LOS ANGELES (CN) - Famed auction house Christie's botched the sales of Elizabeth Taylor's "most prized and valuable possessions" and stiffed the late actress' trust of proceeds earmarked for her AIDS foundation, according to a federal complaint filed Tuesday.
Barbara Berkowitz, Timothy Mendelson and Christopher Wilding - trustees for Taylor's Sothern Trust - sued Christie's Inc. for breach of contract and fiduciary duty, conversion and an accounting over the auction house's handling the legendary actress' jewelry, wardrobe and art collection.
Following Taylor's death in 2011, the Sothern Trust entered into a consignment agreement with Christie's to auction off the actress' personal effects - including the famous "Taj Mahal" diamond, a 17th century necklace given to the actress by her then-husband Richard Burton for her 40th birthday.
The auctions also included signed copies of Taylor's 2002 book "My Love Affair with Jewelry," a $3 million diamond and emerald ring, art pieces and items from the actress' iconic wardrobe. Proceeds from exhibition ticket sales for the jewelry sale and the autographed books were earmarked for the Elizabeth Taylor AIDS Foundation with the rest going to Taylor's trust, the complaint states.
But the trustees claim that after the auctions, Christie's canceled a number of the sales - including the heart-shaped Taj Mahal necklace - and refused to return unsold and canceled items.
In the case of the necklace, the anonymous buyer demanded his money back after deciding it hadn't actually belonged to a Mughal emperor. The trustees note that Christie's never warranted or guaranteed the diamond's age or its Mughal origins, simply describing the item as an "Indian" diamond.
Yet Christie's rescinded the sale in violation of its own policies, the trustees claim.
"In the past, Christie's has consistently (and successfully), as a matter of policy, taken the legal position that if a buyer's claim falls outside the scope of Christie's warranty, there has been no violation of the conditions of the sale and no obligation by Christie's to rescind," the 25-page complaint states. "Moreover, pursuant to the consignment agreement, Christie's had an obligation to the trust not to cancel the sale of any property, including the diamond, unless it reasonably believed that the sale has subjected, or would subject, Christie's or the trust to liability. Despite facing no credible threat of legal liability, Christie's nonetheless rescinded the sale of the diamond. In doing so, Christie's not only deviated from its usual business practices and its own established policies, but it violated its obligations to the trust, all in an effort to appease the buyer." [Parentheses in original.]
And after canceling the sale, Christie's demanded that the trustees return the money paid for the necklace - something the Sothern Trust has so far refused to do since it contests the auction house's "objectively unreasonable" cancelation of the sale. The trustees claim that in retaliation, Christie's refuses to pay proceeds from the sale of one of Taylor's Bulgari rings.
And then there's the matter of missing items that were supposedly auctioned off but the trustees haven't seen a dime for, according to the complaint.
"Plaintiffs are informed and believe, and thereon allege, that Christie's cancelled an art sale without explanation, failed and refused to return to the trust the unsold auction items (with no explanation), and failed to pay the trust the proceeds from the sale of the Bulgari ring in an attempt to strong-arm the trust into returning the proceeds that the trust rightfully received from the sale of the Taj Mahal diamond," the trustees' complaint states. [Parentheses in original.]
And Christie's has never turned over the proceeds from the autographed books to the Elizabeth Taylor AIDS Foundation either, the trustees add.
The Sothern Trust asks the court for a declaration of the parties' rights and responsibilities under their consignment agreement and an order that it can keep the proceeds from the canceled Taj Mahal diamond sale - or a swap of the proceeds for the necklace's return, according to the complaint.
Additionally, the trustees want an explanation of the canceled sales, return of the five missing items, $2.9 million for the Bulgari ring and all the proceeds from the autographed books.
They are represented by David Fink and Audrey Jing Faber of the firm Kelley Drye & Warren in Los Angeles.
A day after the 2011 auction of Taylor's jewelry - dubbed "the crown jewels of Hollywood," Forbes reported that the "madcap buying spree" took in over $137.2 million, with many lots going for three, four and even five times their estimated worth.
A Christie's spokesperson told Courthouse News the entire auction took in over $183.5 million.
"Christie's created a landmark auction that produced over $183.5 million in proceeds for the beneficiaries of the Elizabeth Taylor Trust - the friends and family of Elizabeth Taylor," the spokesperson said. "This suit stems from Christie's seeking the return of a small portion of proceeds due to the canceled sale of a single item from the 1,800-lot collection."
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