Ending a more than six-year saga over authentication issues and related legal fees, the Andy Warhol Foundation for the Visual Arts announced Wednesday that it has concluded a settlement with its insurer, Philadelphia Indemnity Insurance Company, whereby the Foundation has recouped nearly $6.6 million in legal defense costs. According to a statement from the Warhol Foundation, the latest development “fully resolves the Foundation’s claims against the insurer for refusing to pay the Foundation’s legal costs incurred in defending itself against an antitrust case brought by Joe Simon and a ‘copy-cat’ suit by Susan Shaer.”
Last December, the Warhol Foundation announced it had won a major fight against the insurer over whether it could recoup the hefty legal defense fees relating to the case, which was settled in November 2011. The 2007 suit by collector Joe Simon-Whelan alleged fraud and collusion by the Warhol board’s authentication arm and related entities, after his 1965 red Warhol self-portrait for which he paid roughly $200,000 in 1989 was deemed inauthentic in two opinion letters. The Warhol Foundation hired Boies, Schiller & Flexner to represent it in the suit. Shaer brought a nearly identical suit against the board in early 2010. Legal fees eventually climbed to $6.6 million.
According to the Warhol Foundation statement, “both suits alleged an absurd scheme to manipulate the prices for Andy Warhol’s artwork yet [they] were forced to dismiss their claims in late 2010… The Foundation’s insurer nevertheless refused to reimburse the Foundation for its legal costs incurred in defending these bogus suits, alleging that the Foundation’s insurance policies did not cover claims of this nature.”
The Foundation said Philadelphia Indemnity has paid back the “lion’s share of our legal costs,” and that the funds have been restored to its endowment.
“We're pleased that the ending of this case firmly recognizes what was apparent from the beginning: the two meritless antitrust cases should have never been brought against the Foundation, and PIIC should have stood by its policyholder the moment those lawsuits were filed,” Luke Nikas of Boies, Schiller & Flexner LLP told ARTINFO.
In an email, Foundation president Joel Wachs also expressed satisfaction: “It was a long tough battle, but well worth it.”