United States District Court, S.D. New York
OPINION & ORDER
A. ENGELMAYER, DISTRICT JUDGE.
decision sets out the Court's findings as to damages owed
by defendants Margo Feiden ("Feiden") and the Margo
Feiden Galleries, Ltd. (singly, the "Gallery," and
together with Ms. Feiden, the "defendants" or
"Galleries") as to two areas of contract breach
with respect to which the Court has already found defendants
liable. In a November 1, 2017 Opinion & Order (the
"Summary Judgment Opinion"), the Court held that
the Galleries had breached the settlement agreement (the
"Agreement") that had long governed the
relationship between the Galleries and plaintiff, the Al
Hirschfeld Foundation (the "Foundation").
Specifically, the Court granted summary judgment as to
liability on the Foundation's claims that the Galleries
had breached the agreement by (1) failing to maintain custody
over, and records for, 20 works consigned to them by the
Foundation; and (2) selling giclee reproductions
beyond the scope of the license afforded by the Agreement.
parties then waived their rights to have a jury determine the
damages owed for these breaches. See Dkt. 200. The
Court then held an evidentiary hearing limited to those
issues. The Court heard live testimony from four witnesses.
For each, direct testimony was received in the form of a
sworn affirmation and each was subject to live cross and
redirect examination. Two were called by the Foundation:
Harry L. Katz, an expert witness, see Pl. Br. Ex. 1
("Katz Decl."); Dkt. 217 ("Rebuttal Katz
Decl."), and David Leopold, the Foundation's
Creative Director, see Pl. Br. Ex. 5 ("Leopold
Decl."); Dkt. 216 ("Rebuttal Leopold Decl.").
The Galleries called two witnesses: John Yavel, an employee
of the Galleries, see Dkt. 209 ("Yavel
Decl."), and Margo Feiden, see Dkt. 212
("Feiden Decl."). The Court also received certain
documentary evidence via the declarations of counsel.
See Pl. Br. Ex. 8 ("Kaplan-Peterson
Decl."); Dkt. 215 ("Lackman
Decl."). Finally, the Court has also benefitted
from the parties' helpful post-hearing letter briefs, in
which the parties set out their respective calculations of
the damages owed for unauthorized giclees. Dkt. 226
("Pl. Post-Hr. Br."); Dkt 227 ("Def. Post-Hr.
Court found at summary judgment, the Galleries breached the
Agreement by failing to maintain custody of 20 original
Hirschfeld works, whose whereabouts the Galleries is unable
to account for today. The parties have subsequently reduced
the list of missing works to 19. These works-to which the
Court and the parties refer as the "Missing
• "Famous Feuds: Zanuck and Greco,"
• "S.J. Perelman: Readying Myself for My
• "Dick Shawn in the World of Sholom Aleichem,
• "Curtis and Leigh in Houdini,"
• "Outdoor Life,"
• "Artists and Models: 300 Girls Paraded Before
Monte Prosser and Wally Wanger,"
• "Hit Plays in England,"
• "Swiss Family Perelman p.6, 'Go Ahead' I
shouted, 'Milk Me, Drain Me Dry,' Mr. and Mrs. S. I.
• "Every Barn's a Stage: Life with
• "Westward Ha: Lazy Days on the Poop's
Mortician, Missionary, Perelman Boy Meets Gull,"
• "Directing Minds of Russian Cinema and
• "The Filming of Stolen Hours a/k/a Summer
• "Walking Happy,"
• "Duke Ellington,"
• "Dizzy Gillespie,"
• "Lorabid Doctor Waiting for a Phone Call for Eli
• "The Cast of 45 Seconds from Broadway."
The parties dispute the proper valuation of these works.
The Measure of Damages For the Works
parties agree that the Galleries' failure to account for
the Missing Works, as found by the Court, is an act of
conversion under New York law. See Pl. Br. at 1;
Def. Br. at 3; see also, e.g., Thyroff v.
Nationwide Mut. Ins. Co., 460 F.3d 400 (2d Cir.
