC’s capacity to properly regulate the market. But the wildlife groups’ criticism of the DEC and the licensing process was always a diversion; people who were importing and selling newly-poached ivory were not applying for DEC licenses. It has been illegal since 1976 under the federal Endangered Species Act to import raw ivory into the United States for commercial purposes. The people selling newly-poached ivory were brazenly aware of the illegal nature of the wares and sold them anyway with full knowledge of the problems in Africa. In contradistinction, New York’s auctioneers and antique dealers played by the rules and weren’t contributing to the problem.

The fact is that both the wildlife groups and the antiques trade were right: there is a very serious crisis in Africa with the killing of elephants, but the continued sale of documented, bona fide antiques was in no way contributed to the danger. As a result, there should have been an accommodation that would give the DEC more power to arrest and prosecute people involved with the illegal ivory trade while allowing for the legal trade in bona fide antiques. But last minute calls from Hillary Clinton and Robert Kennedy, Jr. to Governor Cuomo and the leaders of the Legislature convinced lawmakers to restrict the sale of antiques to those containing less than 20% by volume of ivory. While at first glance this might seem like a reasonable solution, it will certainly decimate the decorative arts market in New York City; the overwhelming majority of valuable objects on the market made of ivory contain more than 20%. Auctioneers and dealers will no longer take consignments of the valuable ivory objects and those objects, along with the permitted objects with less than 20%, will be sold elsewhere. If you add to the equation the efforts by the Federal government to further restrict the sale of ivory in interstate commerce, then these important artist creations will slowly leave the United States and will steadily flow to the only part of the world interested in giving these orphans a home: South-East Asia. And, ironically, China and the South-East Asian countries are the main consumers of the tourist trinkets and decorative carving containing newly-poached ivory that created the problem in the first place- but this only makes the point about half-truths in the policy discussion in an even more emphatic way.