Firm Obtains Discovery Win in Dispute Over Sale of Pablo Picasso Painting

Feb. 6, 2025 – Hughes Hubbard secured a key discovery victory as part of its representation of Sotheby's in a long-running dispute over ownership of Pablo Picasso's painting “Le Peintre." The painting was used as collateral to obtain a $14.6 million loan without the knowledge of the artwork's owners.

In August 2021, Maria Iride Crippa, the owner of the artwork, entered into a consignment agreement with Sotheby's granting the auction house “exclusive possession, custody and control over the Artwork to privately offer and sell it." In her agreement, Crippa gave Sotheby's permission to loan the work to a buyer before it paid the full purchase price, provided that Crippa retained title to the artwork until receiving full payment.

The same month, August Uribe Fine Art agreed to purchase the painting for $5.5 million paid to Sotheby's in two installments. Before making the first payment, Uribe asked Sotheby's to release the painting on temporary loan for viewing purposes – presumably so Uribe could show it to a potential purchaser from Uribe. Sotheby's agreed on the conditions that the artwork (1) be held at an art storage warehouse in Long Island City, NY, (2) not be removed from that warehouse, and (3) be returned to Sotheby's if Uribe failed to make timely payment.

Separately, Uribe agreed to sell the painting to Dartmilano SRL (Dart), with the work remaining in Uribe's possession at the Long Island City warehouse until Dart paid for it in full. While its payment obligation was still owing to Uribe, Dart secretly pledged the painting as collateral for a $14.6 million loan from Art Lending, Inc. Dart then asked for Uribe to move the painting to a warehouse in New Jersey, which Uribe did without the knowledge of Sotheby's or Crippa. Dart thereafter defaulted on its payment obligations to Uribe, which in turn defaulted on its final payment to Sotheby's, which then demanded return of the painting. However, Uribe was unable to return the painting to Sotheby's because it was in Art Lending's warehouse space in New Jersey.

In May 2022, Uribe sued Dart and others in New Jersey federal court. In June 2024, Sotheby's filed an intervenor complaint in that action against Art Lending and Dart to protect its interest in the painting and its commission. The following month, Crippa also filed an intervenor complaint against Dart and Art Lending.

On Aug. 26, 2024, Art Lending produced a draft participation agreement indicating the existence of individual participants who purchased interests in the Dart loan secured by the painting. Sotheby's was not aware of the extent of the loan participants' involvement until November 2024, during depositions of Art Lending's witnesses, who testified that they discussed diligence and Art Lending's relationship with Dart with those participants. When pressed, Art Lending refused to identify the participants.

Attempts at resolution failed and on Nov. 22, 2024, Sotheby's asked the New Jersey court to direct Art Lending to provide the identities of the loan participants, the amount they each invested and all of their communications relating to the Dart loan. Art Lending sought a protective order opposing this request, and Sotheby's filed its opposition on Dec. 16, 2024.

Sotheby's argued that Art Lending failed to show good cause and did not identify any “specific or serious injury" that the loan participants would suffer absent a protective order, noting that the participant information is relevant to Sotheby's claims and Art Lending's defenses, the governing California law does not prohibit disclosure of the requested information, and Sotheby's made its request before the close of discovery. Sotheby's also contended that Art Lending involved the loan participants in its decisions to seek collection of the Dart loan and argued this will provide information regarding Art Lending's purported diligence and other facts relevant to the litigation.

On Feb. 6, U.S. Magistrate Judge James B. Clark III of the U.S. District Court for the District of New Jersey ruled in Sotheby's favor, issuing a 26-page decision denying Art Lending's motion for a protective order and ordering it to produce the loan participant information to Sotheby's.

Dan Weiner leads the Hughes Hubbard team; Sigrid Jernudd, Mana Ameri, Tyler Bloom, Kayahan Cantekin and Persis Moore assisted in resolving this discovery dispute.