2006). The parties dispute, however, how damages
for such a conversion ought to be measured. The Foundation
seeks to recover the market value of the works; the
Galleries, on the other hand, argue that damages should be
limited to the Foundation's lost profits. Because the
Agreement provided that the Foundation would receive 50% of
any profits from the Galleries' sales of the Missing
Works, the Galleries argue that the Foundation's damages
for the Missing Works should be 50% of their market value,
Court agrees with the Foundation that the market value of the
works-without any discount for the Galleries' right to
retain 50% of the profits-is the proper measure of damages.
Under New York law, "[t]he usual measure of damages for
conversion is the value of the property at the time and place
of conversion, plus interest." Fantis Foods, Inc. v.
Standard Importing Co., 49 N.Y.2d 317, 326 (1980).
"However, lost profits are allowed where either from the
nature of the article or peculiar circumstances of the case
they might reasonably be supposed to follow from the
conversion." Rajeev Sindhwani, M.D., PLLC v. Coe
Bus. Serv., Inc., 861 N.Y.S.2d 705, 708 (2d Dep't
2008) (internal quotations omitted). But New York law allows
for the recovery of lost profits above and beyond
the market value of the lost or stolen property (in certain
circumstances) not as an alternative, lesser measure of
damages. See id.
event, whether the Galleries might have sold the Missing
Works, and thereby earned a commission, is of no moment here
because the Agreement, which provided the Galleries their
only authority to make such sales, has been terminated, for
multiple reasons. And upon termination of the Agreement, all
rights in consigned works-that is, 100% of their value-
reverted to the Foundation. The proper measure of damages,
therefore, is the fair market value of the works at the time
and place of the conversion-that is, New York City on
December 14, 2017, the date on which the Foundation demanded
the Missing Works' return and on which the Galleries,
having been unable to account for them, were unable to
produce them. See Leopold Decl.¶4.
basis, the Court proceeds to consider the proper value of the
The Parties' Valuation
on the work-by-work valuation of their expert, Harry Katz,
the Foundation values the Missing Works at $328, 000. Pl. Br.
at 2; Katz Decl. ¶ 54.
Galleries do not advance or substantiate an alternative
valuation. Instead, they argue that the value of the works
should be limited to approximately $10, 000 per work,
see Def. Br. at 4, a calculation which would yield a
total valuation of approximately $190, 000.
The Court's Findings
Court finds Katz's valuations, anchored in sales prices
for Hirschfeld works that Katz contends to be comparable, to
be thoughtful and helpful. Katz's valuations provide an
appropriate starting point for valuing the missing works. As
explained further below, however, depending on the missing
work, the sales of Hirschfeld works to which Katz likens a
missing works are more apposite-and his valuations more
persuasive-than others. Katz's approach is also fairly
critiqued for examining only certain for a in which
Hirschfeld works have been offered for sale. Accordingly,
while the Court begins with Katz's valuation, it does not
the Court addresses Katz's qualifications, reviews the
Galleries' critiques of Katz's approach to valuation,
and sets out its overall assessment. The Court then explains,
work by work, its valuation of the 19 works, 1.
Court finds Katz clearly qualified to appraise the works. He
served for 13 years as Curator of Popular & Applied
Graphic Art and Head Curator in the Prints and Photographs
Division of the Library of Congress. Katz Decl. ¶ 2.
Since then, he has served as Curator of the Herb Block
Foundation and has worked as an independent curator of fine
and graphic art. Id. ¶¶ 1, 4; see also
Id. Ex. 1 (Katz CV). Katz has particular expertise in
the work of Al Hirschfeld. He has written about Hirschfeld
and his work and has collected Hirschfeld's work for the
Library of Congress. Katz. Decl. ¶ 6. He also put on a
Hirschfeld exhibition at the Library of Congress. Tr. at 24.
In his work as a curator and acquirer for the Library of
Congress, Katz was repeatedly called on to appraise the value
of Hirschfeld works. See Katz Decl. ¶ 9; Tr. at
26-29. He has been appraising works for one client or another
since 1991. Tr. At 23.
Katz's valuation is, for the most part, credible and
convincing. Katz's valuation involved comparing each
Missing Work to Hirschfeld works which he deemed comparable.
