Museum Sues Insurer in Salander Fiasco

GREENBELT, Md. (CN) - The Philadelphia Museum of Art says AXA Art Insurance refused to honor a $1.5 million claim for two paintings that an art dealer effectively stole or lost. The museum consigned the art to the Salander-O'Reilly Galleries in Manhattan in 2006. The Manhattan district attorney charged the Upper East Side art dealer with 100 counts of fraud a year ago, estimating damages at more than $90 million.

The Philadelphia Museum says it consigned "The Harbor" by Maurice Prendergast and "Mountain Landscape" by Arthur B. Davies to the Salander Gallery.

The museum says Salander was to sell the paintings together within 6 months for $1.5 million, but Lawrence Salander claimed he was having difficulty with the sale, then said a buyer was willing to pay $800,000 for both.

Salander said he sold the paintings in 2007, but the museum says it never got the money. Salander then filed for bankruptcy.

The museum says it discovered in 2009 that Salander had lied about the consigned paintings. It claims that Salander sold the Prendergast to Davis & Langdale Co. for $1.5 million within weeks of accepting the consignment.

"Salander's entire course of conduct during 2007 with respect to the paintings was a continuation of its effort to cover up the fact that, in violation of the agreement, it had sold the Prendergast for $1.5 million and taken the proceeds for its own use," according to the complaint.

The museum does not state what became of the Davies, only that it did not turn up during an inventory.

AXA, a New York company, issued a $100 million policy to the museum, but has not told the museum anything about its investigation of the paintings' whereabouts and denied the insurance claim, the museum says.

"The museum did not know at the time of the sale to Langdale that the sale had been made, much less that Salander had sold the Prendergast separate and apart from the Davies, and for years after the sale Salander did not tell the museum about its breach of the agreement and sale of the Prendergast," according to the complaint.

The museum says when it figured out and reported to AXA that Salander had improperly sold the Prendergast, AXA denied coverage.

"AXA asserted that the museum has not suffered a 'direct physical loss or damage to' the paintings, and that an exclusion for the assumption of governmental control over property supposedly applied," according to the complaint.

The museum says its loss merits coverage because "Mr. Salander and Salander, in effect, stole the Prendergast from the Museum."

It seeks $1.5 million plus "the fair market value of the Davies," alleging breach of insurance contract and bad faith. The museum is represented by Gerald Konkel with Morgan, Lewis & Bockius of Washington, D.C.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit