Sharon, Julian and family finished their cruise and went home to await the arrival of their purchases.
Some time after arriving back in the UK, they received a phone call from Morris Shapiro, Gallery Director of Park West Gallery, offering to sell them a complete set of Salvador Dali's Divine Comedy prints - a full set of six books with Dante's text, and each set individually signed in pencil by Salvador Dali himself and Jean Estrade, the publisher of the French edition of Divine Comedy prints.
Some back and forth ensued between Julian and Morris which culminated in the purchase of the full set. The price was $450,040.00 plus a buyer's premium. Buyer's premiums are customary at auctions where work is consigned by a buyer to the auction house. The buyer's premium is how the auctioneer and auction house make their money. The grand total charged by Park West for their purchase of the full Divine Comedy set was $483,828.00. They were credited for some of their purchases aboard the Adventure of the Seas which they decided not to keep. What remained to be paid was $422,601.50. An invoice was sent to them by Park West with all the above fictitious details and the amount remaining to be paid.
They were instructed by Park West to wire this amount to a Royal Caribbean bank in Texas, which they did.
The shipment of the prints was sent to Mana Fine Arts art storage facility in Jersey City, New Jersey, and they were sent a "certificate of authenticity" signed by Morris Shapiro and an appraisal also signed by Morris Shapiro. Some copies of additional documents were sent by email, including an attestation by Jean Estrade and Daniel David of Les Heures Claires in Paris and a Professional Opinion by a Santa Fe, NM appraiser, Bernard Ewell, to support the authenticity of the prints that were purchased.."
I am not a Dali expert nor have I had access to the documentation that specifically relates to the purchase of Dali's Divine Comedy set for $483,828.00. What I do have is the Park West appraisal that accompanied the sale that was provided by the purchasers to the Fine Art Registry website . The three page document is printed below. I want to examine this document in order to see if it conforms to current accepted standards of appraisal practice. The standard that is currently accepted by both real property and personal property appraisers is the Uniform Standards of Professional Appraisal Practice 2010 (USPAP).
I have only listed those elements that I fail to see included in this document. You be the judge whether this list is accurate and whether this appraisal complies with USPAP.
USPAP 2010
1. Standard 8 (b)b (i) - State the identity of the client and any intended users, by name or type - Julian Howard's name is listed on page one; however he is not identified as the client nor are any intended users listed.
2. Standard 8 (b) (ii) - State the intended use of the appraisal - The words "retail replacement appear on page one but they are listed as "the current Park West retail replacement price". Is this a value for obtaining insurance coverage or confirmation of sale price.. or maybe both. It is not stated. If Park West is providing a "retail replacement price" to confirm their own sale price, it would be troublesome.
3. Standard 8 (b) (iii) - Summarize information sufficient to identify the property involved in the appraisal including the physical and economic property characteristics relevant to the assignment. The complete set is described as 100 wood engravings. Did Dali make more than one set? What is the condition of the appraised set? What are the dimensions? No description is actually provided of the wood engravings.
4. Standard 8 (b) (v) State the type and definition of value and cite the source of the definition. There is no definition of retail replacement.
5. Standard 8 (b) (vi) State the effective date of the appraisal and the date of the report. The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market and property as of the effective date of the appraisal was prospective, current, or retrospective. This is a very critical point because you have no idea whether Park West's value conclusion is supported by past, current, or future data. There is no effective date stated.
6. Standard 8 (b) (vii) Summarize the scope of work used to develop the appraisal. No scope of work is included in the appraisal.
7. Standard 8 (b) (viii) Summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained. There is no summary of any methodology, techniques, reasoning, analysis, opinions considered, or conclusions that supported the Park West appraisal.
