O.C. Heiress Smith, Dealer Have $4-Million Art Clash

Heiress Joan Irvine Smith filed a lawsuit in Superior Court on Wednesday claiming a Fallbrook art dealer has refused to give her more than $4 million in California impressionist paintings he bought with her money.

However, the art dealer, Michael Johnson, countered Wednesday that the 60-year-old granddaughter of the Irvine Co. founder owes him $750,000 in unpaid commissions for his help in obtaining $15 million in art.

Smith, an avid art patron, accused Johnson of breaking an oral contract over the paintings. “You try to trust people, but this is a situation where (Johnson) couldn’t be trusted,” she said.

In the lawsuit, which alleges breach of contract as the chief complaint among seven, she is seeking $10 million in damages, including the value of the allegedly missing art, punitive and exemplary damages.

Johnson, 46, called Smith’s charges “ludicrous. If she can’t find $4 million worth of paintings, it is not my problem.”

The dispute stems from a whirlwind buying spree, from fall, 1991, through spring, 1992, in which Smith astonished the art world by becoming the largest buyer of California impressionist art in the nation.

Armed with a $256-million fortune from the sale of her stock in the Irvine Co., the massive Orange County land development firm founded by her grandfather, James Irvine II, Smith snatched up paintings by plein-air artists.

She hired Johnson, a former policeman and private investigator turned art dealer, to help her locate and buy paintings for her private collection, the Irvine Museum that Smith opened in January, and for a proposed commercial gallery.

The artists were painters who, between 1890 and 1930, migrated to Southern California, attracted by the quality of light and pristine scenery. Smith said she was drawn to their work because it showed what the area looked like before it was overrun with development.

Although she received many paintings, she claims Johnson has failed to turn over paintings worth $4 million. She declined Wednesday to directly discuss the litigation, but Johnson said he received a letter from Smith’s attorney demanding the return of 200 to 300 paintings.

Johnson conceded that he has kept some paintings that Smith claims are hers, although nowhere near $4 million worth, but said he’s holding them until Smith pays his full commissions.

” . . . They are not hers until they are paid for,” he said, referring to the commissions.

Smith’s lawsuit says that in October, 1991, she entered into a verbal agreement with Johnson for him to act as her agent in buying the impressionist paintings.

Smith said Wednesday that a gallery owner referred her to Johnson when she was looking for certain paintings that Johnson offered for sale. “He started sending me pictures of more paintings,” she said.

According to the lawsuit, Johnson told her he was a former police officer who had become interested in art dealing while working as a private detective specializing in the recovery of stolen art.

“I knew he didn’t have much knowledge of plein-air art,” she said in an interview Wednesday. “But I did.”

“I never thought in the beginning it (the collection) would get into this much money,” she added.

But Robert S. Kilborne, Johnson’s lawyer, said that in the six-month period Johnson helped Smith make purchases worth $15 million. Smith has not disclosed how much she has paid for the art.

Johnson and Smith said that according to their agreement, Johnson was to receive a 10%, or $1.5 million, commission on the purchased art. He said he has received half, but is owned another $750,000.

But where Johnson contends he was to be paid all cash, Smith argues that he agreed to accept as partial payment some of the paintings he bought with her money but that she rejected.

“That’s baloney. I never agreed to that ever,” Johnson said.

Orange County Superior Court records show that on March 2, Johnson filed a lawsuit against Smith alleging negligent misrepresentation and fraud and seeking $1 million in damages, including accrued interest, over the $750,000 in commissions that he contended Smith hadn’t paid.

Johnson resigned as Smith’s agent in May, 1992, Kilborne said.

Johnson said he voluntarily dropped his lawsuit last month when it appeared lawyers for both sides would thoroughly account for the art and settle the dispute out of court.

Russell Allen, Smith’s lawyer, said Wednesday that Smith decided to file a lawsuit of her own when she heard rumors among art dealers that Johnson “may have sold major pieces that she paid for.”

Johnson denied that he has sold any paintings in which Smith claims ownership. “If they want to know what I am doing, let them call me,” he said.

Kilborne believes that some of the misunderstanding relates to the “impetuous buying” of art over a short period. “It created a very difficult accounting issue about where the art is,” he said.

“Some is with Mrs. Smith and her relatives, some is in a warehouse, some are still with dealers and one or more may be in Mr. Johnson’s possession,” he said.