Federal Judge: Insurer’s ‘Masterpiece Policy’ Covered Gallery’s Alleged Conversion Of Couple’s Artwork

Let me start off this post by acknowledging that I know little about paintings except what I learned in Humanities classes in college and what I’ve seen on visits to museums.  The only paintings that I possess are the ones my kids make for me with their fingers.  These artworks are on display in my office, if you care to stop by to see my collection. My newest addition is an abstract in yellow from my three-year-old daughter, which reminds me of a blazing sun and brutally humid conditions, and which I therefore call "Washington, D.C. in August," in memory of one heck of a fantastic summer I spent there back in the day.  Of the art world, I know little except that it exists.

The U.S. District Court for the Northern District of Illinois, on January 16, came out with a summary judgment ruling that a story in yesterday’s Leisure & Arts section of the Wall Street Journal points to as possibly being a landmark decision.  The case is Henry F. and Anne Marie Frigon v. Pacific Indemnity Co.  Here is a pdf of the opinion.  And here is a pdf of the Frigons’ summary judgment memorandum.  Here is a copy of the insurer’s response brief.  There is no sense in providing a link to the story, because it is by paid subscription only, but I enjoyed it, although almost the entire story was a recounting of the judge’s opinion, and seemed to lack much proof of the landmark effect of this decision on the art world.  Again, however, I caution that I know nothing of art or the art world, so perhaps I would not recognize proof if I saw it.

The case is about the Frigons, a wealthy couple who allegedly were taken in by a gallery owner, who had tutored them in art knowledge and sold them a number of paintings, including the 11 at issue in the case.  They paid more than $1 million for these paintings, and at a later time, put them up for sale on consignment at the gallery.  These were then sold, but regrettably, for less than the minimum price put on them by the Frigons, according to the judge’s opinion.  Unfortunately, except for about $70,000, none of the money actually found its way back to the Frigons, but instead was kept by the gallery, which sadly had fallen into insolvency some years earlier. The couple was able to recover one painting, but the others appear to be the property of bona fide purchasers who did not know of these facts.  So the Frigons made a claim on their Masterpiece Policy, which is not actually a policy specific to great art, as the name suggests, but instead a kind of deluxe homeowners/property insurance offered by several carriers. 

This policy is an "all risk" policy, meaning covered property and personal possessions are insured against destruction or theft unless some exclusion applies.  No exclusion appeared to apply.  The insurer characterized the Frigons’ claim as one seeking to recover bad business debt, which of course is not included in the coverage grant.  The Frigons, on the other hand, said it was a case of loss by conversion, or in other words, a kind of theft of the physical property itself.  I do have to admit I really liked the brief the Frigons’ attorneys put together, full of great case law and a lot of colorful, aggressive language: very persuasive.  The judge saw it the Frigons’ way and granted summary judgment for them on the question of coverage.  Still to be decided is the amount of the loss.  The docket for this case in the court’s PACER electronic system indicates that the insurer has filed briefing asking for reconsideration.

If I’m reading the decision correctly, and it’s only seven pages, so it wouldn’t take you any time to do the same, it doesn’t sound very landmark to me.  I did an electronic search and didn’t find any other cases about both Masterpiece Policies and artworks, and this ruling sounds to me exactly like I’ve described it: the judge said wrongful taking of the paintings is a physical loss of ownership the same as if a thief ran off with them and sold them at a makeshift kiosk.  Then again, I know nothing of the art world or art.  (But I do like my kids’ paintings).

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