Billionaire Ronald Perelman Spars With Art Insurers Over $410 Million Damage Claim

The high-stakes legal battle that has been raging between billionaire art collector Ronald Perelman and a consortium of insurers since mid-2020 is growing even more heated.

Via his holding companies, Perelman is demanding a $410 million insurance payout for damage that he says five blue-chip artworks suffered in a 2018 fire at his Hamptons estate, known as the Creeks. Accusations are flying in a blizzard of recent legal filings. Dueling over testimony that Perelman gave under oath, each side is asking a New York State Supreme Court justice to rule in their favor without holding a trial.

The insurers allege that Perelman attempted to sell the five pieces-a Cy Twombly, two Ed Ruschas, and two Andy Warhols-despite saying in an examination under oath that he did not do so. In addition, they allege that he sold two works that were in his house during the fire, casting doubt on his claim that everything on hand suffered damage.

Attorneys for the insurers-underwriters of Lloyds of London including Great Lakes Insurance SE of Germany, Swiss Re International of Luxembourg, AIG Property Casualty of New York, and Federal Insurance Company of New Jersey-assert that none of the paintings were actually damaged in the fire and that their cumulative value is just $103 million. (The insurers have paid $141 million for other fire-related damage.)

In one recent filing, the insurers assert that Perelman "repeatedly gave deliberately false testimony that concealed his efforts to sell paintings exposed to the September 2018 fire . . . including the very paintings he now claims are damaged and for which he seeks $410 million." The insurers say that his testimony violated the terms of his policy, which denies coverage if the policyholder intentionally makes false materialstatements.

Perelman's attorneys did not respond to request for comment, but in their request for summary judgment, they assert thatPerelman made no false statements, that there is no evidence of fraudulent intent on his part, and that any misstatements he may have made are immaterial to the case.

"Insurers misrepresent Mr. Perelman's testimony," their brief states. "Mr. Perelman never testified that he did not consider selling any of the artworks that hung at The Creeks; Insurers never asked that question. Instead, Insurers focused only on the Five Artworks."They also assert that the insurers "have focusedmyopically on Mr. Perelman's statement that the pieces he sold in the last year 'were not in thefire.' . . . But they ignore the surrounding testimony in which he repeatedly explainedthat he could not recall all his sales from the prior year. . . In context, Mr.Perelman's testimony was equivocal."

The insurers insist that, at a July 2021 examination, Perelman stated that he did not try to sell any of the paintings that had been hanging during the fire. "But it turns out he tried selling all five in dispute here," the insurers' filing states. "And while those efforts did not result in any of the five paintings being sold, he sold others (including one in the same room as three of them, and another just nine days before his examination) that were exposed to the same conditions," according to the court papers.

According to court papers, two works from the Creeks were eventually sold to fellow billionaire art collector Kenneth C. Griffin, who paid an in-person visit to the Creeks in August 2020 with Larry Gagosian, who helped broker the sales. Representatives for Griffin and Gagosian did not respond to requests for comment.

One of the works that changed hands was a Brice Marden painting, Letter about Rocks #2 (2008-09), sold in December 2020 for $30 million, which was not part of the claim but which hung in the same dining room as three of the five paintings in the claim, according to the filing. Perelman also sold another large Brice Marden painting, River 4 (2014), for $9.5 million in July 2021, which insurers point out hung in a neighboring room of the Creeks during the fire.

"This transaction occurred nine days before Perelman testified at his examination under oaththat he had not sold any art from the Creeks the year before the [examination] in which he claimed the firedamaged 'everything,' preventing him from selling anything," according to the insurers' documents.Perelman, who has faced financial issues in recent years, subsequently admitted he was "wrong" in testifying otherwise, the papers allege. (A filing by Perelman's team says that he is "a busy businessman and an avid art collector" and could not recall all of his art sales. "Between March 10, 2020 and January 10, 2022, for example, he sold 71 pieces of fine art for just under $1 billion," it states.)

According to Perelman's filing: "At no point during the lengthy [examination] did Insurers' counsel ask whether Mr. Perelman considered selling any other artwork that was at The Creeks during the fire-even though the Policy's schedule listed each such artwork. Nor did counsel ask any questions about two paintings by Brice Marden," with the ensuing text redacted.

In an effort to show that Perelman knew about the sales, the insurers highlight a June 30, 2021, email to Griffin from a Gagosian employee on behalf of the dealer stating, "I'm really pushing Perelman but he wants $10M. Do you want to try $9.5M to meet him in the middle?" The insurers also state that Griffin, who has testified in the case, understood all the work at the Creeks to be for sale.

In another recent filing, aimed at casting doubt on Perelman's claim that he noticed only in 2020 that the paintings had lost "oomph," the insurers provide details and photos of a post-fire fundraiser benefit party in August 2019 that he hosted at the Creeks on behalf of Harlem's Apollo Theater. Along with photos showing two of the five paintings in the background, a Warhol Soup Can and Elvis 21 Times, there are photos of Pharrell, actor Andrew Garfield, and entertainment mogul Tom Freston, among other VIPs.

According to Perelman's request for summary judgment, after paying the insurers "substantial premiums for more than adecade to protect against physical damage to their property," the insurers are advancing"convoluted arguments to avoid paying," the papers state.

Further, Perelman alleges that the insurers "conducted a bad-faith investigation and denied coverage," and says that the insurers had selected only certain quotes (they use the term "cherry-pick") from the examination of Perelman to support their argument. Attorneys for the insurers declined to comment. The time frame for the judge's decision on the competing summary judgment is expected to be several months, according to a source familiar with the case.

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artnet AG published this content on 07 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 07:51:34 UTC.