For example, Katz appraised the drawing "Dick Shawn in
the World of Shalom Aleichem" (inventory no. 704), a
drawing that first appeared in The New York
Times's Friday Theater column. Id.
¶¶ 20-21. Katz compared this "Friday
Drawing" to other "Friday Drawings" the
Foundation has recently sold, including one depicting Maurice
Hines, sold for $12, 000, and another depicting Robert Reed,
also sold for $12, 000. Id. ¶ 21. Based on
those sales, Katz opined that the missing "Dick
Shawn" drawing is worth $12, 000. Id. ¶
testified, this method of appraisal is typical, and the
materials on which he relied are "the type of
documentation [he] would typically review and rely on in
conducting an appraisal of a particular work."
Id. ¶ 14.
The Galleries' Critiques
Galleries challenge Katz's valuation on several global
the Galleries note, because the Missing Works are missing,
Katz was unable to assess the condition of the missing
drawings. The Galleries argue that Katz's valuations are
based on the "extraordinary assumption" that the
works are in good condition. See Tr. at 35. The
Galleries dispute that assumption as to all missing works.
See Def. Br. at 6; Tr. at 31-38, The Galleries'
critique is overbroad. As for works created prior to 1970,
when Hirschfeld's practice was not consistently to use
archival paper, there is a colorable reason-separate from any
possible mishandling by the Galleries-to surmise that the
condition of a work could have deteriorated over time.
See Tr. at 31 (Katz); id. at 388-89
(Feiden). As to the post-1970 works, however, there is no
basis to assume such deterioration. Of the 19 missing works,
this critique applies only to six, because, as Ms. Feiden
testified, only six date from the period in which Hirschfeld
tended to use non-archival paper. See Tr. at 388
(Feiden) (testifying that low inventory numbers correspond to
pre-1970 drawings). Also problematic for the Galleries, the
testimony was not that deterioration of works on non-archival
paper was inevitable, only that it was possible. The works
were last held in the custody of the Galleries, and they have
not come forward with affirmative evidence, e.g.,
testimony by a percipient witness, that when observed most
recently, their condition was compromised. Under these
circumstances, given the nature of Katz's task, his
assumption that the missing works were in good condition is
justified. There was simply not any concrete evidence that
any of the earlier drawings had, in fact, deteriorated before
the Galleries disposed of (or lost) them.
the Galleries challenge the fact that Katz took as truthful
the data he was given by the Foundation as its own prior
sales, a number of which he used as comparables. See
Def. Br. at 5. In addition to relying on auction records,
Katz relied on the Foundation's reports of its sales
prices for particular works. Id.; Tr. at 51-52
(Katz). While the better practice undoubtedly would have been
for Katz to verify the Foundation's representations, that
is ultimately not a basis to discount his opinions as having
a "flimsy basis," as the Galleries urge.
See Def. Br. at 5. The Galleries do not offer any
concrete basis to treat as inaccurate the Foundation's
sales figure. And the Galleries, which had the opportunity to
conduct full discovery of the Foundation, has not come
forward with any evidence impeaching any of these sales
records. Katz's consideration of the Foundation's
reported sales figures, therefore, was justified.
the evidence elicited at the damages hearing by the Galleries
brought to light certain methodological limitations to
Katz's approach to valuation. The Court has taken account
of these limitations, as relevant, in assigning values to
the Foundation's own website lists several original
Hirschfeld drawings for sale. Those works are offered from
between $4, 000 and $15, 000, but never more. See
Def. Br. at 4; Tr. at 146; The Official Al Hirschfeld
Store, Al Hirschfeld Foundation,
Katz testified that he ignored these asking prices altogether
because they do not represent actual, realized sales.
See Tr. at 147, 154-56. The Court's view,
however, is that these offering prices are a relevant data
point. Notably, the Foundation's website does not provide
for an auction in which the listed price functions as a
floor, not a ceiling. Rather, the website allows a customer
to purchase a work at the listed price. Therefore, there is
no persuasive reason for Katz to discount these listings on
the ground that the works listed on the Foundation's
website might sell for above the listed price. That a work
has not sold at the listed price might suggest, if anything,
that a lower price might be necessary to achieve a sale. In
all events, the Foundation's own asking price for a
Hirschfeld work, where fairly comparable, is germane, in the
Court's view, to the valuation inquiry.
