Museums’ Dispute Goes to Mediator

The Laguna Art Museum has requested a mediator to help settle a months-long dispute with the Orange County Museum of Art over a $60,000 interest payment.

When LAM and the former Newport Harbor Art Museum merged in 1996 to create OCMA, the new, consolidated entity legally acquired the Laguna museum’s $2-million endowment.

After a prolonged, heated protest against the merger by the community of Laguna Beach, the Orange County museum agreed to give the Laguna museum its independence, plus about half the endowment. But legal red tape delayed fund transfer for about 10 months, during which time the money earned interest.

In February, OCMA paid LAM about $60,000 in interest, but OCMA earned at least twice that amount, LAM trustee and attorney Richard Schwarzstein said.

“The question is whether it’s fair, under any legal or moral principle, for the other side to have made a large sum investing our money, but only to have given us a small portion” of the earnings, he said.

OCMA Chairman Charles D. Martin, however, said that the two museums had agreed to an investment rate and that LAM had been paid accordingly. He acknowledged that OCMA made more than $60,000 in interest (he could not say how much more because the principle had been mingled with other investments) but said the issue was irrelevant because OCMA made good on its obligation.

Martin added that the $2-million endowment originally invested belonged to OCMA, not LAM, according to the terms of the merger.

Schwarzstein denied that the two parties, which share access to a permanent collection, had agreed on investment procedures. But both he and Martin expressed regret over the dispute, and are expected to enter into mediation by October.

Schwarzstein said he filed a request for mediation with a judicial mediation and arbitration service in Orange. OCMA officials say they are willing to have a third party mediate the dispute, but both parties are still working out details of the process.

“I hope there’s not any acrimony, because I think our working relationship is improving a lot,” Martin said.

In related news, LAM has hired Patricia Wright, a longtime fund-raiser for cultural and charitable organizations, to serve as LAM’s first development director since 1996; and Mitch Goldstein, a part-time preparator at Santa Ana’s Bowers Museum of Cultural Art, will become chief preparator.