MANHATTAN (CN) — A New York federal judge on Wednesday ordered the world-renowned Sotheby's auction house to face claims in Russian billionaire oligarch Dmitry Rybolovlev's lawsuit accusing it of helping his erstwhile private art dealer overcharge him by hundreds of millions of dollars on 15 pieces of world-class art.
For years Rybolovlev, a billionaire art collector who sold two Russian fertilizer producers for almost $7.5 billion in 2010 and 2011, claims that Swiss art dealer Yves Bouvier overcharged him on 38 artworks that he purchased for $2 billion between 2003 and 2015.
Bouvier, who is linked to infamous high-profile forgers and also faces accusations of stealing famous paintings, was arrested in early 2015 in Monaco.
A dozen of these masterpieces were sold through Sotheby’s, and Rybolovlev claimed in a 2018 lawsuit that the auction house was uniquely positioned to facilitate Bouvier’s fraud.
In a 76-page mixed ruling made public Wednesday, U.S. District Judge Jesse Furman dismissed the bulk of Rybolovlev’s allegations, but ordered Sotheby's to face fraud-related claims in connection with Leonardo da Vinci’s 500-year old painting of Christ, "Salvator Mundi,” which Rybolovlev eventually sold at Christie's in 2017 for a record $450 million.
“From this evidence, a reasonable jury could infer that Sotheby’s assisted Bouvier in obtaining an inflated valuation to conceal his breach, that Sotheby’s knew Bouvier had previously purchased the work on behalf of plaintiffs, and that Bouvier was therefore likely to provide the da Vinci’s inflated valuation to plaintiffs,” Furman wrote. “That — combined with the fact that plaintiffs began to make efforts to uncover Sotheby’s role, if any, in Bouvier’s scheme less than a year and a half later— could support application of equitable estoppel as to this claim.”
The judge also advanced Rybolovlev’s aiding-and-abetting fraud claims against Sotheby’s based on the sale of Rene Magritte’s “Le Domaine d’Arnheim,” the sale of Gustav Klimt’s “Wasserschlangen II,” and the sale and auction of Amedeo Modigliani’s “Tête."
Furman, however, granted Sotheby’s motion for summary judgment dismissal on timeliness grounds as to Rybolovlev's fiduciary duty claims with respect to the fourteen transactions other than da Vinci’s “Salvator Mundi” and Henri de Toulouse-Lautrec’s “Red Au Lit: Le Baiser.”
Furman, an Obama-appointee, urged the two parties to settle the remaining claims outside of court, noting in the opinion that a trial “would be expensive, risky, and potentially embarrassing to both sides.”
Swiss art broker Yves Bouvier began acquiring the works in question for Rybolovlev in 2003, charging a 2 percent commission on each sale.
To keep the high-profile sales private, however, Bouvier had little or no contact with the actual sellers during the sales; his interests were instead represented by MEI Invest Ltd. or a related company.
Bouvier and Rybolovlev's relationship soured in 2014 when The New York Times published a story about the sale of "Salvatore Mundi," a painting of Christ whose title translates in English to “Savior of the World.”
Though the story reported that this painting sold for anywhere from $75 million to $80 million, Rybolovlev claimed he paid $127.5 million for the painting, roughly a 50 percent markup.
All in all, he claims, Bouvier’s markups caused him to overpay by $1 billion on 38 total paintings over 11 years.
Rybolovlev — whose collection includes highly valued pieces by Monet and Gaugin — lives in Monaco and filed a criminal lawsuit against Bouvier there for fraud and money laundering. He also joined similar lawsuits against Bouvier in France and Singapore, where Bouvier’s assets are now subject to a freeze by Singapore’s high court.
Rybolovlev then petitioned the U.S. District Court for the Southern District of New York in Manhattan for discovery of documents from Sotheby’s for use in the lawsuits.
In 2016, Sotheby’s filed suit in an effort to recoup monies from the da Vinci art sale and also to absolve itself of any blame in the dispute. The famed auction house, which made $3 million on the sale, argued it was owed more since the artwork ultimately was sold for $127 million instead of the $80 million listed reported to the auction house.
"Salvator Mundi” was purchased in 2017 by an unnamed bidder, who was later identified as a Saudi royal who purportedly purchased it on behalf of the Louvre Abu Dhabi. It was supposed to have been unveiled a year later at the museum, but the exhibition was delayed indefinitely and the work hasn't been seen in public since.
Rybolovlev has purchased the private Greek island of Skorpios, once owned by Aristotle Onassis and inhabited by Jacqueline Kennedy Onassis, and is reportedly developing a luxury art resort on the private island in the Ionian Sea.
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