LAS VEGAS (CN) - An art dealer says its insurer refused to pay a $50 million claim after the dealer was fleeced by Lawrence Salander, a former gallery owner who is serving 6 to 18 years in prison for grand larceny. Renaissance Art Investors sued Axa Art Insurance in Clark County Court.
Salander, whose Salander-O'Reilly Galleries was called the best art gallery in the world by the Robb Report in 2003, declared bankruptcy in 2007 and was sentenced in August this year for multiple counts of grand larceny: a $120 million fraud that ran for decades. He admitted, among other things, selling fractional sales in paintings that added up to more than 100 percent. The New York Post reported at his sentencing that Salander admitted chartering planes so he could see his son's Little League games.
Renaissance Art Investors claims it agreed in 2006 to acquire a collection of Renaissance art works from Salander-O'Reilly Galleries. The collection included "Old Master" paintings, drawings, sculptures, reliefs, tapestries and other art created in Europe from the 12th through the 18th centuries.
Renaissance Art says it authorized Curtis Galleries to sell the art on consignment and took out a $50 million insurance policy with AXA Art Insurance. The policy provided "broad coverage" against "all direct physical loss" to property, according to the complaint.
In 2007, Renaissance found that "a significant number of items" in the collection were missing.
"It was later revealed that Lawrence Salander had systematically disposed of items" in the collection.
Renaissance says it submitted a claim to Axa for $42 million in January 2008.
"In response ... before even investigating the claim," AXA "cited purported exclusions in the policy and began laying the groundwork for a coverage denial before even conducting an investigation," the complaint states.
In its refusal letter, Axa wrote, "any fraudulent acts that may have been committed by you or anyone in your investment group ... would immediately void coverage," according to the complaint.
Renaissance says it eventually was able to recover about $20 million worth of art, reducing its insurance claim to about $22 million.
But July 22 this year, Axa sued Renaissance in Manhattan Federal Court, claiming that Renaissance was formed "in order to partner with Salander and his gallery," and that the insurance claim was "brought about because of a failed investment scheme."
Renaissance seeks compensatory and punitive damages for breach of contract and negligent misrepresentation.
It is represented by Byron Francis with Armstrong Teasdale.
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