8. Standard 8 (b) (xi) Include a signed certification in accordance with Standards Rule 8 - 3
a. I have no (or the specified) present or prospective interest in the property that is the
subject of this report and no (or the specified) personal interest with respect to the
parties involved. Park West who signed this appraisal clearly has an interest in the property.
b. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. The individual who signed the appraisal is a major principal with Park West and must realistically be presumed to be biased.
c. my engagement in this assignment was not contingent upon developing or reporting. I can not know Mr. Shapiro's mind;however, I would think if he had appraised this object lower than the gallery sales price it would have been most unusual.
d. predetermined results. One can only speculate whether the results were predetermined by the sales price. What would a reasonable person assume?
e. my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. One can only speculate whether the results were predetermined by the sales price. What would a reasonable person assume?
f. my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. That was not stated so there is no way of knowing whether this appraiser was aware of USPAP
g. I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.)" There was no statement of inspection indicating that Mr. Shapiro of anyone not signing the appraisal report made an inspection.
h. no one provided significant personal property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant personal property appraisal assistance must be stated.) There was no statement indicating that anyone other than Mr. Shapiro provided assistance on this appraisal.
Comment: A signed certification is an integral part of the appraisal report. An appraiser who
signs any part of the appraisal report, including a letter of transmittal, must also sign this certification. The certification statement was not provided nor was it signed by Mr. Shapiro.
Clearly there is enough information here for a reasonable person to conclude that Park West appraisals do not conform to accepted appraisal industry standards. However, this is hardly a gotcha moment as can be seen in Park West's Terms of Appraisal. Park West makes it emphatically clear that Park West will not stand behind their appraisals: "By issuing this Appraisal, Park West makes no warranties or representations, express or implied, with respect to the artwork or its authenticity." The gallery is very much out in the open that their appraisals are not really useful for anything such as obtaining insurance, collateralizing a loan, resale, divorce settlement, etc. So why would you the purchaser pay for an appraisal signed by Mr. Shapiro, the gallery director? The only purpose that I can see for buying this appraisal is to feel good personally about your purchase. So in this sense and in my opinion the appraisal is a marketing tool for Park West.
The question that comes to mind is do these purchasers really understand this appraisal process. If Park West Gallery grants me a written interview this will certainly be one of the questions I ask. Undoubtedly, the lawyers in the upcoming law suits will have many questions to ask.
Park West Gallery
TERMS OF APPRAISAL
The following terms and conditions govern our Appraisal.
Method of Appraisal
The appraisal herein represents solely our opinion of the replacement value of the work. In making this determination we rely on many factors including the condition of the art work, gallery prices of reputable art galleries, and other reliable price data and lists. We do not rely on third party auction prices or Internet prices to arrive at the appraisal. At any given time, including the date of your purchase, the art that is the subject of this Appraisal may sell elsewhere for more or less than our Appraisal.
Exclusions and Limitations
While we endeavor to provide accurate appraisals, Park West disclaims and assumes no liability or responsibility for errors or omissions in connection with this Appraisal. Without limitation:
* Park West provides a limited five year guarantee of authenticity with the original purchase of certain works of art. That limited guarantee, as set forth in the " Terms of Guarantee" is the exclusive guarantee applicable to art work sold by Park West. By issuing this Appraisal, Park West makes no warranties or representations, express or implied, with respect to the artwork or its authenticity.
* In no event shall Park West or any of its respective parents, affiliates, subsidiaries, officers, directors, or employees be liable for claims that this appraisal is inaccurate or incorrect in any respect, or for any damage whatsoever including but not limited to incidental or consequential damages, loss of profits or loss of value or increase in value. We disclaim any liability for: (i) insurance losses or (ii) claims for refunds or money damages based on a claim that our appraisal value is too high, too low or otherwise inaccurate in any respect. It is further understood that the remedy set forth herein, namely the rescission of the appraisal sale and refund of the price paid for the Appraisal is exclusive and in lieu of any other remedies which might otherwise be available as a matter of law or equity.
7 comments:
"The gallery is very much out in the open that their appraisals are not really useful for anything such as obtaining insurance, collateralizing a loan, resale, divorce settlement, etc"
Really?
Why then did State Farm Insurance rely on said appraisal to insure the work for the full $510,000 Park West appraised value???
"The gallery is very much out in the open that their appraisals are not really useful for anything such as obtaining insurance, collateralizing a loan, resale, divorce settlement, etc."
Really?
