United States: DALI FORGERY: Reliance On Art Gallery Reasonable, No Duty For Art Buyer To Conduct Own Due Diligence

In a recent case, the Michigan Court of Appeals ruled in an unpublished opinion that claims against Park West Galleries, Inc. for fraudulent concealment and breach of warranty could move forward despite West Galleries' statute of limitations argument.

Time Line:

1999 – Purchase by buyer aboard cruise ship of Salvadore Dali's Divine Comedy, complete set

2009 – Buyer attempts to sell the set and discovers that the works are not authentic by the Fine Art Register

2011 – Buyer brings suit on eleven counts including negligence, conspiracy, fraudulent concealment and breach of warranty claims.

Litigation

West Galleries argued that the claims were barred by the relevant statute of limitations because the purchase of the collection dated back to 1999. Further, West Galleries argued that the buyer failed to do due diligence to discover the forgery.

On appeal, the Michigan Court of Appeals agreed with the buyer that (i) the state's tolling statute, MCL 600.5855 (which tolled the statute of limitation to the time of the discovery of the fake in 2009), applied due to West Galleries' fraudulent concealment; and (ii) the buyer was not negligent in relying on the gallery's "promise that the art was real and the appraisal was fair." The court noted, inter alia, that tolling was appropriate in this case because the gallery provided the buyer a certificate of authenticity and a written appraisal at the time of purchase, which was the affirmative act of concealment that prevented the buyer from further inquiring about the piece.

Although the buyer in this case was permitted to move forward on her claims, this case demonstrates again the importance of provenance. In this case, a prospective buyer of the collection tipped the seller that the authenticity of work offered by West Galleries was under investigation, which prompted the additional review of the work. Provenance is key!

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