Michael Ovitz sues gallery, alleging fraud over artwork sales

Michael Ovitz, the former Hollywood power player who co-founded talent agency Creative Artists Agency, has sued a Los Angeles gallery, alleging it sold two pieces of art he consigned to it but didn’t give him the proceeds, which totaled nearly $1 million.

Ovitz, a prominent art collector who had a short stint as president of the Walt Disney Co. in the mid-1990s, claimed in the Los Angeles Superior Court lawsuit filed Tuesday that Perry Rubenstein Gallery improperly sold two of his works by contemporary American painter and photographer Richard Prince.

The lawsuit, which names the gallery and its namesake head, Perry Rubenstein, as parties, alleges that the value of the works was damaged by the “unauthorized transactions,” the details of which were kept from Ovitz.

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Ovitz alleges that the gallery represented to him that it sold the 2006 Prince work “Untitled (de Kooning)” in May but withheld proceeds of the supposed sale; and sold Prince’s 1992 work “Nobody’s Home” for less than an agreed upon amount and has not given the collector the proceeds from the deal.

Suing for fraud and breach of contract, Ovitz is seeking the return of the artwork, along with unspecified compensatory and punitive damages.

The lawsuit describes the gallery’s conduct as “self-dealing that can only be described as Byzantine.”

Reached by telephone, Rubenstein declined to address the specifics of the case, though he said that his attorney “has been and continues to be” in discussion with Ovitz’s representation about a resolution.

“Personally, I prefer resolution and relationships. There are some, very few, that prefer litigation. In this case, I would consider the source,” said Rubenstein, whose gallery is located on Highland Avenue in Hollywood.

As a talent agent, Ovitz was famed for his pugnacious deal-making style and sharp elbows. In 1975, Ovitz co-founded Creative Artists Agency with a handful of other agents, including Ron Meyer, now vice chairman of NBCUniversal. Creative Artists became a juggernaut in the agency business, and Ovitz represented A-list entertainers, including Tom Cruise and Steven Spielberg, before leaving for the job at Disney in 1995.

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According to the lawsuit, Ovitz consigned “Untitled (de Kooning)” to Perry Rubenstein Gallery in September 2012, originally seeking to sell the work for no less than $650,000. However, he and the gallery agreed in May on a sale to a Mexican collector for a net payment to Ovitz of $500,000. The lawsuit states that Rubenstein told Ovitz the buyer would pay, but was “notoriously slow.” Ovitz was promised payment by the fall.

However, he had not been paid by September, and the gallery still possessed “Untitled (de Kooning),” according to the lawsuit. Ovitz believes, the lawsuit said, that “Untitled (de Kooning)” was not actually sold, because if the transaction had occurred he would have received a payment from the gallery.

Regarding the “Nobody’s Home” sale, Ovitz contends that he and Perry Rubenstein Gallery made an agreement in writing in July that the work would not be sold for less than $575,000. The painting was sold in October -- after the consignment agreement had expired -- for $475,000 without Ovitz’s permission, the lawsuit states.

The lawsuit claims that the sale was concealed from Ovitz, and he learned about it from a third party. The complaint alleges that a representative of Ovitz and Rubenstein spoke by telephone on Nov. 21, and that the art dealer admitted to selling the work for $475,000.

It is argued by Ovitz that the value of the painting was significantly hurt by Rubenstein’s actions, which constituted a sale at a “deeply discounted price.”

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In recent years, Ovitz has become known for his art collection, which is reported to include notable works by Pablo Picasso, Mark Rothko and Jasper Johns.

Ovitz’s time at Disney was brief: He left the Burbank company in January 1997 after an acrimonious stint there as the company’s No. 2 under Chairman Michael Eisner. In addition to collecting art, Ovitz is a tech investor.

Among the questions raised by the case is the value of the two Prince works. The lawsuit alleges that when artwork is shopped around or “undersold,” it has been “burned,” severely decreasing its value on the resale market. The lawsuit claims both Prince works have now been “burned.”

The art valuation website findartinfo.com lists more than 40 Prince pieces that have sold for more than $1 million at auction.

Ovitz’s attorney, Eric George of Browne George & Ross, did not immediately respond to a phone call seeking comment.

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