A lawsuit between two young collectors over the resale of a $700,000 Cecily Brown painting appears to have concluded as soon as it was made public, after a report from Bloomberg . But a number of documents submitted in evidence have provided rare insight into the dynamics at play at the top end of the contemporary art market.
The case, which was brought in the Miami-Dade District Court last March, was brought by 26-year-old prominent Chinese patron and X Museum founder, Beijing Michael Xufu Huang, against Monaco-based Argentine Federico Castro Debernardi. The pair settled informally yesterday, just after the Bloomberg story came out, though this has yet to be formalized.
Huang demanded $1.3 million in “reputational damage” after alleging that Debernardi violated the terms of a private contract between the two, under which Huang would use his status to purchase much-needed primary market works for Debernardi that the latter would otherwise not have access to. . The agreement stipulated that Huang would purchase the works in his own name under the guise of adding them to his collection, and then immediately sell them to Debernardi for a 10% mark-up on the original price.
The central dispute involved a 2019 painting by Brown titled: Faeriefeller, shown by Paula Cooper at Art Basel in Miami Beach in December 2019. According to court documents seen by the art newspaperHuang attended the fair with the “sole purpose” of purchasing the painting from Paula Cooper’s booth, purchasing the work for $700,000, and then selling it to Debernardi for $770,000. Debernardi also reimbursed Huang for his travel expenses from China to Miami.
However, in violation of their agreement, Debernardi resold the work in 2020 to chic gallery Lévy Gorvy – a deal that Paula Cooper soon got wind of. Because of this, Huang was liable for the terms of the contract he signed with Paula Cooper when purchasing the painting that prohibited him from selling it within three years without first offering it back to the gallery.
Most intriguingly, the contract between Huang and Paula Cooper contained a clause stating that if Huang sold the work within that period (and not through the gallery), he would be liable to pay Paula Cooper the difference between the original purchase price. and “sale price of similar works of art in perfect condition by the artist at the latest public auctions”.
With Brown’s auction results regularly reaching seven figures – her record is $6.7 million – the gallery calculated this figure between $500,000 and $1 million. In an exchange submitted as evidence by Huang, the gallery warned him that it was willing to seek damages of this amount, writing to him: “Media attention can be expected, your actions and the various statements made you have rendered to us shall become public knowledge.”
How likely it is that a court would have upheld Paula Cooper’s claim is unknown, and the gallery was notably not involved in the lawsuit. In a statement shared with the art newspaper, the director Steven Henry says: “We have no comment on the dispute between Mr. Huang and Mr. Debernardi. The information contained in the documents that the parties have chosen to make public in court records speaks for itself. The gallery will continue to serve the interests protecting the artists we work with.”
Huang has since settled with Paula Cooper for an amount he said was “far above the ten percent I earned” from the commission. “It was my fault for letting this happen, so I paid and took responsibility,” he told Bloomberg.
He added that the intent of his deal with Debernardi was not to make a profit and that he would have made much more money selling the works on the open market.
Further lawsuit documents show that in 2019 Huang also bought paintings by Nicolas Party for $68,000 and Harald Ancart for $220,000 for Debernardi under the same scheme. A Debernardi wish list, submitted as evidence, also includes works by other market enthusiasts such as Dana Schutz, Jonas Wood, and George Condo.
Text messages between the plaintiff and the defendant tell of a friendly relationship, and yesterday, just hours later Bloomberg‘s report was published, Huang’s lawyer announced that the two sides had settled the matter privately, although official documents have yet to be signed.
“We are pleased that the parties have reached an agreement in principle to resolve this matter, which stems from a misunderstanding between Mr Huang and Mr Castro Debernardi,” Huang’s attorney Wendy Lindstrom said in a statement. “They look forward to working together again in the future.”
The damage to the reputation of the two collectors remains to be seen. Huang, who co-founded Beijing’s M Woods Museum at age 22, is one of China’s most prominent socialists in the art world and the youngest person to serve on the New Museum’s board. Meanwhile, Debernardi, who was on Apollo’s 40 under 40 list in 2017, founded Fundación Arte in Buenos Aires to promote Argentina’s art scene.