Katz's valuation did not take into account the prices at
which several original Hirschfeld drawings have sold in
recent years on alternative art-sales fora. Katz testified
that the Foundation provided him with records of auction
sales in the form of printouts from the website ArtNet, which
aggregates auction results from a range of auction houses.
See Tr. at 149-50 (Katz) (describing ArtNet). The
prices realized at these auctions for original Hirschfeld
works range from $200 to $15, 000. See Katz Decl.
Ex. 3. Katz did not, however, take those sales into account
in his appraisal, apparently skeptical that sales in such
fora yield maximal prices. Tr. at 140-46. But the works sold
did not differ significantly in kind from the Missing Works
or the works sold by the Foundation which Katz was prepared
to treat as comparables. Tr. at 144 (Katz). And some of these
sales were more recent than those on which he relied. And
while Katz relied on certain sales by the Galleries, he did
not account for more recent sales, despite being aware of
them. See Katz Decl. ¶ 33; id, Ex. 3
at 83-84; Tr. at 105, 168-69 (Katz). In the Court's view,
a complete appraisal would have considered sales prices for
Hirschfeld works yielded on these other fora, while taking
into account any well-founded bases to conclude that auctions
in these venues tend to produce lower prices.
to some degree, Katz can be faulted for assigning
significance to particular features of missing artworks only
when they supported a higher valuation. In certain instances,
Katz's report noted that a particular missing work
depicts a celebrity-or a backstage scene, or an opera-as
evidence of the drawing's significance and, therefore,
presumably a heightened valuation. But Katz's report
never makes the contrary point-that the contents of
particular missing works are, by nature, more quotidian,
e.g., depicting persons whose modern cachet is
limited. See, e.g., Tr. at 70 (Katz). In the end,
the decisive factor in the Court's valuation analysis is
the guidance offered by fairly comparable sales, but the
Galleries' critique of Katz for seeming to treat the
subjects of artwork as a one-way ratchet-favoring upward, but
no downward, adjustments in valuation-has some traction.
for certain missing works, Katz was unable to identify
comparable sales. These include "Directing Minds of
Russian Cinema and Theatre" ("Directing
Minds"), "Duke Ellington," and "Dizzy
Gillespie." See Katz Decl. ¶¶ 4G-41
("Directing Minds"); 46-47 ("Duke
Ellington"); 48-49 ("Dizzy Gillespie"). For
"Dizzy Gillespie" and "Duke Ellington,"
Katz testified that relevant comparable sales exist but are
in his head, not on paper. Tr. at 137 (Katz). As finder of
fact, however, the Court is unable to test any such claim, as
Katz did not elucidate the particular sales of works in his
head that he believes are comparable. As to "Directing
Minds," Katz testified that no comparable sales exist
because few, if any, comparable works exist. Tr. at 78-79.
That may be: The "Directing Minds" work is indeed
extraordinary, and Katz's testimony as to the
significance-both political and art-historical-of this work
was persuasive. See Id. In the end, however,
Katz's numerical valuation of this landmark work is
limited by the lack of evidence of comparable sales.
as to several missing works, Katz's valuation is limited
because no images of those works were available for Katz to
consult. See Id. ¶ 25 (no images or
measurements available of "Outdoor
Life"); id. ¶ 28 (no images or
measurements available of "Hit Plays in England").
Works for Which Comparable Sales Support Katz's
these considerations, the Court finds Katz's valuations
persuasive as to those works for which a sale that the Court
finds fairly comparable has recently occurred and for which
the Galleries have not provided any competing comparable
sales. As to these works, the Court finds that Katz's
valuation is proper. Accordingly, the Court assigns the
following valuations to the following 13 missing works:
• "S.J. Perelman: Readying Myself for My
Debut": $8, 000.
• "Dick Shawn in the World of Sholom
Aleichem": $12, ...