(Bloomberg) -- As a major investor in distressed debt and a millionaire art collector, Steven Tananbaum is used to getting what he wants. And he wants three giant sculptures he says he paid Gagosian Gallery Inc. $13 million to deliver.
He came a step closer to getting them, or millions of dollars in place of them, when a judge ruled last week that a lawsuit he filed in April 2018 can go forward. New York State Supreme Court Justice Saliann Scarpulla trimmed back some of Tananbaum’s claims, including breach of good faith, but allowed breach-of-contract claims to continue.
The yearned-for artworks, “Magenta Balloon Venus,” “Eros” and “Diana,” were to be made by Jeff Koons, and like their purchase price they were to be big: 8 1/2 by 4 by 4 feet for the “Balloon Venus,” in “mirror-polished stainless steel with transparent color coating,” according to a court filing.
Tananbaum, the chief investment officer of GoldenTree Asset Management LP -- or, as Gagosian called him, the “imperious” multimillionaire -- claims the gallery lures unwary investors with promises of custom-made art, then keeps them waiting, and waiting, all the while using their payments to keep the scheme going. In his initial complaint he called it a “garden-variety, interest-free fraudulent financial routine that hearkens the name Ponzi.”
Tananbaum, who’s on the board of trustees of the Museum of Modern Art, purchased the Venus in 2013, according to the complaint. It is a modern interpretation of the paleolithic Venus of Willendorf figurine that stands 4 1/2 inches tall. He bought the other two artworks later. He’s seeking more than the $13 million he says he spent, as damages for Gagosian’s failure to deliver the works.
Larry Gagosian, whose global network of galleries stretches from New York to Los Angeles to Hong Kong, has argued that Tananbaum is a “highly sophisticated art investor” who entered into the purchase contracts knowing that the completion dates for the commissioned sculptures were only an “estimate” and that fabrication could take years.
“The imperious demands of a multimillionaire who no longer wants to wait cannot trump the plain and unambiguous language of the purchase agreements, which do not require Mr. Koons to create the works by any specified deadline,” the gallery said in court filings.
In addition to the dismissal of four of Tananbaum’s claims, it got the investor’s bid to collect triple damages thrown out.
Shannon Selden, a lawyer for Tananbaum, said her client was pleased with the judge’s decision.
“As Mr. Tananbaum alleged in his complaint, a dealer can’t just take the cash and fail to perform within a reasonable period of time,” Selden said. “They are contractually required to honoring their obligations.”
Matthew Dontzin, a lawyer for Gagosian, didn’t immediately return a voicemail seeking comment on the ruling.
No trial date has been set.
The case is Tananbaum v. Gagosian Gallery Inc., 651889/2018, New York State Supreme Court (Manhattan).
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