An acclaimed Los Angeles artist who has sued a prominent local collector to enforce the California “resale royalty” law could get his day in court long before the plaintiffs in class-action suits filed last week against Christie’s and Sotheby’s.
Artist Mark Grotjahn has sued collector Dean Valentine to recover a 5% royalty for three artworks that Valentine resold. The case, which has been quietly working its way through the courts for nearly a year, now has a trial date in March.
Grotjahn, who shows with the galleries Blum & Poe in Los Angeles and Gagosian in London, has works in major museums. His last L.A. show was described by Times critic Christopher Knight as “sumptuous and mesmerizing — one of the most beautiful painting shows in recent memory.”
A media and Internet entrepreneur who was previously president of the UPN television network, Valentine serves as a trustee at the Hammer Museum. He has a reputation for discovering artists early, before the masses catch on.
Just five years ago, Valentine would have been described as one of Grotjahn’s most ardent and active supporters. Now the two are no longer speaking.
Grotjahn said he’s been paid his 5% royalty by collectors more than a dozen times. “When they first started selling my stuff at auction, I’d have my dealers ask collectors for the royalty. A lot of people would hem and haw — I wouldn’t say they gave the money happily, but they paid, I think out of respect for me. At this point as far as I know, I only have one person who has refused to pay, and that’s Dean.”
“I think Dean’s made $3 million off of buying and selling my work, so this is a really lame thing to do,” Grotjahn added, noting that Valentine had bought some of his early works for less than $10,000. His paintings, including one that Valentine resold, have since topped $1 million.
Valentine says that he is not paying the fee as a matter of principle. “As a California resident I don’t believe I should be disadvantaged in collecting or reselling art. I’m being treated unfairly. I’m a big believer that there should be some kind of national royalty here, like in France, but I don’t see any reason why I should have to pay in a situation when other collectors do not.”
He declined to comment on how much money he has made by reselling Grotjahn’s work. “This is not about impoverished artists versus rich collectors, which is how a lot of people will try to frame it,” he said. “This is about a law that is incredibly poorly written and discriminatory.”
The law that pits Grotjahn against Valentine was signed by Gov. Jerry Brown in 1976, when the contemporary art market was still in its infancy. Robert Rauschenberg, frustrated at seeing collectors profit from flipping his work at auction, helped lobby for its passage. Similar legislation was defeated in New York; California is the only state with a resale royalty for visual artists.
The California Resale Royalty Act specifies that artists whose work is resold are entitled to 5% of the sales price if the transaction takes place in California or the seller resides in the state and that certain other conditions are met. The percentage applies to sales amounts (not profits) exceeding $1,000. The resold work must be “an original painting, sculpture, or drawing, or an original work of art in glass.”
Grotjahn filed suit against Valentine last October in California state court under the name “Baby Moose Drawings Inc.” — the artist has used “baby moose” in place of a signature on his paintings. According to the complaint, Valentine failed to pay Grotjahn the full 5% fee on three occasions. The biggest sale in dispute took place in 2008 at the New York auction house Phillips de Pury and Co., when Valentine sold an untitled oil on linen painting from 2005 known as “Blue Face Grotjahn” for $1,217,000, including premium.
Earlier this year, Valentine’s lawyers were able to move the case to federal court on the grounds that the law interferes with the Copyright Act of 1976 — an argument that many expect Christie’s and Sotheby’s to revisit should the class-action suits go forward.
But the argument didn’t fly with U.S. District Court Judge Jacqueline J. Nguyen. She found that the Royalty Act “does not infringe on the exclusive rights delineated in the Copyright Act,” providing a “qualitatively different” right than copyright holders receive. She sent the case back to state court.
A trial has been set for March 6, and Grotjahn’s attorney, Lonnie Blanchard, says he is optimistic. “The statute says: If you sell, you pay. And at this point in our case its constitutionality has been upheld.”
“It’s such a funny thing to me that there’s controversy about this,” he added. “We are so used to having royalties go to musicians and movie stars when their things are being replayed.”
Valentine’s Washington, D.C.-based attorney Josh Kaufman is working to avoid a trial. He has filed a motion for summary judgment, asking the judge to decide the case based on interpretation of the law.
“Our position at this point is very simple,” he said. “As we spelled out in the proceedings, Mr. Valentine didn’t sell any of the works [directly], he used a third party. And the language of the law is clear: Whether at an auction or gallery, when a third party sells the work, it’s incumbent on them to collect the fees and distribute them.”
Kaufman said there has been “very little litigation around the statue. There may have been trial level lawsuits between people, but nothing that’s gone up to appellate court that’s made or changed the law.”
Blanchard says there is a lack of case law in part because artists have a hard time tracking when resales occur. “If a work is sold at auction it’s a public record, but sometimes work is sold between collectors, or collectors and galleries, and the artist has no way of knowing about it,” he said.
Then there’s that many artists, who depend on collectors, galleries and even auction houses in the delicate ecosystem of the art world, are simply afraid to rock the boat.
Or else they can’t afford to. The artists who could benefit the most from a 5% royalty have not, historically, been the ones to aggressively pursue their fees. The irony is not lost on Grotjahn.
“This law is not enforced,” says Grotjahn. “To collect your money, you have to get a lawyer. It’s a pain in the neck and it’s expensive. Most artists don’t have the money to do this.”