Scher v. Stendhal Gallery, Inc.

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: PETER TOM
• Citation: Scher v. Stendhal Gallery, Inc., 2014 NY Slip Op 2154, 117 A.D.3d 146, 983 N.Y.S.2d 219 (N.Y. App. Div. 2014)
• Decision Date: 27 March 2014
• Parties: Paula SCHER, Plaintiff–Respondent–Appellant, v. STENDHAL GALLERY, INC., et al., Defendants–Appellants–Respondents.

117 A.D.3d 146

983 N.Y.S.2d 219

2014 N.Y. Slip Op. 02154

Paula SCHER, Plaintiff–Respondent–Appellant,

v.STENDHAL GALLERY, INC., et al., Defendants–Appellants–Respondents.

Supreme Court, Appellate Division, First Department, New York.

March 27, 2014.

Wollmuth Maher & Deutsch LLP, New York (Michael C. Ledley and Melissa A. Finkelstein of counsel), for appellants-respondents.

Carter Ledyard & Milburn LLP, New York (Judith M. Wallace, Jeffrey L. Loop and Michael H. Bauscher of counsel), for respondent-appellant.

PETER TOM, J.P., DAVID FRIEDMAN, HELEN E. FREEDMAN, PAUL G. FEINMAN, JJ.

FRIEDMAN, J.

The primary issue on this appeal is whether plaintiff Paula Scher, an artist, or defendant Stendhal Gallery, Inc. (the Gallery), Scher's former exclusive agent, owns 320 fine-art silk-screen prints made from Scher's paintings that remained unsold upon the termination of the parties' relationship.¹ Pursuant to an oral agreement between the parties, the prints had been fabricated, with Scher's close collaboration, by a printer hired and paid by the Gallery. Although the motion court adopted Scher's contention that the question of the ownership of the prints is resolved in her favor by Arts and Cultural Affairs Law § 12.01, as construed in Wesselmann v. International Images, 172 Misc.2d 247, 657 N.Y.S.2d 284 (1996),affd.259 A.D.2d 448, 687 N.Y.S.2d 339 (1st Dept.1999), lv. dismissed94 N.Y.2d 796, 700 N.Y.S.2d 429, 722 N.E.2d 509 (1999), we affirm the declaration that Scher owns the prints on a different ground. Specifically, the parties' initial written agreement provided that the Gallery would act as Scher's “exclusive agent” in matters relating to, inter alia, any future deal “for the exhibition and sales of ... limited edition prints published exclusively by [the][G]allery” during the term of the agreement. Thus, when the Gallery purchased the finished prints from the printer, it did so as Scher's agent. Accordingly, the parties' written agreement establishes as a matter of law that the prints are to be treated as Scher's property.

In the 1990s, Scher, a nationally known graphic designer, began to create fine-art paintings. Between 1998 and 2005, she produced a series of 12 map-based acrylic-on-canvas paintings known as the Map I paintings. Scher and the Gallery entered into a written agreement, dated October 18, 2005 (the 2005 agreement), that provided for the consignment and sale of the Map I paintings and any future works Scher might create during its term, as well as a broader “exclusive agen[cy]” relationship between the parties encompassing, inter alia, any publication of limited-edition prints of Scher's paintings during the agreement's term. In 2006 and 2007, while the 2005 agreement was in effect, Scher produced seven additional map-based paintings (the Map II paintings), which were consigned to the Gallery pursuant to the 2005 agreement.

Section 1 of the 2005 agreement provides in pertinent part (emphases added):

“1. Scope of Agency. The Artist [Scher] appoints the Gallery to act as Artist's [X] exclusive agent in the followinggeographic area: Exclusive worldwide for the exhibition and sales of artworks in the following media: original paintings/ Works on Paper / limited edition prints published exclusively by [G]allery and Digital / electronic art for computers.

“Publishing. The [G]allery will publish a full color catalogue to accompany the exhibit and will act as the [A]rtist's agent to put forth a book deal based on ‘The Maps.’ In the event of a publishing deal, a separate agreement will be furnished to the artist.”

Pursuant to section 2 of the 2005 agreement, the agreement was to have a term of three years from its date, although it is undisputed that the parties continued to operate under it for about 4 1/2 years, until May 11, 2010, when Scher's counsel sent the Gallery a letter terminating the relationship. Section 2 of the 2005 agreement also provides that, upon termination or expiration of the agreement, “all works consigned hereunder” are to be returned to Scher. Section 4 provides that the Gallery “shall receive a commission of 50% percent [ sic ] of the retail price of each work sold,” a rate that, it is undisputed, applied to paintings but not to prints. Finally, section 11 provides: “All modifications of this Agreement must be in writing and signed by both parties. This Agreement constitutes the entire understanding between the parties hereto.”

