Norman Waitt is the co-founder of computer maker Gateway, a multimillionaire and a serious art collector. So serious that the Wall Street Journal reports that, between 1996 to 2008, he spent more than $13 million for about 50 works from the Gerald Peters Gallery.
His habit couldn’t have been fed without the help of Gerald Peters himself, who deals in New Mexico and New York. “Waitt came to trust Peters and relied on Peters’ expertise and what Waitt believed to be Peters’ integrity,” according to a lawsuit filed in 2009. Peters may have exploited his position in this dealer-collector relationship. Waitt filed suit against Peters and the gallery for breach of contract and negligent misrepresentation.
The lawsuit is mainly based around the sale of “Buffalo Standing in a River”, a painting by Samuel Seymour, for $1.2 million. It was revealed during legal discovery that Peters had first acquired “Buffalo Standing in a River” for $200,000 in 2008 – a significantly lesser sum.
“The case illustrates the financial risks of the art market and highlights the difficulty of valuing an artist’s work.”
What legal duty did Peters owe to Waitt in valuing the works? Albuquerque Journal reports that, under New Mexico law, the buyer-seller relationship is not fiduciary. Peters’ lawyer says, “Alleging Mr. Peters gave an express warranty as to the future value of the painting — that would be an impossible thing to do. No gallery in the country will do this. We believe it was a fair market price for the Seymour and we stand by it today.” But Waitt’s lawyer argues that Waitt would not have bought the painting but for the negligent representation as to the value of the work.
“You can really get taken in this market,” says Mr. Waitt. Or, as the gallery’s lawyers say, is this just an example of extreme buyers’ remorse?
A judge in a New Mexico state court ruled this month that the case can proceed.