Safflane Holdings Ltd. et al v. Gagosian Gallery, Inc.

Filing 95

DECLARATION of Dara G. Hammerman. Document filed by Gagosian Gallery, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H)(Hammerman, Dara)

WITHERS BERGMAN LLP
Hollis Gonerka Bart (HB-8955)
Brian Dunefsky (BD-3554)

Dara G. Hammerman (DH-1591)
Azmina Jasani (AJ-4161)
430 Park Avenue, 10th Floor

New York, New York 10022
212.848.9800 (p)

212.848.9888 (f)
Attorneys for defendant Gagosian Gallery, Inc.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-- -- - --- --- --- -- ------ ------ ------ - -- - --- --- --- - -- - --- - )(

Case No.: 11 CIV 1679 (DLC)

(MHD)

SAFFLANE HOLDINGS LTD., and
ROBERT WYLDE,
Plaintiffs,
-against -

GAGOSIAN GALLERY, INC., and
CHARLES COWLES
Defendants.

DECLARATION OF
DARA G. HAMMERMAN

- - -- - -- - -- - -- - ---- --- -- - ------ --- - -- -- - --- -- ---- - -- ---- - )(

Dara G. Hammerman hereby declares under the penaltes of

perjury that the following is

true and correct:
1. I am an associate of the law firm of Withers Bergman LLP ("Withers"), attorneys

for defendant Gagosian Gallery, Inc. ("Gagosian Gallery") in this action, and I am admitted to

practice before this Court. Plaintiffs Safflane Holdings, Ltd. and Robert Wylde (the "Saffane

Plaintiffs") obtained a default against Charles Cowles ("Cowles") on October 14,2011. In
accordance with the terms of

the Settlement Agreement, on January 13,2012, the Safflane

Plaintiffs assigned their rights and claims against Cowles, including their interest in any

document number: NY23B02/0009-US-135570B/9

judgment entered by the Court against Cowles, to Gagosian Gallery. This affidavit is submitted
in support of Gagosian Gallery's application for entry of a default judgment against defendant
Cowles in this action.
2. The Complaint in this action was originally brought on March 10,2011 by the

Saffane Plaintiffs against Gagosian Gallery to recover, inter alia, at least $6 milion on claims
relating to a painting by Mark Tansey entitled, The Innocent Eye Test (the "Tansey Painting")

(the "Complaint") that Cowles sold to the Safflane Plaintiffs through Gagosian Gallery. A copy
of the Safflane Complaint is annexed hereto as Exhibit A.
.3. On July 15,2011, the Saffane Plaintiffs amended their Complaint to assert claims

against Cowles for his alleged fraudulent and negligent misrepresentations as to the title and
ownership of

the Tansey Painting (the "Second Amended Complaint"). A copy of

the Second

Amended Complaint is anexed hereto as Exhibit B. On the same date, Gagosian Gallery fied a
third-party complaint against Cowles seeking indemnification and contribution in connection
with his sale of

the Tansey Painting (the "Third-Party Complaint"). A copy of

the Third-Party

Complaint is anexed hereto as Exhibit C.
4. On July 20, 2011, the Saffane Plaintiffs filed a Corrected Second Amended

the Safflane

Complaint (the "Safflane Corrected Second Amended Complaint"). A copy of

Corrected Second Amended Complaint is annexed hereto as Exhibit D.
5. On July 27, 2011, Cowles was personally served with a Sumons and a copy of

the Saffane Amended Complaint at 84 Mecer Street, New York, New York 10012. At his

deposition on July 13,20011, Cowles admitted that this was his current address. A copy ofth~
Affidavit of Service is annexed hereto as Exhibit E.

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document number: NY23B02/0009-US-135570B/9

6. On August 10, 2011, the Affidavit of Service was filed with the Cour. A copy of
the Affidavit of Service fied with the Court is annexed hereto as Exhibit F.

7. Cowles's deadline to answer the Saffane Corrected Second Amended Complaint

was August 17,2011. However, he failed to answer, appear or otherwise respond to the Safflane
Corrected Second Amended Complaint, and the time to do so has long since expired.
8. On September 9, 2011, the Safflane Plaintiffs fied an Order to Show Cause

seeking a default judgment against Cowles. That same day, the Cour issued an Order directing
Cowles to appear before the Court on October 14,2011 to show cause as to why an Order should

not be issued against him. A copy of the September 9th Court Order is anexed hereto as
Exhibit G.

9. On October 14,2011, Cowles failed to appear before the Court, and the Court

entered a default against him and ordered an inquest to determine damages (the "Default
Order"). A copy of

the Default Order is anexed hereto as Exhibit H.

