A Glimpse Into an Uneasy Gallery-Artist Relationship

During the mid-1980s, Hiro Yamagata was Martin Lawrence Galleries’ most popular artist. The silk-screen reproductions of Yamagata’s brightly colored paintings accounted for nearly 60% of sales at the retail art chain, operated by Van Nuys-based Martin Lawrence Limited Editions Inc.

During the first nine months of last year, Yamagata’s works still generated 42% of Martin Lawrence’s $36.5 million in sales.

Yamagata’s serigraph reproductions, which resemble originals because they bear the artist’s signature, come in limited editions and sell from $3,800 to $15,000 each at Martin Lawrence’s 43 shopping mall galleries, and his original acrylics sell in the $200,000 range. The brisk sale of his works has enabled Yamagata to buy a $2.3-million house in Malibu with a sweeping view of the ocean.

But the 10-year relationship could be doomed as Yamagata and Martin Lawrence square off in a lawsuit filed by the company contending breach of contract and fraud by Yamagata that cost Martin Lawrence at least $40 million in lost sales since 1985, according to the company’s estimate. The company filed the suit Jan. 30 in Los Angeles Superior Court.

The lawsuit comes at a particularly bad time for Martin Lawrence, which saw profits plummet 57% in the quarter that ended Sept. 30 from a year earlier because of the soft art market and slumping retail sales. The Yamagata lawsuit has also scared off many investors. Martin Lawrence’s stock fell 17% Jan. 31--the day the suit was announced--and closed at $2.375. The stock had traded above $13 in 1989.

The stock closed Monday at $2.50, up 25 cents from Friday’s close.

The suit offers a glimpse into the uneasy relationship between Martin Lawrence and its biggest contributor. It also raises questions about how Martin Lawrence became so dependent on one artist.

Yamagata, meanwhile, has not renewed his three-year contract with Martin Lawrence after it expired in December, and Martin Lawrence executives said they do not expect Yamagata to change his mind.

Martin Lawrence contends that Yamagata published or sold to other publishers at least 40 serigraph editions without first offering them to Martin Lawrence, as required under Yamagata’s old contract with the company. Martin Lawrence also says that Yamagata failed to sign a number of his serigraphs, lowering their value, and that last year he offered the company a series of watercolors that Martin Lawrence said it refused because they didn’t meet its standards.

“Martin Lawrence has been very accommodating to Mr. Yamagata over the years and is not eager to be involved in litigation with him,” said Martin Lawrence’s attorney, Jeffrey C. Briggs. “We have been trying to meet with him to discuss all of these issues and how they can be resolved, and have in the course of more than a year not met with any success.”

Efforts to reach Yamagata for comment were unsuccessful. Susan A. Grode, an attorney who has represented Yamagata in the past and who is expected to represent him in the lawsuit, did not return repeated phone calls seeking comment.

Martin Lawrence acknowledged in a press release announcing the lawsuit that future cutoff of Yamagata artworks “will have a significant detrimental impact” on the company’s operations (company executives said the exact impact would depend on how the lawsuit is resolved).

But the cutoff does not mean the company is ruined, said Frank Podbelsek, an independent financial analyst, formerly with Paine Webber, who has followed Martin Lawrence since shortly after the company went public in 1985.

“You always have a risk when you have a high dependency on any single person,” Podbelsek said. “But it’s not like turning off or on a light switch. Because of the legal situation and the contract not being renewed, many people would assume that 40% of the business is gone. That’s not the case.”

Why? Podbelsek said Martin Lawrence has about $100 million worth of artworks in its inventory, including many Yamagata serigraphs, so the company is well supplied for the near future. Also, he said, Martin Lawrence has been actively promoting the works of other artists, including Keith Haring, Mark King, Linnea Pergola, Susan Rios and Rodney Alan Greenblat.

Yamagata’s share of Martin Lawrence sales has been steadily declining since its peak in the mid-1980s and his popularity would have continued to shrink with or without a lawsuit, Podbelsek contends.

Ron Anderson, a broker with Wedbush Morgan Securities in Los Angeles who used to follow Martin Lawrence’s stock, offered a simple explanation for the company’s reliance on Yamagata: “If . . . he is in demand, what are you going to do? You can’t tell the customers, ‘Well, we can’t sell you that.’ ”

Allen A. Baron, the company’s chief financial officer, said Yamagata’s share of the company’s business should come as no surprise to careful investors because the company’s quarterly reports state the percentage of sales represented by each artist. “People know Yamagata,” he said. “They know he is one of the most popular artists in the country.”

But that was not always the case. In its lawsuit, Martin Lawrence suggests that Yamagata was relatively unknown until the company began selling and promoting his works in 1981. Before that, Yamagata’s works were displayed off and on at one-man and group exhibitions in Paris, Vienna, Munich, San Francisco and other cities.

Born in 1948 in Malbara, Japan, near Kyoto, Yamagata moved to Paris in 1972 to study at L’Ecole des Beaux Arts and left in 1978 for Los Angeles, according to a Martin Lawrence brochure. The artist is most famous for his intricately detailed and colorful cityscapes, occasionally dotted with well-known names and faces from sports and film entertainment.

Although Yamagata has become popular in the reproduction art market, his works draw less admiration from some veteran collectors. “It features a naive, primitive style that is really lovable,” said Fletcher Smith, curator at Galerie Michael, a Beverly Hills gallery that specializes in Old Masters and Impressionists. “But personally, I think there’s so much more interesting things.”

Still, Yamagata has been a hit among people who can’t afford an original Picasso or Matisse. Indeed, Martin Lawrence’s marketing approach is to sell artworks in much the same way that appliance stores sell refrigerators, on easy monthly payments.

“His pieces are in much greater demand and command much higher prices today than they ever had before” 1981, Briggs said. But Yamagata, Martin Lawrence says, was anything but grateful for the success the company says it had generated for him.

Yamagata deliberately delayed deliveries of his artworks and skipped out on scheduled promotional appearances, the suit contends. His erratic work habits created problems for Martin Lawrence by alternately starving and flooding the market for his serigraphs, the company says.

When Yamagata delivered a series of watercolors late, they weren’t what Martin Lawrence says he had promised the company. Yamagata started over, but again the paintings were unsatisfactory, according to the suit. At the same time, however, Yamagata was busy displaying other watercolors in such places as the Daimaru department store chain in Japan, Martin Lawrence contends.

“Martin Lawrence has given him an awful lot of leeway,” Briggs said. “He has abused the trust and confidence that Martin Lawrence put in him.”