Posts Tagged ‘horse auctions’

Through the first three days, Keeneland has sold a total of 523 horses for $114,725,000, down 48.1 percent from last year’s $221,137,000 when 638 horses sold.  The average of $219,359 was down 36.7 percent from $346,610 in 2007, while the median of $125,000 decreased 34.2 percent from last year’s $190,000

“In general, given the state of the world today, it was a very good session,” said Geoffrey Russell, Keeneland’s director of sales. “What is good is that there is active trade here; and active trade with an international feel.”
Woodland Farm, the day’s leading buyer, purchased the session’s second-, third- and fourth-highest priced horses, paying $500,000 for Capeside Lady, in foal to Empire Maker; $385,000 for Sacred Feather, in foal to Giant’s Causeway; and $375,000 for Princess Patricia, in foal to Hard Spun.

Halsey Minor, the technology entrepreneur and Thoroughbred owner and breeder whose bid to purchase Hialeah Park was recently rebuffed by owner John Brunetti, has filed a class-action lawsuit against the auction company Sotheby’s for transparency and disclosure issues that may parallel those in the Thoroughbred auction business.

Minor, 43, was sued by the New York-based Sotheby’s for $16.8 million last month after he failed to pay for three works of art he purchased through the auction house in May, including $8.6 million for the “Peaceable Kingdom With the Leopard of Serenity,” by 19^th Century American folk artist Edward Hicks. On Tuesday morning in federal court in the Northern District of California, Minor filed a class-action claim against Sotheby’s for deceptive practices, unjust enrichment and fraud, plus one individual count of breach of fiduciary duty. (Click here for a copy of the suit.)

The lawsuit stems from Minor’s claim that Sotheby’s was deceptive in not disclosing its own economic interest in the artwork he purchased. Sotheby’s was owed money by art collector Ralph Esmerian, the suit claims, and the debt was secured by the works of art that Minor purchased, with Sotheby’s allegedly retaining the proceeds from the sale in order to reduce the debt. Sotheby’s failed to disclose those details verbally or in its sale catalogue, which the suit claims is a violation of New York statute and common law.

Furthermore, it is claimed, Dara Mitchell, director of the American Paintings Department for Sotheby’s, acted as an advisor to Minor and recommended the purchase of “Peaceable Kingdom” and steered him away from other works. The suit states: “Sotheby’s took on obligations to plaintiff beyond those of an independent auction house or traditional middleman when engaged as art consultant and purchasing agent … Sotheby’s breached its fiduciary duty to plaintiff by intentionally and in bad faith concealing from plaintiff information concerning its economic interest in the auctioned property.”

Minor seeks to represent what the suit projects are thousands of other buyers who may have purchased property at Sotheby’s auctions in which Sotheby’s had an undisclosed economic interest. Proposed class-action members can be identified and located through access to Sotheby’s records, the suit states. It seeks relevant information about previous buyers from Sotheby’s over a six-year period.

The issue of a sale company’s economic interest in property it sells has not come up in legal action in the Thoroughbred auction business to this writer’s knowledge, but it is not uncommon for proceeds from horses sold to to be used to settle debts to an auction company; those details are not disclosed publicly. Further, individuals employed by auction companies in various positions have had undisclosed economic interests in horses sold by the auction companies.

An attorney familiar with art and Thorouthbred auctions commented to the Paulick Report: “Sotheby’s will take the same tactic the horse business does in such matters and say, ‘No one twisted your arm to bid — if you were willing to pay it, it must be a fair price,’ and ignore the ‘informed buyer’ requirement of the fair market value definition.”

The Los Angeles law firm Dreier Stein Kahan Browne Woods George is representing Minor.

The suit demands a jury trial and seeks an injunction requiring preliminary and permanent disclosure in catalogues by Sotheby’s of any economic interests the company has in property it auctions; repayments to Minor and class-action members of unjust enrichments by Sotheby’s from property’s in which it had an economic interest; compensatory and punitive damages for wrongful conduct; and treble damage in accordance with New York law.

Seven years ago, Sotheby’s and counterpart auction house Christie’s paid a $537-million settlement to customers for price-fixing on commissions and Sotheby’s former chairman Alfred Taubman was convicted of price fixing and sentenced to one year in prison.

Copyright © 2008, The Paulick Report

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