10. On October 12, 2011, Gagosian Gallery entered into a confidential settlement

agreement with the Safflane Plaintiffs, in which Gagosian Gallery agreed to pay the Safflane

Plaintiffs the amount set forth in the settlement agreement (the "Settlement Amount"). A copy
of

the Settlement Agreement, Exhibit I, has been sealed pursuant to the Court's Order, dated

November 8, 2011, and a hard copy of

the Settlement Agreement along with the Court's

November 8, 2011 Order wil be submitted to the Cour by hand in accordance with the Court's
instruction for submitting documents under seaL.
11. In accordance with the terms of

the Settlement Agreement, on January 13,2012,

the Safflane Plaintiffs assigned their rights and claims against Cowles, including their interest in
any judgment entered by the Court against Cowles, to Gagosian Gallery.
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12. By defaulting, Cowles has admitted that he is liable to the Saffane Plaintiffs for

the claims brought against him in the Saffane Corrected Second Amended Complaint. See
Estate ofShefner v. Tuchman, 2009 U.S. Dist. LE)(IS 117273, *3 (S.D.N.Y. 2009) (plaintiffs'
allegations deemed admitted where defaulting defendants presented no defense to the Court, and
therefore Court was unable to determine whether defaulting defendants had a meritorious
defense to allegations); see also Au Bon Pain Corp. v. Artect, Inc., 653 F. 2d61, 65 (2d. Cir.

1981) (upon a defendant's default, the Cour should accept as true all the factual allegations of
the complaint, except those relating to damages); Schwarz-Liebman Textiles v. Last Exit Corp.,

judgment entered on well-pleaded allegations

815 F. Supp. 106, 107 (S.D.N.Y. 1992) ("default

of a complaint establishes a defendant's liability"). As such, Cowles's failure to proffer any
defense constitutes his admission to the allegations of the Saffane Corrected Second Amended
Complaint and warrants entry of a default judgment against him.
13. The measure of damages for the type of claims brought against Cowles is the fair
market value of

triaL. See Menzel v. List, 24 N.Y.2d 91,97

the Tansey Painting at the time of

(1969) (holding that a buyer's damages should be measured by the present value of the painting).

However, because the Saffane Plaintiffs, through their settlement with Gagosian Gallery, have
already recovered a portion of their damages, Cowles should only be liable for the fair market
value of

the Tansey Painting less that portion ofthe Settlement Amount attributable to the

Tansey Painting.

the Saffane Plaintiffs' rights, now

14. As such, Gagosian Gallery, as assignee of

seeks entry of a default judgment against Cowles for the current fair market value of the Tansey
Painting less that portion of

the Settlement Amount attributable to the Tansey Painting.

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document number: NY23802/0009-US-1355708/9

Elin Lake-Ewald and its accompanying

15. As set forth in the Expert Affidavit of

exhibits, the fair market value of

the Tansey Painting is $6,500,000. See Elin Lake-Ewald

Affdavit at ii 2-3.
the Settlement Amount is attributable to

16. Gagosian Gallery submits that 82% of

the Tansey Painting. Gagosian Gallery derived this percentage by taking into account the

amounts demanded by the Saffane Plaintiffs in the Saffane Corrected Second Amended

Complaint. Specifically, the Saffane Plaintiffs demanded a total of at least $6 milion in
damages with respect to the Tansey Painting, and a total of$1.1 milion in damages with respect

to a separate painting by Richard Prince entitled Milionaire Nurse (the "Prince Painting"). As
such, the 82% represents the ratio between the amount demanded by the Safflane Plaintiffs in

connection with the Tansey Painting and the total amount of damages demanded by the Saffane
Plaintiffs in the Safflane Action. The precise amount attributable to the Tansey Painting (and the
the Tansey Painting to

amount that should be subtracted from the current fair market value of

determine the amount of the default judgment) is set forth in a "Summary of Damages Paid by

Gagosian Gallery to Plaintiffs in Saffane Action for Tansey Painting" (the "Summar"),
prepared by Withers Bergman. The Summary, Exhibit J, has been sealed pursuant to the Court's
the Summary along with the Court's

Order dated November 21,2011, and a hard copy of

November 21,2011 Order wil be submitted to the Court by hand in accordance with the Cour's
instructions for submitting documents under seaL.
17. As evidenced by the facts set forth in this affidavit and its accompanying exhibits,

and the Expert Affidavit ofElin Lake-Ewald and its accompanying exhibits, Gagosian Gallery
respectfully submits that this Court has ample basis for granting a default judgment in the
amount of

the fair market value of

the Tansey Painting less the amount set forth in the Summary.
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document number: NY23802/0009-US-1355708/9

18. It is respectfully submitted that for the reasons set forth herein, as well as in the
Safflane Corrected Second Amended Complaint, and the Affidavit ofElin Lake-Ewald,
Gagosian Gallery is entitled to entry of a default judgment against Cowles as follows:
a. Awarding Gagosian Gallery judgment against Cowles for $6,500,000 less the

amount set forth in the Summary;
b. Granting such additional relief as this Court deems proper.

DATED: New York, New York
January 19,2012

t)~/~

Dara G. Hammerman

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document number: NY23802/0009-US-1355708/9