Why then did the court in the Heidi Rice divorce case (subsequently, co-plaintiff to Day and Howard vs Park West Gallery) rely on the Park West Gallery appraisals of her artwork in awarding the artwork as a substantial part of her divorce settlement???
What a great question. Let's say the work was stolen and the insured party submitted a claim. State Farm goes back and checks the file and decides to get a second opinion, which is significantly lower. State Farm refuses to pay and now Park West appraisal becomes pivotal in the dispute. What would the outcome be? Would Park West stand behind their $35 dollar appraisal for a $510000 claim? You be the judge.
Thanks Sharon you have made another great point. Let's say that the Park West appraisal was used for equitable distribution in a divorce case. The value of this work of art represents a significant portion of the settlement. The spouse decides to sell the work and finds a prospective buyer, who decides to get another appraisal to confirm the sales price. The second appraisal comes in much lower and the sale is cancelled. The spouse goes back to the divorce court and Park West. Nothing can be done. Park West has disclaimed all liability for their $35 appraisal.
So why would the court or the attorney accept such an appraisal? I have no explanation.
Thank you John, I am glad that you posted my comments, with you being the gatekeeper, I was sceptical as to whether they would be posted.
In any event, re the insurance: my being the judge of whether Park West will stand behind their appraisal or not somewhat misses the point - unfortnately, we already know the answer to that question. I am responding to your comment that PWG appraisals "are not really useful for anything such as obtaining insurance. . .".
When we obtained insurance on our work, it was not a simple matter of adding it to our personal articles policy - not at all, the insurance company submitted the authentication documentation and appraisal to the underwriters for further scrutiny. I discovered this when I chased them because the insurance was taking so long to come through.
If, therefore, the PWG appraisals can pass muster with the insurance company and its underwriters, I am somewhat bewildered that you would take the view you have and also conclude that our purchase of a PWG appraisal is merely to make us "feel good personally" about the purchase.
Re court settlements, ditto my point above about passing muster - if the PWG appraisals can convince a judge, an insurance company and its underwriters, how can you possibly take the view that they are merely marketing tools to enhance the "feel good" factor of the purchasers.
You are looking through the eyes of an experienced, INDEPENDENT appraiser - something I have discovered PWG is not.
Your question about whether these purchasers understand the appraisal process is a resounding - of course not! I did not think that I had to be given that I was dealing with a household brand name (Royal Caribbean Cruises) and the World's Largest Art Gallery.
I am an ex-employment law lawyer turned full-time mum of three for the past decade; my husband is debt finance lawyer - we are not sophisticated art buyers and we most certainly are not experts in the appraisal field.
And let's not forget the "caveat emptor" argument. Yeah, too bad that "caveat emptor" is not a defence to fraud, otherwise Bernie Madoff would not be in jail. Let's see what happens to Albert Scaglione, Morris Shapiro et al.
Sharon, I think the dialogue is important, so there was no hesitation in publishing your remarks. The fact that you were able to obtain insurance is not really relevant until you have a loss and your appraisal then becomes instrumental in settling the claim favorably. My point in writing this was to point out that lawyers, judges, and insurance companies often don't have a clear understanding of the appraisal business. Obviously, you and your husband have every right to be angry; because, as reasonable people, you had certain expectations in your transaction that proved to be inaccurate. Even as lawyers you were not aware that you were entering into a one-sided transaction. Think of the folks that are in completely unrelated fields that suddenly find that have no recourse but to accept their loss. And you are right I have been doing this for 36 years have seen problems like this before. I hope this article does some good in making more art buyers aware of invoices and appraisals that are provided after the sale. Thanks JB
John, you are right "lawyers, judges, and insurance companies often don't have a clear understanding of the appraisal business".
And nor do the innocent purchasers - in fact, they generally don't have a clue, they are relying on the pretty piece of paper from a so-called reputable source.
I reckon that you are a good, honest appraiser - in fact, I know you are because you too have suffered the PWG baseball bat and yet have had the guts to try to portray and open and even-balanced dialoge.
Should you get your written interview with PWG, it will be interesting to see what they have to say. I have seen the results of some of these "written interviews" - answered by their PR firm Fleishman Hillard or Bob's Goldman Whittman.
Good Luck!
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