As noted, the 2005 agreement contemplated that, during its term, the scope of the Gallery's agency for Scher would extend to the production and sale of any “limited edition prints” based on Scher's works. It is undisputed that, while the 2005 agreement was in effect, Scher reached an oral agreement with nonparty Maya Stendhal, then one of the Gallery's principals, concerning prints of Scher's paintings. Scher granted the Gallery an oral license to produce ink-on-paper silk-screen prints based on the Map I and Map II paintings, at the Gallery's expense, and to sell the prints, with the proceeds to be split 90% to the Gallery, 10% to Scher.²

The Gallery engaged a printing company headed by Alexander Heinrici, a prominent fine-art printer, to make the prints. Scher worked closely with the printer in the production of the prints, a process that the parties agree was not one of simple reproduction. The prints, which were much smaller in size than the original paintings, were the result of what Scher described at her deposition as “a back and forth collaborative process” between herself and the printer, involving the fabrication of printing plates based on the original paintings and the choice of ink colors to approximate the paint colors of the original works. Ultimately, Scher approved and signed each numbered individual print to be sold.³ Scher, however, admittedly had no contractual relationship with the printer; the Gallery hired and paid the printer and took delivery of the finished prints from the printer. In January 2012, the Gallery claimed that it had incurred costs of $299,163 in producing and selling the prints, which by that time had generated sales of $1,388,680.⁴ Nonetheless, as of the time this action was commenced, the Gallery had paid Scher only $15,000 on account of print sales.⁵

By letter dated May 11, 2010, Scher's counsel notified the Gallery that both the 2005 agreement and the oral license to create and sell prints of the Map I and Map II paintings were terminated, and demanded, among other things, that the Gallery return to Scher all of her unsold paintings and prints. The following month, Scher commenced this action against the Gallery and its principal, Harry Stendhal, in Supreme Court, New York County. Scher's complaint asserts numerous causes of action, seeking, among other relief, recovery of Scher's unpaid share of the sales of her paintings and prints, replevin of the unsold prints, and an accounting. In January 2011, Supreme Court ordered that the unsold prints be placed in the possession of an independent escrow agent pending determination of which party owns them.

In April 2011, after the parties had conducted discovery, Scher moved for partial summary judgment declaring, inter alia, that she is the owner of the unsold prints and that she is entitled to recover “the full list price for all Scher Prints sold by the Gallery after May 11, 2010 [the date Scher terminated her agreements with the Gallery] and for all undocumented transfers and missing prints.” Scher's motion also sought a ruling on a claim (not pleaded in the complaint) concerning one of the Map I paintings ( Long Island ), and a declaration that she was entitled to an accounting.⁶ The Gallery opposed the motion and cross-moved, in pertinent part, for partial summary judgment declaring that “the Gallery is the owner of the unsold Prints or, in the alternative, is entitled by contract to 90% of the resale value of the Prints.”

By order and interlocutory judgment entered October 19, 2011 (the initial judgment), the motion court granted in part and denied in part both Scher's motion and the Gallery's cross motion. Regarding the ownership of the unsold prints, the court granted Scher's motion to the extent of declaring that Scher “is the owner of and entitled to immediate possession of all of the approximately 320 unsold prints of her artwork.” At the same time, the court granted the Gallery's cross motion “to the extent of ruling that [the Gallery] is entitled by contract to 90% of the re-[sale] value of the unsold prints, either gross or net of expenses, and the amount, if any, owed to [the Gallery] shall be determined at the plenary trial of this action.”

In determining that Scher owns the prints, the motion court adopted Scher's argument that this result is compelled by Arts and Cultural Affairs Law § 12.01 (“Artist-art merchant relationships”) as construed by this Court and Supreme Court in Wesselmann v. International Images, 172 Misc.2d 247, 657 N.Y.S.2d 284 (1996),affd.259 A.D.2d 448, 687 N.Y.S.2d 339 (1st Dept.1999), lv. dismissed94 N.Y.2d 796, 700 N.Y.S.2d 429, 722 N.E.2d 509 (1999), supra ), an earlier case concerning ownership of unsold prints from an artist's paintings that were commissioned and paid for by an art dealer. As in effect at all relevant times (which were before the effective date of a 2012 amendment),⁷§ 12.01(1) provided in pertinent part:

“1. Notwithstanding any custom, practice or usage of trade, any provision of the uniform commercial code or any other law, statute, requirement or rule, or any agreement, note, memorandum or writing to the contrary:

“(a) Whenever an artist [as defined in § 11.01(1) ] ... delivers or causes to be delivered a work of fine art, craft or a print [as defined in § 11.01(14) ] of his own creation to an art merchant [as defined in § 11.01(2) ] for the purpose of exhibition and/or sale on a commission, fee or other basis of compensation, the delivery to and acceptance thereof by the art merchant...